PayPoint plc deliver good financial and operating performance during the quarter

GOOD FINANCIAL AND OPERATIONAL PROGRESS

Group net revenue increased by £1.0 million (3.6%) to £28.7 million.
Service fee growth of £0.7 million (30.7%) driven by the roll out of PayPoint One to 13,633 sites at 30 June 2019 and a 2.8% improvement in the average weekly service fee.
UK parcel volumes increased by 11.9% to 5.6 million, due to new partner relationships converting to volumes, with three of the four new parcel partners now transacting.
UK bill payments net revenue was up by 7.5%, driven by strong growth in MultiPay and a robust performance in the legacy business.
Romania net revenue increased by 5.0%, due to improved client margins and growth in transactions.

Patrick Headon, PayPoint plc (LON:PAY) CEO, commented:

“PayPoint has delivered a good financial and operating performance during the quarter, with group revenue increasing 3.6% to £28.7 million. PayPoint One is now operating in over 13,920² convenience retailers and we remain on track to meet our year-end target of 15,800 sites. Our parcels business is benefitting from our new partners, which were secured last year, with parcel volumes now having returned to growth. Bill payments in the UK and Romania delivered a robust performance with 12 new clients contracted and we saw continued strong growth in our MultiPay platform and eMoney services where transactions grew 38.5% and 16.3% respectively. We continue to believe these initiatives are key to driving future growth and profits. Consequently, the Board remains confident that there will be a progression in profit before tax and exceptional items for the year ending 31 March 2020.”

Performance for the first quarter ending 30 June 2019
Net revenue increased by £1.0 million from £27.7 million to £28.7 million driven by an increase in service fees, through the ongoing roll out of PayPoint One and a robust performance in bill payments in the UK and Romania.

Progress during the period against our strategic priorities is set out below:

Embed PayPoint at the heart of convenience retail
- Retail services net revenue grew by 3.5% driven by the continued strong performance of the PayPoint One rollout. We remain on track to reach our year-end target of 15,800 PayPoint One sites with 13,633 sites at 30 June 2019, an increase of 752 since the start of the financial year.
- Service fee net revenue increased by 30.7% to £3.1 million and PayPoint One’s average weekly service fee per site increased by £0.40 (2.8%) to £15.70. EPoS Pro installations grew to 770 from 645, as at the 31 March 2019, as we build resilience in the platform ahead of driving significant penetration of the product.
- Card payment transactions grew by 17.6% to 32.2 million, card payment rebate revenue increased 10.1% as lower average transaction values partially offset the volume growth. Our card payments service is in 9,788 sites at 30 June 2019, broadly unchanged from 31 March 2019, and we are planning to extend the card payment net settlement feature to further sites following the success of the initial pilot.
- ATM net revenue decreased by 8.4% to £3.0 million due to LINK’s 10% reduction in the interchange fee and a 3.0% reduction in transactions to 10.4 million. We secured a new significant ATM client and will commence in the second quarter with the rollout of 159 ATMs to its leisure centres.
- Our retail network remains broadly stable with 28,483 (31 March 2019: 28,435) sites in the UK.
Become the definitive parcel point solution
- Underlying parcel net revenue3 increased by 15.2% and parcel volumes grew by 11.9% due to volumes from new partners.
- Three of the four new parcel partners secured last year are now transacting, with the fourth expected to be live by September 2019.
- The Collect+ network was in 7,100 sites at 30 June 2019.

Sustain leadership in ‘pay-as-you go’ and grow digital bill payments

Bill payment net revenue increased by 7.5% driven by an increase in transactions of 3.2% to 75.0 million in the quarter.
MultiPay continues to grow strongly with transactions up by 38.5% to 7.4 million and net revenue increasing by 36.2%.
As announced on 28 June 2019, PayPoint was unable to agree appropriate renewal terms with British Gas and will cease working with British Gas on 31 December 2019. The impact on net revenue and contribution in the financial year to 31 March 2020 is expected to be around £1.4 million and in the financial year to 31 March 2021 is expected to be approximately £3.5 million. As previously referenced, plans are underway to mitigate this in part.
As expected, UK top-up and eMoney transactions reduced by 12.3% due to the declining prepaid mobile sector which resulted in a 6.3% decrease in net revenue. eMoney transactions increased by 16.3% driven by continued growth from existing clients which led to a 16.8% increase in eMoney net revenue.
Nine new clients were contracted in the period, including Utility Warehouse and Nabuh energy.

Romania

Transactions increased by 1.5% from the same period last year to reach 28.2 million. Net revenue increased by 5.0%⁴ driven by successful ongoing work to improve client margins.
Sites increased to 18,610 from 18,466 at 31 March 2019 and card payment sites increased to 1,518 sites at 30 June 2019.
Three new clients were contracted in the period.

Organisation and service delivery

PayPoint and eBay won “Best Domestic or International Delivery Options” award at MetaPack’s Delivery Excellence Awards 2019.
PayPoint One also won the “Best Use of Digital Devices and Software” at the UK Digital Experience Awards 2019.
Development of the Salesforce CRM lead to sales feature has progressed well and remains on track for release in the second half of this financial year.

Balance sheet as at 30 June 2019
The Group had net cash of £36.1 million (31 March 2019: £37.5 million) including the balance held in respect of short term client settlement obligations which totalled £31.6 million (31 March 2019: £34.0 million).

Dividends
The final ordinary dividend of 23.6 pence per share will be paid in equal instalments of 11.8 pence per share on 29 July 2019 and 30 September 2019. The additional dividend of 18.4 pence per share will be paid in equal instalments of 9.2 pence per share and paid to shareholders on the same dates as the ordinary dividend.

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