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Paypoint plc (PAY)

  Print      Mail a friend       Annual reports

Thursday 26 May, 2011

Paypoint plc

Preliminary Results Year Ended 27 March 2011






                                  PayPoint plc
                               Preliminary results
                            Year ended 27 March 2011

                              Year ended   Year ended   Increase / (decrease) %
                                27 March     28 March
                                    2011         2010
--------------------------------------------------------------------------------


 Revenue                         £193.2m      £196.6m                     (1.7)

 Net revenue(1)                   £82.7m       £77.4m                       6.9

 Gross margin                      36.6%        32.3%                   4.3ppts

 Operating profit                 £36.1m       £34.1m                       5.8

 Profit before tax                £34.5m       £32.6m                       5.5

 Diluted earnings per share        35.1p        32.7p                       7.5



 Dividend per share                23.4p        21.8p                       7.3
--------------------------------------------------------------------------------

  * Record group transaction volume (590 million), with growth in all channels


  * UK retail services continued strong growth, net revenue up 25%


  * 12 million Romanian bill payment transactions, up 118%


  * 59 million internet transactions processed, up 34%


  * PayByPhone transaction volumes of 14 million


  * Collect+ transaction volumes increased to over 1 million, up over 4 times on
    last year


  * Developed  new  virtual  terminal  which  is  currently  being rolled out to
    selected multiple retailers' till systems


  * Debt repaid and year end net cash was £26.5 million


Enquiries
PayPoint plc                                                           Finsbury
Dominic Taylor, Chief Executive 01707 600300      Rollo Head 0207 2513801
George Earle, Finance Director                            Don Hunter

A presentation for analysts is being held at 11.45 am 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 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.


 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.


CHAIRMAN'S STATEMENT

I  am pleased to  report the return  to growth in  earnings as a  result of good
performance  by our  UK retail  network, excellent  internet payment  growth and
substantial  progress in  our Romanian  network and  Collect+. We have increased
resources  and  improved  infrastructure  at  PayByPhone.   We  have made strong
progress  in technology, completing the development and starting the roll out of
our  virtual terminal, developing a broadband communications solution for faster
transactions  and introduced  new services  for our  terminal network, including
cash out and money transfer.

In  the UK  retail network,  retail services  delivered healthy growth, although
mobile  top-ups  continued  to  decline.   I  am particularly delighted with the
recent  announcement that we have  won the tender to  provide the retail network
for  the  Department  for  Work  and  Pensions'  replacement of giro cheques for
benefit  payments, the contract for which is under negotiation.  Currently, over
20 million  giro cheques are  issued annually to  pay benefits.  We have already
demonstrated  that our retailers can make  payments to consumers (in addition to
our   traditional   strength   in   collecting  money  from  them).   This  will
substantially  increase  the  flow  of  money  out,  reducing banking charges to
retailers and delivering more commission and footfall to them.

Internet net revenues have increased 20% and the business had notable success in
winning  gaming merchants, including Stan James, 32 Red and Sportingbet.  We are
continuing  to win gaming business because of our robust and resilient platform,
innovation,  advanced  fraud  and  risk  management  capabilities, and real-time
enterprise level reporting.

We  have continued to  invest in our  Romanian retail network  by increasing our
full  service terminal  estate by  more than  1,100, whilst removing all the old
mobile top-up only sites.  We accept bill payment for 27 clients and transaction
volumes  have more than doubled to  over 12.1 million transactions.  Under a new
contract with Western Union, we will roll out money transfer this year.

We  have extended our  parcels service through  Collect+, our joint venture with
Yodel,  selectively  across  our  UK  retail  network.  Momentum is strong, with
considerable  interest among major internet retailers and internet marketplaces.
We  have  over  3,700 sites  handling  Collect+  parcels  and  30 home  shopping
retailers  live, including some of the  most respected customer service leaders,
including  ASOS, New Look, Boden  and Very. During the  year, we handled over 1
million parcels.

In  PayByPhone, we have increased the resources in sales, marketing and delivery
more  than we planned.  We have upgraded  the infrastructure to provide disaster
recovery  and introduced a new consumer friendly mobile web parking registration
and  payment system for the UK and North  America. We will continue to invest to
stay at the leading edge of this fast moving market.

The  combination of sound, profitable  growth in both the  UK retail network and
our internet business, substantive progress towards profitability in our Romania
retail  network,  gathering  momentum  in  Collect+  and  proper  resourcing  of
PayByPhone,  mark an important year in re-establishing the group for substantial
growth.  We are  proposing a  final dividend  of 15.6 pence  per share, making a
total for the year of 23.4 pence, an increase of 7.3 per cent.

For  the  current  financial  year,  trading  is  in  line  with  the  company's
expectations. Our established business streams (UK and Irish retail networks and
internet  payments)  are  strong,  with  further opportunities to enhance retail
yield  through the  introduction of  new technology  and services.  In addition,
improvements   in   our  service  offering  to  online  merchants  will  provide
opportunities  for  growth.  We  will  benefit  from rolling out services in our
developing  business streams (Collect+, PayByPhone and Romanian retail network),
growing  our market share and  improving profitability. Together, our businesses
provide a solid foundation to deliver value for our shareholders.


David Newlands
26 May 2011


CHIEF EXECUTIVE'S REVIEW

PayPoint  has had another good year, in  which we have delivered profits in line
with  market expectations  and our  strategic plans.   Our UK retail network and
internet  payments have continued  to be highly  profitable and cash generative.
Collect+, PayByPhone and our Romanian retail network, which are important to the
creation of value, have all made good progress during the year.

Our strategy:
Since the flotation of the original UK retail network business in 2004, PayPoint
has  evolved  into  a  specialist  payments  company.  Our strategy has four key
elements:

  * Breadth of payments capability
    The acceptance of a broad range of payments (cash, cards, e-money, etc.)
    through multiple channels (retail, internet and mobile phone)
  * Strength in vertical markets
    Targeting sectors with high volume, recurring consumer payments
  * Value added content / services
    Providing additional content or services to the payment channels and chosen
    vertical markets to create differentiation
  * Geographic reach
    Identifying regions with attractive payment dynamics to create value through
    exporting our know-how.


PayPoint  has  succeeded  in  delivering  this  broad  payment hub capability to
clients  in a  number of  key vertical  markets (energy/utilities,  telecoms and
media,  financial, transport/parking,  public sector/social  housing, retail and
gaming/leisure),  with  the  ability  to  process payments across the consumer's
choice  of payment and channel.  The delivery of payments  from consumers to our
clients   encompasses   transaction   authorisation,  processing,  clearing  and
settlement  and interfacing to banks,  card schemes/networks and other financial
intermediaries.  PayPoint also provides value  added content and services within
each  channel,  to  differentiate  the  PayPoint  proposition  from those of its
competitors.

In  our retail channels, differentiation is achieved through providing retailers
with  a broad range of  retail services, including ATMs,  parcels, SIM cards and
international money transfer through Western Union®.

In  the  internet  channel,  differentiation  to  merchants  is driven through a
widening  base of acquiring bank relationships  and payment types, together with
the quality of our fraud screening and reporting.

Our   mobile   channel,  delivered  through  PayByPhone,  will  similarly  drive
differentiation  through  its  ability  to  leverage  our  cash  retail  payment
capability  and internet payment services,  combined with improving the consumer
experience with appropriate smart phone applications.

The extension of our geographic reach is progressing.

Growth and prospects:

Technology
We  use technology to drive value through  the introduction of new payment types
and  related services.   These, in  turn, add  new revenue  opportunities to our
proven recurring payment methods.

In  our UK retail network, we are rolling out a new virtual terminal to multiple
retailers  - a  software variant  of our  terminal which  is integrated into the
retailers'  till systems, in conjunction with  a bespoke PayPoint plug-in reader
to  provide the full functionality of the physical terminal more efficiently and
at lower cost. In store, this allows our service to be available at every check-
out  lane and eliminates the need for  reconciliation with the main till system.
As we free UK network terminals, we will deploy them in Romania.

An  increasing number  of our  terminals are  being connected  through broadband
connectivity  rather than  dial-up, dramatically  improving the  speed of online
transactions.

In  Romania and the UK,  a development to enable  money transfer on our terminal
will  eliminate the  expense and  complication of  a separate personal computer,
significantly   reducing   the  entry  cost  for  retailers  and  expanding  the
eligibility  criteria for  the service.  Development work  for cash out services
will  make our retailer  settlement systems more  streamlined and allow the cash
balances  we generate  through bill  payment to  be recycled  back to consumers,
saving retailers bank charges and increasing in-store spend.


In  the  internet  channel,  we  are  developing substantial improvements to our
services  to online  merchants. These  include new  transaction optimisation, an
advanced  management  and  reporting  solution,  a  PCI  compliance offering and
additional   payment  methods,  which  should  provide  significant  competitive
advantage.

PayByPhone   is   introducing  a  new,  consumer  friendly  mobile  web  parking
registration and payment system and has utilised one of the group's data centres
as a back-up for business continuity.

