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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| -13.00 | -2.47% | 513.00 | 510.00 | 514.00 | 530.00 | 510.00 | 522.00 | 177,360 | 16:35:01 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Adjustment & Collection Svcs | 167.72M | 34.71M | 0.4776 | 10.70 | 371.39M |
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PayPoint plc
Preliminary Results and update on the impact of Covid-19
Year ended 31 March 2020
FINANCIAL HIGHLIGHTS
PayPoint reported a resilient result for financial year 2019/20 with
profit before tax excluding exceptional items increasing by GBP3.0
million to GBP56.8 million (2019: GBP53.8 million), primarily due to the
GBP2.1 million "variable pay benefit" resulting from the decision to
cancel management bonuses due to Covid-19 and the release of share-based
payment accruals. Excluding the "variable pay benefit", profit before
tax excluding exceptional items increased by GBP0.9 million to GBP54.7m
million (2019: GBP53.8 million).
Year ended 31 March 2020 2019 Change
----------------------------------------
Revenue GBP213.3m GBP211.6m 0.8%
Net revenue(1) GBP120.7m GBP116.6m 3.5%
Operating margin(2) 47.2% 46.3% 0.9ppts
Profit before tax excluding exceptional
items GBP56.8m GBP53.8m 5.6%
Profit before tax GBP56.8m GBP54.7m 3.8%
Diluted earnings per share 66.3p 64.8p 2.3%
Cash generation(3) GBP66.4m GBP62.8m 5.7%
Ordinary dividend paid per share 47.2p 46.2p 2.2%
Additional dividend paid per share 36.8p 36.7p 0.3%
Ordinary reported dividend per share 39.2p 39.2p (0.0)%
Net corporate (debt)/cash(4) GBP(12.0)m GBP3.5m (444.7)%
Cash and cash equivalents GBP93.8m GBP37.5m 150.1%
----------------------------------------
Resilient performance delivered from a strong business platform
-- Embed PayPoint at the heart of convenience retail
-- PayPoint One was live in 16,098 sites at 31 March 2020, growth of 3,217
year-on-year, with 98.9% of PayPoint's independent retailer partners now
using the platform and the legacy T2 terminal successfully retired from
our independent estate. The original target of 15,800 was exceeded and
the revised target of 16,500 sites achieved on 21 February 2020 although
subsequently a number of sites became non-operational due to Covid-19.
-- PayPoint One average weekly service fee per site increased to GBP15.4
from GBP15.1 last year and total service fee net revenue increased 28.1%
to GBP13.1 million.
-- Card payments net revenue increased by 10.9% to GBP8.7 million. Card
payments estate declined by 444 sites from 30 September 2019 to 9,435
sites at 31 March 2020, largely due to non-operational sites from
Covid-19.
-- Become the definitive parcel point solution
-- Parcel volumes increased by 12.7%, primarily due to good growth from new
parcel partners.
-- On 6th April 2020, PayPoint acquired the 50% of the joint operation that
Yodel owned resulting in Collect+ becoming a fully owned brand within the
PayPoint Group.
-- Sustain leadership in 'pay-as-you-go' and grow digital bill payments
-- In the UK 19 new clients were contracted including Monese; 22 contracts
were renewed including EDF and Monzo Bank and 7 existing clients signed
up for additional services, notably Shell taking our MultiPay service.
-- Continued strong growth in MultiPay, transactions increased by 20.4% and
net revenue increased by 25.7%.
-- Romania performed well, maintaining its strong position with good growth
in net revenue from margin improvement.
-- Innovate for future growth and profits
-- New self-service proposition trialled in Romania with the development of
an automatic vending machine (AVM) to offer a new and convenient channel
to consumers.
-- Continued investment into our EPOS platform with number of improvements
to benefit our retailer partners.
-- Card net settlement fully operational and live in 399 sites.
-- MultiPay PayByLink capability developed to extend functionality.
-- Organisation and service delivery
-- An internal reorganisation to deliver a more streamlined and accountable
structure across all business lines including the appointment of a new
Retail Services Director responsible for the end-to-end delivery of
products and services to our retailer partners and the management of
relationships within the network.
-- Salesforce CRM rolled-out to Sales and Head Office teams, improving
efficiencies and delivering an enhanced service for our retailer
partners.
-- Improved the onboarding service for new retailers by bringing PayPoint
One terminal installation in-house, survey results5 show over 90% of
retailers questioned rated the installation as good or very good.
Financial highlights
-- Net revenue of GBP120.7 million (2019: GBP116.6 million) increased by
3.5% on a reported basis and increased by 4.1% on an underlying basis,
which excludes the GBP0.7 million prior year impact from the Yodel
renegotiation.
-- Underlying net revenue growth, which excludes the Yodel renegotiation
mentioned above, was driven by a 10.5% growth in UK retail services,
resilient performance in UK bill payments and top-ups which grew by 0.3%
and growth of 5.5% in Romania.
-- Total costs of GBP63.9 million6 (2019: GBP62.8 million) increased by 1.8%
on a reported basis and decreased by 2.0% on an underlying basis, which
excludes the one-off benefit in the prior period of GBP2.4 million from
improved VAT recovery. Total costs decreased primarily due to the GBP2.1
million variable pay benefit arising from the decision to cancel
management bonuses due to Covid-19 and the release of share based payment
accruals, although this was partly offset by increased costs for
additional resources relating to the parcel partners integration, contact
centre and client services team and amortisation of contract set up
expenses.
-- Underlying second half costs, excluding a one-off benefit in the prior
period of GBP0.7 million from improved VAT recovery, decreased by GBP2.6
million from GBP33.3 million to GBP30.7 million due to the GBP2.1 million
variable pay benefit and implementation of cost savings.
-- Profit before tax excluding the variable pay benefit and exceptional
items of GBP54.7m increased by 1.7%. This was in line with the
expectations we set in our 23 January 2020 Trading Statement, before the
escalation of the Covid-19 pandemic and subsequent actions and events and
the decision to cancel management bonuses.
-- Profit before tax excluding exceptional items of GBP56.8 million (2019:
GBP53.8 million) increased by 5.6%. Underlying profit before tax
excluding exceptional items increased by 12.3%, which excludes the
one-off VAT recovery benefit of GBP2.4 million and GBP0.7 million Yodel
renegotiation impact in the prior year.
-- Net corporate debt of GBP12.0 million (2019: net corporate cash GBP3.5
million) reflects cash balances of GBP58.0 million less borrowings of
GBP70.0 million from the revolving credit facility, which was fully drawn
down to ensure PayPoint was in a strong position to withstand a sustained
period of disruption to trading should it occur.
-- Final ordinary dividend of 15.6 pence per share (2019: 23.6 pence per
share) to be paid to shareholders in equal instalments of 7.8 pence per
share on 27 July 2020 and 28 September 2020.
Covid-19 impact and current trading
PayPoint continues to provide its vital services to local communities
during this un-precedented period of uncertainty. Our priority is to
ensure our business continues to function effectively and safely
enabling continued support for our clients and retailer partners so that
communities can access required services. Our network continues to
function with over 96% of our retailer partners remaining open during
the lockdown period and our contact centre remains fully operational. We
have made our network available to local authorities to provide
financial support, through our CashOut service, to the most vulnerable
in their local communities. We have also increased resources and
provided a dedicated call line in our Contact Centre to further support
these consumers. We have proactively worked with our retailer partners
to ensure our network coverage remains best in class and can continue to
deliver for our clients and their consumers.
PayPoint moved to an operating model which combines remote working,
continued activity in the field, to support our retailer partner network,
and some essential office based activity. We are actively minimising the
disruption to services and the support we provide clients and retailer
partners whilst taking the appropriate steps to safeguard our people.
Currently we have not furloughed any of our people and have not accessed
any available government assistance. Instead, we have reviewed and
reduced third party expenditure, suspended annual salary reviews and
cancelled management bonuses for the financial year ended 31 March 2020.
A number of measures have been implemented to support the convenience
retail community amid the Covid-19 outbreak. The initiatives include a
campaign to celebrate Retail Heroes, a GBP25,000 contribution to the
NFRN Covid-19 Hardship Fund, service fee changes, including waving
annual increase, and a new partnership with Deliveroo.
PayPoint's Retail Heroes is being launched in May with the aim of
recognising retailer partners in the PayPoint network that have gone
'above and beyond' to serve their local communities during the Covid-19
pandemic. The winning retailer partners will be showcased across
PayPoint's social media channels, receive a certificate and a GBP500
donation to a charity of their choice. In addition, a donation will be
made to the NFRN Covid-19 Hardship Fund, which offers financial
assistance to members struggling with cash flow during the coronavirus
pandemic. The fund has raised more than GBP200,000 to date and PayPoint
is proud to contribute a further GBP25,000.
PayPoint is also introducing changes to its service fees and billing
process. The first component of this is waiving the yearly inflation
increase to service fees, which will remain consistent with last year's
amounts. This will be coupled with a permanent move to service fee
billing in arrears, benefitting retailer partners' monthly cash flows,
and the option for those forced to close their stores to claim a service
fee refund for the closure period.
Finally, PayPoint recently announced an innovative partnership with
Deliveroo, the UK's leading online food delivery company. The
collaboration allows retailer partners to apply for fast-track access to
the Deliveroo system so members of the local community can order
products to be delivered contact-free in as little as 30 minutes.
In response to the Covid-19 outbreak, and in line with the related
public health guidance and legislation issued by the UK Government, the
Board will be running this year's AGM as a closed meeting and
shareholders will not be able to attend in person. Further details will
be available in the 2019/20 annual report.
Whilst it is still too early to have visibility on the longer-term
consequences that will ensue following Covid-19, the impact of consumers
avoiding cash and remaining at home has significantly reduced ATM
transactions and parcel volumes. Parcels have also been impacted by some
carriers suspending their redirect to local store services during this
period. Card payments have benefitted as consumers tended to use their
local convenience stores more and in replacement of going to restaurants
and entertainment venues. Bill payment transactions have reduced as
energy companies have provided pre-pay consumers with credit, services
including transport have significantly reduced, clients have encouraged
digital payments and consumers increased their average top-up amounts.
This table below compares the volume of transactions with the comparable
periods in prior years. Whilst there are always additional factors that
impact trading such as the impact of warmer temperatures seen on the
energy business, it provides a helpful insight as to the impact of
Covid-19 on consumer behaviour:
18 April
1 - 17 April - 17 May
Full year FY20/21 vs FY20/21 vs
19/20 vs 18/19 FY19/20 FY19/20
% increase/ % increase/ % increase/
Service (decrease) (decrease) (decrease)
----------------------------- ---------------- ------------ ------------
Bill payment transactions(7) (0.9%) (31.5)% (24.8)%
----------------------------- ---------------- ------------ ------------
Top-up transactions (11.2%) (20.1)% (19.0)%
----------------------------- ---------------- ------------ ------------
ATM transactions (4.1%) (39.9)% (33.1)%
----------------------------- ---------------- ------------ ------------
Card payment transactions 20.6% 75.3% 74.4%
----------------------------- ---------------- ------------ ------------
Parcels 12.7% (54.9)% (22.8)%
----------------------------- ---------------- ------------ ------------
Nick Wiles, Chief Executive of PayPoint plc, said:
"The past year has been a resilient one for PayPoint. We delivered
growth in net revenues and profit before tax for the year. The Covid-19
crisis began to escalate late into our financial year with limited
financial impact in the results we are reporting. We took swift action
across our business in response to the unfolding crisis. Our priority
through this crisis is to keep our people safe and well, while providing
the necessary support to our clients and retailer partner network, as we
continue to serve some of the most vulnerable in our communities. We are
proud of the way our people and business have stepped up to the
challenges and to provide broader help in this time of crisis.
The core characteristics of the business remain unchanged, with a strong
balance sheet, clear business model, a broad and resilient earnings'
base with the opportunity to use technology to adapt our business model
and strong cash generation which supports the payment of a dividend. We
are also focused on ensuring that the business is flexible and able to
rapidly respond to the dynamic marketplace and trends which will
inevitably be accelerated by the Covid-19 crisis. Taking these factors
into account the board is confident in the long-term resilience of the
business and is recommending a final dividend of 15.6p."
Enquiries
PayPoint plc Finsbury (telephone: 0207 2513 801)
Nick Wiles, Chief Executive (mobile 07768 636 801)
Rollo Head
Rachel Kentleton, Finance Director (mobile: 07843 074 906)
Andy Parnis
A presentation for analysts is being held at 9.30am today (28 May 2020)
via webcast. This announcement is available on the PayPoint plc website:
www.paypoint.com
CHAIRMAN'S STATEMENT
Following the announcement made on 20 May 2020, the Board is delighted
that Nick has agreed to continue to lead the business in his new role of
Chief Executive.
Nick joined the Board in October 2009 as a Non-Executive Director and
has been Chairman of the Company for the past five years. Since
September 2019 he has been operating in the capacity of Executive
Chairman after Patrick Headon stepped down from the Board due to ill
health.
Consequently, I have stepped down as Senior Independent Director and
have taken over from Nick as Chairman of the Board and Chair of the
Nomination Committee. I will continue to carry out my chairmanship
duties of the Audit Committee until such time as a new Chair of the
Audit Committee can be appointed. Rakesh Sharma, the Chair of the
Remuneration Committee, has been appointed as Senior Independent
Director.
We also say goodbye to Rachel Kentleton, who is to step down from her
role as Finance Director over the summer. When she leaves Rachel will
hand over her role to Alan Dale, Interim Finance Director. Alan joined
PayPoint in 2017 and most recently was Head of UK Finance.
The Board wish Rachel all the best for the future and thank her for her
significant contribution during her time in the business.
I would also like to welcome Ben Wishart, who joined the Board during
the year as a Non-Executive Director and is already bringing his strong
technology and business transformation skills and experience to Board
discussions.
We have also seen some changes in the members of our Leadership Team
this year. We have said goodbye to Susan Court, Head of Legal & Company
Secretary and welcomed Danny Vant as Client Services Director. Lewis
Alcraft has been promoted to Chief Operating Officer and we have
appointed a new Retail Services Director who is due to join the business
on 1 July 2020.
Financially, the Board's immediate priority is to continue to preserve
PayPoint's balance sheet strength to ensure PayPoint emerges in a strong
position from the Covid-19 crisis, consequently the additional dividend
programme announced in May 2016 was suspended in March 2020 and has now
ended. The programme has returned GBP83.5 million to shareholders.
The Board's approach to the setting of the ordinary dividend has not
materially changed and follows the following capital allocation
priorities:
-- investment in the organic business; and
-- progressive growth in ordinary dividends targeting a cover ratio of 1.2
to 1.5 times earnings8;
whilst ensuring that leverage is not substantially increased even in a
scenario whereby the trading patterns seen in late April continue until
the end of December 2020.
Giles Kerr
Chairman
27 May 2020
CHIEF EXECUTIVE'S STATEMENT
At the time of writing, the final outcome and achievements in the
business over the past year have been overtaken by the immediate
challenges we face in response to Covid-19 and its impact on our
business.
Our priority through this crisis is to keep our people safe and well,
while providing the necessary support to our clients and retailer
partner network, as we continue to serve some of the most vulnerable in
our communities. As we reported in March 2020, the business has quickly
moved to an operating model which combines remote working, continued
activity in the support of our retailer partner network, including our
Contact Centre which has remained fully operational throughout, and some
essential office-based activity. We have sought to minimise the
disruption to service and support we can provide to clients and our
retailer partner network at this time while taking the appropriate
actions to safeguard our people.
