PayPoint plc Half Year Financial Report
(Thomson Reuters ONE) -
PayPoint plc
Half year financial report
for the six months ended 25 September 2011
HIGHLIGHTS
| 6 months 6 months
| ended ended
| 25 September 26 September Increase
| 2011 2010
----------------------------+----------------------------------------
Transaction value | £5,588m £4,831m 16 %
|
Revenue | £95.9m £92.9m 3%
|
Net revenue(1) | £41.9m £38.7m 8%
|
Gross margin | 37.5% 35.3% 2 ppts
|
Operating profit | £16.7m £15.3m 9%
|
Profit before tax | £15.8m £14.6m 9%
|
Diluted earnings per share | 16.7p 14.8p 13%
|
Interim dividend per share | 8.7p 7.8p 12%
----------------------------+----------------------------------------
* 292 million transactions processed in the period, up 9%
* UK & Ireland transactions increased 5% with net revenue up 9%
* Internet payment transactions have grown by 34% and net revenue by 4%
* Romanian retail network moved into profit bill payment transactions
increased to over 8 million in the period (2010: 5 million)
* PayByPhone increased transactions to over 8 million, up 23% with net revenue
up by 18%
* Collect+ has processed over 1 million transactions, an increase of nearly
five times and has won two national awards for its innovative parcel
delivery and returns service
* Earnings per share increase helped by lower UK tax charge
* 8.7p dividend per share, up 12%
David Newlands, Chairman of PayPoint plc said:
"Our retail network continues to perform well, processing 5% more transactions
overall in the period, despite there being 5 million fewer mobile top-ups.
Internet payments contributed to overall growth in transactions of 8% in the
established business (the UK and Ireland retail networks and internet payments).
Net revenue in the established business increased by 7%.
Our developing business, consisting of our Romanian retail network, Collect+
parcel service and PayByPhone, also made good progress. In Romania, we made a
small profit following 69% growth in bill payments and since the period end, we
have introduced Western Union money transfer. Collect+, our award-winning
parcels joint venture, has won 44 new merchants and processed nearly five times
as many parcels as in the same period last year. PayByPhone has been selected
by 33 new clients in the period, with a substantial number of tender decisions
still awaited.
For the current financial year, trading is in line with the company's
expectations. Our established business is strong. We will pursue further
opportunities to enhance our retail yield by introducing new technology and
services, while enhanced transaction management and information services should
help our internet sales in the next financial year. Continuing progress is
expected in our developing business. Our Romanian retail network will focus on
improving market share and further modest network growth to improve yield.
PayByPhone will continue to pursue new clients and enhance its technology to
grow revenue and improve customer satisfaction. Collect+ will continue its
intensive marketing to new clients, to extend deliveries to its existing returns
clients and to promote its consumer-to-consumer proposition. We expect
PayByPhone and the Collect+ parcel service to turn to profit in the next
financial year.
I am pleased to announce an interim dividend of 8.7pence per share."
The condensed financial statements cover the six months from 28 March 2011 to
25 September 2011, the last Sunday in the month (2010: 6 months covering the
period 29 March 2010 to 26 September 2010).
1. Net revenue is revenue less the cost of mobile top-ups and SIM cards where
PayPoint is principal and costs incurred by PayPoint, which are recharged to
clients and merchants. These costs include retail agent commission,
merchant service charges levied by card scheme sponsors and costs for the
provision of call centres for PayByPhone clients. Net revenue is a measure,
which the directors believe assists with a better understanding of the
underlying performance of the group.
Management report
The management report has been prepared solely to provide additional information
to shareholders as a body to assess PayPoint's half year performance and it
should not be relied upon for any other purpose. It contains forward looking
statements made by the directors in good faith, based on the information
available at the time of approval of the half yearly financial report. Such
statements should be treated with caution due to the inherent uncertainties
underlying any such forecast, including both economic and business risk factors.
PayPoint is a payment service provider to retailers and consumer service
companies and as such, has only one operating segment. However, reflection on
various facets helps to explain the execution of our strategy as set out on page
3 of our annual report and accordingly, in addition to the analysis of the
number and value of consumer transactions, revenue and net revenue, we have
shown an analysis which separates our developing business (our retail network in
Romania, Collect+ and PayByPhone), from our established business (the UK and
Irish retail networks and internet payments).
