Paypoint Plc · LSE:PAY
Paypoint — H1 2018 Earnings Presentation
35 slides from Paypoint's earnings presentation, Nov 30, 2017
Slide 1: Results for the half year ended 30 September 2017
Dominic Taylor, Chief Executive Rachel Kentleton, Finance Director 30 November 2017 Results for the half year ended 30 September 2017
Slide 2: Agenda
Agenda 2 Introduction 3 Financial review 5 PayPoint’s unique strategic positioning 15 Our five business priorities 18 Summary 34 Results for the period ended 30 September 2017
Slide 3: Introduction
Introduction
Slide 4: Continued progress in reshaping the business
Continued progress in reshaping the business 4 • Product and Network − Continued successful rollout of PayPoint One, now in 6,898 sites, on track to deliver 8,000 target − EPoS Pro and Mobile App launched on 1st November 2017 − Further growth in parcels up by 13.6% to 11.9 million; Collect+ network
Slide 5: Financial review
Financial review
Slide 6: Statutory results
Statutory results 6 Half year 30 September 2017 2016 % £m £m change Gross revenue 97.6 101.7 (4.1) Net revenue 56.5 58.4 (3.2) Other cost of revenue (9.1) (8.4) 8.9 Administrative costs (23.0) (25.7) (10.8) Operating profit before impairments and disposals 24.4 24.3 0.6 Share of Collect+ JV - 0.4 (1
Slide 7: Retail networks' revenue growth continues
Retail networks’* revenue growth continues 7 Half year 30 September 2017 2016 % £m £m change Gross revenue 97.6 95.4 2.3 Net revenue 56.5 53.8 5.0 Other cost of revenue (9.1) (7.5) 21.6 Administrative costs (23.0) (21.3) 8.3 Operating profit 24.4 25.0 (2.7) *Retail networks consists of our UK, Irish
Slide 8: Analysis of retail networks' operating profit
Analysis of retail networks’ operating profit 8 £m 30 £0.7m (£1.3m) £123.1m £2.1m (£0.1m) (£2.0m) 25 £113.7m £25.0m £24.4m 20 Retail networks Net revenue Net revenue Net revenue Depreciation Cost Retail networks operating profit UK UK Romania increases operating profit 2016 bill payments retail serv
Slide 9: Analysis of retail networks' net revenue
Analysis of retail networks’ net revenue 9 (net revenue 2016) (net revenue 2017) UK retail UK retail services services £17.0m £19.1m UK top-ups Romania UK top-ups Romania £8.5m £4.3m £9.0m £5.0m UK bill UK bill payments payments £24.0m £23.4m £123.1m £m 58 56 £113.7m £0.7m £2.1m* 54 £0.5m (£0.6m) £5
Slide 10: Analysis of retail networks' costs
Analysis of retail networks’ costs 10 Third party costs £12.1m Depr & amort £4.6m £m 33 People £123.1m £15.5m £32.1m total costs 20171 £1.3m 31 £113.7m £0.4m £0.3m 2 £0.4m £0.5m £32.1m 29 £0.4m £30.8m £30.4m £28.8m 27 Retail PayPoint One CRM Data centre VAT Other Depre Retail networks costs rollout
Slide 11: Balance sheet remains strong
Balance sheet remains strong 11 Six months ended 30 September 2017 2016 £m £m Goodwill 8.4 8.5 Other intangible assets 13.8 9.8 Property, plant & equipment 28.9 25.0 Assets held for sale and Collect+ - 4.3 Cash1 27.6 49.6 Working capital (18.3) (16.2) Current and deferred tax (3.8) (5.3) Net assets
Slide 12: Cash generation and use
Cash generation and use 12 Six months ended 30 September 2017 2016 £m £m Profit before tax 24.4 24.7 Non-cash items 5.1 3.4 Operating cash flows 29.5 28.1 Working capital (3.0) (0.6) Tax paid (5.0) (3.1) Capital and other expenditure (8.1) (9.1) Free cash flow 13.4 15.2 Movement in client cash (2.0)
Slide 13: Shareholder returns
Shareholder returns 13 Adjusted earnings (basic) and dividends per share – track record 120.0p 100.0p 38.9p 80.0p 58.4p 64.2p 57.6p 60.0p 52.9p 21.0p 36.7p 45.7p 39.8p 40.0p 32.9p 35.2p 15.0p 20.0p 42.4p 45.0p 12.2p 35.3p 38.5p 26.5p 30.4p 21.8p 23.4p 15.3p 0.0p 2010 2011 2012 2013 2014 2015 2016 20
Slide 14: Outlook remains consistent with that given in May 2017
Outlook remains consistent with that given in May 2017 14 • UK business in transition − SPS contract expected to terminate sometime between September 2017 and March 2018. Full year effect £4m − Reducing Yodel fee – impact £1.7m 2018, further £1.0m 2019 − Impact of investment on PayPoint One, MultiPa
Slide 15: PayPoint's unique strategic positioning
PayPoint’s unique strategic positioning
Slide 16: PayPoint's differentiated business model
PayPoint’s differentiated business model 16 Growing portfolio Top ups Household bills Parcels Digital Popular services for vouchers customers, retailers and clients, which increase Contactless & ATMs card payments MultiPay EPoS engagement UK & Romania Differentiated Robust 24/ 7 Retailer & resilient
Slide 17: PayPoint's landscape in the UK
PayPoint’s landscape in the UK 17 Major multiple groups(1) Symbols and independents Sectors • Convenience • CTNs • Huge investment in latest • Lower investment in technology • Supermarkets technology • More fragmented • Forecourts • Highly complex organisations • Less collective buying power and • S
Slide 18: Our five business priorities
Our five business priorities
Slide 19: Making good progress against our strategic priorities
