Preliminary results

PayPoint plc
                         Preliminary results
                      Year ended 25 March 2007


+-------------------------------------------------------------------+
|                              | Year ended | Year ended |          |
|                              |   25 March |   31 March |          |
|                              |       2007 |       2006 | Increase |
|------------------------------+------------+------------+----------|
|                              |         £m |         £m |        % |
|------------------------------+------------+------------+----------|
| Revenue                      |        157 |        120 |       31 |
|------------------------------+------------+------------+----------|
| Net revenue[1],[3]           |         58 |         46 |       25 |
|------------------------------+------------+------------+----------|
| Operating profit             |         25 |         19 |       31 |
|------------------------------+------------+------------+----------|
| Profit before tax            |         27 |         20 |       31 |
|------------------------------+------------+------------+----------|
|                              |            |            |          |
|------------------------------+------------+------------+----------|
| Basic earnings per share     |      27.7p |      25.0p |       11 |
|------------------------------+------------+------------+----------|
| Proposed final dividend per  |            |            |          |
| share                        |       9.1p |       7.5p |       21 |
+-------------------------------------------------------------------+



HIGHLIGHTS


  * Strong growth in both revenues and operating profit ahead 31%
    driven by 29% increase in transactions
  * Operating margin[2],[3], increased by 2 percentage points to 44%
  * Earnings per share of 27.7p, up 11% notwithstanding an increase
    in the effective tax rate from 17% to 30% as prior year losses
    are fully utilized
  * Total dividends for year 13.7p per share, up 30%
  * Terminal network expanded by 15% to 17,537
  * Bill and general payments transaction growth enhanced by
    exclusive BBC TV Licensing contract
  * Entry into rapidly growing internet payment service market
    through acquisitions of Metacharge and SECPay
  * International expansion through acquisition of Pay Store SRL in
    Romania since the year end
  * Brand continuing to gain traction with prompted consumer
    awareness[4] over 70%


David Newlands,  Chairman of  PayPoint, said  "PayPoint continues  to
deliver strong  increases  in  both revenues  and  profits,  and  has
opportunities for further growth through  market share gains and  new
initiatives. The Metacharge and  SECPay acquisitions during the  year
are a positive  step in  generating transactions in  new sectors  and
increasing the  range of  consumer  payments processed  by  PayPoint.
 Since the year  end we have  also announced the  acquisition of  Pay
Store SRL, the leading independent Romanian mobile top-up provider as
the first step of our  international strategy. Overall we look  ahead
with confidence  for continuing  growth supported  by an  encouraging
performance at the start of the new financial year."

The financial statements  have been  drawn up  to the  year ended  25
March 2007 (the last Sunday in  the month). The year ending 30  March
2008 will contain 53 weeks.


BUSINESS REVIEW

The business review  has been prepared  solely to provide  additional
information to shareholders as a body to assess PayPoint's strategies
and their potential to succeed, and it should not be relied upon  for
any other purpose. It contains  forward looking statements that  have
been made by  the directors in  good faith based  on the  information
available at  the time  of approval  of the  annual report  and  such
statements should  be  treated  with  caution  due  to  the  inherent
uncertainties, including  both economic  and business  risk  factors,
underlying any such forward looking information.


Operational overview

We have continued to grow in all sectors and particularly in bill and
general payments  with  the  introduction of  the  exclusive  BBC  TV
licensing contract. 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.

During  the   financial   year,  PayPoint   processed   414   million
transactions (2006: 322 million), an increase of 29%, with a value of
£5.2 billion (2006: £3.8 billion) up 38%. Commissions paid to  agents
of £77 million were up 21%, reflecting lower than average increase in
mobile top-ups which carry higher than average agent commission.  The
average transaction value has increased to £13 (2006: £12) mainly  as
a result  of the  TV  licence contract,  rises  in domestic  gas  and
electricity prices, increased volumes in the housing rent and council
tax sector and payments via the internet.

