PayPoint plc · LSE:PAY
PayPoint — FY2011 Earnings Presentation
62 slides from PayPoint's earnings presentation, May 26, 2011
Slide 1: PayPoint plc
PayPoint plc 26 May 2011
Slide 2: PayPoint's results summary and key trends
PayPoint’s results summary and key trends 2
Slide 3: Results summary
Results summary • A strong set of operational and financial results Net revenue £m • With the Camelot issue now concluded, we are now focused on driving our strategy forward to achieve shareholder value 69.9 77.4 77.4 82.7 • We have made good progress in our established 2008 2009 2010 2011 business
Slide 4: Strong business momentum
Strong business momentum £m 100 March year end 2007 2008 2009 2010 2011 80 £m £m £m £m £m 60 Transactions 414.1 503.3 544.6 551.9 589.7 40 Net revenue 1 57.7 69.9 77.4 77.4 82.7 20 0 Net revenue per transaction 1 13.9p 13.9p 14.2p 14.0p 14.0p 2007 2008 2009 2010 2011 Operating profit 25.2 29.2 33.7
Slide 5: Net revenue bridge 2010 to 2011
Net revenue bridge 2010 to 2011 1 £000 Established business stream Developing business stream operating loss operating profit £38.4m (2010 £36.2m) including Collect+ £3.9m (2010 £3.8m) 84,000 82,000 80,000 78,000 76,000 74,000 72,000 70,000 PayByPhone Internet Top-Up general general services 2010 Bi
Slide 6: Cash generation and use
Cash generation and use March year end 2007 2008 2009 2010 2011 £m £m £m £m £m Operating profit 25.2 29.2 33.7 34.1 36.0 Amortisation 3.8 5.7 5.7 4.8 3.6 Share based payments - 1.1 0.8 0.9 1.1 Operating cash flows 29.0 36.0 40.1 39.8 40.7 Working capital 5.2 (0.2) 0.5 (1.1) 1.5 Cash generated by ope
Slide 7: Great positioning
Great positioning We have high expectations for our business following the work done over the past three years We now have … • a powerful platform for growth • stronger management teams • with a very cash generative and growing established business platform • combined with good growth opportunities
Slide 8: PayPoint's strategy
PayPoint’s strategy 8 8
Slide 9: The four key elements of PayPoint's strategy
The four key elements of PayPoint’s strategy Payments Selected Value added Geographic capability vertical services / reach markets content Multiple payment Differentiation to High volume channel through media Ability to import know recurring payments products & services how and replicate Multiple pa
Slide 10: Progress and opportunity
Progress and opportunity Vertical markets Existing capability eCommerce) Telecoms & Transport / Retail (incl services Financial Gaming / Under development Energy / housing parking sector / utilities added leisure Public Value media social Future opportunity Progress in year Mobile phone channels Pay
Slide 11: PayPoint's businesses
PayPoint’s businesses 11
Slide 12: UK and Ireland retail network
UK and Ireland retail network 2011 Group net revenues £m • Market leading ‘over the counter’ payments proposition • Established retail network handling household bill 80% payments, mobile phone top-ups and retail services – 23,000 terminals – 99.1% of UK population within 1 mile urban or 5 miles rur
Slide 13: UK and Ireland retail networks
UK net revenue waterfall £000 UK67,131 net revenue (1,295) waterfall (455) £000 347 2,144 67,872 UK and Ireland retail networks 68,000 67,000 Current dynamics • Relatively mature payments revenues, but with 66,000 opportunities for further growth • Decline in mobile more than offset by growth in 65,
Slide 14: Internet
Internet 2011 Group net revenues £m • A young entrepreneurial business in a fast growing 11% market • Established management team driving growth through differentiation • Created through two acquisitions in 2006/7 for aggregate consideration of £20m • Provides secure credit card, debit card and othe
Slide 15: Internet
Internet Current dynamics • Strong transaction and net revenue growth • Positioning attracting tier 1 merchants – Stan James, Sportingbet, 32 Red • Transaction volumes growing from UK client base • Progressing international opportunities – e.g. France Transactions 000 Transactio ns 000 Net revenue £
Slide 16: Romanian retail network
Romanian retail network 2011 Group net revenues £m 3% • Intention is to recreate UK retail success in strong cash based economy (22m population) • Acquired mobile top up provider in 2007 – invested £15.6m to date • Established management team in place • Retail network handling household bill payment
Slide 17: Romanian retail network
Transaction volume 000 Romanian retail network Transaction volume 000 Bill and general Top-ups 15,000 Current dynamics • Strong growth in bill payment revenues, offsetting decline in top-ups 10,000 • Successfully signing up new bill payment clients • About to launch first retail service (money trans
Slide 18: PayByPhone
