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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Paypoint Plc | LSE:PAY | London | Ordinary Share | GB00B02QND93 | ORD 1/3P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -4.00 | -0.76% | 522.00 | 526.00 | 531.00 | 522.00 | 522.00 | 522.00 | 10,538 | 09:44:46 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Adjustment & Collection Svcs | 167.72M | 34.71M | 0.4776 | 10.93 | 379.38M |
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PayPoint plc
Half year financial report
for the 6 months ended 30 September 2016
SUMMARY
6 months ended 6 months ended
30 September 30 September (Decrease)/
2016 2015 increase
Revenue GBP101.7m GBP102.8m (1.1)%
Net revenue([1] #_ftn1) GBP58.4m GBP59.3m (1.5)%
Gross margin 49.1% 49.6% (0.5)ppts
Adjusted operating profit
before impairment([2] #_ftn2) GBP24.7m GBP21.3m 15.6%
Operating profit after
impairment GBP24.2m GBP3.5m 589.3%
Basic earnings per share 29.0p (1.9)p 30.9p
Adjusted earnings per share([3]
#_ftn3) 28.7p 24.8p 3.9p
Interim dividend per share 15.0p 14.2p 0.8p
Cash at period end GBP49.6m GBP46.1m 7.8%
Progress in strategic priorities
-- Delivering against our strategy of refocussing PayPoint on our
retailers:
o Following successful commercial trials, PayPoint One and Core EPoS
were launched in September
o Retail services including investment in rollout and support for
PayPoint One and Core EPoS, increasing in the second half
-- MultiPay transactions (3 million), up 38.1%; 14 clients contracted.
SSE live ahead of customer rollout in 2017
-- Collect+ discussions with Yodel and Mobile sale process both
progressing
Financial results
-- Retail services net revenue growth of 14.7% but bill payments growth
has moderated
-- Revenue reduced by 1.1% as a result of the sale of Online, offset by
growth in Retail and Mobile
-- Adjusted operating profits(2) increased by 15.6% driven by growth
from Romania and Mobile and deferral of costs
-- Strong balance sheet with cash of GBP49.6 million and undrawn credit
facility of GBP45 million
-- Increase in interim dividend by 5.6% to 15.0p per share
-- Commencement of additional dividend of 12.2p per share as announced
in full year results
Operations
-- Retail network transaction volumes down 1.9% to 307.1 million due to
bill and general and top-up decline in the UK offset by growth in retail
services and Romania
-- Strong growth in Romania bill payment transactions up by 11.7% to
32.6 million, sites up by 12.7% to 10,662
-- Collect+ parcels increase 5.7% to 10.5 million
-- Mobile payments business transaction volumes up 27.5% to 30.0
million
-- Total retail network sites increased to 39,635 and Collect+ sites
to 5,960
Dominic Taylor, Chief Executive, said: "Overall results are in line with
our expectations. As set out in our last full year results announcement,
this year is proving to be pivotal as we change the focus of the
organisation towards our retailers. In the first half, the commercial
trial of our new PayPoint One terminal and Core EPoS were successfully
concluded with the official launch in September. The platform has been
well received and will enable us to drive further growth in retail
services which is central to our strategy. Whilst we will continue to
improve the client offering, our main development focus will continue on
enhanced versions of our new EPoS product and implementing
organisational improvements and process efficiencies to improve our
retailer offering.
Looking ahead to the second half, we expect to rollout PayPoint One to
achieve around 4,000 sites by the end of the financial year, to develop
Advanced EPoS and to step up our installations of ATMs and card payment,
requiring increased costs as expected, to deliver our full year results.
Trading since 30 September has been in line with our expectations."
MANAGEMENT REPORT
This management report has been prepared solely to provide additional
information to shareholders as a body to assess PayPoint's half year
results 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, including both economic and business
risk factors, underlying any such forward looking statements.
PayPoint processes consumer transactions and as such, has only one
operating segment. However, we include an analysis of the number and
value of consumer transactions, revenue and net revenue by product and
an analysis of our networks to help to explain our performance and
strategy.
Growth opportunities include: continuing rollout of PayPoint One and
Core EPoS, which will enable further growth in retail services, enhanced
versions of our new EPoS product; provision of single solution,
multi-channel payments and services to new and existing clients; the
extension of services in each payment channel across our existing and
prospective clients, new and existing client development and retail
services in the UK and Romanian retail networks; the expansion of these
retail networks. There are also opportunities to extend our services
into other countries.
The channel and product analysis is as follows:
Retail Payments and Services:
Bill and general (prepaid energy, bills and cash out services)
Top-ups (mobile, e-money vouchers, prepaid debit cards and lottery)
Retail services (Core EPoS, ATM, payment card, parcels, money transfer,
SIMs, broadband, receipt advertising, charges for failed direct debits
and paper invoicing)
In addition, fees for early settlement, development and set up are
attributed to the client, to which they are billed and included above in
the relevant categories.
Mobile:
Parking, permits, tolling, ticketing and bicycle rental transactions.
Directorate Change
Neil Carson has notified the board of his intention to step down as a
non-executive director of the company prior to the annual general
meeting in 2017 due to his other commitments. A search process to
identify a new non-executive director will be initiated in due course
and a further announcement will be made when appropriate.
OPERATIONAL REViEW
Net revenue for the period was GBP58.4 million (2015: GBP59.3 million),
on revenues of GBP101.7 million (2015: GBP102.8 million), with
transaction volume of 337.2 million (2015: 399.0 million) and
transaction value of GBP4.9 billion (2015: GBP7.2 billion). The results
of the online payments business, which was sold on 8 January 2016, are
included in the 2015 comparatives. Excluding the online payments
business, net revenue grew year on year by 5.1%, revenue by 2.7%,
transactions by 0.1% and transaction values by 0.4%.
Our retail networks produced net revenue growth of 2.8% (2015: 3.5%)
with strong growth from Romania of 23.9% and 1.3% from UK and Ireland.
In the UK, PayPoint One has been well received by retailers, however the
revenue achieved in the period has been lower than anticipated, as we
stopped rolling out the older terminals at the start of the initial
rollout of PayPoint One and demand for upgrades, which produce lower
incremental revenues than new agents, was stronger than expected.
Nevertheless, retail services net revenue grew by 14.0%. Now that the
rollout of PayPoint One has gathered pace, focus has returned to the ATM
and card payment products to drive further growth in the second half.
Bill and general payments net revenue grew year on year by 1.2% despite
a year on year reduction in Big 6 energy transactions. Mobile top-up
transaction volumes continued to decline, resulting in net revenue
decreasing to GBP5.7million (2015: GBP6.5 million), which was 11.4% of
UK and Ireland net revenues (2015: 13.1%).