There has  been  strong  growth in  transaction  volumes  across  all
sectors:


+-----------------------------------------------------------+
|                            |    2007 |    2006 | Increase |
| Transactions by sector     | million | million |        % |
|----------------------------+---------+---------+----------|
| Bill and general payments* |     267 |     205 |       30 |
|----------------------------+---------+---------+----------|
| Mobile top-ups             |     130 |     108 |       21 |
|----------------------------+---------+---------+----------|
| ATMs                       |      13 |       9 |       44 |
|----------------------------+---------+---------+----------|
| Internet payments          |       4 |       - |        - |
|----------------------------+---------+---------+----------|
| Total                      |     414 |     322 |       29 |
+-----------------------------------------------------------+


*Including debit/credit transactions


Bill and general payments

PayPoint has performed well in this sector with growth stimulated  by
increased agent numbers, client payment options and brand  awareness.
Migration of market share  away from the  Post Office, following  its
branch closure  programme,  and the  launch  of the  BBC  TV  licence
payments exclusively in PayPoint agents have contributed to growth in
transactions. The major new contract with TV Licensing will  continue
to add to transaction volumes next year being its first full year  of
operation.

In prepaid energy, substantial  energy consumer price increases  have
continued to  have  a  beneficial effect  on  PayPoint's  transaction
volumes, offset by an increase in average transaction values. Gas and
electricity price  reductions  have  been  announced  which,  in  the
absence of a reduction  in transaction values,  will have an  adverse
effect on volumes in  the current year. This  adverse impact will  be
partly mitigated by network growth and increasing market share.

In transport, we have extended  our geographical coverage by  signing
new contracts  with, amongst  others,  regional Go  Ahead  companies,
Ipswich Buses,  Reading Transport,  Northampton Buzz  and  Stagecoach
Northampton, in  addition  to  our existing  contracts  with  Arriva,
National Express, Lothian, First and Greater Manchester  Travelcards.
Whilst current volumes in transport ticketing are relatively  modest,
there is  considerable potential  for long-term  growth if  transport
authorities take steps to  move ticket purchasing  off buses. We  are
also  discussing  contracts  with   other  operators  and   transport
executives.

PayPoint has also achieved  strong growth in the  rest of the  sector
(energy bill payments, communications including TV Licensing,  water,
local authorities, and others).


Mobile top-ups

PayPoint's share  of the  UK  mobile top-up  market is  c.30%  (2006:
c.27%) as  a result  of  extending the  retail network  and  improved
outlet branding.  Growth  in Epos  transactions  is higher  than  for
mobile top-ups on  PayPoint's terminals,  partly as a  result of  the
migration of transactions from  terminals to two multiple  retailers'
till systems on which Epos  transactions are performed and partly  on
the higher growth in Epos sites than terminal sites.

The re-branding  programme  has  contributed  to  an  improvement  in
prompted consumer awareness[4] of 34ppts to 70% from 36% last year.


Automatic Teller Machines (ATMs)

New machines have continued to be rolled out, albeit at a slower rate
of 34 per month  (2006: 41 per month).  The quality of the  installed
estate has  been  maintained  and  average  transaction  volumes  and
revenues are higher  than last  year, with sites  averaging over  630
transactions per  month (2006:  600 per  month), split  between  cash
withdrawals  and  balance  enquiries  with  the  latter  representing
slightly more  than half  of the  transactions. Installed  ATMs  have
grown to 1,860 at the year end (2006: 1,451).


Network growth
Demand remains  strong  for new  PayPoint  terminal outlets  and  the
retail network has  grown to  17,537 sites at  25 March  2007, a  net
increase of over 2,200 or 15% on 2006.

2,488  sites  (2006:  2,300)  with  our  terminals  also  have   Epos
connections, to allow mobile top-up transactions over the  retailers'
own till systems and there are a further 3,855 Epos only sites (2006:
2,780).


+---------------------------------------------------+
| Analysis of sites    |   2007 |   2006 | Increase |
|                      |        |        |        % |
|----------------------+--------+--------+----------|
| PP terminal only     | 15,049 | 12,996 |       16 |
|----------------------+--------+--------+----------|
| PP terminal and Epos |  2,488 |  2,300 |        8 |
|----------------------+--------+--------+----------|
| PP terminal sites    | 17,537 | 15,296 |       15 |
|----------------------+--------+--------+----------|
| ATM sites            |  1,860 |  1,451 |      28. |
|----------------------+--------+--------+----------|
| Internet merchants   |  4,249 |      - |        - |
+---------------------------------------------------+



Financial overview
Revenue for the financial year was 31% up at £157 million (2006: £120
million), driven by  a 29%  increase in transaction  volumes and  the
increase in revenue from  the sale of  mobile top-ups in  Ireland[5].
Cost of sales was  £111 million (2006: £83  million), an increase  of
33%. Cost of sales comprises commission  paid to agents, the cost  of
mobile top-ups  in Ireland,  depreciation and  other items  including
telecommunications costs. Agents' commission increased to £77 million
(2006: £64 million), up 21%, lower than volume growth as a result  of
lower than average growth of  mobile top-ups which carry higher  than
average agent commissions. The cost of mobile top-ups in Ireland  has
risen to £21 million (2006: £10m). Depreciation and amortisation have
increased to £3.8 million (2006: £2.3 million) as a result of the new
terminal and ATM deployment and  the refurbishment of the  operations
base at Welwyn Garden City.

