Mi-Pay Group PLC (LON:MPAY) Chief Executive Officer Michael Dickerson caught up with DirectorsTalk for an exclusive interview to discuss their interim results for the 6 months to 30 June 2017
Q1: Interim results out today, can you talk me through the highlights of the last 6 months?
A1: So, we set with clear targets for 2017 which were to re-grow our growth with existing clients that we have & build longer-term opportunities for growth going forward so a core focus for the first half of 2017 was to enhance & improve this growth opportunity. So, in doing that, we have grown our annuity based transactions by 12% & we have demonstrated that we have seen the natural migration to these digital channels that we have talked about before so it’s happening.
We’ve also delivered a new three-year extension with our largest client which, due to the acquisitions in their own markets, will grow to over €100 million in run rate transactions over the course of 2018 from a level today of €25 million.
We expect to deliver a live test of our first pure fraud as a service solution based on our own in-house IP & proven expertise. We’ve also, in addition to this, signed a new contract with Filipino clients where they are opening the services to their customers in 2018.
All this, we believe, is underpinning Mi-Pay Group’s ability to deliver core metrics & keeping the fraud levels low for clients & their success levels high. This also combined with continued enhancement in our security infrastructure & platform stability which we believe in the future will be a must for clients to consider outsource.
Q2: What can you tell us about the secured relationship with your largest client & how this impacts the numbers?
A2: We have worked with this client for 7 years & in fact, we helped them to build their first digital payments proposition from the start. In winning this extension, this was in a situation where they have purchased another telco within their markets which in fact was significantly bigger than they were today, & as a consequence of this due to the procurement rules that they have, they were in a position that they need to issue a proper tender. So, this has been done in a competitive environment where we have proven that our flexible omnichannel digital solution is relevant in the market that we operate within, our challenge is to enhance the system solution & to support their old technology, they have to integrate themselves within their own business.
As a result of this acquisition, as I mentioned before, they are moving from a level of €25 million in transaction value per annum in 2016 to over €100 million over 2018 as a run rate. The short-term improvement in commercial terms with a client would impact our revenues however the long-term consequence of this contract would underpin our growth & significantly de-risk the existing market outlook.
Q3: You talk about ‘providing more dependable income’, what does that mean for the Group?
A3: Well, that means that we have a deliberate focus, traditionally we have always had around 25% of our revenue coming from one-offs, non-recurring professional services revenues, whilst these have high margins, they’re not repeatable & they’re also more difficult to project to when they will happen. So, we have, in viewing that situation, focussed on our transaction services revenue which is based on us managing our customer purchases, they are monthly recurring & they’re neutral based. That means that both in terms of projection but also in terms of natural growth over to digital channel, this we believe is the core focus & we believe that this will create a more dependable income for the future. This is expected, over time, to a little bit over 90% of our total revenue, thing brings confidence in our growth & long-term performance in our opinion.
Q4: Why would you say Tier 1 Mobile Network Operators (MNO’s) & Mobile Virtual Network Operators (MNVO’s) are choosing Mi-Pay?
A4: We believe that they choose us, & this is what we’re hearing from the dialects we’re having from our clients, is that we offer a deeper value proposition than traditional payment institutions & we solve a number of strategic challenges for our clients. So, that is security & data management & cyber risk in general is also thought with management as more anonymous payments methods come & go out of the norm.
As ever-increasing customer contract channels so retail, web, mobile app voice services, so we have a comprehensive solution that we basically cover all of the touchpoints that our clients ask with their end users. We’re also dealing with the ever-changing payment environment & solutions such as payment cards, PayPal, Amazon Pay, Apple Pay, Samsung Pay etc. so they basically can have a security, by choosing us as a provider, that they are futureproof & safe & secure in their outsourcing choice.
Q5: What can the market expect in the next 6 months for Mi-Pay Group Plc?
A5: As a business, we are now focussing on delivering of the existing customer relationship & the new opportunities that we have already noted. We hope that they will increase our transaction values process payment to form the present label which is a little bit over £80 million to over £150 million & as such, drive more investment via those growth opportunities.
