TIDMPAY
PayPoint plc
Results for the six months to 30 September 2019
Financial HIGHLIGHTS
Six months to Six months to
30 September 30 September
2019 2018 Change
------------------------------
Revenue GBP103.7m GBP106.1m (2.3)%
Net revenue(1) GBP57.3m GBP55.6m 3.0%
Operating margin(2) 42.1% 45.8% (3.7)ppts
Profit before tax GBP24.0m GBP25.3m (5.2)%
Diluted earnings per share 28.5p 30.0p (5.0)%
Cash generation(3) GBP27.1m GBP27.6m (1.8)%
Ordinary dividend per share 23.6p 15.6p 51.6%
Additional dividend per share 18.4p 12.2p 51.1%
Net corporate (debt)/cash(4) GBP(12.3)m GBP0.6m n/m
Cash and cash equivalents GBP40.5m GBP39.4m 3.0%
------------------------------
Good progress against PayPoint's strategic priorities
-- Embed PayPoint at the heart of convenience retail
-- PayPoint One installed in 15,088 sites as at 30 September 2019, an
increase of 2,207 since 31 March 2019 and represents 86% of
PayPoint's independent retailer estate.
-- PayPoint will significantly exceed its original target of 15,800
PayPoint One sites by 31 March 2020 with the legacy terminal
largely retired from the independent retailer estate by that date.
Our new target is 16,500 by 31 March 2020.
-- PayPoint One average weekly service fee per site has grown to
GBP15.5 from GBP15.0 last year and total service fee revenue has
grown by 31.8% to GBP6.3 million versus GBP4.8 million last year.
-- Card payment estate returned to growth, operating in 9,879 sites
as at 30 September 2019 compared to 9,796 sites as at 31 March
2019.
-- Become the definitive parcel point solution
-- Good volumes from new parcel partners delivered a 15.1% growth in
parcel volume.
-- eBay, Amazon, FedEx and DHL now5 integrated into network, 7,000
training sessions held with retailers on new parcel partners
requirements.
-- Collect+ Trust Pilot rating of 4.7 out of 5 maintained,
reconfirming the leading service quality of Collect+.
-- Sustain leadership in 'pay-as-you go' and grow digital bill payments
-- 10 new clients were secured; 11 contracts renewed representing
17.0%6 of UK bill payments and top-ups annual net revenue. Renewed
clients include Utilita and Paysafe.
-- Continued strong growth in MultiPay with transaction growth of
33.5%; net revenue growth of 32.0%.
-- New direct debit functionality now delivered with a strong
pipeline of clients.
-- Romania performed well, maintaining its market leadership position
with good growth in net revenue from margin improvement.
-- Innovate for future growth and profits
-- Parcel mobile app now fully functional with parcel inventory management,
character recognition and predictive text features.
-- Organisation and service delivery
-- Introduced call quality monitoring, improved first contact
resolution by 10ppts.
-- Bringing terminal repairs in-house reduced run rate costs by
cGBP0.8 million p.a. and terminal swap rates by 57%, significantly
improving the quality of service to our retailers.
Financial highlights
-- Net revenue of GBP57.3 million was up by 3.0% on a reported basis and up
4.0% on an underlying basis, which excludes the GBP0.5 million final year
impact from the Yodel renegotiation.
-- Underlying net revenue growth was driven by strong performance in UK
service fee revenue (up by 31.8%) Romania (up by 6.2%) and a resilient
performance in UK bill payments and top-up businesses which were up by
GBP0.2 million (0.7%).
-- Costs of GBP33.2 million7 represent a GBP3.0 million increase from the
prior period (GBP30.2 million). Excluding a one-off benefit in the prior
period of GBP1.7 million from improved VAT recovery, costs increased by
GBP1.3 million, reflecting investment into additional resources to
integrate new parcel partners into the network and in the contact centre
to further improve customer service.
-- Profit before tax of GBP24.0 million was GBP1.3 million below prior year.
Excluding the one-off VAT recovery benefit of GBP1.7 million and GBP0.5m
Yodel impact in the prior year, underlying8 profit before tax was up
GBP0.9 million (4.0%).
-- Continued strong cash conversion with GBP27.1 million cash generated9
from profit before tax of GBP24.0 million.
-- Net corporate debt of GBP12.3 million reflects cash balances of GBP5.7
million less GBP18.0 million financing facility usage.
-- Ordinary interim dividend of 23.6 pence per share and an additional
interim dividend of 18.4 pence per share declared. The total dividend of
42.0 pence per share will be paid in equal instalments of 21.0 pence per
share on 30 December 2019 and 9 March 2020.
Nick Wiles, Executive Chairman of PayPoint plc, said:
"I'm pleased with the progress PayPoint has made over the past six
months as continued execution against our stated strategic priorities
has seen the business deliver net revenue growth of 3.0% and underlying
profit before tax growth(10) of 4.0%.
The roll out of PayPoint One has continued at pace, expanding to
15,922(11) sites. The strong momentum we have seen means PayPoint is set
to exceed its original target of 15,800 PayPoint One sites by 31 March
2020. Our new target for that date is now(5) 16,500 and will mean we
have largely retired our legacy terminal from the UK independent
retailer estate by 31 March 2020. Service fee revenue grew by 31.8% in
the period and is now the largest net revenue contributor in our UK
retail services business. We will invest further into our platform in
the second half to drive further expansion of EPoS features, ensuring
ongoing delivery of benefits to our retailers and more widely into the
convenience sector.
In parcels, our new partnerships with eBay, Amazon, FedEx and DHL are
now delivering good volumes driving overall parcel volume growth of
15.1% in the first half. There has also been a strong focus on
operational excellence whilst onboarding our new partners. We also saw a
resilient performance in our bill payments and top-up business, with
energy transactions higher than the same period last year, delivering
increased net revenue.
Ben Wishart was appointed as an independent non-executive director of
the Company with effect from 14 November 2019. Ben will serve as a
member of the nomination and remuneration committees together with the
audit committee and its sub-committee, the Cyber & IT Committee.
Whilst the financial performance of the business will be influenced by
parcel volumes and continued resilience in UK bill payments over the
second half, the progress of the business during the first half,
reported today, underpins the Board's confidence that as PayPoint's
growth drivers continue to develop, there will be progression in profit
before exceptional items and tax for the full financial year to 31 March
2020."
Enquiries
PayPoint plc Finsbury (Tel: 0207 2513 801)
Nick Wiles, Executive Chairman (Tel: 01707 600 317) Rollo
Head
Rachel Kentleton, Finance Director (Tel: 07843 074 906) Andy
Parnis
A presentation for analysts is being held at 9.30am today (28 November
2019) at Canaccord Genuity Limited, 88 Wood Street, London, EC2V 7QR.
This announcement is available on the PayPoint plc website:
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corporate.paypoint.com
EXECUTIVE CHAIRMAN'S REVIEW
In the first six months of the year, PayPoint delivered a financial
performance in line with the Board's expectations and continued to make
good progress executing its strategic priorities. PayPoint One is
now(12) in over 86% of PayPoint's independent retail estate which
ensures we are in a strong position to drive future growth
opportunities. Our new parcel partners have begun to deliver volumes
through their increased presence in our network and Romania delivered a
good result with further margin improvements.
We continued to work towards achieving a good balance between taking
actions to deliver results for the current financial year against
appropriate positioning of the business for the longer term.
Net revenue of GBP57.3 million increased by GBP1.7 million (3.0%) on a
reported basis and included the GBP0.5 million impact from the final
year impact of the revised Yodel commercial terms. Net revenue growth
was achieved across all of our businesses with UK retail services up by
GBP1.0 million (5.7%), UK bill payments and top-ups up by GBP0.2 million
(0.7%) and Romania up by GBP0.5 million (6.2%).
There was also a continued focus on delivering sustainable cost
efficiencies. In the first half we extended in-house terminal repairs to
PPoS and PayPoint One terminals. We have now secured GBP0.8 million of
annual savings from bringing terminal repairs in-house, which has
significantly improved the quality of repairs, reduced swap levels by
57% and enhanced customer service. Microsoft NAV was also installed as
the new Enterprise Resource Planning ('ERP') system resulting in
automation of reports and processes. There will be an ongoing
integration programme extending these benefits further into the
organisation.
Profit before tax of GBP24.0 million was a reduction of GBP1.3 million
from GBP25.3 million for the same period last year, although the prior
period included a one off GBP1.7 million benefit from improved VAT
recovery. Underlying profit before tax, which excludes this one-off
benefit and the Yodel renegotiation, improved by 4.0%. Diluted earnings
per share was 28.5 pence for the six-month period to 30 September 2019
(September 2018: 30.0 pence).
An interim ordinary dividend of 23.6 pence per share and an additional
interim dividend of 18.4 pence per share have been declared. The total
dividend of 42.0 pence per share will be paid in equal instalments of
21.0 pence per share on 30 December 2019 and 9 March 2020.
As announced on 26 September 2019, Chief Executive, Patrick Headon, has
taken a temporary leave of absence from the Company to receive treatment
for a medical condition for approximately three months. The Company's
Chairman, Nick Wiles is acting as Executive Chairman to support the
Executive team during this period.
MARKET OVERVIEW
Changing market dynamics are creating significant opportunities for
PayPoint. Consumer demand for convenience and immediacy are shaping the
markets in which PayPoint operates in, and disruption by challenges in
energy and banking sectors is creating exciting opportunities for
PayPoint's offering.
Key trends and changes since the end of the 18/19 financial year in the
UK markets in which PayPoint operates include:
-- Convenience
-- Total convenience sector sales growth expected to be 3% and reach
over GBP41.7bn in 201913.
-- Total UK convenience stores were stable at 46,00014, with
multiples and symbols gaining marginal market share.
-- 50% of independent retailers have an EPoS system which, on average,
costs cGBP20 per week.
-- Card payments
-- Total UK card payment transactions increased by 7.8%15.
-- Contactless payments increased by 19.4%4.
-- Average transaction values declined by 6.6%4.
-- ATMs
-- LINK's ATM transactions declined by 7.3% to c1.3 billion
transactions16 and the number of ATMs in the UK reduced by 1,200
sites since December 2018 to 61,961 in June 20195.
-- On 1 April 2019, LINK introduced additional premiums for ATM
operators where eligible ATMs provide access to cash in deprived
areas under the Financial Inclusion Programme17.
