Interim Results
PayPoint PLC
23 November 2005
PayPoint plc
Interim Results
for the 6 months ended 30 September 2005
HIGHLIGHTS
6 months 6 months
ended ended
30 September 30 September
2005 2004
£m £m Increase
Revenue 54.1 39.9 35%
Net revenue(1,5) 21.3 16.5 29%
Operating profit before 8.2 4.7 75%
exceptional items(2)
Operating profit 8.2 0.1
Profit before tax 8.4 0.3
Adjusted earnings per share(3,5) 10.5p 6.1p 72%
Basic earnings/(loss) per share 10.5p (0.8p)
Interim dividend 3.0p -
Comparing the first six months of 2005 and 2004:
• Consumer transactions processed up 23% at 139 million with strong growth in all sectors.
• Operating margins (4,5) increased to 38% from 28%.
• PayPoint terminal outlets have increased to over 14,000 up 17% on September 2004 and up 7% on March 2005.
• The new terminal roll out to agents which started in October 2004, will be substantially complete by year end.
David Newlands, Chairman of PayPoint, said 'These results show strong continuing
growth and demonstrate the excellent operational gearing of PayPoint's business.
Increased market share from our competitive service proposition, our new
branding and the larger terminal estate have driven growth in mobile and bill
and general payments. Within this sector, bill payments remain key to delivering
substantial additional volumes. Our network expansion is well on the way to our
target of 15,000 terminal sites by the end of the current financial year and we
plan to continue the expansion next year. Our ATM roll out continues, with the
emphasis on good quality sites. We have announced today, an important contract
with Western Union, the world's premier brand in money transfer and a number of
transport contracts, laying the groundwork for future revenue growth. Finally, I
am pleased to report that trading in the second half of the current financial
year has started well.'
1 Net revenue is revenue less commissions paid to retail agents and the cost of
e-vouchers for mobile top-ups where PayPoint is the principal.
2 Exceptional items relate to flotation and bid defence costs incurred in the
prior period - see note 3 to the accounts.
3 Adjusted earnings per share are based on prot before exceptional items after
taxation - see note 6 to the accounts.
4 Operating margins are calculated as operating prot before exceptional items as
a percentage of net revenue.
5 Net revenue, operating profit before exceptional items, adjusted earnings per
share and operating margins are measures which the directors believe assist with
a better understanding of the underlying performance of the group. The
reconciliation to statutory amounts can be found in the income statement and in
notes 2,3 and 9 to the accounts.
Enquiries:
PayPoint plc 01707 600 300
Dominic Taylor, Chief Executive
George Earle, Finance Director
Finsbury 020 7251 3801
Rollo Head
James Leviton
Don Hunter
This announcement is available on the PayPoint plc website: www.paypoint.co.uk.
About PayPoint
PayPoint is a leading branded payment collection network used, primarily, for
the cash payment of bills and services and prepayments for mobile telephones and
energy meters. There are over 14,000 retail outlets using PayPoint's payment
terminals.
PayPoint began trading in 1996 and initially collected payments through its
network of retail agents for its founder client investors, who included British
Gas, BT, BBC TV Licensing, London Electricity (now part of EDF Energy) and four
water companies.
It now has more than 500 clients including many of the UK and Ireland's major
energy, cable, mobile and fixed line telephony companies. Its blue chip client
list also extends to numerous water companies, local authorities and housing
associations and a growing transport and travel base.
BUSINESS REVIEW
We have continued to grow in all sectors. This growth has been achieved through
the success of our strategy to:
• broaden our customer service proposition and increase the range of payments
through our network; and
• grow and optimize our network coverage.
Operational overview
In the first six months of the financial year, PayPoint processed 139 million
transactions, with a value of £1.6 billion (2004: 112 million transactions with
a value of £1.3 billion) an increase of 23% in transactions and 24% in value.
Commissions paid to agents of £29.1 million were up 27%, reflecting increased
volumes and the mix of mobile top-up and ATM volumes, which carry higher agent
commissions.
