Paypoint Plc · LSE:PAY
Paypoint — FY2012 Earnings Presentation
65 slides from Paypoint's earnings presentation, May 24, 2012
Slide 1: PayPoint plc Preliminary results presentation
PayPoint plc Preliminary results presentation 24 May 2012
Slide 2: Agenda
Agenda • Results summary • Strategy and execution • Financial review • Operational review • Summary 2
Slide 3: Results summary
Results summary Years ended March • Strong results with good progress in all parts of the Net revenue £m business in line with our strategy • Record transaction volumes of 659m up 12%, and operating profit up 8% to £38.9m 77.4 77.4 82.7 90.4 • Good performance in our established businesses with 2009
Slide 4: Strategy and execution
Strategy and execution 4 4
Slide 5: Four key elements of our strategy
Four key elements of our strategy PayPoint links clients to consumers providing them with convenient services and ways to pay Payments Selected Value added Geographic capability vertical services / reach markets content Multiple payment High volume Differentiation to Ability to export know media cha
Slide 6: Execution of strategy
Execution of strategy • Our established businesses have shown strong growth, leveraging their assets and driving new revenue streams • On track to deliver scale cash-out capability for the Department for Work and Pensions (DWP) this year • Our developing businesses are developing well in fast growin
Slide 7: Financial review
Financial review 7 7
Slide 8: Strong business momentum
Strong business momentum Years end March 2010 2011 2012 £m £m £m £m 90.4 Transactions 551.9 589.7 659.1 82.7 Net revenue 1 77.4 82.7 90.4 77.4 77.4 69.9 Operating profit 34.1 36.1 38.9 Profit before taxation 32.6 34.5 37.2 Operating cash flow 39.8 40.7 43.2 38.9 36.1 33.7 34.1 Dividends 2 12.9 15.0
Slide 9: Profit and loss
Profit and loss Years ended March 2010 2011 2012 £000 £000 £000 Revenue 196,603 193,233 200,029 Cost of sales (119,197) (110,510) (109,587) Net revenue 77,406 82,723 90,442 Depreciation and amortisation (4,820) (3,612) (3,333) Other cost of sales (9,093) (8,445) (8,858) Gross profit 63,493 70,666 78
Slide 10: Net revenue bridge 2011 to 2012
Net revenue bridge 2011 to 2012 1 Established business Developing business £000 Operating profit £41.2m (2011 £38.4m) Operating loss including Collect+ £4.2m (2011 £3.9m) 92,000 90,000 88,000 86,000 84,000 82,000 80,000 Bill and general Bill and general PayByPhone 2011 Retail Services Other 2012 Int
Slide 11: Cash generation and use
Cash generation and use Years ended March 2010 2011 2012 £m £m £m Operating profit 34.1 36.0 38.9 Depreciation/amortisation 4.8 3.6 3.3 Share based payments 0.9 1.1 1.1 Operating cash flows 39.8 40.7 43.3 • High and consistent Working capital (1.1) 1.5 - conversion of profit to cash Cash generated b
Slide 12: Capital Expenditure
Capital Expenditure Plan Years ended March 2011 2012 2013 £m £m £m Terminals, ATMs, PPos 2.6 1.8 2.7 Other computer hardware 0.5 1.5 1.5 Development (incl. software 0.2 1.5 4.5 intangible) Other 0.2 0.5 0.8 Total 3.5 5.3 9.5 • Opportunity to improve IT infrastructure for future growth • Virtual term
Slide 13: Key Messages
Key Messages • Net revenue and profit growth • Excellent cash conversion • Ongoing investment to secure future growth • Balance sheet strong • Sustainable dividend growth 13
Slide 14: Operational review
Operational review 14 14
Slide 15: UK & I retail network
UK & I retail network • As our most established business, it is core to our Group capability and accounts for 82% of the Group’s net revenue • Market leading ‘over the counter’ payments proposition with strong differentiation through the range of payments we accept and breadth of retail relationship
Slide 16: UK & I retail network
