Annual Report 2021 Making people’s lives a little easier Who we are The PayPoint Group delivers innovative services and technology connecting millions of consumers with over 60,000 retailer partner and SME locations. Our Group businesses serve a diverse range of customers: from leading service organisations like EDF and Monzo; retailers and SMEs from Asda to the best UK independent stores; parcel carriers like eBay and DPD to the millions of consumers who pay bills, get cash, make card payments or pick up parcels every day at thousands of locations across the UK. Our purpose We deliver innovative services that make people’s lives a little easier every day. For more information go to corporate.paypoint.com Strategic Report Governance Financial statements Shareholder information 01 Contents Highlights Strategic Report Revenue from continuing Ordinary dividend 01 Highlights operations paid per share 02 PayPoint Group at a glance 03 Our approach 04 Chief Executive’s review 08 Year in review £127.7m 31.2p 10 Market overview 12 Our business model -11.5% -34% 20 Our strategy (2020: £144.3m)1 (2020: 47.2p) 28 Key performance indicators 30 Financial review 36 Risk management Profit before tax from Ordinary reported 37 Principal risks and uncertainties continuing operations2 dividend per share 41 Viability statement 42 Responsible business Governance £19.4m 32.2p 52 Chairman’s statement for governance 54 Board of Directors -61.1% -17.9 % 56 Executive Board (2020: £50.0m) (2020: 39.2p) 58 Corporate Governance Report 64 Nomination Committee Report 66 Audit Committee Report Net corporate debt4 Diluted earnings per share 72 Directors’ Remuneration Report 84 Directors’ Report 86 Statement of Directors’ responsibilities £68.2m 31.3p Financial statements 87 Independent Auditor’s Report -465.8% -52.8% 93 Consolidated statement of profit or loss (2020: £12.0m) (2020: 66.3p) 93 Consolidated statement of comprehensive income 94 Consolidated statement of Cash generation from Net revenue from financial position continuing operations continuing operations 95 Consolidated statement of changes in equity 96 Consolidated statement of cash flows 96 Reconciliation of cash and cash equivalents £44.1m £97.1 m 97 Company statement of financial position 98 Company statement of changes in equity -23.8% -9.1% 98 Company statement of cash flows (2020: £57.9m) (2020: £106.8m) 99 Notes to the consolidated financial statements Operating margin from Underlying profit before Shareholder information continuing operations tax from continuing 128 Notice of Annual General Meeting before exceptional items5 operations3 131 Notes to the Notice of Annual General Meeting 133 Explanatory notes to certain of the resolutions to be proposed at the annual 38.0% £35.5m general meeting ibc Officers and professional advisors -9.2ppts -19.3% (2020: 47.2%) (2020: £44.1m) 1. Comparative information has been restated for the discontinued operation. Refer to note 9. 2. Profit before tax from continuing operations includes £3.6 million of non-recurring costs associated with the acquisitions undertaken in the year and the £12.5 million provision made as a current best estimate for a resolution of Ofgem’s Statement of Objections. 3. Underlying profit before tax is an alternative performance measure as explained in note 1 to the financial information; a reconciliation to profit before tax from continuing operations is included in the Financial Review on page 30. 4. Net corporate (debt)/cash (excluding IFRS 16 liabilities) is an alternative performance measure. Refer to note 1 to the financial information for a reconciliation to cash and cash equivalents. 5. Operating margin before exceptional items % is an alternative performance measure and is calculated by dividing operating profit before exceptional items by net revenue. 02 PayPoint Plc Annual Report 2021 PayPoint Group at a glance Delivering innovative services and technology After a What we do: We deliver innovative services and technology connecting transformational millions of consumers with over 60,000 retailer partner year for the PayPoint and SME locations Read more on page 12 Group, we are now positioned for Our divisions: growth in the UK We operate across three divisions: with significant opportunities to Payments Shopping E-commerce deliver shareholder & Banking value as we maximise We help consumers conveniently We enhance the retailer proposition We provide a technology-based the opportunities make and receive payments online and consumer experience, driving delivery platform to deliver and in-store for the biggest service footfall, new commission best-in-class customer journeys available to the brands in the UK opportunities and better store for e-commerce brands and management tools for thousands their customers over the ‘first business. of SMEs and retailers across the UK and last mile’ We have updated How we do it How we do it How we do it how we describe our • Digital payments – MultiPay • Retail services – EPoS, FMCG, • E-commerce – Collect+ • Cash through to digital Home Delivery, ATMs (Parcels Send, Pick