Paypoint Plc · LSE:PAY
Paypoint — H1 2011 Earnings Presentation
71 slides from Paypoint's earnings presentation, Nov 25, 2010
Slide 1: PayPoint plc Interim Results Presentation
PayPoint plc Interim Results Presentation 25 November 2010 Strictly private and confidential
Slide 2: Agenda
Agenda • Highlights & strategy • Operational review • Financial review • Summary and outlook • Q&A 2
Slide 3: Highlights & strategy
Highlights & strategy Dominic Taylor Chief Executive 3
Slide 4: Overview
Overview Strong set of results • Growth in net revenue (7.6%), operating profit (4.4%) and profit before tax (5.4%) • Improved yield in established business streams • Developing business streams showing strong growth • Established and developing business streams together provide a solid foundation t
Slide 5: Established and developing business streams
Established and developing business streams Established business streams • Comprise UK and Ireland retail networks and internet payments • Generate the group’s profits and cash flows • Provide unique retail/internet proposition to clients • Strongly differentiated to clients and retailers • Have sig
Slide 6: PayPoint highlights
PayPoint highlights Established business streams • Overall transaction growth of 3% • 33% transaction growth in internet payments • Strong growth in retail services (transactions 22% up; net revenue up 23%) • Over 350 net additions to UK retail network, reinforcing our value to retailers • Introduce
Slide 7: Four elements of strategy
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 strategy c
Slide 8: Progress and opportunity
Progress and opportunity Vertical markets 9 Existing capability Public sector eCommerce) Transport / Telecoms & Retail (incl 9 services Financial Gaming / Under development parking Energy / housing utilities / social added leisure Value media Future opportunity Mobile phone 9 9 9 Payment channel Int
Slide 9: Operations review
Operations review 9
Slide 10: Established business streams
Established business streams Bill and general payments Top-ups • Core to our bespoke client • Strong growth in e-money proposition and our unique market transactions (46%) positioning • Offset by mobile volumes down by • Small increase in retail coverage, 8% (relative to 11% last year) with continue
Slide 11: Established business streams – retail services
Established business streams – retail services Retail services transaction volumes • Transaction volumes of 23m up 22% • Net revenue up 23% at £5.1m • Early promise from trial of free-to-use ATMs • Credit & debit added to 426 sites • Money transfer volumes up 25% • Sold over 290,000 SIM cards to 2,3
Slide 12: Established business streams - internet
Established business streams - internet PayPoint.net processes payments from consumers to web merchants via acquiring banks, in a growing market UK eCommerce Transaction Value (€bn)1 2009 PayPoint eCommerce Market Position 30 27% 12% CAGR 25 20 17% % 15 13% 10 8% 8% 7% 7% 7% 5 3% 3% 0 Performance ye
Slide 13: Established business streams - internet
Established business streams - internet Differentiation achieved through Leveraging our UK retail proposition Driving value added services to • New home vend solution now over 1m Merchants transaction run rate1 pa. • Fraudguard launched as standalone • Continued sales to UK clients as part of produc
Slide 14: Developing business streams - Romania
Developing business streams - Romania Business on track to profitability Average weekly bill payment volume 300,000 Bill payment continues to grow 250,000 • 26 clients now live 200,000 • More than 5m payments 150,000 processed in the period, 171% up, 100,000 17% average monthly growth since 50,000 l
Slide 15: Developing business streams – Collect+
Developing business streams – Collect+ Significant opportunity • JV with Yodel created ‘dream team’ • Strong growth in underlying market driven by online shopping • Proposition provides full ‘track and trace’ • PayPoint earns as a supplier to the JV on a per transaction basis • 58% of shoppers shun
Slide 16: Collect+ parcel volumes are scaling across all propositions
Collect+ parcel volumes are scaling across all propositions Parcels/week Period end Volume split by proposition Returns from new commercial clients eg ASOS, New Look Increased share of outbound deliveries from Shop Direct Group brands Increased share of returned items from Shop Direct Group brands C
