Results for the year ended 31 March 2024
PayPoint PlcResults for
the year ended 31 March 2024
Further progress towards £100m EBITDA by
end of FY26
Three-year share buyback programme
commencing with at least £20m over the next 12 months
GROUP FINANCIAL HIGHLIGHTS
- Underlying EBITDA1 of
£81.3 million (FY23: £61.3 million) increased by £20.0
million (32.6%)
- Underlying profit before tax2
of £61.7 million (FY23: £50.8 million) increased
by £10.9 million (21.5%)
- Net corporate debt7 of £67.5
million reduced by £4.9 million from opening position of
£72.4 million
- Final dividend of 19.2 pence per
share declared vs the final dividend for the year ended 31
March 2023 of 18.6 pence per share
|
|
|
|
Year ended 31 March 2024 |
FY24 |
FY233 |
Change |
Revenue |
£306.4m |
£167.7m |
82.7% |
Net revenue4 |
£181.0m |
£128.9m |
40.4% |
Underlying EBITDA1 |
£81.3m |
£61.3m |
32.6% |
|
|
|
|
Underlying profit before tax2 |
£61.7m |
£50.8m |
21.5% |
Adjusting items5 |
£(13.5)m |
£(8.2)m |
64.6% |
Profit before tax |
£48.2m |
£42.6m |
13.1% |
|
|
|
|
Diluted underlying earnings per share6 |
62.6p |
60.3p |
3.8% |
Diluted earnings per share |
48.8p |
49.6p |
(1.6)% |
Net corporate debt7 |
£(67.5)m |
£(72.4)m |
(6.8)% |
Nick Wiles, Chief Executive of PayPoint Plc,
said:
“This has been another year of progress for
PayPoint where we have delivered a robust financial performance and
made further progress towards delivering £100m EBITDA by the end of
FY26. These results reflect both the resilience of our businesses
and the transformation delivered over the past three years as we
unlock further opportunities and growth across our four business
divisions.
In the current year, consumer behaviour across a
number of our businesses remains subdued, reflecting continued
tighter family budgets and a generally flat economy. Our
expectation is that the consumer outlook will improve during the
course of the year. Against this background, our
streamlined organisational structure and cost base will support the
delivery of our medium-term growth plans. Strong earnings growth
and cash flow generation, combined with a sustainable dividend
policy provide a robust platform for the Board to propose further
steps to enhance shareholder returns through a share buyback
programme of at least £20 million over the next 12 months, all
underpinned by the delivery of further progress in the current
year.”
SHARE BUYBACK PROGRAMME
Today the Group announces its intention to
commence a 3-year share buyback programme (the “Buyback
Programme”). This Buyback Programme reflects the strong
cash generative nature of the Group, along with the Board’s
confidence in delivering on our growth targets for FY25-FY27 and
in-line with our commitment to enhance shareholder returns.
The Buyback Programme will return 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.
OPERATIONAL HIGHLIGHTS
The Group has delivered significant progress in the year in a
number of key growth areas:
- Parcels and Network Expansion – positive
momentum on journey to achieving a 250m+ parcel network. New
strategic partnerships agreed with Royal Mail and Yodel/Vinted;
further network site growth to 11,786 sites and expansion into new
locations, including 15 student union sites now live
- Card processing and Lloyds Bank partnership –
further estate growth delivered in EVO and Lloyds Cardnet estates,
underpinned by strengthened proposition, pricing governance and
focus on retention; major strategic partnership with Lloyds Cardnet
announced, launching in Autumn 2024
- Open Banking and Digital payments – 25 clients
live for Open Banking services, including the Department for Energy
and Net Zero, Citizens Advice, and AMEX for Confirmation of Payee,
in addition to a record year of new business wins (over 70 new
client services) delivered in FY24 for MultiPay platform, with a
strengthened client base in Housing and Charities, including POBL
Housing and East Anglian Air Ambulance
- Love2shop and Park Christmas Savings –
Love2shop Essentials added to key government procurement frameworks
and integrated into our PayPoint OpenPay service; strengthened
Love2shop Business sales team now in place; return to billings
growth for Park Christmas Savings for first time in six years
- Access to Cash and Local Banking – growth in
ATM sites to 3,485 and active Counter Cash sites to 2,150,
providing cash withdrawals at the counter; over £430 million of
consumer deposits processed for neobanks in the year through our
extensive network
- Community services for retailer partners –
launched next generation device, PayPoint Mini; our FMCG consumer
engagement solution, PayPoint Engage, has delivered over £1m of net
revenue, partnering with major brands; DVLA International Driving
Permit service launched on 1st April 2024; continued growth in
Business Finance, with over £19m lent to our SME and retailer
partners, partnering with YouLend
- Integration of Love2shop – successfully
completed in the year, with positive progress made in enhancing the
core business performance and launching new initiatives which
leverage our enhanced capabilities across the Group
- Streamlined organisational structure – steps
taken in March 2024 to simplify structure, enhance cross company
collaboration and deliver efficiencies to enable future
reinvestment in the business and mitigate inflationary cost
pressures, representing a gross cost saving of circa £4 million for
FY25.
DIVISIONAL HIGHLIGHTS
Shopping divisional net revenue increased by 3.9% to
£64.4 million (FY23: £62.0 million)
- Service fee net revenue increased by 10.1% to £19.7million,
reflecting growth in the number of revenue-generating PayPoint
One/Mini sites to 19,297 (31 March 2023: 18,453 sites)
- Card payment net revenue increased by
2.8% to £32.7 million, with further site growth in the EVO estate
to 19,682 (31 March 2023: 18,397) and in the Lloyds Cardnet estate
to 10,064 (31 March 2023: 9,541)
- UK retail network increased to
29,149 sites (31 March 2023: 28,478), with 70.0% in independent
retailer partners and 30.0% in multiple retail groups
E-commerce divisional net revenue increased strongly by
61.6% to £11.8 million (FY23: £7.3 million)
- Record year for Collect+ as parcel transactions grew strongly
by 77.5% to 100.1 million (FY23: 56.4 million), including regularly
achieving over 2 million parcels processed per week
- Collect+ network increased to 11,786
(31 March 2023: 10,514), with further expansion to support volume
growth
- Print in Store service now available
in over 80% of network across circa 9,100 sites, enabled by the
further rollout of Zebra label printers
Payments & Banking
divisional net revenue decreased by 4.8% to £53.5 million (FY23:
£56.2 million)
- Continued growth through our MultiPay
platform, with underlying net revenue increasing by 29.3% to £5.3
million (FY23: £4.1 million). Total digital net revenue decreased
by 12.7% to £13.8 million (FY23: £15.8 million), with the prior
year including the one-off benefit of £3.5 million from the Energy
Bills Support Scheme
- Cash through to digital net revenue
now stabilised to £6.8 million in the year (FY23: £6.9 million),
with a new baseline set for the category and continued growth in
banking with over £430 million of deposits processed for
neobanks
- Cash payments net revenue decreased by 2.5% to £32.8 million
(FY23: £33.6 million). Legacy energy sector net revenue decreased
by 10.6% for the full year, the rate of decline moderating in H2
FY24 to -2.6% versus the sharp fall of -19.2% in H1 FY24.
Love2shop divisional net revenue was £51.3 million (FY23
– one month only post-acquisition: £3.4 million)
- Park Christmas Savings returned to
growth, delivering £162.6 million of billings for the Christmas
2023 season, an increase of 1.2% versus the prior year (Christmas
20228: £160.7 million). The Christmas 2024 season has started
positively, with payment rates +5% versus the prior year and a
reduction in the number of ‘nil paid’ customers of 21%, driven by a
proactive plan to improve conversion and completion of savings
targets
- Love2shop Business experienced a
weaker billings performance than expected in H2, as indicated in
our Q3 trading update, with £162.8 million delivered in FY24
(FY239: £170.3 million). This was seen particularly in employee
rewards, reflecting the broader caution from large businesses and
the overall challenging economic situation. New corporate APIs were
launched in November 2023, with the first clients onboarded shortly
after, and a restructured corporate sales team now in place
- MBL, the leading gift card technology
platform acquired by Love2shop in June 2022, processed £59.7
million of gift card value in the year (FY23: £43.6 million) for
its extensive client base, including Greggs, B&M and
Argos.
RECONCILIATION OF
REPORTED NUMBERS
£m |
FY24 |
FY23 |
Reported profit before tax |
48.2 |
42.6 |
Exceptional items10 |
5.2 |
5.6 |
Profit before
tax excluding
exceptional items |
53.4 |
48.2 |
|
Net movement on convertible loan notes – OBConnect and Optus |
0.2 |
- |
Amortisation of intangible assets arising on acquisition – PayPoint
(previous acquisitions) |
2.1 |
2.1 |
Amortisation of intangible assets arising on acquisition –
Love2shop |
6.0 |
0.5 |
Underlying profit
before tax
(profit before
tax excluding
adjusting items) |
61.7 |
50.8 |
Underlying EBITDA |
81.3 |
61.3 |
BUSINESS DIVISION
NET REVENUE AND
MIX
Net revenue by
business division
(£m) |
FY24 |
FY23 |
FY22 |
ShoppingE-commercePayments & Banking |
64.411.853.5 |
62.07.356.2 |
58.74.951.5 |
PayPoint Segment Total |
129.7 |
125.5 |
115.1 |
Love2shop Segment Total |
51.3 |
3.4 |
N/A |
PayPoint Group
Total |
181.0 |
128.9 |
115.1 |
|
Business division
mix |
FY24 |
FY23 |
FY22 |
Shopping |
35.6% |
48.1% |
51.0% |
E-commerce |
6.5% |
5.6% |
4.3% |
Payments & Banking |
29.6% |
43.6% |
44.7% |
Love2shop |
28.3% |
2.7% |
N/A |
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)
|
A presentation for analysts is being held at 9.30am today (13
June 2024) via webcast. This announcement, along with details for
the webcast, is available on the PayPoint plc website:
corporate.paypoint.com
CHIEF EXECUTIVE’S
REVIEW
GROUP UPDATE
Robust financial performance with further progress
towards delivering £100m EBITDA by the end of FY26
This has been another year of progress for the PayPoint Group
where we have delivered a robust financial performance and made
further progress towards delivering £100m EBITDA by the end of
FY26. These results reflect both the resilience of our businesses
and the transformation delivered over the past three years as we
unlock further opportunities and growth across our four business
divisions.
Partnership philosophy opening up new revenue
opportunities
Our partnership philosophy across the Group, combined with an
intensity and focus on execution, is already unlocking new markets
and revenue opportunities for us. This includes the recently
announced partnerships with Royal Mail, Lloyds Bank and DVLA, our
success in Open Banking working with Ovo and the Department for
Energy Security and Net Zero, and the continued focus on our
convenience retail sector relationships, working closely with our
retailer partners and the key retail trade associations. This
approach underpins our delivery across every business division, in
addition to our growth building blocks in digital payments, card
payments, parcels, community cash access, retailer services and our
Love2shop business.
Streamlined organisational structure and cost base to
deliver medium-term growth
During H2 FY24, we announced that we had commenced a thorough
review to ensure we had the appropriate organisational structure
and cost base to underpin our growth ambitions and, in part,
mitigate inflationary cost pressures. Like many organisations in
the UK, we are trading in a challenging economic climate and facing
significant inflationary cost pressures, and need to be proactive
in order to mitigate these pressures and maintain a strong business
platform. The review concluded in March 2024 and a number of
changes were implemented in April 2024 to simplify the structure,
enhance cross company collaboration and deliver efficiencies to
enable future reinvestment in the business, representing a gross
cost saving of circa £4 million for FY25.
REVIEW BY DIVISION
SHOPPING DIVISION
In Retail Services, we have further enhanced our retailer
propositions, with positive feedback from our partners and
additional value delivered to our retailers through a 21.5%
increase in commission paid year on year. In November 2023, our
next generation device, PayPoint Mini, was launched and our
integrated third-party EPoS solution, PayPoint Connect, is now
rolling out across our estate, working in partnership initially
with the Retail Data Partnership and iPosG. Our FMCG consumer
engagement proposition, PayPoint Engage, has delivered its first
seven figure net revenue contribution, delivering brand campaigns
for major consumer brands, leveraging our PayPoint One platform,
advertising screens and vouchering capability. In addition, we
launched Love2shop physical gift cards for the first time in over
2,600 locations for the Christmas 2023 gifting season, partnering
with key multiple retailers, including One Stop, MFG, Henderson’s
Retail and CJ Lang, with a further rollout to independent retailers
underway in the current year.
In Cards, the positive momentum has continued to grow, driven by
further improvements to our merchant proposition, including our
recently launched Handepay Rewards scheme, a strengthened pricing
governance approach and a continued focus on proactive churn
management driven by AI and analytics. Our recently announced major
partnership expansion with Lloyds Bank will enhance our proposition
further, strengthening our market position, accelerating growth
across our merchant estates and delivering better tools, support
and experience for our SME and retailer partners. The expanded
partnership, starting with an initial phase in Q2 FY25, followed by
a full launch expected in Q3 FY25 (subject to regulatory approval),
will offer merchants a market-leading banking and card services
proposition combining card payments, a 12-month fee-free Lloyds
bank business account and a connected competitive commercial card
offering. Lloyds Bank Cardnet will be investing significantly into
their business to enhance product development and data analytics
for merchants.
In our building Community Cash Access and Banking network, ATM
performance has been disappointing, with net revenue decreasing by
8.2% year on year. Management in this area has been strengthened,
with a new hire secured to drive tighter operational management of
the estate and to win new estate growth opportunities. Our Counter
Cash service, offering withdrawals and balance enquiries over the
counter, has grown to 2,150 locations, and, we have processed over
£430 million of consumer deposits for our neobank clients in the
year. We are now actively exploring how we support High Street Bank
customers with cash access for consumer and SME deposits and
withdrawals across our extensive network.
We have continued to strengthen our retailer partner
relationships and service, including a refreshed approach to the
‘early life’ support provided to our retailer partners to drive
adoption of new services, the launch of a new chatbot and automated
services for day-to-day queries, more direct communications and our
strengthened relationships with the key retail trade associations.
Our broader commitment to our retailer partners to deliver further
value and opportunities to earn has delivered an increase to a
positive NPS score for the first time in six years. As more
critical services continue to withdraw from communities and High
Streets across the UK, we are more focused than ever on working
closely with our retailer and industry partners to evolve our
service provision and ensure we can leverage our extensive network
to provide vital infrastructure and accessibility to individuals
close to where they live.