The channel analysis is as follows:
Retail networks:
Bill and general (prepaid energy, bills, tickets and cash out payments)
Top-ups (mobile, prepaid cards and phone cards)
Retail services (ATM, debit/credit, parcels, money transfer, SIMs and receipt
advertising)
Internet (transactions between consumers and merchants, pre-authorisations and
FraudGuard, where separately charged)
PayByPhone (parking and bicycle rental transactions)
Other for revenue and net revenue only (software development and configuration)
Operational review
During the period, transactions have increased to 292 million (2010: 267
million) up 8% in the established business(1) and 37% in the developing
business(2). Transaction value increased to £5.6 billion (2010: £4.8 billion),
and is up 14% in the established business and up 78% in the developing business.
Revenue has increased 3% overall, comprising 1% in the established business and
16% in the developing business. Net revenue(3) increased by 8% overall. In the
established business, net revenue increased by 7% and in the developing business
(including Collect+), by 52%.
Operating profit in the established business was £17.8 million, up 9% on last
year. The operating loss in the developing business, including our share of the
losses of Collect+, was £2.0 million (2010: £1.5 million). The Romanian retail
network made a small profit in the period (2010: loss of £0.3m).
|
|
| Established Developing Adjust As
| business(1) business(2) Total Collect+(4) reported
----------------+---------------------------------------------------------------
Transactions |
(million) |
|
6 months 2011| 273 19 292 - 292
|
6 months 2010| 253 14 267 - 267
|
Year ended 2011| 559 31 590 - 590
----------------+---------------------------------------------------------------
Transaction |
value £million |
|
6 months 2011| 5,395 193 5,588 - 5,588
|
6 months 2010| 4,723 108 4,831 - 4,831
|
Year ended 2011| 10,316 285 10,601 - 10,601
----------------+---------------------------------------------------------------
Revenue |
£000 |
|
6 months 2011| 81,365 15,939 97,304 (1,381) 95,923
|
6 months 2010| 80,337 12,835 93,172 (274) 92,898
|
Year ended 2011 | 167,700 26,535 194,235 (1,002) 193,233
----------------+---------------------------------------------------------------
Net revenue(3) |
£000 |
|
6 months 2011| 38,544 4,521 43,065 (1,135) 41,930
|
6 months 2010| 35,977 2,973 38,950 (222) 38,728
|
Year ended 2011| 76,811 6,539 83,350 (627) 82,723
In the established business, following our tender success announced in March
2011, the UK retail network duly signed a contract with Citibank to be the
retail network for the DWP's replacement for giro-cheques. The service is
expected to go live next financial year and is unlikely to affect the current
financial year's profit to any material extent. The internet channel growth was
constrained by the impact of one large merchant changing its business model. We
have re-started processing for this merchant since the period end.
In the developing business, our Romanian retail network has turned from loss to
a small profit in the first half of the year and will introduce money transfer
with Western Union in the second half. PayByPhone has made substantial
progress, winning 33 new clients, including London Borough of Lambeth, Ottawa in
Canada and Coral Gables in Florida, USA. PayByPhone parking is due to go live
in San Francisco across 22,000 spaces this year. Cash payments for parking have
been introduced in Barnet and Islington. Collect+ has extended its consumer
proposition by introducing two resellers, Parcel2Go and myParcelDelivery and has
also won 44 new merchants for returns, including JD Sports, Monsoon and
Accessorize, Asda Direct, Argos Outlet, Aurora (Karen Millen and Oasis) and
Wiggle. Collect+ has been recognised with prestigious industry awards for
logistics and innovation. Since the period end, Collect+ has started processing
deliveries for on-line clothing retailer, M and M Direct.
1. The established business includes the UK and Irish retail networks and
internet payments.
2. The developing business includes the Romanian retail network, Collect+ and
PayByPhone.
3. Net revenue is revenue less the cost of mobile top-ups and SIM cards where
PayPoint is principal and costs incurred by PayPoint, which are recharged to
clients and merchants. These costs include retail agent commission,
merchant service charges levied by card scheme sponsors and costs for the
provision of call centres for PayByPhone clients. Net revenue is a measure,
which the directors believe assists with a better understanding of the
underlying performance of the group.
4. Collect+ revenue and net revenue is included in the developing business
revenue and net revenue, but as Collect+ is reported in the Consolidated
Income Statement on a profit after tax only basis, revenue and net revenue
needs to be eliminated to reconcile to reported revenue and net revenue.