Slide 17: Returns from commercial clients now gaining traction
Returns from commercial clients now gaining traction Mainstream retailers now Clear benefits offering Collect+ returns • Daily manifest of incoming parcels based on tracking - items available to resell 24 hours sooner • Customers no longer have to wait to return items • 40% drop-offs outside regular
Slide 18: Consumer “Store to Door” service now live
Consumer “Store to Door” service now live and set to be marketed www.collectplus.co.uk website overhauled • More professional look and feel • Send a parcel to any UK postcode (not just to C+ stores) Send a parcel to any UK postcode • 1 minute booking process • Price competitive vs Royal Mail • eBay
Slide 19: Developing business streams - PayByPhone
Developing business streams - PayByPhone The company • Acquired Verrus (PayByPhone) in March for £29m cash, including £4m deferred, and a further potential £4m, dependent on performance to March 2013 • Leader in mobile phone payments for parking, operating in UK, France, USA and Canada Results • Pro
Slide 20: Developing business streams - PayByPhone
Developing business streams - PayByPhone Since acquisition • Business rebranded PayByPhone • Infrastructure upgraded including the addition of disaster recovery • Additional resources for sales, product development and delivery & finance, should deliver benefit from next financial year • Existing cl
Slide 21: Developing business streams - PayByPhone
Developing business streams - PayByPhone Market opportunities • Mass market application for mobile payments – North American and European parking markets $65bn pa. – Internationally scalable • Compelling attractions to parking operators – Significant financial benefits: Westminster revenue up 45% an
Slide 22: Business streams
Business streams Established Developing Total Adjust As Collect+ reported Transactions (000) 6 months 253,451 13,973 267,424 - 267,424 2010 6 months 246,958 5,030 251,988 - 251,988 2009 Transaction value £000 6 months 4,723,019 108,381 4,831,400 - 4,831,400 2010 6 months 4,398,697 47,679 4,446,376 -
Slide 23: Financial review
Financial review George Earle Finance Director 23
Slide 24: Business streams
Business streams Established Developing Total Adjust As Collect+ reported Transactions (000) 6 months 253,451 13,973 267,424 - 267,424 2010 6 months 246,958 5,030 251,988 - 251,988 2009 Transaction value £000 6 months 4,723,019 108,381 4,831,400 - 4,831,400 2010 6 months 4,398,697 47,679 4,446,376 -
Slide 25: Revenue and net revenue bridge
Revenue and net revenue bridge Net Revenue revenue £000 £000 H1 2009 (including Collect +) 96,476 36,042 Bill and general (901) 158 Top-ups (5,876) (614) Retail services 1,624 976 Internet (444) 828 PayByPhone 2,183 1,488 Collect + 208 170 Other (98) (98) H1 2010 (including Collect +) 93,172 38,950
Slide 26: Revenue and net revenue bridge
Revenue and net revenue bridge Net Revenue revenue £000 £000 H1 2009 (including Collect +) 96,476 36,042 Bill and general (901) 158 Top-ups (5,876) (614) Bill and Retail general net revenue up from: services 1,624 976 Increase in transactions in UK pre-paid energy and local Internet housing (444)
Slide 27: Revenue and net revenue bridge
Revenue and net revenue bridge Net Revenue revenue £000 £000 H1 2009 (including Collect +) 96,476 36,042 Bill and general (901) 158 Top-ups (5,876) (614) Retail services 1,624 976 Internet revenue down: Bill and general (444) 828 Retail exclusivity PayByPhone 2,183 from British Gas driving footfal
Slide 28: Revenue and net revenue bridge
Revenue and net revenue bridge Net Revenue revenue £000 £000 H1 2009 (including Collect +) 96,476 36,042 Bill and general (901) 158 Top-ups (5,876) (614) Retail services 1,624 976 Top ups revenue is down: Internet (444) £000 828 UK mobile PayByPhone 2,183 (1,519)1,488 Romania and Ireland mobile
Slide 29: Revenue and net revenue bridge
Revenue and net revenue bridge Net Revenue revenue £000 £000 H1 2009 (including Collect +) 96,476 36,042 Bill and general (901) 158 Top-ups (5,876) (614) Retail services 1,624 976 Internet (444) 828 Retail services increases in revenues and net PayByPhone revenues from 2,183 1,488 Collect SIMs + 20
Slide 30: Revenue and net revenue bridge
Revenue and net revenue bridge Net Revenue revenue £000 £000 H1 2009 (including Collect +) 96,476 36,042 Bill and general (901) 158 Top-ups (5,876) (614) Retail services 1,624 976 Internet (444) 828 PayByPhone 2,183 1,488 Collect + 208 170 Internet net revenue is up from organic Other (98) growth
