PayPoint plc (the 'Company')
26 June 2018
Publication of Annual Report and Notice of 2018 Annual General Meeting
The Company has today published its Annual Report and Financial Statements for the year ended 31 March 2018 ('2018 Annual Report') on its website http://corporate.paypoint.com/
In accordance with Listing Rule 9.6.1, the 2018 Annual Report and notice of Annual General Meeting will shortly be available for public inspection on the National Storage Mechanism (NSM) - Morningstar (www.morningstar.co.uk/uk/nsm ).
The Company will hold its 2018 Annual General Meeting on Thursday, 26 July 2018 at 12 noon at the offices of Canaccord Genuity, 88 Wood Street, London EC2V 7QR.
In addition, following the release on 24 May 2018 of the Company's preliminary results for the year ended 31 March 2018, which are also available at http://corporate.paypoint.com/, the Company makes the following additional disclosure in compliance with Rule 6.3.5R of the Disclosure and Transparency Rules of the UK Financial Conduct Authority. Together these constitute the information required to be communicated to the media in unedited full text through a Regulatory Information Service. This information is not a substitute for reading the full 2018 Annual Report and Financial Statements.
Principal risks and uncertainties Since publication of the annual report last year, the Executive team has completed a thorough review of the key risks that could prevent PayPoint meeting its strategic objectives, its risk appetite, the risk management framework and the format for managing these risks and reporting to the Board. The Group's level of risk remains broadly the same as last year however, PayPoint's business, financial condition or operations could be materially and adversely affected by the risks summarised in the sections below. +------------------------+--------------------------+--------------------------+ |Risk area |Potential impact |Mitigation strategies | +------------------------+--------------------------+--------------------------+ |Business | +------------------------+--------------------------+--------------------------+ |Innovation and market |The Group could fail to |The Group monitors | |changes |adapt to changes in |external technological and| | |consumer behaviour or to |consumer trends through | | |commercialise and develop |its monthly strategy | | |innovation that is |committee and twice yearly| | |scalable and meets the |Board strategy reviews. | | |requirements of clients |The Group is committed to | | |and retailers. The |continued research and | | |inability to implement new|investment in technology | | |products and services |and products to support | | |effectively may impact |its continued growth. Our | | |PayPoint's ability to |product portfolio and the | | |drive growth and |progress of new | | |profitability. |initiatives are reviewed | | | |at the monthly product | | | |committee that contains | | | |representatives from | | | |commercial, product, | | | |technology, finance and | | | |legal. | | | | | +------------------------+--------------------------+--------------------------+ |Culture |The strategic objectives |The PayPoint strategic | | |and values of the Group |objectives and values are | | |are focused on retailer |defined and advocated by | | |and consumer-centric |the Executive Board. These| | |products and services. If |values are linked to | | |employees are not aligned |strategic, team and | | |with these objectives or |individual employee | | |empowered to realise |objectives and performance| | |opportunities, deliver |appraisals. The Group's | | |performance or mitigate |ethical principles are | | |risks this could lead to |published on its website | | |poor service quality, a |and intranet. A | | |loss in revenue, increased|whistleblowing policy and | | |cost or failure by |procedures are published | | |employees to escalate |and a third-party service | | |concerns or issues to |if available for employees| | |senior management and the |to report wrongdoing. The | | |Executive Board. |Retailer Pledge is | | | |published and all | | | |employees made aware of | | | |its requirements. | | | | | +------------------------+--------------------------+--------------------------+ |Dependence on key |The consolidation of major|The Group monitors client | |clients and retailers |clients or multiple |and retailer concentration| | |retailers could adversely |risk to ensure that no one| | |affect revenue. |client or retailer | | |Insolvency, liquidation, |accounts for a | | |administration or |disproportionate share of | | |receivership of retailers |the Group's net revenue. | | |could lead to PayPoint |In addition, the Group | | |being unable to recover |continues to acquire new | | |some or all of the client |clients and retailers to | | |monies processed by the |reduce reliance on | | |retailer. PayPoint would |existing sources of | | |be liable to account to |revenue. All major clients| | |those clients where |are covered by specific | | |PayPoint bears the risk of|contracts or agreements. | | |collections. |Contract end dates and | | | |start of notice periods | | | |are scheduled and | | | |regularly reviewed by | | | |client management teams. | | | |Retail teams maintain and | | | |develop the relationship | | | |with retailers. | | | | | +------------------------+--------------------------+--------------------------+ |Partners & suppliers |Reliance on third parties |The Group selects and | | |for the provision of key |negotiates agreements with| | |parts of the PayPoint |strategic suppliers and | | |services (e.g. Payment |agents based on criteria | | |Service Providers) could |such as delivery assurance| | |lead to extended outages |and reliability. Single | | |if the supplier fails to |points of failure are | | |meet required SLAs or goes|avoided, where practicable| | |into administration. |and economically feasible.| | | |Specifically, for our | | | |MultiPay product we are | | | |adding a second payment | | | |service provider which | | | |will enhance the | | | |resilience of the service.