EMERGING OPPORTUNITIES
- FMCG – further growth from our consumer engagement platform,
PayPoint Engage
- Foreign Currency – development of our partnership with
eurochange in circa 500 stores
- Park Christmas Savings – optimisation of our network of Super
Agents for recruiting savers
E-COMMERCE DIVISION
In E-commerce, it has been a landmark year for Collect+, with
net revenue of £11.8 million delivered and parcel transactions
exceeding 100 million for the first time. This excellent
performance has been delivered against the backdrop of an
increasingly challenged UK online retail market, with total market
parcel volumes down in each year since the recent peak of 2021 and
a number of major brands failing in the year. Our partnership with
Yodel/Vinted has delivered strong growth in our new Store to Store
service, which has been quickly adopted by consumers and our
carrier partners. We have also expanded our Amazon network to over
7,000 stores and a further rollout of Zebra printer technology has
also been completed in the year, underlining our continuing
commitment to invest in improving the consumer experience in
store.
Importantly, we have announced new and expanded partnerships
with Royal Mail and Yodel, particularly via their relationship with
Vinted, reinforcing the quality and attractiveness of our leading
Out of Home network and ensuring that we continue to deliver
positive volume growth over the current financial year. We have
also successfully expanded the Collect+ network into new locations
and demographics, including our growing student presence working
with 15 of the top universities and student unions.
EMERGING OPPORTUNITIES
- Expanded carrier relationships – broadening range of services
offered to each of our carrier partners, leveraging our superior
in-store technology and network to drive further volume growth
- Network expansion – expanding from extensive convenience retail
network into new sectors and locations, including student unions,
transport hubs and hospitals
- Print In Store – further rollout of circa 2,000 additional
Zebra label printers to widen access to service and support new
partnerships, including Royal Mail
PAYMENTS & BANKING DIVISION
In Payments & Banking, our integrated digital payments
platform, MultiPay, continues to establish itself as a
comprehensive payment solution for clients across card processing,
Open Banking, direct debit and cash. We have secured further wins
in the Housing sector, with Rooftop and Sovereign Network Group,
and in the Charity sector with East Anglian Air Ambulance. We have
processed over £430 million of neobank consumer deposits through
our retailer partner network and are expanding our community cash
banking solutions across the UK. We were also pleased to have won
the DVLA contract for International Driving Permits, which went
live on 1 April 2024, marking another key central government
service that will be fulfilled via our extensive retailer
network.
Our Open Banking services continue to go from strength to
strength, supported by our partner, OB Connect, with 25 clients
live for our services, including Ovo and AMEX for Confirmation of
Payee. In particular, our work with Citizens Advice in Stevenage,
and a growing number of Citizens Advice offices nationally,
utilising our FIS (Financial Information Service) support tool, is
having an important impact on the work they do supporting clients
in financial distress – debt caseworkers are now able to get an up
to date, accurate and holistic view of someone’s finances in
minutes, when it used to take weeks or even months. As a result,
they can provide advice and information faster, reducing the risk
of debts becoming even greater or more serious throughout the
advice process. Open Banking payments in the UK grew 90% year on
year to 130m payments in 2023 and PayPoint is now one of the
leading Payment Initiation Service Providers (PISP) in the UK. This
is an important demonstration of how our digital payments solutions
are having a strong community impact, which is underpinned by our
continuing engagement with key senior stakeholders across the
sectors we operate in, including Ofgem, UK Finance, Pay.UK and the
Department of Energy Security and Net Zero.
In Cash, legacy energy bill payments net revenue decreased by
10.6% for the full year, with the rate of decline year on year
moderating in H2 FY24 to -2.6% versus the sharp fall of -19.2% in
H1 FY24. The decreased H1 FY24 performance was driven by several
factors, including a shift in consumer topping up behaviour due to
the Cost of Living challenges, unseasonably warm weather over the
period and the impact of customers still using credit from the
Energy Bills Support Scheme (EBSS) up until the end of the half
year. In H2, energy sector performance recovered as the EBSS scheme
ended, with the rate of decline moderating versus the prior year.
In addition, the energy price cap, updated by Ofgem on a quarterly
basis, was set at £1,928 for pre-pay customers for January to March
2024, decreasing over the course of FY24 from £4,358 in the same
period last year. The impact of this reduction in our consumer
energy top up frequency and volumes is not yet clear in the current
financial year.
EMERGING OPPORTUNITIES
- New business growth – build a more systematic approach to
growing our client base in target sectors of Housing and Charities
for our MultiPay platform
- Strengthening PayPoint and Love2shop collaboration – develop
closer alignment between the corporate sales teams, driving revenue
opportunities across both client bases and leveraging the Group’s
comprehensive payments solutions
- Open Banking growth – further expansion of our Open Banking
services to new and existing sectors, leveraging CCS/DPS frameworks
and working in partnership with OBConnect and Aperidata, an
innovative consumer and business credit reporting and Open Banking
platform
- Government services – expand range of services provided for
central and local government, building on the DVLA International
Driving Permit service win and the existing DWP Payment Exception
Service
LOVE2SHOP DIVISION
In Park Christmas Savings, it was particularly pleasing to see a
return to growth in the Christmas 2023 season, with conversion to
paid for new customers up 5%, retention rates for direct customers
the highest to date at 77%, and agency size maintained at an
average of 4.49 savers per agent. In addition, a new closed-loop
Mastercard (Purple Card) was launched with 140+ brands, exclusively
for Park customers. The 2024 savings season has started positively,
with payment rates +5% versus the prior year, cash collected +1%
versus the prior year and a reduction in the number of ‘nil paid’
customers of 21%, driven by a proactive plan to improve conversion
and encouraging savers to stay on track with payments, leveraging
PayPoint’s Pay By Link service for when a payment has been missed.
This again reinforces the enduring appeal and vital role this
service plays in helping consumers budget for big occasions and
avoid debt, with a Trustpilot rating of 4.6/5 and over £2 million
of value delivered to savers each year. In our first year, we have
established a Park Super Agent network of circa 1,700 PayPoint
retailer partners, with a modest number of savers recruited and
with plans underway to improve on this early success in the 2025
season.
In Love2shop Business, we experienced a more challenging H2,
with billings down year on year due to the broader caution from
large businesses, particularly with employee rewards. We have now
taken steps in the year to address this, investing in additional
APIs to unlock further sales growth and establishing a restructured
corporate sales team to better manage our existing relationships
and drive new business, with some early success already evident in
Q4 FY24. There is now a strong pipeline of new business building
into the current financial year and much closer alignment with the
business development team in PayPoint, driving revenue
opportunities within both client bases. On highstreetvouchers.com,
a key acquisition channel for B2B sales, we made important changes
in Q4 FY24 to the product mix and focus of the site, prioritising
corporate sales and digital products, which has resulted in
improved margin and profitability for billings generated via this
channel and where we will continue to optimise activity into the
current financial year.
In addition, we are well-positioned to leverage the technology
platform and capabilities of MBL, which was acquired by Love2shop
in 2022, to expand the range of products that we offer to our
corporate clients and grow gift card management services with more
retailers. This will build on the £59.7 million of gift card value
processed in FY24 and a strong client base including Greggs, Argos
and Pizza Express. A number of major brands were also added in the
year to Love2shop as redemption partners, including B&Q,
Currys, Adidas, WH Smith, Matalan & Blackwell’s and a
successful refresh of the Love2shop brand was delivered.
EMERGING OPPORTUNITIES
- Love2shop channel and partnership expansion - delivering
further growth through new partnerships, expanded provision of gift
card management services and acceleration of Love2shop
Business
- Love2shop Gift Cards – grow sales within multiple retailer
network of circa 2,600 stores
- Park Christmas Savings – expand into delivering white label
savings schemes for partners and broaden prepaid savings occasions
beyond Christmas
UPDATE ON CLAIMS AGAINST PAYPOINT
In FY24, a number of companies in the PayPoint Group, including
PayPoint Plc, received two claims relating to issues addressed by
commitments accepted by Ofgem in November 2021 as a resolution of
Ofgem’s concerns raised in its Statement of Objections received by
the PayPoint Group in September 2020. The Ofgem resolution did not
include any infringement findings.
The first claim was served by Utilita Energy Limited and Utilita
Services Limited (subsequently renamed Luxion Sales Limited)
(“Utilita”) on 16 June 2023. The second claim was served by
Global-365 plc and Global Prepaid Solution Limited (“Global 365”)
on 18 July 2023. Paypoint can confirm that a first Case Management
Conference (CMC) was held on 31 October 2023 at the Competition
Appeal Tribunal relating to these claims. The focus of the first
CMC was to agree disclosure and a timetable for proceedings.
PayPoint can also confirm that a second CMC was held on 26 April
2024 to agree further disclosure and the appointment of expert
witnesses for all parties. A provisional date for a third CMC was
set for 28 October 2024. Both claims have been listed for a joint
trial at the Competition Appeal Tribunal starting on
10 June 2025.
The Group’s position remains unchanged: it is confident that it
will successfully defend the claim by Utilita, which does not
provide any clear evidence to support the cause of action or the
amount claimed, and also that it will successfully defend the claim
by Global 365, which fundamentally misunderstands the energy market
and the relationships between the relevant Group companies and the
major energy providers, whilst also over-estimating the opportunity
available, if any, for the products offered by Global 365.
Consequently, no accounting provision has been made for these
claims.
The Group will continue to update the market on a quarterly
basis as part of its financial reporting cycle.
OUTLOOK AND DIVIDEND
The streamlining of our organisational structure and delivery of
our FY24 financial performance are important building blocks to
achieving our financial targets, including the delivery of £100
million EBITDA by the end of FY26.
In the current year, consumer behaviour across a number of our
businesses remains subdued, reflecting continued tighter family
budgets and a generally flat economy. Our expectation is that this
consumer outlook will improve during the course of the year.
Against this background, our confidence in the prospects for the
business is underpinned by the actions we are taking in each of our
divisions to accelerate performance and identify new opportunities.
In addition, our commitment today to a three-year share buyback
programme, commencing with at least £20 million over the next
twelve months, will enhance shareholder returns and is reflective
of our long-term confidence in the business and our underlying cash
flow. The Board has proposed an ordinary final dividend of 19.2p
per share, an increase of 3.2% vs the prior year final dividend of
18.6p per share, consistent with our dividend policy and target
cover range of 1.5 to 2.0 times earnings excluding exceptional
items.
We remain confident in delivering further progress in the
current year and achieving our medium-term financial goals.
Nick WilesChief
Executive 12 June 2024
KEY PERFORMANCE INDICATORS
PayPoint Group has identified the following KPIs to measure
progress of business performance:
|
KPI |
Description, purpose and reference |
FY24 |
FY2311 |
FY22 |
Overall performance |
Net revenue(£ million) |
Revenue from continuing operations less commissions paid to
retailers and Park Christmas Savings agents and costs where the
Group is principal for SIM cards and single retailer vouchers. This
reflects the benefit attributable to the Group’s performance
eliminating pass-through costs and is an important measure of the
overall success of our strategy.(See Financial review – ‘Overview’
on page 9) |
181.0 |
128.9 |
115.1 |
Underlying EBITDA(£ million) |
This measures our earnings before interest, tax, depreciation and
amortisation, net movements in convertible loan notes and
exceptional items. This is an important measure as it is widely
used by investors, analysts and other interested parties to
evaluate profitability of companies.(See Financial review –
‘Overview’ on page 10) |
81.3 |
61.3 |
58.2 |
Underlying profit before tax (profit before tax excluding adjusting
items) (£ million) |
Underlying profit before tax (profit before tax excluding adjusting
items), provides a measure of the operational performance of the
Group. This reflects the rebalancing of the business towards growth
opportunities, the shift away from our legacy cash payments
business and is an important measure of the overall success of our
strategy. (See Financial review – ‘Overview’ on page 9) |
61.7 |
50.8 |
48.0 |
Net corporate debt(£ million) |
Net corporate debt represents cash and cash equivalents excluding
cash recognised as clients’ funds, retailer partners’ deposits, and
card and voucher deposits, less amounts borrowed under financing
facilities (excluding IFRS 16 liabilities). This shows how the
Group is utilising its finance facilities to invest in growth and
will be an important measure of how the Group intends to maintain a
target leverage ratio of around 1.0 times net debt/EBITDA.(See
Financial review – ‘Group statement of financial position’ on page
14) |
67.5 |
72.4 |
43.9 |
Shareholder returns |
Diluted underlying earnings per share (Pence) |
Diluted underlying earnings per share (earnings from continuing
operations excluding adjusting items) divided by the weighted
average number of ordinary shares in issue during the year
(including potentially dilutive ordinary shares). Earnings per
share is a measure of the profit attributable to each share. |
62.6 |
60.3 |
55.4 |
Non-financial |
Employee engagement(%) |
Measures the overall employee engagement, calculated by our survey
provider. The survey provides insight into the health of our
organisation, enabling the identification of what is important to
our people so that appropriate action can be taken. |
73 |
71 |
72 |
ESG(Tonnes CO2e) |
Measures the greenhouse gas (GHG) emission for scope 1, 2 and 3 per
employee. This is recorded in accordance with the Companies Act
2006 (Strategic Report and Directors Report Regulations 2013) |
9.4 |
10.0 |
14.3 |
FINANCIAL REVIEW
OVERVIEW
£m |
Year ended 31 March
2024 |
Year ended 31 March 2023 |
Change% |
|
|
|
|
PayPoint segment |
169.8 |
160.1 |
6.0% |
Love2shop segment |
136.6 |
7.6 |
n/m |
Total revenue |
306.4 |
167.7 |
82.7% |
|
|
|
|
PayPoint segment |
129.7 |
125.5 |
3.3% |
Love2shop segment |
51.3 |
3.4 |
n/m |
Total net revenue12 |
181.0 |
128.9 |
40.4% |
|
|
|
|
PayPoint segment |
(79.2) |
(75.2) |
5.3% |
Love2shop segment |
(40.1) |
(2.9) |
n/m |
Total costs (excluding adjusting items) |
(119.3) |
(78.1) |
52.8% |
|
|
|
|
PayPoint segment |
50.5 |
50.3 |
0.4% |
Love2shop segment |
11.2 |
0.5 |
n/m |
Underlying profit before
tax13 |
61.7 |
50.8 |
21.5% |
|
|
|
|
Adjusting items: |
|
|
|
Amortisation of intangible assets arising on acquisition |
(8.1) |
(2.6) |
n/m |
Net movement in convertible loan notes |
(0.2) |
- |
- |
Exceptional items |
(5.2) |
(5.6) |
7.1% |
Profit before tax |
48.2 |
42.6 |
13.1% |
|
|
|
|
Underlying EBITDA14 |
81.3 |
61.3 |
32.6% |
Net corporate debt15 |
(67.5) |
(72.4) |
6.8% |
Total revenue increased by £138.7 million
(82.7%) to £306.4 million (2023: £167.7 million). Net revenue
increased by £52.1 million (40.4%) to £181.0 million (2023: £128.9
million), with the Love2shop (L2s) segment contributing an increase
of £47.9 million with a full year of revenue compared to one month
in the previous year. Revenue from the PayPoint segment increased
by £9.7 million to £169.8 million (2023: £160.1 million)
predominately driven by the growth in e-commerce, with parcel
transactions exceeding 100 million in the year, partially offset by
the cash payments decline in Payments & Banking.
