PayPoint plc Half Year Financial Report

PayPoint plc Half year financial report for the six months ended 25 September 2011 HIGHLIGHTS   | 6 months 6 months | ended ended | 25 September 26 September Increase | 2011 2010 ----------------------------+---------------------------------------- Transaction value | £5,588m £4,831m 16 % | Revenue | £95.9m £92.9m 3% | Net revenue(1) | £41.9m £38.7m 8% | Gross margin | 37.5% 35.3% 2 ppts | Operating profit | £16.7m £15.3m 9% | Profit before tax | £15.8m £14.6m 9% | Diluted earnings per share | 16.7p 14.8p 13% | Interim dividend per share | 8.7p 7.8p 12% ----------------------------+---------------------------------------- * 292 million transactions processed in the period, up 9% * UK & Ireland transactions increased 5% with net revenue up 9% * Internet payment transactions have grown by 34% and net revenue by 4% * Romanian retail network moved into profit  bill payment transactions increased to over 8 million in the period (2010: 5 million) * PayByPhone increased transactions to over 8 million, up 23% with net revenue up by 18% * Collect+ has processed over 1 million transactions, an increase of nearly five times and has won two national awards for its innovative parcel delivery and returns service * Earnings per share increase helped by lower UK tax charge * 8.7p dividend per share, up 12% David Newlands, Chairman of PayPoint plc said: "Our retail network continues to perform well, processing 5% more transactions overall in the period, despite there being 5 million fewer mobile top-ups.  Internet payments contributed to overall growth in transactions of 8% in the established business (the UK and Ireland retail networks and internet payments).  Net revenue in the established business increased by 7%. Our developing business, consisting of our Romanian retail network, Collect+ parcel service and PayByPhone, also made good progress.  In Romania, we made a small profit following 69% growth in bill payments and since the period end, we have introduced Western Union money transfer.  Collect+, our award-winning parcels joint venture, has won 44 new merchants and processed nearly five times as many parcels as in the same period last year.   PayByPhone has been selected by 33 new clients in the period, with a substantial number of tender decisions still awaited. For the current financial year, trading is in line with the company's expectations.  Our established business is strong.  We will pursue further opportunities to enhance our retail yield by introducing new technology and services, while enhanced transaction management and information services should help our internet sales in the next financial year. Continuing progress is expected in our developing business. Our Romanian retail network will focus on improving market share and further modest network growth to improve yield.  PayByPhone will continue to pursue new clients and enhance its technology to grow revenue and improve customer satisfaction.  Collect+ will continue its intensive marketing to new clients, to extend deliveries to its existing returns clients and to promote its consumer-to-consumer proposition.  We expect PayByPhone and the Collect+ parcel service to turn to profit in the next financial year. I am pleased to announce an interim dividend of 8.7pence per share." The condensed financial statements cover the six months from 28 March 2011 to 25 September 2011, the last Sunday in the month (2010: 6 months covering the period 29 March 2010 to 26 September 2010). 1. 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.  Net revenue is a measure, which the directors believe assists with a better understanding of the underlying performance of the group. Management report The management report has been prepared solely to provide additional information to shareholders as a body to assess PayPoint's half year performance and it should not be relied upon for any other purpose.  It contains forward looking statements made by the directors in good faith, based on the information available at the time of approval of the half yearly financial report.  Such statements should be treated with caution due to the inherent uncertainties underlying any such forecast, including both economic and business risk factors. PayPoint is a payment service provider to retailers and consumer service companies and as such, has only one operating segment.  However, reflection on various facets helps to explain the execution of our strategy as set out on page 3 of our annual report and accordingly, in addition to the analysis of the number and value of consumer transactions, revenue and net revenue, we have shown an analysis which separates our developing business (our retail network in Romania, Collect+ and PayByPhone), from our established business (the UK and Irish retail networks and internet payments). The channel analysis is as follows: Retail networks: Bill and general (prepaid energy, bills, tickets and cash out payments) Top-ups (mobile, prepaid cards and phone cards) Retail services (ATM, debit/credit, parcels, money transfer, SIMs and receipt advertising) Internet (transactions between consumers and merchants, pre-authorisations and FraudGuard, where separately charged) PayByPhone (parking and bicycle rental transactions) Other for revenue and net revenue only (software development and configuration) Operational review During the period, transactions have increased to 292 million (2010: 267 million) up 8% in the established business(1) and 37% in the developing business(2). Transaction value increased to £5.6 billion (2010: £4.8 billion), and is up 14% in the established business and up 78% in the developing business. Revenue has increased 3% overall, comprising 1% in the established business and 16% in the developing business.  Net revenue(3) increased by 8% overall.  In the established business, net revenue increased by 7% and in the developing business (including Collect+), by 52%. Operating profit in the established business was £17.8 million, up 9% on last year.  The operating loss in the developing business, including our share of the losses of Collect+, was £2.0 million (2010: £1.5 million). The Romanian retail network made a small profit in the period (2010: loss of £0.3m).     | | | Established Developing   Adjust As | business(1) business(2) Total Collect+(4) reported ----------------+--------------------------------------------------------------- Transactions    |      (million) | | 6 months 2011| 273 19 292 - 292 | 6 months 2010| 253 14 267 - 267 | Year ended 2011| 559 31 590 - 590 ----------------+--------------------------------------------------------------- Transaction | value  £million | | 6 months 2011| 5,395 193 5,588 - 5,588 | 6 months 2010| 4,723 108 4,831 - 4,831 | Year ended 2011| 10,316 285 10,601 - 10,601 ----------------+--------------------------------------------------------------- Revenue         |          £000 | | 6 months 2011| 81,365 15,939 97,304 (1,381) 95,923 | 6 months 2010| 80,337 12,835 93,172 (274) 92,898 | Year ended 2011 | 167,700 26,535 194,235 (1,002) 193,233 ----------------+--------------------------------------------------------------- Net revenue(3)  |         £000 | | 6 months 2011| 38,544 4,521 43,065 (1,135) 41,930 | 6 months 2010| 35,977 2,973 38,950 (222) 38,728 | Year ended 2011| 76,811 6,539 83,350 (627) 82,723 In the established business, following our tender success announced in March 2011, the UK retail network duly signed a contract with Citibank to be the retail network for the DWP's replacement for giro-cheques.  