Paypoint Plc · LSE:PAY
Paypoint — FY2021 Earnings Presentation
34 slides from Paypoint's earnings presentation, May 27, 2021
Slide 1: Results for the year ended 31 March 2021
Nick Wiles, Chief Executive Alan Dale, Finance Director 27 May 2021
Slide 2: Agenda
2 1 Overview 2 Structural changes & Covid-19 3 Strategy update 4 Financial review 5 Operational review 6 Investment case Results for the year ended 31 March 2021
Slide 3: Strategic, Financial, Operational highlights
3 Strategic Financial Operational • Step change in strategic • Net revenue from continuing • Major client relationship delivery whilst delivering a operations of £97.1m, down 9.1%, renewal programme complete solid financial performance driven by impact of Covid-19 on bill with accelerated expansion
Slide 4: Ofgem Statement of Objections
4 • On 30 September 2020, we announced that we had received a Statement of Objections from Ofgem setting out its provisional views that PayPoint infringed competition law through entering into certain contractual terms with certain energy suppliers that confer exclusivity to PayPoint for the provisi
Slide 5: Structural changes and Covid-19
Structural changes and Covid-19
Slide 6: Need to reposition the business
6 Going into the 2020/21 financial year, management recognised the need to reposition the business in response to the impact of structural changes in our traditional legacy markets and the Covid-19 pandemic. In addition to the full year impact from the loss of the British Gas contract (£3.8m), the b
Slide 7: Strategic response to structural changes
7 • Strengthen our relationships and broaden our digital payments solutions for our core energy clients • Broaden our digital payment offer and capabilities into non-energy sectors, including housing and local authorities • Expand our cash through to digital payment capabilities and proposition, thr
Slide 8: Transactions by service and Covid-19 impact
8 Q1 20/21 vs 19/20 Q2 20/21 vs 19/20 Q3 20/21 vs 19/20 Q4 20/21 vs 19/20 Transactions by service % increase/ % increase/ % increase/ % increase/ (decrease) (decrease) (decrease) (decrease) UK bill payment1 (25.0%) (18.7%) (25.3%) (23.7%) UK mobile top-up (20.0%) (19.0%) (16.9%) (16.6%) UK eMoney 12
Slide 9: Strategy update
Strategy update
Slide 10: PayPoint Group Overview
10 PayPoint Group We deliver innovative services and technology connecting millions of Overview consumers with over 60,000 retailer partner and SME locations Divisions Payments and Banking Shopping E-commerce Macro Trends Cash through to digital Shop local E-commerce explosion Sustainable, essential
Slide 11: Strong portfolio of brands within PayPoint Group
11 Strong portfolio of brands within the PayPoint Group, supporting our clients and retailer partners with innovative solutions and product offerings, across different sizes of network Results for the year ended 31 March 2021 *Projected
Slide 12: Financial review
Financial review
Slide 13: Financial results summary
13 2021 2020 Year ended 31 March (Restated)1 £m £m Change Revenue from continuing operations 127.7 144.3 (11.5%) Net revenue from continuing operations2 97.1 106.8 (9.1%) See slide 15 Operating margin from continuing operations3 38.0% 47.2% (9.2ppts) Profit before tax from continuing operations4 19.
Slide 14: Underlying profit before tax bridge
14 £57m (19.3%) (£6.8m) £52m (£3.8m) £47m (£2.1m) £1.5m £42m (£9.9m) £37m £56.8m £0.5m (£0.7m) £50.0m £32m £46.2m £44.1m £44.1m £27m (£16.1m) £35.7m £35.5m £35.5m £22m £19.4m £17m PBT 19/20 Romania Continuing British Gas Variable Pay Underlying UK retail UK bill Acquisitions Costs Underlying Excepti
Slide 15: Net revenue by service
15 Year ended 31 March 2021 2020 (restated1) Change % Continuing operations £m £m £m Change UK bill payments and top-ups 52.1 62.0 (9.9) (16.0%) - UK bill payments (Excl MultiPay & British Gas) 30.9 41.4 (10.5) (25.3%) - MultiPay 4.2 4.4 (0.2) (6.8%) - UK top-ups (Excl eMoney) 8.3 9.3 (1.0) (10.4%)
Slide 16: Costs and exceptional items
16 £58.9m total £59.5m total costs 20203 Third costs 2021 Third party party costs Exceptional items £’m costs D&A £21.5m1 D&A £21.5m2 Ofgem provision 12.5 £8.7m £10.1m Acquisition costs 2.8 People People Refinancing costs 0.8 £28.7m £27.9m Total 16.1 80 £m 75 70 +1.1% £16.1m 65 £77.6m 60 £2.0m (£1.5
Slide 17: Cash generation and cash flow
17 2021 2020 (continuing (continuing Year ended 31 March operations) operations) 2021 2020 £m £m £m £m Profit before tax 19.4 50.0 27.0 56.8 Depreciation and amortisation 10.5 8.7 10.9 9.5 Share based payments / other 1.0 - 1.0 - Exceptional item – Ofgem provision 12.5 - 12.5 - Working capital (Corp
Slide 18: Balance sheet
18 Mar 2021 Mar Mar (adjusted for Romania sale) 2021 2020 £m £m £m Goodwill 51.6 51.6 11.9 Other intangible assets 41.7 41.7 17.3 Net investment in finance lease receivables 6.5 6.5 - Property, plant & equipment 21.4 21.4 24.8 Cash held as clients’ funds and retailers’ deposits 28.4 28.4 35.7 Net as