-- Parcels
-- UK parcel volume declined by 5.6%18, expectation remains that
there will be long term growth.
-- The click and collect market is set to rise 45.8% over the next
four years to reach GBP9.8bn by 202319.
-- Returns market is c185 million parcels per year. 37% of consumers
returned delivered items in the six months to February 2019, an
increase of 7 ppts year-on-year since 201820.
-- Bill and digital payments
-- Challenger energy providers (i.e. non-big six) combined market
share continued to grow and is now at c28%21 of the overall
market.
-- Rollout of smart meters has slowed by c20% to 1m per quarter22.
New proposed roll out deadline set to 31 December 2024 for a
minimum smart meter coverage level of 85% for each energy
provider23.
-- Mobile pre-pay subscribers reduced by 6% in 2018 to 25.9
million24.
PROGRESS AGAINST OUR STRATEGIC PRIORITIES
PayPoint's strategy is to maximise its opportunity in the dynamic
markets in which it operates by leveraging its leading retailer network,
scalable technology and payments platform. The strategy is executed
through the following four key priorities:
1. Embed PayPoint at the heart of convenience retail.
2. PayPoint becomes the definitive parcel point solution.
3. Sustain leadership in 'pay-as-you-go' and grow digital bill payments.
4. Innovate for future growth and profits.
Progress against these priorities is set out below.
1. PRIORITY 1: EMBED PAYPOINT AT THE HEART OF CONVENIENCE RETAIL
PayPoint will continue to provide and develop new products and services
which enhance our retailers' offer to their customers and help them
operate their businesses more effectively. Core to this priority is
PayPoint One, which includes EPoS and bill payment functionality, and
other products such as card payments and ATMs.
Achievements in the first half of the year
-- Continued roll out of PayPoint One which was in 15,088 sites at 30
September 2019, an, increase of 2,207 since 31 March 2019. As at 25
November 2019, PayPoint One was in 15,922 sites. Our original target of
15,800 sites by 31 March 2020 will be exceeded with a new revised target
of 16,500:
-- 86%25 of PayPoint's independent retailers are now26 using PayPoint
One. Retirement of the legacy terminal from the UK independent
retailer estate will be completed by the end of financial year
19/20.
-- Average weekly revenue per site increased to GBP15.5 (2018:
GBP15.0) largely as a result of the annual price indexation. EPoS
Pro was in 824 sites.
-- Card payment sites returned to growth; increased by 83 since 31 March
2019 to 9,879 at 30 September 2019.
-- Card payment transactions increased by 16.9% to 66.6 million
(September 2018: 57.0 million).
-- Net revenue of GBP4.2 million was 8.3% higher than the same period
last year. The increase in the number of transactions was offset
by lower average transaction values arising from the growth in
contactless payments. The average transaction value was GBP11.83,
a reduction from GBP12.81 achieved in 2018.
-- Operational improvements and new pricing structures have reduced
the card service churn rate by 1.4ppts to 15.9%1 in the period
ended September 2019 compared to 17.3%27 last period.
-- ATM sites were 3,972 at 30 September 2019, an increase of 145 since 31
March 2019.
-- Secured a new significant ATM client and rolled out 132 ATMs to
its leisure centres.
-- PayPoint continued to focus on relocating machines from low
performing sites to better locations. The average monthly
transactions per site per month increased by 0.9% to 885
transactions.
-- ATM transactions declined to 20.7 million (September 2018: 21.4
million). This represents a decline of 3.2%, less than the general
market decline of 7.3%.
-- Net revenue decreased by GBP0.5 million (7.2%) to GBP6.0m,
primarily due to the reduction in LINK interchange fees (5% in
July 2018 and 5% in January 2019).
-- PayPoint was the first to support LINK's new nationwide scheme
which reinstitutes access to free-to-use cash machines in
communities by installing an ATM in Ardington in Oxfordshire in
September.
Priorities for the second half of the year
1. Largely retire the legacy terminal from the independent retailer estate
by the end of this financial year through roll out of PayPoint One to
16,500 sites by 31 March 2020.
2. Ongoing focus on service delivery improvement. As part of this drive we
will hire a new customer services director and will commence development
of a self-service retailer portal.
3. Extend card payment net settlement pilot into the retailer estate.
4. Continued investment into our EPoS platform to allow further expansion of
features and ensure ongoing delivery of benefits to our retailers.
2. PRIORITY 2: PAYPOINT BECOMES THE DEFINITIVE PARCEL POINT SOLUTION
Online retail shopping will continue to grow as retailers enhance their
offering with ongoing improvements in convenience and service delivery
methods. However, deliveries in the "last mile" remain difficult for
carriers who are operating in a competitive low-margin market.
PayPoint's extensive network, which comprises over 7,000 sites, provides
a solution for carriers and retailers, improving service levels for
their customers.
Progress in the first half of the year
-- Rolled out new partners access to the PayPoint network; held over 7,000
training sessions with new and existing retailers on behalf of parcel
partners.
-- Volumes increased to 11.5 million, up 15.1%, from 10.0 million,
reflecting improvement in Yodel volumes and new partner volumes
commencing.
-- Parcel mobile app fully functional with parcel inventory management,
character recognition and predictive text features.
-- Delivered excellent customer service across all new and existing
partners; Collect+ Trust Pilot rating of 4.7 out of 5, reconfirming
Collect+ as the consumers favourite solution.
Priorities for the second half of the year
-- Continued focus on customer and retailer experience with further training
and site visits.
-- Continue to scale partners' access into the network and generate
additional volumes from new partnerships.
-- Development of a send proposition, in preparation for a pilot in
financial year 20/21.
PRIORITY 3: SUSTAIN LEADERSHIP IN 'PAY-AS-YOU-GO' AND GROW DIGITAL BILL
PAYMENTS
UK
Over-the-counter payments will remain an important part of the UK
economy and we will continue to retain our leadership in this market.
This business remains highly cash generative and enables us to invest in
future growth and innovation. We intend to grow our presence in
omni-channel payments by evolving the MultiPay platform offering and
extending beyond the energy sector.
Progress in the first half of the year
-- 10 new clients and 11 existing clients renewed on similar terms,
representing 17.0%28 of our bill payments and top-ups annual net revenue.
-- UK bill payment (including MultiPay) net revenue of GBP22.0 million was
3.9% ahead of the same period in the prior year. Transaction volume
increased by 0.7%, driven by a resilient performance in the energy
sector. Client revenue mix continued to improve, with average net revenue
per transaction increasing to 15.5 pence, up 3.2%.
-- MultiPay's continued strong growth delivered a net revenue increase of
32.0% driven by processing 13.9 million transactions, an increase of
33.5% in the period.
-- Strong growth in eMoney which increased transactions by 0.7 million
(17.0%) to 4.4 million transactions and net revenue by 18.7%.
Priorities for the second half of the year
-- Capture further opportunities within other verticals including housing
associations and local authorities.
-- Development of a PayByLink feature for MultiPay ready for the 20/21
financial year.
-- Maximise cross selling opportunities.
-- Execute well on the established detailed transition plans and process of
the British Gas account. The impact to the financial year ending 31 March
2020 of this contract ending is GBP1.4m. The impact to financial year
ending 31 March 2021, is GBP3.5m.
Romania
Romania is an important growth driver for PayPoint. Its technology
platform, network strength and brand recognition make it uniquely placed
as the Romanian market evolves. This evolution will include, over time,
growth in automated, digital, parcel and card payments solutions. Cash
bill payments remain a mass market proposition and will continue to be a
robust category.
Progress in the first half of the year
-- Maintained leadership in the bill payment market with a 34% share of
clients' cash bill payments, driven by 74% consumer awareness.
-- 12 new clients secured in the period.
-- Transaction growth of 1.7% to 56.7 million despite challenging market
conditions.
-- Net revenue increased by 6.2% to GBP7.3 million; net revenue per
transaction increased 4.4% to 12.8 pence per transaction driven by
ongoing focus on margin improvement.
-- Trialled a new self-service proposition with development of an automatic
vending machine (AVM).
-- Extended network into large multiple retailers; PayPoint was in 19,088
sites at 30 September 2019, an increase of 622 since 31 March 2019.
-- Developed a new T4 terminal with integrated card payment functionality in
preparation for replacing the legacy terminals in Romania.
Priorities for the second half of the year
-- Deliver further margin improvement.
-- Rollout the card payment proposition to a further 300 sites.
-- Commence roll out of the new T4 terminal into the retailer network.
PRIORITY 4: INNOVATE FOR FUTURE GROWTH AND PROFITS
Innovation has been a key to our success since the PayPoint started over
20 years ago. As evidenced in the above priorities, we continue to
innovate to maintain our competitive advantage, drive new products and
services, improve our retailer experience and increase efficiency.
ORGANISATION AND SERVICE DELIVERY
Underpinning PayPoint's future success is the continued development and
investment in our people, systems and organisation with the aim to
create an efficient and high performance based culture with a focus on
empowerment, engagement and customer service.
Progress in the first half of the year
-- Extended our in-house terminal maintenance and repairs to include
PayPoint One and PPoS terminals.
-- Terminal swap rates reduced by 57% driven by stability of PayPoint One
and improved quality of repairs from in-house maintenance which
ultimately improved customer service and experience.
-- Improved first time contact resolution by 10ppts.
-- Implemented a new ERP system, Microsoft NAV, enabling streamlined
processes and efficiency.
Priorities for the second half of the year
-- Ongoing improvement in service delivery by redefining our end to end
service proposal for retailer experience, including appointment of a new
customer services director.
-- Continued development of the Salesforce CRM lead to sales feature in
preparation for release in the fourth quarter of the financial year.
Outlook
Whilst the financial performance of the business will be influenced by
parcel volumes and continued resilience in UK bill payments over the
second half, the progress of the business during the first half,
reported today, underpins the Board's confidence that as PayPoint's
growth drivers continue to develop, there will be progression in profit
before exceptional items and tax for the full financial year to 31 March
2020.