The service is expected to go live next financial year and is unlikely to affect the current financial year's profit to any material extent.  The internet channel growth was constrained by the impact of one large merchant changing its business model.  We have re-started processing for this merchant since the period end. In the developing business, our Romanian retail network has turned from loss to a small profit in the first half of the year and will introduce money transfer with Western Union in the second half.  PayByPhone has made substantial progress, winning 33 new clients, including London Borough of Lambeth, Ottawa in Canada and Coral Gables in Florida, USA.  PayByPhone parking is due to go live in San Francisco across 22,000 spaces this year. Cash payments for parking have been introduced in Barnet and Islington.  Collect+ has extended its consumer proposition by introducing two resellers, Parcel2Go and myParcelDelivery and has also won 44 new merchants for returns, including JD Sports, Monsoon and Accessorize, Asda Direct, Argos Outlet, Aurora (Karen Millen and Oasis) and Wiggle.  Collect+ has been recognised with prestigious industry awards for logistics and innovation. Since the period end, Collect+ has started processing deliveries for on-line clothing retailer, M and M Direct. 1. The established business includes the UK and Irish retail networks and internet payments. 2. The developing business includes the Romanian retail network, Collect+ and PayByPhone. 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.  Net revenue is a measure, which the directors believe assists with a better understanding of the underlying performance of the group. 4. Collect+  revenue and net revenue is included in the developing business revenue and net revenue, but as Collect+ is reported in the Consolidated Income Statement on a profit after tax only basis, revenue and net revenue needs to be eliminated to reconcile to reported revenue and net revenue. Analysis of transactions There has been growth in transaction volumes across all payments types except UK and Ireland mobile top-ups, which have decreased as a result of market decline.   | 6 months 6 months   Year   | ended ended   ended   |25 September 26 September Increase / 27 March | 2011  2010 (decrease) 2011 | thousands thousands % thousands ----------------------------+---------------------------------------------- Retail networks | |    Bill and general payments| 165,419 152,286 9 350,970 |    Top-ups | 55,496 60,597 (8) 117,670 |    Retail services | 29,108 22,658 28 48,425 | Internet payments | 33,914 25,326 34 58,544 | | PayByPhone | 8,068 6,557 23 14,059 ----------------------------+---------------------------------------------- Total | 292,005 267,424 9 589,668 ----------------------------+---------------------------------------------- Bill and general payment transactions were ahead of the same period last year as a result of an 11% increase in prepaid energy volumes.  There was strong growth in Romania, where we processed over 8 million transactions (2010: 5 million). In the UK and Ireland, mobile top-up volumes were down 9%. In Romania, mobile top-up volumes increased 8% although the net revenue per transaction fell. E- currency volumes in the UK continue to grow and were up 9% on the same period last year, with over 3 million transactions processed. Retail services volumes have increased across most products. ATM transactions increased by 14%, credit and debit transactions by 29%, SIM card sales by 56% and parcels by five times over the same period last year. Internet transactions were up 34% to 34 million as we continue to add large merchants and through organic growth in our existing merchants. PayByPhone transactions have increased 23% as we have started to implement PayByPhone in new parking authorities and some existing authorities have removed other payment options. Transaction value There has been growth in the transaction value paid by consumers, primarily in bill and general, and internet payments.   | 6 months 6 months   Year | ended  ended   ended | 25 September 26 September Increase / 27 March |  2011 2010  (decrease)  2011 | £000 £000             % £000 ---------------------+---------------------------------------------------------- Retail networks | |    Bill and general | 3,005,334 2,759,418 9 6,198,171 |    Top-ups | 549,448 573,689 (4) 1,114,809 | |    Retail services | 211,005 194,174 9 394,727 | Internet payments | 1,790,612 1,277,867 40 2,838,147 | PayByPhone | 31,916 26,252 22 55,020 ---------------------+---------------------------------------------------------- Transaction value | 5,588,315 4,831,400 16 10,600,874 ---------------------+---------------------------------------------------------- The increase in bill and general transaction value results from higher transaction volumes with broadly similar average values. The reduction in top-up transaction value is primarily as a result of a decline in the prepay mobile market, partially offset by increases in the average transaction values in the UK and Ireland and an increase in e-currency transactions. The increase in retail services is accounted for by ATM cash withdrawals. The transaction value in other retail services is relatively small as SIM sales are low value transactions and for credit and debit card transactions (where merchants are settled by the card sponsor, not PayPoint), receipt advertising and parcels, there is no transaction value. Internet consumer spending has increased by 40% over the same period last year and the average transaction value has increased 5% to £52.80 (2010: £50.46). PayByPhone transaction values have increased by 22%.  The average value of a transaction has remained broadly the same. Revenue   | 6 months 6 months   Year | ended ended    ended | 25 September 26 September Increase / 27 March | 2011 2010  (Decrease)   2011 | £000 £000              % £000 ---------------------+--------------------------------------------------------- Retail networks | |    Bill and general | 28,032 25,429 10 57,889 | | |    Top-ups | 47,066 50,177 (6) 98,843 |    Retail services | 11,693 9,437 24 19,602 | Internet payments | 4,372 4,190 4 8,939 | PayByPhone | 2,560 2,183 17 4,501 | Other | 2,200 1,482 48 3,459 ---------------------+--------------------------------------------------------- Revenue | 95,923 92,898 3 193,233 ---------------------+--------------------------------------------------------- Bill and general payment revenue is higher than the same period last year mainly as a result of growth in prepaid energy and local authority housing transactions in the UK and 70% growth in Romanian bill payment transactions. The reduction in mobile top-up revenue is driven by the migration of prepaid consumers to contract in the UK and greater value for money offered by mobile operators. Retail services revenue has increased as a result of an increase in both the number of retailers taking the services and increased volumes of SIM, parcel, debit and credit card, and ATM transactions. Internet payment revenue growth has been explained on page 3. PayByPhone revenues are up 17% against the same period last year. Although PayByPhone has won a good share of tenders as a consequence of the increased resources we have put in, client delays in implementations have delayed revenue growth into the second half of the year. Other revenue includes one-off set-up fees and the recharge of development costs, but is not expected to continue at the same rate for the second half of the current year. Net revenue 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 for PayByPhone clients, costs for the provision of call centres.  