Paypoint Plc · LSE:PAY
Paypoint — H1 2008/09 Earnings Presentation
42 slides from Paypoint's earnings presentation, Nov 20, 2008
Slide 1: PayPoint plc Interim Results Presentation
PayPoint plc Interim Results Presentation 20 November 2008 Strictly private and confidential 1
Slide 2: Agenda
Agenda • Highlights and operations review • Financial review • Summary • Q&A • Closing 2
Slide 3: Highlights and operations review
Highlights and operations review Dominic Taylor Chief Executive 3
Slide 4: PayPoint overview
PayPoint overview • Strong half year’s performance, driven by a combination of steady revenue growth (8%)* and operational gearing (40% operating margin) • Results driven through implementation of PayPoint’s core business strategy, namely: – broadening our customer proposition by increasing the rang
Slide 5: PayPoint overview
PayPoint overview Our investment in the business continues • Two internet companies integrated successfully as a single business, PayPoint.net • Launched bill payment in Romania • Increase in all sites – Terminal estate in the UK and Ireland increased by 9% – Romania terminal estate increased by 31%
Slide 6: PayPoint highlights
PayPoint highlights For the six months ended September each period Transaction volume (million) Net revenue (£million) 300 40 35 250 30 200 25 150 20 15 100 10 50 5 - - 1 1 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 6 The comparative figures for 2007 have been adjusted to 26 weeks 1
Slide 7: PayPoint highlights
PayPoint highlights For the six months ended September each period Operating profit (£million) PayPoint terminal outlets 16 30,000 UK & Ireland Romania 14 25,000 12 20,000 10 8 15,000 6 10,000 4 5,000 2 0 - 1 1 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 7 The comparative figures for 2007 have
Slide 8: Trading in today's economic climate
Trading in today’s economic climate • PayPoint’s business model is one that … – is based on recurring revenue streams – drives strong retail and client loyalty – is differentiated through a broad product offering – drives good operational gearing and cashflows • Majority of PayPoint transactions rel
Slide 9: Operations review
Operations review For the six months ended September each period Transaction volumes by sector (million) 300 250 General Mobile ATM PP.net 200 150 100 50 - 1 1 2004 2005 2006 2007 2008 9 The comparative figures for 2007 have been adjusted to 26 weeks 1
Slide 10: Bill and general payments
Bill and general payments • Improved coverage, high quality of the retail network and signage/brand awareness are increasing share • Increases in domestic gas and electric prices have helped prepaid energy volumes grow by 13% on a like for like basis • Continued growth as E.ON and British Gas roll o
Slide 11: Bill and general payments
Bill and general payments … Bill payment volumes* (millions) 60 Energy Water 50 Communications Other 40 30 20 10 - 1 2004 2005 2006 2007 2008 * excludes prepaid energy and transport 11 The comparative figures for 2007 have been adjusted to 26 weeks 1
Slide 12: Bill and general payments
Bill and general payments … Bill payment volumes (millions) - exc BBC 40 Other Communications 35 Water 30 Energy 25 20 15 10 5 - 2004 2005 2006 2007 2008 12 The comparative figures for 2007 have been adjusted to 26 weeks 1
Slide 13: Mobile payments
Mobile payments • UK volumes down overall (c.2%) with evidence of reduced consumer spending and networks offering more free airtime • PayPoint UK volumes are down 1% on a like-for-like basis lower than the market decrease as we have installed nearly 900 extra terminals but revenue is up by 3% on a l
Slide 14: ATMs
ATMs • Surcharge self replenishment model remains successful – low fixed costs • Installed 238 new sites in the first six months, net increase 149 (25 per month), to achieve a network size of 2,165 • Decrease of 2% in the number of transactions processed by self- fill independent ATM deployers • Our
Slide 15: ATMs
ATMs … ATM Sites 2,400 2,000 1,600 1,200 800 400 0 Sept 03 Mar 04 Sept 04 Mar 05 Sept 05 Mar 06 Sept 06 Mar 07 Sept 07 Mar 08 Sept 08 15
Slide 16: ATMs
ATMs Average Monthly Transactions by Independent ATM Deployer Self-Fill Model 700 PayPoint 600 500 Self-fill competitors 400 300 200 100 0 April 07 May 07 June 07 July 07 Aug 07 Sept 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 June 08 July 08 Aug 08 Sept 08 16
Slide 17: Retail (UK & Ireland)
Retail (UK & Ireland) • 20,772 PayPoint terminal Terminal site outlets (September 2008) Epos only site ATM site • Rolled out over 1,518 (net 894) agents in 6 months • Continuing to rollout agents to 21,350 target by year end • Continued strong demand with churn remaining at 6%pa 17
Slide 18: PayPoint's value to retailers