Net revenue[6] of £58 million (2006: £46 million) was up 25%,  driven
primarily by  volume growth.  Operating  margins[7] were  44%  (2006:
42%), ahead of last year despite  the step change in operating  costs
resulting from the expansion of the operations base.

Gross profit improved to £46  million (2006: £37 million), 26%  ahead
of last year, with  a gross margin  of 29% (2006:  30%). The rate  of
increase in mobile top-ups, where  PayPoint acts as principal,  which
is greater than  the rate of  increase from other  sources, tends  to
depress gross margin, mitigated by  lower rates of increase in  other
costs. Gross  margin,  excluding the  cost  of mobile  top-ups  where
PayPoint is  the  principal from  both  revenue and  cost  of  sales,
improved to 34% (2006: 33%).


Operating costs (administrative expenses)  have risen to £21  million
(2006: £17 million), an increase of 21%.  The inclusion of Metacharge
and SECPay since acquisition has accounted for a 5% increase and  the
remainder results from the increase in leased space at our operations
base, merger and acquisition  activity, promotional activity and  the
expansion of the  senior management  team. Operating  profit was  £25
million (2006: £19 million). The operating margin[8] improved to  44%
(2006: 42%).

Profit before tax was £27 million (2006: £20 million). The tax charge
of £8  million  (2006: £3  million)  represents an  increase  in  the
effective rate to 30% (2006: 17%), mainly as a result of the use last
year of the previously unrecognized  tax losses from prior years.

Operating cash flow was £28  million (2006: £14 million),  reflecting
strong conversion of profit to cash and a beneficial timing impact of
drawing up the year end to 25 March 2007. Net capital expenditure  of
£6 million (2006: £7 million) reflected spend on new terminals,  ATMs
and infrastructure  assets and  the refurbishment  of the  operations
base. Net interest received was £1 million (2006: £1 million). Equity
dividends paid were £8 million (2006: £6 million).

Cash and cash equivalents were £24 million (including client cash  of
£7 million), down £5 million from £29 million (including client  cash
of £6 million) at 31 March 2006 following the net cash outflow of £20
million for  the acquisitions  of Metacharge  and SECPay  during  the
financial year.

Economic profit

PayPoint has made an economic  profit (operating profit less tax  and
capital charge) of £16 million (2006: £13 million). Operating profits
were £25million  (2006: £19  million),  up 31%,  tax was  £8  million
(2006: £3 million),  sharply increased  as a  result of  the low  tax
charge last year when the remaining tax losses from prior years  were
used, and  the capital  charge of  £1 million  (2006: £0.5  million),
increased as a result of the investment in Metacharge and SECPay, the
refurbishment of the operations base and the capital invested in  new
terminal sites and ATMs.

Dividend

We propose to  pay, on 22  June 2007,  a final dividend  of 9.1p  per
share to shareholders  on the  register on  25 May  2007, subject  to
approval of  the  shareholders  at the  annual  general  meeting.  An
interim dividend of 4.6p per share was paid on 21 December 2006.


PayPoint Internet Payment Services

Metacharge was acquired on 1 November 2006 for £8 million and  SECPay
for £12 million on 26 February 2007 to form PayPoint Internet Payment
Services  (PPIPS).  Both  companies  are  internet  payment   service
providers (PSP) which contract with small and medium size enterprises
to provide  a secure  payment service  for internet  shoppers.  PPIPS
earns revenue from transaction fees or monthly management fees.  Both
companies are Payment  Card Industry (PCI)  accredited for both  Visa
and MasterCard. PayPoint's  network of  agents will be  offered as  a
cash payment solution for online purchases, in addition to the  debit
and credit card  payments currently offered  by these companies,  and
the PSP  solution is  being offered  to some  of PayPoint's  existing
clients.

PayPoint is  combining  the  two businesses  creating  synergies  and
economies of scale. The first phase of this integration will  deliver
a single billing platform, a single extranet and both businesses will
share SECPay's  hosted  hardware  platforms. The  second  phase  will
permit Metacharge products to be delivered to SECPay's merchant  base
and vice versa, opening SECPay's electronic interfaces with its wider
acquiring bank base to Metacharge. This will enable the  introduction
of merchants by PPIPS to banks.