In Romania, net revenue increased in bill and general payments by 19.8%,
retail services by 66.1% and top-ups by 24.6%. Net revenue growth was
achieved from a 12.1% increase in transactions driven by the increase in
market share of existing clients and the addition of new clients.
Administrative expenses of GBP25.8 million are broadly in line with the
same period last year, excluding GBP3.7 million from the comparative
figure in respect of the online payments business. Administrative
expenses in the prior period contained business restructuring costs and
professional fees incurred for the sale of the mobile and online
payments businesses (in total GBP0.7 million). Included in the first
half of this year are costs of GBP0.5 million related to the launch and
rollout of PayPoint One and Core EPoS and the organisational changes for
the support of these new retailer services. We expect costs to increase
in the second half as the rollout of PayPoint One and Core EPoS
accelerates and attention returns to increasing ATM and card payment
site numbers.
Adjusted earnings per share([4] #_ftn4) of 28.7 pence per share
increased by 15.7% as a consequence of growth from retail services, the
Romanian business and reduced losses from the mobile payments business.
We were delighted to launch our new generation terminal, PayPoint One,
in the period. At the end of September, there were over 1,100 terminals
operational. PayPoint One combines EPoS, card payments and PayPoint
services on a single platform. Features include quick payments with
integrated contactless, Apple Pay and Android Pay to improve customer
experience and reduce queue times. Its Android operating system gives
future flexibility and extendibility and the cloud-based back office
allows retailers to manage their stores anywhere from any device. A
modern content management system ensures software applications are kept
up to date and it has an integrated messaging system.
We continue to grow transactions using our multi-channel product,
MultiPay which contributed more than three million transactions, despite
slower than expected growth in smart meter numbers, caused by the delay
to the readiness of the Data Communications Company. There are now 14
clients contracted, including a Big 6 energy company and our pilot
client Utilita.
In Collect+, our joint venture with Yodel, the number of parcels
increased by 5.7% to 10.5 million (2015: 9.9 million). Collect+ ranks
first both in customer satisfaction and customer recommendation to
friends and colleagues (source:YouGov BrandIndex). At period end, the
number of Collect+ sites was 5,960. We continue to discuss with Yodel
the future arrangements for the parcels service following Yodel's
proposal to increase costs to the joint venture.
The mobile payments business net revenue increased to GBP4.6 million, up
41.7% as a result of new clients, existing clients generating more
transactions and the benefit of a weaker pound. We continue to progress
the sale of this business.
Bill and general
6 months ended 6 months ended Year ended
30 September 30 September (Decrease)/ increase 31 March
2016 2015 % 2016
Transactions
'000 195,010 203,215 (4.0) 449,170
Transaction
value
GBP000 3,860,261 3,909,134 (1.3) 8,557,707
Revenue
GBP000 37,818 38,533 (1.9) 85,770
Net
revenue([5]
#_ftn5)
GBP000 26,923 26,180 2.8 59,480
Bill and general transactions decreased 4.0% compared to the same period
last year. UK and Irish bill and general transactions reduced by 6.7% on
last year due to the continuing decline in energy transactions. A
decrease in consumption, lower energy prices and higher average
transaction values exceeded the impact from meter growth. MultiPay
continued to grow, with total transactions for the period exceeding
three million, despite the delay in the readiness of the Data
Communications Company, which is constricting the installation of smart
meters. Strong growth in Romania continued as a result of increased
market share([6] #_ftn6) of 23.1% in September (September 2015: 21.3%)
and the addition of new clients. Romanian transactions increased 11.7%
(2015:15.6%) to 32.6 million transactions (2015: 29.1 million).
Growth in net revenue of 2.8% was achieved, despite the decline in
transactions and revenue, as a result of the transaction mix and changes
to individual transaction commission caps.
Top-ups
6 months ended 6 months ended Year ended
30 September 30 September Decrease 31 March
2016 2015 % 2016
Transactions '000 35,782 41,636 (14.1) 79,041
Transaction value
GBP000 370,033 390,739 (5.3) 767,376
Revenue GBP000 31,867 32,541 (2.1) 63,325
Net revenue1 GBP000 9,583 11,083 (13.5) 20,885
Top-up transactions reduced as expected compared to the same period last
year, as a result of the continued decline in the mobile top-up volumes
in the UK and Ireland of 14.1% (2015: 13.8%) and a decline in other
top-ups. These declines were partly offset by an increase in Romanian
mobile top-ups.
Overall revenue declined less than net revenue as result of the growth
in mobile top-ups in Romania, where PayPoint is principal in top-up
transactions and therefore includes as revenue the whole sale value of
the top-up, whereas in the UK, where PayPoint acts as agent, only the
commission is included in revenue.
Retail services
6 months ended 6 months ended Year ended
30 September 30 September Increase 31 March
2016 2015 % 2016
Transactions '000 76,338 68,305 11.8 139,965
Transaction value
GBP000 588,652 524,591 12.2 1,065,739
Revenue GBP000 25,682 23,397 9.8 47,301
Net revenue([7]
#_ftn7) GBP000 17,281 15,062 14.7 30,299
Retail services transaction volume increased 11.8% (2015: 21.2%) over
the same period last year. Card payment transactions increased by 14.7%,
ATM transactions by 9.3% and parcels by 5.7%.
Net revenue growth of 14.7% (2015: 16.2%) was greater than transaction
growth and was driven by bonuses earned on SIM activations and increased
retailer service fees for PayPoint One, card payment service fees and
broadband enabled terminals.
Collect+
PayPoint has a 50% equity interest in Drop and Collect Limited, trading
as Collect+, a 50:50 joint venture with Yodel. The results of the joint
venture are not consolidated but the share of the profit or loss of the
joint venture is included in the consolidated income statement, after
group operating profit.
6 months ended 6 months ended Year ended
30 September 30 September Increase/ (decrease) 31 March
Collect+ at 100% 2016 2015 % 2016
Transactions '000 10,471 9,911 5.7 20,690
Revenue GBP000 24,609 23,693 3.9 49,588
Profit/(loss)
GBP000 887 (797) 211.3 (448)
Collect+ is the market-leading proposition for third party Click and
Collect services and its parcel returns activity also continues to grow.
Within the consumer send market, there continues to be substantial price
competition and consequently the Collect+ management team has focussed
on developing Click & Collect and returns. During the six months ended
30 September 2015, PayPoint agreed a temporary increase in Yodel's
charges which ended in February 2016.
We continue to discuss with Yodel, new arrangements for the continuation
of the service, following Yodel's proposed change in basis of charging
for its logistics, which would substantially increase the costs in the
joint venture.
