Paypoint Plc · LSE:PAY
Paypoint — H1 2018/19 Earnings Presentation
30 slides from Paypoint's earnings presentation, Nov 29, 2018
Slide 1: Results for the half year ended 30 September 2018
Dominic Taylor, Chief Executive Rachel Kentleton, Finance Director 29 November 2018 Results for the half year ended 30 September 2018
Slide 2: Introduction
Introduction
Slide 3: Reshaping phase complete…
Reshaping phase complete… 3 4 3 2 Future Grow PayPoint One 1 8,500 PayPoint One live ecosystem Launched EPoS Pro Launch new parcel and Mobile App carriers Launched MultiPay Continued strong cash- 19m transactions on flows from UK payments Mobile and Launched MultiPay and top-ups Online Sale PayPoint
Slide 4: … growth coming through
… growth coming through 4 4 3 2 Future Grow PayPoint One 1 8,500 PayPoint One live ecosystem Launched EPoS Pro Launch new parcel and Mobile App carriers Launched MultiPay Continued strong cash- 19m transactions on flows from UK payments Mobile and Launched MultiPay and top-ups Online Sale PayPoint O
Slide 5: Good progress overall
Good progress overall 5 • PayPoint continues to deliver against roadmap Activities Progress Grow PayPoint One eco-system • PayPoint One in over 11.2k sites Launch new parcel partners • ebay live Continued strong cash-flows from • Strong net revenue growth in MultiPay (+64%) and E-money UK payments a
Slide 6: Financial review
Financial review
Slide 7: Financial results – profit before tax up 4%
Financial results – profit before tax up 4% 7 Half year 30 September 2018 2017 % £m £m change Gross revenue 106.1 97.6 8.7 Net revenue 55.6 56.5 (1.6) Other cost of revenue (9.1) (9.1) (1.2) Administrative costs (21.0) (23.0) (8.4) Operating profit 25.5 24.4 4.5 Net financing costs (0.2) - - Profit
Slide 8: Underlying net revenue up 3.2%
Underlying net revenue up 3.2% 8 (net revenue 2017) (net revenue 2018) SPS Collect+ £2.2m £0.5m UK top-ups & e-money UK top-ups £9.0m & e-money £8.8m Service fees Service fees £4.8m ATM £3.4m £6.6m Retail Retail ATM UK bill £6.5m services services UK bill payments Cards £18.5m Cards £18.9m £3.9m pay
Slide 9: Underlying costs down 0.5%
Underlying costs down 0.5% 9 £32.1m total £30.2m total costs 20171 costs 20182 Third party Third party costs costs D&A D&A £12.0m £10.3m £4.6m £4.6m People People £15.5m £15.3m £m 33 (£0.7m) £1.1m (£0.8m) £0.2m (£1.7m) £32.1m £31.9m £30.2m £30.2m 28 Networks Romania Sustainable Other Net VAT Network
Slide 10: Cash generation and use
Cash generation and use 10 6 mnths 6 mnths Sept Sept 2018 2017 £m £m Profit before tax 25.3 24.4 Non-cash items / other 3.3 5.1 Working capital – PayPoint (1.0) (3.0) Cash generation 27.6 26.5 Working capital – client funds and retailer deposits 5.4 (2.0) Tax paid (4.4) (5.0) Capital and other expen
Slide 11: Balance sheet remains strong
Balance sheet remains strong 11 Sept Mar Sept 2018 2018 2017 £m £m £m Goodwill 12.4 12.2 8.4 Other intangible assets 14.5 13.6 13.8 Property, plant & equipment & deferred tax 27.7 28.6 29.3 Cash 39.4 46.0 27.6 Revolving financing facility (6.0) - - Working capital (37.7) (34.9) (18.3) Current tax (4
Slide 12: Strong cash returns to shareholders
Strong cash returns to shareholders 12 • Ordinary dividend: − Target cover ratio of 1.2 to 1.5x − Full year 2017/18 ordinary dividend was 45.9p per share − Interim 2018/19 ordinary dividend of 15.6p per share, up 2% • Additional dividend: − £125 million: first payment was in December 2016, final pay
Slide 13: Outlook remains consistent with that given in May 2018
Outlook remains consistent with that given in May 2018 13 Headwinds • DWP contract reduction £4m • Yodel renegotiation, second year impact £1m Growth drivers from a base of £47.9m (FY 17/18 PBT £52.9m less headwinds) • Further PayPoint One rollout to 12,400 outlets and mix improvement • • Card servi
Slide 14: Operational review
Operational review - Landscape developments - Our strategic priorities - Progress update
Slide 15: Our landscape continues to change …
Our landscape continues to change … 15 Convenience Parcels • Continued consolidation of retail and wholesale: • 12.6% growth in UK parcel volume; online retail Sainsbury’s/Asda, Today’s/United Wholesale sales value up 14.5% 2 • Total sector sales +2.9% YOY, forecast to reach • Click and collect annu
Slide 16: Delivering on a consistent strategy
