Paypoint Plc · LSE:PAY
Paypoint — FY2005 Earnings Presentation
49 slides from Paypoint's earnings presentation, Jun 13, 2005
Slide 1: Preliminary Results Presentation
Strictly private and confidential Preliminary Results Presentation 13 June 2005
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: 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 5: PayPoint Highlights
PayPoint Highlights Net revenue Operating profit* Margin* 40 35% 14 35 12 30% 30 10 25% 25 8 £000's £000's 20% 20 6 15% 15 4 10% 10 2 5 5% - - 0% 01/ 02 02/03 03/04 04/05 01/02 02/03 03/04 04/05 01/02 02/03 03/04 04/05 * Before exceptionals For the 12 months ended 31 March each year 65 5
Slide 6: PayPoint Highlights
PayPoint Highlights Transaction volume Transaction value PayPoint Term inal Outlets 300 3,500 14,000 3,000 12,000 250 2,500 10,000 200 £million Millions 2,000 8,000 150 1,500 6,000 100 1,000 4,000 50 2,000 500 - - - 01/02 02/03 03/04 04/05 01/02 02/03 03/04 04/05 01/02 02/03 03/04 04/05 For the 12 m
Slide 7: Operations Review
Operations Review Strong set of results underpinned by successful implementation of our strategy – transaction volume growth – driving differentiation There has been strong growth in all sectors Transaction volumes by sector 300,000 250,000 ATM Mobile 200,000 General 000's 150,000 100,000 50,000
Slide 8: Sector and Market Review
Sector and Market Review Bill and General Payments Strong continuing growth Energy prepay (increased share of a bigger market) Bill payment migration from Post Office/banks – TV licensing – BT, BG and water bill payments – Local authority and housing association payments – New scheme wins; mai
Slide 9: Sector and Market Review
Sector and Market Review Bill and General Payment Cont... Opportunities in new sectors: Money Transfer, Travel Emerging transport sector building from Congestion Charging success 9
Slide 10: Sector and Market Review: Transport coverage
Sector and Market Review Transport coverage One-Ticket Arriva Scotland West Lothian Buses Arriva North East and Northumbria Arriva Arriva North West and Wales Yorkshire Arriva Midlands Arriva Shires and Essex Transport for London Arriva Southern Counties 10
Slide 11: Sector and Market Review: Mobile
Sector and Market Review Mobile Continued market growth – now mainly linked to ARPU Growth in PayPoint share from new agents Slower than expected migration from the terminal to retailers own till systems has boosted margins, but will take place in 05/06 Pre-pay airtime by payment method (sourc
Slide 12: Sector and Market Review: ATMs
Sector and Market Review ATMs Surcharge self replenishment model Achieved on average 50 new sites per month 1,100 ATM sites live at 13 June with an initial target of 2,000 Average transactions per ATM is 600 per month for 2004/05 but currently running slightly below 50/50 split between bal
Slide 13: Retail Review
Retail Review 13,108 PayPoint terminal outlets (March 2005) 1,452 new terminal sites live as at 13 June 2005 (of 3,000 target by end 2005/6) Further sites as opportunities exist – through steady selective growth Continued strong demand with churn 6.3% per annum (3.4% agent lead) Circa 6,00
Slide 14: Financial Review
Financial Review George Earle Finance Director
Slide 15: Strong volume driven top line growth and margin enhancement
Strong volume driven top line growth and margin enhancement £000’s 04/05 03/04 % increase Turnover 89,054 67,132 33% Cost of sales 61,332 47,331 30% Gross profit 27,722 19,807 40% Gross margin 31% 29% 14
Slide 16: Net revenue CAGR 34%
Net revenue CAGR 34% 04/05 03/04 % increase £000’s Turnover 89,054 67,132 33% Cost of sales 61,332 47,331 30% Gross profit 27,722 19,801 40% Gross margin 31% 29% Turnover ~ years ended 31 March £100m Turnover £90m £80m CAGR 54% £70m £60m Net revenue £50m CAGR 34% £40m £30m £20m £10m £0m 2001 2002 20
Slide 17: Turnover driven by volume and commissions
Turnover driven by volume and commissions £000’s 04/05 03/04 % increase Turnover 89,054 67,132 33% Cost of sales 61,332 47,331 30% Gross profit 27,722 19,801 40% Gross margin 31% 29% Turnover £000’s 03/04 67,132 Commissions 12,605 Volume 7,262 Mix/price 1,015 Other 1,040 04/05 89,054 16
Slide 18: Margin improved through lesser increases in cost of sales
Margin improved through lesser increases in cost of sales £000’s 04/05 03/04 % increase Turnover 89,054 67,132 33% Cost of sales 61,332 47,331 30% Gross profit 27,722 19,801 40% Gross margin 31% 29% Cost of sales 04/05 03/04 Change £000’s £000’s % Commissions paid 50,348 37,743 33 Depreciation 1,801
Slide 19: Operational gearing improves net margins
Operational gearing improves net margins £000’s 04/05 03/04 % increase Net revenue 36,896 28,596 29% Operating profit* 12,037 6,172 95% Operating margin 33% 22% Interest 598 (148) Profit before tax 12,635 6,024 110% Tax (2,215) (4) Profit after tax 10,420 6,020 73% * Before exceptional items 18
Slide 20: Operating costs under control