There has been strong growth in transaction volumes across all sectors:
6 months 6 months Year
ended ended ended
30 September 30 September 31st March
2005 2004 Increase 2005
millions millions % millions
Bill and general payments 83.0 68.4 22 166.0
Mobile top-ups 51.7 42.2 22 87.9
ATMs 4.0 1.8 122 4.6
Total 138.7 112.4 23 258.5
Bill and general payments
This sector has benefited from continued transaction volume growth helped by a
migration away from the Post Office, following its branch closure programme, in
particular with respect to TV licence payments, BT and British Gas bill
payments. Energy consumer price increases have also continued to have a
beneficial effect on PayPoint's transaction volume, as transaction values have
remained broadly the same.
The new contract with Western Union will allow PayPoint retail agents to process
money transfers to and from Western Union agents all over the world. We are
expecting to roll out this service next year to selected agents. We have
extended our geographical coverage in transport by signing new contracts with
First and Greater Manchester Travelcard, in addition to our existing contracts
with Arriva, National Express and Lothian. Whilst current volumes in transport
ticketing are relatively modest, there is considerable potential for long term
growth. We are also discussing contracts with other operators and transport
executives. These developments provide an additional platform for future growth
in transaction volumes.
Mobile top-ups
Overall market share is c.25% (last year c.23%) as a result of extending the
retail network and the agent re-branding programme through all our independent
outlets and over 1,000 of our multiple sites.
Two of our major multiple retailers were expected to transfer mobile top ups
from our terminals to their own till systems during the year, producing lower
revenues for PayPoint. One of those retailers has started the transfer in the
first half of the year and is expected to complete by the end of this financial
year. The other retailer is now not expected to start the transfer until the new
financial year. The adverse impact on revenues is estimated at £0.5 million this
year, rising to a full year impact of £1.5 million when the transfer is
completed.
ATMs
Installations have continued in excess of 50 per month, at a broadly similar
rate to the whole of last year. Decommissions have, however, increased as a
result of three factors. First, we have taken a more rigorous approach to the
removal of poor performers. Second, there were a number of site owners who
refused to comply with Link's policy of 'transparency of charges' and who were
all decommissioned as a result and third, the estate is larger. As a result, the
quality of the installed estate has been improved and it has performed better
than expected, with sites averaging 600 transactions per month, split evenly
between cash withdrawals and balance enquiries.
Installed ATMs have grown to 1,201 (2004: 651).
Network growth
Strong demand for new PayPoint terminal outlets continues and the retail network
has grown to over 14,000 sites at 30 September 2005 (2004: 12,017, an increase
of 17%) and an increase of 7% since 31 March 2005.
We have added over 900 sites in six months, well on the way to our target of
15,000 sites by the end of this financial year, despite the continued proactive
removal of low performing sites.
2,000 sites (2004: 600) with our terminals also have EPoS connections, to allow
mobile top-up transactions over the retailers' own till systems and there are a
further 2,880 EPoS only sites (2004: 2,590).
New terminal
The second generation terminal is proving to be popular with retailers. The new
terminal offers much faster processing, better reliability and new functionality
through a touch screen and a contactless smartcard reader. These functions help
new products, including the new transport ticketing schemes, to be introduced
rapidly and efficiently. The new terminal design is also chip and PIN compliant.
The replacement of the old terminals commenced in October last year, with some
8,900 new terminals in operation at 30 September 2005 and 10,150 today. It is
anticipated that the old terminal estate will have been substantially replaced
by the end of the current financial year at a total capital cost of
approximately £6 million, of which c.£4 million was incurred by 30 September
2005.
Financial overview
Revenue for the first six months was £54.1 million (2004: £39.9 million) up 35%
driven by a 23% increase in transaction volumes, and the increase in the mix of
Irish mobile volumes1. Cost of sales was £37.4 million (2004: £27.9 million), an
increase of 34%. Cost of sales comprises commission paid to agents, depreciation
and other items including telecommunications. Agents' commission increased to
£29.1 million (2004: £22.9 million) up 27%, slightly ahead of volume growth as a
result of the mix of higher agent commission schemes, in particular mobile
top-ups and ATM volumes. Depreciation has reduced to £1.0 million (2004: £1.2
million) because the first generation terminal estate had already been
completely written down by September last year and the new terminal is not yet
completely deployed.