Mobile and Online
6 months ended 6 months ended Year ended
30 September 30 September Decrease 31 March
2016 2015 % 2016
Transactions '000 30,062 85,891 (65.0) 150,525
Transaction value
GBP000 100,552 2,388,029 (95.8) 3,650,915
Revenue GBP000 6,346 8,344 (23.9) 16,160
Net revenue([8]
#_ftn8) GBP000 4,609 6,983 (34.0) 12,968
The six months ended 30 September 2016 includes only the mobile payments
business as the online payments business was sold on 8 January 2016. The
previous periods includes both businesses.
The mobile payments business performance, excluding the online payments
business is shown below.
6 months ended 6 months ended Year ended
30 September 30 September Increase 31 March
2016 2015 % 2016
Transactions '000 30,062 23,585 27.5 51,315
Transaction value
GBP000 100,552 73,130 37.5 158,858
Revenue GBP000 6,346 4,614 37.5 10,519
Net revenue GBP000 4,609 3,253 41.7 7,327
We have continued to add parking contracts with councils and parking
authorities, as we provide them with a more convenient and cost
effective method for collecting parking charges. Revenue in the mobile
payments business increased by 37.5% and net revenue by 41.7%,
reflecting the increase in transaction volumes as the business continues
to win both new clients and increase its penetration of existing
clients. Consumers are able to pay with Apple Pay and Android Pay at a
growing number of PayByPhone locations, streamlining payment
registration and increasing consumer satisfaction.
The assets and liabilities of the mobile payments business are shown as
held for sale in the statement of financial position for the period
ended 30 September 2016 and together with those of the online payments
business for period ended 30 September 2015. Further detail can be found
in note 10 in the condensed financial information.
Network growth
Terminal sites overall have increased by 407 to 39,635 since March 2016.
In the UK and Ireland, retail sites decreased by 114, a decrease of 0.4%
since March 2016 as a consequence of the decision to stop the rollout of
the old terminal before the new terminal rollout process was in full
flow. At 30 September 2016 there were over 1,100 sites with PayPoint One
terminals. The PayPoint One terminal is being introduced to both new and
existing retailers. Card payment services, which include the contactless
functionality were in 10,076 sites, a decrease of 35 sites since March
2016. The PPoS integrated solution, which combines a virtual terminal
(our software on the retailer's till system) with a plug-in reader,
providing our service at lower cost was in 8,178 sites (2015: 7,717).
Some of the terminals replaced by PayPoint One and PPoS in the UK will
be redeployed in Romania. Romanian sites increased by 521 (5.1%) since
March 2016 to 10,662 sites at 30 September 2016.
There were 5,960 Collect+ sites, an increase of 24 since 31 March 2016.
At At At
30 September 30 September Increase/ 31 March
Analysis of sites/internet merchants 2016 2015 (decrease) % 2016
UK and Ireland terminal sites 28,973 28,931 0.1 29,087
Romania terminal sites 10,662 9,458 12.7 10,141
Total terminal sites 39,635 38,389 3.2 39,228
Internet merchants - 4,017 (100.0) -
Collect+ sites 5,960 5,895 1.1 5,936
Financial review
Movements in revenue and net revenue have been addressed in the
operational review above.
Gross profit was GBP50.0 million (2015: GBP51.0 million, excluding the
online payments business GBP47.7 million), up 4.8% excluding the online
payments business (2015: up 2.0%). The gross profit margin was 49.1%
(2015: 49.6%, excluding online payments business 48.1%).
Administrative expenses were GBP25.8 million, broadly in line with last
year of GBP29.3 million after excluding GBP3.7 million from the
comparative figure in respect of the online payments business. The same
period last year included business restructuring costs and professional
fees incurred for the sale of the mobile and online payments businesses
(in total GBP0.7 million). Included in this year's six month period are
costs related to the launch and rollout of PayPoint One and the
organisational changes for the support of retailer services of GBP0.5
million. We expect costs to increase in the second half largely as a
result of the increased pace of the rollout of PayPoint One and EPoS and
related support costs.
The share of profits from Collect+ was GBP0.4 million (2015: loss of
GBP0.4 million). During the six months ended 30 September 2015, PayPoint
agreed a temporary increase in Yodel's charges which ended in February
2016.
The consequences of the changes in revenue and costs described above
have led to an increase in our operating margin([9] #_ftn9) to 42.2%
(2015: 36.0%).
Profit before tax was GBP24.7 million (2015: GBP3.2 million). The tax
charge was GBP5.0 million (2015: GBP4.4 million) resulting in an
effective tax rate([10] #_ftn10) of 20.2% (year ended 31 March 2016:
20.4%). The slight reduction in the effective tax rate reflects the
decrease in losses incurred by the mobile payments business in North
America for which there is no tax relief. No deferred tax asset has been
recognised for losses carried forward in this territory.
Operating cash flow was GBP9.1 million (2015: GBP24.5 million), after
corporation tax payments of GBP3.1 million (2015: GBP4.9 million) and as
expected, a net decrease in the client settlement liability of GBP15.6
million, the high comparative resulting from the timing of Easter in
2015 (2015: increase GBP7.8 million). Capital expenditure of GBP9.1
million (2015: GBP5.5 million) comprised of the purchase of the freehold
of the adjacent building at Welwyn Garden City, which we already part
occupy, PayPoint One terminals, EPoS and MultiPay development, data
centre migrations and ATMs. Share incentive schemes settled in cash
absorbed GBP0.4 million (2015: GBP0.6 million). Equity dividends paid
were GBP33.5 million (2015: GBP17.8 million). Net cash and cash
equivalents at the period end were GBP49.6 million (excluding net cash
within assets held for sale of GBP1.7 million), lower than GBP80.8
million (excluding net cash within assets held for sale of GBP2.4
million) at 31 March 2016. Capital expenditure for the year is expected
to be in the range of GBP15 million to GBP18 million, above our previous
expectations because of the purchase of the freehold in Welwyn, further
feature enhancements to PayPoint One and EPoS and ongoing development of
an alternate payment service provider for MultiPay to reduce risk of
downtime.
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 20 to 21.
Dividend
An interim dividend of 15.0p per share (2015: 14.2p) and an additional
dividend of 12.2p per share have been declared. The additional dividend
is one third of the first GBP25 million per annum of additional
dividends announced last year end. Both dividends will be paid on 15
December 2016 to shareholders on the register at 2 December 2016. The
final dividend for the year ended 31 March 2016 totalling GBP19.3
million (28.2p per share) and the gross sale proceeds of the online
business of GBP14.2 million (21.0p per share) were paid during the
period.