Financial review
OVERVIEW
Six months to Six months to Year ended
30 September 30 September Change 31 March
GBPm 2019 2018 % 2019
----------------------------
Net revenue
UK retail services 19.9 18.9 5.7% 37.8
UK bill payments and
top-ups 30.1 29.9 0.7% 64.9
Romania 7.3 6.8 6.2% 13.9
----------------------------
Total net revenue 57.3 55.6 3.0% 116.6
Costs 33.2 30.2 9.9% 62.8
Profit before exceptional
items and tax 24.0 25.3 (5.2%) 53.8
Profit before tax 24.0 25.3 (5.2%) 54.7
Cash generation 27.1 27.6 (1.8%) 62.8
Net corporate (debt)/cash (12.3) 0.6 n/m 3.5
Profit before tax of GBP24.0 million (2018: GBP25.3 million) was, as
expected, lower than the same period last year by GBP1.3 million with
the prior period including a one-off GBP1.7 million benefit from
improved VAT recovery. Excluding this and the final GBP0.5 million fee
from renegotiation of the Yodel commercial arrangement, underlying
pre-tax profits grew by GBP0.9m (4.0%).
Net revenue increased by GBP1.7 million to GBP57.3 million. Underlying
net revenue, which excludes the Yodel renegotiation mentioned above,
increased by GBP2.2 million (4.0%) driven by GBP1.5 million underlying
growth in UK retail services, a resilient performance in UK bill
payments and top-ups and strong margin growth in Romania.
UK retail services net revenue, excluding the impact from the Yodel
renegotiation, increased by GBP1.5 million (8.2%) driven by the roll out
of PayPoint One to 15,088 sites which increased service fee revenue by
GBP1.5 million (31.8%). The card payment estate returned to growth and
card payment rebate revenue increased by GBP0.3 million due to increased
transaction volumes.
UK bill payments and top-ups businesses delivered net revenue of GBP30.1
million (2018: GBP29.9 million), an increase of GBP0.2 million from
prior period. There was a resilient performance in bill payments with
transactions increasing by 1.0 million (0.7%) mainly from the energy
sector. MultiPay continued to grow strongly, transactions increased by
3.5 million (33.5%) resulting in a GBP0.4 million (32.0%) increase in
net revenue. As expected, the UK top-ups transaction volumes declined by
2.7 million (11.8%) to 20.4 million. UK top-up net revenue reduced by
GBP0.7 million to GBP8.1 million. Included within top-ups is eMoney net
revenue which grew by GBP0.5 million (18.7%).
Romania's net revenue increased by 6.2% to GBP7.3 million primarily
driven by improved margins in bill payments and top-ups. Romania's bill
payments and top-up transactions were broadly flat at 49.6 million and
6.1 million respectively. The new card payments proposition was rolled
out to 1,400 sites by 30 September 2019.
Included in the prior period comparatives was the Irish business which
ceased operations in the second half of the 2018/19 financial year. In
the six months to September 2018, it generated GBP1.2 million gross
revenue and net revenue of GBP0.1 million.
Costs increased by GBP3.0 million to GBP33.2 million. Underlying costs
which excludes the prior period VAT benefit of GBP1.7 million increased
by GBP1.3 million (4.1%). The increase in underlying cost was primarily
due to investment in customer service through additional resources for
the contact centre, the parcels team, to roll out the parcel proposition
to new partners, and the client service team. This was partially offset
by efficiencies including extending in-house repairs and maintenance to
PayPoint One and PPoS terminals. In-house terminal maintenance has
significantly improved repair quality thereby reducing terminal swaps
and ultimately improved retailers' experience.
Cash generation remained strong with GBP27.1 million delivered from
profit before tax of GBP24.0 million. Similar to the last period, there
was a working capital outflow of GBP1.2 million which will reverse in
the second half of the year.
Net corporate (debt)/cash declined by GBP12.9 million to a net debt
position of GBP12.3 million primarily driven by tax payments of GBP10.2
million and capital expenditure of GBP4.1 million. Tax payments are
higher compared to the same period in the prior year due to HMRC
bringing payments on account forward by six months. At 30 September
2019, GBP18 million (2018: GBP6 million) was utilised of the GBP75
million facility.
SECTOR ANALYSIS
UK retail services
UK retail services are services PayPoint provides to retailers which
form part of PayPoint's network. Services include providing the PayPoint
One platform (which has a basic till application), EPoS, ATMs, card
payments, parcels and SIMs.
Six months to Six months to Year ended
30 September 30 September Change 31 March
2019 2018 % 2019
-----------------------
Number of retailers 17,472 17,626 (0.9%) 17,608
PayPoint terminal sites
(No.)
PayPoint One(29) 15,088 10,242 47.3% 12,881
Legacy terminal 4,732 10,080 (53.1%) 7,000
PPoS(30) 8,546 8,564 (0.2%) 8,554
Total sites 28,366 28,886 (1.8%) 28,435
Services in sites (No.)
PayPoint One Base 7,579 4,589 65.2% 6,337
EPoS Core 6,685 5,235 27.7% 5,899
EPoS Pro 824 418 97.1% 645
Card payments 9,879 9,951 (0.7%) 9,796
ATMs 3,972 3,983 (0.3%) 3,827
Parcels 7,113 7,084 0.4% 7,134
Transactions (Millions)
Card payments 66.6 57.0 16.9% 113.5
ATMs 20.7 21.4 (3.2%) 42.1
Parcels 11.5 10.0 15.1% 21.8
PayPoint One average
weekly service fee per
site (GBP) 15.5 15.0 3.3% 15.1
Net revenue (GBPm)
Service fees 6.3 4.8 31.8% 10.3
Card payments 4.2 3.9 8.3% 7.9
ATM 6.0 6.5 (7.2%) 12.3
Parcels and other 3.4 3.7 (8.0%) 7.3
-----------------------
Total net revenue
(GBPm) 19.9 18.9 5.7% 37.8
As at 30 September 2019, PayPoint had a terminal in 28,366 UK sites, a
small reduction of 69 from 31 March 2019. The PayPoint One roll out
continued at pace resulting in PayPoint One sites increasing by 2,207
sites since 31 March 2019 to 15,088 sites at 30 September 2019 and,
consequently, the number of UK sites with the legacy terminal reduced by
2,268 sites to 4,732. The sun-setting of the legacy terminal is ahead of
original plans and is expected to be largely complete for the
independent retailer estate by the end of the 19/20 financial year.
UK retail services: underlying net revenue increased by GBP1.5 million
(8.2%) to GBP19.9 million excluding the prior period impact of GBP0.5
million from the revised commercial terms with Yodel. The net revenue of
each of our key products is separately addressed below.
Service fees: This is a core growth area and consists of service fees
from PayPoint One and our legacy terminal. PayPoint One is now the
largest net revenue contributor to UK retail services. Service fee
revenue increased by GBP1.5 million (31.8%) to GBP6.3 million driven by
the additional 4,846 PayPoint One sites compared to 30 September 2018.
The PayPoint One average weekly fee per site increased by 3.3% to
GBP15.5 benefitting from the annual price indexation. Retailers taking
the Core version of the product represent 44.3% (2018: 51.1%) of all
PayPoint One sites and the Pro version representing 5.5% (2018: 4.1%).
ATMs: As expected ATM net revenue declined by GBP0.5 million (7.2%) due
to the reduction of LINKs interchange fee and a 3.2% reduction in
transactions to 20.7 million. In the lead up to the half year end 132
ATMs were rolled out to leisure centres for a significant new client,
with the revenue benefit expected to be realised from the second half of
the financial year onwards. PayPoint continued to optimise its network
by moving ATM's from low transacting sites to better performing
locations. The average monthly transactions per site per month increased
by 0.9% to 885 transactions.
Card payments: Card payments transaction volumes grew by 16.9% to 66.6
million benefitting from the market trend of growing card payments, in
particular contactless payments. Across our network, 9,879 retailers
were using the card payment solution, an increase of 83 sites since 31
March 2019. Net revenue increased by 8.3% to GBP4.2 million, which is
lower than the transaction volume increase as there were lower average
transaction values as a result of the growth in contactless payments.
PayPoint's revenue rebate is broadly based on a percentage of the
transaction value processed.
Parcels & other: Parcel volumes increased by 15.1% to 11.5 million,
benefitting from stabilisation of Yodel volumes and growth from our new
partnerships in this market. Parcel sites increased by 29 from the prior
period to 7,113 sites.
Parcel and other net revenue decreased by 8.0%, however underlying net
revenue excluding the prior year GBP0.5m Yodel impact increased by 6.4%.
During the period focus was on rolling out new partners into the network
with eBay, DHL, FedEx and Amazon each having over 20% access to the
network. Other services provided include SIM sales and other ad hoc
items. SIM sales continue to be affected by the overall decline in the
mobile top-up market.
UK bill payments(31)
Bill payments is our most established category and consists of prepaid
energy, bill payments (including MultiPay) and CashOut services.
Six months to Six months to Year ended
30 September 30 September Change 31 March
2019 2018 % 2019
----------------------------
Total transactions
(millions) 141.7 140.7 0.7% 317.2
Of which: MultiPay
transactions (millions) 13.9 10.4 33.5% 27.3
Transaction value (GBPm) 2,896.6 2,920.1 (0.8%) 6,390.2
Net revenue (GBPm) 22.0 21.1 3.9% 47.8
Net revenue per
transaction (pence) 15.5 15.0 3.2% 15.1
UK bill payments net revenue increased by 3.9% (GBP0.9 million) to
GBP22.0 million. There was a 1.0 million increase (0.7%) in transaction
volumes, mainly from the energy sector. Net revenue per transaction
continued to increase and was up by 3.2% due to the ongoing improvement
in mix to smaller, but higher yielding clients. MultiPay continued to
grow strongly where transactions increased by 3.5 million (33.5%) to
13.9 million and net revenue by 32.0% to GBP1.8 million.
As announced on 28 June 2019, PayPoint was unable to agree appropriate
renewal terms with British Gas
and will cease working with British Gas on 31 December 2019. The impact
on net revenue and contribution
in the financial year to 31 March 2020 is expected to be around GBP1.4
million.
UK top-ups & eMoney
Top-ups include transactions where consumers can top up their mobiles,
prepaid debit cards and lottery tickets. This sector also includes
eMoney transactions where PayPoint provides the physical network for
consumers to convert cash into electronic funds with online
organisations.