Total costs increased by £41.2 million to £119.3 million (2023:
£78.1 million). The increase in costs was driven by the £37.2
million additional costs from a full year of L2s compared to one
month in the previous year, together with increases in
transactional costs of revenue and depreciation of terminals and
devices used to drive revenue in the business. Exceptional costs of
£5.2 million, which are one-off, non-recurring and do not reflect
current operational performance, consisted of £2.0 million
restructuring costs, £2.1 million in relation to legal fees
incurred as a result of the Group’s defence of claims served
against it and £1.1m in relation to costs associated with
refinancing for the Group.
The underlying profit before tax for the Group
increased by £10.9 million (21.5%) to £61.7 million (2023: £50.8
million). This result includes 12 months of contribution from L2s
leading to an increase of £10.7 million in underlying profit before
tax.
Profit before tax of £48.2 million (2023: £42.6
million) increased by £5.6 million (13.1%). The increase reflects a
full year of profit contribution from the L2s segment compared to
the prior year which only included one month.
EBITDA / Underlying EBITDA (£m) |
Year ended 31 March 2024 |
Year ended 31 March 2023 |
Profit before tax |
48.2 |
42.6 |
Add back: |
|
|
Net interest expense |
7.0 |
2.6 |
Depreciation & Amortisation - including amortisation of
intangible assets arising on acquisition |
20.7 |
10.5 |
EBITDA
(£m) |
75.9 |
55.7 |
Exceptional items and net movement in convertible loan notes |
5.4 |
5.6 |
Underlying
EBITDA (£m) |
81.3 |
61.3 |
Underlying EBITDA increased by £20.0 million to £81.3 million
(2023: £61.3 million), which comprises £17.8 million for the L2s
segment and £63.5 million for the PayPoint
segment.
Cash generation reduced by £2.5 million to £57.9
million (2023: £60.4 million), delivered from profit before tax of
£48.2 million (2023: £42.6 million). There was a net working
capital outflow of £11.8 million, of this £3.2 million related to
payment of costs accrued for the Appreciate acquisition at the
prior year end, £3.7 million for the extension of payment terms
with a key customer, £3.0 million following an exceptionally high
year of non-redemption income releases in L2s and £2.8 million
resulting from the timing of redemption and expiry of various types
of L2s products.
Net corporate debt decreased by £4.9 million to
£67.5 million (2022: £72.4 million) following cash generation of
£57.9 million partially offset by tax, capital expenditure and
dividends. At 31 March 2024 loans and borrowings were £93.9 million
(2023: £94.4 million)
PAYPOINT SEGMENT
£m |
Year ended 31 March
2024 |
Year ended 31 March 2023 |
Change% |
|
|
|
|
Revenue |
169.7 |
160.1 |
6.0% |
|
|
|
|
Shopping |
64.4 |
62.0 |
3.9% |
E-commerce |
11.8 |
7.3 |
61.6% |
Payments & Banking |
53.5 |
56.2 |
(4.8)% |
Net revenue |
129.7 |
125.5 |
3.3% |
|
|
|
|
Other costs of revenue |
(16.9) |
(17.6) |
(4.0)% |
Depreciation and amortisation (costs of revenue) |
(9.7) |
(7.2) |
34.7% |
Depreciation and amortisation (administrative expenses) excluding
amortisation of intangible assets arising on acquisition |
(0.4) |
(0.4) |
- |
Other administrative costs – excluding exceptional items |
(49.3) |
(47.7) |
3.4% |
Net finance costs – excluding exceptional costs |
(2.9) |
(2.3) |
26.1% |
Total costs |
(79.2) |
(75.2) |
5.3% |
|
|
|
|
Underlying profit before tax (excluding adjusting
items) |
50.5 |
50.3 |
0.4% |
Shopping net revenue increased by £2.4 million
(3.9%) to £64.4 million (2023: £62.0 million). Service fees net
revenue increased by £1.8 million (10.1%) driven by the
implementation of the annual RPI increase and additional PayPoint
sites. Cards net revenue increased by £0.9 million (2.8%), with
site growth delivered in the Handepay EVO and PayPoint Lloyds
Cardnet estates. ATM and Counter Cash net revenue decreased by £0.6
million (6.4%) due to a reduction in transactions driven by the
continuing trend of reduced demand for cash across the economy.
FMCG voucher revenue increased by £0.5 million (75.4%) to £1.1
million (2023: £0.6 million) following further campaigns run in the
year.
E-commerce net revenue increased by £4.5 million (61.6%) to
£11.8 million (2023: £7.3 million), driven by strong growth in
total transactions which increased by 77.5%. This was due to our
strength in clothing/fashion categories, the investment in the
in-store experience with Zebra label printers over the past 18
months and the continued expansion from new services and carrier
partners.
Payments & Banking net revenue decreased by £2.7 million
(4.8%) to £53.5 million (2023: £56.2 million). Cash bill payments
and top ups revenue decreased by £2.2 million (7.3%) to £27.8
million (2023: £30.0 million) driven by a 12.2% reduction in
transactions following the reduced usage of cash and the continued
switch to digital payments. Digital net revenue decreased by £2.0
million (12.7%) to £13.8 million (2023: £15.8 million) as a result
of the EBSS scheme which benefited the previous year by £3.0
million. This was partially offset by an increase in interest
income received on client balances resulting from the increase in
interest rates.
The cost of commission to retailers increased by
£7.4 million (21.5%) to £41.8 million (2023: £34.4 million). This
increase in payment to our retailer partners reflects an increase
in the number of transactions processed as well as more with higher
commission rates per transaction
Total costs (excluding adjusting items) increased by £4.0
million (5.3%) to £79.2 million (2023: £75.2 million), primarily as
a result of further investment in our people and field sales team
to support growth in sales.
SECTOR ANALYSIS
SHOPPING
Shopping consists of services PayPoint provides to retailer
partners, which form part of PayPoint’s network, and SME partners.
Services include providing the PayPoint One platform (which has a
basic till application), EPoS, card payments, terminal leasing,
ATMs, Counter Cash and FMCG vouchering.
Net revenue (£m) |
Year ended 31 March 2024 |
Year ended 31 March 2023 |
Change % |
Service fees |
19.7 |
17.9 |
10.1% |
Card payments |
32.7 |
31.8 |
2.8% |
ATMs and Counter Cash |
8.8 |
9.4 |
(6.4)% |
Other shopping |
3.2 |
2.9 |
10.3% |
Total net revenue (£m) |
64.4 |
62.0 |
3.9% |
Net revenue increased by £2.4 million (3.9%) to
£64.4 million (2023: £62.0 million) primarily due to the growth in
service fees and Handepay/Merchant Rentals card payments. The net
revenue of each of our key products is separately addressed
below.
Service fees from terminals |
Year ended 31 March 2024 |
Year ended 31 March 2023 |
Change % |
Net Revenue (£m) |
19.7 |
17.9 |
10.1% |
PayPoint terminal sites (No.) |
|
|
|
PayPoint One Terminals |
18,428 |
18,453 |
(0.1)% |
PayPoint Mini |
869 |
- |
- |
Total PayPoint One / MiniLegacy (T2)PPoSPayPoint
One – non-revenue generating |
19,297179,164671 |
18,4531429,174709 |
4.6%(88.0)%(0.1)%(5.4)% |
Total terminal sites in PayPoint network |
29,149 |
28,478 |
2.4% |
|
|
|
|
PayPoint One average weekly service fee per site
(£) |
19.1 |
17.8 |
7.3% |
As at 31 March 2024, PayPoint had a live
terminal in 29,149 UK sites, an increase of 2.4% primarily as a
result of new PayPoint mini sales.
Service fees: This is a core
growth area and consists of service fees from PayPoint One,
PayPoint mini and our legacy terminals. Service fee net revenue
increased by £1.8 million (10.1%) to £19.7 million driven by the
additional revenue generating sites compared to the prior year.
The PayPoint One average weekly service fee per
site increased by 7.3% to £19.1, following an annual RPI
increase.
Card Payments and leases |
Year ended 31 March 2024 |
Re-presented16Year ended 31 March 2023 |
Change % |
Net Revenue (£m) |
|
|
|
Card payments – Acquiring |
23.3 |
23.5 |
(0.9)% |
Card payments – Rentals |
8.8 |
7.8 |
12.8% |
Card payments – Lending and other |
0.6 |
0.5 |
20.0% |
Services in Live sites (No.) |
|
|
|
Card payments – Handepay - EVO |
19,682 |
18,397 |
7.0% |
Card payments – Handepay - Worldpay |
2,572 |
3,839 |
(33.0)% |
Card payments – PayPoint |
10,064 |
9,541 |
5.5% |
Card terminals – Merchant Rentals |
49,844 |
47,085 |
5.9% |
Transaction value (£m) |
|
|
|
Card payments – Handepay |
4,612 |
4,421 |
4.3% |
Card payments – PayPoint |
2,561 |
2,457 |
4.2% |
Card payments: Card payments
acquiring services generated £23.3 million net revenue in the year,
a reduction of £0.2 million from the previous year (2023: £23.5
million). Transaction values overall have increased by 4.3% to
£7,173 million (2023 £6,878 million) and Handepay new site sales
increased in the year supported by an improved proposition, but
sites have been impacted by higher churn, particularly in our
Worldpay back book in this very competitive market.
Card payment terminal rentals have increased by £1.0 million
(2023: £7.8 million) mainly as a result of a change in the sales
mix of operating leases compared to finance leases. Operating
leases also have associated costs included in the profit and loss
account.
ATMs and Counter Cash |
Year ended 31 March 2024 |
Year ended 31 March 2023 |
Change % |
Net Revenue (£m) |
8.8 |
9.4 |
(6.4)% |
Services in Live sites (No.) |
9,599 |
9,150 |
4.9% |
Active sites (No.) |
5,635 |
5,400 |
4.4% |
Transactions (Millions) |
28.5 |
30.1 |
(5.3)% |
ATMs and Counter Cash: Net
revenue reduced by £0.6 million (6.4%) to £8.8 million (2023: £9.4
million) as transactions reduced by 5.3% to 28.5 million. This is
attributable to the continued reduced demand for cash across the
economy, although our new product, Counter Cash, continues to grow.
ATM and Counter Cash active sites increased 4.4% to 5,635 mainly as
a result of the continued roll out of Counter Cash sites and
PayPoint continued to optimise its ATM network by relocating
existing machines to better performing locations.
Other: Other shopping services
increased by £0.3 million (10.3%) to £3.2 million (2023: £2.9
million) this includes FMCG voucher campaigns which have increased
by 75.4%.
E-COMMERCE
Parcels |
Year ended 31 March 2024 |
Year ended 31 March 2023 |
Change % |
Net Revenue (£m) |
11.8 |
7.3 |
61.6% |
Services in Live sites (No.) |
11,786 |
10,514 |
12.1% |
Transactions (Millions) |
100.1 |
56.4 |
77.5% |
E-commerce net revenue increased by £4.5 million
(61.6%) to £11.8 million following a record year for Collect+ as
parcel transactions grew strongly by 77.5% to 100.1 million. This
was driven by our strength in clothing/fashion categories and the
investment in the in-store experience with Zebra label printers
over the past 18 months. There has been continued expansion from
new services, Yodel store to store and Amazon returns, and new
carrier partnerships with Royal Mail. Parcel sites increased by
12.1% to 11,786 sites.
PAYMENTS & BANKING
|
Year ended 31 March 2024 |
Re-presented17 Year ended 31 March 2023 |
Change % |
Net revenue (£m) |
|
|
|
Cash – bill payments & top ups |
27.8 |
30.0 |
(7.3)% |
Digital |
13.8 |
15.8 |
(12.7)% |
Cash through to digital |
6.8 |
6.9 |
(1.4)% |
Other payments and banking |
5.1 |
3.5 |
45.7% |
Total net revenue (£m) |
53.5 |
56.2 |
(4.8)% |
Payments & Banking divisional net revenue decreased by 4.8%
to £53.5 million mainly as a result of the Energy Bills Support
Scheme impacting the previous year, fewer cash bill payments and
top up transactions and margin erosion, this has been partially
offset by continued growth in digital transactions and higher
interest received on customer balances.
Cash – bill payments & top ups |
Year ended 31 March 2024 |
Re-presented1 Year ended 31 March 2023 |
Change% |
Net revenue (£m) |
27.8 |
30.0 |
(7.3)% |
Transactions (millions) |
145.2 |
165.4 |
(12.2)% |
Transaction value (£m) |
4,062 |
4,483 |
(9.4)% |
Average transaction value (£) |
28.0 |
27.1 |
3.3% |
Net revenue per transaction (pence) |
19.1 |
18.1 |
5.5% |
Cash - bill payments & top ups net revenue
decreased by £2.2 million (7.3%) to £27.8 million. The year on year
decrease in energy transactions was 6.8% however, the Government’s
EBSS reduced the number of top ups in H2 FY23, and without this
impact in the prior year, the rate of decrease in energy
transactions and net revenue year on year would have been
greater.
