Trading update for the three months ended 30 June 2024
PayPoint Plc
Trading update for the three months ended 30 June
20241
1 August 2024
A positive quarter with further progress
on building blocks to £100m EBITDA by end of FY26
Nick Wiles, Chief Executive of PayPoint Plc,
said:
“This has been a busy and productive quarter
for the Group in which we have delivered further net revenue growth
and established a strong platform for continued progress in the
current financial year. The strategic investments we have made in
Yodel and obconnect, along with an expanded partnership with Incomm
in Love2shop, underpin our confidence in a number of our key new
opportunity building blocks, adding further momentum to meeting
expectations for the current financial year and achieving our
medium-term targets.
Consumer behaviour across a number of our
businesses has improved over the quarter, though we continue to
monitor energy and cash bill payment activity as we head towards
the second half of the year. Our expectation remains that the
consumer outlook will improve during the course of the
year.
Our share buyback programme commenced on 1 July 2024, returning
at least £20m over the next 12 months, which, combined with our
growing dividend, will further enhance shareholder returns. Our
core characteristics of strong earnings growth and cash flow
generation, along with continued growth across the Group, give the
Board confidence in delivering further progress in the current
year.”
GROUP AND DIVISIONAL
HIGHLIGHTS
Group net revenue increased by 9.5% to £39.2 million (Q1
FY24: £35.8 million), driven by a strong performance in the quarter
by the Shopping, E-commerce and Love2shop divisions.
Shopping divisional net revenue increased by 3.8% to
£16.4 million (Q1 FY24: £15.8 million)
- Retail services net revenue increased
by 3.8% to £8.1 million (Q1 FY24: £7.8 million) driven by further
PayPoint One/Mini site growth to 19,431 (31 March 2024: 19,297) and
the annual RPI service fee increase
- Card payments net revenue grew by
3.8% to £8.3 million (Q1 FY24: £8.0 million) with further site
growth in the EVO estate to 19,755 (31 March 2024: 19,682) and in
the Lloyds Cardnet estate to 10,120 (31 March 2024: 10,064)
- Continued focus on cards pricing
governance yielding improved new business and retention margins.
Additionally, we continue to see contract length mix shift
positively from 1 month to 12 months and time to transact has
drastically reduced driven by our welcome call programme and an
improved customer onboarding process
- Good progress on PayPoint Engage, our
consumer engagement platform for FMCG brands, with further
campaigns delivered in the quarter. This includes an Abraxas
Marketing award-winning campaign for SPAR during the Euro 2024
campaign, and winning an award at the Independent Agency Awards for
our 2023 campaign for Pringles, delivered with our partners, ZEAL
Creative.
E-commerce divisional net revenue increased strongly by
75.0% to £4.2 million (Q1 FY24: £2.4 million)
- Strong transaction growth of 66.7% to
32.0 million parcel transactions (Q1 FY24: 19.2 million) reflecting
further volume growth for Vinted and driven by the growing consumer
adoption of Out of Home and the strong market positioning of the
Collect+ network
- Collect+ network increased to 13,085
sites (31 March 2024: 11,786)
- Royal Mail rollout to 5,000 sites now
complete as of 31st July 2024
Payments & Banking
divisional net revenue decreased by 1.6% to £12.2 million (Q1 FY24:
£12.4 million)
- Continued growth through our MultiPay
platform and Open Banking, with underlying net revenue increasing
by 14.3% to £1.6 million (Q1 FY24: £1.4 million). Total digital net
revenue decreased by 8.8% to £3.1 million (Q1 FY24: £3.4 million),
with cash out net revenue decreasing by -22.9% to £1.5 million,
with the prior year including the one-off benefit of £0.3m from the
Energy Bills Support Scheme (EBSS)
- Further Open Banking progress, including delivering cheque
replacement services, leveraging our PayPoint OpenPay service,
enabling customers to receive funds directly to their bank account
or in cash
- Cash through to digital net revenue
increased by 5.9% to £1.8 million in the quarter (Q1 FY24: £1.7
million), with continued growth in neobank deposits processed
- Cash payments net revenue was flat at
£7.3 million (Q1 FY24: £7.3 million). Legacy cash energy sector net
revenue decreased by 15.6% for the quarter versus Q1 FY24.