Net revenue is a measure which the directors believe assists with a better understanding of the underlying performance of the group and is shown in the table below:   | 6 months 6 months   Year | ended ended    ended | 25 September 26 September Increase / 27 March | 2011 2010 (decrease) 2011 | £000 £000 % £000 ---------------------+----------------------------------------------------- Retail networks | |    Bill and general | 16,179 14,892 9 33,806 |    Top-ups | 10,747 11,539 (7) 22,683 |    Retail services | 6,671 5,137 30 10,827 | Internet payments | 4,372 4,190 4 8,939 | PayByPhone | 1,761 1,488 18 3,009 | Other | 2,200 1,482 48 3,459 ---------------------+----------------------------------------------------- Net revenue | 41,930 38,728 8 82,723 ---------------------+----------------------------------------------------- Net revenue on bill and general payments has increased from volume growth in energy prepayment and local authority housing in the UK and bill payment in Romania, offset by some UK clients migrating bill payments to direct debit. Net revenue is in line with transaction growth. Top-up net revenue has decreased slightly more than revenue because margins in Romania and Ireland have reduced, offset by the positive impact of mix in the UK where the reduction in top-ups in independents is less severe than in multiple retailers. Retail services net revenue has a larger percentage increase than revenue, as credit and debit card transactions and receipt advertising do not attract retail agent commission. Growth in net revenue from internet transactions has been explained on page 3. PayByPhone net revenue was up 18%, lower than the growth in transactions as margin in the UK has reduced. Network growth Outlets have increased to 30,545 (March 2011: 29,508), an increase of 1,037. In the UK and Ireland, outlets increased by 649, more than expected, as a consequence of unfulfilled orders at last year end and lower churn.  Our new virtual terminal, a software variant which can be loaded onto retailers' till systems, has been rolled out to 1,400 outlets. Our focus in the UK since the year end remains on increasing retail agent yield.  In Romania, we have installed 388 outlets. In our internet payments channel, we have added over 250 new merchants during the period, focussing on winning higher volume merchants, rather than start-ups that process little volume. We introduced Collect+ to 584 of our retail outlets, bringing the total to 4,252.   | | At At Increase / At | 25 September 26 September (decrease)(1) 27 March | 2011 2010 % 2011 --------------------+-------------------------------------------------------- UK and Ireland | 24,162 23,021 3 23,513 | Romania | 6,383 5,012 6 5,995 --------------------+-------------------------------------------------------- Total | 30,545 28,033 4 29,508 --------------------+-------------------------------------------------------- Internet merchants | 5,464 5,522 5 5,213 | Collect+ outlets | 4,252 3,350 16 3,668 --------------------+-------------------------------------------------------- ((1)) Increase/(decrease) measured against position at 27 March 2011 Financial review Movement in revenue and net revenue have been addressed in the operational review above. Gross profit was £36.0 million (2010: £32.8 million), up 9.7% and the gross profit margin improved to 37.5% (2010: 35.3%) as a result of the reduction in agent commission, due to lower mobile top-ups. Operating costs (administrative expenses) were £19.3 million (2010: £17.5 million), up 10.3%, due to some initial costs relating our new benefits contract, signage for Collect+ sites and our continuing investment in increased resources for PayByPhone. Operating profit was £16.7 million (2010: £15.3 million), up 9.0%, excluding PayPoint's share of losses in Collect+.  The operating margin(1) increased slightly to 39.8% (2010: 39.5%), mainly as result of improved performance in the UK retail network. Our share, in the period, of the loss in our parcels joint venture, Collect+, increased to £0.9 million (2010: £0.7 million) as it continues to invest in resources to grow the business. Profit before tax was £15.8 million (2010: £14.6 million), up 8.7% on the same period last year.  The tax charge was £4.5 million (2010: £4.5 million) and the estimated effective tax rate for the current financial year is 28.5% (year ended 27 March 2011: 30.9%). The reduction in tax rates reflects the decrease in the UK corporate tax rate. Operating cash flow was £8.1 million (2010: £9.4 million) after corporation tax payments of £5.3 million (2010: £5.9 million).  Capital expenditure of £1.7 million (2010: £1.1 million) comprised expenditure on new terminals, software development and ATMs.  Collect+ funding was £0.8m (2010: £0.4 million). Equity dividends paid were £10.6 million (2010: £9.8 million). Net cash and cash equivalents at the period end were £21.5 million (27 March 2011 £26.5 million), including client cash of £3.0 million, down from £6.1 million at 27 March 2011. The reduction in client cash results from a change in practice in respect of ATM monies, which LINK recommended be held in trust for the benefit of retailers, which at the period end were £3.1 million (27 March 2011 £3.3 million). (1)        Operating margin is operating profit (which excludes Collect+) as a percentage of net revenue. Related party transactions Related party transactions are disclosed in note 5. Risks Risks to PayPoint's business, financial condition and operations are disclosed on pages 22 and 23. Dividend We have declared an interim dividend of 8.7p per share (2010: 7.8p) which will be paid on 21 December 2011 to shareholders on the register at 2 December 2011. Liquidity and going concern The group is profitable, cash generative, had cash of £21.5 million at the period end and an undrawn £35 million revolving term credit facility with an unexpired term of over four years.  Cash and borrowing capacity is adequate to meet the foreseeable needs of the group, taking account of any risks (pages 22 and 23).  The financial statements have therefore been prepared on a going concern basis. Economic climate Bill and general payments which account for 39% (2010: 38%) of our net revenue, have continued to be resilient, as consumers' discretion in expenditure is limited for essential services and our service continues to be popular.  Utility providers in the UK continue to install new prepay gas and electricity meters, which will have a beneficial impact on our transaction volumes.    There has been adverse impact on our top-up volumes as a consequence of migration from prepaid to contract and more value for money being offered to consumers. Mobile top-ups account for 23% of our net revenue (2010: 27%).  The internet payment market continues to grow substantially.  PayByPhone is able to offer parking authorities a more cost effective collection system for parking compared to pay and display machines, which should continue to make PayByPhone's services attractive. The convenient service for users of the fast growing online market provided by Collect+ offers opportunity for substantial growth in parcel volumes. Outlook For the current financial year, trading is in line with the company's expectations.  