Ahead of this crisis, the Board had already commenced a strategic and
organisational review of the business as it considered how best to adapt
and invest to maximise the opportunities available in an increasingly
competitive environment and one in which the relationships with our
clients and our retailer partner network are central to our long-term
future success. One of the inevitable consequences of this situation
will be the need to respond more quickly to these challenges and some of
the trends which we expect to accelerate following this crisis.
The work the Board has done continues to support our core strategic
priorities for the business: embedding PayPoint at the heart of
convenience retail; become the definitive parcel point solution; and
sustain leadership in pay-as-you-go and grow digital bill payments.
However, to develop a strategy which both underpins these core strategic
priorities and creates meaningful new opportunities for growth, we need
an organisational structure and renewed culture which delivers a step
change in operational performance and accountability throughout the
business. Recognising these needs, we have already made changes to our
organisational structure and, in addition, identified necessary actions
to strengthen and invest in our business to deliver a stronger platform
for long-term growth, further details of which are set out later in the
report.
Over the coming months the impact of Covid-19 will continue to create
significant uncertainties in our business. However, PayPoint has already
shown great adaptability in its initial response to the challenge and we
have confidence in our resilience and preparedness for the next stage in
this developing situation. We have clear plans underway to contain costs,
we are working flexibly in support of our clients and retailer partner
network and we continue to explore new opportunities.
Finally, I am deeply grateful to both our incredible people who have
been working so hard through this terrible situation and the strong
leadership from the Leadership Team in response to the challenges we are
facing.
Nick Wiles
Chief Executive
27 May 2020
BUSINESS REVIEW
2019/20 performance
This financial year, revenue grew by GBP1.7 million (0.8%) to GBP213.3
million. Underlying(9) net revenue grew by GBP4.8 million (4.1%) to
GBP120.7 million with growth across the majority of business areas. UK
retail services, which now represents 34% of Group net revenue, grew by
GBP3.2 million (8.5%) driven by increased service fees from adding over
3,000 new PayPoint One sites. PayPoint One was live in 16,098 sites on
31 March 2020(10) , exceeding our original target of 15,800 sites, which
we set out at the beginning of the financial year. Our revised
target(11) of 16,500 sites was achieved on 21 February 2020 and this
achievement brings our T2 sunset program in our independent estate to an
end. Our parcel business delivered strong volume growth as our new
partners, particularly eBay and Amazon, were rolled out to more sites
within our network and awareness of the service developed. UK bill
payments and top-ups net revenue showed continued resilience in the face
of the current decline in cash payments in the UK and the previously
announced ending of the British Gas contract, partially offset by the
current year benefit from client contracts entered into in prior years
(IFRS 15). Romania net revenue grew by 5.5% through improved margins and
increased transactions. Reported net revenue, which reflects the GBP0.7
million headwind of the revised Yodel commercial terms in prior year,
increased by GBP4.1m million (3.5%).
Pre-tax profits before reflecting the "variable pay benefit" of GBP2.1
million was GBP54.7 million and was in line with the expectations we set
in our 23 January 2020 Trading Statement. The "variable pay benefit"
arises due to the recent and unexpected situation of Covid-19 and
subsequent actions and events, including the decision to cancel
management bonuses. Reported profit before tax grew by 3.8% with diluted
earnings per share also increasing by 2.3% to 66.3 pence. PayPoint
remains highly cash generative with profit before tax of GBP56.8 million
converted into GBP66.4 million cash. Net corporate debt of GBP12.0
million represents a decline in net cash of GBP15.4 million as a result
of the additional dividend programme.
On 6 April 2020, PayPoint acquired the remaining 50% of the joint
operation that Yodel owned for GBP6 million, resulting in Collect+
becoming a fully owned brand within the PayPoint Group. The long-term
partnership was reaffirmed as Yodel renewed a multi-year contract to
continue as a parcel carrier for Collect+. PayPoint also acquired the
ownership of the Collect+ website domain which will now be developed to
further the brand and promote volume growth.
For the year ended 31 March 2020, the Board is proposing a final
dividend of 15.6 pence per share.
Outlook and dividend
At this early stage in the year we are not in a position to predict the
full nature, extent and duration of the financial impact of Covid-19 on
the business and as a result there is a broad range of potential profit
outcomes for both the current year and further into the future.
The core characteristics of the business remain unchanged, with a strong
balance sheet, clear business model, a broad and resilient earnings'
base with the opportunity to use technology to adapt our business model
and strong cash generation which supports the payment of a dividend.
Current trading has demonstrated good resilience in the bill payments
and top-ups businesses. ATMs and parcels have been more severely
affected although card payments have benefitted from increased sales in
the convenience sector. For the current year, we have reviewed a number
of scenarios. Our base case assumes that the trading patterns seen
during the second half of April and into May will continue through until
the end of June and thereafter the business will see a gradual recovery,
with the rate of this recovery being impacted by overall economic
conditions. Whilst there are many sensitivities that sit behind these
base assumptions, at this stage we view this as a prudent basis from
which to manage the business, maximise our resilience during this crisis
and take opportunities as they emerge for the longer term.
Ahead of this crisis we had anticipated the ending of the British Gas
contract effective from 1 January 2020, this contributed GBP3.8 million
net revenue and contribution for the year ended 31 March 2020. Whilst we
have successfully renewed all subsequent contracts, some of these
contract renewals have required additional investments. Costs are being
tightly managed and we expect operating cost cashflow in the current
financial year to remain flat on the prior year, albeit reported costs
will rise due to additional depreciation from investment in our
back-office systems and the absence of the prior year variable pay
benefit.
As a measure of the confidence the Board has in the resilience of
PayPoint the Board has proposed a final dividend of 15.6 pence. In
determining the level of dividend, the Board has sought to ensure a
prudent level of earnings coverage for the dividend within the target
cover range of 1.2 to 1.5(12) times earnings and to ensure that leverage
is not substantially increased even in a scenario whereby the trading
patterns seen in late April continue until the end of December 2020.
MARKET OVERVIEW
PayPoint's retailer partner network is the largest of its' kind. Our
superior network means 99.5% of the urban population live within one
mile of a PayPoint retailer partner and 98.3% of the rural population
live within five miles. This provides a convenient place for consumers
to pay their bills and access other PayPoint services, including the
collection and sending of parcels where available.
The recent events surrounding the outbreak of Covid-19 and the measures
taken by the government has, at the time of writing, had an impact in
the markets that we operate in. Whilst it is too early to understand the
longer term structural changes that will ensue following Covid-19, we
have included current trends in the market overview.
In the UK, the retail sector comprises of c62,600 retail sites and is
made up of the following segments:
UK retail PayPoint's UK
sector(13) network(14) (As
(Before at 31 March
Covid-19) 2020)
Independent retailers 18,500
Symbol group independents 14,400
Specialist and confectionery, tobacconist
& news sites 6,000
Symbol and independent retailers 38,900 17,700
Multiple groups in convenience retail(1) 13,500
Supermarkets and discounters 10,200
Managed groups 23,700 9,100
Total UK sites 62,600 26,800
Convenience retail
Before Covid-19
Convenience retail growth has been driven by consumers' habits changing
towards smaller but more frequent shopping trips at their local stores.
-- Total convenience sector sales are estimated to have grown by 3% in 2019
to over GBP40bn15, compared to overall food retail growth of 1.7%.
Convenience sales are expected to grow at an annual compound rate of 3.1%
until 202416.
-- Convenience retailer sites increased marginally to 46,400 sites across
the UK, driven by Multiple groups opening additional sites.
Current impact of Covid-19
Home bound consumers have driven the increase in local shopping for
essential items, benefiting local convenience stores and specialist food
and drink retailers, such as off licences and greengrocers.
degConvenience sales since the beginning of Covid-19 lockdown (24 March
-- 5 April 2020) are up 56% compared to the same period last year(17) .
Our PayPoint One technology is well suited for symbol and independent
convenience retailers. In conjunction with additional PayPoint services
such as parcels, it enables retailers to achieve higher footfall, serve
customers more quickly and improve business efficiency. This helps them
to grow their businesses profitably and remain competitive. Managed
groups which offer PayPoint services typically use the PPoS solution
which integrates into their own EPoS systems. As we develop our range of
services and value for retailers, we will look to drive additional
growth from service fee revenue.
Card payments
Before Covid-19
Card payments, particularly contactless, continued to displace cash as a
payment method.
-- UK Convenience store card payments transactions increased by 10.5%18.
Contactless payments increased 12.3%19.
-- Average transaction values declined by 9.0%20 to GBP15.48.
-- Over 90% (2019: 88%) of convenience retailers offer debit and credit card
facilities with 88% (2019: 80%) accepting contactless payments21.
Current impact of Covid-19
Card payments have benefited from the increase in convenience store'
sales and health concerns related to handling cash.
degContactless payment limit increased to GBP45 from GBP30 from 1 April
2020.
PayPoint will benefit both from the market growth in UK card payments
and by increasing the penetration of its card payments product in its
retailer partner network, assisted by our new unique net settlement
feature, allowing the offset of bill payments cash due from retailers
against funds due to retailers for card payments.
Cash-Out
Before Covid-19
Cash remains a very popular payment method, and is the second most
frequently used payment method in the UK.
-- Estimated 55 million over the counter branch withdrawals in 201822.
-- 3,303 bank branch closures between January 2015 and August 2019, around
34% of the network23.
-- LINK's ATM transactions declined by 11.3% to an average of 2,558 million
transactions24, in the 12 months to February 2020.
-- LINK's ATM network declined by 2,861 (4.5%) to 60,291 sites in December
201925.
Current impact of Covid-19
ATM activity has reduced because of temporary retailer closures and
health concerns related to handling of cash.
-- Weekly transaction volumes have reduced to c21 million transactions26,
c60% lower than similar weeks in 2019. LINK's ATM network reduced to
53,874 (c10% from December 2019) by 17 April 2020.
-- It is likely consumers' cash usage habits will fundamentally change,
however the need for cash access, as a contingency and for vulnerable
consumers, will continue to be important. LINK has suggested a possible
fundamental review and potential restructuring of the country's ATM
network and its business model27.
PayPoint's ATM merchant replenishment model allows retailers to recycle
cash received from bill payments into the ATM. This model is more cost
effective for both PayPoint and the retailer, allowing PayPoint's ATMs
to operate profitably at much lower volumes than the market. As a result
this model, as part of a broader product offering, makes the PayPoint
ATM network more resilient than the market as a whole. This provides
PayPoint the opportunity to grow its market share and continue to enable
additional revenue and footfall opportunities for the retailer. PayPoint
also has other cash-out services providing an effective solution for
local authorities, charities and service providers to Department for
Work and Pensions.
Parcels
Before Covid-19
-- Interactive Media in Retail Group (IMRG) forecast UK parcel volumes (in
November 2019) to decline by 5.6% year-on-year in 201928 to 1.4bn
parcels.
-- The pick-up and drop-off (PUDO) market comprises Click and Collect,
returns and send propositions. The Click and Collect market is 11% of all
volumes c.150 million parcels per year and is expected to double by
202529. Returns and send volumes are estimated at c.185 million and c.380
million parcels per year respectively30.
Current impact of Covid-19
-- Online clothing sales, a large sector of the PUDO click and collect
volumes, have reduced by c30% year on year for the four weeks following
15 March 202031.
-- Some Parcel carriers have suspended their redirect services decreasing
volumes.
As PayPoint develops new parcel partnerships it will look to maximise
its share of this market. This will drive additional footfall and
revenue opportunities for convenience retailers and improve the Click
and Collect experience for online shoppers. Volume is also expected to
increase with the development of a market attractive send proposition.
Bill payments and top-ups
Before Covid-19
-- Cash payments in the UK declined by 16% in 201832.
-- Energy:
-- The price cap for pre-pay customers reduced to GBP1,200 per year
in April 202033, 3.4% lower than the cap set in April 2019.
-- Non-Big Six energy providers combined market share grew marginally
to 26% (2018: 25%)34.
-- OVO Group Ltd's acquisition of SSE Energy Services Group Ltd was
cleared by the Competition and Markets Authority in December
201935.
-- In 2019, 4.4 million domestic smart meters were installed to reach
19.3 million of 51.8 million36 total meters.
-- Number of pre-paid mobile subscriptions declined by 6.2% to 25.9 million
subscribers37, with more customers topping up online.
Current impact of Covid-19
-- The Department for Business, Energy and Industrial Strategy and domestic
energy supply companies agreed principles to support energy customers
impacted by Covid-19 including extending discretionary/ friendly credit
or sending out a pre-loaded top up card38.
-- Smart meter installations are slow; most suppliers have decided to carry
out emergency metering work only39.
-- Energy suppliers encouraging consumers to switch to digital payments.
PayPoint will work to maintain its leadership in this area and look to
drive profitable growth opportunities supporting new entrants in the
energy and banking space. Through MultiPay and other innovative new
services, PayPoint will further facilitate the growth of online bill
payment transactions in selected verticals.
Romania
There are c435 million bill payments per year(40) with cash payments
being the preferred payment method.
Before Covid-19
-- Cash usage continued to grow as reflected by PSP ATM cash withdrawals
increasing by 12% in 2019 to RON 221 billion in 201941.
-- Card payments are growing in usage with PSP processing RON 72 billion in
2019, a 23.6% increase from 201814.
-- Grocery and pharmacy footfall increased c15% year on year in first two
weeks of March 202042.
Current impact of Covid-19
degGrocery and pharmacy footfall fell by over 40% in the initial lock
down and was still 21% lower by the second week of April 2020(15) .
PROGRESS AGAINST OUR STRATEGIC PRIORITIES
PayPoint's strategy is to maximise its opportunity in the dynamic
markets in which it operates by leveraging its leading retailer network,
scalable technology and payments platform. The strategy is executed
through the following priorities identified in the 2018/19 annual
report:
1. Embed PayPoint at the heart of convenience retail.
2. PayPoint becomes the definitive parcel point solution.
3. Sustain leadership in 'pay-as-you-go' and grow digital bill payments.
4. Innovate future growth and profits.
Progress against these priorities is set out below.
PRIORITY 1: EMBED PAYPOINT AT THE HEART OF CONVENIENCE RETAIL
PayPoint will continue to provide and develop new products and services
which enhance our retailer partners' offer to their customers and help
them operate their businesses more effectively. Core to this priority is
PayPoint One, which includes EPoS and bill payment functionality, and
other products such as card payments and ATMs.
Progress in 2019/20
-- PayPoint One was live in 16,098 sites at 31 March 2020, representing
growth of 3,217 since last year. The original target of 15,800 was
exceeded and whilst the revised target of 16,500 live sites at the year
end was not met due to non-operational sites due to Covid-19, this target
was achieved on 21 February 2020:
-- Retirement of legacy T2 terminals from the UK independent retailer
estate completed by 31 March 2020, 98.9%43 of PayPoint's
independent retailer partners are now using PayPoint One.
-- Average weekly service fee revenue per site increased to GBP15.4
(2019: GBP15.1) benefitting from the annual price indexation. EPoS
Pro was live in 838 sites, growth of 193 since last year.
-- After a successful national trial, the Booker EPoS link is now
available to PayPoint One Pro sites. Retailers will benefit from
daily price updates, monthly consumer promotions, the ability to
place orders through the PayPoint One mobile app and receive
electronic delivery notes to update stock.
-- Card payments was live in 9,435 sites at 31 March 2020, a decline of 444
sites from 30 September 2019, largely due to non-operational sites from
Covid-19:
-- Card payment transactions grew by 20.6% to 136.8 million.
-- Net revenue increased 10.9% to GBP8.7 million. The effect of the
increased number of transactions was partly offset by lower
average transaction values arising from the growth in contactless
payments. The average transaction value was GBP11.97, a reduction
from GBP12.60 achieved in 2019.