Love2shop divisional net revenue increased by 23.1% to
£6.4 million (Q1 FY24: £5.2 million)
- Love2shop Business is trading in line
with expectations with a continued focus on driving new business
wins. Highstreetvouchers.com continues to perform ahead of
expectations, driven by the positive changes made in Q4 FY24 to the
product mix and focus of the site to drive improved margin and
profitability
- Park Christmas Savings – good
progress for 2024 savings season, with payment to conversion for
new customers +5% vs prior year and an improvement in the number of
‘nil paid’ and ‘off track’ customers, driven by focused saver
activity leveraging PayPoint’s PayByLink payment solution
- New redemption partners onboarded in
the quarter, including Dobbies Garden Centres, Foyles Bookstores,
Blackwells, Frankie & Bennys, Las Iguanas and Wilko
- Growing benefits from corporate API
integrations launched into major clients last year, with increased
billings and improved customer experience
PROGRESS ON BUILDING BLOCKS DRIVING NEW OPPORTUNITIES
AND SUSTAINED GROWTH
Strategic investment in Yodel (Parcels)
As announced on 21 June 2024, PayPoint has made a strategic
investment in the Yodel business alongside other strategic
partners. This investment is in support of the management team plan
to further automate and modernise the Yodel business, including
initiatives to further strengthen the partnership between the two
businesses and to enable an acceleration of consumer adoption of
Out of Home delivery and materially increase parcel volumes through
this channel. This partnership will enhance the longer-term growth
prospects of Collect+ and underpin the further expansion of the
Collect+ network as our parcel volumes continue to grow from the
100 million parcel transactions achieved in FY24 towards our
medium-term target of 250 million transactions per annum.
Majority ownership of obconnect (Open Banking and
Digital Payments)
In July 2022, PayPoint made a minority investment in obconnect,
an early-stage technology platform with the capabilities to provide
complete market ecosystems across Open Banking, Finance, Data,
Energy, Confirmation of Payee and Enhanced Fraud Data. This
investment and partnership with obconnect have enabled PayPoint to
leverage this technology platform and range of capabilities,
offering Open Banking services to both new and existing clients. At
a time when the number of applications for Open Banking is growing
rapidly, this technology has been an important addition for
PayPoint and its clients. This partnership has delivered on our
expectations and the Group has already made strong early progress,
with over 25 clients contracted for Open Banking services,
including American Express and Citizen’s Advice, along with a
growing pipeline of opportunities across new and existing clients.
Over the same period, obconnect as a standalone business has made
significant progress, securing contracts with a number of banks and
building societies, winning industry recognition at the Open
Banking Expo Awards and is on track to achieve profitability in H2
2024.
Given this progress, in agreement with the obconnect management
team, we have now taken the decision to take a majority position in
obconnect. This strategic investment will see PayPoint own 59.3% of
the business and is immediately earnings enhancing. It will further
leverage their Open Banking technology platform and unlock greater
opportunities within both the PayPoint business and obconnect’s new
business streams working with a number of key financial
institutions and payment organisations. Open Banking is important
to the future of the PayPoint business and this investment will
enable the Group to consolidate its position further, recognising a
modest financial contribution in H2 FY25, and a more meaningful
contribution in FY26 and thereafter. The investment is subject to
regulatory approval, with completion expected in early October.
Expanded partnership for Love2shop with Incomm
Payments
The Group has agreed an important distribution partnership for
Love2shop gift cards with Incomm Payments, a global payments
technology provider, building on the long-standing relationship
between the two companies. The multi-year agreement will enable the
distribution of Love2shop gift cards for the first time into new
retailer channels, including leading UK grocers and High St stores.