Six months to Six months to Year ended
30 September 30 September Change 31 March
2019 2018 % 2019
---------------------------
Transactions (millions) 20.4 23.1 (11.8%) 44.5
Of which: eMoney
transactions
(millions) 4.4 3.7 17.0% 7.8
Transaction value (GBPm) 308.1 308.2 (0.0%) 607.0
Net revenue (GBPm) 8.1 8.8 (8.6%) 17.1
Net revenue per
transaction (pence) 39.6 38.2 3.6% 38.7
UK top-ups continued to be affected by market trends whereby direct
debit pay monthly options displace UK prepay mobile. As expected, UK
top-up transactions declined by 2.7 million (11.8%) to 20.4 million
which led to a decline of GBP0.7m (8.6%) in net revenue. Offsetting the
impact of lower transactions on net revenue was the strong growth in the
higher yielding eMoney sector which increased transactions by 0.7
million (17.0%) to 4.4 million and net revenue by 18.7%.
Romania
The Romanian business mainly comprises bill payments and top-ups
operating on a similar basis to our UK business. Cash payment remains a
mass market proposition in the country and is expected to be the
dominant payment method for the medium term.
Six months to Six months to Year ended
30 September 30 September Change 31 March
2019 2018 % 2019
----------------------------
PayPoint terminal sites
(No.) 19,088 18,984 0.5% 18,466
Transaction value (GBPm) 1,146 1,082 5.8% 2,312
Transactions (millions)
Bill payments 49.6 49.1 1.1% 99.1
Top-ups 6.1 6.1 0.4% 11.9
Other 1.0 0.6 64.2% 1.2
----------------------------
Total transactions 56.7 55.8 1.7% 112.2
Net revenue (GBPm) 7.3 6.8 6.2% 13.9
Net revenue per transaction
(pence) 12.8 12.3 4.4% 12.3
Following the completion of the Payzone integration programme, the
number of sites with a PayPoint terminal returned to growth and
increased to 19,088 sites. Bill payment transactions increased by 1.1%
to 49.6 million and top-up transactions were flat, a good performance
given that growth in the bill payments market has slowed and the top-up
market is in decline. The growth in other transactions was driven by
card payment transactions which was rolled out to 1,400 sites. Net
revenue increased by 6.2% which reflects improved margins from
contractual increases and benefits from the Payzone integration
programme.
COSTS
Six months to Six months to Year ended
30 September 30 September Change 31 March
GBPm 2019 2018 % 2019
--------------------------
Other costs of revenue 4.1 4.5 (10.0%) 9.0
Depreciation and
amortisation 4.3 4.7 (7.4%) 9.8
Administrative costs 24.7 20.9 18.5% 43.8
Finance costs 0.1 0.1 (47.1%) 0.2
Total costs 33.2 30.2 9.9% 62.8
Add back VAT recovery
benefit related to prior
years - 1.7 (100.0%) 2.4
--------------------------
Underlying costs 33.2 31.9 4.1% 65.2
Costs increased by GBP3.0 million to GBP33.2 million. Underlying costs
which excludes the prior period VAT benefit of GBP1.7 million increased
by GBP1.3 million (4.1%). The increase in underlying cost was primarily
due to investment in customer service through additional resources for
the contact centre, the parcels team, to roll out the parcel proposition
to new partners, and the client service team. There was also the annual
inflationary increases and one-off costs related to the CEO change. This
was partially offset by efficiencies including extending in-house
repairs and maintenance to PayPoint One and PPoS terminals, bringing
internal audit in-house and terminating redundant telephone lines.
In-house terminal maintenance has significantly improved repair quality
thereby reducing terminal swaps by 57% and ultimately improved
retailers' experience.
OPERATING MARGIN(32)
Operating margin of 42.1% (2018: 45.8%) declined by 3.7ppts due to the
prior period GBP1.7 million VAT benefit described above. Excluding the
VAT benefit from 2018, the operating margin would have been 42.8% which
is broadly similar to the current period.
PROFIT BEFORE TAX AND TAXATION
The tax charge of GBP4.5 million (2018: GBP4.8 million) on profit before
tax of GBP24.0 million (2018: GBP25.3 million) represents an effective
tax rate(33) of 18.8% (2018: 19.0%). The effective tax rate was slightly
below the UK statutory rate due to Romania having a lower statutory rate
of 16% which was partially offset by non-deductible expenses.
STATEMENT OF FINANCIAL POSITION
Net assets of GBP41.4 million (2018: GBP45.7 million) declined by GBP4.3
million. Current assets declined by GBP3.3 million to GBP175.8 million
mainly due to a decrease in trade and other receivables. There is a
corresponding decrease in trade and other payables. Non-current assets
increased by GBP2.0 million to GBP56.5 million, with a
right-of-use-asset of GBP1.1m introduced for IFRS 16, capital
expenditure of GBP4.1 million offset by depreciation and amortisation of
GBP4.3 million.
CASH FLOW AND LIQUIDITY
The following table summarises the cash flow movements during the year.
Six months to Six months to Year ended
30 September 30 September Change 31 March
GBPm 2019 2018 % 2019
---------------------------------------------------
Profit before tax 24.0 25.3 (5.2%) 54.7
Exceptional items - - - (0.9)
Depreciation and amortisation 4.3 4.7 (7.4%) 9.8
VAT and other non-cash items - (1.7) (100.5%) (2.3)
Share based payments and other items - 0.2 (101.1%) 1.1
Working capital changes (corporate) (1.2) (0.9) 42.6% 0.4
Cash generation 27.1 27.6 (1.4%) 62.8
Taxation payments (10.2) (4.4) 131.9% (10.0)
Capital expenditure (4.1) (3.7) 10.5% (11.0)
Movement in financing facility 18.0 6.0 200.0% -
Dividends paid (28.7) (37.6) (23.6%) (56.6)
---------------------------------------------------
Net increase/(decrease) in corporate cash and cash
equivalents 2.1 (12.1) (117.5%) (14.8)
Net change in clients' funds and retailers'
deposits 0.8 5.4 (84.5%) 7.3
---------------------------------------------------
Net increase/(decrease) in cash and cash
equivalents 2.9 (6.7) (143.3%) (7.5)
Cash and cash equivalents at the beginning of
year 37.5 46.0 (18.5%) 46.0
Effect of foreign exchange rate changes 0.1 0.1 - (1.0)
---------------------------------------------------
Cash and cash equivalents at period end 40.5 39.4 2.8% 37.5
Comprising:
---------------------------------------------------
Net corporate cash 5.7 6.6 (14.3%) 3.5
Clients' funds and retailers' deposits 34.8 32.7 6.4% 34.0
--------------------------------------------------- ----------
Cash generation remained strong with GBP27.1 million delivered from
profit before tax of GBP24.0 million. As with the prior period there was
a working capital outflow of GBP1.2 million which will reverse in the
second half of the year.
Taxation payments of GBP10.2 million (2018: GBP4.4 million) are higher
compared to the same period in the prior year due to HMRC bringing
payment on accounts forward by six months, although these payments will
revert to normal levels in the second half of the year.
Capital expenditure of GBP4.1 million (2018: GBP3.7 million) consists of
PayPoint One terminals and EPoS and CRM development. Capital expenditure
for the financial year 2019/20 remains in line with expectations.
As anticipated PayPoint transitioned to a net debt situation of GBP12.3
million as part of the additional dividend programme. At 30 September
2019 GBP18.0 million of the GBP75 million facility was utilised (2018:
GBP6 million).
DIVIDS
Six months to Six months to
30 September 30 September Change
2019 2018 %
--------------------------------------
Paid dividends per share (pence)
Final ordinary dividend for the
prior year 23.6 30.6 (22.9%)
Final additional dividend for the
prior year 18.4 24.5 (24.9%)
--------------------------------------
42.0 55.1 (23.8%)
Proposed dividend per share (pence)
Interim ordinary dividend
(Proposed) 23.6 15.6 51.6%
Interim additional dividend
(Proposed) 18.4 12.2 51.1%
42.0 27.7 51.4%
Total dividends paid in period (GBPm) 28.7 37.6 (23.6%)
On 1 April 2019 a new programme of four equal dividends payable in July,
September, December and March was implemented. In the six months to 30
September 2019, total dividend payments under the new programme of
GBP28.7 million (42.0p per share) were made. This represents the final
ordinary dividend for the year ended 31 March 2019 totalling GBP16.1
million (23.6p per share) and the final additional dividend of GBP12.6
million (18.4p per share). This is lower than the same period last year
when dividends were paid under the previous payment profile and were two
thirds of total annual dividend payments.
An interim dividend of 23.6p per share (September 2018: 15.6p) and an
additional dividend of 18.4p (September 2018: 12.2p) per share have been
declared. As part of the new quarterly dividend payment profile the
total dividend of 42.0p per share will be paid in equal instalments of
21.0p per share on 30 December 2019 and 9 March 2020. This will result
in shareholders receiving a similar level of dividends in the 19/20
financial year as they would have under the previous payment profile.