-- Operational improvements and new pricing structures have reduced
the card payments churn rate, excluding Covid-19 suspended sites,
by 2.2ppts to 14.4% (2019: 16.6%).
-- Launched rollout of card payments net settlement functionality
allowing the offset of bill payments cash due from retailer
partners against funds due to retailer partners for card payments,
this is now live in 399 sites.
-- ATMs were live in 3,620 sites at 31 March 2020, a decrease of 207 since
31 March 2019, largely due to non-operational sites from Covid -19:
-- Secured a new significant ATM client and rolled out 141 ATMs to
its leisure centres.
-- PayPoint continued to focus on relocating machines from low
performing sites to better locations.
-- The average monthly transactions per site per month grew by 2.7%
to 1,809 transactions. ATM transactions declined by 4% to 40.4
million, less than the general market decline of 11.3%44 before
Covid-19.
-- Net revenue decreased 3.5% to GBP11.9 million, primarily due to
the reduction in LINK interchange fees (5% in July 2018 and 5% in
January 2019) and lower transactions.
-- Paypoint have been actively converting surcharging ATMs to free
ATMs, under LINK's Financial Inclusion scheme. This activity has
contributed to building an estate of over 160 free PayPoint ATMs,
that facilitate free access to cash to the most vulnerable in
society.
-- Continued focus on service delivery improvement:
-- Continued investment into our EPoS platform to facilitate further
expansion of features and ensure continued delivery of benefits to
our retailer partners. This has included improved processing speed
for transactions and so reducing our server use, implementing new
operational monitoring to better manage the platform, redesigned
EPoS configuration of communication with the till and redesigning
back end reporting to be faster and report over longer periods.
-- Introduced 'Early life project' and "Retailer end to end
management' initiatives to support retailers.
-- A Retail Services Director has been recruited and will start on 1
July 2020, to take direct responsibility for the delivery of
products and services to our retailer partner network and the
management of our relationships in the network. The new structure
will bring together our Field, Operations, Contact Centre and
Product teams so all are focused on delivering improved value to
retailers.
-- Extended our in-house terminal maintenance and repairs to include
PayPoint One and PPoS terminals. Terminal swap rates reduced by
57% driven by stability of PayPoint One and improved quality of
repairs from in-house maintenance which ultimately improved
customer service and experience.
-- Deployed the lead to sales feature of Salesforce CRM, a
cornerstone to delivery of our strategy, enabling paperless sign
up supported by a system-driven workflow which has improved data
accuracy and has reduced timeframes from prospecting to
installation. In addition to reducing manual paper based processes
this investment has supported our move to remote working.
PRIORITY 2: PAYPOINT BECOMES THE DEFINITIVE PARCEL POINT SOLUTION
Online retail shopping will continue to grow as retailer partners
enhance their offering with ongoing improvements in convenience and
service delivery methods. However, deliveries in the "last mile" remain
difficult for carriers who are operating in a competitive low-margin
market. PayPoint's extensive network, which comprises over 8,000 sites,
provides a solution for carriers and retailer partners, improving
service levels for their consumers.
Progress in 2019/20
-- Rolled out new partners access to the PayPoint network with minimal
operational impact on Collect+ network sites.
-- Held over 9,000 training sessions with new and existing retailers on
behalf of new parcel partners.
-- Volumes grew by 12.7% to 24.5 million, primarily from new partner
volumes.
-- Parcel mobile app functional enhancements with parcel inventory
management, character recognition and predictive text features.
-- On 6 April 2020, PayPoint acquired the 50% of the joint operation that
Yodel owned resulting in Collect+ becoming a fully owned brand within the
PayPoint Group. It also reaffirmed the long-term partnership with Yodel
with commitment to a multi-year contract. PayPoint also acquired the
ownership of the Collect+ website domain which will now be developed to
further the brand.
PRIORITY 3: SUSTAIN LEADERSHIP IN 'PAY-AS-YOU-GO' AND GROW DIGITAL BILL
PAYMENTS
UK
Over-the-counter payments will remain an important part of the UK
economy and we will continue to retain our leadership in this area. This
business remains highly cash generative and enables us to invest in
future growth and innovation. We intend to grow our presence in
omni-channel payments by evolving the MultiPay platform offering and
extending beyond the energy sector.
Progress in 2019/20
-- 19 new clients were contracted including Monese; 22 contracts were
renewed including EDF and Monzo Bank and 7 existing clients signed up for
additional services, notably Shell taking our MultiPay service. Renewals
represented 23.7% of our bill payments and top-ups annual net revenue.
-- UK bill payment and top-ups net revenue increased 0.3% to GBP65.1 million,
the impact from the ending of the British Gas contract partially offset
by the current year benefit from client contracts entered into in prior
years (IFRS 15). Transaction volume decreased by 7.0%, primarily due to
the end of the British Gas contract and decline in top-ups. Client
revenue mix continued to improve, with the average net revenue per
transaction increasing to 19.4 pence, up 7.8%.
-- Strong growth continued with MultiPay, transactions increased by 20.4% to
32.9 million transactions, net revenue increased 25.7%.
-- Implemented new direct debit and PayByLink functionality for MultiPay.
-- Strong growth in eMoney, transactions increased by 17.3% to 9.1 million,
net revenue increased 19.9%.
-- Executed detailed transition plans for British Gas account.
Romania
Romania is an important growth driver for PayPoint. Its technology
platform, network strength and brand recognition make it uniquely placed
as the Romanian market evolves. This evolution will include, over time,
growth in automated, digital, parcel and card payments solutions. Cash
bill payments remain a mass market proposition and will continue to be a
robust category.
Progress in 2019/20
-- Maintained leadership in the bill payment market with a 32% share of
clients' cash bill payments, driven by 74% consumer awareness.
-- 24 new clients secured in the year.
-- Transactions increased by 2.0% to 114.6 million despite challenging
market conditions, net revenue increased 5.5% to GBP14.6 million.
-- Extended network into large multiple retailers; PayPoint was in 19,257
sites at 31 March 2020, an increase of 791 since 31 March 2019 due to
continued sales efforts.
-- Card payment sites increased by 244 to 1,548.
PRIORITY 4: INNOVATE FUTURE GROWTH AND PROFITS
Innovation has been a key to our success since PayPoint started over 20
years ago. As evidenced in the above priorities, we continue to innovate
to maintain our competitive advantage, drive new products and services,
improve our retailer partner experience and increase efficiency.
Progress in 2019/20
-- Trialled a new self-service proposition in Romania with development of an
automatic vending machine (AVM) to offer a new, convenient channel to
consumers.
-- MultiPay PayByLink capability developed to extend functionality.
-- Deployed the lead to sales feature of Salesforce CRM.
-- Parcel mobile app functional enhancements.
-- Continued investment into our EPOS platform.
ORGANISATION AND SERVICE DELIVERY
Underpinning PayPoint's future success is the continued development and
investment in our people, systems and organisation with the aim to
create an efficient and high performance based culture with a focus on
empowerment, engagement and customer service.
Progress in 2019/20
-- Deployed the lead to sales feature of Salesforce CRM, enabling paperless
sign up supported by a system driven workflow which has improved data
accuracy and has reduced timeframes from prospecting to installation. In
addition to reducing manual paper based processes this investment has
supported our move to remote working.
-- Implemented a new ERP system, Microsoft NAV, enabling streamlined
processes and improved efficiency together with more analysis.
STRATEGY AND AMBITIONS FOR 2020/21
We are still assessing the impact of Covid-19 on our business and the
longer term trends in our key markets. For the short term our focus is
on necessary tactical actions to support the business but the core
strategic priorities for the business remain unchanged;
-- Embed PayPoint at the heart of convenience retail,
-- Become the definitive parcel point solution,
-- Sustain leadership in 'pay-as-you-go' and grow digital bill payments.
To develop a strategy which both underpins these core strategic
priorities and creates meaningful new opportunities for growth we need
an organisational structure and renewed culture which delivers a step
change in operational performance and accountability throughout the
organisation. A new sense of energy and purpose in the business is
required as we take the necessary actions to improve our engagement with
clients and partnership with our retailer partner network.
With the benefit of external support the board has identified a number
of actions necessary to strengthen and invest in our business to deliver
a stronger platform for long term growth.
PRIORITY 1: EMBED PAYPOINT AT THE HEART OF CONVENIENCE RETAIL
Ambition for 2020/21
Our assessment of the market remains that the changing dynamics in the
convenience retail sector are creating significant opportunities for
PayPoint. However, to access these opportunities we need to deliver a
different level of service and partnership with our retailer partner
network to improve retailer sentiment we face today and in response to
intensified network competition following the Post Office's acquisition
of Payzone. To build on the successful rollout of PayPoint One and
retirement of legacy terminals we have a number of key objectives
underway in the Retail Services business;
-- A reorganisation of our retailer partner network facing resource, to
deliver a more closely aligned Field Operations and Contact Centre,
leveraging the benefits of our newly rolled out CRM system, to deliver a
better service to our retailer partners. Combined with investment in our
retailer portal, this will give our retailer partners a greater range of
channels from which to interact with PayPoint and our support teams the
real-time information needed to resolve issues quicker.
-- To improve the overall quality of our interactions with retailers we will
work with retailers to design a new multi-platform self-service portal.
This will replace several existing separate portals. Ultimately, this
will improve our retailer partners experience and reduce their need to
call the Contact Centre.
-- Undertake a detailed retailer network review, to understand better our
retailer partners, the products and services they need to succeed in
their businesses and the retailer proposition we can provide which
delivers the best value. The outcome of this process will be increasing
engagement and value for our retailer partners and a more efficient and
service orientated retailer facing resource.
-- Better use of the data we have within the business today to pro-actively
manage our retailer partner network and monitor its performance. To
achieve this the business is establishing a small number of key KPIs to
speed up management response times to issues and opportunities in the
network.
-- Deliver more ambitious plans to grow our Card and ATM estate and support
these plans with investment. PayPoint has strong offerings in both of
these products, with a number of unique features which should be adding
significantly more value to our existing retailer partner network. These
products also offer opportunities to provide growth opportunities beyond
our existing network.
-- In offering support for access to banking services in the community, we
need to provide withdrawal and deposit services to credit institutions
and other authorised organisations and build on existing offerings we
have already developed with a number of challenger banks and eMoney
issuers.
PRIORITY 2: PAYPOINT BECOMES THE DEFINITIVE PARCEL POINT SOLUTION
Ambition for 2020/21
The Collect+ transition to a multi-carrier parcel proposition is now
complete and there is a strong recognition from carriers, our retailer
partners and consumer of the value our service brings to convenience and
service delivery in parcels. For our retailer partners, Collect+ offers
a combination of benefits, including a broadening of the footfall
demographic and meaningful commission payment. Our next phase of volume
growth in this business will be delivered through a maturing and
optimisation of the network, underlying growth in consumer adoption of
the pick up proposition and an increased focus on operational
performance and improved / consistent consumer experience. To achieve
this our objectives are;
-- Integrate our Parcels Contact Centre into our overall retailer facing
activities and deliver an improved level of retailer support (again
benefiting from the rollout of our CRM system).
-- A retailer parcel network assessment to ensure we have the appropriate
network capacity and skills / training levels in the network to support
our next phase of growth.
-- Continue to scale partners' access into the network, with a carrier by
carrier plan to capture optimal network size, and identify new carrier
prospects appropriate to the Collect+ network.
-- Renew our focus and measurement of operational performance, consumer
service and experience, including additional retailer training and
support, refreshing our key KPIs to ensure there is full alignment with
our carrier partners.
-- Establish a market attractive send proposition and ensure this is
operational ahead of the peak parcel volume season in 2020/21.
PRIORITY 3: SUSTAIN LEADERSHIP IN 'PAY-AS-YOU-GO' AND GROW DIGITAL BILL
PAYMENTS
UK Ambition for 2020/21
Our focus is to maintain our leadership in bill payments and to grow our
presence in omnichannel payments through the continued development of
our MultiPay platform and extending this capability into new market
segments.
As part of our strategic review we have undertaken a detailed assessment
of our current market positioning in the bill payments market and the
key underlying trends in our markets, to identify the specific actions
required to both maintain our current market leading position and
maximise the growth opportunities across a number of additional bill
payment segments, such that we can offer a wider range of services,
covering both cash and other payment channels. These actions include;
-- Work with our major energy supply clients to develop a better
understanding of the evolving needs of each one and identify how we can
broaden out the services we can provide to meet their goals. Our approach
will reflect our new organisational design and culture and comprehensive
engagement from across the business, to deliver a more institutional
management of each relationship, a better understanding of how we can
help and work with each client as we broaden out the services we can
provide, in response to the evolving needs of these clients.
-- Continue to strengthen our relationships with our challenger energy
suppliers, as they evolve their own business models in response to
changes in the energy market. This includes winning new energy clients as
the challenger energy suppliers continue to grow market share in this
sector.
-- Continue to identify and win new bill payment clients beyond the energy
sector seeking access to the strength of the PayPoint retailer network
and our strong technology platform.
-- In MultiPay, building on the strong technology platform we have invested
in, including the new PayByLink functionality, to accelerate our
expansion into new sector verticals, including a greater penetration of
the Housing Authority and Local Authority sectors, in addition to other
new verticals.
-- Extend the PayPoint Cash-out voucher service, particularly in light of
the Covid-19 environment.
Romania Ambition for 2020/21
-- Consolidate PayPoint's share of client bill payments, and continue to
secure new clients and offerings.
-- Start replacing the legacy terminal with a modern lightweight and hand
held terminal, which can also be card-enabled, to enhance the bill
payment experience.
-- Continue to deploy self-service machines (AVMs).
-- Launch our Consumer App embedding the most important features of the
PayPoint services portfolio and introducing mobile card payments for
utilities and top-ups.
NEW PRIORITY 4: BUILDING A DELIVERY FOCUSED ORGANISATION AND CULTURE
Innovating for future growth and profits is now embedded in each of the
strategic priorities. This provides us with the opportunity to leverage
our investment in PayPoint One and CRM to use the technology to deliver
future growth, and whilst we will continue to invest, we need to ensure
we can benefit from this and therefore have the above new priority for
the coming year.
Ambition for 2020/21
One of the consequences of the current Covid-19 crisis will be a review
of the number of aspects of the way our business and its resources are
best utilised to support our clients and retailer network. Already we
can see good examples as to how we can work smarter and more efficiently
in the business which we must build upon.
-- A strategic and organisational review was undertaken by the Board. A key
conclusion was the recognition of the need for a more streamlined and
operationally focused organisational structure to support our strategy
with clear accountability for the client and retail service businesses
and the alignment of resources to deliver better execution and engagement
with our client and retailer network. To achieve this we have made some
fundamental changes to the future organisational structure;
-- The importance of client focus has been underlined by adding a
Client Services Director to the Executive Board. We are delighted
that we have been able to internally promote Danny Vant to the
role. He will focus on and assume responsibility for maintaining
our leadership in bill payments and growing our presence in
omni-channel payments through the continued development of our
MultiPay platform and the extension of these capabilities into new
market segments.
-- The Board has created a new role, Retail Services Director as a
member of the Executive Board. This role will lead a newly
established Retail Services function, incorporating all retail
supporting teams, responsible for the end-to-end delivery of
products and services to our retailer partner network and the
management of relationships within the network, leveraging the
benefits of our newly rolled out CRM system. An external
appointment has been made who will join the business on 1 July
2020.
-- Nick Williams has been promoted to the role of Head of Strategic
Partners and Product -- Parcels, to lead the Parcels business and
our focus on a multi-carrier parcel proposition. In doing so, he
will drive the next phase of parcel growth and a greater focus on
improvements to customer service and experience.
These changes will lead to a more efficient organisational structure
with greater accountability and focus on client and retailer network
relationships.