Pay Store SRL

Pay Store SRL was acquired  on 15 May 2007  for ¤16 million from  the
RTC group  with  potential  for  a  further  ¤1  million  payable  or
recoverable, on the  performance of  the business in  the first  year
after acquisition.    Pay Store  is  a mobile  top-up  provider,  the
largest independent  provider  in Romania,  selling  both  electronic
top-ups and scratch cards,  with over 6,000  retail agents, 4,000  of
which have electronic terminals  provided by Pay  Store. Some 97%  of
Romanians pay bills in cash and  are poorly served by a wide  variety
of payment methods. There  is no single  branded payment service.  We
plan to roll out a branded  bill payment service using the Pay  Store
infrastructure, PayPoint terminals, and processing from Welwyn Garden
City. Pay Store  is well placed  to benefit from  the migration  from
scratch cards to  electronic top-ups,  and to  capture a  significant
share of  the bill  payment market  as privatized  utilities look  to
rationalize current inefficient and costly cash collection channels.


Liquidity

The group has cash of £24  million and an unsecured loan facility  of
£35 million with  a remaining  term of  4 years.  Cash and  borrowing
capacity are adequate to meet the foreseeable needs of the group.


Financing and treasury policy

The policy requires a prudent  approach to the investment of  surplus
funds, external  financing,  settlement, foreign  exchange  risk  and
internal  control  structures.  The  policy  prohibits  the  use   of
financial derivatives and sets limits for gearing and dividend cover.


Charitable donations

During the  year  the group  made  charitable donations  of  £33,300.
including the sponsorship of MacMillan Cancer Relief of £25,000.  All
other payments were to charities serving the communities in which the
group operates.


Employees

We would like to take this opportunity to thank PayPoint's  employees
for their commitment, energy and enthusiasm in achieving the  targets
that underpin the delivery of these results.


Outlook

There is further potential to expand the business in the UK.   Whilst
previous growth in energy prepayment attributed to energy price rises
will not be sustained as  energy prices fall, bill payment  including
the full  year  impact  of  the  BBC  TV  licensing  contract  offers
substantial opportunities  for  increase  both  in  market  share  of
existing  business   and  through   new  initiatives.   The   planned
installation of a further 2,000  terminal sites will also bring  more
market share in  mobile top-up  volumes and other  transactions.   We
will continue to  roll out ATMs,  taking care to  match the  existing
high quality outlets comprising  our estate and  this is expected  to
build total ATM transaction  volumes.  Our acquisitions,  Metacharge,
SECPay and  more  recently  Pay  Store,  although  small,  are  sound
platforms for expansion in markets  which are increasing rapidly.  We
are confident of continuing  growth and trading  in the current  year
has started well.




David Newlands     Dominic Taylor
Chairman           Chief Executive


17 May 2007


Enquiries:


PayPoint plc                                   01707 600300


Dominic Taylor, Chief Executive
George Earle, Finance Director



Finsbury                                          020 7251 3801


Rollo Head
Don Hunter

A presentation  for  analysts  is  being held  at  11.30am  today  at
Finsbury, Tenter House, Moorfields, London EC2.

This  announcement  is  available   on  the  PayPoint  plc   website:
http//www.paypoint.com


[1] Net revenue is  revenue less commissions  paid to retail  agents,
the cost  of  mobile top-ups  where  PayPoint is  the  principal  and
external processing costs.
[2] Operating margin is operating profit expressed as a percentage of
net revenue.
[3] Net  revenue  and operating  margins[2]  are measures  which  the
directors  believe  assist  with   a  better  understanding  of   the
underlying performance  of  the  group.  The  reconciliation  of  net
revenue to statutory amounts can be found in note 2.
[4] BMRB Omnibus survey April 2007.
[5] 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.
[6] Net revenue is revenue less commissions paid to retail agents and
the cost of mobile top-ups where PayPoint is the principal.
[7] Operating  margins  are  calculated  as  operating  profit  as  a
percentage of net revenue[6].
[8] Operating  margins  are  calculated  as  operating  profit  as  a
percentage of net revenue[9]
[9]Net revenue is revenue less commissions paid to retail agents  and
the cost of mobile top-ups where PayPoint is the principal.


The full  report with  tables can  be downloaded  from the  following
link:



http://hugin.info/137093/R/1127447/209633.pdf

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http://hugin.info/137093/R/1127447/209633.pdf