Our established business is strong.  We will pursue further opportunities to enhance UK retail yield by introducing new technology and services, while enhanced transaction management and information services should help our internet sales in the next financial year.  Continuing progress is expected in our developing business. Our Romanian retail network will focus on improving market share with modest network growth to improve yield.  PayByPhone will continue to pursue new clients and the development of technology to grow revenue and improve customer satisfaction.  Collect+ will continue its intensive marketing to new clients, to extend deliveries to its existing returns clients and promote its consumer to consumer proposition.  We expect PayByPhone and the Collect+ parcel service to turn to profit next financial year. David Newlands   Dominic Taylor Chairman Chief Executive 24 November 2011 CONDENSED CONSOLIDATED INCOME STATEMENT     Unaudited Unaudited Audited     6 months 6 months Year     ended ended ended     25 September 26 September 27 March     2011 2010 2011 Continuing operations Note £000 £000 £000 ----------------------------------------------------------------------- Revenue 2 95,923 92,898 193,233 Cost of sales 2 (59,913) (60,079) (122,567) ----------------------------------------------------------------------- Gross profit   36,010 32,819 70,666 Administrative expenses   (19,316) (17,510) (34,614) ----------------------------------------------------------------------- Operating profit   16,694 15,309 36,502 Share of loss of joint venture   (935) (726) (1,541) Investment income   87 38 88 Finance costs   (23) (64) (143) ----------------------------------------------------------------------- Profit before tax   15,823 14,557 34,456 Tax 3 (4,510) (4,496) (10,614) ----------------------------------------------------------------------- Profit for the period   11,313 10,061 23,842 ----------------------------------------------------------------------- Attributable to: Equity holders of the parent   11,329 10,061 23,883 Non-controlling interest   (16) - (41) -----------------------------------------------------------------------     11,313 10,061 23,842 ----------------------------------------------------------------------- Earnings per share ----------------------------------------------------------------------- Basic 4 16.7p 14.9p 35.2p ----------------------------------------------------------------------- Diluted 4 16.7p 14.8p 35.1p ----------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME     Unaudited Unaudited Audited     6 months 6 months Year     ended ended ended     25 September 26 September 27 March     2011 2010 2011   Note £000 £000 £000 Exchange differences on translation of foreign operations 8 655 (837) (72) -------------------------------------------------------------------------------- Other comprehensive income / (loss) for the period 655 (837) (72) Profit for the period   11,313 10,061 23,842 -------------------------------------------------------------------------------- Total comprehensive income for the   11,968 9,224 23,770 period -------------------------------------------------------------------------------- Attributable to: -------------------------------------------------------------------------------- Equity holders of the parent   11,984 9,224 23,811 Non-controlling interest   (16) - (41) --------------------------------------------------------------------------------     11,968 9,224 23,770 -------------------------------------------------------------------------------- CONDENSED CONSOLIDATED BALANCE SHEET     Unaudited Unaudited Audited     25 September 26 September 27 March     2011 2010 2011   Note £000 £000 £000 -------------------------------------------------------------------------------- Non-current assets Goodwill   56,744 56,058 57,133 Other intangible assets   1,344 1,277 1,329 Property, plant and equipment   14,566 13,851 14,520 Investment in joint venture   - - 135 Deferred tax asset   1,079 904 1,116 Investment   435 405 435 --------------------------------------------------------------------------------   2 74,168 72,495 74,668 -------------------------------------------------------------------------------- Current assets Inventories   1,412 1,582 915 Trade and other receivables   19,006 18,470 17,103 Cash and cash equivalents 7 21,511 22,928 26,464 --------------------------------------------------------------------------------     41,929 42,980 44,482 -------------------------------------------------------------------------------- Total assets   116,097 115,475 119,150 -------------------------------------------------------------------------------- Current liabilities Trade and other payables   28,834 30,563 32,996 Current tax liabilities   4,491 3,930 5,287 Short-term borrowings   - 10,000 - Obligations under finance leases   9 11 32 --------------------------------------------------------------------------------     33,334 44,504 38,315 -------------------------------------------------------------------------------- Non-current liabilities Other liabilities   225 175 240 --------------------------------------------------------------------------------     225 175 240 -------------------------------------------------------------------------------- Total liabilities   33,559 44,679 38,555 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net assets   82,538 70,796 80,595 -------------------------------------------------------------------------------- Equity Share capital 8 226 226 226 Investment in own shares 8 (216) (216) (216) Share premium 8 25 25 25 Share based payment reserve 8 2,566 2,476 3,005 Translation reserve 8 1,126 (294) 471 Retained earnings 8 78,868 68,579 77,125 -------------------------------------------------------------------------------- Total equity attributable to equity   82,595 70,796 80,636 holders of the parent company -------------------------------------------------------------------------------- Non-controlling interest   (57)  - (41) -------------------------------------------------------------------------------- Total equity   82,538 70,796 80,595 -------------------------------------------------------------------------------- Condensed Consolidated statement of changes in equity     Unaudited Unaudited Audited     6 months 6 months Year     ended ended ended   Note 25 September 26 September 27 March   2011 2010 2011   £000 £000 £000 -------------------------------------------------------------------------------- Opening equity   80,595 70,744 70,744 Profit for the period   11,313 10,061 23,842 Dividends paid   (10,565) (9,765) (15,041) Movement in own shares 5 - 154 154 Exchange differences on translation of foreign operations 655 (837) (72) Movement in share based payment reserve (439) (208) 321 Adjustment on share schemes vesting   979 647 647 -------------------------------------------------------------------------------- Closing equity   82,538 70,796 80,595 -------------------------------------------------------------------------------- CONDENSED CONSOLIDATED CASH FLOW STATEMENT     Unaudited Unaudited Audited     6 months 6 months Year     ended ended ended   Note 25 September 26 September 27 March 2011 2010 2011 £000 £000 £000 -------------------------------------------------------------------------------- Net cash flow from operating activities 9 8,098 9,444 31,137 -------------------------------------------------------------------------------- Investing