PayPoint plc · LSE:PAY
PayPoint — H1 2021 Earnings Presentation
32 slides from PayPoint's earnings presentation, Nov 26, 2020
Slide 1: Half year results presentation, 26 November 2020
Nick Wiles, Chief Executive Alan Dale, Finance Director 26 November 2020
Slide 2: Agenda
2 1 Introduction & Covid-19 2 Strategy update 3 Financial review 4 Operational review 5 Summary 6 Q&A Results for the half year ended 30 September 2020
Slide 3: Strategic, Financial, Operational highlights
3 Strategic Financial Operational • Strategy confirming • Net revenue from continuing • 16,900 PayPoint One sites significant growth operations1 of £46.4m, down by • Resilient network recovery and opportunities in UK 7.8% continued client and retailer • Sale of Romanian business to • As expected, H1
Slide 4: Our people
4 Tight Retailer Retailer Our Client operational network support and people support and financial management engagement control Hybrid working model now fully adopted Product pipeline Client and retailer recovery (Cards, PP1, Parcels initiatives support upgrading) Retailer One version of Organisatio
Slide 5: Covid-19 impact on transactions and sites
5 April 20/21 May 20/21 vs June 20/21 July 20/21 August 20/21 September 20/21 vs 19/20 19/20 vs 19/20 vs 19/20 vs 19/20 vs 19/20 Product % increase/ % increase/ % increase/ % increase/ % increase/ % increase/ (decrease) (decrease) (decrease) (decrease) (decrease) (decrease) UK bill payment (28%) (26
Slide 6: Strategy update
Strategy update
Slide 7: Broader payment pipeline into retailer network
7 Client services Retail services (independents and multiples) Terminal services SME Platform Cash Payments Digital EPoS & Cards Parcels ATMs payments Terminals Cash In Cash Out • Broader payment pipeline into retailer network • Greater retailer footfall • Establish new payment • Broader consumer de
Slide 8: Romania disposal and acquisitions
8 Retail services (independents and multiples) Client services Romania Disposal SME Platform • Sale of Romanian Cards EPoS & Digital CashOut Terminals payments business to Innova Capital • Refocus on UK and accelerate strategic shift from cash to digital • Cash consideration £47 • Handepay/Merchant
Slide 9: Growth in card payments and shopping local
9 • 2016 - tipping point for shift to cards from cash by UK consumers • Forecast growth in UK debit card market by 2027 to 19.7bn payments, with 36% contactless • Accelerated by Covid-19 consumer Source: UK Finance behavior and shift to shopping local • PayPoint H1 card transactions +68.7% and net r
Slide 10: Results for the half year ended 30 September 2020
10 Results for the half year ended 30 September 2020
Slide 11: H1 progress and H2 priorities
11 Client services Retail services (independents and multiples) Terminal services SME Platform Cash Payments Digital EPoS & Cards Parcels ATMs payments Terminals Cash In Cash Out • i-movo acquisition • Handepay and Merchant Rentals acquisition • Romania sale (31 Mar 21) • Full ownership of Collect+
Slide 12: Financial review
Financial review
Slide 13: Half year financial summary
13 2020 2019 Half year ended 30 September (Restated)1 £m £m Change Revenue from continuing operations2 60.7 69.1 (12.1%) Net revenue from continuing operations3 46.4 50.3 (7.8%) Operating margin from continuing operations4 37.7% 41.4% (3.7ppts) Profit before tax 20.6 24.0 (14.2%) - Profit before tax
Slide 14: Profit before tax bridge
14 (4.0%) (£3.3m) £21m £24.0m (£2.1m) £1.8m (£3.6m) £20.7m £18.6m £18.6m £18.6m £1.0m £17.8m £16.8m £16.8m £16.8m £16m PBT 19/20 Romania Continuing British Gas Underlying PBT UK retail services UK bill payments PBT continuing One off Underlying PBT Operation 19/20 growth and top-ups operations20/21
Slide 15: Net revenue by product
15 Half year ended 30 September 2020 2019 % £m £m Change UK bill payments and top-ups 24.7 28.3 (12.7%) - UK bill payments (Excl MultiPay & British Gas) 14.5 18.4 (21.2%) - MultiPay 2.1 1.8 17.7% - UK top-ups (Excl eMoney) 4.2 4.9 (12.6%) - UK eMoney 3.9 3.2 19.9% UK retail services 21.7 19.9 8.6% -
Slide 16: UK costs bridge
16 £29.7m total £29.6m total Third party costs 20192 Third party costs 20201 D&A costs costs £4.0m £9.5m D&A £8.8m One off acquisition £4.6m & disposal costs £1.0m People People £16.2m £15.2m £m 3.7% 31 (£0.4m) £1.0m (£0.8m) (£1.0m) £1.0m £30.3m (£0.4m) £0.5m £29.7m £29.6m £28.5m £28.6m £28.6m £28.1
Slide 17: Cash flow
17 Half year ended 30 September 2020 2019 £m £m Profit before tax 20.6 24.0 Depreciation and amortisation 4.9 4.3 Share based payments / other 0.6 - Working capital (VAT deferral) 3.3 - Working capital (Corporate) 0.1 (1.2) Cash generation 29.5 27.1 Tax paid – 2019 includes change in payment pattern