UK retail network
We are focussed on selling retail services to our retail networks.  Net revenues
from  these services  have increased  25% in the  year.  These  services include
parcels,  ATMs, SIM cards, debit and credit card acceptance, receipt advertising
and  money transfer.  Our retail  network in the UK  has provided energy clients
with  a service to rebate cash to consumers, which reverses the traditional flow
of  money in our retailers.  We are currently negotiating the contract following
our  success in winning  the DWP's tender  for a service  to replace giro cheque
benefits which provides us with a scale opportunity to extend cash out.

Romanian retail network
Increasing  bill payment volumes have continued to provide growth in Romania and
we  will launch money transfer  services this year.  In  addition, we are adding
new  sites to cover more neighbourhoods and optimising existing sites to improve
their profitability.  This business should break even in the current year.

Internet
Alongside  the introduction of new systems referred  to above, we expect to sign
up further new merchants and to benefit from the introduction of new card scheme
sponsors,  including  HSBC  International  for  38 countries and BNP for France,
driving   growth   in  profits.  These  activities  will  increasingly  position
PayPoint.net as an international provider and will add profitable growth.

PayByPhone
PayByPhone,  one  of  the  worldwide  leaders  in  mobile phone parking, has the
potential  to replace traditional parking meters in many major cities around the
world.  We have  added significant  sales and  development resources  and we are
currently  tendering to  several large  parking authorities  as well  as a large
number  of smaller opportunities in the UK, France and North America. Sales lead
times  are extended in  this market, but  our momentum is  encouraging.  We have
spent  more  heavily  than  anticipated  and  a  further loss will result in the
current year. We expect it to turn to profit in the year ending March 2013.

Collect+
Our  parcels  joint  venture  (50:50)  with  Yodel has progressed strongly, with
substantial endorsement from the online retailing community and resulting growth
in  transaction volumes.   We  expect them to grow  further this year as we sign
more  home shopping clients  for returns and  deliveries.  A recently introduced
consumer  to  consumer  service  is  being  extended  to  smaller packets and is
expected  to grow  significantly this  year, as  we target  online traders. This
joint  venture processes  around two  million transactions  per annum  (based on
transaction  volumes  in  March  2011) and  is  making good progress towards its
breakeven  volume of 6-8 million parcels,  which we expect to  reach in the year
ending March 2013.

Our plans for the current year
We  will continue to make further progress  in the four elements of our strategy
to  increase  shareholder  value:  more  payment/channel  options, specialism in
vertical  markets, value  added services  and geographic  reach. We plan to make
good  progress in both the established  and developing business streams, notably
through  continuing growth in retail services  and internet payments, by turning
the  Romanian  retail  network  profitable  through  an increase in bill payment
market share, and by adding new customers in Collect+ and PayByPhone.

We  are increasingly  benefiting from  the synergy  between our various business
streams,  with more clients  taking multi-channel services.  We aim to push this
dynamic  more strongly  over time,  as newer  business areas  bed in  and system
platforms can be developed across the group. We are strengthening the management
in  our  UK  retail  network  to  ensure senior management attention is directed
proportionately to the developing business streams.

PayPoint  is one of the best placed companies  to make further gains in the fast
moving payment industry and has a market leading position in retail services, on
which we intend to build.


Dominic Taylor
26 May 2011



KEY PERFORMANCE INDICATORS

In  order  to  realise  its  strategic  aims,  PayPoint  has identified areas of
strategic  focus  and  has  put  in  place  a number of KPIs to measure progress
against   them.   Whilst  these  KPIs  are  helpful  in  measuring  the  group's
performance,  they are not exhaustive and the  group uses many other measures to
monitor progress.
Measuring our performance

+-----------------+-----------------+-----------------+------------+-----------+
|Strategic        |KPI              |Description      |        2011|       2010|
|focus            |                 |                 |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|Shareholder      |Earnings per     |Profit  after tax|       35.2p|      32.9p|
|return           |share (basic)    |attributable   to|            |           |
|                 |                 |equity holders of|            |           |
|                 |                 |the        parent|            |           |
|                 |                 |divided   by  the|            |           |
|                 |                 |weighted  average|            |           |
|                 |                 |number         of|            |           |
|                 |                 |ordinary   shares|            |           |
|                 |                 |in  issue  during|            |           |
|                 |                 |the year.        |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |                 |                 |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |Dividends per    |Proposed    final|       23.4p|      21.8p|
|                 |share            |dividend      and|            |           |
|                 |                 |interim  dividend|            |           |
|                 |                 |divided   by  the|            |           |
|                 |                 |number  of  fully|            |           |
|                 |                 |paid   shares  at|            |           |
|                 |                 |the  end  of  the|            |           |
|                 |                 |year.            |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |                 |                 |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |Economic profit  |Operating  profit|       £17.4|      £18.5|
|                 |                 |after  tax  and a|     million|    million|
|                 |                 |charge        for|            |           |
|                 |                 |capital  employed|            |           |
|                 |                 |based   upon  the|            |           |
|                 |                 |group's  cost  of|            |           |
|                 |                 |capital.         |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |                 |                 |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|Growth           |Retail networks  |Number         of| 517 million|507 million|
|                 |transactions     |PayPoint         |            |           |
|                 |                 |transactions     |            |           |
|                 |                 |processed  in the|            |           |
|                 |                 |year    on    our|            |           |
|                 |                 |terminals,   ATMs|            |           |
|                 |                 |and     on    our|            |           |
|                 |                 |retailers'   EPoS|            |           |
|                 |                 |systems.         |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |                 |                 |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |Internet         |Number         of|  59 million| 44 million|
|                 |transactions     |transactions     |            |           |
|                 |                 |processed  in the|            |           |
|                 |                 |year           by|            |           |
|                 |                 |PayPoint.net.    |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |                 |                 |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |PayByPhone       |Number         of|  14 million|  1 million|
|                 |                 |PayByPhone       |            |           |
|                 |                 |transactions     |            |           |
|                 |                 |processed  in the|            |           |
|                 |                 |year (2010: since|            |           |
|                 |                 |acquisition).    |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |                 |                 |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |Transaction value|The    value   of|       £10.6|       £9.7|
|                 |                 |transactions     |     billion|    billion|
|                 |                 |processed via our|            |           |
|                 |                 |terminals,       |            |           |
|                 |                 |retailers'   EPoS|            |           |
|                 |                 |systems, internet|            |           |
|                 |                 |merchants,  ATMs,|            |           |
|                 |                 |PayByPhone    and|            |           |
|                 |                 |the sale of other|            |           |
|                 |                 |retail services. |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |                 |                 |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |Net revenue      |Revenue  less the| £83 million|£77 million|
|                 |                 |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.         |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |                 |                 |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |Operating margin |Operating  profit|         42%|        42%|
|                 |                 |including     our|            |           |
|                 |                 |share   of  joint|            |           |
|                 |                 |venture losses as|            |           |
|                 |                 |a  percentage  of|            |           |
|                 |                 |net revenue.     |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |                 |                 |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|Asset            |Return on capital|Total   operating|         53%|        88%|
|optimisation     |employed         |profit   for  the|            |           |
|                 |                 |year  divided  by|            |           |
|                 |                 |monthly   average|            |           |
|                 |                 |capital  employed|            |           |
|                 |                 |excluding cash.  |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |                 |                 |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|People           |Labour turnover  |Number         of|            |           |
|                 |                 |permanent        |            |           |
|                 |                 |employees     who|            |           |
|                 |                 |left  during  the|            |           |
|                 |                 |year  divided  by|            |           |
|                 |                 |average     total|            |           |
|                 |                 |permanent        |            |           |
|                 |                 |employees.       |            |           |
+-----------------+-----------------+-----------------+------------+-----------+
|                 |                 |UK & Ireland     |         25%|        20%|
|                 |                 |                 |            |           |
|                 |                 |Rest of the world|         18%|        49%|
+-----------------+-----------------+-----------------+------------+-----------+




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. 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.
Our key performance indicators are shown on page 5.

PayPoint  is  a  payment  service  provider  for  consumer  and business payment
transactions  and, as such, has only  one operating segment. However, reflection
on  various  facets  helps  explanation  of  the  execution  of  our strategy in
developing the group and, accordingly, in addition to the analysis of the number
and  value of transactions, revenue  and net revenue, we  have shown an analysis
which  separates our  developing business  streams (bill  payment and top-ups in
Romania, Collect+ and PayByPhone), from our established business streams (the UK
and Irish retail networks and internet channel).

In addition, we have analysed our results by channel as follows:

Retail networks:
Bill and general (prepaid energy, bills and tickets)
Top-ups (mobile, pre-paid 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, configuration and
customisation and settlement of claims)

Growth  opportunities  include  retail  services  in  the UK retail network; new
merchants  for internet  payments; the  expansion of  the retail network and new
retail  services in Romania; new parking contracts and driving consumer adoption
for PayByPhone and building and developing Collect+.


