PayPoint plc · LSE:PAY
PayPoint — FY2006 Earnings Presentation
49 slides from PayPoint's earnings presentation, May 25, 2006
Slide 1: Preliminary Results Presentation
Strictly private and confidential Preliminary Results Presentation 25 May 2006
Slide 2: Agenda
Agenda Highlights and operations review Financial review Summary Q&A Closing 2
Slide 3: Highlights & operations review
Highlights & operations review Dominic Taylor Chief Executive
Slide 4: Preliminary results for the year ended 31 March 2006
PayPoint pic PRESS RELEASE 25 May 2006 PayPoint pic Preliminary results for the year ended 31 March 2006 FINANCIAL HIGHLIGHTS Year ended Year ended 34 March 31 March 2006 2005 Increase =m =m 3 Revenue 120 89 35 Net revenue’* 46 37 25 Operating profit before exceptional items* 19 12 60 Operating prof
Slide 5: PayPoint overview
PayPoint overview Strong year’s performance, driven by a combination of good revenue growth (35%) and operational gearing (42% operating margin, up 9 ppts) Results driven through implementation of PayPoint’s core business strategy, namely to continue to: – Broaden the range and volume of payment
Slide 6: PayPoint highlights
PayPoint highlights Net revenue £000 Operating profit* £000 Margin* 50 25 45% 45 40% 40 20 35% 35 30% 30 15 25% 25 20% 20 10 15% 15 10% 10 5 5 5% - - 0% 01/02 02/03 03/04 04/05 05/06 01/02 02/03 03/04 04/05 05/06 01/02 02/03 03/04 04/05 05/06 * Before exceptional items For the year ended March each
Slide 7: PayPoint highlights
PayPoint highlights Transaction volume (million) Transaction value (£million) PayPoint terminal outlets 4,000 18,000 350 3,500 16,000 300 3,000 14,000 250 12,000 2,500 200 10,000 2,000 150 8,000 1,500 6,000 100 1,000 4,000 50 500 2,000 - - - 01/02 02/03 03/04 04/05 05/06 01/02 02/03 03/04 04/05 05/0
Slide 8: Operations review
Operations review Strong growth in all sectors Transaction volumes by sector (million) 350 300 ATM 250 Mobile 200 General 150 100 50 - 01/02 02/03 03/04 04/05 05/06 For the year ended March each year 8
Slide 9: Sector and market review
Sector and market review Bill and general payments Energy prepay – growth driven by: – Improved quality of the retail network and signage – The effect of domestic energy price increases and average price per transaction remaining broadly the same – Continued growth will be provided by access to th
Slide 10: Sector and market review
Sector and market review Bill and general payment cont... Transport – Strong sales drive in signing up new operators (the 5 major operators signed up) – Developing further smart technologies to enable more sales – Successful implementation in Manchester (SystemOne) Money transfer ~ Western Union
Slide 11: Sector and market review: Mobile
Sector and market review Mobile Continued market growth – now mainly linked to Average Revenue Per User (ARPU) PayPoint market share gains – Driven by terminal and epos growth combined with new signage – Market share now 27% (last year 23%) – e-vouchers particularly suited to convenience channel
Slide 12: Sector and market review: ATMs
Sector and market review ATMs 225,000 ATM transactions (per week) 1,451 200,000 1,201 175,000 Balance equiries 957 Surcharge self replenishment 150,000 125,000 Withdrawals 651 model 100,000 75,000 50,000 358 25,000 Achieved on average 50 new 0 sites per month, with net 4 5 6 03 3 04 4 05 5 04 05
Slide 13: Retail review
Retail review 15,296 PayPoint terminal outlets (March 2006) Successfully rolled out 3,200 (net 2,200) agents over the past 12 months Continuing to rollout agents to create a network of over 17,000 by April 2007 Continued strong demand with churn 7.6% per annum All first generation terminal
Slide 14: Financial review
Financial review George Earle Finance Director
Slide 15: Strong volume driven top line growth
Strong volume driven top line growth £000 05/06 04/05 % Increase Revenue 119,968 89,054 35% Cost of sales 83,409 61,332 36% Gross profit 36,559 27,722 32% Gross margin 30% 31 % 15
Slide 16: Net revenue CAGR 33%