Rachel Kentleton
Finance Director
27 November 2019
Condensed Consolidated Statement of Profit or loss
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
Note 2019 2018 2019
GBP000 GBP000 GBP000
CONTINUING OPERATIONS
Revenue 2,3 103,735 106,134 211,576
Cost of revenue 5 (54,697) (59,605) (113,303)
Gross profit 49,038 46,529 98,273
Administrative expenses (24,931) (21,048) (44,319)
Operating profit 24,107 25,481 53,954
Finance income 228 176 427
Finance costs (300) (312) (586)
Profit before tax before exceptional
items 24,035 25,345 53,795
Exceptional items - - 922
Profit before tax 24,035 25,345 54,717
Tax 6 (4,508) (4,815) (10,285)
Profit for the period 19,527 20,530 44,432
Earnings per share
Basic 7 28.6p 30.1p 65.2p
Diluted 7 28.5p 30.0p 64.8p
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
Exchange differences on translation
of foreign operations 415 229 (740)
Other comprehensive income for the
period 415 229 (740)
Profit for the period 19,527 20,530 44,432
Total comprehensive income for the
period 19,942 20,759 43,692
Notes 1 to 15 form part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
Note GBP000 GBP000 GBP000
Non-current assets
Goodwill 12,037 12,372 11,618
Other intangible assets 16,997 14,464 15,875
Property, plant and equipment 26,505 27,273 26,665
Deferred tax assets 945 400 781
56,484 54,509 54,939
------------------------------------ ------ ------------- ------------- ---------
Current assets
Inventories 180 193 124
Trade and other receivables 9 133,840 139,561 139,010
Current tax asset 1,262 - -
Cash and cash equivalents 10 40,521 39,359 37,485
175,803 179,113 176,619
------------------------------------ ------ ------------- ------------- ---------
Total assets 232,287 233,622 231,558
Current liabilities
Trade and other payables 11 171,686 176,959 176,720
Current tax liabilities - 4,629 4,455
Lease liabilities 211 - -
Loans and borrowings 18,000 6,000 -
189,897 187,588 181,175
------------------------------------ ------ ------------- ------------- ---------
Non-current liabilities
Other liabilities 11 169 322 233
Deferred tax liability
e - 54 -
Lease liabilities 828 - -
997 376 233
Total liabilities 190,894 187,964 181,408
Net assets 41,393 45,658 50,150
Equity
Share capital 12 227 227 227
Share premium 4,485 3,351 3,352
Share-based payment reserve 2,349 2,221 2,684
Translation reserve (574) (20) (989)
Retained earnings 34,906 39,879 44,876
Total equity attributable to equity
holders of the parent 41,393 45,658 50,150
Notes 1 to 15 form part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-
based
Share Share payment Translation Retained Total
capital premium reserve reserve earnings equity
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Audited equity
31 March 2018 227 2,907 2,771 (249) 55,637 61,293
---------------------------- ---- -------- -------- -------- ----------- --------- --------
Profit for the period - - - - 20,530 20,530
Exchange differences on
translation of foreign
operations - - - 229 - 229
Comprehensive income for
the period - - - 229 20,530 20,759
Adoption of IFRS 15 - - - - 975 975
Equity-settled share-based
payment expense - - 886 - - 886
Vesting of share scheme - 444 (1,439) - 302 (693)
Deferred tax on share-based
payments - - 3 - - 3
Dividends - - - - (37,565) (37,565)
Unaudited equity
30 September 2018 227 3,351 2,221 (20) 39,879 45,658
---------------------------- ---- -------- -------- -------- ----------- --------- --------
Profit for the period - - - - 23,902 23,902
Exchange differences on
translation of foreign
operations - - - (969) - (969)
Comprehensive income for
the period - - - (969) 23,902 22,933
Equity-settled share-based
payment expense - - 580 - - 580
Vesting of share scheme - 1 (124) - 91 (32)
Deferred tax on share-based
payments - - 7 - - 7
Dividends - - - - (18,996) (18,996)
Audited equity
31 March 2019 227 3,352 2,684 (989) 44,876 50,150
---------------------------- ---- -------- -------- -------- ----------- --------- --------
Profit for the period - - - - 19,527 19,527
Exchange differences on
translation of foreign
operations - - - 415 - 415
Comprehensive income for
the period - - - 415 19,527 19,942
Adoption of IFRS 16 - - - - (73) (73)
Equity-settled share-based
payment expense - - 1,026 - - 1,026
Vesting of share scheme 13 - 1,133 (1,374) - (788) (1,029)
Tax on share-based payments - - 13 - 72 85
Dividends 8 - - - - (28,708) (28,708)
Unaudited equity
30 September 2019 227 4,485 2,349 (574) 34,906 41,393
---------------------------- ---- -------- -------- -------- ----------- --------- --------
Notes 1 to 15 form part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
Note GBP000 GBP000 GBP000
Net cash flow from operating activities 15 17,531 28,299 59,563
Investing activities
Finance income 228 176 427
Purchase of property, plant and
equipment (1,562) (1,583) (5,087)
Intangible asset development (2,521) (2,112) (5,894)
Net proceeds from disposal of
property, plant and equipment 1 7 12
Net cash used in investing activities (3,854) (3,512) (10,542)
Financing activities
Dividends paid (28,708) (37,565) (56,561)
Movement in financing facility 18,000 6,000 -
Net cash used in financing activities (10,708) (31,565) (56,561)
Increase/(decrease) in cash and
cash equivalents 2,969 (6,778) (7,540)
Cash and cash equivalents at beginning
of year 37,485 46,040 46,040
Effect of foreign exchange rate
changes 67 97 (1,015)
Cash and cash equivalents at period
end 40,521 39,359 37,485
Reconciliation of cash and cash
equivalents
Corporate cash 5,673 6,617 3,471
Clients' funds and retailers'
deposits 34,848 32,742 34,014
Cash and cash equivalents at period
end 40,521 39,359 37,485
Notes 1 to 15 form part of these financial statements.
NOTES TO condensed FINANCIAL STATEMENTS
1. Accounting policies
Reporting entity
PayPoint plc ('the company') is a company domiciled in the United
Kingdom. These consolidated interim financial statements ('interim
financial statements') as at and for the six months ended 30 September
2019 comprise the company and its subsidiaries (together referred to as
the 'group'). The group is primarily involved in providing innovative
and time-saving technology to retailers and is a service provider for
consumer transactions (see note 2).
Basis of preparation
These interim financial statements have been prepared in accordance with
IAS 34 Interim Financial Reporting, and should be read in conjunction
with the group's last annual consolidated financial statements as at and
for the year ended 31 March 2019 ('last annual financial statements').
They do not include all the information required for a complete set of
IFRS financial statements. However, selected explanatory notes are
included to explain events and transactions that are significant to an
understanding of the changes in the group's financial position and
performance since the last annual financial statements. The interim
financial statements contained in this report are unaudited, but have
been formally reviewed by the auditor and their report to the company is
set out on page 30.
The information shown for the year ended 31 March 2019, which is
prepared under International Financial Reporting Standards (IFRS), does
not constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006. The report of the auditor on the statutory
accounts for the year ended 31 March 2019, prepared under IFRS, was
unqualified, did not draw attention to any matters by way of emphasis
and did not contain a statement under sections 498 (2) or (3) of the
Companies Act 2006 and has been filed with the Registrar of Companies.
By order of the Board, these interim statements were authorised for
issue on 27 November 2019.
The directors are satisfied that the group has adequate resources to
continue in operational existence for the foreseeable future, a period
of not less than 12 months from the date of this report.
The accounting policies are consistent with those included in the annual
report 2019, except for the adoption of IFRS 16 Leases.
Adoption of IFRS 16 Leases
As a lessee, the group previously classified leases as operating or
finance leases based on its assessment of whether the lease transferred
substantially all of the risks and rewards of ownership. On transition
to IFRS 16, the group's policy is to recognise right-of-use assets and
liabilities for leases, except in the case of short-term leases and
leases of low-value assets. In these instances, the lease payments are
recognised as an expense on a straight-line basis over the lease term.
IFRS 16 was adopted from 1 April 2019 using the modified retrospective
method, therefore the prior period comparatives have not been restated.
On transition to IFRS 16, the group recognised right-of-use assets and
lease liabilities on the statement of financial position with the
difference recorded in retained earnings. The impact on transition is
summarised below.
1 April 2019
GBP000
Right-of-use asset presented in property, plant and equipment 1,016
Lease liabilities 1,089
Retained earnings (73)
The group recognises a right-of-use asset and a lease liability at the
lease commencement date.
-- The right-of-use asset is initially measured at cost and subsequently at
cost less accumulated depreciation and impairment losses.
-- The lease is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease. The lease liability is subsequently
increased by the interest cost on the lease and decreased by payments
made. In the event of a change in future lease payments, the lease
liability will be remeasured and the difference recognised in the
right-of-use asset.
Information about the leases for the six-month period is presented
below.
Property Vehicles Total
Right-of-use asset GBP000 GBP000 GBP000
Balance at 30 September 2019 947 27 974
Depreciation charge for the period (109) (5) (114)
Lease liability
Current balance at 30 September 2019 200 10 210
Non-current balance at 30 September 2019 813 15 828
Interest for the period (22) (1) (23)
The group assessed whether it had any assets where it was a lessor and
concluded that it does not lease any assets.
Use of judgements and estimates
In the application of the group's accounting policies, the directors are
required to make judgements, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based
on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision affects
both current and future periods.
The critical accounting judgement at the balance sheet date that has a
significant risk of causing a material adjustment to the carrying amount
of assets and liabilities through estimation uncertainty is the
evaluation of capitalised development expenditure shown in intangible
assets.
Judgement: capitalised development expenditure
An accounting judgement at the statement of financial position date that
has a risk of causing an adjustment to the carrying amount of assets and
liabilities through estimation uncertainty is the evaluation of
capitalised development expenditure shown in intangible assets.
Significant estimate: Useful economic lives of intangible assets
The useful life used to amortise intangible assets relates to the
expected future performance of the assets and management's judgement of
the period over which economic benefit will be derived from the asset.
For development costs, the group has determined the useful life based on
historical experience with similar products and platforms controlled by
the group as well as anticipation of future events which may impact
their life such as changes in technology. Historically, changes in
useful lives have not resulted in material changes to the group's
amortisation charge.
Significant judgement: agent vs principal
A significant judgement for revenue recognition is PayPoint's assessment
of whether it is acting as a principal or agent.
This includes evaluating:
a) which party was responsible for fulfilling the promise to provide the
service
b) inventory risk before the service is transferred to a customer
c) discretion in establishing the price for the service
In most cases it was clear that PayPoint acts in the capacity of the
agent for clients, however in the case of mobile top-ups in Romania due
to the nature of the product this becomes a key judgement area. Revenues
are recognised on the principal basis considering the level of service
responsibility, inventory risk and price discretion held by PayPoint.
This is consistent with the judgement in prior years.
Significant judgement: recognition of cash and cash equivalents
A key judgement area is whether clients' funds and retailers' deposits
are recognised on the balance sheet.
This includes evaluating:
a) existence of a binding agreement clearly identifying the beneficiary
of the funds
b) the identification, ability to allocate and separability of funds
c) identification of the holder of those funds at any point in time
The judgement is where there is a binding agreement specifying that
PayPoint holds funds on behalf of the client (i.e. acting in the
capacity of a trustee) and those funds have been separately identified
as belonging to that beneficiary, the cash and the related liability is
held off balance sheet. In all other situations the cash and
corresponding liability are recognised on the balance sheet.
Alternative performance measures
Non-IFRS measures or alternative performance measures are used by the
directors and management for performance analysis, planning, reporting
and incentive setting purposes which have remained consistent with prior
periods. These measures are included in these interim financial
statements to provide additional useful information on performance and
trends to shareholders.
These measures are not defined terms under IFRS and therefore they may
not be comparable with similarly titled measures reported by other
companies. They are not intended to be a substitute for, or superior to,
IFRS measures. The measures are described below.
Net revenue (non-IFRS measure)
Net revenue is revenue less commission paid to retailers and the cost of
mobile top-ups and SIM cards where PayPoint is principal. This reflects
the benefit attributable to PayPoint's performance eliminating
pass-through costs which creates comparability where PayPoint is agent
or principal and is an important measure of the overall success of our
strategy. A reconciliation from revenue to net revenue is included in
note 4.