OPERATING REVIEW

Transactions  have increased  to 590 million  (2010: 552 million),  up 4% in the
established business streams and 155% in the developing business streams.
Transaction  value increased to £10.6 billion (2010: £9.7 billion), up 8% in the
established  business streams  and up  123% in the  developing business streams,
including  the impact of PayByPhone for a whole year and the reduction in mobile
top-ups in Romania.

Revenue  in developing  business streams  was up  7% as a  result of a full year
trading  of PayByPhone, offset  by a 19% decrease  in mobile revenue in Romania.
Established  business stream revenue was down 2% as a result of the reduction in
mobile  top-ups and  the change  of card  scheme sponsor, where merchant service
charges  are no  longer included  in revenue  as they  are now charged direct to
merchants.

Net  revenue in the developing business  streams was up 119%, with strong growth
in  Romanian bill payment and Collect+ and  as a consequence of the inclusion of
PayByPhone.  Established business stream net revenue was up 3%, held back by the
decline in mobile volumes.

Operating  profit in the  established business streams  was £38.4 million (2010:
£36.2  million) and the operating loss, including  our share of Collect+, in the
developing  business streams was £3.9 million  (2010: £3.8 million), an increase
of £0.1 million. The small increase in the loss in developing businesses is as a
result of a better performance in Romania offsetting the impact of the inclusion
of the PayByPhone business, which was loss making in the year, as expected.

                      Established     Developing
                         business       business              Adjust
                       streams(1)     streams(2)   Total Collect+(3) As reported
--------------------------------------------------------------------------------
Transactions

million

2011                          559             31     590           -         590

2010                          540             12     552           -         552


--------------------------------------------------------------------------------
Transaction value

£million

2011                       10,316            285  10,601           -      10,601

2010                        9,560            128   9,688           -       9,688


--------------------------------------------------------------------------------
Revenue

£000

2011                      167,700         26,535 194,235     (1,002)     193,233

2010                      171,933         24,875 196,808       (205)     196,603


--------------------------------------------------------------------------------
Net revenue(4)

£000

2011                       76,811          6,539  83,350       (627)      82,723

2010                       74,589          2,981  77,570       (164)      77,406
--------------------------------------------------------------------------------
(1)  Established business streams  include the UK  and Irish retail networks and
the internet payment channel
           (2) Developing  business streams includes Romania, PayByPhone and for
Collect+, revenue and net revenue only.
               (3)  Collect+  revenue  and net revenue is included in developing
business  stream's revenue and net  revenue, but as Collect+  is reported in the
Consolidated Income
                  Statement on  a profit  before tax only basis, revenue and net
revenue needs to be eliminated to reconcile to reported revenue and net revenue.
        (4) 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.






Analysis of transactions
There has been growth in transaction volumes across most services, with the
exception of mobile top-ups where, in all territories, there has been a
decrease.. Mobile operators are offering more value for the same or lower cost
per top-up to consumers, resulting in fewer transactions and, in the UK in
particular, mobile operators promote monthly contracts over prepay thereby
migrating prepaid consumers to contracts.

                          Year       Year
                         ended      ended   Increase /
                      27 March   28 March   (decrease)
                          2011       2010            %
                       million    million
-------------------------------------------------------
 Retail networks

   Bill and general    350,970    339,801          3.3

   Top-ups             117,670    128,887        (8.7)

   Retail services      48,425     38,901         24.5

 Internet payments      58,544     43,536         34.5

 PayByPhone             14,059        762          n/a
-------------------------------------------------------
 Total                 589,668    551,887          6.8
-------------------------------------------------------

Prepaid  energy volumes (included in bill and  general) in the UK have increased
by  4% on last year. The cold weather before Christmas and increases in domestic
energy tariffs have helped volumes in the second half of the year.

Bill  payments in  Romania have  continued to  grow as  more terminal  sites are
rolled  out and  consumers become  aware of  the service.  In the  year, we have
processed  over 12 million bill payment transactions, an increase of 118% on the
previous  year and our  run rate, based  on transactions in  March 2011, is c.16
million transactions per annum.

Mobile top-ups in UK, Ireland and Romania were down 10% overall, against an 11%
decline  this time  last year.  E-money volumes,  which are included in top-ups,
were up 21% to 4 million.

Retail  service transaction  volumes have  increased across  all products, ATMs,
debit/credit,  parcels, money transfer and  SIMs. Debit/credit card transactions
are  up more than 30% on last year. We have sold almost 700,000 SIMs in the year
(2010:  300,000). Parcel volumes continue  to grow and  have increased over four
times on last year to just over 1 million transactions.

Internet  transactions of 59 million were up 34% on last year as we continued to
add  new merchants and existing merchants grew organically. New merchants in the
last 12 months include Stan James, 32Red, Sportingbet, Funky Pigeon and Links of
London.

PayByPhone  transactions  are  for  a  full  year compared to 19 days last year.
 Towards  the end of  the year, PayByPhone  saw the number  of tenders issued by
councils  and  parking  authorities  increase  as  they  looked  for a more cost
effective method for collecting parking charges.

During  the year, we produced  70 million receipts (2010: 10 million) containing
an advertising message. These are not counted as additional transactions.



Transaction value
There has been substantial growth in the value paid by consumers (transaction
value), primarily in bill and general payments, internet payments and
PayByPhone.

                            Year        Year
                           ended       ended    Increase/
                        27 March    28 March   (decrease)
                            2011        2010            %
                            £000        £000
----------------------------------------------------------
 Retail networks

   Bill and general    6,198,171   5,925,249          4.6

   Top-ups             1,114,809   1,166,507        (4.4)

   Retail services       394,727     377,271          4.6

 Internet payments     2,838,147   2,216,319         28.1

 PayByPhone               55,020       3,077          n/a
----------------------------------------------------------
 Total                10,600,874   9,688,423          9.4
----------------------------------------------------------

Growth  in  bill  and  general  transaction  value  reflected  the  increase  in
transactions  and in their average value. There continues to be strong growth in
higher value transactions for local authority and housing authority payments and
a small rise in the average value for energy prepayments.

The  reduction in top-ups transaction value reflected the overall decline in the
pre-pay  mobile market.  An increase  in e-money  transaction value  off-set the
overall reduction and average transaction values were up 5%.

Retail  services transaction  value is  relatively small  as SIM  sales have low
value  and debit/credit transactions (where the merchant acquirer settles direct
with  our  retailer),  parcel  transactions  and  terminal  advertising  have no
associated transaction value.

Internet  transaction value has  increased by 28% but  transactions have a lower
average value of £48.47 (2010: £50.91). Part of the decline in average value was
due to over 1 million energy pre-payment gas and electricity transactions, where
consumers  topped-up via the internet  at home, at lower  values. The signing of
three   large  gaming  merchants  during  the  year  also  reduced  the  average
transaction  value as gaming tends  to be at lower  transaction value than other
sectors.

PayByPhone  value  reflects  a  full  year  of  the  value of consumers' parking
transactions   and  bicycle  rentals  against  a  period  of  19 days  from  the
acquisition of the business in the prior period.



Revenue analysis

                          Year       Year
                         ended      ended
                      27 March   28 March    Increase/
                          2011       2010   (decrease)
                          £000       £000            %
-------------------------------------------------------
 Retail networks

   Bill and general     57,889     58,564        (1.2)

   Top-ups              98,843    108,508        (8.9)

   Retail services      19,602     16,168         21.2

 Internet payments       8,939      9,968       (10.3)

 PayByPhone              4,501        283          n/a

 Other                   3,459      3,112         11.1
-------------------------------------------------------
 Total                 193,233    196,603        (1.7)
-------------------------------------------------------

Bill  and general payments  revenue was slightly  lower than last  year, as some
clients  elected to work  on a more  exclusive basis to  secure lower commission
rates for more volume.

In Romania and Ireland, PayPoint acts as principal for mobile phone top-ups and,
as  a result,  the sales  value of  the top-up  is recorded as revenue, with the
purchase  cost of the top-up recorded in cost of sales. In the UK, PayPoint acts
as  an agent and only the commission  income is recorded as revenue. The decline
in  mobile volumes,  therefore, affects  revenue arising  in Romania and Ireland
more than in the UK.

Retail  services revenue increased strongly across  several products as a result
of  growth in the  number of sites  processing credit and  debit transactions to
5,948 at  the year  end (2010:  4,998); growth in  revenues from parcels; a full
year of SIM card sales; advertising on till receipts; and money transfer.

Retail   services  also  include  ATMs,  where  revenue  is  derived  from  cash
withdrawals,  balance enquiries and rental income. Whilst ATM revenue has grown,
the  average revenue per ATM decreased as a consequence of lower cash withdrawal
revenues  on more recently installed ATMs and  lower rental income, as five year
term  rental agreements expire and fully depreciated machines are rolled over on
lower rentals.

Internet  payment revenues  were lower  because merchant  service charges, which
were  formerly included  in revenue  and cost  of sales,  were £nil  this period
(2010: £2.5 million), as a consequence of a change in card scheme sponsor.