activities Investment income   69 30 70 Purchase of property, plant and equipment (1,670) (1,051) (3,160) Proceeds from disposal of property, plant and equipment 23 - 61 Investment   - - (30) Loan to joint venture 5 (800) (400) (1,350) -------------------------------------------------------------------------------- Net cash used in investing activities   (2,378) (1,421) (4,409) -------------------------------------------------------------------------------- Financing activities Repayments of obligations under  finance leases (23) (3) (22) Receipt / (repayment) of short-term   - 4,000 (6,000) borrowings Dividends paid   (10,565) (9,765) (15,041) -------------------------------------------------------------------------------- Net cash used in financing activities   (10,588) (5,768) (21,063) -------------------------------------------------------------------------------- Net  (decrease)/increase in cash and cash equivalents (4,868) 2,255 5,665 Cash and cash equivalents at beginning of period 26,464 20,769 20,769 Effect of foreign exchange rate changes   (85) (96) 30 -------------------------------------------------------------------------------- Cash and cash equivalents at end of period 21,511 22,928 26,464 -------------------------------------------------------------------------------- NOTES TO CONDENSED FINANCIAL STATEMENTS 1. Accounting policies These condensed financial statements have been prepared in accordance with IAS 34 as adopted by the European Union on an historical cost basis and the same accounting policies, presentation methods and methods of computation are followed in this condensed set of financial statements as applied in the group's latest annual audited financial statements. Basis of preparation The condensed financial statements contained in this report are unaudited, but have been formally reviewed by the auditors and their report to the company is set out on page 24.  The information shown for the year ended 27 March 2011, which is prepared under International Financial Reporting Standards (IFRS), does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.  The report of the auditors on the statutory accounts for the year ended 27 March 2011, prepared under IFRS, was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under sections 498 (2) or (3) of the Companies Act 2006 and has been filed with the Registrar of Companies. The directors are satisfied that the group has adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report.  The group's liquidity and going concern review can be found in the Management Report on page 9. 2. Segmental reporting, net revenue analysis and cost of sales (i)   Segmental information PayPoint is a service provider for consumer payment transactions (payments and receipts) through various distribution channels, involving the processing of high volume transactions, the management of retail agents, clients and online merchants, the settlement of funds (collection and transmission) and transmission of data in secure environments, by the application of technology. The application of technology is directed on a group basis from the group's executive team (consisting of the Chief Executive Officer, Finance Director, Business Development Director and Chief Information Officer) to develop products across the business, prioritised on an economic value basis (generally by product), rather than on a subsidiary by subsidiary basis.  As the business has high fixed operating costs, the company regards the analysis of net revenue as the most reliable indication of contribution on a product by product basis and analysis of net revenue is shown in the Management Report. Whilst the group has a number of different products, these do not meet the definition of different segments under IFRS 8 and, therefore, the group has only one reportable class of business, being a payment service provider for consumer payment transactions. (ii) Reconciliation of revenue to net revenue, analysis of cost of sales Revenue comprises the value of sales (excluding VAT and sales taxes) of products and services in the normal course of business. 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 cost for the provision of call centres to PayByPhone clients. Net revenue   6 months 6 months Year ended ended ended 25 September 26 September 27 March 2011 2010 2011 £000 £000 £000 -------------------------------------------------------------------------------- Revenue - transaction processing 95,240 92,135 191,742                - rental income of ATMs 683 763 1,491 -------------------------------------------------------------------------------- Revenue 95,923 92,898 193,233 less: Commission payable to retail agents (33,120) (34,579) (71,322) Cost of mobile top-ups and SIM cards as principal (20,076) (18,896) (37,696) Card scheme sponsors' charges and call centre charges (797) (695) (1,492) -------------------------------------------------------------------------------- Net revenue 41,930 38,728 82,723 -------------------------------------------------------------------------------- Cost of sales   6 months 6 months Year   ended ended ended 25 September 26 September 27 March 2011 2010 2011 £000 £000 £000 -------------------------------------------------------------------------------- Cost of sales Commission payable to retail agents 33,120 34,579 71,322 Cost of mobile top-ups and SIM cards as principal   20,076 18,896 37,696 Card scheme sponsors' charges and call centre charges 797 695 1,492 Depreciation and amortisation 1,652 1,912 3,612 Other 4,268 3,997 8,445 -------------------------------------------------------------------------------- Total cost of sales 59,913 60,079 122,567 -------------------------------------------------------------------------------- Geographical information:   6 months 6 months Year ended ended ended 25 September 26 September 27 March 2011 2010 2011 £000 £000 £000 ------------------------------------------------------------- Revenue UK 72,136 71,675 148,737 Ireland 11,006 11,204 22,475 Romania 11,998 9,559 21,036 North America 783 460 985 ------------------------------------------------------------- Total 95,923 92,898 193,233 ------------------------------------------------------------- Non-current assets UK 71,642 70,486 71,850 Ireland - 44 - Romania 2,108 1,711 2,329 North America 418 254 489 ------------------------------------------------------------- Total 74,168 72,495 74,668 ------------------------------------------------------------- 3. Tax on profit of ordinary activities   6 months 6 months Year   ended ended ended   25 September 26 September 27 March   2011 2010 2011 £000 £000 £000 ------------------------------------------------------- Current tax 4,473 4,233 10,565 Deferred tax 49   37 263 ------------------------------------------------------- Total 4,510 4,496 10,614 ------------------------------------------------------- 4.  Earnings per share The basic and diluted earnings per share are calculated on the following profit and number of shares.   