Analysis of transactions
There has been growth in transaction volumes across all payments types except UK
and Ireland mobile top-ups, which have decreased as a result of market decline.
| 6 months 6 months Year
| ended ended ended
|25 September 26 September Increase / 27 March
| 2011 2010 (decrease) 2011
| thousands thousands % thousands
----------------------------+----------------------------------------------
Retail networks |
|
Bill and general payments| 165,419 152,286 9 350,970
|
Top-ups | 55,496 60,597 (8) 117,670
|
Retail services | 29,108 22,658 28 48,425
|
Internet payments | 33,914 25,326 34 58,544
|
|
PayByPhone | 8,068 6,557 23 14,059
----------------------------+----------------------------------------------
Total | 292,005 267,424 9 589,668
----------------------------+----------------------------------------------
Bill and general payment transactions were ahead of the same period last year as
a result of an 11% increase in prepaid energy volumes. There was strong growth
in Romania, where we processed over 8 million transactions (2010: 5 million).
In the UK and Ireland, mobile top-up volumes were down 9%. In Romania, mobile
top-up volumes increased 8% although the net revenue per transaction fell. E-
currency volumes in the UK continue to grow and were up 9% on the same period
last year, with over 3 million transactions processed.
Retail services volumes have increased across most products. ATM transactions
increased by 14%, credit and debit transactions by 29%, SIM card sales by 56%
and parcels by five times over the same period last year.
Internet transactions were up 34% to 34 million as we continue to add large
merchants and through organic growth in our existing merchants.
PayByPhone transactions have increased 23% as we have started to implement
PayByPhone in new parking authorities and some existing authorities have removed
other payment options.
Transaction value
There has been growth in the transaction value paid by consumers, primarily in
bill and general, and internet payments.
| 6 months 6 months Year
| ended ended ended
| 25 September 26 September Increase / 27 March
| 2011 2010 (decrease) 2011
| £000 £000 % £000
---------------------+----------------------------------------------------------
Retail networks |
|
Bill and general | 3,005,334 2,759,418 9 6,198,171
|
Top-ups | 549,448 573,689 (4) 1,114,809
|
|
Retail services | 211,005 194,174 9 394,727
|
Internet payments | 1,790,612 1,277,867 40 2,838,147
|
PayByPhone | 31,916 26,252 22 55,020
---------------------+----------------------------------------------------------
Transaction value | 5,588,315 4,831,400 16 10,600,874
---------------------+----------------------------------------------------------
The increase in bill and general transaction value results from higher
transaction volumes with broadly similar average values.
The reduction in top-up transaction value is primarily as a result of a decline
in the prepay mobile market, partially offset by increases in the average
transaction values in the UK and Ireland and an increase in e-currency
transactions.
The increase in retail services is accounted for by ATM cash withdrawals. The
transaction value in other retail services is relatively small as SIM sales are
low value transactions and for credit and debit card transactions (where
merchants are settled by the card sponsor, not PayPoint), receipt advertising
and parcels, there is no transaction value.
Internet consumer spending has increased by 40% over the same period last year
and the average transaction value has increased 5% to £52.80 (2010: £50.46).
PayByPhone transaction values have increased by 22%. The average value of a
transaction has remained broadly the same.
Revenue
| 6 months 6 months Year
| ended ended ended
| 25 September 26 September Increase / 27 March
| 2011 2010 (Decrease) 2011
| £000 £000 % £000
---------------------+---------------------------------------------------------
Retail networks |
|
Bill and general | 28,032 25,429 10 57,889
|
|
|
Top-ups | 47,066 50,177 (6) 98,843
|
Retail services | 11,693 9,437 24 19,602
|
Internet payments | 4,372 4,190 4 8,939
|
PayByPhone | 2,560 2,183 17 4,501
|
Other | 2,200 1,482 48 3,459
---------------------+---------------------------------------------------------
Revenue | 95,923 92,898 3 193,233
---------------------+---------------------------------------------------------
Bill and general payment revenue is higher than the same period last year mainly
as a result of growth in prepaid energy and local authority housing transactions
in the UK and 70% growth in Romanian bill payment transactions.
The reduction in mobile top-up revenue is driven by the migration of prepaid
consumers to contract in the UK and greater value for money offered by mobile
operators.
Retail services revenue has increased as a result of an increase in both the
number of retailers taking the services and increased volumes of SIM, parcel,
debit and credit card, and ATM transactions.
Internet payment revenue growth has been explained on page 3.
PayByPhone revenues are up 17% against the same period last year. Although
PayByPhone has won a good share of tenders as a consequence of the increased
resources we have put in, client delays in implementations have delayed revenue
growth into the second half of the year.
Other revenue includes one-off set-up fees and the recharge of development
costs, but is not expected to continue at the same rate for the second half of
the current year.