Digital |
Year ended 31 March 2024 |
Re-presented1 Year ended31 March 2023 |
Change% |
Net revenue (£m) |
13.8 |
15.8 |
(12.7)% |
Transactions (millions) |
46.9 |
52.3 |
(10.3)% |
Transaction value (£m) |
962.7 |
1,307.6 |
(26.3)% |
Average transaction value (£) |
20.5 |
25.0 |
(18.0)% |
Net revenue per transaction (pence) |
29.4 |
30.4 |
(3.3)% |
Digital (MultiPay, Cash Out, COP and Direct
Debits) net revenue decreased by £2.0 million (12.7%) to £13.8
million and digital transactions decreased by 5.4 million (10.3%)
to 46.9 million. MultiPay net revenue increased by £1.2 million to
£5.3 million (2023: £4.1 million) with transactions growing by 2.5
million to 36.1 million. The DWP Payment Exception Service
contributed £3.9 million net revenue in the year (2023: £4.4
million) following the expected decrease in customers. Cashout
revenue decreased by £2.9 million (49.1%) to £3.0 million (2023:
£5.9 million) with prior year including the one off benefit of £3.5
million from the Energy Bills Support Scheme.
Cash through to digital |
Year ended 31 March 2024 |
Year ended31 March 2023 |
Change% |
Net revenue (£m) |
6.8 |
6.9 |
(1.4)% |
Transactions (millions) |
8.2 |
8.5 |
(3.5)% |
Transaction value (£m) |
545.0 |
496.3 |
9.8% |
Average transaction value (£) |
66.3 |
58.1 |
14.1% |
Net revenue per transaction (pence) |
82.7 |
81.2 |
1.8% |
Cash through to digital
(eMoney) net revenue decreased by £0.1 million (1.4%) to £6.8
million (2023: £6.9 million) and transactions decreased by 0.3
million (3.5%) to 8.2 million (2023: 8.5 million) with volumes
returning to pre-Covid-19 levels and a new baseline set for the
category. eMoney transactions derive a substantially higher fee per
transaction than traditional top-up transactions as they are more
complex to process.
Other payments & banking
net revenue includes interest income from client balances, SIM
sales and other ad-hoc items which contributed £5.1 million (2023:
£3.5 million) net revenue. The year on year increase is driven by
the impact of increased interest rates on our client cash
balances.
LOVE2SHOP SEGMENT
£m |
Year ended 31 March
2024 |
One month in the Year ended 31 March 2023 |
|
|
|
Billings |
359.3 |
14.8 |
Revenue |
136.6 |
7.6 |
|
|
|
Net revenue |
51.3 |
3.4 |
|
|
|
Other costs of revenue |
(7.0) |
(0.6) |
Depreciation and amortisation (administrative expenses) excluding
amortisation on intangible assets arising on acquisition |
(2.5) |
(0.2) |
Other administrative costs |
(26.5) |
(1.8) |
Net finance costs |
(4.1) |
(0.3) |
Total costs |
(40.1) |
(2.9) |
|
|
|
Underlying profit before tax (excluding adjusting
items) |
11.2 |
0.5 |
L2s has generated £359.3 million of total billings in the year.
The primary focus of the business is the sale of multi-retailer
redemption products. Revenue from these products is largely service
fee received from retail partners when the products are spent,
non-redemption income when the product expires, and interest income
earned on prepaid funds. L2s also sells cards and vouchers that can
only be redeemed at a single retailer, effectively acting as a
reseller. For these products, L2s acts as the principal, and
revenue is recognised at the full value of billings at the time of
dispatch. Net revenue however is stated after deducting the costs
for the single retailer product, reflecting the actual income
generated from the sale. Net revenue for the year was £51.3 million
with the previous period only including one month of contribution
following the acquisition.
The business is seasonal in nature, and profit
is primarily generated in the second half of the financial year,
which represents the peak trading period for L2s corporate business
and the dispatch of Park Christmas Savings prepaid products around
Christmas.
PROFIT BEFORE TAX AND TAXATION
The income tax charge of £12.5 million (2023: £7.9 million) on
profit before tax of £48.2 million (2023: £42.6 million) represents
an effective tax rate of 25.9% (2023: 18.5%). This is higher than
the UK statutory rate of 25% mainly due to adjustments in respect
of share based payments. The effective tax rate is higher than the
prior year primarily as a result of the UK statutory rate of tax
increasing from 19% to 25%.
GROUP STATEMENT OF FINANCIAL POSITION
Net assets of £121.2 million (2023: £111.7 million) increased by
£9.5 million reflecting the growth in retained earnings. Current
assets increased by £44.7 million to £296.6 million (2023: £251.9
million) due to an increase in the balance for items in the course
of collection, an equal but opposite increase in the settlement
payables is included in current liabilities. Non-current assets of
£222.5 million (2023: £228.1 million) decreased by £5.6 million due
amortisation of intangible assets partially offset by additional
investment in terminals.
Total liabilities increased by £29.7 million to £398.0 million
(2023: £368.3 million) due to an increase in settlement payables,
as noted above.
Net corporate debt was £67.5 million (2023:
£72.4 million) and has decreased by £4.9 million from the previous
year. Positive cash generation from trading has been offset by
working capital requirements in the year along with tax payments,
capital expenditure and dividend requirements. Total loans and
borrowings were £93.9 million at the year end, reducing by £0.5
million from 31 March 2023. These consisted of a £36.0 million
amortising term loan, £57.5 million drawdown of the £90.0 million
revolving credit facility and £0.4 million of accrued interest
(2023: £46.5 million drawdown from the revolving credit facility,
£46.8 million of amortising term loans and £1.1 million of asset
financing balances and accrued interest).
GROUP CASH FLOW AND LIQUIDITY
The following table summarises the cash flow and net debt
movements during the year.
£m |
Year ended 31 March 2024 |
Year ended 31 March 2023 |
Change % |
Profit
before tax |
48.2 |
42.6 |
13.1% |
Non cash other exceptional items |
0.2 |
1.3 |
(84.6)% |
Depreciation and
amortisation |
20.7 |
10.5 |
97.1% |
Share-based
payments and other items |
0.6 |
2.4 |
(75.0)% |
Working capital
changes (corporate) |
(11.8) |
3.6 |
n/m |
Cash
generation |
57.9 |
60.4 |
(4.1)% |
Taxation
payments |
(8.4) |
(6.2) |
35.5% |
Capital expenditure |
(16.2) |
(13.0) |
24.6% |
Acquisitions &
disposals of strategic investments and acquisitions |
(0.1) |
(44.4) |
n/m |
Payment of leases |
(1.0) |
(0.2) |
n/m |
Dividends paid |
(27.3) |
(25.1) |
8.8% |
Net
increase/(decrease) in net corporate |
4.9 |
(28.5) |
n/m |
Net corporate debt
at the beginning of the year |
(72.4) |
(43.9) |
64.9% |
Net corporate debt at the end of year |
(67.5) |
(72.4) |
(6.8)% |
|
|
|
|
Comprising: |
|
|
|
Corporate cash less overdraft |
26.4 |
22.0 |
|
Loans and borrowings |
(93.9) |
(94.4) |
|
Cash generation reduced £2.5 million to £57.9 million (2023:
£60.4 million) delivered from profit before tax of £48.2 million
(2023: £42.6 million). There was a net working capital outflow of
£11.8 million, of this £3.2 million related to payment of costs
accrued for the Appreciate acquisition at the prior year end, £3.7m
for the extension of payment terms with a key customer, £3.0
million following an exceptionally high year of non redemption
income releases in L2s and £2.8 million resulting from the timing
of redemption and expiry of various types of L2s products.
Taxation payments on account of £8.4 million (2023: £6.2
million) were higher compared to the prior period, with the
increase in the rate in corporation tax rate from 19% to 25%.
Dividend payments were higher compared to the prior period
following an increased interim and final ordinary dividend per
share from the prior year ended 31 March 2023.
Capital expenditure of £16.2 million (2023: £13.0 million) was
£3.2 million higher than the prior year. Capital expenditure
primarily consists of PayPoint One and card terminals, terminal
development, the enhancement to the Direct Debit platform and IT
hardware. The increase in capital expenditure is primarily the
result of the inclusion of L2s, which accounts for £2.2 million of
the £3.2 million.
DIVIDENDS
We have declared an increase of 3.2% in the final dividend to
19.2 pence per share (2023: 18.6 pence per share) payable in equal
instalments of 9.6 pence per share (2023: 9.3 pence per share) on 6
August 2024 and 27 September 2024 to shareholders on the register
on 5 July 2024 and 30 August 2024 respectively. The final dividend
is subject to the approval of shareholders at the annual general
meeting on 1 August 2024.
The final dividend will result in £14.0 million (2023: £13.5
million) being paid to shareholders from the standalone statement
of financial position of the Company which, as at 31 March 2024,
had approximately £102.2 million (2023: £44.2 million) of
distributable reserves.
CAPITAL ALLOCATION
The Board’s immediate priority is to continue to preserve
PayPoint’s balance sheet strength. The Group maintains a capital
structure appropriate for current and prospective trading over the
medium term that allows a healthy mix of returns to shareholders
and cash for investments. The Group’s capital allocation priorities
have been updated as follows:
- Investment in the business through small investments and
capital expenditure in innovation to drive future revenue streams
and improve the resilience and efficiency of our
operations;
- Progressive ordinary dividends targeting a growth of our
earnings cover ratio from the current 1.5 to 2.0 times range to
over 2.0 times by FY27
- A 3-year share buyback programme, returning at least £20
million 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.
- Targeting an appropriate leverage ratio of around 1.0 times net
debt/EBITDA
GOING CONCERN
The financial statements have been prepared on a going concern
basis having regard to the identified principal risks and
uncertainties and the viability statement on page 21. Our cash and
borrowing capacity provides sufficient funds to meet the
foreseeable needs of the Group including dividends.
Rob HardingChief Financial Officer
12 June 2024
PRINCIPAL RISKS AND UNCERTAINTIES
Continuous development and review, whilst maintaining a dynamic
and effective risk management process, is vital to support the
business in achievement of its strategy and business objectives.
Risk management continues to be an essential part of PayPoint’s
Corporate Governance.
Changes to principal risks
New risks and disclosures
The integration of Love2shop into the wider PayPoint Group has
continued over the financial year, including the roll-out of
PayPoint’s risk management framework into Love2shop. Our risk
appetite remains the same as last year.
It is defined as:
Risk appetite |
Impact on profit before tax |
Low |
Under £2 million |
Medium |
Under £5 million |
High |
Over £5 million |
Changing risks
Competition & Markets – Recognising the
increased importance of consumer behaviours and their impact on our
business model, this risk has been relabelled as “Consumer
Behaviours and Markets” to reflect the composition of this risk
more fully. The appetite for this risk has been assigned as “high”
to reflect the relationship between this risk and value creation /
reward.
Operating Model– This risk has now been renamed
as “Client Services” to reflect clients becoming increasingly
demanding in terms of need and service expectations, along with the
compliance requirements accompanying those services.
Emerging Risks
ESG and Climate Risk remains an emerging risk. Whilst we
recognise the impact climate change is having globally, we continue
to be a low-carbon producing company and, as such, these risks do
not pose an immediate risk to our operations. We have embedded a
strategy of reducing our carbon emissions, with a goal of becoming
fully net-zero by 2040 (2030 for our own operations). Details of
how we plan to achieve are set out in our annual report.
In 2022 we implemented The Task Force on Climate-related
Financial Disclosures (TCFD) which provides companies with a
framework to improve reporting on climate-related risks and
opportunities. Risks caused by climate change have been embedded
into our enterprise risk management framework including our
financial planning processes, business case development and our
overall risk identification and management processes are set out in
our annual report.
The table on pages 17 to 20 sets out our principal and emerging
risks and includes: details of the potential impact; mitigation
strategies; status of each risk; risk appetite; and exposure trend.
They do not comprise all risks faced by the Group and are not set
out in order of priority.