KEY PERFORMANCE INDICATORS(45)
PayPoint has identified the following KPIs to measure progress of our
strategic priorities:
KPI Description, purpose and reference 2019/20 2018/19 2017/18
------------------- ---------------- ------------------------------------------------- ------- ------- -------
Revenue less commissions paid to retailers
and the cost of mobile top-ups and SIM
cards where PayPoint is principal. This
reflects the benefit attributable to
PayPoint's performance eliminating pass-through
costs and is an important measure of
Net revenue the overall success of our strategy.
Overall (GBP million) (See Finance review -- 'Overview' on
performance (Group) page 17) 120.7 116.6 119.6
------------------- ---------------- ------------------------------------------------- ------- ------- -------
Operating profit before exceptional
items as a percentage of net revenue.
Operating margin provides a broad overview
of the efficient and effective management
Operating of the cost base enabling shareholder
margin returns and investment in the business.
(%) (See Finance review -- 'Operating margin'
(Group) on page 20) 47.2 46.3 44.7
---------------- --------------------------------------------------------------------- ------- ------- -------
Earnings before exceptional items, tax,
depreciation and amortisation adjusted
for corporate working capital movements
(excludes movement in clients' funds
and retailers' deposits). This represents
the cash generated by operations which
is available for capex, taxation and
Cash generation dividend payments.
(GBP million) (See Finance review -- 'Cash flow and
(Group) liquidity' on page 21) 66.4 62.8 67.9
---------------- --------------------------------------------------------------------- ------- ------- -------
The number, at the reporting date, of
retailer sites in which at least one
PayPoint One terminal was operational.
Embed A site may have more than one terminal
PayPoint (multiple lanes). This provides a measure
at the PayPoint of the extent of our network into which
heart One sites services and features can be sold driving
of convenience (Number) future growth.
retail (UK) (See Strategic priorities on page 10) 16,098 12,881 8,550
------------------- ---------------- ------------------------------------------------- ------- ------- -------
The average weekly service fee across
all PayPoint One sites based on the
PayPoint PayPoint One devices in store at the
One average reporting date. This provides a measure
weekly fee of the weekly value derived from PayPoint
per site One and EPoS services from each PayPoint
(GBP) One site.
(UK) (See Strategic priorities on page 10) 15.4 15.1 14.9
---------------- --------------------------------------------------------------------- ------- ------- -------
Card payment net revenue represents
the rebate earned from card transactions
processed by retailers through PayPoint's
card payment service. This is an important
Card payment measure of the overall success of our
net revenue card payment solution.
(GBP million) (See Finance review -- 'Sector analysis'
(UK) on page 18) 8.7 7.9 7.5
---------------- --------------------------------------------------------------------- ------- ------- -------
ATM net revenue represents the fees
earned less the commissions paid to
retailers from consumers using PayPoint's
ATMs located inside a retailer's store.
This is an important measure of the
overall success of our ATM product.
Fees are earned from either interchange
fees (from free-to-use ATMs) or surcharge
ATM net fees (from pay-to-use ATMs) from cash
revenue withdrawals and balance enquiries.
(GBP million) (See Finance review -- 'Sector analysis'
(UK) on page 18) 11.9 12.3 12.8
---------------- --------------------------------------------------------------------- ------- ------- -------
The number, at the reporting date, of
sites where the parcel proposition was
enabled on PayPoint terminals. This
currently represents the number of Collect+
Become branded sites and Amazon standalone
the sites. This provides an indication of
definitive the coverage of our network with a larger
parcel Parcel sites coverage being more attractive to clients
point (Number) and consumers wanting to use the product.
solution (UK) (See Strategic priorities on page 11) 8,646 7,134 7,436
------------------- ---------------- ------------------------------------------------- ------- ------- -------
The number of parcels processed and
registered through a PayPoint terminal
or mobile app. Parcel volume provides
Parcels a measure of the source of revenue where
processed revenue is earned on a per parcel basis.
(Millions) (See Finance review -- 'Sector analysis'
(UK) on page 18) 24.5 21.8 23.7
---------------- --------------------------------------------------------------------- ------- ------- -------
KPI Description, purpose and reference 2019/20 2018/19 2017/18
----------------------- ------------------- --------------------------------------------------- ------- ------- -------
The value of bill payment (including
MultiPay), top-up and eMoney transactions
processed via our terminals or MultiPay
Sustain platform where PayPoint provides the
leadership collection and settlement of funds. Transaction
in 'pay-as-you-go' value provides a measure of the extent
and of the service PayPoint provides to clients.
grow Transaction In certain instances, it also provides
digital value a measure of the source of revenue where
bill (GBP million) revenue is based on a percentage of the
payments (Group) transaction value. 9,015 9,237 9,201
----------------------- ------------------- --------------------------------------------------- ------- ------- -------
The number of bill payment (including
MultiPay), top-up and eMoney transactions
processed in the year on our terminals
or MultiPay platform. Transactions processed
provides a measure of the source of revenue
Transactions which is earned on a per transaction
processed basis.
(Millions) (See Finance review -- 'Sector analysis'
(Group) on page 18) 448.8 472.7 482.1
------------------- --------------------------------------------------------------------------- ------- ------- -------
The net revenue earned from bill payments
(including MultiPay, excluding SPS),
top-ups and eMoney divided by the annual
number of transactions processed on our
terminals and MultiPay platform. This
Net revenue provides an indication of profitability
per transaction per transaction.
(Pence) (See Finance review -- 'Sector analysis'
(Group) on page 18) 17.5 16.4 15.9
------------------- --------------------------------------------------------------------------- ------- ------- -------
Diluted earnings divided by the weighted
average number of ordinary shares in
issue during the year (including potentially
Diluted dilutive ordinary shares). Earnings per
earnings share is a measure of the profit attributable
per share to each share.
Shareholder (Pence) (See note 10 to the financial statements
returns (Group) on page 110) 66.3 64.8 62.7
----------------------- ------------------- --------------------------------------------------- ------- ------- -------
Dividends (ordinary and additional) paid
during the financial year divided by
Dividends number of ordinary shares in issue at
paid per reporting date. Dividends paid per share
share provides a measure of the return to shareholders.
(Pence) (See Finance review -- 'Dividends' on
(Group) page 22) 84.0 82.9 82.0
------------------- --------------------------------------------------------------------------- ------- ------- -------
Network
stability Total urban population covered within
one-mile a one-mile radius of a PayPoint site.
urban population This is monitored to ensure PayPoint
cover are above our minimum SLA statistic of
Non-financial (%) 95%. 99.5 99.5 99.5
------------------------ ------------------ --------------------------------------------------- ------- ------- -------
Network
stability
five-mile Total rural population covered within
rural population a five-mile radius of a PayPoint site.
cover This is monitored to ensure PayPoint
(%) are above our minimum SLA statistic of
(UK) 95%. 98.3 98.5 98.5
------------------ --------------------------------------------------------------------------- ------- ------- -------
The % of the retailer partner network,
that on an annual basis, exits PayPoint.
This is calculated by taking the number
of retailers who exited PayPoint in the
period (excluding suspended sites), divided
by the average number of total UK retailer
partner sites for the period. This tracks
the movement in total UK retailer partner
sites.
Retailer 1. Included in retailer partners that
partner left PayPoint in the year were 731 due
site churn to the legacy T2 terminal sunsetting.
(%) Excluding this figure from retailer partners
(UK) leaving, churn would have been 5.8%. 8.4(46) 5.2 7.2
------------------ --------------------------------------------------------------------------- ------- ------- -------
Employee Measures the overall employee engagement 69.0 N/A
engagement of our UK population, calculated by our 68.0
(%) survey provider. The survey provides
(UK) insight into the health of our organisation,
enabling the identification of what is
important to our people so that appropriate
action can be taken.
------------------ --------------------------------------------------------------------------- ------- ------- -------
FINANCIAL REVIEW
OVERVIEW
Change
Year ended 31 March (GBPm) 2020 2019 %
Net revenue
UK retail services 41.0 37.8 8.5%
UK bill payments and top-ups 65.1 64.9 0.3%
Romania 14.6 13.9 5.5%
Total net revenue 120.7 116.6 3.5%
Total costs 63.9 62.8 1.8%
Profit before exceptional items and tax 56.8 53.8 5.6%
Profit before tax 56.8 54.7 3.8%
Cash generation 66.4 62.8 5.7%
Net corporate (debt)/cash (12.0) 3.5 (444.7%)
Profit before tax of GBP56.8 million (2019: GBP54.7 million) increased
by GBP2.1 million, reflecting increased net revenue and the GBP2.1
million "variable pay benefit" effect of the decision to cancel
management bonuses due to Covid-19 and release of share based payment
accruals. The prior year includes the impact from the Yodel
renegotiation of GBP0.7 million and a one-off benefit from improved VAT
recovery of GBP2.4 million as well as an exceptional item of GBP0.9
million relating to a subsidiary disposal provision release. Underlying
profit before exceptional items and tax of GBP56.8 million (2019:
GBP50.6 million) grew by 12.3% (2019: 11.3%).
Revenue grew by GBP1.7 million (0.8%) to GBP213.3 million (2019:
GBP211.6 million). Net revenue increased by GBP4.1 million to GBP120.7
million (2019: GBP116.6 million). Underlying net revenue, which excludes
the prior year impact from the Yodel renegotiation of GBP0.7 million,
increased by GBP4.8 million (4.1%) driven by growth in UK retail
services, strong margin growth in Romania and a resilient performance in
UK bill payments and top-ups.
UK retail services underlying net revenue, which excludes the Yodel
renegotiation mentioned above, delivered growth of GBP3.9million (10.5%)
mainly from increased service fee net revenue. The GBP2.8 million
(28.1%) increased service fee net revenue was primarily driven by the
rollout of PayPoint One to additional sites. Card payments net revenue
increased by GBP0.8 million due to increased transaction volumes. ATM
net revenue declined by GBP0.4 million (3.5%) due to the prior year
reductions of LINK's interchange fees and a reduction in transactions.
Underlying parcel net revenue, which excludes the GBP0.7 million prior
year impact from the Yodel renegotiation, increased by GBP0.7 million
due to a 12.7% increase in parcel volumes reflecting the benefit of new
parcel partnerships.
UK bill payments and top-ups businesses net revenue remained stable at
GBP65.1 million (2019: GBP64.9 million). There was a resilient
performance in bill payments net revenue with growth of GBP1.1 million
(2.2%) to GBP48.9 million (2019: GBP47.8 million) mainly due to the
growth in MultiPay, partially offset by the current year benefit from
client contracts entered into in prior years (IFRS 15) and improvement
in net revenue per transaction, which offset a 6.4% decline in
transactions and reflects the ending of the British Gas contract on 1
January 2020, this contributed GBP1.4 million in the results for the
three months ending 31 March 2019. MultiPay continued to grow strongly,
transactions increased by 20.4% to 32.9 million resulting in a GBP0.9
million (25.7%) increase in net revenue. As expected, UK top-up
transaction volumes declined by 5.0 million (11.2%) to 39.5 million,
which reduced net revenue by GBP0.9 million to GBP16.2 million. eMoney
transactions grew by 1.3 million (17.3%) to 9.1 million, which increased
net revenue by GBP1.2 million (19.9%). The prior year comparatives
included the closed Irish business which generated GBP1.4 million gross
revenue and GBP0.2 million net revenue.
In Romania net revenue increased by 5.5% to GBP14.6 million (2019:
GBP13.9 million) primarily driven by price increases and increased
transactions in bill payments and top-ups. Transactions grew by 2.4
million (2.0%) to 114.6 million (2019: 112.2 million).
Total costs increased by GBP1.1 million to GBP63.9 million (2019:
GBP62.8 million). Underlying costs, which excludes the prior period VAT
benefit of GBP2.4 million, decreased by GBP1.3 million (2.0%) due to a
GBP2.1 million "variable pay benefit" reduction in management bonuses
and share based payment expenses due to the decision to cancel
management bonuses due to Covid-19 and release of share based payment
accruals. This was partly offset by increased costs for additional
resources relating to the parcel partners integration, contact centre
and client services team and amortisation of prior year contract set up
expenses.
Cash generation remained strong with GBP66.4 million (2019: GBP62.8
million) delivered from profit before tax of GBP56.8 million (2019:
GBP54.7 million).
Net corporate debt increased by GBP15.4 million to GBP12.0 million
(2019: GBP3.5 million net corporate cash). Tax payments were higher than
the prior year due to HMRC bringing payments on account forward by six
months. At 31 March 2020, GBP70.0 million (2019: GBPnil) was fully drawn
down from the revolving credit facility to ensure PayPoint was in a
strong position to withstand a sustained period of disruption to trading
should it occur.
SECTOR ANALYSIS
UK retail services
UK retail services are services PayPoint provides to retailer partners
which form part of PayPoint's networks. Services include providing the
PayPoint One platform (which has a basic till application), EPoS, ATMs,
card payments, parcels and SIMs.
As at Year ended Year ended
29 February 2020 31 March 2020 31 March 2019 Change %
-----------------
Number of
retailers 17,161 16,663 17,608 (5.4%)
PayPoint terminal
sites (No.)
PayPoint One(47) 16,514 16,098 12,881 25.0%
Legacy (T2) 2,624 2,496 7,000 (64.3%)
PPoS(48) 8,317 8,235 8,554 (3.7%)
-----------------
Total sites 27,455 26,829 28,435 (5.6%)
Services in sites
(No.)
PayPoint One
Base 8,547 8,304 6,337 31.0%
EPoS Core 7,113 6,956 5,899 17.9%
EPoS Pro 854 838 645 29.9%
Card payments 9,776 9,435 9,796 (3.7%)
ATMs 3,923 3,620 3,827 (5.4%)
Parcels 8,575 8,646 7,134 21.2%
Transactions
(Millions)
Card payments 136.8 113.5 20.6%
ATMs 40.4 42.1 (4.1%)
Parcels 24.5 21.8 12.7%
PayPoint One
average weekly
service fee per
site (GBP) 15.4 15.1 1.9%
Net revenue
(GBPm)
Service fees 13.1 10.3 28.1%
Card payments 8.7 7.9 10.9%
ATM 11.9 12.3 (3.5%)
Parcels and other 7.3 7.3 (1.0%)
-----------------
Total net
revenue (GBPm) 41.0 37.8 8.5%
As at 31 March 2020, PayPoint had a live terminal in 26,829 UK sites
(2019: 28,435 sites), a reduction of 1,606 from 31 March 2019, primarily
as a result of temporarily suspended sites due to Covid-19. The PayPoint
One roll-out continued resulting in PayPoint One sites increasing by
3,217 sites to 16,098 sites (2019: 12,881 sites) and, as a consequence,
the number of UK sites with the legacy terminal reduced by 4,504 sites
to 2,496 sites (2019: 7,000 sites). The sun-setting of the legacy
terminal in independent retailers has been completed by the end of the
financial year.
UK retail services: Underlying net revenue increased by GBP3.9 million
(10.5%) to GBP41.0 million (2019: GBP37.1 million) excluding the prior
year GBP0.7 million impact from the revised commercial terms with Yodel.
The net revenue of each of our key products is separately addressed
below.
Service fees: This is a core growth area and consists of service fees
from PayPoint One and our legacy terminal. Service fee revenue increased
by GBP2.8 million (28.1%) to GBP13.1 million (2019: GBP10.3 million)
driven by the additional 3,217 PayPoint One sites compared to 31 March
2019. The PayPoint One average weekly fee per site increased by 1.9% to
GBP15.4 (2019: GBP15.1) benefiting from the annual price indexation.
