SJH.L Regulatory News (SJH)

10 February 2017

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

Boxhill Technologies plc

("Boxhill" or the "Company")

Trading Update & Proposed Acquisition

Trading Update

The board of directors of Boxhill (the "Board"), the payment software and lottery group is pleased to provide a further trading update.

Payments Division

Progress in the payments division has slowed during the second half of the year due to new regulations introduced by card scheme operators and acquiring banks. This has led to a slowdown in credit card processing. During the slower than usual period EmexPay used the time to upgrade security systems including rolling out industry leading 256bit encryption tools across all data sets, and to expand its network of partners and suppliers to provide for a strong and sustainable foundation for future growth.

For example Emex Technologies now has established corporate and acquiring banking relationships with Pasta Bank, Latvia; State Bank of Mauritius; Mauritius Commercial Bank; Sparkasse Bank, Malta; Euro Exim Bank, Gambia and Wall Street Financial in Canada and the USA as well as enhanced services from suppliers in Bulgaria and Georgia.

The scheme rule changes have restricted the ability of certain suppliers to provide the market with the full range of credit card transactions. In doing so it has vindicated the decision to acquire FreePaymaster, which has been rebranded as EmexGo to better suit SWIFT requirements, and now offers a wide range of services including cross border payments, alternative payments and peer to peer payments. It's strategic relationship with Trade and Merchant New Zealand bring access to SWIFT (Society for Worldwide Interbank Financial Telecommunication) and a network of some 91 banks around the world and the ability to issue IBANs (International Bank Account Number) which will be live in 2017.

The Company launched a new secure voucher service at the Malta Gaming Summit (SIGMA), which links services between EmexPay, EmexGo, merchants and their customers. Supported not only by presence at the conference, EmexGo has also advertised in key locations around Malta, often near to potential client locations. So far, the company has had an excellent response to the voucher product and expects to be present on over 400 websites (through approximately 40 clients) by the middle of 2017 and has also seen a threefold increase in EmexGo corporate customers in the last two months.

Lottery Division

Prize Provision Services Limited ("PPSL"), the Company's lottery operating subsidiary, has progressed with improvements across the business as planned

Direct bank payments for clients was introduced in September and taken up by around 30% of clients, including the top 100 clients who targeted after being identified as the primary beneficiaries of the introduction

The revamped admin centre was introduced on schedule in October. The centre gives clients a simple understanding of their lottery at a glance and allow clients to self-serve in a number of areas. Rolling improvements to the centre are in production and planned for regular releases.

The new Weather Lottery website was launched on January 9 2017. The website represents a significant improvement having been designed and built from the ground up to support the new product brand which invites players to 'Support a Great British Good Cause'. The new site incorporates a number of innovative features, is responsive, mobile friendly and fully search engine optimised.

Feedback has been extremely positive from clients and the website will be developed over the coming months based on client and end user feedback.

Soccerdome

The Soccerdome joint venture in Nottingham Soccerdome Ltd and Nineteen Twelve Holdings Ltd which sees Astro Kings Ltd operating the football pitches at the Harvey Hadden Sports Village in Nottingham is operating satisfactorily in line with expectations.

The focus is on increasing awareness of the venue in order to increase sales and pitch utilisation levels. A number of local men's and women's football teams make regular use of the venue, giving positive feedback. Leagues will look to be established in the next six months and are expected to be a significant revenue driver for the business.

Proposed Acquisitions

The Company has agreed heads of terms to acquire Timegrand Limited, a recently incorporated special purpose vehicle ("Timegrand"). On completion of the acquisition, Timegrand will hold intellectual property, software and knowhow including a licence to use an advanced Payment Gateway software system with advanced analytics and security/fraud management as well as finance and administration services. The software and knowhow this acquisition brings will help improve processes and turnaround times for our administration and reconciliation activities and internal reporting capabilities. Boxhill is already using certain elements of the software suite, as are several of its customers, and the benefits have proved to be significant.

The Acquisition, expected to conclude in 1Q 2017, is for a proposed consideration of 500,000,000 new ordinary shares of 0.1 pence ("Ordinary Shares"). The Acquisition is being made to further enhance the offering of the Payments Division and will include Gateway Processing Software with enhanced reporting capabilities, Fraud Management Software and Finance and Administration Services bringing about improved efficiencies between our delivery and internal finance functions. A further more detailed announcement on the acquisition will be made once a sale and purchase agreement has been concluded.

Lord Razzall, Executive Chairman, commented: 

"The changes to regulations for credit card processing introduced particularly by Visa have resulted in a temporary slowdown in the operation of the Payments Division. We have taken this opportunity to develop and enhance the business in ways which will produce positive results in the coming months, as will the development of EmexGo.

In addition, the acquisition of Timegrand saves both time and money by delivering increased efficiencies and resource-saving functionality which, with one eye on the future, will assist as we continue to make planned progress within our payments division. Additionally we are continuing to look for a new CEO and will update as and when appropriate."

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