Trading update for the three months ended 31 December 2023
PayPoint PlcTrading
update for the three months ended 31 December
20231
24 January 2024
A positive quarter with PayPoint Group on
track to deliver c. £80m of underlying EBITDA, net debt below £70m
and underlying PBT in line with expectations for FY24
Nick Wiles, Chief Executive of PayPoint Plc,
said:
“This has been another positive quarter for the PayPoint Group
and we remain on track to deliver c. £80m of underlying EBITDA for
the current year, an important milestone on our journey to
achieving £100m EBITDA by the end of FY26, ending the year with net
debt below £70m and delivering underlying PBT in line with
expectations. This performance reflects both the resilience of our
businesses and the benefits from the transformation delivered over
the past three years as we unlock further opportunities and growth
for our enhanced platform and expanded capabilities.
In Shopping, the positive momentum in our cards business has
continued to grow, with merchant site growth delivered across both
our EVO and Lloyds Cardnet estates and a record week delivered in
the run up to Christmas with over £150m of processed value.
Following the successful launch in November of our next generation
device, PayPoint Mini, we have also delivered further site growth
across the PayPoint network and continued to enhance our retailer
proposition to drive additional value and opportunities to earn for
our retailer partners, including the initial rollout of our foreign
currency service in partnership with eurochange, strong growth in
our FMCG campaigns working with major brands like Coca-Cola, and
good progress in our YouLend Business Finance product with over
£14m lent in the year to date to our SME and retailer partners.
In E-commerce, we have delivered a record quarter, with volumes
up 54% against the peak quarter in FY23, driven by the continued
growth of our Store to Store service, supporting our significantly
expanded partnership with Vinted and Yodel announced in November.
This excellent performance has been delivered against the backdrop
of a challenging e-commerce market, which was down 1.9% year on
year over Black Friday week, with Collect+ benefitting from the
continuing consumer channel shift towards Out of Home and greener
delivery choices, and strong, established relationships with our
carrier partners. We are in advanced discussions with a number of
other major carrier partners about long-term contracts to continue
to grow volumes into FY25.
In Payments and Banking, we are on track to win and onboard a
record level of new business as our integrated digital payments
platform, MultiPay, continues to establish itself as a
comprehensive payment solution for clients across cards, Open
Banking, direct debit and cash. We have secured further wins in the
Housing sector, with Rooftop and Sovereign, and in the Charity
sector with East Anglian Air Ambulance, as well as now having over
21 clients live for our Open Banking services. In Banking, we are
in the process of onboarding Chase and Revolut for consumer
deposits into our retailer partner network, expanding our local
banking provision across the UK and growing our portfolio of
neobank clients. We are also pleased to have won the DVLA contract
for International Driving Permits, marking another key central
government service that will be fulfilled via our extensive
retailer partner network. In our legacy energy sector business, the
rate of decline moderated from the sharp fall in H1, with net
revenue declining 6.1% versus 19.4% in H1 FY24.
In Love2shop, Park Christmas Savings has returned to growth this
year, delivering £162.6m of billings, supported by an enhanced
proposition, strong new customer recruitment and improved retention
rates. This again reinforces the enduring appeal and vital role
this service plays in helping consumers budget for big occasions
and avoid debt. Although early in the Christmas 2024 season, we are
seeing an improving quality of saver across the order book to date.
In Love2shop Business, the number of retained clients was up 6% but
order values were down, resulting in weaker billings than expected
in December and reflecting the broader caution from large
businesses and the overall challenging economic situation. We have
proactive and focused plans in place to end the year strongly.
Planning for the 24/25 financial year is well underway to
achieve our growth ambitions and build on the strong progress
across the business. As we continue towards delivering £100m EBITDA
by the end of FY26, our confidence is underpinned for the next
financial year by: further growth in our PayPoint One/Mini, card
and ATM estates; a strong run rate for won and onboarded new
business wins for our digital payments platform across multiple
sectors; confidence in sustaining our excellent growth rates in
E-commerce; continued innovation and new proposition development
into our retailer partner network; and establishing the right
organisational structure and cost base to support the delivery of
our growth plans."