Other cost of sales increased, mainly as a consequence of the growth in the
Irish mobile top-up business1. Gross profit improved to £16.7 million (2004:
£12.1 million), 38% ahead of the same period last year, with a gross margin of
31% (2004: 30%), despite the adverse impact on the gross margin of the increase
in Irish mobile top-ups.
Net revenue(2)of £21.3 million (2004: £16.5 million) was up 29%, driven primarily
by volume growth. Operating margins(3) were 38% (2004: 28%), benefiting from
operational gearing and also from a delay in the migration of mobile top-ups, in
two of our multiple retailers, from our terminals to the retailers' own till
systems.
Operating costs (administrative expenses) before exceptional items(4) have risen
to £8.5 million (2004: £7.4 million), an increase of 15%, driven largely by
increased staff costs including the senior management appointments that have
been announced during the year and additional running costs following our
listing.
Operating profit was £8.2 million (2004: £4.7 million before exceptional
charges(4)) with a corresponding increase in operating margins(3).
Profit before tax was £8.4 million (2004: £0.3 million after exceptional items(4)
of £4.6 million). The tax charge of £1.3 million represents an effective rate of
16 per cent, which is lower than the UK corporate tax rate because tax losses
which were not included in the deferred tax asset have been used. It is expected
that all the available losses will be utilised this financial year and therefore
the tax charge is expected to rise next year. The remaining deferred tax asset
of £1.3 million relates to capital allowances in excess of depreciation and
other timing differences. This is likely to reverse as capital expenditure
declines following the roll out of the new terminal by the end of the current
financial year.
Operating cash flow (excluding movements in client cash(5)) was £9.0 million
(2004: £6.5 million), reflecting strong conversion of profit to cash. Net
capital expenditure of £3.1 million (2004: £1.1 million) reflected spend on the
new terminal roll out, ATMs and infrastructure assets. Net interest received was
£0.3 million (2004: £0.3 million) and equity dividends paid were £3.5 million
(2004: £0.8 million).
Cash and cash equivalents were £22.8 million including client cash of £4.1
million, down as predicted at the preliminary announcement from £25.9 million at
the end of last year, which included client cash of £11.1 million, an
unsustainably high level at 31 March 2005.
1 In Ireland, PayPoint is principal in the sale of mobile top-ups and
accordingly the face value of the top-up is included in sales and the corresponding costs in cost of sales.
2 Net revenue is revenue less agent commission and the cost of mobile top-ups
where PayPoint is principal - see note 2 to the accounts.
3 Operating margins are calculated as operating profit before exceptional items as a percentage of net revenue.
4 Exceptional items relate to flotation and bid defence costs incurred in the
prior period - see note 3 to the accounts.
5 Client cash is money to which PayPoint has legal title but an equal balance is
included in creditors - see note 9 to the accounts.
Dividend
The directors have declared an interim dividend of 3.0p per share (2004: nil)
payable on 3 January 2006 to shareholders on the register on 2 December 2005.
IFRS
We have adopted IFRS without alteration to past results except for the reversal
of dividends accrued at 31 March 2004 which were not approved by the
shareholders until the AGM in July 2004 and the reclassification of an accrual
for share based payments from liabilities to equity.
Outlook
Trading in the second half of the current financial year has started well. There
continues to be ample opportunity to grow revenue organically in the UK and
Ireland in the short to medium term, by increasing our market share and
continuing to extend our product range to source new transactions. The extension
into money transfer and the continuing sales success in transport will offer
further growth opportunities in the medium to long term. We are well on the way
to expanding the network to our target of 15,000 terminal sites by the end of
the current financial year and are set to continue the expansion next year, as
ever optimised against volume. We will also continue to review the potential to
broaden our product set further and extend our footprint internationally.
David Newlands Dominic Taylor
Chairman Chief Executive
23 November 2005
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
30 September 30 September 31 March
2005 2004 2005
Note £000 £000 £000
Continuing operations
Revenue 2 54,113 39,949 89,054
Cost of sales 2 (37,374) (27,862) (61,332)
Gross profit 2 16,739 12,087 27,722
Administrative expenses (8,552) (11,994) (20,257)
Add back exceptional items 3 - 4,572 4,572
Administrative expenses (8,552) (7,422) (15,685)
excluding exceptional items
Operating profit before 8,187 4,665 12,037
exceptional items
Exceptional items 3 - (4,572) (4,572)
Operating profit 8,187 93 7,465
Investment income 288 293 937
Finance costs (34) (74) (339)
Profit before tax 8,441 312 8,063
Tax 4 (1,315) (855) (2,215)
Profit/(loss) for the period 7,126 (543) 5,848
Earnings/(loss) per share
Basic 5 10.5p (0.8p) 8.7p
Diluted 5 10.4p (0.8p) 8.7p
Dividend 6 3.0p - 5.2p
The results are presented under IFRS and comparatives have been restated
accordingly (see note 1).
