Paypoint Plc · LSE:PAY
Paypoint — H1 2009/10 Earnings Presentation
40 slides from Paypoint's earnings presentation, Nov 19, 2009
Slide 1: PayPoint plc Interim results presentation
PayPoint plc Interim results presentation 19 November 2009 1
Slide 2: Agenda
Agenda • Highlights and operations review • Financial review • Summary • Q&A • Closing 2
Slide 3: Highlights and operations review
Highlights and operations review Dominic Taylor Chief Executive 3
Slide 4: Results overview
Results overview • Operating profit ahead of market expectations, despite the economic downturn • A period of tough trading as expected with mobile volumes down • However traditional retail business continues to deliver – Contract developments – Good local authority and housing volume growth – Conti
Slide 5: Results overview continued
Results overview continued • Core UK retail business remains uniquely differentiated – Widest range of payments; PayPoint processes more retail payments than any other UK provider – Extensive retail network with over 22,600 sites in the UK and Ireland (with thousands on the ‘waiting list’) • New bus
Slide 6: Operations review
Operations review For the six months ended September each period Transaction volumes by sector (million) 300 250 General Mobile ATM PP.net 200 150 100 50 - 1 1 2005 2006 2007 1 2008 2009 6 The comparative figures for 2007 have been adjusted to 26 weeks 1
Slide 7: Sector and market review
Sector and market review Bill and general payments • Transactions up 5%, net revenue up 6% – Strength of retail network has helped UK prepaid energy volumes grow by 3% on a like for like basis – Good growth in Local Authorities and Housing (up 20%) – 1.8m bill payment transactions in Romania • Prefe
Slide 8: Sector and market review
Sector and market review • Online – Mobile market volumes down in UK, Ireland and Romania as operators give more value to the consumer – PayPoint online volumes are 11% down overall, although net revenue only 3% down, mitigated by • Continued network growth: McColls live from July (1,400 sites) • St
Slide 9: Retail (UK & Ireland)
Retail (UK & Ireland) • 22,669 PayPoint terminal Terminal site outlets (September 2009) Epos only site ATM site • Rolled out over 1,188 (net 679) agents in 6 months • Rollout to 23,100 agents by year end • Continued strong demand with churn remaining at c.6% pa 9
Slide 10: Romania
Romania Strong growth in bill payment since launch (August 2008) has mitigated mobile decline. In bill payment: – Growth at 16% per month, with over 3m transactions processed to date – Run rate of 100k per week (doubled since March this year) – 20 clients live (Energy, Water, Telecoms, Financial Ser
Slide 11: Romania
Romania • Investment and knowledge transfer remain our priority – Further network optimisation based on new client requirements – Will achieve 2,900 bill payment sites by end of this financial year – 1,200 low performing top up only sites will be removed – Focus on costs, efficiencies and cash banki
Slide 12: Internet payments
Internet payments PayPoint.net trading profitably in a growing market Consumer spend/£bn 70 60 50 +30% 40 +7% 30 20 10 0 2008 2009 2010 Source: IMRG Growth in the year • Merchants up 132 to 5,243 in total – moneysupermarket, Severn Trent Water, Ann Summers, Parcels2Go and Fair FX. • Transactions up
Slide 13: Internet payments
Internet payments PayPoint.net positioning: Alternative Payments •PayPal •Ukash •PayCash Merchants Acquirers Alternative Services •SME starter pack •SEO •Transaction optimisation •Fraud detection •Collect+ Consumers Card Schemes • Focus on extending acquiring bank relationships and developing altern
Slide 14: Collect+ launched in May 2009
www.collectplus.co.uk • Collect+ launched in May 2009 • ‘Dream team’ JV to create new consumer parcels proposition – PayPoint provides retail network expertise and technology – Home Delivery Network (HDN) provides parcel logistics and distribution capability with mail-order and internet client portf
Slide 15: Collect+ consumer services
www.collectplus.co.uk • Consumers can send, collect and return internet or mail-order purchases from local shops, with full track and trace • Returns proposition has been developed over recent months – c.70% of women's clothing bought online is returned – Over 6,500 returns being processed per week,
Slide 16: One of eBay's chosen partners during Royal Mail strike
www.collectplus.co.uk One of eBay’s 4 chosen partners during Royal Mail strike Driving significant interest from across the internet community New developments coming soon: • Consumer registration • Placement of multiple orders (ideal for eBay power sellers) Will rollout to over 4,000 sites by April
Slide 17: Collect+ website
[email protected] collect+ obas 270 9888 Monday to Friday, 8am-8pm the convenient, new parcel service at local stores Saturday, 8am-12pm (Noon) find your Collect+ store send a parcel returnaparcel | about Collect+ Enter a full UK Post Code: es | raged be] . : . the convenient, new parcel servic
Slide 18: Collect+ website: send a parcel