HIGHLIGHTS
Positive performance across the Group
PayPoint Group
Group net revenue increased by 59.8% in the quarter to £52.0
million (Q3 FY23: £32.5 million). PayPoint segment net revenue
increased by 2.8% to £33.4 million.
Shopping
Shopping divisional net revenue increased by 6.0% to £16.4
million (Q3 FY23: £15.4 million), driven by the growth of our
PayPoint One/Mini estate and a positive performance in our cards
business.
- Service fee net revenue increased by 11.1% to £5.0 million (Q3
FY23: £4.5 million), reflecting growth in the number of PayPoint
One/Mini sites to 18,963 (31 March 2023: 18,453) and supported by
the launch of our next generation device, PayPoint Mini, in
November 2023
- Card payment net revenue increased by 6.6% to £8.3 million (Q3
FY23: £7.8m), driven by a strong sales performance, further
enhancements to our Handepay proposition, and a continued focus on
proactive churn management driven by AI and analytics
- Delivered a record week for processed value in the EVO and
Lloyds Cardnet estates of over £150 million in the week before
Christmas, up over 18% year on year, with strong performances from
the grocery, food & beverage, auto trade and health &
beauty sectors, reinforcing the strength and quality of our
merchant network
- Card payment sites in the EVO estate grew to 19,199 (31 March
2023: 18,397) and the Lloyds Cardnet estate grew to 9,907 (31 March
2023: 9,541), driven by the enhanced proposition and the increased
optimisation of our sales and retention efforts
- Strong quarter of FMCG activity, leveraging our consumer
engagement solution, PayPoint Engage, and partnering with
Coca-Cola, Philip Morris, Lucozade Energy, Netflix and Xbox
- Positive year on year growth of Business Finance via YouLend
with over £14 million lent in the year to date, supporting our
retailer and SME partners during the current economic
challenges
- Further progress on our retailer proposition development, with
the rollout underway of 500 sites for click and collect foreign
currency, partnering with eurochange
- UK retail network increased to 28,900 sites (31 March 2023:
28,478), with 70.0% in independent retailer partners and 30.0% in
multiple retail groups
E-commerce
E-commerce divisional net revenue increased strongly by 34.3% to
£3.1 million (Q3 FY23: £2.3million) and transactions grew by 54.3%
to 26.2 million (Q3 FY23: 17.0 million) through our e-commerce
technology platform, Collect+. This division has now processed over
68.3 million parcel transactions year to date, surpassing the 56.4
million transactions processed over the whole of FY23.
- Excellent transaction volumes driven by continued growth in our
Store to Store service and our significantly expanded partnership
with Vinted and Yodel. Collect+ outperformed the overall e-commerce
market, which experienced a 1.9% decline year on year over Black
Friday week2
- Collect+ network grew to 11,730 sites (31 March 2023:
10,514)
- New, multi-year contract agreed with InPost to provide 2,000
sites for parcel pick up and drop off, complementing their UK
locker network
- DPD Print in Store roll out delivered, increasing overall sites
to 3,000, and UPS now launched into 600 sites
- Further expansion of our Collect+ university network to 12
locations, with plans in place to expand to 25 locations in the
next six months
- Continue to identify opportunities to expand our carrier
partnerships and sustain our volume growth into FY25
Payments & Banking
Payments & Banking divisional net revenue decreased by 5.5%
to £13.9 million (Q3 FY23: £14.7 million): with further growth in
our digital payments platform, MultiPay; offset by the expected
impact of the Energy Bills Support Scheme (EBSS), which was a
one-off activity that ran in the same period last year; and a
continued reduction in cash bill payments.
