CHAIRMAN’S STATEMENT

David Newlands, Chairman of PayPoint, said “In 2009, PayPoint continued to grow and was strongly cash generative. Revenue, margins, profits and dividends increased. Plans announced this time last year to increase the UK terminal estate were exceeded. New terminals have continued to be rolled out in Romania, primarily for our bill payment service launched in August 2008 and for which we now have 14 clients contracted. In February 2009, we announced a joint venture with Home Delivery Network, leveraging our existing retail network, to provide consumers with a more convenient solution for parcel delivery and collection. This demonstrates the adaptability of our retail network to provide new services.

For the current financial year, trading since the period end is in line with the company’s expectations.

We expect further growth in the UK by increasing market share in bill and general payments, mobile top-ups, and ATMs. We plan to add a further 1,500 terminals during the course of the current financial year, to continue to capitalise on these opportunities.

In Romania, we plan to install a further 900 PayPoint terminals. These will complement the existing terminal base and provide further national coverage for our bill payment network. We expect losses in Romania in the first half of the year but the business should be trading profitably by the end of the financial year.

PayPoint.net, which is trading profitably, should see growth accelerate in the latter part of the year, as sales leads are converted into live merchants and PayCash starts to become more widely accepted.

Collect+, our parcels joint venture, will require investment during the year to brand the network, install electronic signature pads, develop the billing platform and market the service. Whilst the prospects for this new business are excellent, it is anticipated that it will be loss-making this year.

Cash generation should remain strong, although the decline in interest rates in the second half of last year to their current historically low levels, is likely to reduce severely interest income in the current year.

We are confident that further opportunities remain for future growth through market share gains, new initiatives and new products.”

Click here to download the full Annual Report for the 52 week period ended 29 March 2009.