PayByPhone 2011 Group net revenues £m 6% • Acquired business in a very exciting market • Mobile payment capability is central to PayPoint’s payment hub strategy • We are investing to create substantial value – Development resource – platform – Sales resource – land grab – Management 2010 2011 PayByP
Slide 19: PayByPhone
PayByPhone 2011 transaction volume 000 Current dynamics 5,000 UK and France North America • Investing in sales, development and 4,000 management • Platform being developed further - mobile web 3,000 app launched • Significant tender activity with over 15 large 2,000 cities in play 1,000 • Strong tra
Slide 20: Collect+
Collect + • Opportunity to provide consumers with radical new solution for online parcel fulfilment • Joint venture launched in 2009 by PayPoint and Yodel to service fast growing e-commerce / mail order (B2C) opportunities • Strong management team in place delivering against plan 2010 2011 • Collect
Slide 21: Collect+
Collect + Current Dynamics • Strong growth in underlying market driven by online shopping – Small packet (<2kg) delivery service launched to further widen market potential • Service now scalable across returns and deliveries • Strong interest across online retailing community – 11 new clients signed
Slide 22: Summary
Summary 22
Slide 23: Summary
Summary • We continue to invest to deliver our group strategy – Building management teams to drive growth – Opportunities for revenue and cost synergies are being pursued • Established business streams are strong, with further growth expected – Retail yield benefits through our retail services propo
Slide 24: Appendices
Appendices 1. Financial review 2. PayPoint management team 3. Five year trading record 4. Strategy 5. Materials to support the consumer transaction 24
Slide 25: Financial review
Appendix 1 Financial review 25
Slide 26: Revenue and net revenue bridge
Appendix 1 Revenue and net revenue bridge Revenue Net revenue £000 £000 2010 196,603 77,406 Bill and general (675) 220 Top-ups (9,665) (1,589) Retail services 3,434 2,143 Internet (1,029) 1,470 PayByPhone 4,218 2,726 Other 347 347 2011 193,233 82,723 26
Slide 27: Revenue and net revenue bridge
Increase in bill and general Appendix 1 - Increase in transactions in UK prepaid energy Revenue and net revenue bridge - Increase in bill payment transaction volume in Romania - Improved mix in electricity prepaid energy Decrease in top-ups Revenue Net revenue Continuing decline driven by operators’
Slide 28: Revenue to net revenue
Appendix 1 Revenue to net revenue 2011 2010 Increase / Year ended March (decease) £000 £000 Revenue 193,233 196,603 (1.7%) Agent commission (71,322) (73,178) Mobile top-ups and SIM cards (37,696) (43,520) Other (1,492) (2,499) Net revenue 82,723 77,406 6.9% 28
Slide 29: Revenue to net revenue
Appendix 1 Agent commission £000 Revenue to net revenue 2010 75,677 2011 2010 Increase / Bill and general (895) Year ended March (decease) £000 £000 Top-ups (2,078) Revenue 193,233 196,603 (1.7%) Retail services 1,117 Agent commission (71,322) (73,178) Mobile top-ups and SIM cards (37,696) (43,520)
Slide 30: Costs
Appendix 1 Costs 2011 2010 Increase / Year ended March (decrease) £000 £000 Net revenue 82,723 77,406 6.9% Depreciation/amortisation (3,612) (4,820) 25.1% Other cost of sales (8,445) (9,093) 7.1% Operating costs (34,614) (29,421) (17.7%) Operating profit 36,052 34,072 5.8% 30
Slide 31: Costs
Appendix 1 Costs UK terminal estate and ATMs 2011 2010 Increase / becoming fully depreciated Year ended March £000 £000 (decrease) no significant obsolescence Net revenue 82,723 77,406 6.9% Depreciation/ amortisation (3,612) (4,820) 25.1% Other cost of sales (8,445) (9,093) 7.1% Operating costs (34,
Slide 32: Profit
Appendix 1 Profit Year ended March 2011 2010 Increase / £000 £000 (decrease) Operating profit 36,052 34,072 5.8% Share of loss on JV (1,541) (1,601) 3.7% Interest (55) 174 Profit before tax 34,456 32,645 5.9% Tax (10,614) (10,513) Profit after tax 23,842 22,132 7.7% 32
Slide 33: Cash flow
Appendix 1 Cash flow Year ended March 2011 2010 £000 £000 Profit before tax 34,456 32,645 Add back non cash items 6,296 7,189 Changes in working capital 1,384 (1,103) Capital expenditure (3,160) (2,700) Bank loan (6,000) 6,000 Tax paid (10,950) (13,702) Acquisition, investment and joint venture loan
Slide 34: Cash flow
Non cash items 000 Appendix 1 Depreciation 3,295 Cash flow Loss on joint venture 1,541 Share based payments 1,088 Year ended March 2011 2010 Amortisation 317 £000 £000 Profit before tax 34,456 32,645 Other 55 Add back non cash items 6,296 7,189 Capital expenditure 000 Changes in working capital 1,38
Slide 35: PayPoint management team
Appendix 2 PayPoint management team 35
Slide 36: Management team
Appendix 2 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 37: Five year trading record
Appendix 3 Five year trading record 37
Slide 38: Five year trading record