UK & I retail network • Our large retail network allows us to leverage retail services, with strong net revenue growth 28% up, and now accounting for 19% of the company’s net revenue – ATMs +9%; debit and credit +25%; SIM sales +36%; parcels volumes growth 3.5x • We plan to continue our focus on ret
Slide 17: Internet
Internet • Our Internet business is central to the Group’s payment hub strategy; it is established and profitable • Well positioned as a general Payment Service Provider, in a fast growing market – would benefit from greater scale • It has a unique bureau and gateway proposition and is focused on dr
Slide 18: Romanian retail network
Romanian retail network • Recreating the UK retail formula in a strong cashed based economy (22m population) • Leveraged the Group technology platform to establish the business and we are the first in Romania to – Process over the counter bill payments in convenience stores – Persuade agents to bank
Slide 19: PayByPhone
PayByPhone • Central to the Group’s multi channel payment hub strategy and integrated into our internet business/Group technology platform • Leader in mobile phone payments for parking in the UK, France, USA and Canada, with compelling benefits to parking operators and consumers • A transformational
Slide 20: Collect+
Collect+ • Transforming home shopping fulfilment for consumers, by creating a more convenient alternative to having parcels delivered to the home • 50/50 JV between Yodel and PayPoint. Yodel’s current integration of its two businesses into one completes in the first half of our reporting year • Prop
Slide 21: Summary and outlook
Summary and outlook 21
Slide 22: Summary and outlook
Summary and outlook We have high expectations for our business following progress in the past few years • Unique and powerful technology platform, in which we continue to invest • Group management driving strategy execution, with strong management in each business • Established business is strong, w
Slide 23: Appendices
Appendices 1. The ‘essence’ of what we do 2. Overview of our businesses 3. Financial review 4. Five year trading record 5. Materials to support the consumer transaction 23
Slide 24: The 'essence' of what we do
Appendix 1 The ‘essence’ of what we do 24
Slide 25: The 'essence' of what we do
Appendix 1 The ‘essence’ of what we do • We process high volume consumer transactions, whether for multi channel payments or retail services (e.g. parcels) for clients in vertical markets, through an integrated flexible platform • Payments are typically low value and cover retail, internet and mobil
Slide 26: Overview of our business
Appendix 2 Overview of our business 26
Slide 27: UK & I retail network
Appendix 2 Year ended March 2012 UK & I retail network Group net revenue • Market leading ‘over the counter’ payments proposition • Established retail network handling household 82% bill payments, mobile phone top-ups and retail services – Over 24,000 outlets (99% population cover) 2011 2012 – Contr
Slide 28: UK & I retail network
Appendix 2 Year ended March 2012 UK & I retail network UK & I net revenue bridge £000 966 3,016 • Relatively mature payments revenues still 1,915 154 showing growth 73,923 67,872 • Decline in mobile top-up transactions mitigated by Health Lottery 2011 Bill and Top-ups Retail Other 2012 general Servi
Slide 29: Internet
Appendix 2 Internet Year ended March 2012 Group net revenue • Well positioned, in a fast growing market – would benefit from greater scale 10% • Provides secure credit card, debit card and other payments for web merchants • Unique bureau and gateway proposition for merchants 2011 2012 • Driving grow
Slide 30: Internet
Appendix 2 Internet Year ended March 2012 Transactions (m) Net revenue £m • Strong transaction growth, up 24% • Net revenue growth of 8%* • Positioning attracting wide range of 9.7 merchants 73 59 – management information and fraud screening tools 8.9 • Transaction volumes growing from UK 2011 2012