|
Risk Trend & Appetite |
Potential Impact |
Mitigation Strategies |
Status |
Principal Risks |
1 |
Consumer Behaviours and MarketsTrend =
IncreasingAppetite =High |
PayPoint’s markets and competitors continue to evolve. The decline
in legacy business cash usage is expected to continue prompting the
need for further business diversification. The current economic
climate, of continually rising prices and lower spend levels by
consumers, has continued from the previous financial year. The
impact in particular markets, such as the Cards market, has been
noticeable with transaction process volumes remaining subdued. |
The Executive Board closely monitors consumer trends and spending
behaviour, regularly re-assessing our markets, competitor activity,
along with any opportunities to further de-risk its legacy
business. We continue to develop our service offerings and to adapt
to changes in consumer needs and behaviours, including strategic
acquisitions or investments, where appropriate. |
Risk is increasing as cost of living pressures have continued in
the year, causing changes in consumer activities, particularly in
spending behaviours. This, along with the continued decline in cash
legacy business has impacted income streams for certain parts of
the business. |
2 |
Emerging TechnologyTrend = StableAppetite =
Medium |
As our markets continue to evolve, so does the technology
supporting the service provision. Pressures to deliver new and
innovative products remain and failure to keep pace with this
technological change is a risk for the Group. |
We continually review technological developments (including the
evolution of AI) to understand how new technologies can be used to
support and enhance our service offerings. The Executive Board
closely monitors emerging technologies and the impact they may have
on the Group. We also develop and implement our own innovative
technology, where appropriate. |
Risk is stable as Group acquisitions, investments and partnerships
have helped to mitigate risks associated with emerging
technologies. The ongoing programme of re-platforming our digital
proposition will facilitate the further expansion of our presence
in digital payment markets. We continue to roll out the new,
updated version of our retailer terminal – the PayPoint Mini. |
3 |
IT Transformation Trend = Increasing Appetite =
Medium |
Several significant IT projects are in our 3-year plan and the
delivery of these projects will be key to delivering our business
strategy and growth aspirations, along with platform
resilience. |
The Executive Board is accountable for the management and delivery
of these projects, with oversight from the Group Board. |
Risk is increasing as several of these projects have been mobilised
after the FY24 year end and will be delivered over the course of
the next 2 – 3 years. |
4 |
Client ServicesTrend = IncreasingAppetite =
Medium |
Clients’ expectations in terms of service level standards and
compliance are increasing as the business diversifies into new
products/ channels (such as community banking).Client retention and
the exposure to clients developing in house solutions as an
alternative to our services remains an ongoing risk, along with
customer concentration risk, such as in Parcels. |
PayPoint builds and carefully manages strategic relationships with
key clients, retailers, redemption partners and suppliers. We
continually seek to improve and diversify services through new
initiatives, products and technology and our involvement in new and
innovative markets. |
Risk is increasing. We continue to renew contracts and onboard new
retailers, clients, merchants and redemption partners in line with
expectations. We have built on our services and continue to
encourage our clients to diversify and utilise more than one of our
service provisions. Working with our clients to continue to
understand their requirements and how best we can meet our clients
needs remains a priority for the Group. |
5 |
Legal andRegulatoryTrend = Stable
Appetite = Low |
PayPoint is required to comply with numerous contractual, legal,
and continuously evolving regulatory requirements. Failure to
anticipate and meet obligations may result in fines, penalties,
prosecution and reputational damage. Increased levels of regulatory
supervision, the implementation of consumer duty and the addition
of new service offerings, such as open banking and PISP, have all
increased the complexity of the regulatory environment in which we
operate. |
Our Legal and Compliance teams work closely with the business on
all legal and regulatory matters and adopt strategies to ensure
PayPoint is appropriately protected and complies with regulatory
requirements. The teams advise on all key contracts and legal
matters and oversee regulatory compliance, monitoring and
reporting. Emerging regulations are incorporated into strategic
planning, and we engage with regulators to ensure our frameworks
are appropriate to support new products and initiatives. |
Risk is stable. We continue to manage new legal and regulatory
exposures through our risk management framework and this framework
has been rolled out across our Love2shop business following its
acquisition in 2023.As referenced in Note 11, the two claims served
on a number of companies in the Group in relation to the matters
addressed by commitments made to Ofgem in 2021 in resolution of
Ofgem’s competition concerns are still ongoing. The Group's
position remains unchanged and we are confident that we will
successfully defend these claims. |
6 |
PeopleTrend = Increasing Appetite = Low |
Failure to retain and attract key talent impacts many areas of our
business. A key element of the 3 year plan is revenue growth, and
we need to be confident we can attract/ retain those individuals
who are instrumental in driving top line growth, along with
individuals who will support the operational transformation of our
business. Key person dependencies, at both executive and senior
management levels, have been noted as a key risk. |
The Executive Board continues to monitor this risk, with oversight
from the Remuneration Committee. We continue to invest in our
people, with a clear focus on retaining talent and key person
dependency. PayPoint’s purpose, vision and values, are defined and
embedded within the business, our expected behaviours and our
review and monitoring processes. An employee forum comprising
employees from across the business engages directly with the
Executive Board on employee matters. |
Risk is increasing. The delivery of £100m EBITDA requires
significant revenue growth over FY25 and FY26 and a key element of
this is retaining and attracting key talent to support delivery of
this growth. Employee engagement surveys remain positive and key
actions around cost-of-living support, better employee interaction
and flexible working have been implemented. |
7 |
CyberSecurity Trend = Increasing
Appetite = Low |
Cyber security risk continues to grow due to the growing volume and
ever-increasing sophistication of the nature of these attacks and
our expanding digital footprint. Such attacks may significantly
impact service delivery and data protection causing harm to
PayPoint, our customers and stakeholders. As the geographical
instability has continued and increased over the last year,
cyber-crime and its potential impact on our Group continues to
increase as do our efforts to mitigate the likelihood of such an
attack and in monitoring activities for potential instances of
attack. |
Recognising the importance and potential impact this risk poses to
our business, the Executive Board regularly assesses PayPoint’s
cyber security and data protection framework, and the Cyber
Security and IT Sub-Committee of the Audit Committee maintains
oversight. Our IT security framework is comprehensive, with
multiple security systems and controls deployed across the Group.We
are ISO27001 and PCI DSS Level 1 certified, and systems are
constantly monitored for attacks with response plans implemented
and tested.Employees receive regular cyber security training, and
awareness is promoted through phishing simulations and other
initiatives. We have implemented tools to assist in quick
identification of potential threats. We operate a robust incident
response framework to address potential and actual breaches in our
estate or within our supply chain. We engage with stakeholders,
including suppliers on cyber-crime and proactively manage adherence
with data protection requirements. |
Risk is increasing because of the growing volume and sophistication
of cyber-attacks, coupled with our expanding digital footprint. We
continue to enhance our architecture, systems, processes and cyber
monitoring and response capabilities. We regularly engage third
parties to assess and assist on our cyber defences and strengthen
our controls and have implemented strong monitoring capability
across the Group. |
8 |
BusinessInterruptionTrend =
Increasing Appetite = Low |
Failure to provide a stable infrastructure environment or to
promptly recover failed services following an incident can lead to
loss of service provision and financial and reputational loss.
Interruptions may be caused by system failures, cyber-attack,
failure by a third party or failure of an internal process.
Recovery of the service can be hampered by lack of appropriate
resilience levels. |
PayPoint has developed a comprehensive and robust business
continuity framework. This is reviewed by the Executive Board and
the Cyber Security and IT Sub-Committee of the Audit Committee
maintains oversight of the framework and its implementation.
Business continuity, disaster recovery and major incident response
plans are maintained and tested with failover capabilities across
third party data centres and the cloud. Systems are routinely
upgraded. With numerous change management processes deployed and
resilience embedded where possible. Risk from supplier failure is
managed through contractual arrangements, alternative supplier
arrangements and business continuity plans. |
Risk is increasing. System disruption is an inherent business risk.
However, we recognise that the acquisition of Love2shop, our IT
transformation projects and our expansion into different products
contribute to an increasing complexity of our operations. Better
staff training and retention has enhanced our ability to detect and
recover from service issues. |
9 |
Credit and Liquidity/ Treasury Management Trend =
Stable Appetite = Low |
The Group has significant exposures to large clients/retailers,
redemption partners and other counterparties. We process high
volumes of payments which are dependent upon effective operational
controls. The Group also operates a number of debt/banking
covenants and interest expenses which must be carefully managed.
Cash flow management plays an increasingly important role in the
Group’s operations. |
PayPoint has effective credit and operational processes and
controls.Retailers and counterparties are subject to ongoing credit
reviews, and effective debt management processes are implemented.
Settlement systems and controls are continually assessed and
enhanced with new technology. We have effective governance with
oversight committees, delegated authorities and policies for key
processes. Segregation of duties and approvals are implemented for
all areas where fraud or material error may occur. Residual risk
associated with potential default of gift card providers is
mitigated through insurance. |
Risk is stable. Cost of living pressures may impact our client and
retail estate. However, we have robust monitoring and an increase
in support payment processing in place to reduce default rates and
impacts.The risk profile of our business operations remains stable.
We continue to review and enhance our operational processes and
controls, and relationships with our funding partners. We
successfully refinanced to support the acquisition of Love2shop and
our cash generation remains robust. We also successfully refinanced
our facility in June 2024. Liquidity targets as planned for the
year have been met. |
10 |
Operational Delivery Trend = Stable
Appetite = Low |
Delivery of key initiatives and strategic objectives, including
sales and service delivery growth, is key to achieving the desired
success levels anticipated for the group. Successful planning,
forecasting and successful execution of all business function areas
are key to ensuring operational delivery. Supply chain management
is also a key factor in delivering our operational targets. Failure
to manage this risk would hamper our business performance, impact
our stakeholders, and may lead to regulatory or legal
sanctions. |
The Executive Board has overall responsibility for delivering key
initiatives implementing a robust control framework. The Executive
Board has implemented a robust and effective reporting suite to
ensure management of BAU activity is supported by timely and
accurate business analysis. We continue to develop our Business
Intelligence and Management information reporting capabilities to
enhance, support and develop our management functions.Our project
management methodology ensures projects are prioritised and
governed effectively. Our existingprocesses are continuously
reviewed to make sure theyare efficient and well controlled. |
Risk is stable. We continue to focus on effective integration of
Love2shop into our business. We continue to develop new services
and enhance existing capabilities. |
Emerging Risk |
1 |
ESG and Climate Trend = StableAppetite = Medium |
We continue to focus on environmental, social and governance
matters and recognise that our business needs to be environmentally
responsible to create shared value forall stakeholders.PayPoint
continues to seek ways to reduce carbon emissions and its
environmental impact.We continue to closely monitor the impacts on
our business to ensure our revenue streams remain sustainable. |
The CEO and the Executive Board have overall accountability for
PayPoint’s climate and social responsibility agendas, and they
recommend strategy to the Board. PayPoint aligns its business with
reducing carbon emissions, and continually assesses its approach to
environmental risk and social responsibility, which are embedded in
our decision-making processes. We have multiple policies and
processes governing our social responsibility strategy and we
continually assess and evolve our strategy and working practices to
ensure the best outcomes for stakeholders and the environment. |
Our ESG working group has implemented various measures as we embed
low carbon strategies into our working practices and business
strategy. The roll out of the PayPoint Mini, our new terminal,
supports reduction of our carbon footprint through production of
lower emissions. We continue the move toward electric cars for our
company fleet helping our field team to travel in more
environmentally friendly ways.We run an employee forum and have
implemented various measures as a result, such as cost of living
support. |
VIABILITY STATEMENT
In accordance with the 2018 UK Corporate
Governance Code, The Directors have assessed the viability of the
Group over a three-year period, taking account of the Group’s
current financial and trading position, the principal risks and
uncertainties (as set out on pages 17 to 20) and the strategic
plans that are reviewed at least annually by the Board.
Assessment periodThe Directors
have determined that the Group’s strategic planning period of three
years remains an appropriate timeframe over which to assess
viability. This broadly aligns to average client renewal terms, new
client prospecting and onboarding cycles and the
development-through-to-maturity evolution of new products and
service lines. The current financing facilities are in place until
June 2028, broadly in line with this period.
Assessment of prospectsThe
Directors assess the Group’s prospects through the annual strategy
day, held this year in November 2023, and review of the Group’s
three-year Plan, which was most recently in March 2024. The
planning process forecasts the Group’s financial performance
that include cash flows, allowing the Directors to assess both the
Group’s liquidity and adequacy of funding. In its assessment of the
Group’s prospects, the Directors have considered the following:
—
The Group’s strategy and how it addresses
changing economic environments in the context of our clients,
parcel partnerships, merchants, prepay savers and retailer
requirements.
In each of our business divisions we evolve our
proposition to specifically address the requirements of our clients
and merchants. In our Shopping division, our partnership with
Lloyds Bank will provide a market-leading banking and card services
proposition. In the e-Commerce division, the new partnerships with
Royal Mail and Yodel/Vinted, together with new locations in Student
unions creates additional convenience for online shoppers. In
Payments and Banking, we are expanding our community cash banking
solutions across the UK providing much needed access to cash for
consumers. In Love2shop, we have added the ‘Essentials’ product to
key government procurement frameworks and integrated this product
into our PayPoint OpenPay service enabling consumers choice of cash
or vouchers.
The Group’s inherent resilience to risk.
The Group has an inherent resilience to risk
from its diversified proposition across many sectors. This means
there are substantial opportunities to continue to provide more key
services across all our customers (Retailers, SMEs, Clients, prepay
savers and Parcel partnerships). This will ensure we are more
integral to all of our customers. The business remains highly cash
generative, enabling continued investment in key areas of growth to
support the Group’s longer-term viability.
Expectations of the future economic
environment.
The economic environment remains uncertain.
Higher inflation and cost of borrowing have and continue to impact
consumer behaviours and confidence. The diversity and necessity of
our proposition ensures the business can adapt to ongoing and
unexpected changes. A good example of this is the Yodel/Vinted
partnership which supports many value seeking consumers with
purchases in the previously loved clothing market.
The Group’s financial position.
As at 31 May 2024 the Group had £66.2 million of
net debt, split £11.6 million cash and £77.8 million utilised
facilities. Compared to the total committed facilities of £135m
means the group has substantial headroom of £68.8 million. This
level of liquidity is sufficient for all viability scenarios.
Assessment of viability To
assess our viability, we modelled different scenarios by
considering the potential impact of the principal risks (as shown
in the table on pages 17 to 20). Risks are broadly unchanged, the
additional investments required to realise our integration and plan
targets are included in the plan financial projections. We have
reassessed the group’s scenarios to reflect the progress made in
delivering our strategy. All ten principal risks were used in our
modelling. They were chosen because they combine to represent
plausible scenarios covering a range of different operational and
financial impacts on the business.
In total, three severe but plausible individual
scenarios have been modelled, with a fourth reverse stress test
scenario. These scenarios and the assumptions within are detailed
in the table below. Theoretically all these scenarios, with
differing causes could occur together, with varying levels of
impact. However, we have not included a combined scenario of
scenarios A to C.
None of the separate scenarios modelled was
found to impact the long-term viability of the Group over the
assessment period. In assessing each of the scenarios, we have
taken account of the mitigating actions available to us, including,
but not limited to reducing discretionary operating spend, reducing
non-committed capital expenditure, repricing our products and
services, freezing recruitment, reducing variable incentives and
temporary suspension of dividend payments.
ConclusionHaving assessed the
Group’s current position, potential impacts of principal risks,
managing adverse conditions in the past, potential mitigating
actions and prospects of the Group, the Directors confirm they have
a reasonable expectation that the Group will be able to continue in
operation, remain solvent and meet its liabilities as they fall due
over the three-year assessment period.
Scenario modelled |
Linked to principal risks |
Assumptions |
Scenario A A sharp economic decline in
the economy and our markets causes material divergence on planned
product growth rates or accelerated declines |
Risk (1) Competition and markets, Risk (2) Emerging technology,
Risk (4) Operating model Risk (10) Operational delivery |
Transactions/merchants/estateAreas of growth have been reduced or
held flat and in areas of decline have been assumed to continue or
accelerate those declines.Margins, revenue rates per
transaction/merchants or estate Margins and rates have been held in
line with planned levelsCostsNo cost savings assumed however bonus
would not be paid.All of the above are assumed to impact for
FY24/25 with a slow recovery in FY25/26 back to planned levels in
FY26/27.Dividends and Share Buy-BackDividends are unchanged as per
the dividend policy. Share buy-back is maintained. |
Scenario BOur transformation and integration
projects do not deliver the planned growth |
Risk (3) TransformationRisk (6) People |
Revenue GrowthPlanned transformational revenue growth rates are
assumed to halve over the life of the plan.CostsCosts, linked to
transformational revenue growth are assumed to increase by 5% p.a.
above planned levels to achieve transformational execution and
cover retention issues or unforeseen skills gaps.Dividends and
Share Buy-BackDividends are unchanged as per the dividend policy.