Liquidity and going concern
The group had cash of GBP49.6 million (2015: 46.1 million) at the period
end and an undrawn GBP45.0 million revolving term credit facility
expiring in May 2019. Cash includes amounts held to settle short-term
client settlement obligations, which at the period end, amounted to
GBP15.4 million (September 2015: GBP19.0 million, March 2016: GBP30.2
million). Cash and borrowing capacity is adequate to meet the
foreseeable needs of the group, taking account of risks identified on
pages 20 and 21. The financial statements have therefore been prepared
on a going concern basis. Excluded from cash and cash equivalents on the
condensed consolidated statement of financial position and included in
assets held for sale are cash balances related to the mobile payments
business of GBP1.7 million (September 2015: GBP2.0 million, March 2016:
GBP2.4 million).
Economic climate
The company's bill and general payments service accounted for 46.1%
(2015: 44.1%) of our net revenue and has continued to grow. Our MultiPay
development ensures PayPoint can offer clients the convenience of bill
payments across multiple channels. Utility providers continue to install
new prepay gas and electricity meters from which, together with MultiPay,
we anticipate a beneficial impact on transaction volumes. Retail
services has shown robust growth and with the launch of PayPoint One and
Core EPoS, will continue to benefit from growth opportunities. Mobile
top-ups in the UK and Ireland continue to decline as mobile operators
continue to offer more airtime at lower cost and promote prepay less
than contract, although top-up growth has been maintained in Romania.
The mobile payments business is able to offer parking authorities a more
cost effective collection system for parking compared to pay and display
machines.
PayPoint's exposure to retail agent debt in the UK and Ireland is
limited as credit granted to retail agents is restricted by daily direct
debiting for all UK and Irish transactions, other than mobile top-up
transactions on retailers' own till systems (which are collected
weekly). There is some concentration of risk in multiple retail agents.
Most of PayPoint's clients in the UK, other than for top-ups, bear the
cost of retail agent bad debt. In PayPoint Romania, the risk of bad debt
lies with the company. In Mobile, exposure is limited to receivables
from parking authorities.
Post balance sheet events and outlook
Looking ahead to the second half, we expect to rollout PayPoint One to
achieve around 4,000 sites by the end of the financial year, to develop
Advanced EPoS and to step up our installations of ATMs and card payment,
requiring increased costs as expected, to deliver our full year results.
Trading since 30 September has been in line with our expectations.
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
Note 2016 2015 2016
Continuing operations GBP000 GBP000 GBP000
Revenue 2 101,713 102,815 212,556
Cost of sales 2 (51,730) (51,779) (106,539)
Gross profit 49,983 51,036 106,017
Administrative expenses (25,769) (29,316) (55,689)
Operating profit before
impairments and disposal 24,214 21,720 50,328
Impairments 10 - (18,207) (48,986)
Profit on disposal of
online payments business - - 7,014
Operating profit after
impairments and disposal 24,214 3,513 8,356
Share of profit/(loss) of
joint venture 443 (398) (224)
Investment income 93 65 123
Finance costs (19) (25) (103)
Profit before tax 24,731 3,155 8,152
Tax 3 (4,987) (4,441) (10,247)
Profit/(loss) for the
period 19,744 (1,286) (2,095)
Attributable to:
Equity holders of the
parent 19,743 (1,288) (2,111)
Non-controlling interest 1 2 16
19,744 (1,286) (2,095)
Earnings/(loss) per share
Basic 4 29.0p (1.9)p (3.1)p
Diluted 4 28.7p (1.9)p (3.1)p
Adjusted 4 28.7p 24.8p 58.4p
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
Items that may subsequently be reclassified to the
consolidated income statement:
Exchange differences on translation of foreign
operations 1,324 (865) 968
Tax effect thereof - - -
Other comprehensive profit/(loss) for the period 1,324 (865) 968
Profit/(loss) for the period 19,744 (1,286) (2,095)
Total comprehensive income/(expense) for the period 21,068 (2,151) (1,127)
Attributable to: -
Equity holders of the parent 21,067 (2,153) (1,143)
Non-controlling interest 1 2 16
21,068 (2,151) (1,127)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
Note GBP000 GBP000 GBP000
Non-current assets
Goodwill 8,507 7,761 8,068
Other intangible assets 9,778 7,501 8,038
Property, plant and equipment 7 25,048 21,479 21,452
Investment in joint venture 8 2,072 1,455 1,629
Deferred tax assets - 383 -
45,405 38,579 39,187
Current assets
Inventories 669 553 523
Trade and other receivables 100,393 106,680 109,247
Cash and cash equivalents 9 49,647 46,056 80,831
Assets held for sale 10 5,166 39,236 4,794
155,875 192,525 195,395
Total assets 201,280 231,104 234,582
Current liabilities
Trade and other payables 117,211 128,300 140,095
Current tax liabilities 5,391 3,564 3,487
Liabilities directly associated with assets classified
as held for sale 10 2,925 3,580 3,070
125,527 135,444 146,652
Non-current liabilities
Deferred tax liability 64 - 67
64 - 67
Total liabilities 125,591 135,444 146,719
Net assets 75,689 95,660 87,863
Equity
Share capital 227 227 227
Share premium 2,633 2,365 2,365
Share-based payment reserve 3,174 3,107 3,956
Translation reserve (1,714) (4,871) (3,038)
Retained earnings 71,482 94,960 84,467
Total equity attributable to equity holders of the
parent company 75,802 95,788 87,977
Non-controlling interest (113) (128) (114)
Total equity 75,689 95,660 87,863
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
Share Share Total equity attributable to equity holders of the controlling Total
capital premium Share- based payment reserve Translation reserve Retained earnings parent company interest equity
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Audited opening equity
31 March 2015 227 1,977 3,926 (4,006) 113,348 115,472 (130) 115,342
(Loss)/profit for the
period - - - - (1,288) (1,288) 2 (1,286)
Dividends paid 6 - - - - (17,768) (17,768) - (17,768)
Exchange differences on
translation of foreign
operations - - - (865) - (865) - (865)
Equity-settled
share-based payment
expense - - 814 - - 814 - 814
Vesting of share scheme - 388 (1,633) - 668 (577) - (577)
Unaudited closing equity
30 September 2015 227 2,365 3,107 (4,871) 94,960 95,788 (128) 95,660
(Loss)/profit for the
period - - - - (823) (823) 14 (809)
Dividends paid 6 - - - - (9,668) (9,668) - (9,668)
Exchange differences on
translation of foreign
operations - - - 1,833 - 1,833 - 1,833
Equity-settled
share-based payment
expense - - 846 - - 846 - 846
Vesting of share scheme - - 3 - (2) 1 - 1
Audited closing equity
31 March 2016 227 2,365 3,956 (3,038) 84,467 87,977 (114) 87,863
Profit for the period - - - - 19,743 19,743 1 19,744
Dividends paid 6 - - - - (33,515) (33,515) - (33,515)
Exchange differences on
translation of foreign
operations - - - 1,324 - 1,324 - 1,324
Equity-settled
share-based payment
expense - - 547 - - 547 - 547
Vesting of share scheme - 268 (1,329) - 653 (408) - (408)
Deferred tax on
share-based payments - - - - 134 134 - 134
Unaudited closing equity
30 September 2016 227 2,633 3,174 (1,714) 71,482 75,802 (113) 75,689
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2016 2015 2016
Note GBP000 GBP000 GBP000
Net cash flow from operating
activities 13 9,142 24,488 59,014
Investing activities
Investment income 93 65 123
Purchase of property, plant
and equipment (6,383) (3,424) (4,633)
Intangible asset development (2,741) (2,050) (3,586)
Proceeds from disposal of
property, plant and
equipment (11) - -
Net proceeds on disposal of
subsidiary - - 11,966
Net cash (used)/ generated in
investing activities (9,042) (5,409) 3,870
Financing activities
Cash settled share-based
remuneration (408) (576) (576)
Dividends paid (33,515) (17,768) (27,436)
Net cash used in financing
activities (33,923) (18,344) (28,012)
Net (decrease)/increase in
cash and cash equivalents (33,823) 735 34,872
Cash and cash equivalents at
beginning of period 83,221 47,198 47,198
Effect of foreign exchange
rate changes 1,963 100 1,151
Cash and cash equivalents at
end of period 51,361 48,033 83,221
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2016 2015 2016
Note GBP000 GBP000 GBP000
Reconciliation of items disclosed on the consolidated
statement of financial position:
Cash and cash equivalents 49,647 46,056 80,831
Cash and cash equivalents included in assets held
for sale 10 1,714 1,977 2,390
Cash and cash equivalents at end of period 51,361 48,033 83,221
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Accounting policies
These condensed financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) 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. The group has not early
adopted any standard, interpretation or amendment that has been issued
but is not yet effective. The group has adopted relevant standards and
amendments with no material impact on its results, assets and
liabilities.