Operating costs under control £000’s 04/05 03/04 % increase Net Revenue 36,896 28,596 29% Operating profit 12,037 6,172 95% Operating margin 33% 22% Interest 598 (148) Profit before tax 12,635 6,024 110% Tax (2,215) (4) Profit after tax 10,420 6,020 73% Operating profit £000’s 03/04 6,172 Increase i
Slide 21: Strong cash flow
Strong cash flow 04/05 03/04 £000’s £000’s EBITDA* 13,838 8,183 Change in working capital# 1,734 158 Operating cash flow 15,572 8,341 Capital expenditure (4,168) (1,887) Interest received 598 (148) Cash flow before dividends 12,002 6,306 * Before exceptional items # Working capital excludes creditor
Slide 22: Net funds increased to £25.7m
Net funds increased to £25.7m 04/05 £000’s Net funds at start (including client cash* £4.7 million) 12,625 Cash in flow 12,002 Increase in client cash 6,371 Payment of exceptional items (4,572) Dividends (783) Movement in loans and leases 82 Net funds at end (including client cash* £11.1 million) 25
Slide 23: Summary & Outlook
Summary & Outlook Dominic Taylor Chief Executive
Slide 24: Summary & Outlook
Summary & Outlook 2004/05 has been a year of good growth, achieved through our strategy of differentiation Continuing opportunities with … – strong growth in bill and general payments – the broadening of our product set into new sectors such as transport, mail order and travel – further growth i
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 An overall picture of sustained growth 23
Slide 27: PayPoint Management Team
Appendix 1 PayPoint Management Team
Slide 28: Management Team
Appendix I Management Team David Newlands (Non Executive Chairman) ex GEC, current Chairman of Tomkins, KESA and Deputy Chairman of Standard Life Dominic Taylor (Chief Executive) ex-Vodafone, Granada George Earle (Finance Director) ex Centrica, GEC, Saatchi, Deloitte & Touche Tim Watkins-Ree
Slide 29: Executive Team
Executive Team Effective 1 August 2005 Dominic Taylor Susan Court Chief Executive Company Secretary George Earle Tim Watkin-Rees Business Development Finance Director Director Mike Igoe TBA Mark Astbury (1 Aug 2005) Chief Information Sales & Marketing Retail Director Officer Director Jonathan Moon T
Slide 30: Five year trading record
Appendix 2 Five year trading record
Slide 31: Five year trading record
Appendix 2 Five year trading record March year end 2001 2002 2003 2004 2005 Transactions million 89.5 106.3 154.3 204.4 258.5 Turnover including agent commissions £ million 15.8 23.6 43.8 67.1 89.1 Net revenue(1,2) £ million 11.2 13.8 20.9 28.6 36.9 Net revenue per transaction (2,3) p 11.5 12.2 12.7
Slide 32: Five year cash flow
Appendix 2 Five year cash flow March year end 2001 2002 2003 2004 2005 £'m EBIT (excluding ABTs deferred revenue release) (4.4) (1.4) 2.7 6.1 12.0 Exceptional item (4.6) ABTs deffered revenue release 0.7 2.5 6.5 0.1 - EBIT (3.7) 1.0 9.2 6.2 7.4 Depreciation charge 1.1 1.2 1.4 2.0 1.8 Working capital
Slide 33: Balance sheet
Appendix 2 Balance sheet March year end 2003 2004 2005 £'m Fixed Assets Tangible assets 2.4 2.2 4.6 Current Assets Stock - - 0.5 Debtors - due within one year 9.2 10.3 9.1 Debtors - due after one year 2.2 0.4 - Cash at bank and in hand(1) 4.4 13.8 25.9 15.8 24.5 35.5 Creditors: amounts falling due w
Slide 34: Background information on PayPoint
Appendix 3 Background information on PayPoint
Slide 35: Our Business and its Metrics
Appendix 3 Our Business and its Metrics Our business objectives Our business metrics To provide clients with a cost 500+ clients effective retail network for their customers to make regular cash 259m annual transactions (2004/05) payments £2.9 billion payment throughout To provide consumer
Slide 36: 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 '00 - '05 payments1 Ave no of terminals 7,278 7,496 7,922 10,820 10,991 1
Slide 37: Our Development
Appendix 3 Our Development 1996 - Founded by client investors; British Gas; BT; BBC; London Electricity and 4 water companies Grow 1998 - Refinanced and new management team appointed transaction volumes: 1999 - National network completed More Clients 2002 - Turned profitable and cash generat
Slide 38: 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 39: The PayPoint Network
Appendix 3 The PayPoint Network 13,108 Retail Agents and 3,000 EPoS connections commission more than £3,800 per annum per agent footfall (c.340 transactions per week) 50% multiple outlets, remainder independent Network optimised for Client service and efficiency - extensive agent modelling
Slide 40: Clients
Appendix 3 Clients Over 500 high quality clients, many long term contracts, generally 3 – 5 years Largest client (Vodafone) 15% of net revenue, top 10 deliver 80% Energy Telecoms/Media Water Transport Other Anglian Water British Gas BT O2 TfL (Capita) AON Bristol Water EdF (London, SWEB, Eircom
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 Alphyra retain 2 regions v. PayPoint’s 8 950m transactions p.a. (APACS) regions (166m txns in 2004/5) 16m congestion charges p.a. (TfL) Po
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