Delivering on a consistent strategy 16 Delivering today Preparing for tomorrow Sustain leadership Embed PayPoint at PayPoint becomes in ‘pay as you go’, Innovate for future the Heart of the definitive parcel OTC & grow digital growth & profits Convenience Retail point solution Bill Payments • Link O
Slide 17: 1. Embed PayPoint at the heart of Convenience Retail
1. Embed PayPoint at the heart of Convenience Retail Grow PayPoint One ecosystem 17 • What we have achieved 30 Sep 18 30 Sep 17 − Over 11,200 stores (10.2k as at 30 Sept 2018); 64%1 of our independent Total 10,242 6,181 retailers now migrated to PayPoint One EPoS Base 4,589 2,593 − c.470 EPoS Pro st
Slide 18: PayPoint One Retailer Case Study
1. Embed PayPoint at the heart of Convenience Retail PayPoint One Retailer Case Study 18 Muhammad Rana Location: Premier Poplar Stores, Huddersfield PayPoint One subscription: EPoS Pro Activity Experience Benefit - Previously stocked high, mid and value coffee Sales up and blended - PP1 identified m
Slide 19: 2. Become the definitive parcel solution
2. Become the definitive parcel solution ebay launched and now live 19 • What we have achieved − First open carrier partner (ebay) signed and live in 2,500 stores before peak 2018 − New retailer mobile app for easier in-store operation • ebay is a significant new opportunity − Up to 24m ebay custome
Slide 20: In-store experience with ebay
2. Become the definitive parcel solution In-store experience with ebay 20 20 View video at https://corporate.paypoint.com/investor-centre/results Results for the period ended 30 September 2018
Slide 21: UK - continued client wins and digital payment growth
3. Sustain leadership in ‘pay as you go’ OTC and grow digital Bill Payments UK - continued client wins and digital payment growth 21 • What we have achieved − MultiPay: 20 clients set live, contracted or renewed − Strong txn growth (55.7%) in MultiPay − E-Money: Strong txn growth (10.3%) driven by p
Slide 22: Romania - integrate Payzone and grow business
3. Sustain leadership in ‘pay as you go’ OTC and grow digital Bill Payments Romania - integrate Payzone and grow business 22 • What we have achieved − Leadership in bill payment; 38% market share of cash bill payment, with opportunity to grow through alternative and non cash channels − 75% PayPoint
Slide 23: We continue to innovate
4. Driving innovation for future growth and profit We continue to innovate 23 PayPoint has a history of innovation • First to bring bill payments to local shops • First to bring parcels to local shops • First to launch bespoke tablet cloud based EPoS system to local shops This innovation continues a
Slide 24: We continue to innovate to improve our service to retailers
4. Driving innovation for future growth and profit We continue to innovate to improve our service to retailers 24 PayPoint is committed to innovate to provide retailers with great service “It’s improved and takes a shorter time to get through. 2 months ago my score would have been 4 out of 10.” .” •
Slide 25: PayPoint uniquely placed to grow
PayPoint uniquely placed to grow 25 Unique Growing Clear Business + Market + Delivery Model Opportunity Roadmap Results for the period ended 30 September 2018
Slide 26: Underpinned by clear delivery roadmap
Underpinned by clear delivery roadmap 26 Products May 2018 May 2019 Future T2 Sunset PP1 9000 12400 Rollout completed Romania deployment T4 iOS app EPoS Further enhancements adding value to retailers LINK OTC Trial ATM Cards Net settlement Peak 18 Peak 19 Parcels Carrier 1 Carrier 2 Carrier 3 MultiP
Slide 27: Summary
Summary 27 • Good progress over first six months • Innovation driving strong momentum in all key areas • We are well positioned to drive benefits to customers from the changes in the retail and payment landscapes • PayPoint provides market leading cash returns to shareholders • The Board confirms ou
Slide 28: Appendix
Appendix
Slide 29: Business model delivers strong cash generation
Business model delivers strong cash generation 29 Growing portfolio PayPoint One Parcels Card payments Popular services for consumers, retailers and ATM Over the counter Top-ups clients, which increase bill payments engagement Services to retailers Footfall Servicing unique retail network close to w
Slide 30: Convenience is the place to be and growing
Convenience is the place to be and growing 30 Behavioural change • Consumers want convenience, variety and choice, whether online or close to home Growing market • Forecast to grow by £7bn by 2022, along with online and discounters Independent retailers* 67% Independent retail opportunity Multiples