Effective tax rate (non-IFRS measure)
Effective tax rate is the tax cost as a percentage of net profit before
tax.
Cash generation (non-IFRS measure)
Cash generation reflects earnings before tax, depreciation, amortisation
and exceptional items adjusted for working capital (excluding movement
in clients' funds and retailers' deposits) as detailed in note 15 to the
financial statements. This measures the cash generated which can be used
for tax payments, new investments and financing activities.
Total costs (non-IFRS measure)
Total costs comprise other cost of revenue (note 5), admin expenses,
financing income and financing costs.
Operating margin (non-IFRS measure)
Operating margin is calculated by dividing operating profit by net
revenue. This measure reflects the efficiency of converting revenue into
profits.
Net (debt)/cash (non-IFRS measure)
Net (debt)/cash represents cash and cash equivalents excluding cash
recognised as clients' funds and retailers' deposits, less amounts
borrowed under financing facilities (excluding IFRS 16 liabilities).
2. Segmental reporting
The group provides a number of different services and products, however
these do not meet the definition of different segments under IFRS 8 and
the group has only one operating segment.
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
Revenue by country
UK 68,693 68,306 143,294
Ireland - 1,238 1,381
Romania 35,042 36,590 66,901
Total 103,735 106,134 211,576
------------------- ------------- ------------- ---------
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
Non-current assets
UK (and Ireland) 42,211 36,172 41,759
Romania 14,273 17,937 13,180
Total 56,484 54,109 54,939
3. Revenue
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
Disaggregation of revenue GBP000 GBP000 GBP000
Bill payments 36,516 35,312 78,095
Top-ups and eMoney 39,638 43,610 79,076
Retail services 27,581 27,212 54,405
Total 103,735 106,134 211,576
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
Contract balances GBP000 GBP000 GBP000
Trade receivables 13,701 19,699 15,271
Accrued income 4,147 2,496 2,047
Contract assets - deferred setup
and development costs 3,397 3,205 3,636
Contract liabilities (2,378) (2,156) (2,696)
Deferred income (612) (632) (599)
Total 18,255 22,612 17,659
Seasonality of operations
PayPoint operates in many sectors each with their own form of
seasonality. The energy bill payment and parcel sectors are the most
seasonal sectors with the energy sector generating more transactions
during the winter months and parcels generating higher volumes in the
lead up to Christmas. As a result, higher revenue and
operating profits are usually expected in the second half of the year
rather than in the first six months. This does not constitute "highly
seasonal" as considered by IAS 34 Interim Financial Reporting.
4. Net revenue
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
The reconciliation of revenue GBP000 GBP000 GBP000
Service revenue 75,124 74,371 147,988
Sale of goods 28,037 31,262 62,557
Royalties 574 501 1,031
Revenue 103,735 106,134 211,576
less:
Retail agent commissions (20,940) (22,043) (46,434)
Cost of mobile top-ups and SIM
cards as principal (25,532) (28,509) (48,507)
Net revenue 57,263 55,582 116,635
Yodel renegotiation - (501) (706)
Underlying net revenue 57,263 55,081 115,929
5. Cost of revenue
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
Cost of revenue
Commission payable to retail agents 20,940 22,043 46,434
Cost of mobile top-ups and SIM
cards 25,532 28,509 48,507
Cost of revenue deducted for net
revenue 46,472 50,552 94,941
Depreciation and amortisation 4,134 4,509 9,365
Other 4,091 4,544 8,997
Other cost of revenue 8,225 9,053 18,362
Total cost of revenue 54,697 59,605 113,303
6. Tax on profit
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
Current tax 4,657 4,811 10,708
Deferred tax (149) 4 (423)
Total 4,508 4,815 10,285
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
Effective tax rate(34) GBP000 GBP000 GBP000
Effective tax rate 18.8% 19.0% 18.8%
Effective tax rate excluding exceptional
items 18.8% 19.0% 19.1%
The tax charge was GBP4.5 million (September 2018: GBP4.8 million)
resulting in an effective tax rate of 18.8% (September 2018: 19.0%),
which is slightly below the UK statutory rate. The tax rate is increased
by disallowable expenses in the UK, but reduced by profits in Romania
being taxed at a lower rate than the UK.
7. Earnings per share
The basic and diluted earnings per share are calculated on the following
profit and number of shares.
The earnings for calculating the earnings per share is the net profit
attributable to equity holders of the parent.
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
Profit for basic and diluted earnings
per share is the net profit attributable
to equity holders of the parent 19,527 20,530 44,432
Number of Number of Number of
Shares Shares Shares
Thousands Thousands Thousands
Weighted average number of ordinary
shares in issue (for basic earnings
per share) 68,251 68,159 68,160
Potential dilutive ordinary shares:
Long-term incentive plan 266 171 361
Deferred annual bonus scheme 43 26 39
SIP and other 51 12 37
Diluted basis 68,611 68,368 68,597
Earnings per share
Basic 28.6p 30.1p 65.2p
Diluted 28.5p 30.0p 64.8p
8. Dividends
On 28 November 2019 an interim dividend of 23.6p per share (September
2018: 15.6p) and an additional dividend of 18.4p (September 2018: 12.2p)
per share were declared. The total dividend of 42.0 pence per share will
be paid in equal instalments of 21.0 pence per share on 30 December 2019
(to shareholders on the register on 6 December 2019) and 9 March 2020
(to shareholders on the register on 7 February 2020). Total dividends of
GBP28.7 million (42.0p per share) were paid during the period and
comprised of the final ordinary dividend for the year ended 31 March
2019 totalling GBP16.1 million (23.6p per share) and the final
additional dividend of GBP12.6 million (18.4p per share).
9. Trade and other receivables
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
Trade receivables 13,701 19,699 15,271
Items in the course of collection(1) 112,623 112,915 117,263
Revenue allowance (2,926) (3,203) (2,957)
123,398 129,411 129,577
Other receivables 217 495 1,032
Contract assets 3,397 3,205 3,636
Accrued income 4,147 2,496 2,047
Prepayments 2,681 3,954 2,718
133,840 139,561 139,010
------------------------------------- ------------ ------------ --------
(1) Items in the course of collection represent amounts collected for
clients by retailers. An equivalent balance is included within trade and
other payables.
10. Cash and cash equivalents
The group operates cash pooling amongst its various bank accounts in the
UK and therefore individual accounts can be overdrawn without penalties
being incurred so long as the overall position is in credit.
Included within group cash and cash equivalents of GBP40.5 million
(2018: GBP39.4 million) are balances of GBP34.8 million (2018: GBP32.7
million) relating to funds collected on behalf of clients where PayPoint
has title to the funds (clients' funds) and where retailers have
provided security deposits (retailers' deposits). An equivalent balance
is included within trade payables (note 11). Clients' funds held in
trust which are not included in cash and cash equivalents amounted to
GBP38.4 million at 30 September 2019 (2018: GBP35.6 million).
11. Trade and other payables
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
Amounts owed in respect of client
funds' and retailers' deposits(1) 34,848 32,741 34,014
Settlement payables(2) 112,623 112,915 117,263
Client payables 147,471 145,656 151,277
Trade payables 6,938 9,421 7,536
Other taxes and social security 3,083 5,087 1,985
Other payables 3,489 2,937 5,939
Accruals 7,884 11,392 6,921
Deferred income 612 632 599
Contract liabilities 2,378 2,156 2,696
171,855 177,281 176,953
----------------------------------- ------------ ------------ --------
Disclosed as:
Current 171,686 176,959 176,720
Non-current 169 322 233
Total 171,855 177,281 176,953
------------ ------- ------- -------
(1) Relates to monies collected on behalf of clients where the group has
title to the funds (clients' funds and retailers' deposits). An
equivalent balance is included within cash and cash equivalents.
(2) Payable in respect of amounts collected for clients by retailers. An
equivalent balance is included within trade and other receivables.
12. Share capital
Share capital as at 30 September 2019 was GBP227,831. During the period
the PayPoint plc issued 111,602 (September 2018: 48,777) shares for the
2016 LTIP, DSB and SIP schemes.
13. Share-based payments
The total charge of GBP1.4 million (September 2018: GBP1.4 million)
recognised directly to equity for schemes which have lapsed or vested
was transferred from the share-based payments reserve to retained
earnings during the period.
On 10 June 2019, 192,675 shares under the LTIP scheme were granted with
50% of the vesting based on total shareholder return (TSR) and 50% on
earnings per share (EPS) growth. The performance condition for the TSR
element is the same as the vesting period. The performance period for
the EPS element is for the three financial years up to 31 March 2022. A
further 19,953 shares were issued under the DABS scheme with vesting
over three years to 12 June 2022.
14. Fair value of financial assets and liabilities
The directors consider there to be no material difference between the
book value and the fair value of the group's financial instruments at 30
September 2019, 30 September 2018 and 31 March 2019.
15. Notes to the statement of cash flows
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP000 GBP000 GBP000
Profit before tax 24,035 25,345 54,717
Adjustments for:
Depreciation on property, plant and
equipment 2,867 3,057 6,318
Amortisation of intangible assets 1,474 1,633 3,466
VAT credits - (1,730) (2,427)
Exceptional item - - (922)
Loss on disposal of fixed assets 8 - 110
Net interest income charge 72 137 159
Share-based payment charge 1,026 886 1,730
Cash element of share-based
remuneration (1,028) (703) (725)
-----------------------------------------
Operating cashflows before movements
in corporate working capital 28,454 28,625 62,426
Movement in inventories (53) 86 155
Movement in trade and other
receivables 993 (1,403) 3,712
Movement in contract assets (192) 182 (614)
Movement in contract liabilities (197) (109) 649
Movement in trade and other payables (1,882) 181 (3,482)
Movement in lease liabilities (10) - -
Cash generated by operations 27,113 27,562 62,846
Corporation tax paid (10,116) (4,405) (9,952)
Finance charges paid (300) (223) (586)
Cash generated from operating activities
(corporate) 16,697 22,934 52,308
Movement in clients' cash and retailers'
deposits(35) 834 5,365 7,255
Net cash from operating activities 17,531 28,299 59,563
16. Post balance sheet events
There were no significant events occurring after the balance sheet date.