Making good progress against our strategic priorities 19 1. Profitable growth in UK retail services 2. Deliver parcels growth 3. Optimise profits in UK bill payments and top-ups 4. Drive organic growth in Romania 5. Business optimisation Results for the period ended 30 September 2017
Slide 20: 1. Profitable growth in UK retail services
1. Profitable growth in UK retail services 20 Continued successful rollout of PayPoint One • Rollout on track to achieve 8,000 sites by year Live Count 27th November end Total 6,898 • Successful launch of EPoS Pro (1 November) − Primarily targeting symbol retailers − Priced at £30 per week − Over 10
Slide 21: PayPoint One – everything a modern convenience store needs
PayPoint One – everything a modern convenience store needs 21 Contactless Card Payments Parcel – pick up and drop off Bill Payments EPoS Future proof technology Results for the period ended 30 September 2017
Slide 22: EPoS: Base, Core, Pro
EPoS: Base, Core, Pro 22 Base Core Pro £10** per week £15** / £20* per week £30 per week • PayPoint services-footfall • PayPoint services-footfall • PayPoint services-footfall Attract • Enhanced service (scanning) • Enhanced service (scanning) • Clear pricing & promotions • Clear pricing & promotion
Slide 23: EPoS: Mobile App
EPoS: Mobile App 23 Allowing retailers to: • See sales in real time • Change prices and promotions instantly • Control stock from anywhere Available to all PayPoint One users with functionality aligned to their EPoS package Results for the period ended 30 September 2017
Slide 24: Positive customer feedback
Positive customer feedback 24 How do you find PayPoint One to use? How likely are you to recommend PayPoint One to another retailer? from an outbound telephone customer satisfaction survey of 100 PayPoint One users Results for the period ended 30 September 2017
Slide 25: Positive customer feedback
Positive customer feedback 25 Results for the period ended 30 September 2017
Slide 26: 2. Deliver parcels growth
2. Deliver parcels growth 26 • Growing market − Home delivery market of over 2.4bn parcels, up c.16% first half − Returns growth driven by high volume fashion − Strong Click & Collect growth across ‘own store’ & third party outlets − Consumer environment volatile - debt rising, higher interest rates
Slide 27: 3. Optimise profits in UK bill payments
3. Optimise profits in UK bill payments 27 PayPoint has a significant number of opportunities to mitigate decline of ‘Big 6’ energy suppliers Electricity market share* Gas market share* 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Big 6 Others Big 6 Others 1. Cash still remains a relevant payment
Slide 28: 3. Optimise profits in UK bill payments
3. Optimise profits in UK bill payments 28 Cash still remains relevant, despite emerging channels All MultiPay Clients - % split of channel volumes 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% CASH WEB APP IVR Results for the period ended 30 September 2017
Slide 29: 3. Optimise profits in UK bill payments
3. Optimise profits in UK bill payments 29 Improving revenue per transaction is mitigating energy volume decline Pence 6 months to September Millions 12 200 180 10 160 8 140 6 120 4 100 H1 2011/12 H1 2012/13 H1 2013/14 H1 2014/15 H1 2015/16 H1 2016/17 H1 2017/18 Net revenue per transaction Transacti
Slide 30: 3. Optimise profits in UK bill payments
3. Optimise profits in UK bill payments 30 Opportunities in MultiPay and other non energy segments • MultiPay momentum continues to build, with 17 clients live • Transaction volume doubled in H1 vs same period last year • Solution for SSE live and tender participation with other ‘Big 6’ suppliers •
Slide 31: 3. Optimise profits in UK bill payments
3. Optimise profits in UK bill payments 31 Scalable platform enables rapid deployment for minimal incremental cost • Exciting new capability developed – Amazon top up • Unique barcode paired to Amazon account, enabling customers to top up cash directly into their account via a PayPoint store • Good
Slide 32: 4. Romania
4. Romania 32 Progress last six months • Cash dominates Romanian household payments (c.90% share) • PayPoint now a strong consumer brand with 75%* recognition • PayPoint share of the bill payment market is growing as Post Office and bank branches retrench • Top-up transactions have grown by 11% refl
Slide 33: 5. Business optimisation – improved service delivery
5. Business optimisation – improved service delivery 33 Time to on-board Operational & cost efficiencies PayPoint One Terminal (working days) 1. Investment in CRM/salesforce to drive productivity in contact centre, field team & operations and to improve retailer billing 2. Product and IT alignment t
Slide 34: Summary
Summary
Slide 35: Summary
Summary 35 • Good first six months with reshaping of the core business firmly on track • Further good progress in PayPoint One, retail services and MultiPay • Romania growing strongly with new opportunities following completion of Payzone acquisition • Scalable and technologically advanced platform