6 months 6 months Year   ended ended ended   25 September 26 September 27 March   2011 2010 2011 £000 £000 £000 -------------------------------------------------------------------------------- Profit for the period attributable to equity holders of the parent 11,329 10,061 23,883 --------------------------------------------------------------------------------   Number of Number of Number of shares shares shares -------------------------------------------------------------------------------- Weighted average number of shares (for basic earnings per share) 67,772,332 67,675,017 67,721,190 Potential dilutive ordinary shares: Deferred share bonus 157,996 117,565 157,914 -------------------------------------------------------------------------------- Diluted basis 67,930,328 67,792,582 67,879,104 -------------------------------------------------------------------------------- Earnings per share -------------------------------------------- Basic 16.7p 14.9p 35.2p -------------------------------------------- Diluted 16.7p 14.8p 35.1p -------------------------------------------------------------------------------- 5. Related party transactions PayByPhone During the period, the company subscribed for additional share capital in Verrus Mobile Technology Inc for £1,756,000 and Verrus UK Limited has subscribed for additional share capital in Mobile Payment Services SAS for £133,000. Collect+ During the period, PayPoint has lent Drop and Collect Limited (its 50/50 joint venture with Yodel, which trades as Collect+) £800,000, bringing the total amount of the loan outstanding to £3,900,000 (27 March 2011: £3,100,000).  This has been treated as part of the investment in the joint venture. At 25 September 2011, there were £28,000 of unrecognised losses in Collect+ (27 March 2011: £Nil). Investment in OB10 OB10 specialises in electronic invoicing.  PayPoint's shareholding at 25 September 2011 represented 1.02% of the issued capital of OB10 (27 March 2011: 1.02%).   6 months 6 months Year   ended ended ended   25 September 26 September 27 March   2011 2010 2011 £000 £000 £000 ------------------------------------------------------------- Investment at cost 435 405 435 ------------------------------------------------------------- In the view of the directors, the aggregate cost of £435,000 represents the fair value of the investment in the shares. David Newlands, who is also Chairman of OB10, Dominic Taylor, George Earle, Eric Anstee and Nick Wiles hold shareholdings in OB10 as follows:   6 months 6 months Year   ended ended ended Directors' shareholding in OB10 25 September 26 September 27 March   2011 2010 2011 % % % -------------------------------------------------------------------------- David Newlands 2.87 4.73 2.87 Dominic Taylor 1.44 1.42 1.44 George Earle 0.40 0.42 0.4 Nick Wiles 1.02 1.04 1.02 Eric Anstee 0.08 0.08 0.08 Share based payments During the period, the Deferred Share Bonus plan (DSB) and long term incentive plan (LTIP) did not vest and, as a result, no treasury shares were released to the relevant executive directors and senior managers. 6. Dividend The interim dividend of 8.7p (2010: 7.8p) was declared on 24 November 2011 and, accordingly, has not been recorded as a liability as at 25 September 2011.  The total dividend in respect of the year ended 27 March 2011 was 23.4p per share. 7. Cash and cash equivalents Included within cash and cash equivalents is £3.0 million (25 September 2010: £6.7 million, 27 March 2011: £6.1 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. The decrease in client cash results from of a change in the practice in respect of ATM monies, where LINK recommended that monies owed to retailers be held in trust accounts. Accordingly, the balance held in trade creditors has decreased by the same amount. At 25 September, amounts held in trust, owed to retailers in respect of ATM monies amounted to £3.1 million (held by PayPoint, not in trust at 27 March 2011: £3.3 million). The group operates cash pooling amongst its various bank accounts in the UK and, therefore, individual accounts can be overdrawn without penalties being incurred so long as the overall position is in credit. At 25 September 2011, the group's cash was £21.5 million (27 March 2011: £26.5 million). 8. Share capital and reserves   6 months 6 months Year   ended ended ended   25 September 26 September 27 March 2011 2010 2011 £000 £000 £000 -------------------------------------------------------------------------------- Authorised share capital 4,365,352,200 ordinary shares of 1/3p each 14,551 14,551 14,551 -------------------------------------------------------------------------------- Called up, allotted and fully paid share capital 67,806,973 ordinary shares of 1/3p each 226 226 226 -------------------------------------------------------------------------------- Investment in own shares At start of period (216) (370) (370) Used on share scheme vesting   - 154 154 -------------------------------------------------------------------------------- At end of period (216) (216) (216) -------------------------------------------------------------------------------- Share premium At start of period 25 25 25 -------------------------------------------------------------------------------- At end of period 25 25 25 -------------------------------------------------------------------------------- Share based payment reserve At start of period 3,005 2,684 2,684 Additions in period 540 558 1,088 Released in period (979) (801) (801) Other adjustments - 35 34 -------------------------------------------------------------------------------- At end of period 2,566 2,476 3,005 -------------------------------------------------------------------------------- Translation reserve At start of period 471 543 543 Movement in the period 655 (837) (72) -------------------------------------------------------------------------------- At end of period 1,126 (294) 471 -------------------------------------------------------------------------------- Retained earnings At start of period 77,125 67,636 67,636 Profit for the period 11,313 10,061 23,842 Non-controlling interest  in loss for year included in above 16 - 41 Dividends paid (10,565) (9,765) (15,041) Adjustment on share scheme vesting 979 647 647 -------------------------------------------------------------------------------- At end of period 78,868 68,579 77,125 -------------------------------------------------------------------------------- 9. Notes to the cash flow statement   6 months 6 months Year   ended ended ended   25 September 26 September 27 March 2011 2010 2011 £000 £000 £000 -------------------------------------------------------------------------------- Profit before tax 15,823 14,557 34,456 Adjustments for items that do not affect cash: Depreciation on property, plant and equipment 1,494 1,753 3,295 Amortisation of intangible assets 158 159 317 Share of losses in joint venture 935 726 1,541 Net interest (income) / expense (64) 26 55 Share based payment expense 540 593 1,088 -------------------------------------------------------------------------------- Operating cash flows before movements in working capital 18,886 17,814 40,752 -------------------------------------------------------------------------------- Increase in inventories (497) (15) 209 (Increase) / decrease in receivables (1,706) 4,732 6,337 (Decrease) / increase in payables - client cash (3,128) 224 (686) - other payables (152) (7,389) (4,476) -------------------------------------------------------------------------------- Cash generated by operations 13,403 15,366 42,136 Corporation tax paid (5,289) (5,886) (10,950) Interest and bank charges paid (16) (36) (49) -------------------------------------------------------------------------------- Net cash from operating activities 8,098 9,444 31,137 -------------------------------------------------------------------------------- RESPONSIBILITY STATEMENT We confirm that to the best of our knowledge: a. the condensed set of