Share buy-back is maintained. |
Scenario C A one-off event, such as a legal,
regulatory, cyber security or a significant credit loss event |
Risk (5) Regulatory and legal (grouping all the one-off hits
together)Risk (7) Cyber security, Risk (8) Business
interruptionRisk (9) Credit and liquidity/Treasury Management |
RevenueNo impact is assumed as PayPoint would adjust to change or
correct any breach so that level of business could continueCostsIt
is assumed that an average of all possible maximum fines, £26.9m,
is incurred in FY24/25 but no other associated costs together with
a credit risk of £12.1m totalling £39m.Dividends and Share
Buy-BackNo interim dividend would be paid in FY26, the year
impacted. Otherwise, dividends are unchanged as per the dividend
policy. Share buy-back is maintained. |
Scenario DTwo reverse stress tests scenario were
undertakenThe first: adopting the principles of Scenarios A and B
where a continuously monthly impact has been modelled to understand
when our funding limits would be breached. The second: adopting the
principles of Scenario C to determine the quantum of a one-off
impact to breach covenants or exceed funding availability. |
Risk (1) Competition and markets, Risk (2) Emerging technology,
Risk (3) TransformationRisk (4) Operating model Risk (6) People
Risk (10) Operational delivery |
For the first scenario, no dividends paid across the three years,
other than the final dividend in respect of FY24. The share-buyback
is assumed to continue. For the second scenario, In this reverse
stress test, it is assumed no dividends are paid in the year of the
event and therefore from a cash perspective, we save c£13m in FY26
and FY27. For both tests, the share buyback is assumed and
therefore remains a management ‘lever’. |
Consolidated statement of profit or loss
|
Note |
Year ended 31 March 2024
£’000 |
Year ended 31 March 2023 £’000 |
|
|
|
|
Revenue |
2,3 |
277,816 |
165,220 |
Other revenue |
2,3 |
28,551 |
2,503 |
Total revenue |
|
306,367 |
167,723 |
Cost of revenue |
|
(158,964) |
(64,257) |
Gross profit |
|
147,403 |
103,466 |
Administrative
expenses - excluding adjusting items |
|
(78,722) |
(50,083) |
Operating profit before adjusting items |
|
68,681 |
53,383 |
Adjusting
items: |
|
|
|
Exceptional
items - administrative expenses |
5 |
(4,120) |
(5,317) |
Amortisation of
acquired intangible assets |
|
(8,076) |
(2,574) |
Movement on convertible loan notes |
|
(186) |
- |
Operating profit after adjusting items |
|
56,299 |
45,492 |
Finance
income |
|
1,390 |
87 |
Finance
costs |
|
(8,408) |
(2,718) |
Exceptional
item – finance costs |
5 |
(1,099) |
(287) |
Profit before tax |
|
48,182 |
42,574 |
Tax |
6 |
(12,495) |
(7,864) |
Profit after tax |
|
35,687 |
34,710 |
|
|
|
|
Earnings per share (pence) |
Year ended 31 March 2024 |
Year ended 31 March 2023 |
Basic |
49.1 |
50.1 |
Diluted |
48.8 |
49.6 |
Underlying earnings per share – before adjusting items
(pence) |
Year ended 31 March 2024 |
Year ended 31 March 2023 |
Basic |
63.0 |
61.0 |
Diluted |
62.6 |
60.3 |
Consolidated statement of comprehensive
income
|
|
Year ended 31 March 2024
£’000 |
Year ended 31 March 2023 £’000 |
Items that will not be reclassified to the consolidated
statement of profit or loss: |
|
|
|
Remeasurement
of defined benefit pension scheme asset |
|
(328) |
353 |
Deferred tax on
remeasurement of defined benefit pension scheme asset |
6 |
82 |
(86) |
Other comprehensive (expense) / income for the
year |
|
(246) |
267 |
Profit for the year |
|
35,687 |
34,710 |
Total comprehensive income for the year attributable to
equity holders of the parent |
|
35,441 |
34,977 |
Consolidated statement of financial
position
|
Note |
31 March 2024 £’000 |
Re-presented131 March 2023£’000 |
Non-current assets |
|
|
|
Goodwill |
|
117,427 |
117,427 |
Other
intangible assets |
|
67,052 |
75,293 |
Convertible
loan notes |
|
3,689 |
3,750 |
Other
investment |
|
251 |
251 |
Property,
plant and equipment |
|
33,292 |
29,257 |
Net investment
in finance lease receivables |
|
512 |
1,711 |
Retirement
benefit asset |
|
286 |
411 |
Total non-current assets |
|
222,509 |
228,100 |
Current assets |
|
|
|
Inventories |
|
3,260 |
3,152 |
Trade and
other receivables |
|
122,950 |
82,055 |
Current tax
asset |
|
5,423 |
6,231 |
Cash and cash
equivalents – corporate |
|
26,392 |
22,546 |
Cash and cash
equivalents – non-corporate |
|
60,378 |
55,905 |
Restricted
funds held on deposit (non-corporate) |
|
78,198 |
82,000 |
Total current assets |
|
296,601 |
251,889 |
Total assets |
|
519,110 |
479,989 |
Current liabilities |
|
|
|
Trade and
other payables |
|
281,864 |
255,526 |
Lease
liabilities |
|
879 |
862 |
Provisions |
7 |
1,850 |
- |
Loans and
borrowings |
|
16,435 |
11,745 |
Bank
overdraft |
|
- |
525 |
Total current liabilities |
|
301,028 |
268,658 |
Non-current liabilities |
|
|
|
Trade and
other payables |
|
- |
115 |
Lease
liabilities |
|
3,956 |
4,617 |
Loans and
borrowings |
|
77,500 |
82,670 |
Deferred tax liability |
|
15,466 |
12,215 |
Total non-current liabilities |
|
96,922 |
99,617 |
Total liabilities |
|
397,950 |
368,275 |
|
|
|
|
Net assets |
|
121,160 |
111,714 |
|
|
|
|
Equity |
|
|
|
Share
capital |
8 |
242 |
242 |
Share
premium |
8 |
1,000 |
1,000 |
Merger
reserve |
8 |
18,243 |
18,243 |
Share-based
payment reserve |
|
2,992 |
2,286 |
Retained earnings |
|
98,683 |
89,943 |
Total equity attributable to equity holders of the
parent |
|
121,160 |
111,714 |
1See note 1 for an explanation of the re-presentation.
These financial
statements were approved by the Board of Directors and authorised
for issue on 12 June 2024 and were signed on behalf of the Board of
Directors.
Nick WilesChief Executive
12 June 2024
Consolidated statement of changes in equity
|
Note |
Share capital £’000 |
Share premium £’000 |
Merger reserve £’000 |
Share-based payment reserve £’000 |
Retained earnings £’000 |
Total equity £’000 |
Opening equity at 1 April 2022 |
|
230 |
1,000 |
999 |
1,570 |
79,459 |
83,258 |
|
|
|
|
|
|
|
|
Profit for the
year |
|
- |
- |
- |
- |
34,710 |
34,710 |
Total other
comprehensive income |
|
- |
- |
- |
- |
267 |
267 |
Comprehensive income for the year |
|
- |
- |
- |
- |
34,977 |
34,977 |
Issue of
shares |
8 |
12 |
- |
17,244 |
- |
- |
17,256 |
Equity-settled
share-based payment expense |
|
- |
- |
- |
1,330 |
- |
1,330 |
Vesting of share
scheme |
|
- |
- |
- |
(614) |
614 |
- |
Dividends |
|
- |
- |
- |
- |
(25,107) |
(25,107) |
Closing equity at 31 March 2023 |
|
242 |
1,000 |
18,243 |
2,286 |
89,943 |
111,714 |
|
|
|
|
|
|
|
|
Profit for the
year |
|
- |
- |
- |
- |
35,687 |
35,687 |
Total other comprehensive expense |
|
- |
- |
- |
- |
(246) |
(246) |
Comprehensive income for the year |
|
- |
- |
- |
- |
35,441 |
35,441 |
Equity-settled
share-based payment expense |
|
- |
- |
- |
1,669 |
(339) |
1,330 |
Vesting of share
scheme |
|
- |
- |
- |
(963) |
963 |
- |
Dividends |
|
- |
- |
- |
- |
(27,325) |
(27,325) |
Closing equity at 31 March 2024 |
|
242 |
1,000 |
18,243 |
2,992 |
98,683 |
121,160 |
Consolidated statement of cash flows
|
Note |
Year ended 31 March 2024
£’000 |
Restated andre-presented1Year ended 31 March 2023
£’000 |
Cash flows from operating activities |
|
|
|
Cash
generated from operations |
9 |
65,706 |
62,923 |
Corporation tax
paid |
|
(8,354) |
(6,204) |
Interest
received |
|
534 |
609 |
Interest
paid |
|
(7,609) |
(2,973) |
Movement in
restricted funds held on deposit (non-corporate) |
|
3,802 |
(35,000) |
Movement in payables – non-corporate |
|
(91) |
9,299 |
Net cash inflow from operating activities |
|
53,988 |
28,654 |
|
|
|
|
Investing activities |
|
|
|
Purchases of
property, plant and equipment |
|
(11,100) |
(7,802) |
Purchases of
intangible assets |
|
(5,106) |
(4,900) |
Acquisitions of
subsidiaries net of cash and cash equivalents acquired |
|
- |
19,380 |
Contingent
consideration cash paid |
|
- |
(1,000) |
Disposal of
investment in associate |
|
- |
5,487 |
Purchase of
convertible loan note |
|
(125) |
(3,000) |
Purchase of
other investment |
|
- |
(251) |
Net cash (used in) / generated from investing
activities |
|
(16,331) |
7,914 |
|
|
|
|
Financing activities |
|
|
|
Dividends
paid |
|
(27,325) |
(25,107) |
Proceeds from
issue of share capital |
|
- |
1 |
Payment of
lease liabilities |
|
(1,008) |
(261) |
Repayments of
loans and borrowings |
|
(44,980) |
(22,074) |
Proceeds from
loans and borrowings |
|
44,500 |
64,500 |
Net cash (used in) / generated from financing
activities |
|
(28,813) |
17,059 |
|
|
|
|
Net increase in cash and cash equivalents |
|
8,844 |
53,627 |
Cash and cash equivalents at beginning of year |
|
77,926 |
24,299 |
|
|
|
|
Cash and cash equivalents at end of year |
|
86,770 |
77,926 |
1See note 1 for explanations of the restatement and
re-presentation.
Note to the consolidated statement of cash flows -
reconciliation of cash and cash equivalents
|
|
31 March 2024 £’000 |
31 March 2023 £’000 |
|
|
|
|
Corporate
cash |
|
26,392 |
22,546 |
Non-corporate
cash |
|
60,378 |
55,905 |
Bank overdraft |
|
- |
(525) |
Cash and cash equivalents |
|
86,770 |
77,926 |
|
|
|
|
Notes to the consolidated financial
statements
- Significant Accounting policies
Basis of preparation
PayPoint Plc (‘PayPoint’ or the ‘Company’) is a public limited
company and is incorporated and registered in England in the UK
under the Companies Act 2006. The Company’s ordinary shares are
traded on the London Stock Exchange. The Group and Company
financial statements have been prepared in accordance with
UK-adopted International Accounting Standards (“UK-adopted IFRS”)
and with the requirements of the Companies Act 2006 as applicable
to companies reporting under those standards.
The financial information for the year ended 31 March 2024 set
out in this document does not constitute the Group’s financial
statements for that financial year but is derived from those
financial statements. Those financial statements have been reported
on by the Group’s auditor, PricewaterhouseCoopers LLP, and will be
delivered to the Registrar of Companies in due course. The report
of the auditor (i) was unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report and (iii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
These financial statements are presented in Pounds Sterling
rounded to thousands (£’000). The Pound Sterling is the currency of
the primary economic environment in which the Group operates.
Adoption of standards and policies
The accounting policies adopted by the Group in the financial
statements for the year ended 31 March 2024 have been applied
consistently to all periods set out in these group financial
statements.
Restatement of comparative figures in the Consolidated
statement of cash flows, and the related note, for the recognition
of acquired cash and cash equivalents in Appreciate Group
PLCOn 28 February 2023 the Group acquired Appreciate Group
PLC for consideration of £79,181,000, comprising cash of
£61,925,000 plus equity of £17,256,000. In its Consolidated
statement of cash flows for the year ended 31 March 2023, the Group
reported a net cash and cash equivalent outflow of £(45,580,000)
for Acquisitions of subsidiaries net of cash acquired. This figure
was the net of the cash outflow of the £61,925,000 referred to
above less £16,345,000 corporate cash and bank overdraft acquired
from Appreciate.
The acquired cash and cash equivalents should also have included
£64,960,000 of Appreciate’s non-corporate cash and cash
equivalents, comprising Gift card voucher cash and Prepay savers’
cash. The total cash and cash equivalents acquired should therefore
have been £81,305,000, and the Acquisitions of subsidiaries net of
cash acquired a net inflow of £19,380,000, rather than a net
outflow of £(45,580,000). The Movement in clients’ funds, retailer
partners’ deposits and card and voucher deposits in the prior year
note to the Consolidated statement of cash flows should have
excluded the £64,960,000 of acquired non-corporate cash and cash
equivalents and should therefore have been reported as an outflow
of £(25,701,000) rather than an inflow of £39,259,000.
The restatement of the comparative figures in the Group’s
Consolidated statement of cash flows and the related note reduces
Cash generated from operations by £64,960,000. It has no impact on
the Group’s opening cash and cash equivalents, net assets or
retained earnings. The re-presentation of the comparative figures
in the Group Consolidated statement of cash flows and the related
note, arising from the changes explained below to the treatment of
the movements in Restricted funds held on deposit (non-corporate)
and in Payables – non-corporate, increases Cash generated from
operations by £25,701,000. The net impact of the restatement and
the re-presentation is therefore a reduction of £39,259,000, from
the inflow of £102,182,000 reported in the prior year financial
statements, to the inflow of £62,923,000 reported as the
comparative figure in the current year financial statements.
Re-presentation of comparative
figuresConsolidated statement of financial position In its
financial statements for the year ended 31 March 2023, the Group
classified its revolving credit facility as a current liability.
The Group reclassified the liability to non-current as at 31 March
2024, having adopted early the International Accounting Standard
Board’s Non-current Liabilities with Covenants, which amended IAS
1 Presentation of Financial Statements.
Consolidated statement of cash flows and Note to consolidated
statement of cash flowsIn its financial statements for the year
ended 31 March 2023, the Group did not show separately Movement in
Restricted funds held on deposit (non-corporate) and in Movement in
payables – non-corporate. Their inclusion in the current year
improves the year-on-year comparability of Cash generated from
operations by excluding movements in Cash and cash equivalents –
non-corporate and in Restricted funds held on deposit
(non-corporate).