Basis of preparation
The condensed 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 22. The information shown for
the year ended 31 March 2016, 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 2016, 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 8.
2. Segmental reporting, net revenue analysis and cost of sales
(i) Segmental information
PayPoint is a service provider for consumer transactions through various
distribution channels, involving the processing of high volume
transactions, the management of retailers and clients, the settlement of
funds (collection and transmission) and transmission of data in a secure
environment, by the application of technology.
The application of technology is directed on a group basis by the
group's Executive Board to develop products across the business,
prioritised on an economic value basis (generally by product), rather
than on a subsidiary by subsidiary basis.
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
Revenue
UK 75,974 81,057 168,172
Ireland 2,697 3,379 6,371
Romania 19,155 15,564 31,956
North America 3,277 2,542 5,303
France 610 273 754
Total 101,713 102,815 212,556
Non-current assets (excluding
deferred tax)
UK 36,107 29,629 30,358
Romania 9,298 8,567 8,829
Total 45,405 38,196 39,187
Whilst the group has a number of different services and 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
service provider for consumer payment and value added transactions.
Geographical information
Non-IFRS measures are included to provide additional useful information
on performance and trends to shareholders. These measures are used
internally for performance analysis but are not defined terms under IFRS
and may therefore 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.
(ii) Net revenue and cost of sales
Revenue comprises the value of sales (excluding sales taxes) of services
in the normal course of business.
Revenue performance of the business is measured by net revenue, which is
calculated as the total revenue from clients 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 mobile
parking clients.
Net revenue reflects the benefit attributable to PayPoint's performance
eliminating pass-through costs and further assists with comparability of
performance where PayPoint acts as a principal for some clients and as
an agent for others. Net revenue is a reliable indication of
contribution on a product by product basis and is shown in the operating
and financial review.
Net revenue
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
Revenue - transaction processing 101,189 102,225 211,401
- service charge income from ATMs 524 590 1,155
Revenue 101,713 102,815 212,556
less:
Commission payable to retail agents (25,801) (28,261) (57,650)
Cost of mobile top-ups and SIM cards
as principal (15,779) (13,885) (28,082)
Card scheme sponsors' charges and
call centre charges (1,737) (1,361) (3,191)
Net revenue 58,396 59,308 123,633
Cost of sales
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
Cost of sales
Commission payable to retail agents 25,801 28,261 57,650
Cost of mobile top-ups and SIM cards
as principal 15,779 13,885 28,082
Card scheme sponsors' charges and
call centre charges 1,737 1,361 3,191
Depreciation and amortisation 3,265 2,900 5,784
Other 5,148 5,372 11,832
Total cost of sales 51,730 51,779 106,539
Commission payable to retail agents has fallen as the group has adjusted
the share of commission with its retailers in response to competitor
rates.
(iii) Significant items
The reporting of significant items, which are presented separately
within the consolidated income statement, helps provide an indication of
PayPoint's ongoing business performance. The items which are separately
presented include the profit on disposal of the online payments business
and goodwill impairments of the mobile and online payments businesses.
As a result, subtotals of 'operating profit before impairments and
disposal' and 'operating profit after impairments and disposal' are
presented on the consolidated income statement.
(iv) Adjusted earnings per share
The term 'adjusted' refers to the relevant measure being reported for
ongoing operations excluding significant items. As a consequence,
adjusted earnings per share is the net profit after tax attributable to
equity holders of the parent excluding significant items. A
reconciliation of earnings for the purposes of calculating basic,
diluted and adjusted earnings per share is presented in note 4.
(v) Effective tax rate
Effective tax rate is the ongoing tax cost as a percentage of the net
profit before tax excluding significant items.
1. Tax on profit of ordinary activities
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
Current tax 4,855 3,685 9,049
Deferred tax 132 756 1,198
Total 4,987 4,441 10,247
Tax for the six month period was charged on profits at an effective tax
rate([11] #_ftn11) of 20.2% (September 2015: 20.8%, year ended March
2016: 20.4%).
1. Earnings per share
The basic and diluted earnings per share are calculated on the following
profit and number of shares.
Earnings for the calculating of earnings per shares 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
2016 2015 2016
GBP000 GBP000 GBP000
Earnings for the purposes of basic and diluted earnings
per share 19,743 (1,288) (2,111)
Impairments - 18,207 48,986
Profit on disposal of business - - (7,014)
Earnings for the purposes of adjusted earnings per
share 19,743 16,919 39,861
Number of Number of Number of
Shares shares shares
Weighted average number of ordinary shares in issue
(for basic earnings per share) 68,110,140 68,072,877 68,080,179
Potential dilutive ordinary shares:
Long-term incentive plan 517,496 - -
Deferred share bonus 82,643 147,156 147,156
Diluted basis 68,710,279 68,220,033 68,227,335
1. Related party transactions
During the period, the company subscribed for GBP400,000 in PayByPhone
Mobile Technologies, Inc. and GBP150,000 in PayPoint Payment Services
Limited. The company increased its loan to Adaptis Solutions Limited by
GBP150,000.