Retailers taking the Core version of the product represent 43.2% (2019:
45.8%) of all PayPoint One sites and the Pro version represent 5.2%
(2019: 5.0%).
ATMs: ATM net revenue declined by GBP0.4 million (3.5%) due to the prior
year reductions of LINK's interchange fee and a 4.1% reduction in
transactions to 40.4 million (2019: 42.1 million). ATM sites decreased
by 207 sites to 3,620 sites (2019: 3,827 sites), with 283 sites
temporarily suspended due to Covid-19 at 31 March 2020. PayPoint
continued to optimise its ATM network by relocating existing machines to
better performing locations.
Card payments: Card payment transaction volumes grew by 20.6% to 136.8
million (2019: 113.5 million) benefiting from the market trend of
growing card payments, in particular contactless payments. Across our
network 9,435 retailer partners (2019: 9,796) were using the card
payment solution, 361 sites lower than the prior year driven by
competitor activity in the convenience market and 293 sites were
temporarily suspended at 31 March 2020 due to Covid-19. Net revenue
increased by 10.9% to GBP8.7 million (2019: GBP7.9 million), with the
effect of increased number of transactions being partly offset by lower
average transaction values due to the growth in contactless payments.
PayPoint's revenue rebate is broadly based on a percentage of the
transaction value processed.
Parcels & other: Parcel volumes increased by 12.7% to 24.5 million
(2019: 21.8 million) benefiting from growth in our new partnerships in
this market. Parcel sites increased by 1,512 from the prior year to
8,646 sites (2019: 7,134) which includes 1,608 standalone Amazon sites.
Parcels and other net revenue remained stable from the prior year,
however underlying net revenue, excluding the prior year GBP0.7 million
Yodel impact, increased by 10.6%. Other services provided include SIM
sales and other ad hoc items.
UK bill payments(49)
Bill payments is our most established category and consists of prepaid
energy, bill payments (including MultiPay) and CashOut services.
Year ended 31 March 2020 2019 Change %
--------------------------------------------
Total transactions (millions) 296.9 317.2 (6.4%)
Of which: MultiPay transactions (millions) 32.9 27.3 20.4%
Transaction value (GBPm) 6,106.3 6,390.2 (4.4%)
Net revenue (GBPm) 48.9 47.8 2.2%
Net revenue per transaction (pence) 16.5 15.1 9.3%
UK bill payments net revenue increased by 2.2% (GBP1.1 million) to
GBP48.9 million (2019: GBP47.8 million). Net revenue per transaction
continued to increase and was up by 1.4 pence (9.3%) due to the ongoing
improvement in mix to smaller, but higher yielding clients. This offsets
the 20.3 million decrease (6.4%) in transaction volumes, mainly arising
from the ending of the British Gas contract. MultiPay continued to grow
strongly, transactions increased by 5.6 million (20.4%) to 32.9 million
(2019: 27.3 million) and net revenue by 25.7% to GBP4.4 million (2019:
GBP3.5 million). Net revenue benefited from the GBP1.4 million swing
relating to client contracts entered into in prior years (due to IFRS
15). In the current year GBP0.7 million net deferred revenue was
recognised whereas in the prior year a net GBP0.7 million was deferred.
UK top-ups & eMoney
Top-ups include transactions where consumers can top up their mobiles,
prepaid debit cards and lottery tickets. This sector also includes
eMoney transactions where PayPoint provides the physical network for
consumers to convert cash into electronic funds with online
organisations.
Year ended 31 March 2020 2019 Change %
------------------------------------------
Transactions (millions) 39.5 44.5 (11.2%)
Of which: eMoney transactions (millions) 9.1 7.8 17.3%
Transaction value (GBPm) 684.1 607.0 12.7%
Net revenue (GBPm) 16.2 17.1 (5.6%)
Net revenue per transaction (pence) 41.0 38.7 5.9%
UK top-ups continued to be affected by market trends whereby UK direct
debit pay monthly options displace UK prepay mobile. As expected, UK
top-up and eMoney transactions declined by 5.0 million (11.2%) to 39.5
million (2019: 44.5 million) which led to a decline of GBP0.9 million
(5.6%) in net revenue. The impact of the lower level of transactions on
net revenue was offset by strong growth in eMoney transactions by 1.3
million (17.3%) to 9.1 million (2019: 7.8 million) and net revenue by
19.9%. eMoney transactions derive a substantially higher fee per
transaction than traditional top-up transactions.
Romania
The Romanian business comprises mainly of bill payments and top-ups
operating on a similar basis to our UK business. Cash payment remains a
mass market proposition in the country and is expected to be the
dominant payment method for the medium term.
Year ended 31 March 2020 2019 Change %
------------------------------------
PayPoint terminal sites (No.) 19,257 18,466 4.3%
Transaction value (GBPm) 2,296 2,312 (0.7%)
Transactions (millions)
Bill payments 100.0 99.1 0.9%
Top-ups 12.4 11.9 3.6%
Other 2.2 1.2 76.3%
------------------------------------
Total transactions 114.6 112.2 2.0%
Net revenue (GBPm) 14.6 13.9 5.5%
Net revenue per transaction (pence) 12.8 12.3 4.1%
The number of sites returned to growth and increased by 791 sites to
19,257 (2019: 18,466) following completion of the Payzone integration
programme. Bill Payment transactions increased by 0.9% to 100.0 million
(2019: 99.1 million) and top-up transactions increased by 3.6% to 12.4
million (2019: 11.9 million). The growth in other transactions was
driven by card payment transactions with an increase of 244 sites to
1,548 sites (2019: 1,304 sites). Net revenue increased by 5.5% which
reflects improved margins from contractual increases and benefits from
the Payzone integration programme.
TOTAL COSTS
Year ended 31 March (GBPm) 2020 2019 Change %
Other costs of revenue 8.0 9.0 (11.1%)
Depreciation and amortisation 9.5 9.8 (3.1%)
Administrative costs 46.2 43.8 5.5%
Finance costs 0.2 0.2 0.0%
-------------------------------------------
Total costs 63.9 62.8 1.8%
Add back VAT recovery benefit related to
prior years - 2.4 (100.0%)
-------------------------------------------
Underlying costs 63.9 65.2 (2.0%)
Total costs increased by GBP1.1 million to GBP63.9 million (2019:
GBP62.8 million). Underlying costs, which excludes the prior period VAT
benefit of GBP2.4 million, decreased by GBP1.3 million (2.0%) primarily
due to a GBP2.1 million "variable pay benefit" effect of reduction in
staff bonuses and share based payment expenses, following the decision
to cancel management bonuses due to Covid-19 and the release of accruals
due to the fall in value of the share-based payments. This was partly
offset by increased costs for additional resources relating to the
parcel partners integration, contact centre and client services team and
the GBP1.4 million swing relating to client contract costs incurred in
prior years (due to IFRS 15). In the current year GBP0.8 million net
deferred expense was recognised whereas in the prior year a net GBP0.6
million was deferred.
OPERATING MARGIN(50)
Operating margin of 47.2% (2019: 46.3%) increased by 0.9ppts due to 3.5%
increase in net revenue which was offset by a 1.8% increase in total
costs as mentioned above.
PROFIT BEFORE TAX AND TAXATION
The tax charge of GBP11.1 million (2019: GBP10.3 million) on profit
before tax of GBP56.8 million (2019: GBP54.7 million) represents an
effective tax rate(51) of 19.6% (2019: 18.8%), 0.8ppts higher than prior
year due to higher adjustments in respect of prior year.
STATEMENT OF FINANCIAL POSITION
Net assets of GBP38.3 million (2019: GBP50.2 million) declined by
GBP11.8 million as a result of the additional dividend programme.
Current assets increased by GBP26.8 million to GBP203.5 million (2019:
GBP176.6 million) due to increased cash as a result of the GBP70 million
draw down of the revolving credit facility. There is a corresponding
increase in current liabilities with an additional GBP0.2 million
increase for the recognition of bringing the lease liability on-balance
sheet in the year. Non-current assets of GBP54.5 million (2019: GBP54.9
million) decreased by GBP0.4 million, with a right-of-use asset of
GBP0.9 million introduced for bringing the leases on-balance sheet in
the year, capital expenditure of GBP8.4 million offset by depreciation
and amortisation of GBP9.5 million.
In light of the recent Covid-19 pandemic the Group performed an
impairment review on assets and no impairment was deemed necessary.
CASH FLOW AND LIQUIDITY
The following table summarises the cash flow movements during the year.
Year ended 31 March (GBPm) 2020 2019 Change %
Profit before tax 56.8 54.7 3.8%
Exceptional items - (0.9) (100.0%)
Depreciation and amortisation 9.5 9.8 (3.1%)
VAT and other non-cash items 0.4 (2.3) (117.4%)
Share-based payments and other items (0.4) 1.1 (136.4%)
Working capital changes (corporate) 0.1 0.4 (75.0%)
Cash generation 66.4 62.8 5.7%
Taxation payments (15.8) (10.0) 58.0%
Capital expenditure (8.4) (11.0) (23.6%)
Loans and borrowings 70.0 - 0.0%
Lease payments (0.3) - 0.0%
Dividends paid (57.4) (56.6) 1.4%
Net increase/(decrease) in corporate cash
and cash equivalents 54.5 (14.8) (468.2%)
Net change in clients' funds and retailers'
deposits 1.4 7.3 (80.8%)
Net increase/(decrease) in cash and cash
equivalents 55.9 (7.5) (845.3%)
Cash and cash equivalents at the beginning
of year 37.5 46.0 (18.5%)
Effect of foreign exchange rate changes 0.4 (1.0) (140.0%)
Cash and cash equivalents at the end of
year 93.8 37.5 150.1%
Comprising:
Corporate cash 58.0 3.5 1557.1%
Clients' funds and retailers' deposits 35.7 34.0 5.0%
--------
Cash generation remained strong with GBP66.4 million (2019: GBP62.8
million) delivered from profit before tax of GBP56.8 million (2019:
GBP54.7 million).
Taxation payments on account of GBP15.8 million (2019: GBP10.0 million)
are higher compared to the same period in the prior year due to HMRC
bringing payments on account forward by six months.
Capital expenditure primarily consists of PayPoint One terminals and
EPoS and CRM development. Capital expenditure of GBP8.4 million (2019:
GBP11.0 million) was lower than the prior year; fewer PayPoint One
terminals were purchased and less new sites were added this year, CRM
development reduced as we deployed the lead to sales feature and there
were delays in the delivery of the T4 terminals in Romania.
As anticipated PayPoint transitioned to a net debt situation of GBP12.0
million. At 31 March 2020 the revolving credit facility was fully drawn
down, GBP70.0 million (2019: GBPNil).
DIVIDS
Year ended 31 March 2020 2019 Change %
--------------------------------------
Ordinary dividends per share (pence)
Interim (paid) 23.6 15.6 51.3%
Final (proposed) 15.6 23.6 (33.9%)
Additional dividend per share (pence)
Interim (paid) 18.4 12.2 50.8%
Final - 18.4 (100.0%)
--------------------------------------
Total dividend per share (pence) 57.6 69.8 (17.5%)
Total dividends paid in year (GBPm) 57.4 56.6 1.5%
From 1 April 2019 a programme of four equal dividends payable in July,
September, December and March was implemented. Due to the need to
preserve cash at a time of uncertainty as a result of Covid-19, the
additional dividend programme announced in May 2016 and then suspended
in March 2020 will not be reinstated.
We have declared a final dividend of 15.6 pence per share (2019: 23.6
pence per share) payable in equal instalments of 7.8 pence per share
(2019: 11.8 pence per share) on 27 July 2020 and 28 September 2020 to
shareholders on the register on 26 June 2020 and 28 August 2020
respectively. The final dividend is subject to the approval of the
shareholders at the annual general meeting on 24 July 2020. No
additional dividend has been declared (2019: 18.4 pence per share).
The final dividends will result in GBP10.7 million (2019: GBP28.8
million) being paid to shareholders from the standalone statement of
financial position of the Company which, as at 31 March 2020, had
approximately GBP58.5 million (2019: GBP79.8 million) of distributable
reserves.
An interim ordinary dividend of 23.6p (2019: 15.6p) and an additional
interim ordinary dividend of 18.4p (2019: 12.2p) were paid in equal
instalments of 21.0p on 30 December 2019 and 9 March 2020.
CAPITAL ALLOCATION
The Board's immediate priority is to continue to preserve PayPoint's
balance sheet strength to ensure PayPoint emerges in a strong position
from the Covid-19 crisis, consequently the additional dividend programme
announced in May 2016 and then suspended in March 2020, which has
returned GBP83.5 million to date to shareholders, will not be
reinstated.
The Board's approach to the setting of the ordinary dividend has not
materially changed and follows the following capital allocation
priorities:
-- Investment in the business through capital expenditure in innovation to
drive future revenue streams and improve the resilience and efficiency of
our operations;
-- Investment in opportunities such as the PayZone Romania acquisition in
September 2018 and the purchase of the 50% of the Collect+ brand not
previously owned by PayPoint in April 2020;
-- Progressive ordinary dividends targeting a cover ratio of 1.2 to 1.552
times earnings;
GOING CONCERN
The financial statements have been prepared on a going concern basis
having regard to the identified principal risks and uncertainties and
viability statement on pages 23 to 26. Specific consideration has been
given to the impact of Covid-19 together with our cash and borrowing
capacity in the going concern and viability assessment. Our cash and
borrowing capacity provides sufficient funds to meet the foreseeable
needs of the Group including dividends.
Rachel Kentleton
Finance Director
27 May 2020
PRINCIPAL RISKS AND UNCERTAINTIES
The Board considers these to be the most significant risks and
uncertainties faced by the Group.
Strategy
Risks are assessed through PayPoint's risk management and internal
control framework which is a defined process for
identifying and managing risk. The process applies throughout the Group
and principal risks are reviewed in line with our strategic priorities.
The Board is responsible for overseeing the risk management process and
approves the level of risk acceptable under each principal risk
category. It is also responsible for maintaining an appropriate control
environment to
manage risk effectively and the Board has delegated responsibility for
reviewing the effectiveness of risk management and internal controls to
the Audit Committee. The risk management and internal control framework
aims to provide assurance and confidence to stakeholders about
PayPoint's ability to deliver its objectives and manage principal risks.
Risk appetite
The risk appetite represents the level of risk considered appropriate to
achieving our business objectives and is determined by the Board.
PayPoint has no appetite for risk relating to the welfare of employees,
retailers, consumers or other stakeholders. There is a greater appetite
for risk in relation to activities which are directed towards creating
additional demand for our services to drive revenues and increase
financial returns.
Risk identification and management
The risk management process assesses risks on both strategically and
granular functional level. The process involves assessing the impact of
risks on the Group, the probability of risks occurring and developing
and monitoring appropriate internal controls.
Functional risk registers are maintained which form an important
component of our governance framework. Functional risk registers detail
key risks, the materiality and likelihood of risks, and controls in
place to mitigate the impact of risks. The risk framework is designed to
identify emerging risks by conducting horizon scanning to identify
emerging trends and technologies as well as identifying and preparing
for new legislation and regulation. The content of risk registers is
discussed and agreed with senior management and reviewed and considered
by the Executive Board. The Audit Committee receives and reviews
information on the risk framework, principal risks and mitigating
controls at each meeting, and advises the Board on risks. Further
details are set out on pages 58 to 63 of the financial statements.
Principal risks remain similar to last year however there are some key
changes. Brexit is no longer considered a principal
risk but Covid-19 has evolved as a principal risk and uncertainty for
the Group. The table below sets out our principal risks, their movement
during the year, and key mitigating controls. They do not comprise all
risks faced by the Group and are not set out in order of priority.