Net revenue
Net revenue is revenue less the cost of mobile top-ups and SIM cards where
PayPoint is principal and costs incurred by PayPoint which are recharged to
clients and merchants. These costs include retail agent commission, merchant
service charges levied by card scheme sponsors and for PayByPhone clients, costs
for the provision of call centres. Net revenue is a measure which the directors
believe assists with a better understanding of the underlying performance of the
group and is shown in the table below:
| 6 months 6 months Year
| ended ended ended
| 25 September 26 September Increase / 27 March
| 2011 2010 (decrease) 2011
| £000 £000 % £000
---------------------+-----------------------------------------------------
Retail networks |
|
Bill and general | 16,179 14,892 9 33,806
|
Top-ups | 10,747 11,539 (7) 22,683
|
Retail services | 6,671 5,137 30 10,827
|
Internet payments | 4,372 4,190 4 8,939
|
PayByPhone | 1,761 1,488 18 3,009
|
Other | 2,200 1,482 48 3,459
---------------------+-----------------------------------------------------
Net revenue | 41,930 38,728 8 82,723
---------------------+-----------------------------------------------------
Net revenue on bill and general payments has increased from volume growth in
energy prepayment and local authority housing in the UK and bill payment in
Romania, offset by some UK clients migrating bill payments to direct debit. Net
revenue is in line with transaction growth.
Top-up net revenue has decreased slightly more than revenue because margins in
Romania and Ireland have reduced, offset by the positive impact of mix in the UK
where the reduction in top-ups in independents is less severe than in multiple
retailers. Retail services net revenue has a larger percentage increase than
revenue, as credit and debit card transactions and receipt advertising do not
attract retail agent commission.
Growth in net revenue from internet transactions has been explained on page 3.
PayByPhone net revenue was up 18%, lower than the growth in transactions as
margin in the UK has reduced.
Network growth
Outlets have increased to 30,545 (March 2011: 29,508), an increase of 1,037. In
the UK and Ireland, outlets increased by 649, more than expected, as a
consequence of unfulfilled orders at last year end and lower churn. Our new
virtual terminal, a software variant which can be loaded onto retailers' till
systems, has been rolled out to 1,400 outlets. Our focus in the UK since the
year end remains on increasing retail agent yield. In Romania, we have
installed 388 outlets.
In our internet payments channel, we have added over 250 new merchants during
the period, focussing on winning higher volume merchants, rather than start-ups
that process little volume.
We introduced Collect+ to 584 of our retail outlets, bringing the total to
4,252.
|
| At At Increase / At
| 25 September 26 September (decrease)(1) 27 March
| 2011 2010 % 2011
--------------------+--------------------------------------------------------
UK and Ireland | 24,162 23,021 3 23,513
|
Romania | 6,383 5,012 6 5,995
--------------------+--------------------------------------------------------
Total | 30,545 28,033 4 29,508
--------------------+--------------------------------------------------------
Internet merchants | 5,464 5,522 5 5,213
|
Collect+ outlets | 4,252 3,350 16 3,668
--------------------+--------------------------------------------------------
((1)) Increase/(decrease) measured against position at 27 March 2011
Financial review
Movement in revenue and net revenue have been addressed in the operational
review above.
Gross profit was £36.0 million (2010: £32.8 million), up 9.7% and the gross
profit margin improved to 37.5% (2010: 35.3%) as a result of the reduction in
agent commission, due to lower mobile top-ups.
Operating costs (administrative expenses) were £19.3 million (2010: £17.5
million), up 10.3%, due to some initial costs relating our new benefits
contract, signage for Collect+ sites and our continuing investment in increased
resources for PayByPhone.
Operating profit was £16.7 million (2010: £15.3 million), up 9.0%, excluding
PayPoint's share of losses in Collect+. The operating margin(1) increased
slightly to 39.8% (2010: 39.5%), mainly as result of improved performance in the
UK retail network.
Our share, in the period, of the loss in our parcels joint venture, Collect+,
increased to £0.9 million (2010: £0.7 million) as it continues to invest in
resources to grow the business.
Profit before tax was £15.8 million (2010: £14.6 million), up 8.7% on the same
period last year. The tax charge was £4.5 million (2010: £4.5 million) and the
estimated effective tax rate for the current financial year is 28.5% (year ended
27 March 2011: 30.9%). The reduction in tax rates reflects the decrease in the
UK corporate tax rate.