During the period, the 2013 deferred share bonus scheme vested which was
settled in cash and by the issue of shares. The 2013 long term incentive
scheme did not vest and lapsed.
1. Dividend
The interim dividend of 15.0p (2015: 14.2p) and additional dividend of
12.2p per share declared on 24 November 2016 have not been recorded as a
liability at 30 September 2016. The total dividend in respect of the
year ended 31 March 2016 was 42.4p per share. The final dividend of
GBP19.2 million (28.2p per share) for the year ended 31 March 2016 and
the gross proceeds from the sale of the online payments business of
GBP14.3 million were paid during the period.
1. Property, plant and equipment
The freehold building adjacent to the Welwyn Garden City building was
purchased during the period for GBP3.7 million. Prior to acquisition,
the first floor was occupied by PayPoint under an operating lease.
1. Investment in joint venture
PayPoint has a 50:50 joint venture with Yodel. The joint venture company,
Drop and Collect Limited, trades as Collect+. Discussions with Yodel,
following Yodel's proposal to change the basis of charging, increasing
substantially its logistics costs to the joint venture, continue.
1. Cash and cash equivalents
Included within cash and cash equivalents is GBP15.4 million (September
2015: GBP19.0 million, March 2016: GBP30.2 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.
Funds which are held in trust for clients in the UK and Ireland are not
included within 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.
At 30 September 2016, the group's cash was GBP49.6 million (31 March
2016: GBP80.8 million), excluding GBP1.7 million in assets held for sale
(31 March 2016: GBP2.4 million).
1. Assets held for sale
The major classes of assets and liabilities comprising the operations
classified as held for sale are as follows:
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
Assets held for sale:
Goodwill - 29,704 -
Other intangible assets - 3,769 -
Property plant and equipment 599 694 549
Deferred tax asset - 62 -
Trade and other receivables 2,853 3,030 1,855
Cash and cash equivalents 1,714 1,977 2,390
5,166 39,236 4,794
Liabilities directly associated with assets classified
as held for sale:
Trade and other payables 2,925 3,580 3,070
Current tax liabilities - - -
2,925 3,580 3,070
-
Net assets held for sale 2,241 35,656 1,724
Translation deficit relating to assets held for sale (2,062) (3,130) (2,051)
The assets held for sale at 30 September 2016 and 31 March 2016 relate
solely to the mobile payments business as the online payments business
was sold on 8 January 2016. Assets held for sale at 30 September 2015
include both the mobile and online payments businesses, including the
mobile business' goodwill. In the second half of the year ended 31 March
2016 the goodwill of the mobile payments business was fully impaired.
1. Share capital and reserves
Share capital as at 30 September 2016 was GBP227,078. During the period
the group issued 36,047 shares for the 2013 DSB and SIP schemes.
1. Share-based payments
The total charge of GBP1.3 million recognised directly to equity for the
LTIP 2013, which lapsed and DBS scheme, which vested, was transferred
from share-based payments reserve to retained earnings during the
period. On 2 June 2016 the 2016 LTIP award was granted with vesting
based 100% on TSR over a three-year performance period ending on 2 June
2019. The performance period and the vesting period are the same. The
number of shares granted was 271,508.
1. Notes to the cash flow statement
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2016 2015 2016
GBP000 GBP000 GBP000
Profit before tax 24,731 3,155 8,152
Adjustments for:
Depreciation on property, plant and equipment 2,547 2,282 4,698
Amortisation of intangible assets 718 618 1,086
Share of (profit)/loss and impairment of joint
venture (443) 398 224
Research and development credit - (522)
Impairments - 18,207 48,986
Profit on sale of investments - - (7,014)
Loss on disposal of fixed assets 409 11 25
Net interest income (74) (40) (20)
Share-based payment charge 547 814 1,442
Operating cash flows before
movements in working capital 28,435 25,445 57,057
(Increase)/decrease in inventories (108) 139 193
Decrease/(increase) in receivables 2,851 (1,408) (1,500)
(Decrease)/increase in payables -
- client cash (15,556) 7,751 17,762
- other payables (3,343) (2,494) (4,516)
Cash generated by operations 12,279 29,433 68,996
Corporation tax paid (3,118) (4,921) (9,877)
Interest and bank charges paid (19) (24) (105)
Net cash from operating activities 9,142 24,488 59,014
Movements in items in the course of collection and settlement payables
have not been included in this reconciliation as the directors do not
consider them to be operating working capital balances.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
1. the condensed set of 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).
By order of the board.
Nick Wiles Dominic Taylor
Chairman Chief Executive
24 November 2016
RISKS AND UNCERTAINTIES
PayPoint's business, financial condition or operations could be
materially and adversely affected by the risks summarised below.
Although management takes steps to mitigate risks where possible or
where the cost of doing so is reasonable in relation to the probability
and seriousness of the risk, it may not be possible to avoid the
crystallisation of some or all of such risks. The directors do not
consider that the risks and uncertainties have changed since the
publication of the annual report for the year ended 31 March 2016.
Risk area Potential impact Mitigation strategies
Loss or inappropriate usage of data The group's business requires the appropriate and The group has established rigorous cyber security,
secure use of consumer and other sensitive information. anti-fraud and whistleblowing standards, procedures,
Mobile telephone and internet-based electronic commerce and recruitment and training schemes, which are embedded
requires the secure transmission of confidential information throughout its business operations. The group also
over public networks, and several of our products screens new employees carefully. Continued investments
are accessed through the internet. Fraudulent activity, are made in cyber security infrastructure, including
cyber-crime or security breaches in connection with the significant use of data and communications encryption
maintaining data and the delivery of our products technology, improvements in e-mail and web filtering
and services could harm our reputation, business and and the introduction of enhanced data leakage prevention
operating results. tools. We have also developed and tested plans as
to how we would respond to a breach of security.
Dependence upon third parties to provide data and The group's business model is dependent upon third The group selects and negotiates agreements with strategic
certain operational services parties to provide operational services, the loss suppliers and agents based on criteria such as delivery
of which could significantly impact the quality of assurance and reliability. Single points of failure
our services. Similarly, if one of our outsource providers, are avoided, where practicable and economically feasible.
including third parties with whom we have strategic Controls are regularly reviewed and improved to minimise
relationships, were to experience financial or operational risk of retailer churn caused by financial loss to
difficulties, their services to us would suffer or retailers through fraudulent third party activity.
they may no longer be able to provide services to
us at all, significantly impacting delivery of our
products or services.