| | | |Controls are regularly | | | |reviewed and improved to | | | |minimise risk of retailer | | | |churn caused by financial | | | |loss to retailers through | | | |fraudulent third-party | | | |activity. Suppliers are | | | |selected on merit | | | |following tendering, | | | |procurement and due | | | |diligence processes. | | | | | +------------------------+--------------------------+--------------------------+ |Interruptions in |The Group's ability to |Resilience is built into | |processes and systems |provide reliable services |systems and contingency | | |largely depends on the |plans are in place should | | |efficient and |systems fail. These plans | | |uninterrupted operation of|are exercised regularly. | | |our computer network |Programmes are in place to| | |systems, financial |remove technical debt and | | |settlement systems, data |to automate manual | | |and call centres, as well |processes. Payment files | | |as maintaining sufficient |are automatically imported| | |staffing levels. System or|into settlement systems. | | |network interruptions, |All payments are checked /| | |recovery from fraud or |authorised by nominated | | |security incidents or the |signatories. There is | | |unavailability of key |segregation of duties | | |staff or management |maintained between | | |resulting from a pandemic |settlement & corporate | | |outbreak could delay and |accounts. Invoices are | | |disrupt our ability to |recorded and approved by | | |develop, deliver or |authorised managers. Daily| | |maintain our products and |reconciliation of client | | |services, causing harm to |settlement accounts and | | |our business and |weekly reconciliation of | | |reputation and resulting |PayPoint corporate | | |in loss of customers or |accounts is carried out. | | |revenue. |Audited controls for | | | |supplier and client | | | |account set-up are in | | | |place. | | | | | +------------------------+--------------------------+--------------------------+ |Financial | +------------------------+--------------------------+--------------------------+ |Liquidity & funding |Capital might be required |The Finance and Treasury | | |to finance investment, |policy sets borrowing | | |fixed assets, working |limits with headroom | | |capital, acquisitions or |allowed. A five-year | | |losses. If PayPoint does |revolving credit facility | | |not perform to expectation|is in place. Cash | | |or finance is not |resources are available | | |available from the market |but will be depleted by | | |it may be necessary to |additional annual | | |reduce the scope of the |dividends of £25 million | | |Group's operations or |for five years. The | | |anticipated expansion. |ability to raise new | | | |funding is available via | | | |the stock market. Investor| | | |relations programme | | | |communicates company | | | |strategy, opportunities | | | |and results to the market | | | |and investors. Monthly | | | |business reviews and | | | |quarterly forecasts | | | |highlight any change in | | | |cash requirements. Cash | | | |flow reporting has been | | | |improved. | | | | | +------------------------+--------------------------+--------------------------+ |Operational | +------------------------+--------------------------+--------------------------+ |Legislation or |PayPoint is required to |The Group's legal | |regulatory reforms and |comply with relevant legal|department works closely | |risk of non-compliance |and regulatory |with senior managers to | | |requirements. Any breach |adopt strategies to | | |of these obligations could|educate legislature, | | |lead to costly and |regulators, consumer and | | |damaging legal or |privacy advocates and | | |corrective actions to |other stakeholders to | | |return to compliance e.g. |support the public policy | | |Health & Safety at Work |debate, where appropriate,| | |Act, Data Protection Act /|to ensure regulation does | | |GDPR, Stock Market listing|not have unintended | | |rules, Financial Conduct |consequences over the | | |Authority requirements, |Group's services. A | | |anti-money laundering |central compliance | | |legislation, employment |department co-ordinates | | |law etc. It could also |all compliance monitoring | | |lead to the prosecution of|and reporting. Subsidiary | | |individual company |managing and finance | | |officers or employees. |directors are required to | | | |sign annual compliance | | | |statements. A plan is in | | | |place to ensure that the | | | |Group is compliant with | | | |the requirements of the | | | |General Data Protection | | | |Regulations prior to the | | | |25 May 2018 deadline. | | | | | +------------------------+--------------------------+--------------------------+ |Cyber security, data |System or network |Service delivery is | |protection, resilience |interruptions, recovery |constantly monitored with | |and business continuity |from fraud or cyber |technical support teams in| | |security incidents or |place to address service | | |poorly implemented change |outages or errors. Contact| | |could delay and disrupt |Centre, Service Management| | |our ability to develop, |and Technical Services | | |deliver or maintain our |Helpdesk are in place to | | |products and services, |assist with and resolve | | |causing harm to our |issues. Client Management | | |business and reputation |and Retail Management | | |and resulting in loss of |teams are in place to | | |customers or revenue. |interface with clients and| | |PayPoint's ability to |retailers. Resilient | | |provide reliable and |systems are in place | | |secure services largely |across the Group. Disaster| | |depends on the |recovery and business | | |availability and |continuity plans are | | |uninterrupted operation of|maintained and exercised | | |its network of retailer |regularly to ensure | | |terminals, computer |contingencies are in place| | |systems, financial |in the case of failure. | | |settlement and key | | | |business processes. | | | | | | +------------------------+--------------------------+--------------------------+ |Attracting and retaining|Future success is |Effective recruitment | |key talent |substantially dependent on|programmes