Operating cash flow was £8.1 million (2010: £9.4 million) after corporation tax
payments of £5.3 million (2010: £5.9 million). Capital expenditure of £1.7
million (2010: £1.1 million) comprised expenditure on new terminals, software
development and ATMs. Collect+ funding was £0.8m (2010: £0.4 million). Equity
dividends paid were £10.6 million (2010: £9.8 million). Net cash and cash
equivalents at the period end were £21.5 million (27 March 2011 £26.5 million),
including client cash of £3.0 million, down from £6.1 million at 27 March 2011.
The reduction in client cash results from a change in practice in respect of ATM
monies, which LINK recommended be held in trust for the benefit of retailers,
which at the period end were £3.1 million (27 March 2011 £3.3 million).
(1) Operating margin is operating profit (which excludes Collect+) as a
percentage of net revenue.
Related party transactions
Related party transactions are disclosed in note 5.
Risks
Risks to PayPoint's business, financial condition and operations are disclosed
on pages 22 and 23.
Dividend
We have declared an interim dividend of 8.7p per share (2010: 7.8p) which will
be paid on 21 December 2011 to shareholders on the register at 2 December 2011.
Liquidity and going concern
The group is profitable, cash generative, had cash of £21.5 million at the
period end and an undrawn £35 million revolving term credit facility with an
unexpired term of over four years. Cash and borrowing capacity is adequate to
meet the foreseeable needs of the group, taking account of any risks (pages 22
and 23). The financial statements have therefore been prepared on a going
concern basis.
Economic climate
Bill and general payments which account for 39% (2010: 38%) of our net revenue,
have continued to be resilient, as consumers' discretion in expenditure is
limited for essential services and our service continues to be popular. Utility
providers in the UK continue to install new prepay gas and electricity meters,
which will have a beneficial impact on our transaction volumes. There has
been adverse impact on our top-up volumes as a consequence of migration from
prepaid to contract and more value for money being offered to consumers. Mobile
top-ups account for 23% of our net revenue (2010: 27%). The internet payment
market continues to grow substantially. PayByPhone is able to offer parking
authorities a more cost effective collection system for parking compared to pay
and display machines, which should continue to make PayByPhone's services
attractive. The convenient service for users of the fast growing online market
provided by Collect+ offers opportunity for substantial growth in parcel
volumes.
Outlook
For the current financial year, trading is in line with the company's
expectations. Our established business is strong. We will pursue further
opportunities to enhance UK retail yield by introducing new technology and
services, while enhanced transaction management and information services should
help our internet sales in the next financial year. Continuing progress is
expected in our developing business. Our Romanian retail network will focus on
improving market share with modest network growth to improve yield. PayByPhone
will continue to pursue new clients and the development of technology to grow
revenue and improve customer satisfaction. Collect+ will continue its intensive
marketing to new clients, to extend deliveries to its existing returns clients
and promote its consumer to consumer proposition. We expect PayByPhone and the
Collect+ parcel service to turn to profit next financial year.
David Newlands Dominic Taylor
Chairman Chief Executive
24 November 2011
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
25 September 26 September 27 March
2011 2010 2011
Continuing operations Note £000 £000 £000
-----------------------------------------------------------------------
Revenue 2 95,923 92,898 193,233
Cost of sales 2 (59,913) (60,079) (122,567)
-----------------------------------------------------------------------
Gross profit 36,010 32,819 70,666
Administrative expenses (19,316) (17,510) (34,614)
-----------------------------------------------------------------------
Operating profit 16,694 15,309 36,502
Share of loss of joint venture (935) (726) (1,541)
Investment income 87 38 88
Finance costs (23) (64) (143)
-----------------------------------------------------------------------
Profit before tax 15,823 14,557 34,456
Tax 3 (4,510) (4,496) (10,614)
-----------------------------------------------------------------------
Profit for the period 11,313 10,061 23,842
-----------------------------------------------------------------------
Attributable to:
Equity holders of the parent 11,329 10,061 23,883
Non-controlling interest (16) - (41)
-----------------------------------------------------------------------
11,313 10,061 23,842
-----------------------------------------------------------------------
Earnings per share
-----------------------------------------------------------------------
Basic 4 16.7p 14.9p 35.2p
-----------------------------------------------------------------------
Diluted 4 16.7p 14.8p 35.1p
-----------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
25 September 26 September 27 March
2011 2010 2011
Note £000 £000 £000
Exchange differences on translation of
foreign operations 8 655 (837) (72)
--------------------------------------------------------------------------------
Other comprehensive income / (loss) for
the period 655 (837) (72)
Profit for the period 11,313 10,061 23,842
--------------------------------------------------------------------------------
Total comprehensive income for the 11,968 9,224 23,770
period