Net revenue CAGR 33% 05/06 04/05 % Increase £000 Revenue 119,968 89,054 35% Cost of sales 83,409 61,332 36% Gross profit 36,559 27,722 32% Gross margin 30% 31% Revenue ~ years ended 31 March Irish mobile top-ups £140m Agent commission £120m Net revenue £100m £80m £60m £40m Net revenue £20m CAG
Slide 17: Revenue growth driven by volume
Revenue growth driven by volume £000 05/06 04/05 % Increase Revenue 119,968 89,054 35% Cost of sales 83,409 61,332 36% Gross profit 36,559 27,722 32% Gross margin 30% 31% Revenue £000 04/05 89,054 Agent Commission 13,210 Irish mobile top-ups 8,487 Other volume 7,965 Mix/price 479 Other 773 05/06 119
Slide 18: Gross profit increased by 32%
Gross profit increased by 32% £000 05/06 04/05 % Increase Revenue 119,968 89,054 35% Cost of sales 83,409 61,332 36% Gross profit 36,559 27,722 32% Gross margin 30% 31% Cost of sales 05/06 04/05 Change £000 £000 % Commissions payable 63,558 50,348 26 Depreciation 2,320 1,801 29 Irish mobile top-ups
Slide 19: Operational gearing improves net margins
Operational gearing improves net margins £000 05/06 04/05 % Increase Net revenue 46,113 36,896 25% Operating profit* 19,311 12,037 60% Operating margin* 42% 33 % Interest 1,036 598 Profit before tax* 20,347 12,635 61% Tax (3,440) (2,215) Profit after tax* 16,907 10,420 62% * Before exceptional items
Slide 20: Operating costs under control
Operating costs under control £000 05/06 04/05 % Increase Net revenue 46,113 36,896 25% Operating profit 19,311 12,037 60% Operating margin 42% 33% Interest 1,036 598 Profit before tax 20,347 12,635 61% Tax (3,440) (2,215) Profit after tax 16,907 10,420 62% Operating profit £000 04/05 12,037 Increas
Slide 21: Strong cash flow
Strong cash flow 05/06 04/05 £000 £000 EBITDA* 21,631 13,838 Change in working capital# (358) 1,734 Operating cash flow* 21,273 15,572 Capital expenditure (6,308) (4,168) Net investment income 1,036 598 Tax paid (1,416) - Cash flow before dividends* 14,585 12,002 * Before exceptional items # Working
Slide 22: Net funds increased to £29.3m
Net funds increased to £29.3m £000 Net funds at start (including client cash* £11.1 million) 25,950 Cash inflow 14,585 Decrease in client cash (5,524) Dividends (5,503) Movement in loans and leases (213) Net funds at end (including client cash* £5.6 million) 29,295 * Client cash is cash to which Pay
Slide 23: Summary & outlook
Summary & outlook Dominic Taylor Chief Executive
Slide 24: Summary & outlook
Summary & outlook 2005/06 has been a year of good growth, achieved through our strategy of differentiation There are continuing opportunities in our core UK business, with … – strong growth in bill and general payments in a sector where our share is less than 10% – the broadening of our product
Slide 25: Q&A
Q&A
Slide 26: Appendices
Appendices 1. PayPoint management team 2. Five year trading record 3. Background information on PayPoint 4. Materials to support the consumer transaction
Slide 27: Management team
Appendix I Management team David Newlands (Non Executive Chairman) formerly GEC, Deputy Chairman of Standard Life and currently Chairman of Tomkins and KESA Dominic Taylor (Chief Executive) formerly Vodafone, Granada George Earle (Finance Director) formerly Centrica, GEC, Saatchi, Deloitte & T
Slide 28: Five year trading record
Appendix 2 Five year trading record
Slide 29: Five year trading record
Appendix 2 Five year trading record March year end 2002 2003 2004 2005 2006 Transactions million 106.3 154.3 204.4 258.5 322.1 (1) Revenue £ million 23.6 43.8 67.1 89.1 120.0 Net revenue(1,2) £ million 13.8 20.9 28.6 36.9 46.1 Net revenue per transaction(2,3) p 12.2 12.7 13.3 14.2 14.3 Costs (4) (5)
Slide 30: Five year cash flow
Appendix 2 Five year cash flow March year end 2002 2003 2004 2005 2006 £'m Operating profit (excluding ABTs deferred revenue release and exception items) (1.4) 2.7 6.1 12.0 19.3 Exceptional items - - - (4.6) - ABTs deffered revenue release 2.5 6.5 0.1 - - Operating profit 1.0 9.2 6.2 7.5 19.3 Adjust
Slide 31: Balance sheet
Appendix 2 Balance sheet March year end 2004 2005 2006 £'m Non-current assets Property, plant and equipment 2.2 4.6 8.9 Deferred tax asset 3.6 1.4 1.2 5.8 6.0 10.1 Current assets Inventories 0.0 0.5 1.1 Trade and other receivables 7.0 7.8 12.1 Cash and cash equivalents (1) 13.8 25.9 29.3 20.9 34.2 4