There have been no gains or losses for the current or comparative periods other
than those reported in the income statement.
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
30 September 30 September 31 March
2005 2004 2005
Note £000 £000 £000
Non-current assets
Property, plant and
equipment 6,685 2,202 4,617
Deferred tax asset 1,331 2,745 1,385
8,016 4,947 6,002
Current assets
Trade and other receivables 7,427 7,373 7,752
Inventories 673 - 472
Cash at bank and in hand 9 22,760 15,718 25,950
30,860 23,091 34,174
Total assets 38,876 28,038 40,176
Current liabilities
Trade and other payables 16,659 17,254 22,790
Tax 1,261 - -
Obligations under finance 138 344 158
leases
18,058 17,598 22,948
Non-current liabilities
Obligations under finance
leases - 123 67
Other liabilities - - 234
- 123 301
Total liabilities 18,058 17,721 23,249
Net assets 20,818 10,317 16,927
Equity
Share capital 7 226 225 226
Share premium account 7 23,976 23,976 23,976
Capital redemption
reserve 7 14,193 14,193 14,193
Investment in own
shares 7 (1) - (1)
Share option and SIP
reserve 7 457 - 219
Retained earnings 7 (18,033) (28,077) (21,686)
Total equity attributable
to equity holders of the
parent 8 20,818 10,317 16,927
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2005 2004 2005
Note £000 £000 £000
Net cash from operating activities 9 3,195 4,220 17,164
Investing activities
Interest received 288 293 937
Purchase of property, plant and
equipment (3,224) (1,241) (4,576)
Proceeds from disposal of
property, plant and equipment 111 128 408
Net cash used in investing (2,825) (820) (3,231)
activities
Financing activities
Repayments of obligations under
finance leases (87) (731) (1,032)
Dividends paid (3,473) (783) (783)
Net cash used in financing
activities (3,560) (1,514) (1,815)
Net (decrease)/increase in cash
and cash equivalents (3,190) 1,886 12,118
Cash and cash equivalents at
beginning of period 25,950 13,832 13,832
Cash and cash equivalents at
end of period 22,760 15,718 25,950
NOTES TO ACCOUNTS
1. Accounting policies
These financial statements have been prepared on a historical cost basis and on
the policies set out below.
Basis of preparation
The financial information contained in this report is unaudited, but has been
formally reviewed by the auditors and their report to the Company is set out on
page 21. The information shown for the year ended 31 March 2005, which is
prepared under IFRS, does not constitute statutory accounts within the meaning
of section 240 of the Companies Act 1985. The report of the auditors on the
statutory accounts for the year ended 31 March 2005, prepared under UK GAAP, was
unqualified and did not contain a statement under section 237 of the Companies
Act 1985 and has been filed with the Registrar of Companies.
The financial statements are prepared in accordance with International Financial
Reporting Standards (IFRS) endorsed by the European Commission.
IFRS 1 First-time Adoption of International Financial Reporting Standards sets
out the procedures that the group must follow when it adopts IFRS for the first
time as the basis for preparing its consolidated financial statements.
The group is required to establish its IFRS accounting policies as at 31 March
2006 and, in general, apply these retrospectively to determine the IFRS opening
balance sheet at its date of transition, 1 April 2004. The impact of the
adoption of IFRS on the consolidated balance sheets and profit and loss accounts
of the group is shown in appendices 1 and 2 on pages 19 to 20.
Basis of consolidation
PayPoint plc (the Company) acts as a holding company. The group accounts
consolidate the accounts of the Company and entities controlled by the Company
(its subsidiaries) drawn up to 31 March each year. Control is achieved where the
Company has the power to govern the financial and operating policies of an
entity in which it invests, so as to obtain benefits from its activities.