PayByPhone  revenues of £4.5 million were for the full year compared to only 19
days  last  year  and  included  costs  that  are  recharged  to clients for the
provision of call centres.

Other revenue includes rechargeable software development work, configuration and
customisation, early settlement and claims.


Net revenue analysis
Net  revenue is revenue  less retail agent  commission, merchant service charges
levied  by card  scheme sponsors,  costs of  SIM card  stock, recharges  for the
provision  of  call  centres  for  PayByPhone  clients and the purchase value of
Romanian and Irish mobile top-ups for which we act as principal.

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.

                          Year       Year
                         ended      ended
                      27 March   28 March   Increase /
                          2011       2010   (decrease)
                          £000       £000            %
-------------------------------------------------------
 Retail networks

   Bill and general     33,806     33,586          0.6

   Top-ups              22,683     24,272        (6.5)

   Retail services      10,827      8,684         24.7

 Internet payments       8,939      7,469         19.7

 PayByPhone              3,009        283          n/a

 Other                   3,459      3,112         11.1
-------------------------------------------------------
 Total                  82,723     77,406          6.9
-------------------------------------------------------

Bill  and general  net revenue  increased mainly  as a  result of  the growth in
Romanian bill payment net revenue, which was up 94% on last year.

The  decrease in top-ups net revenue was lower than the decrease in revenue as a
result of the growth in e-money transactions, which have higher than average net
revenue.

Retail  services net revenue  has a greater  percentage increase than revenue as
there is no commission payable on some services, including debit and credit card
transactions.

Internet  net  revenue  was  up  20%, primarily  as  a result of the increase in
transaction  volumes and value and  the better margins from  our new card scheme
sponsor.  Net revenue  is the  same as  revenue as  a result of merchant service
charges  now being charged directly  to our bureau merchants  by the card scheme
sponsor.


Collect+
During  the year, we processed over 1 million transactions for 30 clients (2010:
0.2 million  transactions for 13 clients). Transaction  volumes continue to grow
and   our   annual  run  rate,  based  on  March  2011, is  now  over  2 million
transactions.  In the  year, we  added a  store to  home delivery service, where
customers  can take a  parcel to a  Collect+ store and  have it delivered to the
recipient's  home address. More recently, we  launched a packet delivery service
for parcels less than 2kg in weight.

Network growth
Terminal sites overall have increased by 7% to 29,508.

In  the UK and Ireland,  sites have increased by  870, an increase of 4%. During
the  second half of the year, we  introduced our new EPoS integrated solution to
multiple  retailers, which combines  a virtual terminal  through software in the
retailer's  till system  with plug  in reader  to provide  full functionality at
lower  costs. As well as enhancing our service to multiple retailers, this frees
terminals for use in Romania.  We expect to roll this out further.

In  Romania, we installed over 1,100 net new  full service terminals in the year
and have removed all the remaining old mobile top-up only terminals.

In  our internet channel, we added over  1,400 new merchants during the year but
churn  of low  value merchants,  in particular  from the  change of  credit card
scheme  sponsor  at  the  start  of  the  year,  led  to a net reduction of 405
merchants.  Since the  half year,  the merchant  estate has  grown by a net 201
merchants.  Despite the decrease in  merchant numbers, transaction volume, value
and net revenue all increased.

We  continued to add more Collect+ sites as transaction volumes increased and as
retailers recognised the benefits of offering this service.

                                                        Increase/
 Analysis of  sites            27 March   28 March   (decrease) %
                                   2011       2010
------------------------------------------------------------------
 UK & Ireland terminal sites     23,513     22,643            3.8

 Romania terminal sites           5,995      4,816           24.5
------------------------------------------------------------------
 Total terminal sites            29,508     27,459            7.5

 Internet merchants               5,213      5,618          (7.2)

 Collect+ sites                   3,668      3,418            7.3
------------------------------------------------------------------

FINANCIAL REVIEW

Income statement
Revenue  for the year was  1.7% lower at £193 million  (2010: £197 million). The
reduction  results from  a decrease  in mobile  top-ups and  from the  impact of
merchant  service charges on card transactions being charged direct to merchants
rather  than through PayPoint.net.  This revenue reduction  is also reflected in
cost  of sales  which, at  £122 million  (2010: £133  million), was  down 8.2%.
Agents'  commission decreased  to £71  million (2010:  £73 million) due to fewer
mobile  top-up transactions,  which pay  a higher  than average  commission, and
reductions  in the amount paid for commission  by the mobile operators. The cost
of mobile top-ups in Ireland and Romania(1) has fallen to £39 million (2010: £44
million).

Net revenue(2) of £83 million (2010: £77 million) was up 6.9%.

Operating  costs  (administrative  expenses)  were  17.7% higher  at £35 million
(2010:  £29 million)  as a  result of  the inclusion  of a whole year's worth of
trading of PayByPhone. Excluding PayByPhone, operating costs were up 5.4%.

The  increase  in  operating  costs  resulted  in  part  from  the one-off costs
including  the legal costs,  of successfully defending  against Camelot's bid to
provide  services in bill and general  payments, mobile top-ups and debit/credit
processing.

Operating  margin(3)  was  flat  at  42% as  a  consequence  of  the increase in
operating costs.
(1)  In Ireland and Romania, 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 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.
(3)  Operating margin is calculated as  operating profit, including our share of
Collect+ losses, as a percentage of net revenue.
Our share of the loss in developing Collect+ was £1.5 million as expected (2010:
loss of £1.6 million).

Profit  before tax was £34.5 million (2010: £32.6 million) an increase of 5.5%.
The  tax charge of  £10.6 million (2010:  £10.5 million) represents an effective
rate  of 30.8% (2010: 32.2%). The tax charge was higher than the UK nominal rate
of  28% because of unrelieved losses in Romania  and Canada and the write off of
the deferred tax asset relating to tax relief for share based payments.

Balance sheet
The short-term borrowing of £6 million was repaid in full in March.

Cash flow
Cash generated by operations was £42.2 million (2010: £38.7 million), reflecting
strong  conversion of  profit to  cash. Corporation  tax of £11.0 million (2010:
£13.7  million)  was  paid.  Capital  expenditure  of  £3.2  million (2010: £2.7
million)  reflected spend on new terminals,  ATMs and IT equipment. Net interest
paid  was £0.1 million (2010: £0.2 million receipt) as a result of the loan that
was drawn down at the end of last year. Equity dividends paid were £15.0 million
(2010:  £12.9 million). During the year the  company repaid the £6 million loan.
Cash  and cash  equivalents were  £26.5 million  (including client  cash of £6.1
million)  up  from  £20.8  million  (including  client  cash of £6.8 million but
excluding the bank loan of £6 million).

Economic profit
PayPoint's  economic profit (operating  profit less tax  and capital charge) was
£17.4  million  (2010:  £18.5  million),  lower  than  last  year because of the
acquisition of PayByPhone, which is loss making as expected.

Dividend
We  propose to pay  a final dividend  of 15.6p per share  on 22 July 2011 (2010:
14.4p) to  shareholders on the register on 24 June 2011, subject to the approval
of  the shareholders at the annual general meeting. An interim dividend of 7.8p
(2010: 7.4p) per share was paid on 21 December 2010, making a total dividend for
the year of 23.4p (2010: 21.8p) up 7.3%, broadly in line with earnings.

Liquidity and going concern
The  group has cash of £26.5 million (including client cash of £6.1 million) and
had,  at the year end, an unsecured loan  facility of £35 million, which was due
to  expire in August 2011. A new replacement £35 million, five year facility has
been  agreed with our bankers since the year end. Cash and borrowing capacity is
adequate to meet the foreseeable needs of the group, taking account of any risks
(page  15). The financial  statements have  therefore been  prepared on  a going
concern basis.

Financing and treasury policy
The  financing and treasury 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.

Charitable donations
During  the year, the group made charitable donations of £19,400 (2010: £15,000)
to  charities serving the communities in  which the group operates. We encourage
employees to raise funds for charity and the company matches funds raised by the
employees, subject to certain limits.

During  the year, we collected money for the Disasters Emergency Committee (DEC)
for the Pakistan flood appeal and for the BBC's Children in Need telethon.

Employees
Our success depends upon the continuing support and commitment of all our staff.
 We  would like to take this opportunity to thank PayPoint's employees for their
commitment, energy and enthusiasm in the delivery of these results.

Strategy and risks
Details of the company's strategy is included in the Chief Executive's review on
page 3. The company's analysis of risks facing the company is set out in
separate statements on pages 15 and 16.

Economic climate
The  company's bill and  general payments sector,  which accounts for 41% (2010:
43%) of our net revenue, has continued to be resilient, as consumers' discretion
in expenditure is limited for essential services and our service continues to be
popular.  Utility providers continue  to install new  prepay gas and electricity
meters,  which will  have a  beneficial impact  on our  transaction volumes. The
internet  payment  market  continues  to  grow  substantially. There has been an
adverse  impact on our mobile top-ups as mobile operators continue to offer more
airtime  at lower cost and  to promote prepay less  than contract. PayByPhone is
able  to offer parking  authorities a more  cost effective collection system for
parking compared to pay and display machines. This has led to an increase in the
number of tenders being issued as parking authorities try to reduce their costs.

