Paypoint Plc · LSE:PAY
Paypoint — H1 2006/07 Earnings Presentation
32 slides from Paypoint's earnings presentation, Nov 23, 2006
Slide 1: Interim Results Presentation
Strictly private and confidential Interim Results Presentation 23 November 2006 15 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 Strong half year’s performance, driven by a combination of good revenue growth (31%) and operational gearing (40% operating margin) Results driven through implementation of PayPoint’s core business strategy, namely to continue to: – Broaden the range and volume of payments across o
Slide 5: PayPoint highlights
PayPoint highlights For the six months ended 30 September each period Net revenue Operating profit Operating margin 30 12 50% 25 10 40% 20 £ millions 8 £ millions 30% 15 6 20% 10 4 5 2 10% - - 0% 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 65 5
Slide 6: PayPoint highlights
PayPoint highlights For the six months ended 30 September each period Transaction volume Transaction value Sites with terminals 200 2.5 18,000 2.0 15,000 150 12,000 Millions £billions 1.5 100 9,000 1.0 6,000 50 0.5 3,000 - - - 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005 200
Slide 7: Operations review
Operations review For the six months ended 30 September each period Transaction volumes by sector (million) 200,000 ATM 150,000 Mobile General 100,000 50,000 - 2002 2003 2004 2005 2006 7
Slide 8: Sector and market review: Bill and general payments
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 but average price per transaction now rising – Continued growth will be provided by access to the East Midlands el
Slide 9: Sector and market review: Transport and money transfer
Sector and market review Bill and general payment cont... Transport – Sales drive to operators continues (9 new signings) – Relationships with 5 major operators (Arriva; Go Ahead exclusive) – Wayfarer smart technology live next calendar year, enabling volume uplift from 10 signed operators – Continu
Slide 10: Sector and market review: Mobile
Sector and market review Mobile PayPoint market share gains – Driven by terminal and epos growth combined with new signage – Market share now 28% (March 06 – 27%) Top up values have declined Mobile operators have reduced commissions by 0.5% to c.6.5%, passed through to retailers One remaining retail
Slide 11: Sector and market review: ATMs
Sector and market review ATMs ATM transactions Surcharge self fill model only Other 1,655 280,000 1,451 240,000 Withdraw als 1500 1,201 No. ATM's 200,000 Live ATM's 957 160,000 651 1000 Rolled out at 34 net installs 120,000 358 80,000 51 500 per month since March 06 40,000 0 0 3 4 5 04 05 06 3 4 5 6
Slide 12: Metacharge acquisition £8.4 million
Sector and market review Metacharge acquisition £8.4 million Payment service provider (PSP) act as the interface between the internet merchant and the acquiring bank for debit credit card payments Metacharge is a leading bureau PSP, with acquiring relationships with Deutsche Bank and Lloyds TSB For
Slide 13: Metacharge acquisition
Sector and market review Metacharge acquisition Revenues driven by merchant (500+) and payment transaction growth Costs fixed around central processing, sales and administration costs Deal: – Provides entry into rapidly growing internet commerce – Provides opportunity to market proposition to PayPoi
Slide 14: Retail Review
Retail Review 16,325 PayPoint terminal outlets (September 2006) Successfully rolled out 1,423 (net 1,029) agents over the past 6 months Continuing to rollout agents and will exceed our current target of 17,000 by April 2007 Continued strong demand with churn under 6% per annum, down from 6.5% Termin
Slide 15: Financial Review
Financial Review George Earle Finance Director
Slide 16: Strong, volume driven top line growth
Strong, volume driven top line growth £000s H1 06/07 H1 05/06 % increase Revenue 70,974 54,113 31% Cost of sales 50,661 37,374 36% Gross profit 20,313 16,739 21% Margin 29% 31% 16
Slide 17: Growth in agents' commissions and net revenue
Growth in agents’ commissions and net revenue H1 06/07 H1 05/06 % increase £000s Revenue 70,974 54,113 31% Cost of sales 50,661 37,374 36% Gross profit 20,313 16,739 21% Margin 29% 31% Revenue ~ 30 September £80m Revenue £70m £60m CGR 42% £50m Net revenue £40m CGR 29% £30m £20m £10m £0m 2002 2003 20
Slide 18: Volume and commission growth
Volume and commission growth H1 06/07 H1 05/06 % increase £000s Revenue 70,974 54,113 31% Cost of sales 50,661 37,374 36% Gross profit 20,313 16,739 21% Margin 29% 31% Revenue £000s H1 05/06 54,113 Volume: Commissions paid 6,813 Cost of Irish mobile top-ups 5,546 Other Commissions retained 5,108 Oth
Slide 19: Gross margin
Gross margin £000s H1 06/07 H1 05/06 % increase Revenue 70,974 54,113 31% Cost of sales 50,661 37,374 36% Gross profit 20,313 16,739 21% Margin 29% 31% Cost Costofofsales sales H1 H106/07 05/06 H1 H105/06 04/05 £000s £000’s £000s £000’s Commissions Commissionspaid paid 35,886 29,073 29,073 22,913 De
Slide 20: Operational gearing improves operating margins
Operational gearing improves operating margins £000s H1 06/07 H1 05/06 % increase Net revenue 25,833 21,331 21% Operating profit 10,363 8,187 27% Operating margin 40% 38% 2ppts Interest 653 254 Profit before tax 11,016 8,441 31% Tax (3,341) (1,315) Profit after tax 7,675 7,126 8% 20
Slide 21: Operating costs increase small compared to gross profit increase
Operating costs increase small compared to gross profit increase £000s H1 06/07 H1 05/06 % increase Net revenue 25,833 21,331 21% Operating profit 10,363 8,187 27% Interest 653 254 Profit before tax 11,016 8,441 31% Tax (3,341) (1,315) Profit after tax 7,675 7,126 8% Operating profit £000s H1 05/06
Slide 22: Strong cash flow
Strong cash flow Six months to 30 September 2006 2005 £000s £000s EBITDA 12,054 9,234 Change in working capital# 1,116 850 Operating cash flow 13,170 10,084 Capital expenditure (5,544) (3,113) Interest received 653 254 Corporation tax paid (1,822) - Cash flow before dividends 6,457 7,225 # Working c
Slide 23: Net cash of £31m
Net cash of £31m Six months to 30 September 2006 £000s Net cash at start (including client cash* £5.6 million) 29,295 Cash inflow 6,457 Increase in client cash 780 Dividends (5,076) Net cash at end (including client cash* £6.4 million) 31,456 * Client cash is cash to which PayPoint has legal title,
Slide 24: Summary & outlook
Summary & outlook Core business continues to deliver strong profitable growth through implementation of strategy Volume growth expected to continue in the second half…. – good performance in October – seasonal uplift in transactions – Likely to exceed current target of 17,000 terminal sites Metachar
Slide 25: Q&A
Q&A
Slide 26: Materials to support the consumer transaction
Appendix 1 Materials to support the consumer transaction
Slide 27: Client payment media
Appendix 1 Client payment media
Slide 28: Retailer external signage
Appendix 1 Retailer external signage
Slide 29: POS merchandising
Appendix 1 POS merchandising
Slide 30: Terminals and ATMs
Appendix 1 Terminals and ATMs
Slide 31: Terminal receipts
Appendix 1 Terminal receipts E-TopUp Congestion Charging E Voucher Utility Payment Transport Ticketing
Slide 32: Metacharge transaction flow
Appendix 1 Metacharge transaction flow