The results of subsidiaries acquired or sold are consolidated for the periods
from or to the date on which control passed.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Revenue
Group revenue is measured at the fair value of the consideration received or
receivable and comprises the value of sales (excluding VAT) of services in the
normal course of business. Revenue is wholly attributable to the operation of
the group's electronic payment collection system and ATM business and has arisen
solely in the United Kingdom and Republic of Ireland.
Revenue and cost of sales are recorded according to the actual transactions that
occur in a given period. In Ireland, PayPoint is principal in the supply chain
for prepaid mobile telephone top-ups (mobile top-ups). Accordingly, revenue
includes the sale price of the mobile top-ups and the cost of sales includes the
cost of the mobile top-ups to PayPoint.
Cost of sales
Cost of sales includes agents' commission, the cost of mobile top-ups where
PayPoint acts as principal in their purchase and sale, consumables,
communications, maintenance, depreciation and field service costs. All other
costs are allocated to administrative costs.
Pension costs
The group makes payments to a number of defined contribution pension schemes.
The amounts charged to the profit and loss account in respect of pension costs
represent contributions payable in the year. Differences between contributions
payable in the year and contributions actually paid are shown as either accruals
or prepayments in the balance sheet.
Share based payments
The group operates equity settled share based compensation plans. Grants under
the long term incentive scheme are generally made annually and will vest over a
three year holding period if the group's comparative TSR performance is equal to
or greater than the median level of performance over the holding period at which
point 30% will vest, with full vesting occurring for upper quartile performance.
The group has applied the requirements of IFRS 2 Share-based Payments.
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight line basis over the vesting
period, based upon the group's estimate of shares that will eventually vest.
Fair value is measured by use of either a 'Monte Carlo' simulation or 'Black
Scholes' model depending upon the scheme. The expected life used in the model
has been adjusted, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations.
Interest income
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and items that are never taxable or deductible. The group's liability for
current tax is calculated using tax rates that have been enacted or
substantially enacted by the balance sheet date.
Deferred tax is provided in full on temporary differences between the tax bases
of assets and liabilities and their carrying amounts in the consolidated
financial statements. The provision is calculated using tax rates that have been
substantially enacted by the balance sheet date. Deferred tax assets are
recognised to the extent that it is probable that future taxable profit will be
available against which the tax will be realised.
Foreign currency
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transaction.
At each balance sheet date, monetary asset and liabilities that are denominated
in foreign currencies are retranslated at the rates prevailing on the balance
sheet date. Non-monetary assets and liabilities carried at fair value that are
denominated in foreign currency are translated at the rates prevailing at the
date when fair value was determined. Gains and losses arising on retranslation
are included in net profit or loss for the period, except for exchange
differences arising on non-monetary assets and liabilities where the changes in
fair value are recognised directly in equity.
On consolidation, the assets and liabilities of the group's overseas operations
are translated at exchange rates prevailing on the balance sheet date. Income
and expense items are translated at the average exchange rates for the period
unless exchange rates fluctuate significantly. Exchange differences arising, if
any, are classified as equity and transferred to the group's translation
reserve. Such translation differences are recognised as income or as expenses in
the period in which the operation is disposed of.
Software development expenditure
The group develops computer software for internal use. Software development
expenditure on large projects is recognised as an intangible asset if it is
probable that the asset will generate future economic benefits. The costs that
are capitalised are the directly attributable costs necessary to create and
prepare the asset for operations. Other software costs are recognised in
administrative expenses when incurred.
Software development costs recognised as an intangible asset are amortised on a
straight line basis over the useful life, generally not more than three years.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation.
Depreciation is provided at rates calculated to write off the cost, less
estimated residual value, of each asset on a straight line basis over its
expected useful life. The estimated useful lives are as follows:
• leasehold improvements - over the life of the lease
• terminals - 5 years
• automatic teller machines - 4 years
• other classes of assets - 3 years
The gain or loss arising on the disposal or retirement of an asset is determined
as the difference between the sales proceeds and the carrying amount of the
asset and is recognised as income.
Inventories
Inventories are valued at the lower of cost or net realisable value.