Risk area Potential impact Mitigation strategies Change
------------------- ----------------------------------- ------------------------------------------- ----------
Credit and PayPoint processes large PayPoint has effective credit >
operational volumes of payments creating and operational procedures and
risk significant credit risks controls in place. Retailers
and risk of fraud and error. and counterparties are subject
Significant credit exposures to ongoing credit assessments,
exist with large retailers and effective debt management
and other counterparties, processes are implemented. Settlement
and failure of a large processes and controls are continually
retailer or counterparty assessed and enhanced, and new
may result in significant systems and technology implemented.
financial loss. Effective Effective governance is in place
operational controls are with segregation of duties and
essential to settle funds approval processes enforced to
securely and timely, and protect against fraud and error.
inadequate or failed controls
may result in fraud, liquidity
risk, contractual breaches
or other financial loss.
People and Failure to attract and The Executive Board define and >
culture develop key talent and advocate PayPoint's values, and
continue evolving our culture employee development and culture
may impact service levels are key strategic priorities.
and delivery of strategic Talent management and people
initiatives. If we do not development are well established,
develop our employees and and employment guidelines and
maintain an appropriate ethical principles are implemented
culture our business performance to assist maintaining a strong
and reputation may be damaged culture. Values and ethical principles
resulting in reduced revenue are aligned with employee objectives
and growth. and employee and retailer engagement
surveys are regularly conducted
to assess how we deliver on our
values. PayPoint is protecting
its employees through the Covid-19
pandemic by allowing employees
to work from home and offering
additional support and flexibility.
Losing key PayPoint has diversified PayPoint builds strategic relationships >
clients and portfolios of clients and with key clients and retailers
retailers retailers however some and continually seeks to improve
are more strategically its service levels; including
important. Our business conducting retailer engagement
relies on an appropriate surveys to monitor and enhance
mix of clients and retailers our performance. Key clients
and losing a key client and retailers are on long term
or retailer, such as losing contracts, and new clients and
British Gas as an energy retailers are routinely onboarded
client in 2019, has the maintaining and diversifying
ability to adversely impact portfolios. New products and
the business model and channels are also developed to
reduce revenue. diversify revenue streams and
mitigate the impact of losing
key clients or retailers in particular
markets.
Competition The markets in which PayPoint PayPoint closely monitors consumer ^
and markets operates, and the competition and technological trends and
in those markets continue engages with clients and retailers
to evolve. The decline to continually improve service
in cash usage, and changes levels. The Executive Board regularly
in consumer trends and reviews markets, trading opportunities,
Government policy may impact pricing and competitor activity,
our core markets, and failure and the Board oversee and challenge
to implement effective strategic direction. PayPoint
strategies in response invests in new products, services
to changes will negatively and technology and adapts to
impact revenue. Industry consumer trends such as growing
consolidation in the UK its parcel and online payments
has increased the competitive businesses to capitalise on market
environment, and our market changes.
proposition and service
levels need to remain strong
to maximise business performance.
Innovation Failure to innovate and PayPoint is committed to innovation >
and implementation implement new products, and investing in new technology
services and technology and products to support its continued
would impede business performance growth. Products and services
and our ability to achieve are continually reviewed and developed
strategic goals. Our business to enhance our proposition and
relies on continued product service levels, consistent with
enhancements and failing customer needs and expectations.
to improve products due Various improvement programmes
to poor design, build or are underway and effective change
rollout would ultimately management processes are deployed
reduce revenue. Continued by dedicated project teams. The
system infrastructure improvements Executive Board oversees all major
are essential in maintaining projects to ensure governance
resilient and effective and implementation are effective.
services, and ineffective
infrastructure upgrades
may impact future performance.
Key partners PayPoint has a diverse PayPoint has effective partner ^
and suppliers range of suppliers and and supplier selection processes
partners, however some and long-term contacts are implemented
suppliers and partners for strategic partners and suppliers.
are more strategically We aim to develop strong relationships
important and not so easily with key partners and suppliers,
substituted. If supply and single points of failure are
of goods or services is avoided where practicable, with
disrupted or relationships alternative suppliers and partners
cease before alternative contracted and continuity plans
arrangements can be implemented, implemented. Impact assessments
PayPoint may experience are conducted for critical dependencies
difficulty maintaining and mitigation measures implemented.
service levels potentially
resulting in revenue loss,
reputational damage or
penalties. Uncertainties
around the Covid-19 pandemic
may significantly impact
PayPoint's partners and
suppliers, increasing the
trend of risk.
Business Service delivery interruption Comprehensive continuity plans ^
interruption caused by system failure, have been implemented to mitigate
loss of premises, or other risk of disruption from Covid-19.
disruption may impede performance Systems are continually upgraded
and harm our reputation. and resilience built into systems
Clients, retailers and and processes. Effective change
consumers rely on resilient management processes are deployed
systems and continued service minimising risk of disruption,
delivery, and failure to and systems are regularly tested
promptly recover services and continually monitored for
may result in revenue loss, outages. PayPoint has a Major
contractual breaches, penalties Incident Response Plan and business
and increased costs. Uncertainties continuity and disaster recovery
around the Covid-19 pandemic plans are implemented and regularly
and the significantly changes tested. Third party data centres
in working practices may are used with failover capabilities,
impact PayPoint's service and business continuity premises
delivery, increasing the and work from home arrangements
trend of risk. are implemented.
Legal and PayPoint is required to PayPoint's Legal team work closely >
regulatory comply with numerous legal with management to advise on regulatory
and regulatory requirements, matters and adopt strategies to
and breaches of these obligations ensure regulatory adherence. Legal
may result in costly corrective teams are engaged on key contracts
actions, reputational damage and legal matters, and Compliance
and prosecution. Regulatory teams oversee compliance programmes,
landscapes continue to monitoring and reporting. Emerging
evolve, and changes in regulations are incorporated into
regulations and license strategic planning, and we engage
requirements may adversely with regulators to ensure we have
impact our business. PayPoint appropriate frameworks to support
is subject to numerous new products and markets. External
contractual requirements counsel is engaged where required.
and failure to meet obligations
may result in penalties
and financial loss.
Cybersecurity Cyberattacks on PayPoint's PayPoint has a robust IT security ^
and data systems and networks may framework and deploys industry
protection significantly impact service standard security systems with
delivery and data protection cyber intelligence capabilities.
causing harm to PayPoint, Systems are constantly monitored
our clients, retailer partners for attacks with teams in place
and other stakeholders. to respond to incidents, and cybersecurity
Although PayPoint continues response plans are regularly tested.
to upgrade and enhance Home working tools, security alert
its cybersecurity capabilities, process and employee cyber awareness
attacks are a constant were enhanced in response to specific
threat, with increased Covid-19 threats. We engage with
ransomware attacks on businesses law enforcement and partners on
over the last 12 months. cybercrime, and proactively manage
Covid-19 has heightened compliance with data privacy requirements.
cyber risk with significant Additionally, PayPoint's Audit
reliance on home working Committee has a Cyber Security
tools and criminals exploiting and IT sub-committee which oversees
vulnerabilities. Failure cybersecurity capability.
to comply with service
delivery, contractual requirements
or data privacy requirements
may result in significant
fines and reputational
damage.
Covid-19
The global Covid-19 pandemic continues to significantly impact
individuals, businesses, markets and economies, and the unprecedented
period of uncertainty presents significant risk to PayPoint across all
business areas. Whilst the majority of PayPoint retailer partners have
remained open during the pandemic to provide vital services to
communities, transaction volumes for some products have been impacted
and may continue to be impacted. Although PayPoint has taken affirmative
action to mitigate numerous risks arising from the pandemic, there
remains a high degree of uncertainty over future events and the
consequences for PayPoint. The table below details the strategic,
financial, operational and cybersecurity risks resulting from Covid-19
and the strategies to mitigate risk.
Potential impact Mitigation strategies
------------------------------------------ -------------------------------------------
Strategic risk PayPoint continually diversifies
Cash usage has significantly declined its product range to reflect market
during the Covid-19 lockdown reducing changes and our card payment revenue
PayPoint's revenue for ATMs and other significantly increased during the
cash-based products. It is anticipated Covid-19
Covid-19 will accelerate a structural lockdown. Our online MultiPay platform
decline in cash usage which will continues to grow in significance,
impact our business model and revenue. with the recent introduction of innovative
Covid-19 may also result in other new features including PayByLink.
market changes which could potentially The acquisition in April 2020 of
impact PayPoint. the 50% of shares in Collect+ PayPoint
did not previously own has significantly
strengthened our parcels proposition
in order to take advantage of the
growth in online sales.
------------------------------------------
Financial risk To maintain liquidity through a sustained
During the Covid-19 lockdown PayPoint period of disruption, the GBP70 million
has experienced reduced revenues revolving credit facility was fully
which is expected to continue until drawn down and additional dividend
an effective Covid-19 vaccine is payments and employee bonuses cancelled.
available. Reduced revenue heightens Government Covid-19 support schemes
PayPoint's liquidity risk, and the are closely monitored, and a review
deterioration in economic conditions of short-term cost reduction and
also heightens credit risk. deferment measures is being conducted
across the business. There is also
increased focus on settlement process
to ensure
heightened credit risk is appropriately
mitigated.
------------------------------------------
Operational risk IT and operational processes have
Covid-19 has heightened the risk been enhanced to ensure effective
of supplier failure, potentially service delivery and robust control.
impacting PayPoint's service delivery. PayPoint is working closely with
The sales pipeline and new initiatives suppliers to ensure continued service
have also been impacted with prospects delivery with contingencies being
delaying new ventures and other sales assessed for areas at risk. Most
initiatives also temporarily postponed. employees are working from home and
Additionally, increased working from safety measures have been implemented
home has impacted the robustness to ensure the safety of employees
of settlement processes and employee working in the office.
welfare remains a heightened risk.
------------------------------------------
Cybersecurity risk PayPoint has effective cybersecurity
Covid-19 has increased cyber threats controls and has increased focus
from cybercriminals and other malicious on addressing security alerts as
groups who are targeting individuals, soon as they arise. Security education
businesses and organisations by deploying has been increased with more frequent
Covid-19 related scams and phishing emails sent to employees highlighting
emails. Significant working from increased security dangers. The IT
home has also heightened cybersecurity change portfolio has also been reviewed
risks. with higher risk projects temporarily
postponed.
------------------------------------------
VIABILITY STATEMENT
In accordance with the 2018 UK Corporate Governance Code, the Directors
have assessed the viability of the Group over a three-year period,
taking account of the Group's current financial and trading position,
the principal risks and uncertainties (as set out on pages 23 to 25) and
the strategic plans that are reviewed at least annually by the Board.
The Directors believe that a three-year period is an appropriate period
over which a reasonable expectation of the Group's longer-term viability
can be evaluated and is aligned with the Group's most recent strategic
and financial planning time horizon, which was reviewed by the Board in
March 2020 and revisited in May 2020, in light of the impact of Covid-19
on the commercial activities of the business. It reflects the nature of
PayPoint's key product and client relationships and the markets in which
we operate as described on page 7 to 9 of this report.
PayPoint's strategic and financial planning process reflects the
Director's best estimate of the future prospects for the Group including
assumptions around key client renewals and the development of our key
product and service lines. In light of Covid-19 normal trading patterns
have been significantly impacted as can be seen in the table below:
Full year 1 - 17 April 18 April -
19/20 vs FY20/21 vs 17 May FY20/21
18/19 FY19/20 vs FY19/20
% increase/ % increase/ % increase/
Service (decrease) (decrease) (decrease)
------------------------------ ------------- ------------ ---------------
Bill payment transactions(53) (0.9%) (31.5)% (24.8)%
------------------------------ ------------- ------------ ---------------
Top-up transactions (11.2%) (20.1)% (19.0)%
------------------------------ ------------- ------------ ---------------
ATM transactions (4.1%) (39.9)% (33.1)%
------------------------------ ------------- ------------ ---------------
Card payment transactions 20.6% 75.3% 74.4%
------------------------------ ------------- ------------ ---------------
Parcels 12.7% (54.9)% (22.8)%
------------------------------ ------------- ------------ ---------------
Consequently, the Directors have a prepared a scenario that assumes that
the trading trends seen since 18th April 2020 continue for the next
three financial years, this is a deep downside scenario that assumes no
recovery from current depressed trading patterns.
Additionally, the Directors have carried out an assessment of the
principal risks and uncertainties and applied several different but
plausible scenarios to further test the Group viability. These viability
scenarios include:
-- Failure to renew significant client contracts
-- Significantly higher than historically seen churn in the retail partner
network as retailer partners becoming out of contract choose not to renew
their contract with PayPoint
-- The financial impact of technical failure from cyber attacks
-- Collapse of significant Romanian banks causing a loss of client
settlement funds
-- Multiple retailer groups going into receivership
As mitigating actions to offset the impact of what would be a
significant and unusual set of circumstances to happen together, we have
assumed achievable reductions in expenditure and a reduction in the
level of future dividends following the payment of the final dividend of
15.6 pence per share declared in respect of financial year ending 31
March 2020.
As at 31 March 2020 the Group had GBP12.0 million of net debt. The Group
has in place a five-year GBP70m revolving credit facility (RCF) and
GBP5m ancillary facilities, expiring on 28 March 2023. The agreement
includes a GBP20m accordion (uncommitted) facility. At 31 March 2020,
the Directors had drawn down a total of GBP70m of the Group's bank
facility to ensure continued liquidity in the face of any potential
banking crisis and potential unforeseen liquidity issues as a result of
Covid-19. A monthly analysis of cashflow has been prepared for the above
scenarios to ensure working capital movements within a reporting period
do not trigger a covenant breach. The principal covenants are the
requirement of leverage of net debt to be no more than three times
EBITDA and interest cover of no more than four times.
Based on this assessment, the Directors confirm that they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period from
the date of this announcement to 31 March 2023.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Year ended 31 March (GBP000) Note 2020 2019
Continuing operations
Revenue 3 213,257 211,576
Cost of revenue 4 (109,621) (113,303)
Gross profit 103,636 98,273
Administrative expenses (46,648) (44,319)
Operating profit 56,988 53,954
Finance income 531 427
Finance costs (720) (586)
Profit before tax before exceptional items 56,799 53,795
Exceptional items -- prior year business
disposals - 922
Profit before tax 56,799 54,717
Tax 5 (11,131) (10,285)
Profit for the year attributable to equity
holders of the parent 45,668 44,432
------------------------------------------- ---- --------- ---------
Earnings per share
Basic 7 66.9p 65.2p
Diluted 7 66.3p 64.8p
------------------------------------------- ---- --------- ---------
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Year ended 31 March (GBP000) 2020 2019
Items that may subsequently be reclassified
to the consolidated statement of profit
or loss:
Exchange differences on translation of
foreign operations 256 (740)
Other comprehensive income for the year 256 (740)
Profit for the year 45,668 44,432
Total comprehensive income for the year
attributable to equity holders of the
parent 45,924 43,692
--------------------------------------------- ------ ------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March (GBP000) Note 2020 2019
Non-current assets
Goodwill 11,853 11,618
Other intangible assets 17,274 15,875
Property, plant and equipment 24,840 26,665
Deferred tax asset 565 781
54,532 54,939
-------------------------------------------- ---- ------- -------
Current assets
Inventories 214 124
Trade and other receivables 8 108,368 139,010
Current tax asset 1,099 -
Cash and cash equivalents 9 93,774 37,485
203,455 176,619
Total assets 257,987 231,558
-------------------------------------------- ---- ------- -------
Current liabilities
Trade and other payables 10 148,621 176,720
Current tax liabilities - 4,455
Lease liabilities 197 -
Loans and borrowings 70,000 -
218,818 181,175
-------------------------------------------- ---- ------- -------
Non-current liabilities
Trade and other payables 10 95 233
Lease liabilities 744 -
839 233
Total liabilities 219,657 181,408
-------------------------------------------- ---- ------- -------
Net assets 38,330 50,150
Equity
Share capital 11 228 227
Share premium 4,485 3,352
Share-based payment reserve 12 1,875 2,684
Translation reserve (733) (989)
Retained earnings 32,475 44,876
Total equity attributable to equity holders
of the parent 38,330 50,150
-------------------------------------------- ---- ------- -------
These financial statements were approved by the Board of Directors and
authorised for issue on 27 May 2020 and were signed on behalf of the
Board of Directors.