This expansion has the potential to deliver a meaningful increase
of over £100 million in Love2shop billings over the next five
years, building on our progress in establishing new distribution
channels through 2,600 multiple retailer partners over the past
year and positioning Love2shop as the leading multi-retailer gift
card in the UK market. The new partnership will start for the peak
trading season this year, with gift cards available in stores
within the InComm Payments retail network beginning in September
2024.
BALANCE SHEET AS AT 30 JUNE 2024
The Group had net corporate debt of £81.2 million (31 March
2024: £67.5 million), comprising cash balances of £8.5 million (31
March 2024: £26.4 million), less loans and borrowings of £89.7
million (31 March 2024: £93.9 million).
DIVIDEND
The Board have declared an increased final dividend of 19.2
pence per share, consistent with our dividend policy, vs the final
dividend for the year ended 31 March 2023 of 18.6 pence per share.
The dividend is payable in equal instalments of 9.6 pence per share
on 6 August 2024 and 27 September 2024.
SHARE BUYBACK PROGRAMME
As announced on 1 July 2024, the Group has commenced a
three-year share buyback programme, returning at least £20 million
to shareholders over the next 12 months, with the potential to
increase in years 2 and 3 depending on business performance, market
conditions, cash generation and the overall capital needs of the
business.
Throughout this period, we will continue to increase dividends
at a nominal rate and grow our cover ratio from the current 1.5 to
2.0 times earnings range to over 2.0 times earnings by FY27.
Combined with the Buyback Programme, this will enhance shareholder
returns and ensure the business continues to maintain an efficient
capital structure, balancing an appropriate leverage ratio of
around 1.0 times net debt/EBITDA with the overall capital needs of
the business.
Enquiries
|
|
PayPoint plc |
FGS
Global |
Nick Wiles,
Chief Executive (Mobile: 07442 968960) |
Rollo
Head |
Rob Harding,
Chief Financial Officer (Mobile: 07525 707970) |
James
Thompson |
|
(Telephone:
0207 251 3801) |
|
(Email:
PayPoint-LON@fgsglobal.com) |
ABOUT PAYPOINT GROUP
For tens of thousands of businesses and millions of consumers,
we deliver innovative technology and services that make life a
little easier.
The PayPoint Group serves a diverse range of organisations, from
SME and convenience retailer partners, to local authorities,
government, multinational service providers and e-commerce brands.
Our products are split across four core business divisions:
- In Shopping, we enhance retailer propositions and customer
experiences through our PayPoint One/Mini devices, card payment
technology, Counter Cash, ATMs and FMCG partnerships in over 60,000
SME and retailer partner locations across multiple sectors. Our
retail network of over 28,000 convenience stores is larger than all
the banks, supermarkets and Post Offices put together
- In E-commerce, we deliver best-in-class customer journeys
through Collect+, a tech-based delivery solution that allows
parcels to be picked up, dropped off and sent at thousands of local
stores
- In Payments and Banking, we give our clients and their
customers choice in how to make and receive payments quickly and
conveniently. This includes our channel-agnostic digital payments
platform, MultiPay, offering solutions to clients across Open
Banking, card payments, direct debit and cash. PayPoint also
supports its eMoney clients with purchase and redemption of eMoney
across its retail network.
- In Love2shop, we provide gifting, employee engagement, consumer
incentive and prepaid savings solutions to thousands of consumers
and businesses. Love2shop is the UK’s number one multi-retailer
gifting provider, offering consumers the choice to spend at more
than 140 high-street and online retail partners. Park Christmas
Savings is the UK’s biggest Christmas savings club, helping over
350,000 families manage the cost of Christmas, by offering a huge
range of gift cards and vouchers from some of the biggest high
street names.
Together, these solutions enable the PayPoint Group to create
long-term value for all stakeholders, including customers,
communities and the world we live in.
1 PayPoint’s auditors have not been requested to
review the performance
- Trading update for the three months ended 30 June 2024
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