Slide 32: Background information on PayPoint
Appendix 3 Background information on PayPoint
Slide 33: PayPoint overview
PayPoint overview Branded cash payment collection network Founded in 1996 by client investors; listed in September 2004 The UK and Ireland’s market leader: Prepay transactions (energy, mobile and transport) Convenience cash payment collection Smart payment technology Premium offer in t
Slide 34: Our business and its metrics
Appendix 3 Our business and its metrics Our business objectives Our business metrics To provide clients with a cost 322m annual transactions (2005/06) effective retail network for their customers to make regular cash payments £3.8 billion payment throughput (2005/06) To provide consumers wit
Slide 35: Highlights
Appendix 3 Highlights Recognised brand and high customer satisfaction Financial performance Market leading position in energy CAGR prepayments and a market leader in retail bill March year end 2000 2001 2002 2003 2004 2005 2006 '00 - '06 payments Ave no of terminals 7,278 7,496 7,922 10,820 10,9
Slide 36: Our development
Appendix 3 Our development 1996 - Founded by client investors Grow 1998 - Refinanced and new management team appointed transaction volumes: 1999 - National network completed More Clients 2002 - Turned profitable and cash generative More Services 2003 - Congestion charging and ATMs More Con
Slide 37: Business overview
Appendix 3 Business overview CLIENT Issue customers with: -swipe or smart cards -barcoded bills -smart keys -details of local outlets Comprehensive scope PAYPOINT Poll information from terminal Send Client details Collect payments from Retail CONSUMER Brand Agent Take payment and device Pay commis
Slide 38: The PayPoint network
Appendix 3 The PayPoint network 15,296 Retail Agents and 5,080 EPoS connections (2,300 with terminals) commission more than £3,500 per annum per agent footfall (c.340 transactions per week) 50% multiple outlets, remainder independent Network optimised for Client service and efficiency - ex
Slide 39: New terminal (T2)
New terminal (T2) The most advanced retail terminal of its type Provides for: – faster and better communication links – lower cost of operation, 3 x more reliable than T1 – contact-less smart card capability – touch screen – chip and pin compliant – thermal printer
Slide 40: Clients
Appendix 3 Clients Many quality clients, many long term contracts, generally 3 – 5 years Top 10 clients deliver 75% of transactions Energy Telecoms/Media Water Transport Other Anglian Water British Gas BT O2 TfL (Capita) AON Bristol Water EdF (London, SWEB, Eircom Orange Arriva Leger Holidays De
Slide 41: PayPoint's current markets
Appendix 3 PayPoint’s current markets Market size Positioning Market leader in energy prepayments 5.7m energy prepayment meters Bill & general payments PayPoint has retail exclusivity in 9 regions vs 950m transactions p.a. (APACS) Alphyra’s sole region (W Midlands) (205m txns in 2005/6) 16
Slide 42: Core business strategy
Appendix 3 Core business strategy Grow transaction volumes optimise retail agent coverage grow client base grow existing and develop new services expand geographic coverage Leverage the asset base brand service differentiation technology/systems and development retail network b
Slide 43: Summary
Appendix 3 Summary Established business with a unique combination of assets extensive UK national network established brand strong contract portfolio robust and innovative technology Strong competitive positioning barriers to new entrants Attractive financial model rapidly growing
Slide 44: Materials to support the consumer transaction
Appendix 4 Materials to support the consumer transaction
Slide 45: Client payment media
Appendix 4 Client payment media
Slide 46: Retailer external signage
Appendix 4 Retailer external signage
Slide 47: POS merchandising
Appendix 4 POS merchandising
Slide 48: Terminals and ATMs
Appendix 4 Terminals and ATMs
Slide 49: Terminal receipts
Appendix 4 Terminal receipts E-TopUp Congestion Charging E Voucher Utility Payment Transport Ticketing