PayPoint's  exposure to retail agent debt is limited as credit granted to retail
agents is restricted by daily direct debiting for all UK and Irish transactions,
other  than EPoS  mobile top-ups  (which are  collected weekly).   There is some
concentration  of risk in multiple retail agents.  Most of PayPoint's clients in
the UK, other than mobile operators, bear the cost of retail agent bad debt.  In
PayPoint  Romania, the risk of bad debt lies with the company.  In PayPoint.net,
exposure  is limited to receivables from merchants  for fees, except in the case
of bureau internet merchants, where PayPoint.net retains credit risk on merchant
default   for  credit  card  charge  backs,  mitigated  by  cash  retention.  In
PayByPhone, exposure is limited to receivables from parking authorities.

National Lottery Commission
On   the  2 March  2011, following  a  lengthy  process,  the  National  Lottery
Commission  refused  consent  for  Camelot's  application  to  provide ancillary
services, including bill payment and mobile top-ups, on competition law grounds.

Outlook
For  the  current  financial  year,  trading  is  in  line  with  the  company's
expectations. Our established business streams (UK and Irish retail networks and
internet  payments)  are  strong,  with  further opportunities to enhance retail
yield,  through the  introduction of  new technology  and services. In addition,
improvements   in   our  service  offering  to  online  merchants  will  provide
opportunities  for  growth.  We  will  benefit  from rolling out services in our
developing  business streams (Collect+, PayByPhone and Romanian retail network),
growing  our market share and  improving profitability. Together, our businesses
provide a solid foundation to deliver value for our shareholders.


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|security         policies,|
|                         |consumer     and    other|standards, procedures, and|
|                         |sensitive    information.|recruitment  and  training|
|                         |Mobile    telephone   and|schemes,     which     are|
|                         |internet-based electronic|embedded   throughout  its|
|                         |commerce   requires   the|business  operations.  The|
|                         |secure   transmission  of|group   also  screens  new|
|                         |confidential  information|employees       carefully.|
|                         |over public networks, and|Continued  investments are|
|                         |several  of  our products|made    in   IT   security|
|                         |are  accessed through the|infrastructure,  including|
|                         |internet.        Security|the   significant  use  of|
|                         |breaches   in  connection|data   and  communications|
|                         |with maintaining data and|encryption technology.    |
|                         |the   delivery   of   our|                          |
|                         |products   and   services|                          |
|                         |could       harm      our|                          |
|                         |reputation,  business and|                          |
|                         |operating results.       |                          |
+-------------------------+-------------------------+--------------------------+
|                         |                         |                          |
+-------------------------+-------------------------+--------------------------+
|Dependence upon third    |The    group's   business|The   group   selects  and|
|parties to provide data  |model  is  dependent upon|negotiates agreements with|
|and certain operational  |third  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|
|                         |quality  of our services.|points   of   failure  are|
|                         |Similarly,  if one of our|avoided, where practicable|
|                         |outsource      providers,|and 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|adopt     strategies    to|
|                         |offer  money transfer are|educate         lawmakers,|
|                         |licensed as Money Service|regulators,  consumer  and|
|                         |Businesses  by  HMRC. Our|privacy   advocates,   and|
|                         |internet and mobile phone|other    stakeholders   to|
|                         |distribution channels are|support  the public policy|
|                         |subject  to  Payment Card|debate,  where appropriate|
|                         |Industry   Data  Security|to  ensure regulation does|
|                         |Standards   regulated  by|not     have    unintended|
|                         |the     card     schemes.|consequences    over   the|
|                         |Regulatory  reform  could|group's    services.   The|
|                         |increase  the cost of the|group   has   in  place  a|
|                         |group's   operations   or|business   ethics   policy|
|                         |deny  access  to  certain|which  requires compliance|
|                         |territories     in    the|with  local legislation in|
|                         |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|
|                         |security  laws could have|all  compliance monitoring|
|                         |serious  implications  in|and   reporting.  Managing|
|                         |cost   and   reputational|and  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|to  minimise  business and|
|                         |of  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|of     all     information|
|                         |or network interruptions,|contained in databases and|
|                         |or  the unavailability of|runs back-up data centres.|
|                         |key  staff  or management|Support  arrangements have|
|                         |resulting from a pandemic|been    established   with|
|                         |outbreak, could delay and|third  party  vendors  and|
|                         |disrupt  our  ability  to|there      are      strict|
|                         |develop,    deliver    or|standards,  procedures and|
|                         |maintain our products and|training    schemes    for|
|                         |services, causing harm to|business 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|programmes   are   ongoing|
|skilled personnel        |the  market  and  compete|across all business areas,|
|                         |effectively   is,   to  a|as  well  as  personal and|
|                         |large  extent,  dependent|career         development|
|                         |on the skills, experience|initiatives. The executive|
|                         |and  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,|competitive    and    also|
|                         |IT  and support services.|reviewed regularly.       |
|                         |The 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 materially    |The  group contracts with|The  group seeks to limit|
|adverse litigation        |a number of large service|exposure      in      its|
|                          |organisations  for  which|contracts.     Mitigating|
|                          |it    provides   services|actions  are  taken where|
|                          |essential     to    their|contractual exposures are|
|                          |customers.    Failure  to|above the norm, including|
|                          |perform   in   accordance|insurance coverage, where|
|                          |with   contractual  terms|appropriate           and|
|                          |could    give   rise   to|economically sustainable.|
|                          |litigation.              |                         |
+--------------------------+-------------------------+-------------------------+
|                          |                         |                         |
+--------------------------+-------------------------+-------------------------+
|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|those that are restricted|
|                          |changes   in  a  specific|to individual territories|
|                          |country's   or   region's|and    market    sectors,|
|                          |political,   economic  or|although  the bulk of its|
|                          |regulatory  requirements,|operations  and  revenues|
|                          |as  well as the potential|are UK based.            |
|                          |for 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|No single client accounts|
|among clients and markets |retailers   and   clients|for  more than  9% of the|
|                          |could      result      in|group's  net revenue, and|
|                          |reductions in the group's|no     single    retailer|
|                          |revenue    and    profits|accounts  for  more  than|
|                          |through price compression|8% of   the  group's  net|
|                          |from   combined   service|revenue,   which  reduces|
|                          |agreements  or  through a|the  probability  of this|
|                          |reduced     number     of|potential  risk  having a|
|                          |clients.                 |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|experts  and professional|
|                          |that  are  different than|advisers.   In  addition,|
|                          |expected.                |the     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|
|unpredictability of       |an  international  basis,|risk  management  focuses|
|financial markets (foreign|it is exposed to the risk|on  the  unpredictability|
|exchange, interest rate   |of  currency fluctuations|of  financial markets and|
|and other financial risks)|and  the unpredictability|seeks     to     minimise|
|                          |of  financial  markets in|potentially       adverse|
|                          |which 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|technology  and  products|
|                          |to          technological|to  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|relies upon a combination|
|                          |and  related intellectual|of   patent,   copyright,|
|                          |property   rights.   Some|trademark    and    trade|
|                          |protection     can     be|secret  laws, as  well as|
|                          |achieved   but   in  many|various       contractual|
|                          |cases,  little protection|restrictions,  to protect|
|                          |can   be  secured.  Third|our           proprietary|
|                          |parties  may  claim  that|technology  and continues|
|                          |the  group  is infringing|to      monitor      this|
|                          |their        intellectual|situation. The group also|
|                          |property  rights  or  our|vigorously   defends  all|
|                          |intellectual     property|third  party infringement|
|                          |rights could be infringed|claims.                  |
|                          |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|
|                          |transmit     and    store|standards  and procedures|
|                          |electronic   information.|for security.            |
|                          |Security  breaches of our|                         |
|                          |data centres could create|                         |
|                          |system       disruptions,|                         |
|                          |shutdowns or unauthorised|                         |
|                          |disclosure             of|                         |
|                          |confidential information.|                         |
+--------------------------+-------------------------+-------------------------+







 CONSOLIDATED INCOME STATEMENT


                                               Year        Year
                                              ended       ended
                                   Note    27 March    28 March
                                               2011        2010
                                               £000        £000
----------------------------------------------------------------
 Continuing operations

 Revenue                            2       193,233     196,603

 Cost of sales                            (122,567)   (133,110)
----------------------------------------------------------------
 Gross profit                                70,666      63,493

 Administrative expenses                   (34,614)    (29,421)
----------------------------------------------------------------
 Operating profit                            36,052      34,072

 Share of loss of joint venture             (1,541)     (1,601)

 Investment income                               88         224

 Finance costs                                (143)        (50)
----------------------------------------------------------------
 Profit before tax                           34,456      32,645
----------------------------------------------------------------
 Tax                                3      (10,614)    (10,513)
----------------------------------------------------------------
 Profit for the year                12       23,842      22,132
----------------------------------------------------------------


