Paypoint Plc · LSE:PAY
Paypoint — H1 2023 Earnings Presentation
39 slides from Paypoint's earnings presentation, Nov 24, 2022
Slide 1: Half year results presentation, 24 November 2022
Nick Wiles, Chief Executive Alan Dale, Finance Director 24 November 2022
Slide 2: Overview, strategy, financial and divisional review, Q&A
2 1 Overview 2 Strategy update 3 Financial review 4 Divisional review 5 Q&A Results for the half year ended 30 September 2022
Slide 3: Strategic, Operational and Financial highlights
3 Operational Strategic Financial Shopping Division • Building on the strong • Net revenue from momentum across the • Further expansion of Counter Cash, now live in 4,563 sites with over £22.8m continuing operations of Group, delivering a now withdrawn since launch in November 2021 £59.5m, up 6.0%,
Slide 4: Strategy update
Strategy update
Slide 5: Delivering on purpose of making people's lives easier
5 The PayPoint Group has continued to deliver on its purpose of making people’s lives easier every day, particularly through the role our retailer partner network of over 28,000 locations plays in supporting their communities and providing a range of government services vital to combatting the curre
Slide 6: Group net revenue by division H1 FY23
6 H1 FY22 H1 FY23 H1 FY22 H1 FY23 63,582 63,043 £56.1m £59.5m +6.0% SME & -0.8% SME & net net retailer retailer revenue* revenue locations locations SHOPPING E-COMMERCE PAYMENTS AND BANKING H1 FY22 H1 FY23 H1 FY22 H1 FY23 H1 FY22 H1 FY23 £29.8m £30.8m £2.1m £3.0m £24.2m £25.7m +3.2% +45.7% +6.1% net
Slide 7: Acquisitions and disposals timeline
7 Romania • Full ownership secured • Acquired in Nov 2020 • Acquired in Feb 2021 • Disposal completed in April 2020 on 8 April 2021 • Leading secure digital • Leading card payments • Established the leading voucher platform business with over • Proceeds of £48 carrier agnostic out of 22,000 SME mill
Slide 8: Strengthened portfolio of brands and partnerships
8 Strengthened portfolio of brands and partnerships within the PayPoint Group, supporting our clients and retailer partners with innovative solutions and product offerings, across different sizes of network Results for the half year ended 30 September 2022
Slide 9: Appreciate Group overview
9 Corporate Consumer 62.3% of group revenue* 37.7% of group revenue* for year ended 31 March 2022 for year ended 31 March 2022 Trustpilot ‘Excellent’ – 4.3/5 Trustpilot ‘Excellent – 4.4/5 Corporate Corporate / Consumer Consumer Appreciate Business Services Helping businesses incentivise Helping busi
Slide 10: Rationale for the Appreciate Group acquisition
10 2 3 4 1 Opens up Delivers highly Earnings Strengthens growth complementary enhancing and PayPoint Group opportunities in capabilities and delivers universe and new and existing operational attractive proposition markets efficiencies returns Complementary Strengthens and Established business that
Slide 11: Four building blocks to unlock value from acquisition
11 There are 4 clear building blocks to unlocking value from the proposed acquisition: Earnings 1 2 3 4 enhancing and Immediately Single PLC Operational delivers attractive earnings enhancing + structure benefits + revenue enhancements + Revenue enhancements returns 1 The proposed acquisition of App
Slide 12: Revenue enhancements
12 4 Revenue enhancements 1. FY24 cycle for Christmas saving – launch of digital tools and proactive support for agents as key to reduce saver churn and improve recruitment 2. Establish third channel of 2-3k PayPoint retailer ‘Super Agents’ managing 30-50 new savers each, saving c.£400 each, expandi
Slide 13: Financial review
Financial review
Slide 14: Half year financial summary
14 (Restated)1 Half year ended 30 September 2022 2021 £m £m Change Revenue from continuing operations 75.4 70.2 7.4% Net revenue from continuing operations 2 59.5 56.1 6.0% See slide 15 Operating margin before exceptional items3 from continuing 39.7% 41.2% (1.5)ppts operations Profit before tax from
Slide 15: Profit before tax bridge
15 £26m £25m £1.5m (£2.3m) £24m £0.9m (£2.9m) £23m (£0.7m) £1.0m (£0.3m) £22m £0.2m (£1.2m) £21m £24.8m + 2.1% £24.0m £20m £23.1m £22.5m £22.5m £22.2m £21.9m £22.1m £19m £21.0m £21.0m £18m £17m Reported Exceptional IFRIC Restated PBT Net Revenue Net Revenue Net Revenue Costs McColls one PBT Exceptio
Slide 16: Business division mix
16 Half year ended 30 September 2022 2021 Change Change £m £m £m % Shopping 30.8 29.8 1.0 3.2% - Service fees 8.9 8.2 - Card payments & terminal lease – Handepay/Merchant Rentals 9.8 9.8 - Card payments – PayPoint & RSM 2000 6.1 6.2 - ATMs & Counter Cash 4.8 5.0 - Other 1.2 0.6 E-Commerce 3.0 2.1 0.