Going concernThe financial statements have been
prepared on a going concern basis. The Group manages its capital to
ensure that entities in the Group will be able to continue as a
going concern while maximising the return to shareholders through
the optimisation of the debt-to-equity balance. The capital
structure of the Group consists of debt, cash and cash equivalents,
restricted funds held on deposit and equity attributable to equity
holders of the parent company comprising capital, reserves and
retained earnings.
The Group’s policy is to borrow centrally to meet anticipated
funding requirements. Our cash and borrowing capacity provides
sufficient funds to meet the foreseeable needs of the Group. At 31
March 2024, the Group had corporate cash of £26.4 million.
The Group carried out a refinancing, completed on 6 June 2024,
following which its borrowing facilities consist of:
- a £45.0 million non-amortising term loan expiring in June
2028
- a £90.0 million unsecured revolving credit facility expiring in
June 2028; and
- a £30.0 million accordion facility (uncommitted) expiring in
June 2028 with an option, subject to lender approval, to extend by
a further year.
At 31 March 2024, £57.5 million (2023: £46.5 million) was drawn
down from the previous £90.0 million revolving credit facility and
the outstanding balance of the previous amortising term loan was
£36.0 million.
The Group has a strengthened statement of financial position,
with net assets of £121.2 million as at 31 March 2024 (£111.7
million as at 31 March 2023), having made a profit for the year of
£35.7 million (2023: £34.7 million) and generated cash from
operations of £65.7 million for the year then ended (2023: £62.9
million). The Group had net current liabilities of £4.4 million
(2023: £16.8 million).
The Directors have prepared cash flow forecast scenarios for a
period of 3 years from the date of approval of these financial
statements, which take into account the Group’s current financial
and trading position, the principal risks and uncertainties and the
strategic plans that are reviewed at least annually by the Board.
In this ‘base case’ scenario, the cash flow forecasts show
considerable liquidity headroom and debt covenants will be met
throughout the period.
Additionally, the Directors have carried out an assessment of
the principal risks and uncertainties and applied severe but
plausible scenarios to test further the Group going concern
assumption. These scenarios included a reduction in the volume of
transactions caused by a severe economic downturn, transformation
and growth plans not delivering intended benefits and material
one-off impacts of regulatory, IT or credit loss events. As
mitigating actions, we have assumed achievable reductions in
expenditure and a reduction in the level of future dividends
following the payment of the final dividend of 19.2 pence per share
declared in respect of the financial year ended 31 March 2024. The
cash flow forecasts included an analysis and stress test for the
above scenarios to ensure working capital movements within a
reporting period do not trigger a covenant breach.
Based on this assessment, the Directors confirm that they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
of not less than 12 months from the date of approval of these
financial statements and therefore have prepared the financial
statements on a going concern basis.
Use of judgements and estimatesIn the
application of the Group’s accounting policies, the Directors are
required to make judgements, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered relevant. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Critical judgement: recognition of cash and cash
equivalents and restricted funds held on depositThe nature
of payments and banking services means that PayPoint collects and
holds funds on behalf of clients as those funds pass through the
settlement process and retains retailer partners’ deposits as
security for those collections. Following the Appreciate
acquisition, it also holds, in trust, gift card voucher deposits on
behalf of agents, cardholders and redeemers and prepay savers’ cash
on behalf of savers.
A critical judgement in this area is whether each of the above
categories of funds, and restricted funds held on deposit, are
recognised on the consolidated statement of financial position, and
whether they are included in cash and cash equivalents for the
purpose of the Statement of consolidated cash flows. This includes
evaluating:
(a) the existence
of a binding agreement, such as a legal trust, clearly identifying
the beneficiary of the
funds;(b) the
identification of funds, ability to allocate and separability of
funds;(c) the
identification of the holder of those funds at any point in
time;(d) whether the
Group bears the credit risk.
Where there is a binding agreement specifying that PayPoint
holds funds on behalf of the client (i.e. acting in the capacity of
a trustee) and those funds have been separately identified as
belonging to that beneficiary, the cash (referred to as ‘Clients’
own funds’) and the related liability are not included on the
consolidated statement of financial position.
In all other cases, the Group has access to the interest on such
monies and can, having met certain conditions, withdraw the funds.
The cash and corresponding liability are therefore recognised on
the consolidated statement of financial position. Corporate cash
and cash equivalents consists of cash freely available to the Group
for use in its daily operations and is presented as a separate line
item on the consolidated statement of financial position from
non-corporate cash and cash equivalents, which is not freely
available to the Group, either because of self-regulation and
segregation or due to contractual or regulatory requirements.
Non-corporate cash and cash equivalents comprises:
- Clients’ cash – cash collected on behalf of clients from
retailer partners but not yet transferred to clients. Clients’ cash
is held in PayPoint’s bank accounts
- Gift card voucher cash – cash collected on the issue of gift
card vouchers which have not yet expired or been redeemed
- Prepay savers’ cash - cash received from customers under a
prepayment scheme accumulating towards their selected savings
target. It is converted to gift card vouchers once the target is
reached
- Retailer partners’ deposits – cash received from retailers held
as security against their default
Both corporate cash and non-corporate cash are included within
cash and cash equivalents on the Consolidated statement of cash
flows.
Restricted funds held on deposit (non-corporate), comprises gift
card voucher cash and prepay savers’ cash. However, unlike the gift
card voucher cash and prepay savers’ cash included in non-corporate
cash and cash equivalents, restricted funds held on deposit
(non-corporate) may only be accessed after a minimum of three
months. Consequently, they are excluded from cash and cash
equivalents on the Consolidated statement of financial position and
the Consolidated statement of cash flows.
The amounts recognised on the Consolidated statement of
financial position as at 31 March 2024 are as follows:
|
|
Year ended 31 March 2024
£’000 |
Year ended31 March 2023 £’000 |
Corporate
cash |
|
26,392 |
22,546 |
Bank
overdraft |
|
- |
(525) |
|
|
|
|
Clients’
cash |
|
17,276 |
12,041 |
Gift card
voucher cash |
|
9,779 |
29,527 |
Prepay savers’
cash |
|
27,368 |
8,181 |
Retailer
partners’ deposits |
|
5,955 |
6,156 |
|
|
|
|
Sub-total: non-corporate cash |
|
60,378 |
55,905 |
|
|
|
|
Total cash and cash equivalents |
|
86,770 |
77,926 |
|
|
|
|
Restricted
funds held on deposit (non-corporate) |
|
78,198 |
82,000 |
|
|
|
|
Clients’ own fundsClients’ cash held in trust off the
Consolidated statement of financial position as at 31 March 2024 is
£60.5 million (2023: £124.3 million).
Critical judgement: reassessment of the Group’s Cards
division cash generating units (CGUs)Management reassessed
its CGUs during the current period, prompted by the signing of a
new partnership with Lloyds Banking Group’s “Cardnet” division in
March 2024. This resulted in the creation of a new Cards CGU,
comprising the former Handepay CGU and Merchant Rentals CGU plus
the pre-existing PayPoint cards business.
Consequently, at 31 March 2024, the Group tested for impairment
the aggregate goodwill of £45.2 million which arose on the
acquisitions of Handepay and Merchant Rentals, by comparing the
new, enlarged Cards CGU’s recoverable amount to its carrying value.
That impairment test gave significant headroom, with no reasonably
possible changes in any of the discounted cash flow assumptions
causing the Cards CGU’s carrying value to exceed its recoverable
amount.
At 31 March 2023, prior to this CGU reassessment, the Group
performed separate impairment tests on the goodwill which arose on
the Handepay and Merchant Rentals acquisitions (£35.6 million and
£9.6 million respectively) by comparing the recoverable amounts to
the carrying values for each of the Handepay and Merchant Rentals
CGUs. The valuation of the goodwill relating to the Handepay CGU
was a critical estimate in the financial year ended 31 March 2023,
given that reasonably possible changes in the key assumptions used
to calculate the Handepay CGU’s recoverable amount could have
resulted in goodwill impairment.
Critical estimate: valuation of defined benefit pension
scheme obligationsThe Group has an obligation to pay
pension benefits to members of the defined benefit pension scheme
in its Love2shop segment. The present value of the obligations
associated with these future benefits depends on the assumptions
selected for several factors, including the following:
- Discount rate
- Rate of inflation
- Life expectancy
At each reporting period, management selects appropriate
actuarial assumptions for each factor, based on historical and
current trends and with input from a qualified actuary. Using the
set of assumptions selected by management at 31 March 2024, the net
defined benefit pension scheme asset is £286,000 (31 March 2023:
£411,000). This comprises scheme assets with a fair value of
£16,224,000 less obligations of £15,938,000 (31 March 2023: assets
of £17,752,000 less obligations of £17,341,000).
Relatively small changes to one or more of the above assumptions
could result in significant changes to the fair value of the scheme
obligations and hence the net scheme asset or liability, as
follows:
PF scheme |
Change in assumption |
Change in liabilities |
Discount
rate |
decrease of 0.50% p.a. |
increase by £1,068,000 |
Discount
rate |
increase of 0.50% p.a. |
decrease by £972,000 |
Rate of
inflation |
decrease by 0.25% p.a. |
decrease by £319,000 |
Rate of
inflation |
increase by 0.25% p.a. |
increase by £367,000 |
Rate of
mortality |
decrease in life expectancy of 1 year |
increase by £414,000 |
Rate of
mortality |
increase in life expectancy of 1 year |
decrease by £383,000 |
Prior year critical judgements and estimatesAs
explained above, the impact of the Group’s reassessment of its
Cards CGUs is that the valuation of the goodwill relating to the
Handepay CGU, which was a critical estimate in the financial year
ended 31 March 2023, is no longer considered a critical estimate at
31 March 2024.
Alternative performance measures Non-IFRS
measures or alternative performance measures are used by the
Directors and management for performance analysis, planning,
reporting and incentive-setting purposes. They have remained
consistent with the prior year. These measures are included in
these financial statements to provide additional useful information
on performance and trends to shareholders.
These measures are not defined terms under IFRS and therefore
they may not be comparable with similarly titled measures reported
by other companies. They are not intended to be a substitute for
IFRS measures.
Underlying performance measures (non-IFRS
measures)Underlying performance measures allow
shareholders to understand the operational performance in the year,
to facilitate comparison with prior years and to assess trends in
financial performance. They usually exclude the impact of one-off,
non-recurring and exceptional items and the amortisation of
intangible assets arising on acquisition, such as brands and
customer relationships.
Love2shop billings (non-IFRS measure relating solely to
the Love2shop segment)Billings represents the value of
goods and services shipped and invoiced to customers during the
year and is recorded net of VAT, rebates and discounts. Billings is
an alternative performance measure, which the directors believe
provides an additional measure of the level of activity other than
total revenue. This is due to revenue from multi-retailer
redemption products being reported on a ‘net’ basis, whilst revenue
from single-retailer redemption products and other goods are
reported on a ‘gross’ basis.
Net revenue (non-IFRS measure)Net revenue is
total revenue less commissions paid (to retailer partners and Park
Christmas agents) and the cost of revenue for items where the Group
acts in the capacity as principal (including single-retailer
vouchers and SIM cards). This reflects the benefit attributable to
the Group’s performance, eliminating pass-through costs to create
comparability of performance under both the agent and principal
revenue models. It is a key consistent measure of the overall
success of the Group’s strategy. A reconciliation from total
revenue to net revenue is included in note 4.
Adjusting items (non-IFRS measure)Adjusting
items consist of exceptional items, amortisation of intangible
assets arising on acquisition and movements on convertible loan
notes. These items are presented as adjusting items in the
consolidated statement of profit or loss, as they do not reflect
the operational performance of the Group.
|
|
Year ended31 March 2024
£’000 |
Year ended31 March 2023 £’000 |
Exceptional
items – legal fees |
|
2,143 |
- |
Exceptional
items – restructuring costs |
|
1,977 |
- |
Exceptional
items – acquisition costs expensed |
|
- |
4,065 |
Exceptional items – impairment loss on reclassification of
investment in associate to asset held for sale |
|
- |
1,252 |
Sub-total: exceptional items – administrative expenses |
|
4,120 |
5,317 |
|
|
|
|
Exceptional
items – finance costs |
|
1,099 |
287 |
Amortisation of
intangible assets arising on acquisition |
|
8,076 |
2,574 |
Net movement on
convertible loan notes |
|
186 |
- |
Total adjusting items |
|
13,481 |
8,178 |
Total costs (non-IFRS measure)Total costs
comprise other costs of revenue, administrative expenses, finance
income and finance costs. Total costs exclude adjusting items,
being exceptional costs and amortisation of intangible assets
arising on acquisition.
Earnings before interest, tax, depreciation and
amortisation (EBITDA) (non-IFRS measure)The Group now
presents EBITDA as it is widely used by investors, analysts and
other interested parties to evaluate profitability of companies.
This measures earnings before interest, tax, depreciation and
amortisation. See page 10 for a reconciliation from profit before
tax to EBITDA.
Adjusted earnings before interest, tax, depreciation and
amortisation (Adjusted EBITDA) (non-IFRS measure)The Group
also now presents adjusted EBITDA, which comprises EBITDA, as
defined above, excluding exceptional items. See page 10 for a
reconciliation from profit before tax to adjusted EBITDA.
Underlying earnings per share (non-IFRS
measure)Underlying earnings per share is calculated by
dividing the net profit before exceptional items, amortisation of
intangible assets arising on acquisition and movement on
convertible loan notes attributable to equity holders of the parent
by the basic or diluted weighted average number of ordinary shares
in issue.