 Attributable to:

 Equity holders of the parent                23,883      22,132

 Non-controlling interests                     (41)           -
----------------------------------------------------------------
                                             23,842      22,132
----------------------------------------------------------------


 Earnings per share

 Basic                              5         35.2p       32.9p

 Diluted                            5         35.1p       32.7p





CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                   Year     Year
                                                                  ended    ended
                                                          Note 27 March 28 March
                                                                   2011     2010
                                                                   £000     £000
--------------------------------------------------------------------------------
Exchange differences on translation of foreign operations  12      (72)       35
--------------------------------------------------------------------------------
Net income recognised directly in equity                           (72)       35

Profit for the year                                              23,842   22,132
--------------------------------------------------------------------------------
Total recognised income and expenses for the year                23,770   22,167
--------------------------------------------------------------------------------


Attributable to:

Equity holders of the parent                                     23,811   22,167

Non-controlling interests                                          (41)        -
--------------------------------------------------------------------------------
                                                                 23,770   22,167
--------------------------------------------------------------------------------





CONSOLIDATED BALANCE SHEET


                                                               27 March 28 March
                                                          Note     2011     2010
                                                                   £000     £000
--------------------------------------------------------------------------------
Non current assets

Goodwill                                                   6     57,133   56,872

Other intangible assets                                           1,329    1,400

Property, plant and equipment                                    14,520   14,767

Investment in joint venture                                7        135      326

Deferred tax asset                                         8      1,116    1,167

Investments                                                         435      405
--------------------------------------------------------------------------------
                                                                 74,668   74,937
--------------------------------------------------------------------------------
Current assets

Inventories                                                         915    1,567

Trade and other receivables                                      17,103   23,482

Cash and cash equivalents                                  9     26,464   20,769
--------------------------------------------------------------------------------
                                                                 44,482   45,818
--------------------------------------------------------------------------------
Total assets                                                    119,150  120,755
--------------------------------------------------------------------------------
Current liabilities

Trade and other payables                                         32,996   37,926

Current tax liabilities                                           5,287    5,684

Short-term borrowings                                      10         -    6,000

Obligations under finance leases                                     32       22
--------------------------------------------------------------------------------
                                                                 38,315   49,632
--------------------------------------------------------------------------------
Non-current liabilities

Other liabilities                                                   240      379
--------------------------------------------------------------------------------
                                                                    240      379
--------------------------------------------------------------------------------
Total liabilities                                                38,555   50,011
--------------------------------------------------------------------------------
Net assets                                                       80,595   70,744
--------------------------------------------------------------------------------
Equity

Share capital                                              12       226      226

Investment in own shares                                   12     (216)    (370)

Share premium                                              12        25       25

Share based payment reserve                                12     3,005    2,684

Translation reserve                                        12       471      543

Retained earnings                                          12    77,125   67,636
--------------------------------------------------------------------------------
Total equity attributable to equity holders of the parent        80,636   70,744
company

Non-controlling interest                                           (41)        -
--------------------------------------------------------------------------------
Total equity                                                     80,595   70,744
--------------------------------------------------------------------------------




CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                                   Year     Year
                                                                  ended    ended
                                                          Note 27 March 28 March
                                                                   2011     2010
                                                                   £000     £000
--------------------------------------------------------------------------------
Opening equity                                                   70,744   60,967

Profit for the year                                              23,842   22,132

Dividends paid                                                 (15,041) (12,856)

Movement in investment in own shares                       12       154      556

Exchange differences on translation of foreign operations  12      (72)       35

Movement in share based payment reserve                    12       321      195

Adjustment in share scheme vesting                         12       647    (285)
--------------------------------------------------------------------------------
Closing equity                                                   80,595   70,744
--------------------------------------------------------------------------------




CONSOLIDATED CASH FLOW STATEMENT

                                                                 Year     Year
                                                                ended    ended
                                                        Note 27 March 28 March
                                                                 2011     2010
                                                                 £000     £000
------------------------------------------------------------------------------
Net cash flow from operating activities                  14    31,137   24,986
------------------------------------------------------------------------------
Investing activities

Investment income                                                  70      224

Purchases of property, plant and equipment                    (3,160)  (2,700)

Proceeds from disposal of property, plant and equipment            61       93

Acquisition of subsidiaries                              11         - (28,942)

Investment                                                       (30)     (30)

Purchase of own shares                                   12         -    (490)

Loan to joint venture                                    7    (1,350)  (1,750)
------------------------------------------------------------------------------
Net cash used in investing activities                         (4,409) (33,595)
------------------------------------------------------------------------------
Financing activities

Repayments of obligations under finance leases                   (22)      (8)

Dividends paid                                           4   (15,041) (12,856)

(Repayment) / receipt of short-term borrowings           10   (6,000)    6,000
------------------------------------------------------------------------------
Net cash used in financing activities                        (21,063)  (6,864)
------------------------------------------------------------------------------
Net increase / (decrease) in cash and cash equivalents          5,665 (15,473)
------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year                 20,769   36,345

Effect of foreign exchange rate changes                            30    (103)
------------------------------------------------------------------------------
Cash and cash equivalents at end of year                       26,464   20,769
------------------------------------------------------------------------------







NOTES TO THE FINANCIAL INFORMATION

 1. Accounting policies


This financial information has been prepared on an historical cost basis and on
the basis of the policies set out below.

Basis of preparation
While the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting Standards
(IFRS), this announcement does not itself contain sufficient information to
comply with IFRS. The company expects to publish full financial statements that
comply with IFRS in due course.

The financial information set out above does not constitute the company's
statutory accounts for the years ended 27 March 2011 or 28 March 2010, but is
derived from those accounts. Statutory accounts for 2010 have been delivered to
the Registrar of Companies and those for 2011 will be delivered following the
company's annual general meeting.

The auditors have reported on those accounts; their reports were unqualified,
did not draw attention to any matters by way of emphasis without qualifying
their report and did not contain statements under s498(2) or (3) Companies Act
2006 or equivalent preceding legislation.

The financial information complies with the recognition and measurement criteria
of IFRS, and with the accounting policies of the group which were set out on
pages 33 to 35 of the 2010 annual report and accounts. No subsequent material
changes have been made to the group's accounting policies.

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.



2. Segmental reporting, revenue, net revenue 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  retailers  and  clients,  the
settlement  of funds (collection and transmission) and transmission of data in a
secure environment, by the application of technology.

The  application  of  technology  is  directed  on  a group basis by the group's
executive (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 net
revenue analysis is shown in the operating and financial review.

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) Revenue, net revenue and cost of sales
Revenue  comprises the value of sales (excluding sales taxes) of services in the
normal course of business.

Revenue  performance  of  the  business  is  measured  by  net revenue, which is
calculated  as the  total revenue  from clients  less commissions paid to retail
agents, 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.


                                                             Year       Year
 Net revenue                                                ended      ended
                                                         27 March   28 March
                                                             2011       2010
                                                             £000       £000
-----------------------------------------------------------------------------
 Revenue - transaction processing                         191,742    195,008

               - rental income from ATMs                    1,491      1,595
-----------------------------------------------------------------------------
                                                          193,233    196,603

 less:

 Commission payable to retail agents                     (71,322)   (73,178)

 Cost of mobile top-ups and SIM cards as principal       (37,696)   (43,520)

 Card scheme sponsor's charges and call centre charges    (1,492)    (2,499)
-----------------------------------------------------------------------------
 Net revenue                                               82,723     77,406
-----------------------------------------------------------------------------



-----------------------------------------------------------------------------
 Cost of sales

 Commission payable to retail agents                       71,322     73,178

 Cost of mobile top-ups and SIM cards as principal         37,696     43,520

 Card scheme sponsor's charges and call centre charges      1,492      2,499

 Depreciation and amortisation                              3,612      4,820

 Other                                                      8,445      9,093
-----------------------------------------------------------------------------
 Total cost of sales                                      122,567    133,110
-----------------------------------------------------------------------------


 Geographical information
-----------------------------------------------------------------------------
 Revenue

 UK                                                       148,737    147,658

 Ireland                                                   22,475     24,476

 Romania                                                   21,036     24,386

 North America                                                985         83
-----------------------------------------------------------------------------
 Total                                                    193,233    196,603
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
 Non-current assets

 UK                                                        71,850     73,290

 Ireland                                                        -         14

 Romania                                                    2,329      1,422

 North America                                                489        211
-----------------------------------------------------------------------------
 Total                                                     74,668     74,937
-----------------------------------------------------------------------------





3. Tax
                                                                   Year     Year
                                                                  ended    ended
                                                               27 March 28 March
                                                                   2011     2010
                                                                   £000     £000
--------------------------------------------------------------------------------
Current tax

Charge for current year                                          10,869   10,178

Adjustment in respect of prior years                              (304)      394
--------------------------------------------------------------------------------
Current tax charge                                               10,565   10,572
--------------------------------------------------------------------------------