Slide 17: Costs bridge
17 Third party Third party costs costs D&A D&A £13.5m2 £5.1m £11.5m1 £4.7m People People £17.4m £18.8m 38 £m 37 37 (£0.4m) £0.7m £0.6m 36 £0.7m 36 35 £37.0m 35 £1.4m £36.3m £36.3m £36.1m 34 (£0.2m) £35.4m 34 £34.2m £34.0m £34.0m 33 33 Previously reported IFRIC adjustment Restated costs Investment in
Slide 18: Cash flow
18 (Restated)1 Half year ended 30 September 2022 2021 Change £m £m £m Profit before tax 21.0 25.0 (4.0) Exceptional items 1.5 (2.9) 4.4 Depreciation and amortisation 4.7 5.1 (0.4) Share based payments / other 0.3 0.3 - Working capital 0.8 (5.7) 6.5 Cash generation 28.3 21.8 6.5 Tax paid (1.3) (3.9)
Slide 19: Balance sheet and net debt
19 (Restated)1 Sept Mar Change Sept 2022 2022 2021 £m £m £m £m Goodwill 57.7 57.7 - 57.7 Other intangible assets 35.9 36.0 (0.1) 35.1 Net investment in finance lease receivables 4.2 4.4 (0.2) 6.4 Property, plant & equipment 22.6 21.8 0.8 20.9 Investment in associate - Snappy - 6.7 (6.7) 6.7 Converti
Slide 20: Financing, future outflows and interim dividend
20 Financing & future outflows Interim dividend declared • Financing facilities have been renegotiated with existing banks • Ordinary – 18.4p, an increase of 2.2% vs the final (Barclays, BOI, Lloyds) to facilitate the Appreciate Group acquisition – dividend declared on 25 May 2022 of 18p per share n
Slide 21: Divisional review
Divisional review
Slide 22: Shopping Division
Shopping Division 22 Key drivers H1 FY22 H1 FY23 Growth in PayPoint One Provision of digital rollout and service fee solutions, technology £29.8m £30.8m +3.2% and payment net revenue net revenue Strong card payment services for SMEs platform and merchant and retailers to estate for accelerated deliv
Slide 23: Shopping Division H1 FY23 progress
Shopping Division 23 H1 FY23 Progress • Further expansion of Counter Cash, now live in 4,563 sites with over £22.8m now withdrawn since launch in November 2021 • SME proposition enhanced in Handepay, with new Android terminal launched, supported by one month contracts and next day settlement • Enhan
Slide 24: Shopping Division opportunities from Handepay acquisition
Shopping Division 24 Opportunities outlined in November 2020 following announcement of acquisition of Handepay/Merchant Rentals Results for the half year ended 30 September 2022
Slide 25: Shopping Division acquirer synergies, sales, analytics, churn
Shopping Division 25 Acquirer Sales rate Leveraging Churn Synergies improvement analytics reduction New dashboards Clear focus and Increased efficiency and launched to PP Retail accountability for effectiveness of sales team Relationship Managers retention effort, driven by new Sales to drive qualit
Slide 26: Handepay and PayPoint estate sector mix
Shopping Division 26 Analysis of Handepay and PayPoint book value processed (H1 FY23 vs H1 FY22) shows resilience in grocery/food retail and hospitality, but value of spend reductions in ‘big ticket’ sectors like building supplies, furniture and flooring 81.7% of Handepay/PayPoint book is weighted t
Slide 27: Shopping Division key steps forward
Shopping Division 27 • Significant steps forward in product, sales, retention and analytics over the half year to strengthen our position in a competitive market • Leveraging ‘Cards DNA’, expertise and experience of talent brought into the Group, including Mark Latham (Banking Services Director, joi
Slide 28: E-Commerce Division