Slide 31: Revenue and net revenue bridge
Revenue and net revenue bridge Net Revenue revenue £000 £000 H1 2009 (including Collect +) 96,476 36,042 Bill and general (901) 158 Top-ups (5,876 (614) Retail services 1,624 976 Internet (444) 828 PayByPhone 2,183 1,488 Collect + 208 170 Other (98) (98) H1 2010 (including Collect +) 93,172 38,950 3
Slide 32: Revenue to net revenue
Revenue to net revenue 2010 2009 Increase / 6 months ending September (decease) £000 £000 Revenue 92,898 96,410 (3.6%) Agent commission (34,579) (36,172) Mobile top-ups and SIM cards (18,896) (22,976) Other (695) (1,272) Net revenue 38,728 35,990 7.6% 32
Slide 33: Revenue to net revenue
Revenue to net revenue 2010 2009 Increase / 6 months ending September (decease) £000 £000 Revenue 92,898 96,410 (3.6%) Agent commission (34,579) (36,172) Mobile top-ups and SIM cards (18,896) (22,976) Other (695) (1,272) Net revenue 38,728 35,990 7.6% £000 H1 2009 Agent commission 36,172 Bill and ge
Slide 34: Revenue to net revenue
Revenue to net revenue 2010 2009 Increase / 6 months ending September (decease) £000 £000 Revenue 92,898 96,410 (3.6%) Agent commission (34,579) (36,172) Mobile top-ups and SIM cards (18,896) (22,976) Other (695) (1,272) Net revenue 38,728 35,990 7.6% £000 H1 2009 mobile top-ups and SIM cards 22,976
Slide 35: Revenue to net revenue
Revenue to net revenue 2010 2009 Increase / 6 months ending September (decease) £000 £000 Revenue 92,898 96,410 (3.6%) Agent commission (34,579) (36,172) Mobile top-ups and SIM cards (18,896) (22,976) Other (695) (1,272) Net revenue 38,728 35,990 7.6% £000 H1 2009 other costs 1,272 Merchant service
Slide 36: Costs
Costs 2010 2009 Increase / 6 months ending September £000 £000 (decrease) Net revenue 38,728 35,990 7.6% Depreciation/ amortisation 1,912 2,631 (27.3%) Other cost of sales 3,997 4,504 (11.2%) Operating costs 17,510 14,195 23.3% Operating profit 15,309 14,660 4.4% 36
Slide 37: Costs
Costs 2010 2009 Increase / 6 months ending September £000 £000 (decrease) Net revenue 38,728 35,990 7.6% Depreciation/ amortisation 1,912 2,631 (27.3%) (11.2%) Other cost of sales 3,997 4,504 Operating costs 17,510 14,195 23.3% £000 Operating profit 15,309 14,660 4.4% H1 2009 other cost of sales 4,5
Slide 38: Costs
Costs 2010 2009 Increase / 6 months ending September £000 £000 (decrease) Net revenue 38,728 35,990 7.6% Depreciation/ amortisation 1,912 2,631 (27.3%) Other cost of sales 3,997 4,504 (11.2%) 23.3% Operating costs 17,510 14,195 £000 Operating profit 15,309 14,660 4.4% H1 2009 operating costs 14,195
Slide 39: Profit before tax
Profit before tax 6 months ending September 2010 2009 Increase / £000 £000 (decrease) Operating profit 15,309 14,660 4.4% Share of loss on JV (726) (964) 24.7% Interest (26) 115 Profit before tax 14,557 13,811 5.4% Tax (4,496) (4,102) Profit after tax 10,061 9,709 3.6% Effective tax rate 30.9%, hi
Slide 40: Cash flow
Cash flow 6 months ending September 2010 2009 £000 £000 Profit before tax 14,557 13,811 Add back non cash items 3,257 3,940 Changes in working capital (2,448) (1,659) Capital expenditure (1,051) (1,634) Net investment income (6) 85 Bank loan 4,000 - Tax paid (5,886) (9,501) Acquisition and investmen
Slide 41: Cash flow
Cash flow 6 months ending September 2010 2009 £000 £000 Profit before tax 14,557 13,811 Add back non cash items 3,257 3,940 Changes in working capital (2,448) (1,659) Capital expenditure (1,051) (1,634) Net investment income (6) 85 Bank loan capital tends to increase in first half Working 4,000 -
Slide 42: Cash flow
Cash flow 6 months ending September 2010 2009 £000 £000 Profit before tax 14,557 13,811 Add back non cash items 3,257 3,940 Changes in working capital (2,448) (1,659) Capital expenditure (1,051) (1,634) Net investment income (6) 85 Bank loan 4,000 - Tax paid (5,886) (9,501) Acquisition and investmen
Slide 43: Cash flow
Cash flow 6 months ending September 2010 2009 £000 £000 Profit before tax 14,557 13,811 Add back non cash items 3,257 3,940 Changes in working capital (2,448) (1,659) Capital expenditure (1,051) (1,634) Net investment income (6) 85 Bank loan 4,000 - Tax paid (5,886) (9,501) Acquisition and investmen
Slide 44: Cash flow
Cash flow 6 months ending September 2010 2009 £000 £000 Profit before tax 14,557 13,811 Add back non cash items 3,257 3,940 Changes in working capital (2,448) (1,659) Capital expenditure (1,051) (1,634) Net investment income (6) 85 Bank loan 4,000 - Tax paid (5,886) (9,501) Acquisition and investmen