Appendix 3 Five year trading record March year end 2011 2010 2009 2008 2007 £m £m £m £m £m Transactions 589.7 551.9 544.6 503.3 414.1 Revenue 193.2 196.6 224.4 212.1 157.1 Net revenue(1) 82.7 77.4 77.4 69.9 57.7 Net revenue per transaction(1,2) 14.0p 14.0p 14.2p 13.9p 13.9p Costs (3) (44.3) (40.1) (
Slide 39: Five year cash flow
Appendix 3 Five year cash flow March year end 2011 2010 2009 2008 2007 £m £m £m £m £m Operating profit 36.0 34.1 33.7 29.2 25.2 Adjustments for depreciation and amortisation 3.6 4.8 5.7 5.7 3.8 Share based payment reserve 1.1 0.9 0.8 1.1 - Operating cash flows before movements in working 40.7 39.8 4
Slide 40: Balance sheet
Appendix 3 Balance sheet March year end 2011 2010 2009 2008 2007 £m £m £m £m £m Non-current assets Goodwill 57.1 56.9 27.6 27.4 18.2 Other intangilble assets 1.3 1.4 2.0 2.7 2.8 Property, plant and equipment 14.5 14.8 16.1 13.5 11.8 Deferred tax asset 1.0 1.2 1.6 1.6 1.6 Investment 0.6 0.7 0.6 - - 7
Slide 41: Strategy
Appendix 4 Strategy 41
Slide 42: Changing landscape drives opportunity
Appendix 4 Changing landscape drives opportunity Technology Regulatory High levels of internet penetration Banking regulations Wireless communications Data security standards New payment media Cross-border developments New payment technology Cheques being phased out EPOS integration Market Consumer
Slide 43: Consumer payments value chain
Appendix 4 Consumer payments value chain High Growth Payment Payment Transaction Financial medium Channel Processor settlement New Economy Mobile money E-comm / E-comm / Consumers Mobile Businesses mobile operator mobile E-money Internet site PSP Acquirer Bank transfer Debit card ISP / Terminal Bure
Slide 44: PayPoint at float
Appendix 4 PayPoint at float Payment Payment Transaction Financial medium Channel Processor settlement Mobile money E-comm / E-comm / Consumers Mobile Businesses mobile operator mobile E-money Internet site PSP Acquirer Bank transfer Debit card ISP / Terminal Bureau Telephone operator Credit card Ca
Slide 45: PayPoint with internet payments
Appendix 4 PayPoint with internet payments Payment Payment Transaction Financial medium Channel Processor settlement Mobile money E-comm / E-comm / Consumers Mobile Businesses mobile operator mobile E-money Internet site PSP Acquirer Bank transfer Debit card ISP / Terminal Bureau Telephone operator
Slide 46: PayPoint today
Appendix 4 PayPoint today Payment Payment Transaction Financial medium Channel Processor settlement Mobile money E-comm / E-comm / Consumers Mobile Businesses mobile operator mobile E-money Internet site PSP Acquirer Bank transfer Debit card ISP / Terminal Bureau Telephone operator Credit card Cash
Slide 47: Four elements of strategy
Appendix 4 Four elements of strategy Payments Selected Value added Geographic capability vertical services / reach markets content Multiple payment Differentiation to High volume channel through media Ability to import know recurring payments products & services how and replicate Multiple payment UK
Slide 48: Progress and opportunity
Appendix 4 Progress and opportunity Vertical markets Existing capability eCommerce) Telecoms & Transport / Retail (incl services Financial Gaming / Under development Energy / housing parking sector / utilities added leisure Public Value media social Future opportunity Progress in year Mobile phone c
Slide 49: Materials to support the consumer transaction
Appendix 5 Materials to support the consumer transaction 49
Slide 50: UK Retail: Client payment media
Appendix 5 UK Retail: Client payment media 50
Slide 51: UK Retail: Retailer external signage
Appendix 5 UK Retail: Retailer external signage 51
Slide 52: UK Retail: PPOS merchandising
Appendix 5 UK Retail: PPOS merchandising 52
Slide 53: UK Retail: PPOS virtual terminal
Appendix 5 UK Retail: PPOS virtual terminal 53
Slide 54: UK Retail: Terminals and ATMs
Appendix 5 UK Retail: Terminals and ATMs 54
Slide 55: UK Retail: Terminal / PPOS receipts
Appendix 5 UK Retail: Terminal / PPOS receipts E-TopUp Sample SPAR Tag E Voucher Utility Payment Transport Ticketing 55
Slide 56: PayByPhone: Parking payment: IVR, SMS, mobile web
Appendix 5 PayByPhone: Parking payment: IVR, SMS, mobile web PAGE 56 PAGE 56 56
Slide 57: PayByPhone: Consumer value proposition
Appendix 5 PayByPhone: Consumer value proposition 5/26/2011 PAGE 57 57
Slide 58: www.collectplus.co.uk – Parcel delivery
Appendix 5 www.collectplus.co.uk – Parcel delivery 58
Slide 59: www.collectplus.co.uk – Parcel returns
Appendix 5 www.collectplus.co.uk – Parcel returns 59
Slide 60: Collect+: UK Network
Appendix 5 Collect+: UK Network • Target network density - 1 Mile urban - 5 Mile rural 3,700 locations live 60
Slide 61: PayCash – merchant's website
Appendix 5 PayCash – merchant’s website 61
Slide 62: PayCash – consumer voucher
Appendix 5 PayCash – consumer voucher 62