[email protected] collect+) os 270 Monday to Friday, 8am-8pm the convenient, new parcel service at local stores Saturday, 8am-12pm (Noon) find your Collect+ store return a parcel Collect+ Send a parcel with our innovative Store-to-Store service: Only £3.99 up to 10kg! Collect+ is backed by PayP
Slide 19: Collect+ website: return a parcel
[email protected] col lect# 0845 270 9888 Monday to Hie, pean the convenient, new parcel service at local stores Saturday, 8am-12pm (Noon) find your Collect+ store sendaparcel | returnaparcel | about Collect+ Enter a full UK Post Code: Return a parcel Collect+ offers bespoke customer returns se
Slide 20: Collect+ M and M Direct returns
[email protected] collect+) MmDirect! obes 270 9888 Monday to Friday, 8am-8pm Saturday, 8am-12pm (Noon) find your Collect+ store | about Collect+ Return a parcel to MandMDirect.com for just £3.99 FI £3.99 up to 10kg! Find a St & Book inda ore oo Ff) Online tracking + £100 insurance cover f) Una
Slide 21: PayPoint's value chain
PayPoint’s value chain PayPoint creates value by offering: Consumers a rich on multiple with through offering to multiple through variety of synergistic client platforms online and supporting complementary transaction core segments conventional merchant business units services competencies retailers
Slide 22: Financial review
Financial review George Earle Finance Director 22
Slide 23: Gross profit ahead despite mobile top-up decline of 21%
Gross profit ahead despite mobile top-up decline of 21% £000 H1 09/10 H1 08/09 Increase / (decrease) Revenue 96,410 109,341 (11.8%) Cost of sales (67,555) (80,931) (16.5%) Gross profit 28,855 28,410 1.6% Margin 30% 26% 23
Slide 24: Impact of revenue reduction borne by third parties
Impact of revenue reduction borne by third parties £000 H1 09/10 H1 08/09 Increase / (decrease) Revenue 96,410 109,341 (11.8%) Cost of sales (67,555) (80,931) (16.5%) Gross profit 28,855 28,410 1.6% Gross margin 30% 26% Revenue 08/09 109,341 Pass through items (13,364) Other 433 09/10 96,410 24
Slide 25: Cost of sales
Cost of sales H1 09/10 H1 08/09 Increase / £000 (decrease) Revenue 96,410 109,341 (11.8%) Cost of sales (67,555) (80,931) (16.5%) Gross profit 28,855 28,410 1.6% Gross margin 30% 26% Cost of sales 09/10 08/09 Commission 36,172 41,234 Depreciation/ amortisation 2,631 3,177 Mobile top-ups as principal
Slide 26: Operational gearing remains strong
Operational gearing remains strong £000 H1 09/10 H1 08/09 Increase / (decrease) Net revenue 35,990 35,561 1.2% Operating profit 14,660 14,166 3.5% Operating margin 41% 40% Share of joint venture (964) - Interest 115 1,138 (89.9%) PBT 13,811 15,304 (9.8%) Tax (4,102) (4,475) Profit after tax 9,709 10
Slide 27: Operating costs under control
Operating costs under control £000 H1 09/10 H1 08/09 Increase / (decrease) Net revenue 35,990 35,561 1.2% Operating profit 14,660 14,166 3.5% Share of joint venture (964) - Interest 115 1,138 (89.9%) Profit before tax 13,811 15,304 (9.8%) Tax (4,102) (4,475) Profit after tax 9,709 10,829 (10.3%) Ope
Slide 28: Tax catch up in first half
Tax catch up in first half £000 2009 2008 Operating cash flow before 17,751 17,756 movement in working capital Changes in working capital* (1,324) 660 Operating cash flow 16,427 18,416 Capital expenditure (1,595) (2,097) Net investment income 85 1,016 Tax paid (9,501) (5,074) Cash flow before divide
Slide 29: Net cash £32m & undrawn facility
Net cash £32m & undrawn facility £000 Net cash at start (including client cash* 7.5m) 36,345 Cash inflow 5,416 Dividends (7,848) Loan to joint venture (850) Purchase of own shares (490) Movement in client cash (335) Other (58) Net cash at end (including client cash* £7.2m) 32,180 29 *Client cash is
Slide 30: Summary & outlook
Summary & outlook Dominic Taylor Chief Executive 30
Slide 31: Summary & outlook
Summary & outlook • We expect further growth in revenues in the UK by increasing our market share and growing the network • We plan to reach 23,100 terminal sites in the UK and 2,900 bill payment sites in Romania by the end of this financial year • We expect Romania to be breakeven next financial ye
Slide 32: Q&A
Q&A 32
Slide 33: Materials to support the consumer transaction
Appendix 1 Materials to support the consumer transaction 33
Slide 34: Client payment media
Appendix 1 Client payment media 34
Slide 35: Retailer external signage
Appendix 1 Retailer external signage 35
Slide 36: POS merchandising
Appendix 1 POS merchandising 36
Slide 37: Terminals and ATMs
Appendix 1 Terminals and ATMs 37
Slide 38: Terminal receipts
Appendix 1 Terminal receipts E-TopUp Sample SPAR Tag E Voucher Utility Payment Transport Ticketing 38
Slide 39: PSP transaction flow
Appendix 1 PSP transaction flow 39
Slide 40: PayPoint's value to retailers
PayPoint’s value to retailers • Bill pay consumers visit store >25% more frequently than normal shoppers • 82% retailers believe footfall benefit is either ‘very good’ or ‘fairly good’ • Bill pay consumer spends 172% more per week than normal shopper (excluding bill value) • PayPoint facility increa