Leases
Assets held under finance leases, which confer rights and obligations similar to
those attached to owned assets, are capitalised as property, plant and equipment
and are depreciated over the shorter of the lease terms and their useful lives.
The capital elements of future lease obligations are recorded as liabilities,
while the interest elements are charged to the profit and loss account over the
period of the leases to produce a constant rate of charge on the remaining
balance of liability.
Rentals under operating leases are charged on a straight-line basis over the
lease term, even if the payments are not made on such a basis. Benefits received
and receivable as an incentive to sign an operating lease are similarly spread
on a straight line basis over the lease term, except where the period to the
review date on which the rent is first expected to be adjusted to the prevailing
market rate is shorter than the full lease term, in which case the shorter
period is used.
Rentals received from ATMs rented to retail agents under operating leases are
credited to income on a straight line basis over the lease term.
Dividends
Final dividends on ordinary shares are recognised in equity in the period in
which they are approved by the Company's shareholders. Interim dividends are
recognised when declared.
Treasury shares
PayPoint purchases own shares for the purpose of employee share option schemes.
Such shares are deducted from equity and no profit or loss recognised on the
transactions.
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise
cash at bank and in hand and short-term deposits maturing within 3 months.
2. Segmental reporting, net revenue analysis and gross throughput
(i) Segmental information
(a) Geographical segments
The group operates in both the UK and Republic of Ireland but the group has only
one reportable segment as dened in International Accounting Standard 14 Segment
Reporting due to the fact that principally all operations occur in the UK.
(b) Classes of business
The group has one class of business, being cash payment collection and
distribution services.
(ii) Analysis of revenues by sector
Group revenue comprises the value of sales (excluding VAT) of services in the
normal course of business and includes amounts billed to customers to be passed onto retail
agents as commission payable. Cost of sales includes the cost to the group of
the sale, including commission to retail agents and the cost of mobile top-ups
where PayPoint is the principal in the supply chain.
Although there is only one class of business, since the risks and returns are
similar across all markets in which the group operates, the group monitors net revenue (see
below) with reference to each sector.
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2005 2004 2005
£000 £000 £000
Revenue 54,113 39,949 89,054
less:
Commission payable to retail agents (29,073) (22,913) (50,348)
Cost of mobile top-ups as principal (3,709) (506) (1,810)
Net revenue 21,331 16,530 36,896
Net revenue by sector
Bill payments 9,248 7,254 18,861
Mobile top-ups 9,413 8,081 15,286
ATMs 1,850 806 1,947
Other 820 389 802
Net revenue 21,331 16,530 36,896
2. Segmental reporting, net revenue analysis and gross throughput (continued)
Commission payable is included within cost of sales as shown below
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2005 2004 2005
£000 £000 £000
Revenue 54,113 39,949 89,054
Cost of sales
Commission payable to retail agents (29,073) (22,913) (50,348)
Cost of mobile top-ups as principal (3,709) (506) (1,810)
Other (4,592) (4,443) (9,174)
Total cost of sales (37,374) (27,862) (61,332)
Gross profit 16,739 12,087 27,722
(iii) Gross throughput
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2005 2004 2005
£000 £000 £000
Gross throughput 1,635,102 1,316,739 2,931,423
Gross throughput represents payments made by consumers using the PayPoint
service and cash withdrawals from ATMs. Included within gross throughput is
£92.5 million in the six months to 30 September 2005 (2004: £41.4 million)
relating to the ATM business.
3. Exceptional items
There were no exceptional items in the period under review. Exceptional charges
in the comparative period last year of £4.6 million related to the listing of
the Company's shares on the London Stock Exchange (£4.3 million) and bid defence
costs (£0.3 million).
4. Tax on profit of ordinary activities
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2005 2004 2005
£000 £000 £000
UK corporation tax 1,261 - -
Deferred tax 54 855 2,215
Total 1,315 855 2,215
The tax charge for the six months to 30 September 2005 has been based on the
estimated effective rate for the year ending 31 March 2006.
5. Earnings per share
(a) Basic and diluted earnings per share
The basic and diluted earnings per share are calculated on the following prots
and number of shares.