PayPoint’s value to retailers • Bill pay consumers visit store >25% more frequently than normal shoppers • 82% retailers believe footfall benefit is either ‘very good’ or ‘fairly good’ • Bill pay consumer spends 172% more per week than normal shopper (excluding bill value) • PayPoint facility increa
Slide 19: Romania
Romania • All transactions now processed on UK host • Relationships with all mobile operators – leading migration from scratch to electronic • Bill Payment launched with four founding clients in August • Second phase of four clients to go live this year • Continued investment and knowledge transfer
Slide 20: PayPoint in Romania
PayPoint in Romania 20
Slide 21: PayPoint.net (Internet payments)
PayPoint.net (Internet payments) • Business now trading as one company in a growing market Total UK Online Sales 6 Monthly 5.5 5 4.5 £ billion 4 3.5 2008 3 2007 2.5 2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 21 Source IMRG/Cap Gemini
Slide 22: PayPoint.net
PayPoint.net • Transactions up 46% as 303 new merchants added • Cross sell internet business to PayPoint’s existing clients Monthly growth rates • New tenders drawing on % growth in on-line sales 08 v 07 combined cash 80% and web payment 70% offers 60% 50% • PayCash now 40% launched PayPoint.net all
Slide 23: PayCash – merchant's website
PayCash – merchant’s website 23
Slide 24: PayCash – consumer voucher
PayCash – consumer voucher 24
Slide 25: Continued differentiation
Continued differentiation • Maintain leadership in retail point of sale technology – most advanced terminal – enhanced Epos integration – broadband opportunity – contactless payment devices • Strength of branded retail network a key asset in driving new products • Internet differentiation centres on
Slide 26: Financial review
Financial review George Earle Finance Director 26
Slide 27: Volume driven top line growth
Volume driven top line growth £000s H1 08/09 H1 07/08 % like for increase like % increase Revenue 109,341 103,950 5% 9% Cost of sales 80,931 76,645 6% 9% Gross profit 28,410 27,305 4% 9% Margin 26% 26% Margin excluding top-ups 36% 35% as principal 27
Slide 28: Volume growth
Volume growth £000s H1 08/09 H1 07/08 % increase Revenue 109,341 103,950 5% Cost of sales 80,931 76,645 6% Gross profit 28,410 27,305 4% Margin 26% 26% Revenue £000s H1 06/07 103,950 Volume 4,577 Mix/price (277) PP.net and Pay Store 524 Other 567 H1 07/08 109,341 28
Slide 29: Cost of sales
Cost of sales £000s H1 08/09 H1 07/08 % increase Revenue 109,341 103,950 5% Cost of sales 80,931 76,645 6% Gross profit 28,410 27,305 4% Margin 26% 26% Cost Costofofsales sales H1 H108/09 05/06 H1 H107/08 04/05 £000s £000’s £000s £000’s Commissions Commissionspaid paid 41,235 29,073 41,463 22,913 De
Slide 30: Operational gearing remains strong
Operational gearing remains strong % like for £000s H1 08/09 H1 07/08 like % increase increase Net revenue 35,561 34,181 4% 8% Operating profit 14,166 13,946 2% 11% Operating margin 40% 41% -1ppts Interest 1,138 543 Profit before tax 15,304 14,489 6% 15% Tax (4,475) (4,353) Profit after tax 10,829 1
Slide 31: Operating costs under control
Operating costs under control £000s H1 08/09 H1 07/08 % increase Net revenue 35,561 34,181 4% Operating profit 14,166 13,946 2% Interest 1,138 543 Profit before tax 15,304 14,489 6% Tax (4,475) (4,353) Profit after tax 10,829 10,136 7% Operating profit £000s H1 07/08 13,946 Increase in gross profit
Slide 32: Strong cash flow
Strong cash flow Six months to 30 September 2008 2007 £000s £000s Operating cash flow before movements in working capital 17,756 16,666 Change in working capital# 660 (2,465) Operating cash flow 18,416 14,201 Capital expenditure (2,097) (1,801) Net investment income 1,016 549 Corporation tax paid (5
Slide 33: Net cash of £28m
Net cash of £28m Six months to 30 September 2008 £000s Net cash at start (including client cash* £8.0 million) 27,727 Cash inflow 12,261 Dividends (7,024) Acquisition of Pay Store (2,109) Purchase of own shares (2,489) Other (142) Net cash at end (including client cash* £8.0 million) 28,224 * 33 Cli
Slide 34: Summary & outlook
Summary & outlook • Robust business model with recurring revenues • Core business continues to deliver strong profitable growth through implementation of strategy • Romania terminal rollout to continue as platform for growth in mobile top ups and bill payments • PayPoint.net focused on growth, enhan
Slide 35: Q&A
Q&A 35
Slide 36: Materials to support the consumer transaction
Appendix 1 Materials to support the consumer transaction 36
Slide 37: Client payment media
Appendix 1 Client payment media 37
Slide 38: Retailer external signage
Appendix 1 Retailer external signage 38
Slide 39: POS merchandising
Appendix 1 POS merchandising 39
Slide 40: Terminals and ATMs
Appendix 1 Terminals and ATMs 40
Slide 41: Terminal receipts
Appendix 1 Terminal receipts E-TopUp Sample SPAR Tag E Voucher Utility Payment Transport Ticketing 41
Slide 42: PSP transaction flow
Appendix 1 PSP transaction flow 42