Deferred tax

Credit for current year                                            (51)    (110)

Adjustment in respect of prior years                                100       51
--------------------------------------------------------------------------------
Deferred tax charge / (credit)                                       49     (59)
--------------------------------------------------------------------------------


Total income tax
--------------------------------------------------------------------------------
Income tax charge                                                10,614   10,513
--------------------------------------------------------------------------------


The income tax charge is based on the United Kingdom statutory
rate of corporation tax for the year of 28% (2010: 28%)
--------------------------------------------------------------------------------
The charge for the year can be reconciled to the profit before
tax as set out in the consolidated income statement

Profit before tax                                                34,456   32,645
--------------------------------------------------------------------------------
Tax at the UK corporation tax rate of 28% (2010: 28%)             9,648    9,141



Tax effects of:

Losses in countries where the tax rate is different to the UK       109      304

Disallowable expenses / (non-taxable income)                         61      (6)

Utilisation of tax losses not previously recognised                (85)        -

Losses in companies where a deferred tax asset is not
recognised                                                          652      408

Adjustments in respect of prior years                             (204)      445

Deferred tax impact of share based payments                         393      221

Revaluation of deferred tax asset from 28% to 27%                    40        -
--------------------------------------------------------------------------------
Actual amount of tax charge                                      10,614   10,513
--------------------------------------------------------------------------------




4. Dividends on equity shares
                                                                   Year     Year
                                                                  ended    ended
                                                               27 March 28 March
                                                                   2011     2010
                                                                   £000     £000
--------------------------------------------------------------------------------
Equity dividends on ordinary shares:

Interim dividend paid of 7.8p per share (2010: 7.4p)              5,276    5,008

Proposed  final dividend of 15.6p per share (2010: paid 14.4p
per share)                                                       10,576    9,756
--------------------------------------------------------------------------------
Total  dividends paid  and recommended  23.4p per share (2010:
21.8p per share)                                                 15,852   14,764
--------------------------------------------------------------------------------
Amounts distributed to equity holders in the year:

Final dividend for the prior year                                 9,765    7,848

Interim dividend for the current year                             5,276    5,008
--------------------------------------------------------------------------------
                                                                 15,041   12,856
--------------------------------------------------------------------------------

The proposed final dividend is subject to approval by shareholders at the annual
general  meeting and  has not  been included  as a  liability in these financial
statements.


5. Earnings per share

Basic earnings per share

Basic and diluted earnings per share are calculated on the following profits and
number of shares.

                                                           Year             Year
                                                          ended            ended
                                                       27 March         28 March
                                                           2011             2010
                                                           £000             £000
--------------------------------------------------------------------------------
Profit  for  basic  and  diluted  earnings per
share is the net profit attributable to equity
holders of the parent                                    23,842           22,132
--------------------------------------------------------------------------------


                                                       27 March         28 March
                                                           2011             2010
                                               Number of shares Number of shares
--------------------------------------------------------------------------------
Weighted  average number of ordinary shares in
issue (for basic earnings per share)                 67,721,190       67,170,830

Potential dilutive ordinary shares:

Long-term incentive plan                                      -          427,415

Deferred share bonus                                    157,914          133,313
--------------------------------------------------------------------------------
Diluted basis                                        67,879,104       67,731,558
--------------------------------------------------------------------------------




6. Goodwill
The group tests goodwill annually for impairment or more frequently if there are
indications that goodwill might be impaired. The recoverable amounts of the cash
generating  units  are  determined  from  value  in  use  calculations.  The key
assumptions  for the value in use  calculations are those regarding the discount
rates,  growth rates  and expected  changes to  selling prices  and direct costs
during  the period. Management estimates discount rates using pre-tax rates that
reflect  current market  assessments of  the time  value of  money and the risks
specific  to the cash generating  units. The growth rates  are based on industry
growth  forecasts. Changes in selling prices and  direct costs are based on past
experience and expectation of future changes in the market.

The  group prepares cash  flow forecasts derived  from the most recent financial
budgets approved by management for the next four years and extends cash flows to
perpetuity.  Terminal values are based on growth  rates that do not exceed three
per cent. The post tax rate used to discount the forecast cash flows is based on
the  group's estimated  weighted average  cost of  capital of 8.5%, adjusted for
country  or business  specific risk  premiums of  up to 1.5%. Equivalent pre-tax
rates would be 12% for the UK and 11% for Romania.

                                   Total
                                    £000
-----------------------------------------
 Cost

 At 28 March 2010                 56,872

 Adjustment (see note 11)            446

 Exchange rate adjustment          (185)
-----------------------------------------
 At 27 March 2011                 57,133
-----------------------------------------


 Accumulated impairment losses

 At 28 March 2010                      -
-----------------------------------------


 Impairment losses for the year

 At 27 March 2011                      -
-----------------------------------------


 Carrying amount

 At 27 March 2011                 57,133
-----------------------------------------
 At 28 March 2010                 56,872
-----------------------------------------



                                            Total
                                             £000
--------------------------------------------------
 Cost

 At 29 March 2009                          27,628

 Recognised on acquisition of subsidiary   29,168

 Exchange rate adjustment                      76
--------------------------------------------------
 At 28 March 2010                          56,872
--------------------------------------------------


 Accumulated impairment losses

 At 28 March 2010                               -
--------------------------------------------------


 Impairment losses for the year                 -

 At 28 March 2010                               -
--------------------------------------------------


 Carrying amount
--------------------------------------------------
 At 28 March 2010                          56,872
--------------------------------------------------
 At 29 March 2009                          27,628
--------------------------------------------------



6. Goodwill continued


Goodwill arising on acquisition:
                    27 March   28 March
                        2011       2010
                        £000       £000
----------------------------------------
 PayPoint.net         18,207     18,207

 PayPoint Romania      9,312      9,497

 PayByPhone           29,614     29,168
----------------------------------------
 Total                57,133     56,872
----------------------------------------

For  PayPoint Romania,  the difference  between the  recoverable amount  and the
carrying  amount at year end was £6.2  million. Headroom would reduce to £nil if
either  the forecast average growth in revenue for the next four years of 19.5%
reduced  to 16% per annum or  if the discount rate  applied to the forecast cash
flows were to increase from 10% to 13.4%.

Management  does not consider that  a reasonably possible change  in one or more
key  assumptions during the next year could  cause the recoverable amount of the
other cash generating units to fall below their carrying amount.


7. Investment in joint venture
On  5 February 2009, PayPoint agreed a  50:50 joint venture with Yodel (formerly
Home  Delivery Network).  The joint  venture company,  Drop and Collect Limited,
trades  as Collect+. PayPoint  subscribed to £500,000  of ordinary shares in the
company.  The joint  venture company  has the  same accounting reference date as
PayPoint plc.

PayPoint's  share  of  aggregated  amounts  relating  to joint 27 March 28 March
ventures                                                           2011     2010
                                                                   £000     £000
--------------------------------------------------------------------------------
Total assets                                                        644      545

Total liabilities                                               (3,609)  (1,969)
--------------------------------------------------------------------------------
Share of net assets                                             (2,965)  (1,424)

Loan to joint venture (note 13)                                   3,100    1,750
--------------------------------------------------------------------------------
Investment in joint venture                                         135      326
--------------------------------------------------------------------------------


                                                                   Year     Year
                                                                  ended    ended
                                                               27 March 28 March
                                                                   2011     2010
                                                                   £000     £000
--------------------------------------------------------------------------------
Revenues                                                          1,002      205

Loss for year                                                   (1,541)  (1,601)
--------------------------------------------------------------------------------



8. Deferred tax asset


                                   Credit / (charge) to
                         28 March      income statement Debit to equity 27 March
                             2010                  £000            £000     2011
                             £000                                           £000
--------------------------------------------------------------------------------
Tax depreciation            1,320                  (16)               -    1,304

Share based payments          239                 (132)               -      107

Tax losses                      -                     -               -        -

Intangibles                 (392)                    99               -    (293)

Short term temporary
differences                     -                   (2)               -      (2)
--------------------------------------------------------------------------------
Total                       1,167                  (51)               -    1,116
--------------------------------------------------------------------------------




                                   Credit / (charge) to
                         29 March      income statement Debit to equity 28 March
                             2009                  £000            £000     2010
                             £000                                           £000
--------------------------------------------------------------------------------
Tax depreciation            1,137                   183               -    1,320

Share based payments          421                 (162)            (20)      239

Tax losses                     36                  (36)               -        -

Intangibles                 (517)                   125               -    (392)

Short term temporary
differences                    51                  (51)               -        -
--------------------------------------------------------------------------------
Total                       1,128                    59            (20)    1,167
--------------------------------------------------------------------------------

At  the balance  sheet date  a deferred  tax asset  of £1.1  million (2010: £1.2
million) is recognised on the basis that there will be sufficient future taxable
profits  against  which  the  deferred  tax  asset  can  be  recovered, based on
management forecasts.