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2005 2004 2005
£000 £000 £000
Profit/(loss) on ordinary
activities after taxation (used
for basic earnings per share) 7,126 (543) 5,848
Potential dilutive impact of
interest saved on the conversion
of debt - 4 4
Diluted basis 7,126 (539) 5,852
Number of Number of Number of
shares shares shares
Weighted average number of shares
(for basic earnings per share) 67,665,908 66,479,120 67,054,583
Potential dilutive ordinary
shares:
Conversion of convertible debt - 61,099 30,550
Long term incentive plan 624,118 - 171,366
Diluted basis 68,290,026 66,540,219 67,256,499
(b) Adjusted earnings per share
The adjusted earnings per share is calculated on the prot after tax but before
the exceptional item (see note 3). This adjusted measure has been presented in
order to demonstrate the growth in earnings in the underlying business.
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2005 2004 2005
£000 £000 £000
Earnings/(loss) used for
unadjusted basic earnings per share 7,126 (543) 5,848
Add: exceptional items (see note 3) - 4,572 4,572
Adjusted basis 7,126 4,029 10,420
6. Dividend
The declared interim dividend is 3.0p (2004: nil). The total dividends relating
to the year ended 31 March 2005 were £3,473,000 (5.2p per share).
The interim dividend was declared on 23 November 2005 and accordingly has not
been recorded as a liability as at 30 September 2005.
7. Equity
30 September 30 September 31 March
2005 2004 2005
£000 £000 £000
Authorised share capital
4,365,352,200 ordinary shares of 1/3p 14,551 14,551 14,551
each
14,551 14,551 14,551
Called up, allotted and fully paid
share capital
67,675,378 ordinary shares of 1/3p each
(30 September 2004: 67,465,794
31 March 2005: 67,653,358) 226 225 226
226 225 226
Called up share capital
At start of period 226 14,418 14,418
Shares issued under share incentive plan - - 1
Deferred shares purchased and cancelled - (14,193) (14,193)
At end of period 226 225 226
Share premium
At start of period 23,976 23,894 23,894
Loan stock converted - 82 82
At end of period 23,976 23,976 23,976
Capital redemption reserve
At start of period 14,193 - -
Deferred shares purchased and cancelled - 14,193 14,193
At end of period 14,193 14,193 14,193
Investment in own shares
At start of period (1) (25) (25)
Share incentive plan issue - 25 24
At end of period (1) - (1)
Share option and SIP reserve
At start of period 219 - -
Additions 238 - 219
At end of period 457 - 219
Retained earnings
At start of period (21,686) (26,751) (26,751)
Profit/(loss) for the period 3,653 (1,326) 5,065
At end of period (18,033) (28,077) (21,686)
8. Statement of changes in equity
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2005 2004 2005
£000 £000 £000
Opening equity 16,927 11,536 11,536
Profit/(loss) for the period 7,126 (543) 5,848
Dividends paid (3,473) (783) (783)
Investment in own shares - (1) (1)
Share option and SIP reserve 238 - 219
Conversion of loan stock/options - 108 108
Closing equity 20,818 10,317 16,927
9. Notes to the cash flow statement
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2005 2004 2005
£000 £000 £000
Operating profit before exceptional
items 8,187 4,665 12,037
Exceptional items (see note 3) - (4,572) (4,572)
Profit from operations 8,187 93 7,465
Adjustments for:
Depreciation 1,047 1,196 1,801
Operating cash flows before movements 9,234 1,289 9,266
in working capital
Increase in inventories (201) - (440)
Increase in receivables (1,072) (362) (731)
(Decrease)/increase in payables
- client cash (5,794) (2,302) 6,371
- other payables 799 5,595 2,686
Increase in share option and SIP reserve 238 - 219
Cash generated by operations 3,204 4,220 17,371
Interest paid (9) - (207)
Net cash from operating activities 3,195 4,220 17,164
Included within cash at bank and in hand is £4.1 million (September 2004: £2.4
million, March 2005: £11.1 million) relating to monies collected on behalf of
PayPoint clients where PayPoint has title to the funds (client cash). An
equivalent balance is included within trade payables.
