Interim Management Statement

PayPoint plc
Interim Management Statement
25 January 2011
 
The  board reports on events, transactions  and trading from 27 September to 26
December 2010.
 
Bill  and general payment  transactions in the  UK are up  over 6% on last year,
which  is ahead of our expectations.  In prepaid gas and electricity especially,
the  cold weather experienced  by most of  the country has benefited transaction
volumes.  The  number of  bill payments  in Romania  has doubled compared to the
same  period last year,  with 3.3 million transactions  processed in the period.
Mobile  top-up volumes in the UK, Romania  and Ireland continue to be lower than
last  year, as a consequence of mobile operators offering consumers more airtime
for  lower prices.   Retail services  continue to  show encouraging  growth with
transaction volumes increasing by 29% on last year.
 
Internet  transactions increased  over 40% to  17 million compared to 12 million
for the same period last year.  We expect to process transactions this financial
year  for our three new  large gaming merchants (Unibet,  Sporting Bet, and Stan
James).
 
In  Romania, we have now replaced all  mobile only sites with full service sites
in  our continuing efforts  to broaden the  business, making it  less reliant on
mobile  top-ups.  We will  introduce money transfer  services across the country
through  PayPoint terminals in the next financial year.  Growth in bill payments
has  been encouraging, but  the continuing decline  in mobile top-ups has pushed
back profitability into the next financial year.
 
Performance(1)  for the period from 27 September 2010 to 26 December 2010(2) and
financial position(1) as at 26 December 2010
 
Terminal sites in the UK and Ireland increased by 318 and by 298 in Romania.
 
Transactions  processed in the period were 162 million, including 3.6 million of
PayByPhone  transactions, up 11% from 146 million in the same period last year.
Revenues  of £51 million were up 1% on the same period as last year, including a
decline in mobile top-up revenues of £1.6 million.
 
Net  revenues(3) for the period were up 7% to £22 million, as a result of growth
in bill payment, retail services and the acquisition of PayByPhone.
 
Earnings  before tax and interest for the period to 26 December are in line with
market expectations, taking seasonality of trading into account.
 
After  the payment of the interim dividend  of £5 million, part repayment of the
short-term  loan of £4 million and corporation tax of £2 million, net cash(4) at
26 December  was £16 million (including client  cash of £8 million), compared to
£13 million (including client cash of £7 million) at 26 September 2010.
 
(1) PayPoint's auditors have not been requested to review the performance or
financial
      position
(2) Comparative data is given for the similar 13 week period last year (i.e. 28
September to
      27 December 2009)
(3) Net revenue is revenue less the cost of mobile top-ups and SIM cards where
PayPoint is
     principal and costs  incurred by PayPoint which are recharged to clients
and merchants.
     These costs include retail agent commission, merchant service charges
levied by card
     scheme sponsors and costs for the provision of call centres for PayByPhone
clients.
(4) Net cash is cash after short-term borrowings
 
Enquiries
Finsbury+44 207 251 3801
Rollo Head/Don Hunter
 
Notes to Editors
PayPoint is a leading international provider of convenient payments and value
added services to major consumer service organisations in the utility, telecoms,
media, financial services, transport, retail, gaming and public sectors. We
handle over £10 billion from almost 570 million transactions annually for more
than 6,000 clients and merchants.  We deliver payments and services through a
uniquely strong combination of local shops, internet and mobile distribution
channels.
 
Retail networks
PayPoint  operates branded retail networks in  the UK, Ireland and Romania.  The
network  in  the  UK  numbers  over  22,700 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.  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.
 
In  Romania, the branded retail network  numbers over 5,300 terminals located in
local  shops across Romania  and is expanding.   Our terminals process cash bill
payments  for utilities and mobile phone top-ups. In the Republic of Ireland, we
have  over 500 outlets in shops and  Credit Unions processing mobile top-ups and
bill payments.
 
We  also supply added value  services to our retail  agents to improve the yield
from our network.  In the UK, we have recently introduced a consumer parcel drop
off  and collection service using PayPoint's  retail network through Collect+, a
joint  venture with  Yodel (formerly  Home Delivery  Network and  DHL Express UK
Limited).  This service is already available  in 3,400 of our convenience retail
agents.  Clients  include  ASOS,  Littlewoods,  Woolworths,  New  Look,  Dorothy
Perkins,  Very,  Mobile  Phone  Xchange,  Virgin  Media and Great Universal.  In
addition,  in the UK, we  have over 2,400 LINK branded  ATMs, mainly in the same
sites as our terminals.
 
Internet channel
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,  Moonpig  and  British  Gas.   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.
 
Mobile channel
We  acquired PayByPhone  in March  2010.  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 payment 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.
 
PayPoint  sustains its  competitive differentiation  by aiming  to meet 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  retail agents  and our new home vending
solutions  allow consumers  to pay  across the  internet as  well as through our
retail  network.  Our  combination of  distribution channels  makes us unique in
this regard.
 
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Source: Paypoint plc via Thomson Reuters ONE
 
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