1

Interim Results Presentation20 November 2008

Strictly private and confidential

PayPoint plc

2

Agenda

• Highlights and operations review

• Financial review

• Summary

• Q&A

• Closing

3

Highlights and operations review

Dominic TaylorChief Executive

4

PayPoint overview• Strong half year’s performance, driven by a combination of

steady revenue growth (8%)* and operational gearing (40% operating margin)

• Results driven through implementation of PayPoint’s core business strategy, namely:

– broadening our customer proposition by increasing the range and volume of payments across our network

– growing and optimising our network coverage

* On a like-for-like basis which adjusts the comparative period to 26 weeks

5

PayPoint overview

Our investment in the business continues

• Two internet companies integrated successfully as a single business, PayPoint.net

• Launched bill payment in Romania

• Increase in all sites– Terminal estate in the UK and Ireland increased by 9%– Romania terminal estate increased by 31% with 1,200 bill payment branded

PayPoint terminals– ATM estate grown by 11%– Internet merchants increased by 12%

6

PayPoint highlightsFor the six months ended September each period

Net revenue (£million)

-

5

10

15

20

25

30

35

40

2004 2005 2006 2007 2008

Transaction volume (million)

-

50

100

150

200

250

300

2004 2005 2006 2007 2008

1The comparative figures for 2007 have been adjusted to 26 weeks

1 1

7

For the six months ended September each period

PayPoint highlights

1The comparative figures for 2007 have been adjusted to 26 weeks

PayPoint terminal outlets

-

5,000

10,000

15,000

20,000

25,000

30,000

2004 2005 2006 2007 2008

UK & Ireland Romania

Operating profit (£million)

0

2

4

6

8

10

12

14

16

2004 2005 2006 2007 20081 1

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Trading in today’s economic climate• PayPoint’s business model is one that …

– is based on recurring revenue streams– drives strong retail and client loyalty– is differentiated through a broad product offering– drives good operational gearing and cashflows

• Majority of PayPoint transactions relate to non discretionary spend

• In a slowing economy consumers likely to …– make smaller payments more frequently– use cash over credit– use prepay products

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Operations reviewFor the six months ended September each period

1

Transaction volumes by sector (million)

-

50

100

150

200

250

300

2004 2005 2006 2007 2008

General MobileATM PP.net

1The comparative figures for 2007 have been adjusted to 26 weeks

1

10

Bill and general payments

• Improved coverage, high quality of the retail network and signage/brand awareness are increasing share

• Increases in domestic gas and electric prices have helped prepaid energy volumes grow by 13% on a like for like basis

• Continued growth as E.ON and British Gas roll out key meters

• Good growth in water bill payment (up 14%) and Local Authorities (up 20 %)

• Preferred choice for new schemes e.g. PrePay cards, Football Pools

11

Bill and general payments …

Bill payment volumes* (millions)

-

10

20

30

40

50

60

2004 2005 2006 2007 2008

Energy WaterCommunications Other

* excludes prepaid energy and transport

1The comparative figures for 2007 have been adjusted to 26 weeks

1

12

Bill payment volumes (millions) - exc BBC

-

5

10

15

20

25

30

35

40

2004 2005 2006 2007 2008

OtherCommunicationsWaterEnergy

Bill and general payments …

1The comparative figures for 2007 have been adjusted to 26 weeks

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Mobile payments

• UK volumes down overall (c.2%) with evidence of reduced consumer spending and networks offering more free airtime

• PayPoint UK volumes are down 1% on a like-for-like basis lower than the market decrease as we have installed nearly 900 extra terminals but revenue is up by 3% on a like-for-like basis

• PayPoint UK volume growth– driven by more terminals - increased awareness/visibility– sector share 32% (excludes Cr/Dr)– several new smaller MVNO clients e.g Lebara

• PayPoint in Romania – volumes up 8%, despite a delay in launching Cosmote (3rd largest mobile operator) on the new PayPoint branded terminals

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ATMs

• Surcharge self replenishment model remains successful – low fixed costs

• Installed 238 new sites in the first six months, net increase 149 (25 per month), to achieve a network size of 2,165

• Decrease of 2% in the number of transactions processed by self-fill independent ATM deployers

• Our transactions flat as we have rolled out further ATMs, however transaction per ATM have fallen to 568 per month

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ATMs …

ATM Sites

0

400

800

1,200

1,600

2,000

2,400

Sept 03 Mar 04 Sept 04 Mar 05 Sept 05 Mar 06 Sept 06 Mar 07 Sept 07 Mar 08 Sept 08

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ATMs

Average Monthly Transactions by Independent ATM Deployer Self-Fill Model

0

100

200

300

400

500

600

700

April 07 May 07 June 07 July 07 Aug 07 Sept 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 June 08 July 08 Aug 08 Sept 08

PayPoint

Self-fill competitors

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• 20,772 PayPoint terminal outlets (September 2008)

• Rolled out over 1,518 (net 894) agents in 6 months

• Continuing to rollout agents to 21,350 target by year end

• Continued strong demand with churn remaining at 6%pa

Terminal siteEpos only siteATM site

Retail (UK & Ireland)

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PayPoint’s value to retailers• Bill pay consumers visit store >25% more frequently than

normal shoppers

• 82% retailers believe footfall benefit is either ‘very good’or ‘fairly good’

• Bill pay consumer spends 172% more per week than normal shopper (excluding bill value)