Slide 31: Romania retail network
Appendix 2 Romania retail network Year ended March 2012 • Recreating UK retail success in strong cash based Group net revenue economy (22m population) 4% • Retail network handling household bill payments and mobile phone top-ups – 6,730 terminals and growing – Bill payment growing strongly (56%) – M
Slide 32: Romania retail network
Appendix 2 Romania retail network Year ended March 2012 Transaction Volume (000) • Business now profitable 18,870 • Strong growth in bill payment volume (over 9% share 12,102 of existing client volumes by year end) • Small growth in mobile top-up volume as we extend our retail network 4,730 5,123 20
Slide 33: PayByPhone
Appendix 2 PayByPhone Year ended March 2012 Group net revenue 4% • Leader in mobile phone payments for parking in the UK, France, USA and Canada • Mobile payment capability is central to PayPoint’s payment hub strategy • Drives increased revenue at lower cost for parking operators 2011 2012 – Westmi
Slide 34: PayByPhone
Appendix 2 PayByPhone Year ended March 2012 • Continued development: Transaction volume 000 UK and France North America – Apps launched on iPhone, BlackBerry and Android 5,713 – Cash payment launched in the UK 4,172 – NFC deployment – Improved SMS registration for 11,593 consumers 9,900 – Toll payme
Slide 35: Collect+
Appendix 2 Collect+ Year ended March 2012 2011 2012 • Transforming home shopping fulfilment for consumers Collect+ at 100% Transactions (m) 1.1 3.8 • Joint venture with Yodel to service fast growing Collect+ net revenue (£m) 0.6 2.6 e-commerce / mail order (B2C) opportunities • Collect+ provides B2C
Slide 36: Collect+
Appendix 2 Collect + • Strong growth in underlying market driven by online shopping – Small packet (<2kg) delivery service launched to further widen market potential • Strong interest across online retailing community – 11 new clients signed since year end • C2C proposition launched (store to door)
Slide 37: Financial review
Appendix 3 Financial review 37
Slide 38: Established & developing business streams
Appendix 3 Established & developing business streams Established Developing Adjust As business1 business2 Total Collect+3 reported Transactions million 2012 618 41 659 - 659 2011 559 31 590 - 590 Transaction value £million 2012 11,682 438 12,120 - 12,120 2011 10,316 285 10,601 - 10,601 Revenue £000
Slide 39: Revenue and net revenue bridge
Appendix 3 Revenue and net revenue bridge Revenue Net revenue £000 £000 2011 193,233 82,723 Bill and general 5,101 2,573 Top-ups (4,393) 73 Retail services 4,057 3,017 Internet 731 731 PayByPhone 250 275 Other 1,050 1,050 2012 200,029 90,442 39
Slide 40: Revenue and net revenue bridge
Appendix 3 Increase in bill and general Revenue and net revenue bridge Improved transaction volume in UK prepaid energy and bill payment volume in Romania Revenue Net revenue Decrease in top-ups £000 £000 THL volume wholly offsetting the continuing decline driven by 2011 193,233 82,723 operators’ pr
Slide 41: Revenue to net revenue
Appendix 3 Revenue to net revenue 2012 2011 Favourable Years ended March £000 £000 / (adverse) Revenue 200,029 193,233 3.5% Agent commission (69,541) (71,322) (2.5)% Mobile top-ups and SIM cards (38,579) (37,696) 2.3% Other (1,467) (1,492) 1.7% Net revenue 90,442 82,723 9.3% 41
Slide 42: Revenue to net revenue
Appendix 3 Agent commission £000 Revenue to net revenue 2011 71,322 Bill and general 2,529 2012 2011 Favourable Years ended March Top-ups (5,285) £000 £000 / (adverse) Revenue 200,029 193,233 3.5% Retail services 975 Agent commission (69,541) (71,322) (2.5)% 2012 69,541 Mobile top-ups and SIM cards
Slide 43: Costs
Appendix 3 Costs 2012 2011 Favourable Years ended March £000 £000 / (adverse) Net revenue 90,442 82,723 9.3% Depreciation/amortisation (3,333) (3,612) 7.7% Other cost of sales (8,858) (8,445) (4.9%) Operating costs (39,385) (34,614) (13.8%) Operating profit 38,866 36,052 7.8% 43