Up, business to reflect payments – eMoney • Card payments Drop Off) more accurately the • Cash payments – bill payments, CashOut and Banking market opportunities and service Who we work with Who we work with Who we work with innovation driving growth in the UK. PayPoint Group in Numbers PayPoint sites Card payment sites Parcel transactions 28,067 30,000 26.6m Bill payment Retailer partner and Collect+ Trustpilot transactions SME locations score 195.5m 60,000 4.5/5 Strategic Report Governance Financial statements Shareholder information 03 Our approach Our Purpose Our Vision Why we exist What we aim to achieve We deliver innovative services that First-time delivery of make millions of people’s lives outstanding technology and a little easier every day services to our customers Creating a dynamic place to work for our people Delivering positive outcomes for all our stakeholders Our values Our strategy How we bring our vision to life Embed PayPoint Group at the heart of SME and convenience retail businesses Become the definitive technology-based e-commerce Ambitious Results focused Accountable delivery platform for first and last mile customer journeys Sustain leadership in ‘pay as you go’ and Collaborative Can do Good colleague grow digital payments Building a delivery-focused organisation and culture Read more on page 47 Read more on page 20 ESG Creating long-term value for all our stakeholders We are committed to delivering sustainable, essential services that have a positive impact on our customers, UK communities and the world we live in Read more on page 42 04 PayPoint Plc Annual Report 2021 Chief Executive’s review This has been a transformative year for Significant the PayPoint Group with a significant step change in strategic delivery and step change a resilient performance delivered across the business against the in strategic backdrop of Covid-19 government restrictions and structural changes delivery to our traditional legacy cash business. Our new acquisitions Strategic repositioning of the business for growth driven through acquisitions of Handepay, Merchant Rentals, i-movo Nick Wiles and RSM 2000 Chief Executive Strategic Report Governance Financial statements Shareholder information 05 Operationally, we have remained focused In addition, we announced the successful We are now much better positioned for on managing our business by supporting disposal of our Romanian business in early growth and to take advantage of the enduring our people, our clients and retailer partner April for a total consideration (including the structural trends that have accelerated network and the most vulnerable in the trading profit for the year) of £48 million. through the Covid-19 pandemic, including the community. In addition, we have taken continued shift from cash to digital payments, important steps to strengthen our operating The Executive Board has also been the growing demand for online shopping model and organisational structure strengthened in key areas to deliver growth fulfilment and the increase in shopping local. and to identify and support growth and focus on the UK market: Ben Ford joined opportunities in our core UK business. as Retail Services Director in July 2020; Tanya Outlook and dividend Murphy joined as General Counsel and Head As we begin the new financial year, we are In spite of the challenges faced in the past of Compliance in September 2020; Mark already seeing some encouraging signs of year, the overall performance of the Group Latham joined as Card Services Director in renewed activity in a number of areas of our has been driven by our robust, agile response February 2021 following the completion of the business, in particular in card processing and to Covid-19, focused on customer support, Handepay/Merchant Rentals acquisition; and parcels. We are also encouraged by the early service development and enabling our people Simon Coles, our Chief Technology Officer since performance and rapid integration of i-movo to work successfully and productively. After 2017, has now joined the Executive Board. Our and Handepay/Merchant Rentals into the a challenging first quarter, this approach Environment, Social and Governance (’ESG’) PayPoint Group and the new opportunities yielded a swift transaction and site recovery agenda has also gathered pace in the year, arising from the recently completed acquisition as government restrictions eased after the as we consider our social responsibility and of RSM 2000. I am confident the steps we first lockdown and learnings were successfully impact as a management team and business have taken during the 2020/21 financial year applied to minimise the impact of further towards each of these key areas. Already, we have strengthened the business and better lockdowns in the year, which is testament to the have done important work to deliver a refresh positioned us for both recovery in our legacy focus and dedication of the whole business. of our purpose, vision and values, reflecting the businesses and growth in our developing enlarged PayPoint Group and how we deliver markets.