Slide 18: Balance sheet summary
18 Sept Mar Sept 2020 2020 2019 £m £m £m Goodwill - 11.9 12.0 Other intangible assets 22.3 17.3 17.0 Property, plant & equipment 22.1 24.5 26.5 Cash held as clients’ funds and retailers’ deposits 27.2 35.7 34.8 Net asset held for sale - Romania 9.0 - - Cash 14.9 58.0 5.7 Revolving financing facility
Slide 19: Dividend and financing
19 Dividend Financing • Dividend policy • Net debt reduction from £12m to ‒ cover ratio of 1.2 to 1.5x, £6m at half year consistent with policy announced • Rolling Credit Facility (RCF) of at FY in May 2020 £70m + £5m ancillary facilities • Additional accordion facility of • Interim dividend declare
Slide 20: Summary and growth opportunities
20 • Resilient network recovery and continued client, retailer and consumer support through Covid-19 • Strengthened organisational structure and operating model to support growth opportunities in UK • Strategic priorities unchanged – further underpinned by acquisitions and sale of Romania: ‒ i-movo
Slide 21: Operational review
Operational review
Slide 22: Executive Board
22 Executive Board Ben Ford Nick Williams Danny Vant Cultural change Retail Services Head of Strategic Client Services Director Partners and Director Product - Parcels Delivery of Multi-carrier Maintain products and parcel leadership in bill services proposition payments Management of Customer Grow
Slide 23: Embed PayPoint at the heart of Convenience Retail
23 1. Embed PayPoint at the heart of Convenience Retail Our offering 30 Sep 31 Mar 30 Sep Provision of technology, payment services and Increased footfall for 20 20 19 retailers – average basket spend £10.20 (vs. £7.46 average1) Sites 16,900 16,098 15,088 H1 Progress PayPoint One EPoS Base 8,153 8
Slide 24: Embed PayPoint at the heart of Convenience Retail: digital screens and vouchers
24 1. Embed PayPoint at the heart of Convenience Retail Driving conversion and footfall for retailers and new engagement channels for FMCG brands to their consumers 1. Pilot of digital advertising screens ‒ Circa 200 store trial of PayPoint One digital advertising screens ‒ 5 inch digital screen dis
Slide 25: Become the definitive parcel solution
25 2. Become the definitive parcel solution Our offering Leading pick-up and drop-off network with over 10,000 sites Recognised partners: eBay, Amazon, Yodel, FedEx and DHL H1 Progress 10,486 live parcel sites, an increase of 1,840 sites since 31 March 2020 Secured full ownership of Collect+
Slide 26: Become the definitive parcel solution: market impact
26 2. Become the definitive parcel solution Overall online sales increased during lockdown, (particularly electronics, leisure equipment and grocery) As people were generally at home, we also saw a reduction in the requirement for out of home pick up points Collect+ saw a drop in demand due to
Slide 27: Parcels: peak 2020 priorities
27 2. Become the definitive parcel solution Ensure excellent customer experience during Peak k Collect+ Transactions YOY 2020 2,500 ‒ Closely watching the impact of Lockdown 2 and more importantly managing any surge in demand when the 2,000 current lockdown ends (currently the week after Black 1,500
Slide 28: Sustain leadership in pay as you go OTC and grow digital bill payments
28 3. Sustain leadership in ‘pay as you go’ OTC and grow digital Bill Payments Our offering Largest network of its kind, coverage of 99.5% and 98.3% of urban (within one mile) and rural (within five miles) populations respectively PayPoint UK Network Growing and robust omnichannel payments solut
Slide 29: Key MultiPay product enhancements
29 3. Sustain leadership in ‘pay as you go’ OTC and grow digital Bill Payments Key MultiPay product enhancements 1. Direct Debit ‒ Supports a wide range of collection processes through easy to use interface ‒ Extensive APIs for integrating into existing customer processes and back office systems 2.
Slide 30: Building a delivery focused organisation and culture
4. Building a delivery focused organisation and culture 30 H1 Progress ‒ Ben Ford joined PayPoint on 1 July 2020 to lead our new Retail Services function. Focus on aligning all our retailer-facing resource and capability, the end-to-end delivery of products and services to our retailers and the mana
Slide 31: Summary
31 • Resilient business model driving solid performance through Covid-19 • Accelerating execution of strategy to drive growth in UK, through acquisitions of Handepay, Merchant Rentals and i-movo • Sale of Romanian business to realise value and focus on UK business • Incremental growth opportunities
Slide 32: Results for the half year ended 30 September 2020
32 Results for the half year ended 30 September 2020