PRINCIPAL RISKS AND Uncertainties
Since the publication of the Annual Report, a further review of the key
risks that could prevent PayPoint meeting its strategic objectives, its
risk appetite and the risk management framework was undertaken. Key
risks are highlighted below with changes in risk level denoted as
follows Ü - risk level has not changed, Ý - risk level has
increased and Þ risk level has reduced.
Risk area Potential impact Mitigation strategies Change
--------------- ------------------------------------ ----------------------------------------- ------
Business
>
Innovation The group could fail to The group monitors technological
and market adapt to changes in and consumer
changes consumer behaviour or to trends through its monthly
commercialise and Strategy Committee and
develop innovation that twice-yearly Board strategy
is scalable and meets reviews. The group is
the requirements of clients committed to continued research
and retailers. and investment in
The inability to implement technology and products to
new products and support its continued
services effectively may growth. Our product portfolio
impact PayPoint's ability and the progress of
to drive growth and profitability. new initiatives are reviewed
at the monthly Product
Committee that contains representatives
from
commercial, product, technology,
finance and legal.
PayPoint also has an active
sales function and
client teams which are incentivised
to promote
and sell PayPoint products
and services
in the regions in which PayPoint
operates
to expand its client and retailer
base.
>
Culture The strategic objectives The PayPoint strategic objectives
and values of the group and values
are focused on retailer are defined and advocated
and consumer-centric products by the Executive
and services. If employees Board. These values are linked
are not aligned with these to strategic,
objectives or empowered team and individual employee
to realise opportunities, objectives and
deliver performance or performance appraisals. The
mitigate risks this could group's ethical
lead to poor service quality, principles are published on
a loss in revenue, increased its website and intranet.
cost or failure by employees A whistleblowing policy and
to escalate concerns or procedures are
issues to senior management published and a third-party
and the Executive Board. service is available for
employees to report wrongdoing.
The Retailer
Pledge is published and all
employees made
aware of its requirements.
Retailer and employee
engagement surveys are used
to measure
satisfaction and identify
areas of concern.
^
Dependence The consolidation or loss The group monitors client
on key of major clients or multiple and retailer concentration
clients retailers could adversely risk to ensure that no one
and retailers affect revenue. Insolvency, client or retailer accounts
liquidation, administration for a disproportionate share
or receivership of retailers of group net
could lead to PayPoint revenue. In addition, the
being unable to recover group continues to
some or all the client acquire new clients and retailers
monies processed by the to reduce reliance
retailer. on existing sources of revenue.
PayPoint would be liable All major clients
to account to those clients are covered by specific contracts
where PayPoint bears the or agreements.
risk of collection. Contract end dates and start
of notice periods
are scheduled and regularly
reviewed by client
management teams. Retail teams
maintain
and develop the relationship
with retailers.
^
Competitor Competitor activity in Where there is concern that
activity the market continues to the competitor activity may
evolve, with potential be unlawful then PayPoint
for PayPoint clients and will challenge this through
retailers to switch to the Competition and Markets
competitors. Authority. Appropriate terms
are included in client and
retailer contracts. Retailer
engagement surveys are used
to measure satisfaction and
identify areas of concern.
>
Partners Reliance on third parties The group selects and negotiates
& suppliers for the provision of key agreements
parts of the PayPoint services with strategic suppliers and
(e.g. payment service providers) partners based on
could lead to extended criteria such as delivery
outages if the supplier assurance and reliability.
fails to meet required Single points of failure are
SLAs or goes into administration. avoided, where
practicable and economically
feasible. Controls
are regularly reviewed and
improved to minimise
risk of retailer churn caused
by financial loss to
retailers through fraudulent
third-party activity.
Suppliers are selected on
merit following tendering,
procurement and due diligence
processes.
^
Interruptions The group's ability to provide Resilience is built into
in processes reliable services systems and contingency
and systems largely depends on the efficient plans are in place should
and uninterrupted systems fail. These plans
operation of our computer are exercised regularly.
network systems, Programmes are in place
financial settlement systems, to remove technical debt
data and call centres, and to automate manual processes.
as well as maintaining sufficient Payment files are automatically
staffing levels. imported into settlement
System or network interruptions, systems. All payments are
recovery from checked/authorised by nominated
fraud or security incidents signatories. Segregation
or the unavailability of is maintained between settlement
key staff or management resulting and corporate
from a pandemic outbreak accounts. Invoices are recorded
could delay and disrupt our and approved by authorised
ability to develop, deliver managers. Daily reconciliation
or maintain our products of client settlement accounts
and services, causing harm and weekly reconciliation
to our business and reputation of PayPoint corporate accounts
and resulting in loss of are carried out. Audited
customers or revenue. controls for supplier and
client account set-up are
in place. A programme is
in place to upgrade PayPoint's
financial and back office
systems.
Operational
Legislation PayPoint is required to comply The group's legal department >
or regulatory with relevant legal works closely with senior
reforms and regulatory requirements. managers to adopt strategies
and risk Any breach of these to educate legislature,
of non-compliance obligations could lead to regulators, consumer and
costly and damaging legal privacy advocates and other
or corrective actions to stakeholders to support
return to compliance, e.g. the public policy debate,
Health & Safety at Work Act, where appropriate, to ensure
Data Protection Act/GDPR, regulation does not have
Financial Conduct Authority unintended consequences
listing rules and requirements, on the group's services.
anti-money laundering legislation, A central compliance department
employment law. It could co-ordinates all compliance
also lead to the prosecution monitoring and reporting.
of individual company officers Subsidiary managing and
or employees. finance directors are required
to sign annual compliance
statements.
>
Cyber security, System or network interruptions, PayPoint has established
data protection, recovery from fraud or cyber a Cyber Security
resilience security incidents or poorly and IT Sub-Committee to
and business implemented change could oversee
continuity delay and disrupt our ability cybersecurity and information
to develop, deliver or maintain technology
our products and services, matters pertaining to PayPoint.
causing harm to our business Service delivery is constantly
and reputation and resulting monitored with technical
in loss of customers or revenue. support teams in place to
PayPoint's ability to provide address service outages
reliable and secure services or errors. Contact Centre,
largely depends on the availability Service Management and Technical
and uninterrupted operation Services Helpdesk are in
of its network of retailer place to assist with and
terminals, computer systems, resolve issues. Client Management
financial settlement and and Retail Management teams
key business processes. are in place to interface
Due to the heightened activity with clients and retailers.
in the external Resilient systems are in
environment the level of place across the group.
risk has been increased. Disaster recovery and business
continuity plans are maintained
and exercised regularly
to ensure contingencies
are in place in the case
of failure.
V
Attracting Future success is substantially Effective recruitment programmes
and retaining dependent on the are ongoing
key talent continued services and performance across all business areas,
of Executive as well as personal and
Directors, senior management, career development initiatives.
competent and The executive management
qualified personnel. The reviews talent potential
failure to attract the twice a year and retention
right candidates, loss of plans are put in place
key personnel or failure for individuals identified
to adequately train employees at risk of leaving.
could damage Compensation and benefits
the group's business or lead programmes
to non-compliance are competitive and reviewed
with legal and regulatory regularly.
requirements.
>
Brexit The effect on inter-company PayPoint has carried out
relationships may an assessment of the
be adversely affected by impact of a no-deal Brexit
the outcomes of the scenario and identified
negotiations between the key risks to its operating
UK government model. Whilst no business
and the other member countries can mitigate against the
during the impact of Brexit, actions
UK's exit from the European to reduce disruption in
Union. the short term are in place
including building a buffer
stock of PayPoint One terminals,
maximising intercompany
dividends and engaging with
clients and suppliers determining
their own readiness and
impact assessments.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
1. the set of interim financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting;
2. the half yearly financial report includes a fair review of the
information required by DTR 4.2.7R (indication of important events during
the first half and description of principal risks and uncertainties for
the remaining half of the year); and
3. the half yearly financial report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
Nick Wiles Rachel Kentleton
Executive Chairman Finance Director
INDEPENT REVIEW REPORT TO PAYPOINT PLC
Conclusion
We have been engaged by the company to review the condensed set of
financial statements in the half-yearly financial report for the six
months ended 30 September 2019 which comprises the condensed
consolidated statement of profit and loss, condensed consolidated
statement of other comprehensive income, condensed consolidated
statement of financial position, condensed consolidated statement of
changes in equity, condensed consolidated statement of cash flows and
the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 September 2019
is not prepared, in all material respects, in accordance with IAS 34
Interim Financial Reporting as adopted by the EU and the Disclosure
Guidance and Transparency Rules ("the DTR") of the UK's Financial
Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity issued by
the Auditing Practices Board for use in the UK. A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. We read the other information
contained in the half-yearly financial report and consider whether it
contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
The impact of uncertainties due to the UK exiting the European Union on
our review
Uncertainties related to the effects of Brexit are relevant to
understanding our review of the condensed financial statements. Brexit
is one of the most significant economic events for the UK, and at the
date of this report its effects are subject to unprecedented levels of
uncertainty of outcomes, with the full range of possible effects
unknown. An interim review cannot be expected to predict the unknowable
factors or all possible future implications for a company and this is
particularly the case in relation to Brexit.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing
the half-yearly financial report in accordance with the DTR of the UK
FCA.
The annual financial statements of the group are prepared in accordance
with International Financial Reporting Standards as adopted by the EU.
The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report in
accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the
condensed set of financial statements in the half-yearly financial
report based on our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the company in accordance with the terms
of our engagement to assist the company in meeting the requirements of
the DTR of the UK FCA. Our review has been undertaken so that we might
state to the company those matters we are required to state to it in
this report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than
the company for our review work, for this report, or for the conclusions
we have reached.
Michael Harper
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
27 November 2019
ABOUT PAYPOINT
In thousands of retail locations, at home and on the move, we make life
more convenient for everyone.
For retailers, we offer innovative and time-saving technology that
empowers convenience retailers in the UK and Romania to achieve higher
footfall and increased spend so they can grow their businesses
profitably. Our innovative retail services platform, PayPoint One, is
now live in over 15,000 stores in the UK and offers everything a modern
convenience store needs, from parcels and contactless card payments to
EPoS and bill payment services. Our technology helps retailers to serve
customers quickly, improve business efficiency and stay connected to
their stores from anywhere.
We help millions of people to control their household finances, make
essential payments and access in-store services, like parcel collections
and drop-offs. Our UK network of over 28,000 stores is bigger than all
banks, supermarkets and Post Offices together, putting us at the heart
of communities nationwide.
