Trading update for the three months ended 31 December 2024
29/01/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250129:nGNE1tss4P&default-theme=true
PayPoint Plc
Trading update for the three months ended 31 December 2024(1)
29 January 2025
PayPoint Group delivers another positive quarter with strong performance from
key seasonal businesses
Group remains on track to deliver expectations for FY25 and a further step to
achieving £100m EBITDA by the end of FY26
Nick Wiles, Chief Executive of PayPoint Plc, said:
“Our business has continued to deliver further progress in the third quarter
building on our strong first half year performance, despite a more challenging
overall trading environment and a stalled recovery in consumer confidence.
During the period, our seasonal businesses in particular have performed well
and, for the business as a whole, the Board remains confident in the delivery
of further progress in the year and meeting expectations.
The resilience of our business, our investment to enhance capabilities,
combined with the growing opportunities to deliver value-add solutions to our
clients continue to underline our confidence in building further momentum in
our key growth building blocks and achieving £100m EBITDA by the end of FY26.
In Shopping, the use of data and analytics to drive better support to our
retailers and card merchants is becoming increasingly important and, during
the period, we have initiated a number of projects to better harness these
capabilities to support engagement with our retailers, identifying performance
trends in the PayPoint and card merchant networks and where best to direct new
resources to deliver the highest return. We have continued to grow the
PayPoint estate, enhance our proposition and create more opportunities for
retailers to make money from being a PayPoint retailer. In Cards, lower
consumer spending during the quarter and the continuing challenging
environment for UK consumers have impacted processed volume and value. In the
PayPoint estate, we have delivered continued site growth, and in the Handepay
estate, it has been a consolidation quarter, with the focus being on the
transition of all new merchant business to Lloyds Cardnet supported by
training of the field and telesales teams and introduction of new onboarding
processes. Early signs are encouraging, with an enhanced proposition and
onboarding process and a good response from new merchants. We are now building
momentum and returning to growth in the estate for the current quarter,
further supported by the launch of our new Merchant App, targeted marketing
campaigns to specific sectors, and the launch of a new AI-driven statement
reader to enhance the merchant sales experience. In addition, although early
in Q4, we are seeing some signs of better processed volumes across the
estates. We continue to see growth in our FMCG pipeline, with consumer brand
campaigns in planning for delivery over the next 6-12 months, and good
progress in our YouLend Business Finance product with over £16m lent in the
year to date to our SME and retailer partners.
In E-Commerce, we have delivered a record quarter, with volumes up 36.8%
against the peak quarter of FY24, reflecting the strong positioning of our
growing Collect+ network for Out of Home (OOH) fulfilment with both consumers
and carriers and a continuing market shift towards OOH delivery. We continue
to work hard to support all our carrier relationships and our partnership with
Royal Mail continues to gather pace, with parcel volumes growing quickly from
a low base and plans now in place to grow further the number of Royal Mail
sites and volumes. We also continue to make progress in our engagement with
Chinese and South Asian marketplaces and expect our services to go live with
some of these partners during our final quarter. In addition, we will be
starting a number of initiatives through our network with SF Express in Q4,
the leading integrated logistics service provider with an extensive PUDO
network in China, focused on enabling our services in Chinese communities
across the UK.
In Payments and Banking, there was continued growth through our MultiPay
platform, with underlying net revenue increasing by 4.7% and 14 new client
services live in the quarter, including Click Energy and Shelter. Our Local
Banking initiatives are gathering pace, with the first High St bank on track
for launch of consumer deposits at the end of Q4 FY25, with SME deposits to
follow later in the year. In addition, over £373 million of consumer deposits
have been processed in the year to date for neobanks through our extensive
network. The legacy energy sector business continues to be resilient, both in
transaction volumes, rates and the renewal of a number of key contracts
including Scottish Power. In Open Banking, there continues to be a growing
number of upsell opportunities to our existing client base, for example
providing a digital solution for cheque replacement, as well as further client
wins for our Open Banking services, with over 50 clients now live, including
further regional Citizens Advice Bureaus. In the quarter, we completed the
majority ownership of obconnect in October 2024, with a modest contribution
expected in H2, and the major contract win for the New Zealand Banking
Association to provide Confirmation of Payee ecosystem went live in early
December 2024. The obconnect team have a strong pipeline of future
opportunities and are well placed to capitalise on this rapidly evolving
market.
In Love2shop, all of our business and consumer channels have performed
extremely well during the critical third quarter, building on the strong
performance delivered in the first half and benefiting from the excellent
planning and preparation by the Love2shop team well in advance of the peak
trading period. In Love2shop business, billings are ahead of last year after a
strong peak and the pipeline of opportunities for Q4 FY25 is already
encouraging. The performance of highstreetvouchers.com continues to reflect
the benefits of the actions taken earlier in the year with billings +9.2%
ahead of plan, and we expect this performance to continue as we re-platform
our consumer business to Love2shop in the next financial year. Our strategic
partnership with InComm Payments, enabling the distribution of Love2shop gift
cards into leading UK grocers and High St stores, has delivered an outstanding
performance in the quarter, with an incremental £1.7m of billings and further
enhanced consumer Love2shop brand recognition. In addition, sales of Love2shop
gift cards over the quarter through our multiple retailers have increased
materially year on year with value loaded up 69%. Park Christmas Savings has
delivered a solid outcome to the 2024 campaign with final billings of
£162.2m, consistent with the previous year. The 2025 prepayments saving
season is already well underway, with early indications encouraging in terms
of growth in retained clients, increased order value and the recruitment of
new clients supported by an enhanced proposition and a strong multichannel
marketing campaign. In Love2shop, MBL and our prepayment savings platform
there is a growing pipeline of opportunities to expand our sales channels and
partnerships and to broaden the base of the business, reducing the importance
of peak over time.