financial statements which has been prepared in accordance with IAS 34 Interim Financial Reporting gives a true and fair view of the assets, liabilities, financial position and profit of the group as required by DTR 4.2.4R; b. the half yearly financial report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first 24 weeks and description of principal risks and uncertainties for the remaining 28 weeks of the year); and c. the half yearly financial report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein). By order of the board. David Newlands   Dominic Taylor Chairman Chief Executive 24 November 2011 RISKS PayPoint's business, financial condition or operations could be materially and adversely affected by the risks summarised below. Although management takes steps to mitigate risks where possible or where the cost of doing so is reasonable in relation to the probability and seriousness of the risk, it may not be possible to avoid the crystallisation of some or all of such risks. Risk area Potential impact Mitigation strategies -------------------------------------------------------------------------------- Loss or inappropriate The group's business The group has established usage of data requires the appropriate rigorous information   and secure use of consumer security policies, and other sensitive standards, procedures, and information. Mobile recruitment and training telephone and internet- schemes, which are embedded based electronic commerce throughout its business requires the secure operations. The group also transmission of screens new employees confidential information carefully. Continued over public networks, and investments are made in IT several of our products security infrastructure, are accessed through the including the significant internet. Security use of data and breaches in connection communications encryption with maintaining data and technology. the delivery of our products and services could harm our reputation, business and operating results. -------------------------------------------------------------------------------- Dependence upon third The group's business model The group selects and parties to provide data is dependent upon third negotiates agreements with and certain operational parties to provide strategic suppliers based services operational services, the on criteria such as loss of which could delivery assurance and significantly impact the reliability.  Single points quality of our services. of failure are avoided, Similarly, if one of our where practicable and outsource providers, economically feasible. including third parties with whom we have strategic relationships, were to experience financial or operational difficulties, their services to us would suffer or they may no longer be able to provide services to us at all, significantly impacting delivery of our products or services. -------------------------------------------------------------------------------- Exposure to legislation The group is largely The group's legal or regulatory reforms and unregulated by financial department works closely risk of non-compliance services regulators. The with senior management to group's agents which offer adopt strategies to educate money transfer are lawmakers, regulators, licensed as Money Service consumer and privacy Businesses by HMRC. Our advocates, and other internet and mobile phone stakeholders to support the distribution channels are public policy debate, where subject to Payment Card appropriate, to ensure Industry Data Security regulation does not have Standards regulated by the unintended consequences card schemes. Regulatory over the group's services. reform could increase the The group has in place a cost of the group's business ethics policy operations or deny access which requires compliance to certain territories in with local legislation in the provision of certain all the territories in services.  Non-compliance which the group operates. with law, regulation,  A central compliance privacy or information department co-ordinates all security laws could have compliance monitoring and serious implications in reporting. Managing and cost and reputational finance directors are damage to the group. required to sign annual compliance statements. -------------------------------------------------------------------------------- Interruptions in business The group's ability to Comprehensive business processes or systems provide reliable services continuity plans and largely depends on the incident management efficient and programmes are maintained uninterrupted operation of to minimise business and our computer network operational disruptions, systems, data and call including pandemic centres, as well as incidents. The group maintaining sufficient maintains full duplication staffing levels. System or of all information network interruptions, or contained in databases and the unavailability of key runs back-up data centres. staff or management Support arrangements have resulting from a pandemic been established with third outbreak, could delay and party vendors and there are disrupt our ability to strict standards, develop, deliver or procedures and training maintain our products and schemes for business services, causing harm to continuity. our business and reputation and resulting in loss of customers or revenue. -------------------------------------------------------------------------------- Dependence on recruitment The ability of the group Effective recruitment and retention of highly to meet the demands of the programmes are ongoing skilled personnel market and compete across all business areas, effectively is, to a large as well as personal and extent, dependent on the career development skills, experience and initiatives. The executive performance of its management reviews talent personnel. Demand is high potential at quarterly for individuals with meetings. Compensation and appropriate knowledge and benefits programmes are experience in payments, IT competitive and also and support services. The reviewed regularly. inability to attract, motivate or retain key talent could have a serious consequence on the group's ability to service client commitments and grow our business. Risk area Potential impact Mitigation strategies -------------------------------------------------------------------------------- Exposure to failure to The group contracts with a The group seeks to limit meet contractual number of large service exposure in its contracts obligations and materially organisations and but such limits can be adverse litigation governments for which it high and in some cases, provides services obligations are unlimited. essential to consumers.  