--------------------------------------------------------------------------------
Attributable to:
--------------------------------------------------------------------------------
Equity holders of the parent 11,984 9,224 23,811
Non-controlling interest (16) - (41)
--------------------------------------------------------------------------------
11,968 9,224 23,770
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
25 September 26 September 27 March
2011 2010 2011
Note £000 £000 £000
--------------------------------------------------------------------------------
Non-current assets
Goodwill 56,744 56,058 57,133
Other intangible assets 1,344 1,277 1,329
Property, plant and equipment 14,566 13,851 14,520
Investment in joint venture - - 135
Deferred tax asset 1,079 904 1,116
Investment 435 405 435
--------------------------------------------------------------------------------
2 74,168 72,495 74,668
--------------------------------------------------------------------------------
Current assets
Inventories 1,412 1,582 915
Trade and other receivables 19,006 18,470 17,103
Cash and cash equivalents 7 21,511 22,928 26,464
--------------------------------------------------------------------------------
41,929 42,980 44,482
--------------------------------------------------------------------------------
Total assets 116,097 115,475 119,150
--------------------------------------------------------------------------------
Current liabilities
Trade and other payables 28,834 30,563 32,996
Current tax liabilities 4,491 3,930 5,287
Short-term borrowings - 10,000 -
Obligations under finance leases 9 11 32
--------------------------------------------------------------------------------
33,334 44,504 38,315
--------------------------------------------------------------------------------
Non-current liabilities
Other liabilities 225 175 240
--------------------------------------------------------------------------------
225 175 240
--------------------------------------------------------------------------------
Total liabilities 33,559 44,679 38,555
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net assets 82,538 70,796 80,595
--------------------------------------------------------------------------------
Equity
Share capital 8 226 226 226
Investment in own shares 8 (216) (216) (216)
Share premium 8 25 25 25
Share based payment reserve 8 2,566 2,476 3,005
Translation reserve 8 1,126 (294) 471
Retained earnings 8 78,868 68,579 77,125
--------------------------------------------------------------------------------
Total equity attributable to equity 82,595 70,796 80,636
holders of the parent company
--------------------------------------------------------------------------------
Non-controlling interest (57) - (41)
--------------------------------------------------------------------------------
Total equity 82,538 70,796 80,595
--------------------------------------------------------------------------------
Condensed Consolidated statement of changes in equity
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
Note 25 September 26 September 27 March
2011 2010 2011
£000 £000 £000
--------------------------------------------------------------------------------
Opening equity 80,595 70,744 70,744
Profit for the period 11,313 10,061 23,842
Dividends paid (10,565) (9,765) (15,041)
Movement in own shares 5 - 154 154
Exchange differences on translation of
foreign operations 655 (837) (72)
Movement in share based payment reserve
(439) (208) 321
Adjustment on share schemes vesting 979 647 647
--------------------------------------------------------------------------------
Closing equity 82,538 70,796 80,595
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
Note 25 September 26 September 27 March
2011 2010 2011
£000 £000 £000
--------------------------------------------------------------------------------
Net cash flow from operating activities 9 8,098 9,444 31,137
--------------------------------------------------------------------------------
Investing activities
Investment income 69 30 70
Purchase of property, plant and
equipment (1,670) (1,051) (3,160)
Proceeds from disposal of property,
plant and equipment 23 - 61
Investment - - (30)
Loan to joint venture 5 (800) (400) (1,350)
--------------------------------------------------------------------------------
Net cash used in investing activities (2,378) (1,421) (4,409)
--------------------------------------------------------------------------------
Financing activities
Repayments of obligations under finance
leases (23) (3) (22)
Receipt / (repayment) of short-term - 4,000 (6,000)
borrowings
Dividends paid (10,565) (9,765) (15,041)
--------------------------------------------------------------------------------
Net cash used in financing activities (10,588) (5,768) (21,063)
--------------------------------------------------------------------------------
Net (decrease)/increase in cash and
cash equivalents (4,868) 2,255 5,665
Cash and cash equivalents at beginning
of period 26,464 20,769 20,769
Effect of foreign exchange rate changes (85) (96) 30
--------------------------------------------------------------------------------
Cash and cash equivalents at end of
period 21,511 22,928 26,464
--------------------------------------------------------------------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Accounting policies
These condensed financial statements have been prepared in accordance with IAS
34 as adopted by the European Union on an historical cost basis and the same
accounting policies, presentation methods and methods of computation are
followed in this condensed set of financial statements as applied in the group's
latest annual audited financial statements.