Slide 19: Dividend and Financing
19 Dividend Financing • Dividend policy • Net debt increase to £68.2m reflecting the ‒ cover ratio of 1.2 to 1.5x, consistent with investments in Handepay and i-movo policy announced at FY in May 2020 • Refinancing undertaken during the year for a £32.5m 3 year term loan and £75m revolving credit fa
Slide 20: Financial summary and outlook
20 • Step change in strategic delivery whilst delivering a solid financial performance against the backdrop of structural changes to our legacy markets and the impact of Covid-19 • Strategic repositioning of the business for growth driven through acquisitions of Handepay/Merchant Rentals, i-movo, RS
Slide 21: Operational review
Operational review
Slide 22: Embed PayPoint at the heart of Convenience Retail
22 1. Embed PayPoint at the heart of Convenience Retail Our offering • Provision of digital solutions, technology, payment services and increased 31 Mar 21 31 Mar 20 footfall for retailers – average basket spend £10.20 (vs. £7.46 average1) Sites 17,805* 16,098 20/21 FY Progress PayPoint One EPoS Bas
Slide 23: Become the definitive parcel solution
23 2. Become the definitive parcel solution Our offering Collect+ is our technology-based platform to deliver best-in- class customer journeys for e-commerce brands and their customers over the ‘first and last mile’, supported by a network of over 10,000 sites Leading e-commerce partners: eBay,
Slide 24: Sustain leadership in pay as you go OTC and grow digital bill payments
24 3. Sustain leadership in ‘pay as you go’ OTC and grow digital Bill Payments Our offering New client sector mix 2020/21 Growing digital payment capability through our MultiPay platform 3% Over-the-counter payments proposition maintaining vital access Energy 3% 5% 5% to cash in over 28,000 site
Slide 25: Banking and eMoney operational progress
25 Completed November 2020 Completed February 2021 Completed February 2021 • Delivered innovative cash • Transaction value processed • Strong lease book with Lloyds deposit & withdrawal solution in February and March 2021 of Cardnet and Handepay to support Access to Cash £401.3m continues to grow •
Slide 26: Building a delivery focused organisation and culture
4. Building a delivery focused organisation and culture 26 20/21 FY Progress ‒ Good progress on integration of Handepay, Merchant Rentals and i-movo acquisitions, with work well underway for RSM2000 acquisition completed on 12 April 2021 ‒ Executive Board strengthened to deliver growth and focus on
Slide 27: Investment case
Investment case
Slide 28: Strong portfolio of brands within the PayPoint Group
28 Strong portfolio of brands within the PayPoint Group, supporting our clients and retailer partners with innovative solutions and product offerings, across different sizes of network Results for the year ended 31 March 2021 *Projected
Slide 29: Strategic priorities and business divisions
29 Business Strategic Priority Macro Trend Division Embed PayPoint Group at the heart of 1 SME and convenience retail businesses Shopping Shop local Become the definitive technology- E-commerce 2 based e-commerce delivery platform for E-commerce explosion first and last mile customer journeys Sustai
Slide 30: Embed PayPoint Group at the heart of SME and convenience retail
1. Embed PayPoint Group at the heart of SME and convenience retail businesses 30 Enhancing retailer proposition and driving value from acquisitions Retail Services • Embed the combined and restructured sales teams across PayPoint, focused on new business and retailer relationship development • Deliv
Slide 31: Become the definitive e-commerce delivery platform
2. Become the definitive technology-based e-commerce delivery platform for first and last mile customer journeys 31 Delivering best-in-class e-commerce customer journeys E-commerce • Scale Send service in H1 21/22, supported by significant marketing investment plan • Add further partners in 2021 in
Slide 32: Sustain leadership in pay as you go and grow digital payments
3. Sustain leadership in ‘pay as you go’ and grow digital payments 32 Enhancing digital capability and diversifying into new sectors Digital payments • Leverage RSM 2000 acquisition with enhanced digital payments capability and new sector reach • Invest in new verticals and deliver new business wins
Slide 33: Building a delivery focused organisation and culture
4. Building a delivery focused organisation and culture 33 Delivering sustainable synergies, growth and value PayPoint Group • Deliver synergies and growth opportunities through integrating acquisitions of Handepay, Merchant Rentals, i-movo and RSM2000 • Embed new PayPoint Group purpose and values a
Slide 34: Results for the year ended 31 March 2021
34 Results for the year ended 31 March 2021