Planning for the 25/26 financial year is in place to deliver our growth
ambitions for the year ahead, build on the progress we have achieved in the
current year and ensure we have the right plans in place to maximise the
opportunities from our key growth building blocks. As we continue towards
delivering £100m EBITDA by the end of FY26, our confidence in our business
resilience and growth is underpinned by the breadth of opportunities across
all of our divisions and maintaining the right organisational structure and
cost base to support the delivery of our growth plans.”
GROUP AND DIVISIONAL HIGHLIGHTS
Group net revenue increased by 1.9% to £53.0 million (Q3 FY24: £52.0
million), driven by a positive performance in the quarter by the E-commerce
and Love2shop divisions.
Shopping divisional net revenue decreased by 2.0% to £16.1 million (Q3 FY24:
£16.4 million)
* Retail services net revenue increased by 1.9% to £8.2 million (Q3 FY24:
£8.1 million) driven by further PayPoint One/Mini site growth to 20,092 (31
March 2024: 19,297)
* Card payments net revenue decreased by 5.7% to £7.8 million (Q3 FY24: £8.3
million) with further site growth in the PayPoint Lloyds Cardnet estate to
10,433 (31 March 2024: 10,064) and a reduction in the Handepay EVO/Lloyds
Cardnet estate to 19,220 (31 March 2024: 19,682) as we transitioned to a new
acquirer
* Card processed value decreased by 5.9% overall to £1.7 billion (Q3 FY24:
£1.8 billion), with the Handepay EVO estate -1.8% and the Lloyds Cardnet
estate -11.4% versus the prior year
* UK retail network increased to 30,311 sites (31 March 2024: 29,149), with
70.0% in independent retailer partners and 30.0% in multiple retail groups
E-commerce divisional net revenue increased strongly by 32.0% to £4.1 million
(Q3 FY24: £3.1 million)
* Strong transaction growth of 36.8% to 35.8 million parcel transactions (Q3
FY24: 26.2 million)
* Collect+ network increased to 13,930 sites (31 March 2024: 11,786)
Payments & Banking(2) divisional net revenue increased by 0.8% to £14.0
million (Q3 FY24: £13.9 million)
* Continued growth through our MultiPay platform, with underlying net revenue
increasing by 4.7% to £1.8 million (Q3 FY24: £1.7 million)
* Strong growth through Open Banking with net revenue within the PayPoint
business growing to £0.3 million from a low base and with an initial
contribution from obconnect of £0.7m (Q3 FY24: £nil)
* Total digital net revenue increased by 22.0% to £4.4 million (Q3 FY24:
£3.6 million)
* Cash through to digital net revenue increased 3.3% at £1.8 million in the
quarter (Q3 FY24: £1.7 million)
* Cash payments net revenue decreased by 8.8% to £7.8 million (Q3 FY24: £8.6
million). Legacy energy sector net revenue decreased by 10.8% for the quarter
Love2shop divisional net revenue increased by 1.3% to £18.8 million (Q3 FY24:
£18.5 million)
* Love2shop Business experienced a positive Q3 with £71.2 million of billings
delivered (Q3 FY24: £66.8 million)
* The performance of highstreetvouchers.com continues to reflect the benefits
of the actions taken earlier in the year with billings +9.2% ahead of plan
* Park Christmas Savings has delivered a solid outcome to the Christmas 2024
campaign with final billings of £162.2m, consistent with the previous year
* MBL, the leading gift card technology platform acquired by Love2shop in June
2022, delivered a strong performance, processing £45.2 million of gift card
value in the quarter (Q3 FY24: £23.7 million)
BALANCE SHEET AS AT 31 DECEMBER 2024
The Group had net corporate debt of £108.9 million (31 March 2024: £67.5
million), comprising cash balances of £2.4 million (31 March 2024: £26.4
million), less loans and borrowings of £111.3 million (31 March 2024: £93.9
million). This has increased by £22.1 million since September 2024 following
the £10.5 million further investment in obconnect, share buyback and seasonal
working capital requirements. Net corporate debt is expected to reduce to
below £100 million by 31 March 2025.
DIVIDEND
The Board have declared an increased interim dividend of 19.4 pence per share,
consistent with our dividend policy, an increase of 2.1% vs the prior half
year of 19.0 pence per share. The dividend is payable in equal instalments of
9.7 pence per share on 20 December 2024 and 28 March 2025.
SHARE BUYBACK PROGRAMME
On 1 July 2024, the Group 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. As of market close on 27 January 2025, a total of 1,554,667 shares
had been purchased at a total value of £11.2m.
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 29,000 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
(2) Payments & Banking analysis has been re-presented to better aggregate
revenue streams and key KPIs
Attachment
* Trading update Q3 FY25 - Final
(https://ml-eu.globenewswire.com/Resource/Download/d3b957ad-60c6-4946-bf6c-a05a18874839)