Nick Wiles
Chief Executive
27 May 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-based
Share Share payment Translation Retained
capital premium reserve reserve earnings Total equity
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Opening equity
1 April 2018 227 2,907 2,771 (249) 55,637 61,293
Profit for the year - - - - 44,432 44,432
Exchange differences
on translation of foreign
operations - - - (740) - (740)
Comprehensive income
for the year - - - (740) 44,432 43,692
Adoption of IFRS 15 - - - - 975 975
Equity-settled share-based
payment expense - - 1,466 - - 1,466
Vesting of share scheme 12 - 445 (1,563) - 393 (725)
Deferred tax on share-based
payments - - 10 - - 10
Dividends - - - - (56,561) (56,561)
Closing equity
31 March 2019 227 3,352 2,684 (989) 44,876 50,150
---------------------------- ---- -------- -------- ----------- ----------- --------- ------------
Profit for the year - - - - 45,668 45,668
Exchange differences
on translation of foreign
operations - - - 256 - 256
Comprehensive income
for the year - - - 256 45,668 45,924
Adoption of IFRS 16 - - - - (73) (73)
Issue of shares 1 - - - - 1
Equity-settled share-based
payment expense - - 631 - - 631
Vesting of share scheme 12 - 1,133 (1,416) - (746) (1,029)
Deferred tax on share-based
payments - - (24) - 169 145
Dividends - - - - (57,419) (57,419)
Closing equity
31 March 2020 228 4,485 1,875 (733) 32,475 38,330
---------------------------- ---- -------- -------- ----------- ----------- --------- ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 March (GBP000) Note 2020 2019
Net cash inflow from operating activities 13 51,481 59,563
Investing activities
Investment income 531 427
Purchases of property, plant and equipment (2,963) (5,087)
Purchases of intangible assets (5,445) (5,894)
Net proceeds from disposal of property,
plant and equipment - 12
Net cash used in investing activities (7,877) (10,542)
Financing activities
Dividends paid 6 (57,419) (56,561)
Proceeds from issue of share capital 1 -
Movement in financing facility 70,000 -
Payment of lease liabilities (271) -
Net cash from/(used in) financing activities 12,311 (56,561)
Net increase/(decrease) in cash and cash
equivalents 55,915 (7,540)
Cash and cash equivalents at beginning
of year 37,485 46,040
Effect of foreign exchange rate changes 374 (1,015)
Cash and cash equivalents at end of year 93,774 37,485
--------------------------------------------- ---- -------- --------
Reconciliation of cash and cash equivalents
As at 31 March (GBP000) 2020 2019
Corporate cash 58,035 3,471
Clients' funds and retailers' deposits 35,739 34,014
Cash and cash equivalents on the statement of
financial position 9 93,774 37,485
---------------------------------------------- ------ ------
NOTES TO THE FINANCIAL STATEMENTS
1. Significant accounting policies
Basis of preparation
This preliminary announcement does not constitute the Company's
statutory accounts for the years ended 31 March 2020 or 31 March 2019,
but is derived from the statutory accounts and has complied with
International Financial Reporting Standards (IFRS). This announcement
does not contain sufficient information to fully comply with IFRS. The
Company expects to publish full financial statements that comply with
IFRS in due course.
Statutory accounts for 2019 have been delivered to the Registrar of
Companies and those for 2020 will be delivered following the Company's
annual general meeting. The auditors have reported on those accounts and
the report was unqualified, did not draw attention to any emphasis of
matters and did not contain statements under s498(2) or (3) of the
Companies Act 2006.
This preliminary announcement complies with the recognition and
measurement criteria of IFRS, and with the accounting policies of the
Group which were set out on pages 99 to 106 of the 2020 annual report
and accounts. No subsequent material changes have been made to the
Group's accounting policies with selected accounting policies included
below.
At 31 March 2020, the Group had cash and cash equivalents of GBP93.8
million, including GBP35.7 million of clients' funds and retailers'
deposits. In addition, the Group has in place a five-year unsecured
GBP75 million revolving loan facility with a GBP20 million accordion
expiring in March 2023. At 31 March 2020, GBP70 million was fully draw
down from the revolving credit facility to ensure PayPoint was in a strong position to withstand a sustained period of disruption to trading. Our cash and borrowing capacity provides sufficient funds to meet the foreseeable needs of the Group. The Group has a resilient balance sheet position, with net assets of GBP38.3 million as at 31 March 2020, having made a profit for the year of GBP45.9 million and delivered net cash flows from operating activities of GBP51.5 million for the year then ended. As referred to in the Business Review, the business continuity plans actioned by the Group to date have resulted in operations continuing unaffected on a remote working basis but with the possibility of a reduction in revenues in the 2020/21 financial year as a result of the uncertain macro-economic environment caused by the Covid-19 pandemic. An analysis of post year end transaction volumes is included in the Business Review. The Directors have prepared cash flow forecast scenarios over a three-year period, taking into account the Group's current financial and trading position, the principal risks and uncertainties and the strategic plans that are reviewed at least annually by the Board. A downside scenario was prepared which assumed that the trading trends seen since 18th April 2020 continue for the next three financial years. Additionally, the Directors have carried out an assessment of the principal risks and uncertainties and applied several different but plausible scenarios to further test the Group viability, please see the Viability Statement on page 26 for further details. As mitigating actions we have assumed achievable reductions in expenditure and a reduction in the level of future dividends following the payment of the final dividend of 15.6 pence per share declared in respect of financial year ending 31 March 2020. A monthly analysis of cashflow has been prepared for the above scenarios to ensure working capital movements within a reporting period do not trigger a covenant breach. Based on this assessment, the Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of not less than 12 months from the date of this announcement and therefore have prepared the financial statements on a going concern basis. Alternative performance measures Non-IFRS measures or alternative performance measures are used by the Directors and management for performance analysis, planning, reporting and incentive-setting purposes and have remained consistent with the prior year. These measures are included in these financial statements to provide additional useful information on performance and trends to shareholders. These measures are not defined terms under IFRS and therefore they may not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, IFRS measures. These measures include net revenue, operating margin, effective tax rate (note 5), reported dividends (note 6) and cash generation. Net revenue Net revenue is revenue less commissions paid to retailer partners and the cost of mobile top-ups and SIM cards where PayPoint is principal. This reflects the benefit attributable to PayPoint's performance eliminating pass-through costs which creates comparability where PayPoint is agent or principal and is an important measure of the overall success of our strategy. The reconciliation of revenue to net revenue is as follows: Year ended 31 March (GBP000) 2020 2019 Service revenue 156,730 147,988 Sale of goods 55,312 62,557 Royalties 1,215 1,031 Total revenue 213,257 211,576 less: Retailer partners' commissions (42,219) (46,434) Cost of mobile top-ups and SIM cards as principal (50,307) (48,507) Net revenue 120,731 116,635 ---------------------------------------- -------- -------- Yodel contract renegotiation - (706) Underlying net revenue 120,731 115,929 ---------------------------------------- -------- -------- Effective tax rate Effective tax rate is the ongoing tax cost as a percentage of the net profit before tax. Reported dividends (non-IFRS measure) Reported dividends are based on a financial year's results from which the dividend is declared and consist of an interim and final dividend. This is different to statutory dividends as the final dividend on ordinary shares is recognised in the following year when they are approved by the Company's shareholders. Cash generation (non-IFRS measure) Cash generation reflects earnings before tax, depreciation, amortisation and exceptional items adjusted for working capital (excluding movement in clients' funds and retailers' deposits) as detailed in note 13. This measures the cash generated which can be used for tax payments, new investments and financing activities. Total Costs (non-IFRS measure) Total costs comprise of other cost of revenue (note 4), admin expenses, financing income and financing costs. Operating margin (non-IFRS measure) Operating margin is calculated by dividing operating profit by net revenue. This measure reflects the efficiency of converting revenue into profits. Net corporate (debt)/cash (non-IFRS measure) Net corporate (debt)/cash represents cash and cash equivalents excluding cash recognised as clients' funds and retailers' deposits, less amounts borrowed under financing facilities (excluding IFRS 16 liabilities). The reconciliation of cash and cash equivalents to net corporate (debt)/cash is as follows: As at 31 March (GBP000) 2020 2019 Cash and cash equivalents 93,774 37,485 less: - Clients' funds and retailers' deposits (35,739) (34,014) Loans and borrowings (70,000) - Net corporate (debt)/cash (11,965) 3,471 --------------------------------------- -------- -------- Revenue accounting policy Revenue represents the value of services and goods delivered or sold to clients and retailers which is measured using the fair value of the consideration received or receivable, net of value added tax. Performance obligations are identified at contract inception and the revenue is recognised once the performance obligations are satisfied. Revenue from bill payments comprises fees from clients for providing over-the-counter payments, digital bill payments and CashOut services. Over-the-counter and digital payments services are products where customers of PayPoint's clients can pay their bills (due to the client) at any of PayPoint's retailer partners or online. PayPoint provides the technology for recording the payment of bills and transmission of that payment data to the client. PayPoint also collects bill payment funds from retailer partners and remits those funds to clients. Revenue is recognised as performance obligations are satisfied which is usually at the point in time each transaction is processed. Management fees, set-up fees or up-front lump sum payments are deferred and recognised on a straight-line basis over the contracted period with the client. Top-ups and eMoney revenue comprises revenue from top-ups for mobile phones, eVouchers, prepaid debit cards and lottery tickets. Revenue is recognised at the point in time each top-up is sold. Other than as described below, PayPoint is contracted as agent in the supply of top-ups and accordingly the commission earned from clients is recognised as revenue. In Romania, PayPoint contracts as principal for mobile top-ups and revenue is recognised at the gross sale price and cost of revenue includes the related cost. Retail services revenue comprises: -- service fees from retailers that use our technology to facilitate card payments, PayPoint One and legacy terminals and EPoS, all of which are charged for on a weekly or monthly basis, and recognised on a straight-line basis over the period of the contract -- commissions, rebates and fees from card payment, ATM transaction fees and money transfer transactions are recognised when each transaction is processed -- fees earned for processing parcels is recognised when each parcel has been delivered or returned through the PayPoint network -- commissions from sale of SIM cards is primarily earned from the mobile operators based on the value of top-ups after the initial activation. This revenue is contingent on the customer actions and is recognised as the consumer tops up the SIM card -- fees for receipt advertising and failed direct debits are recognised at the time the transaction occurs -- the Group's share of royalty income is from the Collect+ joint operation and is recognised as the parcels are processed Use of judgements and estimates In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical judgement: recognition of cash and cash equivalents
The nature of bill payments services means that PayPoint collects and
holds funds on behalf of clients as those funds pass through the
settlement process and also retains retailer deposits as security for
those collections.
A critical judgement in this area is whether clients' funds and
retailers' deposits are recognised in the statement of financial
position. This includes evaluating:
(a) existence of a binding agreement clearly identifying the beneficiary
of the funds
(b) the identification, ability to allocate and separability of funds
(c) identification of the holder of those funds at any point in time
(d) whether PayPoint bears the risk credit risk
The judgement is where there is a binding agreement specifying that
PayPoint holds funds on behalf of the client (i.e. acting in the
capacity of a trustee), PayPoint bears the credit risk and those funds
have been separately identified as belonging to that beneficiary, the
cash and the related liability is not included in the statement of
financial position. In all other situations the cash and corresponding
liability are recognised on the statement of financial position.
Critical judgement: agent vs principal
A critical judgement for revenue recognition is PayPoint's assessment of
whether it is acting as a principal or agent. This includes evaluating:
(a) which party was responsible for fulfilling the promise to provide
the service
(b) inventory risk before the service is transferred to a customer
(c) discretion in establishing the price for the service
In most cases it is clear that PayPoint acts in the capacity of an agent
for clients, however in the case of mobile top-ups in Romania, due to
the nature of the product, this becomes a key judgement area. Revenues
are recognised on the principal basis considering the level of service
responsibility, inventory risk and price discretion held by PayPoint.
This is consistent with the judgement in prior years.
The cost of mobile top-ups and SIM cards as principal was GBP50.3
million (2019: GBP48.5 million).
Critical estimate: Useful economic lives of intangible assets
A critical estimate for the amount of amortisation that is recognised in
the profit or loss account and the carrying value of the asset in the
statement of financial position. The useful life used to amortise
intangible assets relates to the expected future performance of the
assets and management's judgement of the period over which economic
benefit will be derived from the asset. For development costs, the Group
has determined the useful life based on historical experience with
similar products and platforms controlled by the Group as well as
anticipation of future events which may impact their life such as
changes in technology.
Development costs recognised as an intangible asset could be amortised
on a straight-line basis over a period of three to ten years which could
impact the annual amortisation charge by an increase of GBP3.2 million
to a decrease of GBP2.8 million.
Critical estimate: capitalised development expenditure
A critical estimate at the statement of financial position date that has
a risk of causing an adjustment to the carrying amount of assets and
liabilities through estimation uncertainty is the evaluation of
capitalised development expenditure shown in intangible assets. An
estimate is required of how additions to intangible assets will generate
probable future economic benefits whilst judgement is required in
determining the technical feasibility of completing the intangible
asset.
Additions in the year amounted to GBP5.4million whilst GBP5.1 million
development costs were expensed. Depending on the assumptions applied
relating to the probable future economic benefits, the range of possible
outcomes over what has been capitalised is nil to GBP5.4 million.
2. Segment reporting
Segment information
The Group provides a number of different services and products, however
these do not meet the definition of different segments under IFRS 8, as
the chief operating decision maker does not review those separately for
resource allocations purposes, therefore the Group has only one
operating segment. A sector analysis has been provided in the finance
review on pages 17 to 20.
Geographical information
Year ended 31 March (GBP000) 2020 2019
Revenue
UK 143,545 143,294
Ireland - 1,381
Romania 69,712 66,901
Total 213,257 211,576
Non-current assets
As at 31 March (GBP000) 2020 2019
UK 40,493 41,759
Romania 14,039 13,180
Total 54,532 54,939
3. Revenue
Disaggregation of revenue
Year ended 31 March (GBP000) 2020 2019
Bill payments 78,122 78,095
Top-ups and eMoney 78,653 79,076
Retail services 56,482 54,405
Total 213,257 211,576
Seasonality of operations
PayPoint operates in many sectors each within their own form of
seasonality. The energy bill payment and parcel sectors are the most
seasonal sectors with the energy sector generating more transactions
during the winter months and parcels generating higher volumes in the
lead up to Christmas. As a result, higher revenue and operating profits
are usually expected in the second half of the year rather than in the
first six months. This does not constitute "highly seasonal" as
considered by IAS 34 Interim Financial Reporting.