Exposure to legislation or regulatory reforms and The group is largely unregulated by financial services The group's legal department works closely with senior
risk of non-compliance regulators although in the UK we have Payment Institution management to adopt strategies to educate legislature,
status, through PayPoint Payment Services Limited regulators, consumer and privacy advocates and other
for prefunded cash payments to consumers. The group's stakeholders to support the public policy debate,
agents which offer money transfer on behalf of third where appropriate, to ensure regulation does not have
party clients are licensed as Money Service Businesses unintended consequences over the group's services.
by HMRC. Our Retail and Mobile businesses are subject The group has in place a business ethics policy which
to Payment Card Industry Data Security Standards regulated requires compliance with local legislation in all
by the card schemes. Regulatory reform could increase the territories in which the group operates. A central
the cost of the group's operations or deny access compliance department co-ordinates all compliance
to certain territories in the provision of certain monitoring and reporting. Subsidiary managing and
services. Non-compliance with law, regulation, privacy finance directors are required to sign annual compliance
or information security laws could have serious implications statements.
in cost and reputational damage to the group.
Interruptions in business processes or systems The group's ability to provide reliable services largely Comprehensive business continuity plans and incident
depends on the efficient and uninterrupted operation management programmes are maintained to minimise business
of our computer network systems, financial settlement and operational disruptions, including fraudulent
systems, data and call centres, as well as maintaining activity, system failure or pandemic incidents. Support
sufficient staffing levels. System or network interruptions, arrangements have been established with third party
recovery from fraud or security incidents or the unavailability vendors and there are strict standards, procedures
of key staff or management resulting from a pandemic and training schemes for business continuity.
outbreak could delay and disrupt our ability to develop,
deliver or maintain our products and services, causing
harm to our business and reputation and resulting
in loss of customers or revenue.
Dependence on recruitment and retention of highly The ability of the group to meet the demands of the Effective recruitment programmes are on-going across
skilled personnel market and compete effectively is, to a large extent, all business areas, as well as personal and career
dependent on the skills, experience and performance development initiatives. The executive management
of its personnel. Demand is high for individuals with reviews talent potential twice a year and retention
appropriate knowledge and experience in payments, plans are put in place for individuals identified
IT and support services. The inability to attract, at risk of leaving. Compensation and benefits programmes
motivate or retain key talent could have a serious are competitive and also reviewed regularly.
consequence on the group's ability to service client
commitments and grow our business.
Exposure to materially adverse litigation The group contracts with a number of large service The group seeks to limit exposure in its contracts.
organisations for which it provides services essential Mitigating actions are taken where contractual exposures
to their customers. Failure to perform in accordance are above the norm, including insurance coverage,
with contractual terms could give rise to litigation. where appropriate and economically sustainable.
Potential impact Mitigation strategies
Risk area
Technology change may render products obsolete There are rapid changes in technology in the payments IT development resource is directed at a group level
industry including the development of new payment and developments are in hand to ensure the group has
methods, particularly on smart phones and tablets, relevant products in place to meet the demands brought
but also as a consequence of technology changes in about by changing technology. For smart meters, a
other areas e.g. smart meters, which will replace multi-channel product has been developed and launched.
the use of the energy keys and gas cards currently
used to pay for prepaid energy. Such changes may render
current and new products, such as the PayPoint One
new terminal currently being rolled out, and services
obsolete.
Exposure to country and regional risk (political, The group's geographic footprint subjects its businesses The group's portfolio is diversified by geography,
financial, economic, social) in North America, United to economic, political and other risks associated by product, by sector and by client in order to protect
Kingdom, Romania, France and Ireland with international sales and operations. A variety itself against many of these fluctuations, especially
of factors, including changes in a specific country's those that are restricted to individual territories
or region's political, economic or regulatory requirements, and market sectors, although the bulk of its operations
as well as the potential for geopolitical turmoil, and revenues are UK based.
including terrorism and war, could result in loss
of services, prevent our ability to respond to agreed
service levels or fulfil other obligations. These
risks are generally outside the control of the group.
Exposure to consolidation among clients and markets Consolidation of retailers and clients could result No single client accounts for more than 6.2% of the
in reductions in the group's revenue and profits through group's net revenue, and no single retailer accounts
price compression from combined service agreements for more than 4.1% of the group's net revenue, which
or through a reduced number of clients. reduces the probability of this potential risk having
a significant impact on the group's business. In addition,
the group continues to expand its developing businesses,
and in CashOut (reversing the flow of money through
its retail networks).
Acquisitions may not meet expectations The group's acquisitions, strategic alliances and The group assesses all acquisitions rigorously, using
joint ventures may result in financial outcomes that both in-house experts and professional advisers. In
are different than expected. The net sale proceeds addition, the group conducts regular reviews to monitor
from the proposed sale of the mobile payments business performance.
may not exceed its carrying value.
As a consequence of a proposal by Yodel, our joint
venture partner in Collect+, to increase its charges
to the joint venture we are in discussions over the
future of the joint venture.
Exposure to the unpredictability of financial markets As the group operates on an international basis, it The group's financial risk management seeks to minimise
(foreign exchange, interest rate and other financial is exposed to the risk of currency fluctuations and potentially adverse effects on the group's financial
risks) the unpredictability of financial markets in which performance.
it operates.
Exposure to increasing competition The group operates in a number of geographic, product The group is committed to continued research and investment
and service markets that are highly competitive and in new data sources, people, technology and products
subject to technological developments for example to support its strategic plan.
the introduction of smart meters and new payment solutions.
Competitors may develop products and services that
are superior to ours or that achieve greater market
acceptance than our products and services, which could
result in the loss of clients, merchants and retailers
or a reduction in revenue.
Loss or infringement of intellectual property rights The group's success depends, in part, upon proprietary The group, where appropriate and feasible, relies
technology and related intellectual property rights. upon a combination of patent, copyright, trademark
Some protection can be achieved but in many cases, and trade secret laws, as well as various contractual
little protection can be secured. Third parties may restrictions, to protect our proprietary technology
claim that the group is infringing their intellectual and continues to monitor this situation. The group
property rights or our intellectual property rights also vigorously defends all third party infringement
could be infringed by third parties. If we do not claims.
enforce or defend the group's intellectual property
rights successfully, our competitive position may
suffer, which could harm our operating results.
Data centre security breaches The group is highly dependent on information technology The group's data centres are protected against physical
networks and systems to process, transmit and store break-ins. The group has strict standards and procedures
electronic information. Fraudulent or unauthorised for security and fraud prevention.
access, including security breaches of our data centres,
could create system disruptions, shutdowns or unauthorised
disclosure of confidential information.