Mitigating actions are  Failure to perform in taken where contractual accordance with exposures are above the contractual terms could norm, including insurance give rise to material coverage, where penalties and litigation. appropriate and economically sustainable. -------------------------------------------------------------------------------- Exposure to country and The group's geographic The group's portfolio is regional risk (political, footprint subjects its diversified by geography, financial, economic, businesses to economic, by product, by sector and social) in North America, political and other risks by client in order to United Kingdom, Romania, associated with protect itself against France and Ireland international sales and many of these operations. A variety of fluctuations, especially factors, including changes those that are restricted in a specific country's or to individual territories region's political, and market sectors, economic or regulatory although the bulk of its requirements, as well as operations and revenues the potential for are UK based. geopolitical turmoil, including terrorism and war, could result in loss of services, prevent our ability to respond to agreed service levels or fulfil other obligations. These risks are generally outside the control of the group. -------------------------------------------------------------------------------- Exposure to consolidation Consolidation of retailers No single client accounts among clients and markets and clients could result for more than 9% of the in reductions in the group's net revenue, and group's revenue and no single retailer profits through price accounts for more than 8% compression from combined of the group's net service agreements or revenue, which reduces the through a reduced number probability of this of clients. potential risk having a significant impact on the group's business. In addition, the group continues to expand in its developing businesses and in cash out (reversing the flow of money through its retail networks). -------------------------------------------------------------------------------- Acquisitions may not meet The group's acquisitions, The group assesses all expectations strategic alliances and acquisitions rigorously, joint ventures may result using both in-house in financial outcomes that experts and professional are different than advisers. In addition, the expected. group conducts extensive post-acquisition reviews to ensure, as far as it possible, that performance remains consistent with the acquisition business plan. -------------------------------------------------------------------------------- Exposure to the As the group operates on The group's financial risk unpredictability of an international basis, it management focuses on the financial markets (foreign is exposed to the risk of unpredictability of exchange, interest rate currency fluctuations and financial markets and and other financial risks) the unpredictability of seeks to minimise financial markets in which potentially adverse it operates. effects on the group's financial performance. -------------------------------------------------------------------------------- Exposure to increasing The group operates in a The group is committed to competition number of geographic, continued research and product and service investment in new data markets that are highly sources, people, competitive and subject to technology and products to technological support its strategic developments. Competitors plan. may develop products and services that are superior to ours or that achieve greater market acceptance than our products and services, which could result in the loss of clients or reduction in revenue. -------------------------------------------------------------------------------- Loss or infringement of The group's success The group, where intellectual property depends, in part, upon appropriate and feasible, rights proprietary technology and relies upon a combination related intellectual of patent, copyright, property rights. Some trademark and trade secret protection can be achieved laws, as well as various but, in many cases, little contractual restrictions, protection can be secured. to protect our proprietary Third parties may claim technology and continues that the group is to monitor this situation. infringing their The group also vigorously intellectual property defends all third party rights or our intellectual infringement claims. property rights could be infringed by third parties. If we do not enforce the group's intellectual property rights successfully, our competitive position may suffer, which could harm our operating results. -------------------------------------------------------------------------------- Data centre security The group is highly The group's data centres breaches dependent on information are protected against technology networks and physical break-ins. The systems to process, group has strict standards transmit and store and procedures for electronic information. security. Security breaches of our data centres could create system disruptions, shutdowns or unauthorised disclosure of confidential information. INDEPENDENT REVIEW REPORT TO PAYPOINT PLC We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the period ended 25 September 2011, which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 9. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", 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 it 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 half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the period ended 25 September 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. Deloitte LLP Chartered Accountants and Statutory Auditor London, United Kingdom 24 November 2011 DIRECTORS & KEY CONTACTS Directors Dominic Taylor (Chief Executive) George Earle (Finance Director) Tim Watkin-Rees (Business Development Director) Eric Anstee* David Morrison* David Newlands* (Chairman) Andrew Robb* Stephen Rowley* Nick Wiles * * non-executive directors Registered office 1 The Boulevard Shire Park Welwyn Garden City Hertfordshire AL7 1EL United Kingdom Registered in England and Wales number 3581541 Registrars Capita Registrars Registration Services Northern House Woodsome Park Fenay Bridge Huddersfield West Yorkshire HD8 0LA Telephone 0870 162 3100 Press and investor relations enquiries Finsbury Tenter House 45 Moorfields London EC2Y 9AE Telephone No. 020 7251 3801 ABOUT PAYPOINT 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 £11 billion from over 600 million transactions annually for more than 5,000 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 23,000 local shops with our terminals, or the terminal software on retailers' till systems, (including Co-op, Spar, McColls, Costcutter, Sainsburys Local, One Stop, Londis and thousands of independents) in all parts of the UK. These outlets 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 6,500 outlets across Romania and is expanding.  These outlets 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 offer a consumer parcel drop-off and collection service using PayPoint's retail network through Collect+, a joint venture with Yodel This service is already available in 4,200 of our convenience retail agents. Clients include ASOS, Littlewoods, New Look, Dorothy Perkins, Very, Virgin Media, Asda Direct, Argos Outlet, JD Sports Monsoon & Accessorize.  In addition, in the UK, we have over 2,500 LINK branded ATMs. 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, Ann Summers and British Gas Home Vend.  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 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. 24 November 2011 Enquiries: PayPoint plc                                                     01707 600 300 Dominic Taylor, Chief Executive George Earle, Finance Director RLM Finsbury                                                   020 7251 3801 Rollo Head Don Hunter This announcement is available on the PayPoint plc website: www.paypoint.com Click here for PDF version of release: http://hugin.info/137093/R/1566255/486325.pdf This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Paypoint plc via Thomson Reuters ONE [HUG#1566255]

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