For clients of all sizes we provide cutting-edge payments technologies
without the need for capital investment. Our seamlessly integrated
multichannel payments solution, MultiPay, is a one-stop shop for
customer payments. PayPoint helps over 500 consumer service providers to
save time and money while making it easier for their customers to pay --
via any channel and on any device.
DIRECTORS & KEY CONTACTS
Directors Nick Wiles** (Executive Chairman)
Patrick Headon (Chief Executive)
Rachel Kentleton (Finance Director)
Gillian Barr*
Giles Kerr*
Rakesh Sharma*
Ben Wishart*
* non-executive directors
** non-executive Chairman to 30 September
2019
Registered office 1 The Boulevard
Shire Park
Welwyn Garden City
Hertfordshire
AL7 1EL
United Kingdom
Registered in England and Wales number
3581541
Registrars Link Asset Services
34 Beckenham Road
Beckenham
Kent
BR3 4TU
United Kingdom
Press and investor relations Finsbury
enquiries The Adelphi
1-11 John Adam Street
WC2N 6HT
United Kingdom
Auditors KPMG LLP
15 Canada Square
Canary Wharf
London
E14 5GL
United Kingdom
(1) Net revenue is an alternative performance measure. Refer to note 4
to the financial information for a reconciliation to revenue.
(2) Operating margin % is an alternative performance measure and is
calculated by dividing operating profit by net revenue.
(3) Cash generation is an alternative performance measure. Refer to the
financial review -- cash flow and liquidity for a reconciliation from
profit before tax.
(4) Net corporate (debt)/cash represents cash and cash equivalents
excluding cash recognised as clients' funds and retailers' deposits,
less amounts borrowed under financing facilities (excluding IFRS 16
liabilities).
(5) As at 25 November 2019.
(6) Net revenue of renewed clients divided by bill payments and top-ups
net revenue for the last 12 months.
(7) Costs consist of GBP24.9m administration expenses, other cost of
revenue GBP8.2m (Note 5) and net finance costs of GBP0.1m.
(8) Underlying profit excludes the impact of the one-off VAT benefit of
GBP1.7 million and the GBP0.5 million Yodel renegotiation fee from the
30 September 2018 reported result.
(9) Cash generation reflects operating cash flows including movements in
working capital, but excluding movement in client and retailer deposits
as detailed in note 15 to the interim financial statements.
(10) Underlying profit before tax represents profit before tax of
GBP24.0 million compared to prior periods profit before tax of GBP25.3
million after adjusting for the GBP1.7m one-off VAT benefit and GBP0.5
million Yodel renegotiation fee.
(11) As at 25 November 2019.
(12) As at 25 November 2019
(13)
https://www.globenewswire.com/Tracker?data=hktL_SXq7YIuyGJxDfDnC7MqSjN3o2oKYqUsDWJU1ImVdgBfH_1Fyxf_kzTqKXawAtodvjRGwhyXo0GSV_r4bNM9HwWAQwXwS0vBO_AGU-S5oCUzcf1bgk_1WefNhrVGdrFwjsvp2An_436mh8zBCBFhaSzrHhv9HBLHvgWgKi9aSlLAdab2BgntIBpbkEhhvCN0QjB0c-vC-Iq4Yb7FfC7zl9zOspkp9EDO5-CwCbsExyURqCnBUqtTYZwALQhKz2h6g7lz0GkG-T8Lu_OMy272PUZwBn6ZvuO8hqMyW6M=
https://www.himshopper.com/latest-thoughts/article/convenience-market-trends-and-opportunitie/
(14) ACS - The Local Shop Report 2019
(15)
https://www.globenewswire.com/Tracker?data=hktL_SXq7YIuyGJxDfDnC5ncDMhaSVEHwr1lH6dFnIamk27TrTE24eyR8kF4vJSOI8B-Ntd-At2x_Umcj1bguAMGS9IZwZrB2muiri0Qiv0UnpF_LtHMHSemZcwfm6R42LzTu3n_9XOprlfXwYYQsEZMCXZfyQioLfL_wyIHSwBbLuThwVEQKpv3SaQ-FwphXCFHr-yAi3hzEzECtSmYgso1jCMN1iMQN48-q1IDq6PxDQ_lSb5ReGTBFx5pZHh7u-Ss4Pqz3nxeulUhuDySejAAEuVy3CNY6w4wA0LbpEdfC6YJ1BAqPdVc7Us98eof
https://www.ukfinance.org.uk/wp-content/uploads/2017/12/Card-Expenditure-Statistics-October-2017.pdf
- in the seven months to July 2019
(16)
https://www.globenewswire.com/Tracker?data=hktL_SXq7YIuyGJxDfDnCzF1u-hCXts9NMqiBnyAlhFoN6olPFJlG7TM_dKGIPWw44Lb_YIGUjVRwnfFDZzB_WDKVTs5qVGQilY--m8dSygj376tibnIh7uhu8Nmbh9yFNYW1NQvOndEgu91UjezXkUtGsD1dGNlxjPXbo-5kEo=
https://www.link.co.uk/about/statistics-and-trends/ - in the six months
to September 2019
(17)
https://www.globenewswire.com/Tracker?data=hktL_SXq7YIuyGJxDfDnCzF1u-hCXts9NMqiBnyAlhFmOo4PcNithQ9-HNcoHz_N8XzwfsESxN99FVB01Pkfqe36B_pcAMvDCO5xifV00RN-2e6Oajx-frV12tEigx89Wb_zTaHff4quvGmeyjaO4k81dS5Mc3BeZVpD-TSw0XJMUf5Tq2h7NMxbjYMnLDDhfHEFJ4op-zAsffrFJrMuSRyI-PM7xhmO8AW_S4rb_fE=
https://www.link.co.uk/media/1418/atm-financial-inclusion-dashboard.pdf
(18) IMRG MetaPack UK Delivery Index Report September 2019 and IMRG
Capgemini Sales index report September 2019 - over the eight months to
August.
(19)
https://www.conveniencestore.co.uk/news/click-and-collect-market-to-rise-45-over-next-five-years/576401.article
(20)
https://www.globenewswire.com/Tracker?data=hktL_SXq7YIuyGJxDfDnC-EyLwrrDVyyuuk6mIy7SZrbsPjjKZEYr1ory6IkEsoEST4anrslh9q2-xAzsCrUkjsvWi8bOpTUlnM9mi9DTjS6EU49sicogags_UnGQjxop2TFslNDTg5FBMWjyyPMOLH5xUYA41JvUdbJkWDV5SZFcxUdWyECBOPiyPByVkgZXouZZ-cT8Rf_vdoGJEsOZzWEdhSyl98y58ebR9ElJk-GhdsxfoklNQcGa5tXSYdZnvcGdqKQRv1eZ8dxSdu6TEL75zif-gRiZW4Z1y1rmGBuhNZ32x-IXS0tJtFM8rS69a2VR2f2KI-1JboQnzi_uUPexQk06Ks6Yu0TciMHXsxl7k_ThYk_biRlOOR0-PK_VcUhPKp0Me57p8MGl6xi4yXi2A4reskLUjg2t9Zg_CY=
https://www.mintel.com/press-centre/retail-press-centre/delivering-the-goods-british-courier-and-express-delivery-market-hit-12-6-billion-in-2018
(21)
https://www.globenewswire.com/Tracker?data=hktL_SXq7YIuyGJxDfDnC3N2Q8MqqRWH4rPPdbWj-8k-S3cw21j64917bcM9klQRdHhZTsB8QAtdp4dTLAG3OzPxIwJTGw5qVaBox6s_LD1w7Qg526QK1RqCUvMuylrXZb7t1t7xeMbSJUh9KmokwaJiDfvLliCuaw-wv91f6QT_Zrmd3xUoaYp6UuLCz2RD3vPUf4IVrqvV3rilT1gIUA==
https://www.ofgem.gov.uk/data-portal/retail-market-indicators
(22) Ofgem indicators -- from peak rollout in Q4 2017
(23) Department of Business, Energy & Industrial Strategy consultation
on a 'Smart Meter Policy post 2020'
(24)
https://www.globenewswire.com/Tracker?data=hktL_SXq7YIuyGJxDfDnC_hwm6ZW0VV9ec9l9cpbpEseuM4Dqyrgk6Rzq4gLw3CjntMlv01_E85e7OFbMy1ML5u2OUWx3a3LCBlhVtGCeCziv3M0fWI81-gBKHmrkDjdBO8JjtwfLW3M9Yb-WovNOo1wTg-sBUCpptmDOPSwTC0X3hEfu8Bk-bx1oWabc_sI5oUBQRtO6BLpFS49zyYWB_fsBIQYR7u_UawV1S4kDbTnGvS-gtSmiK5LhhT75BbFLso6uEtXTKhB39l9OGzGoTtaJWrBB-tsgTCJsGFcWouKmiXe9i-SmaSUuM3EobCy
https://www.statista.com/statistics/273608/number-of-prepaid-mobile-subscriber-in-the-united-kingdom-uk/
(25) Excludes retailers using the PPoS terminal and Multiple retailers
using the legacy terminal.
(26) As at 25 November 2019.
(27) Annual churn rate
(28) Net revenue of renewed clients divided by UK bill payments and
top-ups net revenue for the last 12 months.
(29) PayPoint One will replace the legacy terminal and is the platform
from which we can grow our retail services by offering additional
products and services.
(30) PPoS is a plug-in device and virtual PayPoint terminal used on
larger retailers' own EPoS systems who still want to use PayPoint
services.
(31) Ireland is included in the 2018 figures and in the 2019 figures up
to 31 October 2018 when Ireland ceased operations.
(32) Operating margin % is an alternative performance measure and is
calculated by dividing operating profit by net revenue.
(33) Effective tax rate is the tax cost as a percentage of profit before
tax.
(34) Effective tax rate is the tax cost as a percentage of profit before
tax.
(35) Items in the course of collection and settlement payables are
included in this reconciliation on a net basis through the clients'
funds and retailers' deposits line. The directors have included these
items on a net basis to best reflect the operating cash flows of the
business.
Attachment
-- Interim announcement Sept 2019
https://ml-eu.globenewswire.com/Resource/Download/fb96d9ea-e3a1-459e-8b87-b0b26042bc47
(END) Dow Jones Newswires
November 28, 2019 02:00 ET (07:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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