INDEPENT REVIEW REPORT TO PAYPOINT PLC
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 2016 which comprises the condensed
consolidated income statement, the condensed consolidated statement of
comprehensive income, the condensed consolidated statement of financial
position, the condensed consolidated statement of changes in equity, the
condensed consolidated cash flow statement and related notes 1 to13. We
have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the company 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. Our work
has been undertaken so that we might state to the company those matters
we are required to state to it in an independent review 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 formed.
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 Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34 Interim Financial Reporting as adopted by the
European Union.
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.
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 United Kingdom. A review of
interim financial information consists of making inquiries, primarily of
persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with International
Standards on Auditing (UK and Ireland) 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.
Conclusion
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 2016
is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European Union
and the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
24 November 2016
DIRECTORS & KEY CONTACTS
Directors Dominic Taylor (Chief Executive)
George Earle (Finance Director)
Tim Watkin-Rees (Business Development Director)
Gillian Barr*
Neil Carson*
Giles Kerr*
David Morrison*
Nick Wiles* (Chairman)
* non-executive directors
Registered office 1 The Boulevard
Shire Park
Welwyn Garden City
Hertfordshire
AL7 1EL
United Kingdom
Registered in England and Wales number 3581541
Registrars Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
United Kingdom
Press and investor relations Finsbury
enquiries Tenter House
45 Moorfields
London
EC2Y 9AE
United Kingdom
ABOUT PAYPOINT
We support market leading national networks across 39,000 convenience
stores in the UK and Romania so that our customers are always close to a
PayPoint store. In thousands of locations, as well as at home or on the
move, people use us better to control their household finances,
essential payments and in-store services, like parcels. Our UK network
contains more branches than all banks, supermarkets and Post Offices
together, putting us at the heart of communities for over 10 million
regular weekly customers.
We have a proven track record of decades of tech-led innovation,
providing retailers with tools that attract customers into their shops.
Our industry-leading payments systems give first class service to the
customers of over 1,500 clients - utility companies, retailers,
transport firms and mobile phone providers, government and more.
We are on and offline; providing for payments by cash, card including
contactless; retail, phone and digital; at home, work and whilst out and
about from Land's End to the highlands and islands - helping to keep
modern life moving.
Multi-channel payments
We offer clients streamlined consumer payment processing and transaction
routing in one, seamlessly integrated solution, through MultiPay. This
gives customers the flexibility to pay in the way that best suits them;
including mobile app, online, text, phone/IVR and cash in-store.
MultiPay is live with Utilita, a fast growing challenger energy
supplier. We have signed 13 other energy companies and significantly
Scottish and Southern Energy, our first Big 6 energy client and a
framework agreement with Procurement for Housing. Retail networks In the UK, our network includes 29,000 local shops including Co-op, Spar, Sainsbury's Local, Tesco Express and thousands of independent outlets. These outlets are quick and convenient places to make energy meter prepayments, bill payments, benefit payments, mobile phone top-ups, transport tickets, TV licenses, cash withdrawals and more. Our Romanian network continues to grow profitably. We have over 10,000 local shops, helping people to make cash bill payments, money transfers, road tax payments and mobile phone top-ups. Our clients include all the major utilities and telcos and many other consumer service companies. In the UK, our Collect+ joint venture with Yodel offers parcel drop-off and pick-up services in nearly 6,000 convenience stores. Customers use Collect+ to handle parcels from major retailers including Amazon, eBay, ASOS, New Look, John Lewis, House of Fraser, M&S and Very. The UK network also includes 4,200 LINK branded ATMs, and 10,000 of our terminals enable retailers to accept debit, credit and contactless payments, including Apple Pay. We operate over 3,000 Western Union agencies in the UK and Romania for international and domestic money transfers. Enquiries PayPoint plc (telephone: 01707 600 317) Finsbury (telephone: 0207 2513 801) Dominic Taylor, Chief Executive Rollo Head George Earle, Finance Director Andy Parnis A presentation for analysts is being held at 11.45am today (24 November 2016) at Finsbury Group, Tenter House, 45 Moorfields London EC2Y 9AE This announcement is available on the PayPoint plc website: www.paypoint.com ([1] #_ftnref1) Net revenue is revenue less the cost of mobile top-ups (where PayPoint is principal), SIM cards and other costs incurred by PayPoint which are recharged to clients and merchants. These costs include retail agent commission, card payment merchant service charges and costs for the provision of call centres for PayByPhone. ([2] #_ftnref2) Adjusted operating profit before impairment includes our share of joint venture results. ([3] #_ftnref3) Adjusted earnings per share is stated before the GBP18.2 million online payments impairment recognised in the prior period. Net revenue, operating profit before impairment and adjusted earnings per share are measures the directors believe will assist shareholders with a better understanding of the underlying performance of the group. ([4] #_ftnref4) Adjusted earnings per share is stated before the GBP18.2 million online payments impairment recognised in the prior period. ([5] #_ftnref5) Net revenue is revenue less the cost of mobile top-ups (where PayPoint is principal), SIM cards and other costs incurred by PayPoint which are recharged to clients and merchants. These costs include retail agent commission, card payment merchant service charges and costs for the provision of call centres for PayByPhone. ([6] #_ftnref6) Market share in Romanian bill payments is our share of the bill payments expressed as a percentage of the total bills issued by our clients. ([7] #_ftnref7) Net revenue is revenue less the cost of mobile top-ups (where PayPoint is principal), SIM cards and other costs incurred by PayPoint which are recharged to clients and merchants. These costs include retail agent commission, card payment merchant service charges and costs for the provision of call centres for PayByPhone. ([8] #_ftnref8) Net revenue is revenue less the cost of mobile top-ups (where PayPoint is principal), SIM cards and other costs incurred by PayPoint which are recharged to clients and merchants. These costs include retail agent commission, card payment merchant service charges and costs for the provision of call centres for PayByPhone. ([9] #_ftnref9) Operating profit margin is operating profit before impairments and disposal including our share of joint venture results as a percentage of net revenue. ([10] #_ftnref10) Effective tax rate is the tax cost as a percentage of net profit before tax excluding impairments (year ended March 2016: GBP49.0 million) and profit on disposal of the online payment business (year ended March 2016: GBP7.0 million). ([11] #_ftnref11) Effective tax rate is the tax cost as a percentage of the net profit before tax excluding impairments (September 2015: GBP18.2 million, year ended March 2016: GBP49.0 million) and profit on disposal of the online payment business (year ended March 2016: GBP7.0 million). PayPoint Half year financial report: http://hugin.info/137093/R/2058994/771692.pdf This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients. The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein. Source: PayPoint plc via Globenewswire http://www.paypoint.co.uk/default.htm
(END) Dow Jones Newswires
November 24, 2016 02:00 ET (07:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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