At  the balance  sheet date,  the group  has unused  tax losses  of £7.6 million
(2010:  £5.1 million) available  for offset against  future profits for which no
deferred tax asset is recognised. Included in unrecognised tax losses are losses
of  £2.0 million which will  expire in less than  three years, £3.2 million that
will  expire within  four to  seven years.  Other losses  may be carried forward
indefinitely.

No   deferred  tax  liability  has  been  recognised  in  respect  of  temporary
differences  associated with investments in subsidiaries because the group is in
a  position to control the  timing of the reversal  of the temporary differences
and  it is probable  that such differences  will not reverse  in the foreseeable
future. The aggregate amount of these differences is not material at the balance
sheet date.

The government has announced a further reduction in the main rate of corporation
tax from 28% to 26% effective from 1 April 2011, which was substantially enacted
after  27 March 2011. The government has also indicated that it intends to enact
future  reductions in the main  tax rate of 1% each  year down to 23% by 1 April
2014.  The  future 1% main  tax rate  reductions are  expected to have a similar
impact as for 2011; however, the actual impact will be dependent on the deferred
tax position at that time.


9. Cash and cash equivalents
Included within group cash and cash equivalents is £6,132,000 (2010: £6,818,000)
relating  to monies collected on behalf of  clients where the group has title to
the  funds  (client  cash).  An  equivalent  balance  is  included  within trade
payables.
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 27 March 2011, the group's cash
was £26,464,000 (2010: £20,769,000).



10. Short-term borrowings

                    Group

             27 March   28 March
                 2011       2010
                 £000       £000
---------------------------------
 Bank loan          -      6,000
---------------------------------

During  the year, the £6 million loan  was repaid and the balance outstanding at
the end of the year was £nil.



11. Acquisition of subsidiary

On  9 March 2010, the group acquired 100 per cent of the issued share capital of
Verrus  Mobile  Technologies  Inc.  and  Verrus  UK  Limited  (together known as
PayByPhone)  for  cash  consideration  of  £29  million.  In addition, there was
potential  for a further  £4 million dependent  on financial results until March
2013, which has subsequently been waived by the beneficiaries.

On  acquisition of  Verrus Mobile  Technologies Inc.  and Verrus  UK Limited the
group  recognised £29.2 million of goodwill.  During the year it became apparent
that  the group would be unlikely to receive  £0.4 million from a debtor and its
fair value was reduced and the goodwill increased, accordingly.



12. Equity
                                                                   2011     2010
                                                                   £000     £000
--------------------------------------------------------------------------------
Authorised share capital

4,365,352,200 ordinary shares of 1/3p each (2010
4,365,352,200: ordinary shares of 1/3p each)                     14,551   14,551
--------------------------------------------------------------------------------
                                                                 14,551   14,551
--------------------------------------------------------------------------------
Called up, allotted and fully paid share capital

67,795,702 ordinary
shares of 1/3p each (2010: 67,754,202 ordinary shares of 1/3p
each)                                                               226      226
--------------------------------------------------------------------------------
                                                                    226      226
--------------------------------------------------------------------------------
Called up share capital

At start of year                                                    226      226
--------------------------------------------------------------------------------
At end of year                                                      226      226
--------------------------------------------------------------------------------
Investment in own shares

At start of year                                                  (370)    (926)

Acquired in year                                                      -    (490)

Used on share scheme vesting                                        154    1,046
--------------------------------------------------------------------------------
At end of year                                                    (216)    (370)
--------------------------------------------------------------------------------
Share premium

At start of year                                                     25       25

Arising on issue of shares                                            -        -
--------------------------------------------------------------------------------
At end of year                                                       25       25
--------------------------------------------------------------------------------
Share based payment reserve

At start of year                                                  2,684    2,489

Additions in year                                                 1,088      942

Released in year                                                  (801)    (761)

Current tax on awards                                                 -       34

Other adjustments                                                    34     (20)
--------------------------------------------------------------------------------
At end of year                                                    3,005    2,684
--------------------------------------------------------------------------------
Translation reserve

At start of year                                                    543      508

Movement during year                                               (72)       35
--------------------------------------------------------------------------------
At end of year                                                      471      543
--------------------------------------------------------------------------------
Retained earnings

At start of year                                                 67,636   58,645

Profit for year                                                  23,842   22,132

Non-controlling interest loss for year included in above             41        -

Dividends paid                                                 (15,041) (12,856)

Adjustment on share scheme vesting                                  647    (285)
--------------------------------------------------------------------------------
At end of year                                                   77,125   67,636
--------------------------------------------------------------------------------

The  long term incentive plan  tranche did not vest  on 11 June 2010 because the
group did not meet the performance measure. Under IFRS 2, the fair value charges
of  £647,000 relating to this tranche, which  had been previously charged to the
income  statement, are reversed through equity.  The deferred share bonus vested
in  June 2010 and accordingly the  group used £154,000 of  its investment in own
shares to satisfy the award.



13. Related party transactions
PayPoint has entered into a loan agreement with its 50:50 joint venture Drop and
Collect  Limited (trading as Collect+) and during  the year it has lent Drop and
Collect  Limited  an  additional  £1.4  million  bringing the total loan to £3.1
million.

The terms of the loan are:

  * Interest payable annually at a rate of 3 months LIBOR.

  * Repayable  upon  termination  of  the  joint  venture  or upon demand by the
    lender.

The company and its subsidiaries, in the ordinary course of business, enter into
various  sales, purchase and service transactions with joint ventures and others
in  which the group has a material  interest. These transactions are under terms
that  are  no  less  favourable  than  those  arranged with third parties. These
transactions are not considered to be significant.

PayPoint  has  a  small  investment  in  OB10,  a  company  that  specialises in
electronic invoicing. During the year, PayPoint subscribed for a further £30,125
of  shares under a rights issue, resulting in a shareholding at 27 March 2011 of
1.02% (28 March 2010: 1.04%).

In the view of the directors, the aggregate cost of £435,000 represents the fair
value of the investment in the shares.

David  Newlands, Dominic  Taylor, George  Earle, Eric  Anstee and Nick Wiles all
hold shareholdings in OB10 as follows:

                                       Year       Year
                                      ended      ended
 Directors' shareholding in OB10   27 March   28 March
                                       2011       2010
                                       £000       £000

                                          %          %
-------------------------------------------------------
 David Newlands                        2.87       4.73

 Dominic Taylor                        1.44       1.42

 George Earle                          0.40       0.42

 Nick Wiles                            1.02       1.04

 Eric Anstee                           0.08       0.08
-------------------------------------------------------




14. Notes to the cash flow statement
                                                                   Group

                                                                Year       Year
                                                               ended      ended
                                                            27 March   28 March
                                                                2011       2010
                                                                £000       £000
--------------------------------------------------------------------------------
 Profit  before tax                                           34,456     32,645

 Adjustments for:

 Depreciation of property, plant and equipment                 3,295      4,286

 Amortisation of intangible assets                               317        534

 Share of losses in joint venture                              1,541      1,601

 Net interest expense / (income)                                  55      (174)

 Share based payment charge                                    1,088        942
--------------------------------------------------------------------------------
 Operating cash flows before movements in working capital     40,752     39,834

 Decrease / (increase) in inventories                            209      (373)

 Decrease in receivables                                       6,337      2,385

 Decrease in payables

 - client cash                                                 (686)      (729)

 - other payables                                            (4,476)    (2,386)
--------------------------------------------------------------------------------
 Cash generated by operations                                 42,136     38,731

 Corporation tax paid                                       (10,950)   (13,702)

 Interest and bank charges paid                                 (49)       (43)
--------------------------------------------------------------------------------
 Net cash from operating activities                           31,137     24,986
--------------------------------------------------------------------------------











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 £10 billion from 590 million transactions annually for more than
6,000 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  23,000 terminals in  local shops  (including Co-op,
Spar,  McColls, Costcutter, Sainsburys Local, One  Stop, Londis and thousands of
independents)  in  all  parts  of  the  UK.  Our  terminals 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 6,000 terminals located in local
shops  across the  country and  is expanding.   Our terminals  process cash bill
payments  for utilities and mobile phone top-ups. In the Republic of Ireland, we
have over 500 terminals 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 have a consumer parcel drop off and collection
service  using PayPoint's retail network through  Collect+, a joint venture with
Yodel  (formerly Home  Delivery Network).  This service  is already available in
3,700 of  our  convenience  retail  agents.  Clients  include ASOS, Littlewoods,
Woolworths, New Look, Very, Boden, Mobile Phone Xchange and Great Universal.  In
addition,  in the UK, we  have over 2,500 LINK branded  ATMs, mainly in the same
sites as our terminals.

Internet payments
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
5,500 web  merchants,  including  Stan  James, 32Red, Sportingbet, PKR, Betsson,
Moonpig, Moneysupermarket.com, Severn Trent Water, Ann Summers, Links of London,
Funky  Pigeon,  Mr  &  Mrs  Smith  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 payments
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.

PayPoint as






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Source: Paypoint plc via Thomson Reuters ONE

[HUG#1518935]