E-Commerce Division 28 H1 FY22 H1 FY23 Key drivers Development of e-commerce Collect+ is our £2.1m +45.7% £3.0m delivery platform yielding technology-based net revenue net revenue strong year on year transaction platform to deliver growth best-in-class 3.6% 5.0% Continued investment in customer jour
Slide 29: E-Commerce Division H1 FY23 progress
E-Commerce Division 29 H1 FY23 Progress • Excellent parcel transaction growth of +60.6% year on year, driven by our strength in clothing/fashion categories, the continued expansion of new services with carrier partners and the in-store experience investment made in Zebra label printers in the last 1
Slide 30: Payments & Banking Division
Payments & Banking Division 30 Key drivers H1 FY22 H1 FY23 We deliver a channel Built payment channel agnostic £24.2m £25.7m platform, supporting agnostic payment net revenue net revenue diversification to digital platform that gives +6.1% clients and Investment in capabilities to consumers choice 4
Slide 31: Payments & Banking H1 FY23 progress
Payments & Banking Division 31 H1 FY23 Progress • Strong performance in the energy sector, with net revenue +8.1% and transactions +6.0% year on year, driven by an increase in frequency and value of consumer transactions • Continued strong performance of Cash Out services and the DWP Payment Excepti
Slide 32: Payments & Banking i-movo voucher platform
Payments & Banking Division 32 • Acquisition completed in Nov 2020 and contributed over £2.6m of net revenue in H1 FY23 • Leading secure digital voucher platform, opening up opportunities in FMCG vouchering, newspapers and critical to disbursement of government support initiatives to financially vul
Slide 33: PayPoint Group H1 FY23 progress
PayPoint Group 33 H1 FY23 Progress • Good progress against our ESG programme, including commitment to ensure all employees are paid a minimum of the Real Living Wage delivered in July 2022 • Inaugural Pride Month programme launched in June 2022, as part of our ‘Welcoming Everyone’ activities, buildi
Slide 34: Outlook
34 • In a challenging and unpredictable economic environment, the transformation of our business continues, reflecting a rebalancing towards growth opportunities and delivering improving returns to shareholders. • In addition to the progress made in the first half, we have again demonstrated the rol
Slide 35: Results for the half year ended 30 September 2022
35 Results for the half year ended 30 September 2022
Slide 36: Appendix
Appendix
Slide 37: Division and sub-division structure
37 Division Sub-division Lower level PayPoint One/EPoS Retail Services Counter Cash/ATMs Handepay/Merchant Rentals Shopping card payments and leasing Card payments PayPoint card payments RSM 2000 card payments Collect+ parcels (send, pick up E-Commerce E-Commerce and drop off) MultiPay Digital RSM 2
Slide 38: Net revenue by division and sub-division
38 Net revenue Division Sub-division H1 FY23 H1 FY22 Retail Services £14.9m £13.8m Shopping Card payments £15.9m £16.0m E-Commerce E-Commerce £3.0m £2.1m Digital £5.9m £3.0m Payments & Banking Cash through to digital £3.4m £4.3m Cash £16.4m £16.9m TOTAL £59.5m £56.1m Business division mix Division S
Slide 39: PayPoint Group
39 We create innovative services and technology connecting millions of PayPoint Group consumers with brands, retailers and SMEs Our enlarged Group now delivers technology and services to an unparalleled network of Enlarged network 1 over 60,000 retailer partner and SME locations across the UK, inclu