- Continued growth through our MultiPay platform, with net
revenue increasing by 33.1% to £1.8 million (Q3 FY23: £1.4
million). Including the one-off impact of the EBSS from the prior
year, total digital net revenue decreased by 24.4% to £3.6 million
(Q3 FY23: £4.8 million)
- On track for a record year of new business for our integrated
digital payments platform, establishing a strong run rate of net
revenue as we head into the next financial year: further wins
secured in housing with Rooftop and Sovereign and in charities with
East Anglian Air Ambulance for our complete range of payments
solutions; over 21 clients now signed for Confirmation of Payee
services; and with PayPoint establishing as one of the UK’s Top 10
leading Open Banking payment processors for PISP
- DVLA contract awarded for providing International Driving
Permits via our retailer partner network, adding another important
central government service to our portfolio and expected to launch
early in the new financial year
- Cash through to digital net revenue was flat year on year at
£1.7 million (Q3 FY23: £1.7 million). Our neobank proposition,
providing deposits and withdrawals to customers, continued to grow
with over £102 million deposited in the quarter (Q3 FY23: £96.7
million). Chase and Revolut are now in the process of being
onboarded for consumer deposits into our retailer partner network,
expanding this vital service provision into more communities across
the UK
- Cash payments net revenue decreased by 2.3% to £8.1 million (Q3
FY23: £8.2 million). In our legacy energy sector business, the rate
of decline moderated from the sharp fall in H1, with net revenue
declining only 6.1% versus 19.4% in H1 FY24.
Love2shop
Love2shop divisional net revenue of £18.5 million, driven by the
positive performance in Park Christmas Savings, which has returned
to growth for the first time in six years
- Park Christmas Savings returned to growth, delivering £162.6m
of billings for the Christmas 2023 season, an increase of 1.2%
versus the prior year (Christmas 2022: £160.7m). New customer
recruitment was up 8%, retention rates for direct customers
achieved were the highest to date at 79%, and record retention
rates of 89% were maintained for agents, reflecting better
management and engagement of savers during the year. Although early
in the Christmas 2024 season, there are encouraging signs of an
improving order book, with customer recruitment ahead of the prior
year and a higher rate of successful payment set up delivered
- The positive performance in Park Christmas Savings reinforces
the enduring appeal of the service in helping customers budget
responsibly for Christmas and avoid high-cost credit and debt. With
research showing over 56% of consumers having got into debt at
Christmas, a rise in households borrowing from unlicensed lenders
and a 17% rise in the use of Buy Now Pay Later products over the
past year3, Park Christmas Savings provides a structured,
supportive and stress-free way to budget whilst delivering over
£2.2 million of value back to savers each year
- Love2shop physical gift cards were launched for the first time
in over 2,600 locations ahead of the Christmas 2023 gifting season,
with a building sales momentum established, partnering with key
multiple retailers, including One Stop, MFG, Henderson’s Retail and
CJ Lang
- Love2shop Business experienced a weaker billings performance
than expected in December, with good growth in the number of
retained clients up 6% but order values down, particularly in
employee rewards, reflecting the broader caution from large
businesses and the overall challenging economic situation. New
corporate APIs were launched in November, with the first clients
onboarded shortly after, and there are focused plans in place for
the Love2shop Business team for the final quarter to end the year
strongly
- 12 new partners onboarded to our multi-retailer products to
continue to expand consumer choice and flexibility, including
Currys, Rymans, The Body Shop, Halfords Autocentres and Adidas
Costs and organisational structure
Planning for the 24/25 financial year is well underway to
achieve our growth ambitions and build on the strong progress
across the business. As we continue towards delivering £100m EBITDA
by the end of FY26, we have commenced a thorough review to ensure
that the Group has the appropriate organisational structure and
cost base to support the delivery of our growth plans. Further
details will be provided at our preliminary results for FY24.
BALANCE SHEET AS AT 31 DECEMBER 2023
The Group had net corporate debt of £71.2 million (31 March
2023: £72.4 million), down from £83.2 million at the half year,
comprising cash balances of £26.8 million (31 March 2023: £22.0
million), less loans and borrowings of £98.1 million (31 March
2023: £94.4 million).
DIVIDEND
The Board have declared an increased interim dividend of 19.0
pence per share, consistent with our progressive dividend policy,
and representing an increase of 2.2% vs the final dividend declared
on 26 May 2022 of 18.6 pence per share. The dividend is payable in
equal instalments of 9.5 pence per share on 29 December 2023 and 5
March 2024.
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
performance2 IMRG – Black Friday: The Key Findings -
https://www.imrg.org/blog/black-friday-2023-the-key-findings/3
Money Expert: Cost of Christmas 2023 -
https://www.moneyexpert.com/news/the-cost-of-christmas-2023/; FCA –
Deferred Payment Credit Research Oct 2023; abrdn Financial Fairness
Trust Research – Dec 2023
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