• PayPoint facility increases instore spend across each category by approx. 10%

Source: Harris International Marketing (him!) convenience store tracking research on shoppers and shopping, May 2008 - >30k shopper interviews; 4.5k staff interviews

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Romania

• All transactions now processed on UK host

• Relationships with all mobile operators – leading migration from scratch to electronic

• Bill Payment launched with four founding clients in August

• Second phase of four clients to go live this year

• Continued investment and knowledge transfer– increased retail sales force– optimisation of existing PayStore network– additional 800 bill pay sites this financial year (2,000 total)

• Expect Romania to be profitable next financial year

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PayPoint in Romania

212

2.5

3

3.5

4

4.5

5

5.5

6

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

£ billion

20082007

Total UK Online SalesMonthly

PayPoint.net (Internet payments)

Source IMRG/Cap Gemini

• Business now trading as one company in a growing market

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Monthly growth rates % growth in on-line sales 08 v 07

0%

10%

20%

30%

40%

50%

60%

70%

80%

Jan Feb Mar Apr May Jun Jul Aug Sep

PayPoint.net

Market

PayPoint.net• Transactions up 46% as 303 new merchants added

• Cross sell internet business to PayPoint’s existing clients

• New tenders drawing on combined cash and web payment offers

• PayCash now launched allowing internet customers to pay in cash at PayPoint agents

Source IMRG/Cap Gemini/PayPoint

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PayCash – merchant’s website

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PayCash – consumer voucher

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Continued differentiation

• Maintain leadership in retail point of sale technology– most advanced terminal– enhanced Epos integration– broadband opportunity– contactless payment devices

• Strength of branded retail network a key asset in driving new products

• Internet differentiation centres on cross synergies– Leveraging client base– Development of PayCash– Technical synergies

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Financial reviewGeorge Earle

Finance Director

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Volume driven top line growth

26%26%Margin

4%27,30528,410Gross profit

6%76,64580,931Cost of sales

5%103,950109,341Revenue

% increase

H1 07/08H1 08/09£000s

9%

9%

9%

like for like %

increase

35%36%Margin excluding top-upsas principal

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Volume growth

26%26%Margin

4%27,30528,410Gross profit

6%76,64580,931Cost of sales

5%103,950109,341Revenue

% increaseH1 07/08H1 08/09£000s

PP.net and Pay Store

4,577Mix/price

103,950H1 06/07£000sRevenue

Volume(277)

109,341H1 07/08

524567Other

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Cost of sales

26%26%Margin

4%27,30528,410Gross profit

6%76,64580,931Cost of sales

5%103,950109,341Revenue

% increaseH1 07/08H1 08/09£000s

27,862

1,19622,913£000’s

H1 04/05

37,253

910Depreciation29,073Commissions paid£000’s

H1 05/06Cost of sales

76,645

26,6882,643

41,463£000s

H1 07/08

30,749 Mobile top-ups as principal

80,931

3,171 Depreciation/amortisation41,235Commissions paid£000s

H1 08/09Cost of sales

Acquiring bank charges 1,797 1,618Other 3,979 4,233

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Operational gearing remains strong

£000s

4%34,18135,561

7%10,13610,829Profit after tax

(4,353)(4,475)Tax

6%14,48915,304Profit before tax

5431,138Interest

2%13,94614,166Operating profit

% increaseH1 07/08H1 08/09

Net revenue

Operating margin 40% 41% -1ppts

like for like %

increase

8%

11%

15%

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Operating costs under control

4%34,18135,561Net revenue

7%10,13610,829Profit after tax(4,353)(4,475)Tax

6%14,48915,304Profit before tax5431,138Interest

2%13,94614,166Operating profit

% increaseH1 07/08H1 08/09

(567) Other costs14,166H1 08/09

(318) Staff costs1,105Increase in gross profit

13,946H1 07/08£000sOperating profit

£000s

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Strong cash flow

9,21712,261Cash flow before dividends

(1,801)(2,097)Capital expenditure

# Working capital excludes creditors in respect of client cash

14,20118,416Operating cash flow

(2,465)660Change in working capital#16,66617,756

Operating cash flow before movements in working capital

2007£000s

2008£000s

Six months to 30 September

Net investment income 1,016 549

Corporation tax paid (5,074) (3,732)

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Net cash of £28m

(7,024)Dividends

28,224Net cash at end (including client cash* £8.0 million)

12,261Cash inflow 27,727Net cash at start (including client cash* £8.0 million)

2008£000s

Six months to 30 September

* Client cash is cash to which PayPoint has legal title, but for which an equal amount is included in creditors

(2,109)Acquisition of Pay Store

(2,489)Purchase of own sharesOther (142)

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Summary & outlook

• Robust business model with recurring revenues

• Core business continues to deliver strong profitable growth through implementation of strategy

• Romania terminal rollout to continue as platform for growth in mobile top ups and bill payments

• PayPoint.net focused on growth, enhanced by the launch of PayCash

• Second half trading has been in line with company’s expectations

• Confident of continuing growth

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Q & A

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Appendix 1

Materials to support the consumer transaction

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Appendix 1

Client payment media

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Appendix 1

Retailer external signage

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Appendix 1POS merchandising

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Appendix 1

Terminals and ATMs

41Transport Ticketing

E VoucherE-TopUp

Sample SPAR Tag

Utility Payment

Appendix 1

Terminal receipts

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Appendix 1

PSP transaction flow