are on-going | | |the continued services and|across all business areas,| | |performance of executive |as well as personal and | | |directors, senior |career development | | |management, competent and |initiatives. The executive| | |qualified personnel. The |management reviews talent | | |failure to attract the |potential twice a year and| | |right candidates, loss of |retention plans are put in| | |key personnel or failure |place for individuals | | |to adequately train |identified at risk of | | |employees could damage the|leaving. Compensation and | | |Group's business or lead |benefits programmes are | | |to non-compliance with |competitive and reviewed | | |legal and regulatory |regularly. | | |requirements. | | | | | | +------------------------+--------------------------+--------------------------+ |Brexit |The effect on inter- |Due to the current | | |company transactions and |uncertainties with the | | |the Group's international |Brexit negotiations the | | |expansion plans may be |Group is still considering| | |adversely affected by the |appropriate mitigation | | |outcomes of the |strategies. However, the | | |negotiations between the |bulk of the Group's | | |UK government and the |operations and revenues | | |other member countries |are UK-based. Romania and | | |during the UK's exit from |Ireland will remain within| | |the European Union. |the EU and are unlikely to| | | |be significantly affected | | | |by Brexit. Where issues | | | |are identified appropriate| | | |mitigations are being put | | | |in place. | | | | | +------------------------+--------------------------+--------------------------+
Related party transactions Remuneration of the directors, who are the key management of the Group, was as follows during the year:
+-----------------------+----------------------+ |Year ended 31 March |Year ended 31 March | |2018 |2017 | +-----------------------+----------------------+ |£000 |£000 | +-------------------------------+-----------------------+----------------------+ |Short term benefits and |2,579 |2,162 | |bonus(1) | | | +-------------------------------+-----------------------+----------------------+ |Pension costs(2) |234 |235 | +-------------------------------+-----------------------+----------------------+ |Long term incentives(3) |445 |445 | +-------------------------------+-----------------------+----------------------+ |Other(4) |29 |29 | +-------------------------------+-----------------------+----------------------+ |Total |3,287 |2,871 | +-------------------------------+-----------------------+----------------------+ 1. Includes salary, fees, benefits in kind and annual bonus. 2. Defined contribution pension scheme. 3. Long term incentives: includes the value of 2015 LTIP and DABS expected to vest after the year end (2017: 2014 DSB and LTIP awards). 4. SIP matching and dividend shares awarded in the year.
Amounts received from Drop and Collect Limited during the year totalled £15.1 million (2017: £17.8 million) and PayPoint held a trade debtor at year end of £0.4 million (2017: £0.6 million).
Directors' remuneration is disclosed on page 58 of the 2018 Annual Report as part of the annual report on remuneration.
Statement of directors' responsibilities in respect of the Annual Report and the Financial Statements
The 2018 Annual Report contains the following statements regarding responsibility for financial statements on page 69:
'The directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law and have elected to prepare the parent Company financial statements on the same basis.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial statements, the directors are required to: * select suitable accounting policies and then apply them consistently; * make judgements and estimates that are reasonable, relevant and reliable; * state whether they have been prepared in accordance with IFRSs as adopted by the EU; * assess the Group and parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and * use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the directors in respect of the annual financial report
We confirm that to the best of our knowledge:
* The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and * the directors' report which also incorporates the strategic report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group's position and performance, business model and strategy.
Dominic Taylor Chief Executive 24 May 2018'
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Enquiries:
Susan Court Company Secretary, PayPoint plc Tel: +44 (0)1707 600300
ABOUT PAYPOINT
In thousands of retail locations, at home and on the move, we make life more convenient for everyone.
For retailers, we offer innovative and time-saving technology that empowers convenience retailers in the UK and Romania to achieve higher footfall and increased spend so they can grow their businesses profitably. Our innovative retail services platform, PayPoint One, is now live in over 8,000 stores and offers everything a modern convenience store needs, from parcels and contactless card payments to EPoS and bill payment services. Our technology helps retailers to serve customers quickly, improve business efficiency and stay connected to their stores from anywhere.
We help millions of people to control their household finances, make essential payments and access in-store services, like parcel collections and drop-offs. Our UK network of 29,000 stores is bigger than all banks, supermarkets and Post Offices together, putting us at the heart of communities nationwide.
For clients of all sizes, we provide cutting-edge payments technologies without the need for capital investment. Our seamlessly integrated multichannel payments solution, MultiPay, is a one-stop shop for customer payments. It helps over 500 consumer service providers to save time and money while making it easier for their customers to pay - via any channel and on any device.
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients. The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: PayPoint plc via GlobeNewswire
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