Interim Management Statement

PayPoint plc
Interim Management Statement
 
The  board reports on events, transactions  and trading since the last financial
year end on 29 March 2010.
 
Bill  and  general  payment  transactions  are  in  line  with our expectations,
marginally  up in  the UK  on the  same period  last year.   In Romania, we have
processed more than 3 million bill payments, up over 200%. Retail services which
include  ATMs, debit  / credit  card transactions,  parcels and mobile phone SIM
card  sales are  up 23% on  last year.  Mobile top-ups  continue to be adversely
affected by the operators offering more value for money to consumers.
 
Internet transactions increased to 16 million from 12 million in the same period
last  year.  We  have  successfully  completed  the  migration of all our bureau
merchants to our new acquiring bank.
 
PayByPhone,  our newly  acquired business,  is making  investments as planned to
bring  its  operations  up  to  PayPoint  standards,  in particular in sales and
marketing  and disaster recovery.  Transactions processed  in the period were 4
million.
 
The  National Lottery Commission  (NLC) has announced  that it is  minded not to
permit  Camelot's proposal for ancillary commercial  services. The NLC has asked
for further comments by 17 September before it announces its final ruling.
 
Performance(1)   for  the  period  from  29 March  2010 to  25 July  2010(2) and
financial position(1) as at 25 July 2010
 
Transactions  processed for the period were  176 million, up 6% compared to 166
million for the same period last year.
 
Net  revenues(3) for  the period  were up  7% to £26  million as a result of the
acquisition  of  PayByPhone  and  growth  in  bill payment, internet, and retail
services,  partially offset  by the  decline in  mobile top-ups.  The decline in
mobile  top-ups has reduced revenues to £61  million, down 4% on the same period
as last year.
 
The  total terminal estate at 25 July was 28,024, up 2% since the financial year
end.  New installations of terminal sites in the UK and Ireland were a net 212.
In Romania, we have installed over 1,400 full service terminals and removed over
1,000 of the old, mobile top-up only terminals, giving a total estate of 5,169.
The  remaining 850 old mobile top-up only  terminals will be removed or replaced
with full service terminals.
 
Earnings  before tax  and interest  for the  period to  25 July are in line with
pro-rated market expectations, taking seasonality of trading and the acquisition
of PayByPhone into account.
 
The  group has maintained a strong balance sheet. After the payment of the final
dividend  of  £10  million  and  £6  million  for  corporation  tax, net cash as
expected,  at 25 July,  was £6  million (including  client cash  of £7 million),
compared to £15 million (including client cash of £7 million) at 28 March 2010.
 
1  PayPoint's auditors have not been requested to review the performance or
financial position
2  Comparative data is given for the similar 17 week period last year (i.e. 30
March to 26 July 2009)
3  Net revenue is revenue less commissions paid to retail agents, the cost of
mobile top-ups and SIM cards, where PayPoint is the principal and acquiring bank
charges
 
 Enquiries
Finsbury+44 207 251 3801
Rollo Head/Don Hunter
 
ABOUT PAYPOINT
 
PayPoint  is a  leading specialist  payments company  with operations in the UK,
Ireland,  Romania, France, USA and Canada. We handle over £9.5 billion from over
550 million  transactions annually  for more  than 6,000 clients  and merchants.
PayPoint  processes consumer payments  across a wide  variety of markets (energy
pre  and post-payment, telecoms, housing,  water, transport, e-commerce, parking
and gaming) through its retail networks, internet and mobile phone channels:
 
Retail networks
The PayPoint branded retail network in the UK numbers over 22,000 terminals
located in local shops (including Co-op, Spar, McColls, Costcutter, Sainsburys
Local, One Stop, Londis and thousands of independents) in all parts of the UK
and Ireland. Our terminals process energy meter prepayments, cash bill payments,
mobile phone top-ups, transport tickets, BBC TV licences and a wide variety of
other payment types for most leading utilities and many telecoms and consumer
service companies.  We also supply added value services to our retailers to
improve the yield from our network. We have recently successfully launched a
consumer parcel drop off and collection service using PayPoint's retail network
through Collect+ a joint venture with Yodel (formerly Home Delivery Network
combined with it's recently acquired DHL businesses).  This service is already
available in 3,000 of our convenience retailers. Clients include Littlewoods,
Woolworths, Very, Mobile Phone Exchange, Virgin Media and Great Universal.  In
addition, in the UK we have over 2,000 LINK branded ATMs, mainly in the same
sites as our terminals.  In Romania, the retail network numbers over 5,000
terminals located in local shops across Romania and is expanding.  Our terminals
process cash bill payments for utilities and mobile phone top-ups. In Ireland,
we have over 500 outlets in shops and Credit Unions processing mobile top-ups
and bill payments.
 
Internet
PayPoint.net is an internet payment service provider linking into all major UK
acquiring banks to deliver secure online credit and debit card payments for over
5,000 web merchants, including PKR, Betsson, Moneysupermarket.com, Severn Trent
Water, Ann Summers and British Gas Home Vend.  We offer a comprehensive set of
products ranging from a transaction gateway through to a bureau service, in
which we take the merchant credit risk and manage settlement for the merchants.
We offer real time reporting for merchant transactions and Fraudguard, an
advanced service to mitigate the risk of fraud for card not present
transactions.
 
PayByPhone
We recently acquired PayByPhone (Verrus Mobile Technologies Inc and Verrus UK
Limited).  PayByPhone is a leading international provider of services to parking
authorities allowing consumers to use their mobile phones to pay for their
parking by credit or debit card.  It has contracts in the UK, Canada, USA and
France.  PayPoint is widely recognised for its leadership in prepayment systems,
smart technology and consumer service. Our high quality services are backed by a
24/7 operations centre with dual site processing for business continuity.
 
To  give competitive differentiation, we aim to meet our clients' payment needs,
not  just through a wide spectrum of  payments, but also with products that span
payment  channels.  For  example,  PayCash  enables  cash  payment  for internet
transactions  at PayPoint  retailers and  our new  home vending  solutions allow
customers to pay across the internet as well as through our retail network.
 
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