Basis of preparation
The condensed financial statements contained in this report are unaudited, but
have been formally reviewed by the auditors and their report to the company is
set out on page 24. The information shown for the year ended 27 March 2011,
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 auditors on the statutory accounts for
the year ended 27 March 2011, 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.
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 group's liquidity and going concern
review can be found in the Management Report on page 9.
2. Segmental reporting, net revenue analysis and cost of sales
(i) Segmental information
PayPoint is a service provider for consumer payment transactions (payments and
receipts) through various distribution channels, involving the processing of
high volume transactions, the management of retail agents, clients and online
merchants, the settlement of funds (collection and transmission) and
transmission of data in secure environments, by the application of technology.
The application of technology is directed on a group basis from the group's
executive team (consisting of the Chief Executive Officer, Finance Director,
Business Development Director and Chief Information Officer) to develop products
across the business, prioritised on an economic value basis (generally by
product), rather than on a subsidiary by subsidiary basis. As the business has
high fixed operating costs, the company regards the analysis of net revenue as
the most reliable indication of contribution on a product by product basis and
analysis of net revenue is shown in the Management Report.
Whilst the group has a number of different products, these do not meet the
definition of different segments under IFRS 8 and, therefore, the group has only
one reportable class of business, being a payment service provider for consumer
payment transactions.
(ii) Reconciliation of revenue to net revenue, analysis of cost of sales
Revenue comprises the value of sales (excluding VAT and sales taxes) of products
and services in the normal course of business.
Net revenue is revenue less the cost of mobile top-ups and SIM cards where
PayPoint is principal and costs incurred by PayPoint which are recharged to
clients and merchants. These costs include retail agent commission, merchant
service charges levied by card scheme sponsors and cost for the provision of
call centres to PayByPhone clients.
Net revenue
6 months 6 months Year
ended ended ended
25 September 26 September 27 March
2011 2010 2011
£000 £000 £000
--------------------------------------------------------------------------------
Revenue - transaction processing 95,240 92,135 191,742
- rental income of ATMs 683 763 1,491
--------------------------------------------------------------------------------
Revenue 95,923 92,898 193,233
less:
Commission payable to retail agents (33,120) (34,579) (71,322)
Cost of mobile top-ups and SIM cards as
principal (20,076) (18,896) (37,696)
Card scheme sponsors' charges and call centre
charges (797) (695) (1,492)
--------------------------------------------------------------------------------
Net revenue 41,930 38,728 82,723
--------------------------------------------------------------------------------
Cost of sales
6 months 6 months Year
ended ended ended
25 September 26 September 27 March
2011 2010 2011
£000 £000 £000
--------------------------------------------------------------------------------
Cost of sales
Commission payable to retail agents 33,120 34,579 71,322
Cost of mobile top-ups and SIM cards as
principal 20,076 18,896 37,696
Card scheme sponsors' charges and call centre
charges 797 695 1,492
Depreciation and amortisation 1,652 1,912 3,612
Other 4,268 3,997 8,445
--------------------------------------------------------------------------------
Total cost of sales 59,913 60,079 122,567
--------------------------------------------------------------------------------
Geographical information:
6 months 6 months Year
ended ended ended
25 September 26 September 27 March
2011 2010 2011
£000 £000 £000
-------------------------------------------------------------
Revenue
UK 72,136 71,675 148,737
Ireland 11,006 11,204 22,475
Romania 11,998 9,559 21,036
North America 783 460 985
-------------------------------------------------------------
Total 95,923 92,898 193,233
-------------------------------------------------------------
Non-current assets
UK 71,642 70,486 71,850
Ireland - 44 -
Romania 2,108 1,711 2,329
North America 418 254 489
-------------------------------------------------------------
Total 74,168 72,495 74,668
-------------------------------------------------------------
3. Tax on profit of ordinary activities
6 months 6 months Year
ended ended ended
25 September 26 September 27 March
2011 2010 2011
£000 £000 £000
-------------------------------------------------------
Current tax 4,473 4,233 10,565
Deferred tax 49
37 263
-------------------------------------------------------
Total 4,510 4,496 10,614
-------------------------------------------------------
4. Earnings per share
The basic and diluted earnings per share are calculated on the following profit
and number of shares.