Slide 45: Cash flow
Cash flow 6 months ending September 2010 2009 £000 £000 Profit before tax 14,557 13,811 Add back non cash items 3,257 3,940 Changes in working capital (2,448) (1,659) Capital expenditure (1,051) (1,634) Net investment income (6) 85 Bank loan 4,000 - Tax paid (5,886) (9,501) Acquisition and investm
Slide 46: Summary & outlook
Summary & outlook Dominic Taylor Chief Executive 46
Slide 47: Summary & outlook
Summary & outlook • In current financial year trading is in line with company expectations • Our established business is strong, with opportunities to enhance the retail yield and increase the number of online merchants • Our developing business streams have growth potential, as we continue to roll
Slide 48: Q&A
Q&A 48
Slide 49: Appendices
Appendices 1. PayPoint strategy 2. Consumer transaction – UK retail – PayByPhone – Collect+ 49
Slide 50: Strategy
Appendix 1 Strategy 50
Slide 51: Changing landscape drives opportunity
Appendix 1 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 52: Consumer payments value chain
Appendix 1 Consumer payments value chain High Growth Payment Payment Transaction Financial medium Channel Processor settlement New Economy E-comm / Businesses Mobile money E-comm / Consumers Mobile mobile operator mobile E-money Internet site PSP Acquirer Bank transfer Debit card ISP / Terminal Bure
Slide 53: PayPoint at float
Appendix 1 PayPoint at float Payment Payment Transaction Financial medium Channel Processor settlement Consumers E-comm / Businesses Mobile money E-comm / Mobile mobile operator mobile E-money Internet site PSP Acquirer Bank transfer Debit card ISP / Terminal Bureau Telephone operator Credit card Ca
Slide 54: PayPoint with internet payments
Appendix 1 PayPoint with internet payments Payment Payment Transaction Financial medium Channel Processor settlement Consumers E-comm / Businesses Mobile money E-comm / Mobile mobile operator mobile E-money Internet site PSP Acquirer Bank transfer Debit card ISP / Terminal Bureau Telephone operator
Slide 55: PayPoint today
Appendix 1 PayPoint today Payment Payment Transaction Financial medium Channel Processor settlement Consumers E-comm / Businesses Mobile money E-comm / Mobile mobile operator mobile E-money Internet site PSP Acquirer Bank transfer Debit card ISP / Terminal Bureau Telephone operator Credit card Cash
Slide 56: Four elements of strategy
Appendix 1 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 57: Progress and opportunity
Appendix 1 Progress and opportunity Vertical markets 9 Existing capability Public sector eCommerce) Transport / Telecoms & 9 Retail (incl services Financial Gaming / Under development parking Energy / housing utilities / social added leisure Value media Future opportunity Mobile phone 9 9 9 Payment
Slide 58: Materials to support the consumer transaction
Appendix 2 Materials to support the consumer transaction 58
Slide 59: UK Retail: Client payment media
Appendix 2 UK Retail: Client payment media 59
Slide 60: UK Retail: Retailer external signage
Appendix 2 UK Retail: Retailer external signage 60
Slide 61: UK Retail: POS merchandising
Appendix 2 UK Retail: POS merchandising 61
Slide 62: UK Retail: Terminals and ATMs
Appendix 2 UK Retail: Terminals and ATMs 62
Slide 63: UK Retail: Terminal receipts
Appendix 2 UK Retail: Terminal receipts E-TopUp Sample SPAR Tag E Voucher Utility Payment Transport Ticketing 63
Slide 64: PayByPhone: Parking payment: IVR, SMS, mobile web
Appendix 2 PayByPhone: Parking payment: IVR, SMS, mobile web PAGE 64 PAGE 64 64
Slide 65: PayByPhone: Consumer value proposition
Appendix 2 PayByPhone: Consumer value proposition 11/25/201 0 PAGE 65 65
Slide 66: www.collectplus.co.uk – Nearest site
Appendix 2 www.collectplus.co.uk – Nearest site 66
Slide 67: www.collectplus.co.uk – Parcel returns
Appendix 2 www.collectplus.co.uk – Parcel returns 67
Slide 68: www.collectplus.co.uk – Parcel delivery
Appendix 2 www.collectplus.co.uk – Parcel delivery 68
Slide 69: Collect+: UK Network
Appendix 2 Collect+: UK Network • Target network density - 1 Mile urban - 5 Mile rural • Target 5,000 locations 3,400 locations live 69
Slide 70: PayCash – merchant’s website
Appendix 2 PayCash – merchant’s website 70
Slide 71: PayCash – consumer voucher
Appendix 2 PayCash – consumer voucher 71