Appendix 1. Reconciliation of equity at 1 April 2004
Effect of
UK GAAP transition to
IFRS format IFRS IFRS
£000 £000 £000
Non-current assets
Property, plant and equipment 2,217 - 2,217
Deferred tax asset 3,600 - 3,600
5,817 - 5,817
Current assets
Trade and other receivables 7,021 - 7,021
Inventories 32 - 32
Cash at bank and in hand 13,832 - 13,832
20,885 - 20,885
Total assets 26,702 - 26,702
Current liabilities
Trade and other payables 14,742 783 13,959
Obligations under finance leases 903 - 903
15,645 783 14,862
Non-current liabilities
Obligations under finance leases 222 - 222
Other liabilities 82 - 82
304 - 304
Total liabilities 15,949 783 15,166
Net assets 10,753 783 11,536
Capital and reserves
Called up share capital 14,418 - 14,418
Share premium account 23,894 - 23,894
Capital redemption reserve - - -
Investment in own shares (25) - (25)
Profit and loss account (27,534) 783 (26,751)
Total shareholders' funds 10,753 783 11,536
Shareholders' funds are analysed as:
Equity interests 10,753 783 11,536
10,753 783 11,536
The movement between UK GAAP and IFRS relates to the reversal of proposed dividends.
There was no effect on the UK GAAP balance sheet or profit for the year ended 30
September 2004 and therefore no IFRS reconciliations have been presented.
Appendix 2. Reconciliation of equity at 31 March 2005
Effect of
UK GAAP transition to
IFRS format IFRS IFRS
£000 £000 £000
Non-current assets
Property, plant and equipment 4,617 - 4,617
Deferred tax asset 1,385 - 1,385
6,002 - 6,002
Current assets
Trade and other receivables 7,752 - 7,752
Inventories 472 - 472
Cash at bank and in hand 25,950 - 25,950
34,174 - 34,174
Total assets 40,176 - 40,176
Non-current liabilities
Obligations under finance leases 67 - 67
Other liabilities 234 - 234
301 - 301
Current liabilities
Trade and other payables 26,482 3,692 22,790
Obligations under finance leases 158 - 158
26,640 3,692 22,948
Total liabilities 26,941 3,692 23,249
Net assets 13,235 3,692 16,927
Capital and reserves
Called up share capital 226 - 226
Share premium account 23,976 - 23,976
Capital redemption reserve 14,193 - 14,193
Investment in own shares (1) - (1)
Share option and SIP reserve - 219 219
Profit and loss account (25,159) 3,473 (21,686)
Total shareholders' funds 13,235 3,692 16,927
Shareholders' funds are analysed as:
Equity interests 13,235 3,692 16,927
13,235 3,692 16,927
The movement between UK GAAP and IFRS relates to the reversal of proposed
dividends, the reversal of the UK GAAP accrual for equity settled share based
payments and it's replacement with the share option and SIP reserve in
accordance with IFRS.
There was no effect on the UK GAAP profit for the year ended 31 March 2005 and
therefore no IFRS reconciliations have been presented.
INDEPENDENT REVIEW REPORT TO PAYPOINT PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 September 2005 which comprises the income statement, the
balance sheet, the cash flow statement and related notes 1 to 9 and appendices 1
and 2. We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the Company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim gures are consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
International Financial Reporting Standards
As disclosed in note 1, the next annual financial statements of the group will
be prepared in accordance with those IFRS adopted for use by the European Union.
Accordingly, the interim report has been prepared in accordance with the
recognition and measurement criteria of IFRS and the disclosure requirements of
the Listing Rules.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying nancial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verication of assets, liabilities
and transactions. It is substantially less in scope than an audit performed in
accordance with International Standards on Auditing (UK and Ireland) and
therefore provides a lower level of assurance than an audit. Accordingly, we do
not express an audit opinion on the nancial information.
Review conclusion
On the basis of our review we are not aware of any material modications that
should be made to the nancial information as presented for the six months ended
30 September 2005.
Deloitte & Touche LLP
Chartered Accountants
London
23 November 2005
Notes: A review does not provide assurance on the maintenance and integrity of
the website, including controls used to achieve this, and in particular on
whether any changes may have occurred to the nancial information since rst
published. These matters are the responsibility of the directors but no control
procedures can provide absolute assurance in this area.
Legislation in the United Kingdom governing the preparation and dissemination of
nancial information differs from legislation in other jurisdictions.
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