6 months 6 months Year
ended ended ended
25 September 26 September 27 March
2011 2010 2011
£000 £000 £000
--------------------------------------------------------------------------------
Profit for the period attributable to
equity holders of the parent 11,329 10,061 23,883
--------------------------------------------------------------------------------
Number of Number of Number of
shares shares shares
--------------------------------------------------------------------------------
Weighted average number of shares
(for basic earnings per share) 67,772,332 67,675,017 67,721,190
Potential dilutive ordinary shares:
Deferred share bonus 157,996 117,565 157,914
--------------------------------------------------------------------------------
Diluted basis 67,930,328 67,792,582 67,879,104
--------------------------------------------------------------------------------
Earnings per share
--------------------------------------------
Basic 16.7p 14.9p 35.2p
--------------------------------------------
Diluted 16.7p 14.8p 35.1p
--------------------------------------------------------------------------------
5. Related party transactions
PayByPhone
During the period, the company subscribed for additional share capital in Verrus
Mobile Technology Inc for £1,756,000 and Verrus UK Limited has subscribed for
additional share capital in Mobile Payment Services SAS for £133,000.
Collect+
During the period, PayPoint has lent Drop and Collect Limited (its 50/50 joint
venture with Yodel, which trades as Collect+) £800,000, bringing the total
amount of the loan outstanding to £3,900,000 (27 March 2011: £3,100,000). This
has been treated as part of the investment in the joint venture.
At 25 September 2011, there were £28,000 of unrecognised losses in Collect+ (27
March 2011: £Nil).
Investment in OB10
OB10 specialises in electronic invoicing. PayPoint's shareholding at 25
September 2011 represented 1.02% of the issued capital of OB10 (27 March
2011: 1.02%).
6 months 6 months Year
ended ended ended
25 September 26 September 27 March
2011 2010 2011
£000 £000 £000
-------------------------------------------------------------
Investment at cost 435 405 435
-------------------------------------------------------------
In the view of the directors, the aggregate cost of £435,000 represents the fair
value of the investment in the shares.
David Newlands, who is also Chairman of OB10, Dominic Taylor, George Earle, Eric
Anstee and Nick Wiles hold shareholdings in OB10 as follows:
6 months 6 months Year
ended ended ended
Directors' shareholding in OB10 25 September 26 September 27 March
2011 2010 2011
% % %
--------------------------------------------------------------------------
David Newlands 2.87 4.73 2.87
Dominic Taylor 1.44 1.42 1.44
George Earle 0.40 0.42 0.4
Nick Wiles 1.02 1.04 1.02
Eric Anstee 0.08 0.08 0.08
Share based payments
During the period, the Deferred Share Bonus plan (DSB) and long term incentive
plan (LTIP) did not vest and, as a result, no treasury shares were released to
the relevant executive directors and senior managers.
6. Dividend
The interim dividend of 8.7p (2010: 7.8p) was declared on 24 November 2011 and,
accordingly, has not been recorded as a liability as at 25 September 2011. The
total dividend in respect of the year ended 27 March 2011 was 23.4p per share.
7. Cash and cash equivalents
Included within cash and cash equivalents is £3.0 million (25 September 2010:
£6.7 million, 27 March 2011: £6.1 million) relating to monies collected on
behalf of PayPoint clients where PayPoint has title to the funds (client cash).
An equivalent balance is included within trade payables. The decrease in client
cash results from of a change in the practice in respect of ATM monies, where
LINK recommended that monies owed to retailers be held in trust accounts.
Accordingly, the balance held in trade creditors has decreased by the same
amount. At 25 September, amounts held in trust, owed to retailers in respect of
ATM monies amounted to £3.1 million (held by PayPoint, not in trust at 27 March
2011: £3.3 million).
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. At 25 September 2011, the group's
cash was £21.5 million (27 March 2011: £26.5 million).
8. Share capital and reserves
6 months 6 months Year
ended ended ended
25 September 26 September 27 March
2011 2010 2011
£000 £000 £000
--------------------------------------------------------------------------------
Authorised share capital
4,365,352,200 ordinary shares of 1/3p each 14,551 14,551 14,551
--------------------------------------------------------------------------------
Called up, allotted and fully paid share
capital
67,806,973 ordinary shares of 1/3p each 226 226 226
--------------------------------------------------------------------------------
Investment in own shares
At start of period (216) (370) (370)
Used on share scheme vesting - 154 154
--------------------------------------------------------------------------------
At end of period (216) (216) (216)
--------------------------------------------------------------------------------
Share premium
At start of period 25 25 25
--------------------------------------------------------------------------------
At end of period 25 25 25
--------------------------------------------------------------------------------
Share based payment reserve
At start of period 3,005 2,684 2,684
Additions in period 540 558 1,088
Released in period (979) (801) (801)
Other adjustments - 35 34
--------------------------------------------------------------------------------
At end of period 2,566 2,476 3,005
------
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