Slide 44: Costs
Appendix 3 Costs UK terminal estate and ATMs 2012 2011 Favourable becoming fully depreciated. New Years ended March ATM commissioned. £000 £000 / (adverse) Net revenue 90,442 82,723 9.3% Depreciation/ amortisation (3,333) (3,612) 7.7% Other cost of sales (8,858) (8,445) (4.9%) Operating costs (39,38
Slide 45: Profit
Appendix 3 Profit 2012 2011 Favourable Years ended March £000 £000 / (adverse) Operating profit 38,866 36,052 7.8% Share of loss on JV (1,828) (1,541) (18.6%) Interest 163 (55) Profit before tax 37,201 34,456 8.0% Tax (10,262) (10,614) 3.3% Profit after tax 26,939 23,842 13.0% 45
Slide 46: Cash flow
Appendix 3 Cash flow Years ended March 2012 2011 £000 £000 Profit before tax 37,201 34,456 Add back non cash items 6,110 6,296 Changes in working capital 37 1,384 Capital expenditure (5,263) (3,160) Bank loan - (6,000) Tax paid (10,448) (10,950) Acquisition, investment and joint venture loan (1,750)
Slide 47: Cash flow
Appendix 3 Cash flow Non cash items 000 Depreciation 3,085 Years ended March 2012 2011 Loss on joint venture 1,828 £000 £000 Share based payments 1,112 Profit before tax 37,201 34,456 Amortisation 248 Add back non cash items 6,110 6,296 Changes in working capital 37 1,384 Other (163) Capital expendi
Slide 48: Five year trading record
Appendix 4 Five year trading record 48
Slide 49: Five year trading record
Appendix 4 Five year trading record Years ended March 2012 2011 2010 2009 2008 £m £m £m £m £m Transactions 659.1 589.7 551.9 544.6 503.3 Revenue 200.0 193.2 196.6 224.4 212.1 Net revenue(1) 90.4 82.7 77.4 77.4 69.9 Net revenue per transaction(1,2) 13.7p 14.0p 14.0p 14.2p 13.9p Costs (3) (50.0) (44.3
Slide 50: Five year cash flow
Appendix 4 Five year cash flow Years ended March 2012 2011 2010 2009 2008 £m £m £m £m £m Operating profit 38.9 36.0 34.1 33.7 29.2 Adjustments for depreciation and amortisation 3.3 3.6 4.8 5.7 5.7 Share based payment reserve 1.1 1.1 0.9 0.8 1.1 Operating cash flows before movements in working 43.3 4
Slide 51: Balance sheet
Appendix 4 Balance sheet Years ended March 2012 2011 2010 2009 2008 £m £m £m £m £m Non-current assets Goodwill 56.1 57.1 56.9 27.6 27.4 Other intangilble assets 2.3 1.3 1.4 2.0 2.7 Property, plant and equipment 15.2 14.5 14.8 16.1 13.5 Deferred tax asset 0.9 1.0 1.2 1.6 1.6 Investment 0.5 0.6 0.7 0.
Slide 52: Materials to support the consumer transaction
Appendix 5 Materials to support the consumer transaction 52
Slide 53: UK Retail: Client payment media
Appendix 5 UK Retail: Client payment media 53
Slide 54: UK Retail: Retailer external signage
Appendix 5 UK Retail: Retailer external signage 54
Slide 55: UK Retail: PPOS merchandising
Appendix 5 UK Retail: PPOS merchandising 55
Slide 56: UK Retail: Terminals and ATMs
Appendix 5 UK Retail: Terminals and ATMs 56
Slide 57: UK Retail: Terminal / PPOS receipts
Appendix 5 UK Retail: Terminal / PPOS receipts E-TopUp Sample SPAR Tag E Voucher Utility Payment Transport Ticketing 57
Slide 58: UK Retail: PPOS virtual terminal
Appendix 5 UK Retail: PPOS virtual terminal 58
Slide 59: PayByPhone: Parking payment: IVR, SMS, mobile web
Appendix 5 PayByPhone: Parking payment: IVR, SMS, mobile web PAGE 59 PAGE 59 59
Slide 60: www.collectplus.co.uk
Appendix 5 www.collectplus.co.uk 60
Slide 61: www.collectplus.co.uk – Parcel delivery
Appendix 5 www.collectplus.co.uk – Parcel delivery 61
Slide 62: www.collectplus.co.uk – Parcel returns
Appendix 5 www.collectplus.co.uk – Parcel returns 62
Slide 63: Collect+: UK Network
Appendix 5 Collect+: UK Network (4,721) • Target network density - 1 Mile urban - 5 Mile rural 4,721 locations live 63
Slide 64: PayCash – merchant's website
Appendix 5 PayCash – merchant’s website 64
Slide 65: PayCash – consumer voucher
Appendix 5 PayCash – consumer voucher 65