Contract balances
As at 31 March (GBP000) 2020 2019
Trade receivables 12,346 15,271
Accrued income 2,518 2,047
Contract assets -- deferral of setup and
development fees 2,862 3,636
Contract liabilities (1,965) (2,696)
Deferred income (328) (599)
Total 15,433 17,659
4. Cost of revenue
Year ended 31 March (GBP000) 2020 2019
Retailers' commissions 42,219 46,434
Cost of mobile top-ups and SIM cards as
principal 50,307 48,507
Cost of revenue deducted for net revenue 92,526 94,941
Depreciation and amortisation 9,093 9,365
Other 8,002 8,997
Other costs of revenue 17,095 18,362
Total cost of revenue 109,621 113,303
----------------------------------------- ------- -------
5. Tax
Year ended 31 March (GBP000) 2020 2019
Current tax
Charge for current year 10,672 10,475
Adjustment in respect of prior years 267 233
Current tax charge 10,939 10,708
------------------------------------- ------ ------
Deferred tax
Charge for current year 163 (195)
Adjustment in respect of prior years 29 (228)
Deferred tax charge/(credit) 192 (423)
------------------------------------- ------ ------
Total income tax
Income tax charge 11,131 10,285
------------------------------------- ------ ------
The income tax charge is based primarily on the United Kingdom statutory
rate of corporation tax for the year of 19% (2019: 19%). The charge for
the year is reconciled below to the profit before tax as set out in the
consolidated statement of profit or loss.
Year ended 31 March (GBP000) 2020 2019
Profit before tax 56,799 54,717
Tax at the UK corporation tax rate of 19%
(2019: 19%) 10,792 10,396
Tax effects of:
Effect of tax rates in other countries where
the rate is different to the UK (205) (182)
Disallowable expenses 238 103
Adjustments in respect of prior years 296 5
Tax impact of share-based payments 130 102
Revaluation of deferred tax asset (120) 36
Non-taxable exceptional items - (175)
Actual amount of tax charge 11,131 10,285
--------------------------------------------- ------ ------
Profit before tax for purposes of calculating the effective tax rate is
as follows:
Year ended 31 March (GBP000) 2020 2019
Profit before tax 56,799 54,717
Exceptional items - (922)
Total for calculating the effective tax
rate excluding exceptional items 56,799 53,796
---------------------------------------- ------ ------
Year ended 31 March (GBP000) 2020 2019
Effective tax rate 19.6% 18.8%
Effective tax rate excluding exceptional
items 19.6% 19.1%
----------------------------------------- ----- -----
6. Dividends on equity shares
Year ended 31 March 2020 2019
pence pence
GBP000 per share GBP000 per share
Reported dividends on ordinary shares:
Interim ordinary dividend 16,133 23.6 10,643 15.6
Proposed final ordinary dividend 10,667 15.6 16,105 23.6
Total ordinary dividends 26,800 39.2 26,748 39.2
Interim additional dividend 12,577 18.4 8,326 12.2
Proposed additional final dividend - - 12,557 18.4
Total additional dividend 12,577 18.4 20,883 30.6
Total reported dividends (Non-IFRS measure) 39,377 57.6 47,631 69.8
-------------------------------------------- ------ ---------- ------ ----------
Dividends paid on ordinary shares:
Final ordinary dividend for the prior year 16,133 23.6 20,867 30.6
Interim dividend for the current year 16,133 23.6 10,643 15.6
Total ordinary dividend paid 32,266 47.2 31,510 46.2
Final additional dividend for the prior
year 12,576 18.4 16,725 24.5
Additional interim dividend for the current
year 12,577 18.4 8,326 12.2
Total additional dividend paid 25,153 36.8 25,051 36.7
Total dividends paid 57,419 84.0 56,561 82.9
-------------------------------------------- ------ ---------- ------ ----------
Number of shares in issue used for purposes
of dividends per share calculations 68,376,750 68,243,406
The proposed final ordinary dividend is subject to approval by
shareholders at the annual general meeting and has not been included as
a liability in these financial statements.
7. Earnings per share
Basic and diluted earnings per share are calculated on the following
profit and number of shares:
Year ended 31 March (GBP000) 2020 2019
Profit for basic and diluted earnings per
share is the net profit attributable to
equity holders of the parent 45,668 44,432
------------------------------------------ ------ ------
As at 31 March (Number of shares) 2020 2019
Weighted average number of ordinary shares
in issue (for basic earnings per share) 68,264 68,160
Potential dilutive ordinary shares:
Long-term incentive plan 417 361
Deferred annual bonus scheme 73 39
SIP and other 80 38
Weighted average number of ordinary shares
in issue (for diluted earnings per share) 68,834 68,598
------------------------------------------- ------ ------
Earnings per share (pence) 2020 2019
Basic 66.9 65.2
--------------------------- ---- ----
Diluted 66.3 64.8
--------------------------- ---- ----
8. Trade and other receivables
As at 31 March (GBP000) 2020 2019
Trade receivables 12,346 15,271
Items in the course of collection(1) 88,692 117,263
Revenue allowance (1,379) (2,957)
99,659 129,577
Other receivables 594 1,032
Contract assets 2,862 3,636
Accrued income 2,518 2,047
Prepayments 2,735 2,718
108,368 139,010
------------------------------------- ------- -------
1. Items in the course of collection represent amounts collected for
clients by retail partners. An equivalent balance is included within
trade and other payables.
9. Cash and cash equivalents
The Group operates cash pooling amongst its various bank accounts in the
UK and therefore individual accounts can be overdrawn without penalties
being incurred so long as the overall position is in credit.
Included within Group cash and cash equivalents of GBP93.8 million
(2019: GBP37.5 million) are balances of GBP35.7 million (2019: GBP34.0
million) relating to funds collected on behalf of clients where PayPoint
has title to the funds (clients' funds) and where retailer partners have
provided security deposits (retailer partners' deposits). An equivalent
balance is included within trade payables (note 10). Clients' funds held
in trust which are not included in cash and cash equivalents amounted to
GBP41.9 million (2019: GBP47.5 million).
10. Trade and other payables
As at 31 March (GBP000) 2020 2019
Amounts owed in respect of clients' funds
and retailer partners' deposits(1) 35,739 34,014
Settlement payables(2) 88,692 117,263
Client payables 124,431 151,277
Trade payables 8,318 7,536
Other taxes and social security 4,006 1,985
Other payables 3,886 5,939
Accruals 5,782 6,921
Deferred income 328 599
Contract liabilities 1,965 2,696
148,716 176,953
------------------------------------------ ------- -------
Disclosed as:
Current 148,621 176,720
Non-current 95 233
Total 148,716 176,953
------------ ------- -------
(1) Relates to monies collected on behalf of clients where the Group has
title to the funds (clients' funds and retailer partners' deposits). An
equivalent balance is included within cash and cash equivalents.
(2) Payable in respect of amounts collected for clients by retailer
partners. An equivalent balance is included within trade and other
receivables.
11. Share capital
As at 31 March (GBP000) 2020 2019
Called up, allotted and fully paid share
capital
68,376,750 (2019: 68,243,406) ordinary shares
of 1/3p each 228 227
12. Share based payments
During the year, 192,675 (2019: 209,694) shares under the LTIP scheme
were granted with 50% of the vesting based on Total Shareholder Return
(TSR) and 50% on earnings per share (EPS) growth. The performance
condition for the TSR element is the same as the vesting period. The
performance period for the EPS element is for the three financial years
up to 31 March 2022. A further 19,593 (2019: 48,444) shares were issued
under the DABS scheme vesting over three years to 10 June 2022.
Other share-based payments include restricted shares issued to eligible
employees which do not contain any performance criteria. No restricted
shares were issued in the year (2019: 62,196).
The amount charged to the statement of profit or loss in the year was
GBP0.6 million (2019: GBP1.4 million). A total charge of GBP1.4 million
(2019: GBP1.6 million) previously recognised directly to equity for
schemes which have now lapsed or vested was transferred from the
share-based payments reserve to retained earnings during the period.
13. Notes to the consolidated statement of cash flows
Year ended 31 March (GBP000) 2020 2019
Profit before tax 56,799 54,717
Adjustments for:
Depreciation of property, plant and equipment 5,631 6,318
Amortisation of intangible assets 3,886 3,466
VAT credits(54) - (2,427)
Exceptional items - (922)
Loss on disposal of fixed assets 387 110
Net finance costs 189 159
Share-based payment charge 631 1,730
Cash-settled share-based remuneration (1,028) (725)
Operating cash flows before movements in
corporate working capital 66,495 62,426
Movement in inventories (89) 152
Movement in receivables 1,172 3,715
Movement in contract assets 775 (614)
Movement in contract liabilities (731) 649
Movement in payables (1,160) (3,482)
Movement in lease liabilities 96 -
Cash generated by operations 66,558 62,846
Corporation tax paid (15,770) (9,952)
Finance charges paid (720) (586)
Net cash from operating activities (Corporate) 50,068 52,308
Movement in clients' funds and retailers'
deposits 1,413 7,255
Net cash from operating activities(55) 51,481 59,563
14. Subsequent events
Collect+ was originally set up as a joint venture between PayPoint and
Yodel in 2009. In December 2016 the arrangement was restructured into a
Joint Operation which included the formation of the Collect+ Group
consisting of Collect+ Holdings Limited, held 50:50 by PayPoint and
Yodel, and its wholly owned subsidiary Collect+ Brand Limited.
On 6(th) April 2020, PayPoint acquired the 50% of the remaining asset
that Yodel owned for GBP6m, resulting in Collect+ becoming a fully owned
brand within the PayPoint Group. Collect+ Holdings Limited and Collect+
Brand Limited will be a classed as fully owned subsidiaries in the next
financial year 20/21. The agreement reaffirmed the long-term partnership
with Yodel committing to a multi-year contract to continue as a parcel
carrier for Collect+. PayPoint also acquired the ownership of the
Collect+ website domain which will now be developed to further the brand
and promote volume growth.
(1) Net revenue is an alternative performance measure. Refer to note 1
to the financial statements for a reconciliation to revenue.
(2) Operating margin % is an alternative performance measure and is
calculated by dividing operating profit by net revenue.
(3) Cash generation is an alternative performance measure. Refer to the
financial review -- cash flow and liquidity for a reconciliation from
profit
before tax.
(4) Net corporate (debt)/cash (excluding IFRS 16 liabilities) is an
alternative performance measure. Refer to note 1 to the financial
statements for a reconciliation to cash and cash equivalents.
(5) Survey results as at 29/04/2020 from 105 responses.
(6) Total costs is an alternative performance measure as explained in
note 1 to the financial statements, a reconciliation to costs is
included in the Financial Review on page 20.
(7) Excludes the impact of British Gas contract not being renewed.
(8) Profit after tax divided by dividends.
(9) Excludes the prior year impact from the Yodel renegotiation of
GBP0.7 million.
(10) The reduction of c400 sites from 21 February 2020 to 31 March 2020,
was primarily due to retailer partner sites temporarily closing for
business during the initial Covid-19 lock down period. Since then c260
of those sites have reopened.
(11) As indicated in our Half-year results for 6 months ended 30
September 2019.
(12) Profit after tax divided by dividends..
(13) PayPoint (estimates,) does not reflect any stores than may have
closed as a result of the (C) ovid(-19 situation.) Data from (ACS local
shop report 2019) and annual reports of retailers. Retailers with more
than 10 sites have been classified as "Multiple groups in convenience
retail".
(14) As at 31 March 2020, and therefore excludes 553 sites temporarily
closed for Covid-19.
(15) ACS local shop report 2019. Sales figures are for the 12 months to
March 2019.
(16)
https://www.igd.com/articles/article-viewer/t/uk-food-sales-to-grow-by-24bn-by-2024/i/21868.
(17) Based on sites using PayPoint One's scanning functionality only.
(18) (For the 12 months to December 2019. Analysis based on Cardnet UK
Finance data for Miscellaneous Food stores, Off licences, Sweet Stores)
(and) (Tobacconists, which form the majority of the Convenience store
market) .
(19) UK Finance (Card Spending Update for January 2020 -- January 2020
vs January 2019) .
(20) Derived from data in 'Total Market Data - Credit Card Statistics -
January 2019' available at
https://www.ukfinance.org.uk/data-and-research/data/cards/card-spending,
comparing seasonally adjusted figures from six months to July 2018 to
the six months to January 2019.
(21) ACS local shop report 2019.
(22)
https://www.ukfinance.org.uk/sites/default/files/uploads/pdf/UK%20Cash%20and%20Cash%20Machines%202019%20SUMMARY.pdf.
(23)
https://www.moneyobserver.com/news/numbers-uk-bank-branch-closures-reach-alarming-level.
(24) (https://www.link.co.uk/about/statistics-and-trends/ : For the 12
months to 29 Feb 2020.)
(25) (https://www.link.co.uk/about/statistics-and-trends/ : At December
2019) .
(26) (https://www.link.co.uk/about/statistics-and-trends/ : For the
three weeks ending 12 April 2020) .
(27) (https://www.link.co.uk/about/news/Covid19-and-cash-link-update/) .
(28)
(https://www.imrg.org/data-and-reports/imrg-metapack-delivery-indexes/imrg-metapack-uk-delivery-index-november-2019/)
.
(29)
(https://www.imrg.org/uploads/media/default/0001/08/2477f50ad2fee946cdf5ed23ebb8df21f2489d09.pdf?st)
.
(30) (OC&C analysis.)
(31) IMRG Capgemini Online Retail Sales Index.
(32) UK Finance -- UK Payment Markets 2019.
(33) https://www.ofgem.gov.uk/data-portal/retail-market-indicators.
(34) https://www.ofgem.gov.uk/data-portal/retail-market-indicators - as
at 31 December.
(35) https://www.gov.uk/cma-cases/ovo-sse-retail-merger-inquiry.
(36)
https://www.gov.uk/government/statistics/statistical-release-and-data-smart-meters-great-britain-quarter-4-2019.
(37)
https://www.statista.com/statistics/273608/number-of-prepaid-mobile-subscriber-in-the-united-kingdom-uk/.
(38)
https://www.gov.uk/government/news/government-agrees-measures-with-energy-industry-to-support-vulnerable-people-through-Covid-19.
(39)
https://www.ofgem.gov.uk/coronavirus-Covid-19/coronavirus-Covid-19-and-your-energy-supply.
(40) Internal estimates.
(41) https://www.bnr.ro/Payments-Statistics-5312.aspx# Includes resident
and non-resident Payment Service Providers (PSP) .
(42)
https://www.gstatic.com/Covid19/mobility/2020-04-30_RO_Mobility_Report_en.pdf
(43) Excludes retailer partners using the PPoS terminal and Multiple
retailer partners using the legacy terminal.
(44) (https://www.link.co.uk/about/statistics-and-trends/ : For the 12
months to 29 Feb 2020)
1 All these KPIs are non-IFRS measures or Alternative Performance
Measures ('APMs').
(47) PayPoint One has replaced the legacy terminal in independent
retailer partners.
(48) PPoS is a plug-in device and a virtual PayPoint terminal used on
larger retailer partners' own EPoS systems who wish to use PayPoint
services.
(49) Ireland is included in the 2019 figures up to 31 October 2018 when
Ireland ceased operations.
(50) Operating margin % is an alternative performance measure and is
calculated by dividing operating profit by net revenue.
(51) Effective tax rate is the tax cost as a percentage of profit before
tax.
(52) Profit after tax divided by dividends.
(53) Excludes the impact of British Gas contract not being renewed.
(54) In the prior year the improved VAT recovery was offset against the
net payment to HMRC which has been shown as a non-cash item.
(55) Items in the course of collection and settlement payables are
included in this reconciliation on a net basis through the client cash
line. The Directors have included these items on a net basis to best
reflect the operating cash flows of the business.
Attachment
-- PayPointA1. RNS 31 March 20 Final (003)
https://ml-eu.globenewswire.com/Resource/Download/37142dd4-ef5a-4174-a7a3-a7ed19b4ffa5
(END) Dow Jones Newswires
May 28, 2020 02:00 ET (06:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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