Underlying profit before tax (non-IFRS
measure)
|
Year ended31 March 2024
£’000 |
Year ended31 March 2023 £’000 |
Profit before tax |
48,182 |
42,574 |
Total adjusting
items |
13,481 |
8,178 |
Underlying profit before tax |
61,663 |
50,752 |
The calculation of underlying profit before tax is as
follows:
Underlying profit after tax (non-IFRS
measure)The calculation of underlying profit after tax is
as follows:
|
Year ended31 March 2024
£’000 |
Year ended31 March 2023 £’000 |
Profit after tax |
35,687 |
34,710 |
Total adjusting
items |
13,481 |
8,178 |
Tax on
adjusting items |
(3,370) |
(644) |
Underlying profit after tax |
45,798 |
42,244 |
Net corporate debt (non-IFRS measure)Net
corporate debt represents corporate cash and cash equivalents less
bank overdraft and amounts borrowed under financing facilities
(excluding IFRS 16 liabilities). The reconciliation of cash and
cash equivalents to net corporate debt is as follows:
|
31 March 2024 £’000 |
31 March 2023 £’000 |
Cash and cash equivalents – corporate |
26,392 |
22,546 |
Less: |
|
|
Bank
overdraft |
- |
(525) |
Loans and
borrowings |
(93,935) |
(94,415) |
Net corporate debt |
(67,543) |
(72,394) |
2. Segmental reporting Segmental
information
The Group considers its Love2shop business to be a separate
segment from its legacy PayPoint business, since discrete financial
information is prepared for Love2shop and it offers different
products and services. Furthermore, the chief operating decision
maker (CODM) reviews separate monthly internal management reports
(including financial information) for both Love2shop and PayPoint
to allocate resources and assess performance.
The material products and services offered by each segment are
as follows:
PayPoint
- Card payment services to retailers, including leased payment
devices.
- ATM cash machines.
- Bill payment services and cash top-ups to individual consumers,
through a network of retailers.
- Parcel delivery and collection.
- Retailer service fees.
- Digital payments.
Love2shop
- Shopping vouchers, cards and e-codes which customers may redeem
with participating retailers. These are either ‘single-retailer’ or
‘multi-retailer’. The former may only be used at the specified
retailer, whilst the latter may be redeemed at one or more of over
200 retailers.
- Christmas savings club, to which customers make regular
payments throughout the year to help spread the cost of Christmas,
before converting to a voucher.
Information related to each reportable segment is set out below.
Segment profit / (loss) before tax and adjusting items is used to
measure performance because management believes that this
information is the most relevant in evaluating the results of the
respective segments relative to other entities that operate in the
same industries.
Year-ended 31 March 2024 |
PayPoint £’000 |
Love2shop £’000 |
Total£’000 |
|
|
Revenue |
167,717 |
110,099 |
277,816 |
|
|
Other revenue |
2,013 |
26,538 |
28,551 |
|
|
Segment revenue |
169,730 |
136,637 |
306,367 |
|
|
|
|
|
|
|
|
Segment profit
before tax and adjusting items |
50,487 |
11,176 |
61,663 |
|
|
Exceptional
items |
(4,369) |
(850) |
(5,219) |
|
|
Amortisation of
intangible assets arising on acquisition |
(2,137) |
(5,939) |
(8,076) |
|
|
Net movement in convertible loan notes |
(186) |
- |
(186) |
|
|
Segment profit before tax |
43,795 |
4,387 |
48,182 |
|
|
|
|
|
|
|
|
Interest
income |
163 |
1,227 |
1,390 |
|
|
Interest
expense |
3,065 |
5,343 |
8,408 |
|
|
Depreciation
and amortisation |
12,206 |
8,459 |
20,665 |
|
|
Capital
expenditure |
13,628 |
2,578 |
16,206 |
|
|
|
|
|
|
|
|
Segment
assets |
271,068 |
248,042 |
519,110 |
|
|
Segment
liabilities |
173,280 |
224,670 |
397,950 |
|
|
Segment
equity |
97,788 |
23,372 |
121,160 |
|
|
A business division analysis of revenue has been provided in
note 3.
The £306.4 million (2023: £167.7 million) total revenue and
£222.5 million (2023: £228.1 million) non-current assets at 31
March 2024 are geographically located within the UK.
3. Revenue Disaggregation of
revenue
Revenue |
Year ended 31 March 2024
£’000 |
Year ended 31 March 2023 £’000 |
|
|
|
Shopping |
|
|
Service
fees |
19,653 |
17,947 |
Card
payments |
23,998 |
24,293 |
Card terminal
leases |
8,708 |
7,542 |
ATMs |
11,805 |
12,920 |
Other shopping |
4,071 |
3,355 |
Shopping total |
68,235 |
66,057 |
|
|
|
e-commerce total |
31,754 |
20,183 |
|
|
|
Payments
and banking |
|
|
Cash – bill
payments |
31,264 |
34,135 |
Cash –
top-ups |
11,434 |
11,959 |
Digital |
16,197 |
18,081 |
Cash through to
digital |
7,658 |
7,769 |
Other payments and banking |
1,175 |
1,347 |
Payments and banking total |
67,728 |
73,291 |
|
|
|
Love2shop total – voucher and card service
fee |
110,099 |
5,689 |
|
|
|
Revenue |
277,816 |
165,220 |
Service fee revenue of £19.7 million (2023: £17.9 million) and
management fees, set-up fees and upfront lump sum payments of £1.3
million (2023: £0.7 million) are recognised on a straight-line
basis over the period of the contract. Card terminal leasing
revenue of £8.7 million (2023: £7.5 million) is recognised over the
expected lease term using the sum of digits method for finance
leases and on a straight-line basis for operating leases.
Multi-retailer voucher, card and e-code service fee revenue is
recognised on redemption by the customer. The remainder of revenue
is recognised at the point in time when each transaction is
processed. The usual timing of payment by PayPoint customers is on
14-day terms. The usual timing of Love2shop’s corporate customers
is 15-day terms; its consumer customers pay on ordering.
Revenue subject to variable consideration of £13.6 million
(2023: £13.5 million) exists where the consideration to which the
Group is entitled varies according to transaction volumes processed
and rate per transaction. Management estimates the total
transaction price using the expected value method at contract
inception, which is reassessed at the end of each reporting period,
by applying a blended rate per transaction to estimated transaction
volumes. Any required adjustment is made against the transaction
price in the period to which it relates. The revenue is recognised
at the constrained amount to the extent that it is highly probable
that the inclusion will not result in a significant revenue
reversal in the future, with the estimates based on projected
transaction volumes and historical experience. The potential range
in outcomes for revenue subject to variable consideration resulting
from changes in these estimates is not material.
Other Revenue |
Year ended 31 March 2024
£’000 |
Year ended 31 March 2023 £’000 |
Payments
and banking |
|
|
Interest
revenue |
2,013 |
575 |
|
|
|
Love2shop |
|
|
Interest revenue |
6,453 |
325 |
Non-redemption revenue |
20,085 |
1,603 |
Love2shop total |
26,538 |
1,928 |
Total other revenue |
28,551 |
2,503 |
Other revenue comprises:
- Multi-retailer voucher and card non-redemption revenue is
recognised on expiry (where the customer has no right of refund) or
on expiry and lapse of the refund period (where the customer has a
right of refund).
- Interest revenue generated by investing clients’ funds,
retailer partners’ deposits, gift card cash, prepay savers’ cash
and restricted funds held on deposit.
4. Alternative performance measures
Net Revenue
The reconciliation between total revenue and net revenue is as
follows:
|
Year ended 31 March 2024
£’000 |
Year ended 31 March 2023 £’000 |
|
|
|
Service
revenue - Shopping |
68,235 |
66,057 |
Service
revenue – e-commerce |
24,946 |
16,085 |
Service
revenue – Payments and banking |
66,579 |
71,994 |
Service
revenue – multi-retailer redemption products |
18,145 |
1,217 |
Service
revenue - other |
4,281 |
128 |
Sale of goods
– single-retailer redemption products |
87,554 |
4,325 |
Sale of goods
- other |
1,268 |
1,316 |
Royalties -
e-commerce |
6,808 |
4,098 |
Other revenue
– multi-retailer non-redemption income |
20,085 |
1,603 |
Other revenue – interest on clients’ funds, retailer partners’
deposits, gift card cash, prepay savers’ cash and restricted funds
held on deposit |
8,466 |
900 |
Total revenue |
306,367 |
167,723 |
less: |
|
|
Retailer
partners’ commissions |
(41,829) |
(34,369) |
Cost of
single-retailer cards and vouchers |
(83,403) |
(4,208) |
Cost of SIM card and e-money sales as principal |
(163) |
(199) |
Total net revenue |
180,972 |
128,947 |
|
|
|
Total Costs
Total costs, excluding adjusting items, comprises:
|
Year ended 31 March 2024
£’000 |
Year ended 31 March 2023
£’000 |
Other costs of
revenue |
33,569 |
25,481 |
Administrative
expenses – excluding adjusting items |
78,722 |
50,083 |
Finance
income |
(1,390) |
(87) |
Finance costs |
8,408 |
2,718 |
Total costs |
119,309 |
78,195 |
5. Exceptional items
|
Year ended 31 March 2024
£’000 |
Year ended 31 March 2023 £’000 |
Legal fees -
administrative expenses |
2,143 |
- |
Restructuring
costs - administrative expenses |
1,977 |
- |
Acquisition costs
expensed - administrative expenses |
- |
4,065 |
Impairment loss
on reclassification of investment in associate to asset held for
sale |
- |
1,252 |
Total exceptional items included in operating
profit |
4,120 |
5,317 |
Refinancing costs expensed – finance costs |
1,099 |
287 |
Total exceptional items included in profit or
loss |
5,219 |
5,604 |
The tax impact of the exceptional items is £1,305,000 (2023:
£nil).
Exceptional items are those which are considered significant by
virtue of their nature, size or incidence. These items are
presented as exceptional within their relevant income statement
categories to assist in the understanding of the performance and
financial results of the Group, as they do not form part of the
underlying business.
The current period legal fees relate to the Group’s defence of
two claims served on a number of its companies in connection with
issues addressed by commitments accepted by Ofgem as a resolution
of its concerns raised in Ofgem’s Statement of Objections received
by the Group in September 2020. The Group remains confident that it
will successfully defend both claims. See note 10.
The current period restructuring costs relate to the
organisational design of the Group communicated by management to
all staff on 6 March 2024. See note 7.
The current period refinancing costs comprise legal and
professional fees incurred by the Group in respect of its new
borrowing facilities referred to in note 1, and the write-off of
the unamortised balance of capitalised costs arising on the
previous refinancing exercise.
6. Tax
|
Year ended 31 March 2024
£’000 |
Year ended 31 March 2023 £’000 |
Current tax |
|
|
Charge for
current year |
9,293 |
7,829 |
Adjustment in respect of prior years |
(131) |
(806) |
Current tax charge |
9,162 |
7,023 |
|
|
|
Deferred tax |
|
|
Charge for
current year |
3,083 |
1,144 |
Adjustment in respect of prior years |
250 |
(303) |
Deferred tax charge |
3,333 |
841 |
|
|
|
Total income tax charge |
12,495 |
7,864 |
|
Year ended 31 March 2024
£’000 |
Year ended31 March 2023 £’000 |
Tax charged directly to other comprehensive
income |
|
|
Deferred tax
on movement on defined benefit pension scheme asset |
(82) |
86 |
The income tax charge is based on the UK statutory rate of
corporation tax for the year of 25% (2023: 19%). Deferred tax has
been calculated using the enacted tax rates that are expected to
apply when the liability is settled, or the asset realised. During
the prior financial year, an increase in the main rate of UK
corporation tax from 19% to 25% with effect from 1 April 2023 was
enacted. Deferred tax has been calculated based on the rate
applicable at the date timing differences are expected to
reverse.
The income tax charge of £12.5 million (2023: £7.9 million) on
profit before tax of £48.2 million (2023: £42.6 million) represents
an effective tax rate1 of 25.9% (2023: 18.5%). This is higher than
the UK statutory rate of 25% due to adjustments in respect of
share-based payments, disallowable expenses and prior year
adjustments.
The tax charge for the year is reconciled to profit before tax,
as set out in the consolidated statement of profit or loss, as
follows:
|
|
|
|
Year ended 31 March 2024
£’000 |
Year ended 31 March 2023 £’000 |
Profit before tax |
48,182 |
42,574 |
Tax at the UK corporation tax rate of 25% (2023: 19%) |
12,046 |
8,089 |
Tax effects of: |
|
|
Disallowable expense - exceptional items |
- |
1,119 |
Disallowable expense – other |
138 |
1 |
Adjustments in respect of prior years |
119 |
(1,109) |
Capital allowance super deduction |
- |
(390) |
Tax impact of share-based payments |
192 |
(121) |
Revaluation of deferred tax liability |
- |
275 |
Actual amount of tax charge |
12,495 |
7,864 |
1Effective tax rate is the tax cost as a percentage of profit
before tax.
7. Provisions
|
31 March 2024£’000 |
Balance at the beginning of the year |
- |
Provision recognised in relation to the group restructuring |
1,850 |
Balance at the end of the year |
1,850 |
During the year PayPoint conducted a group-wide review of its
organisational structure to identify efficiencies which will enable
future reinvestment in the business. The review resulted in the
redundancy of 75 roles across both segments, announced to employees
on 8 March 2024. Following this, the Group initiated, on 15 March,
a 1-month consultation period for employees impacted by the
restructuring. All related payments are to be made to those
employees between April and October 2024.
8. Share capital, share premium and merger
reserve
|
31 March 2024 £’000 |
31 March 2023 £’000 |
Called up, allotted and fully paid share
capital |
|
|
72,693,673 (2023: 72,563,234) ordinary shares of 1/3p each |
242 |
242 |
The increase in share capital in the current year resulted from
95,854 shares issued (of 1/3p each) for share awards which vested
in the year and 34,585 matching shares issued (of 1/3p each) under
the Employee Share Incentive Plan.
The share premium of £1.0 million (2023: £1.0 million)
represents the payment of deferred, contingent share consideration
in excess of the nominal value of shares issued in relation to the
i-movo acquisition.
The merger reserve of £18.2 million (2023: £18.2 million)
comprises £1.0 million initial share consideration in excess of the
nominal value of shares issued on the initial acquisition of i-movo
and £17.2 million share consideration in excess of the nominal
value of shares issued in relation to the Appreciate
acquisition.
9. Note to the Consolidated statement of cash
flows
|
|
|
|
Note |
Year ended 31 March 2024
£’000 |
Restated1Year ended 31 March 2023 £’000 |
|
Profit before tax |
|
48,182 |
42,574 |
|
|
|
|
|
|
Adjustments for: |
|
|
|
|
Depreciation
of property, plant and equipment |
|
7,318 |
4,922 |
|
Amortisation
of intangible assets |
|
13,347 |
5,555 |
|
Exceptional
item – non-cash movement on convertible loan note |
|
186 |
- |
|
Exceptional
item – non-cash impairment loss on reclassification of investment
in associate to asset held for sale |
5 |
- |
1,252 |
|
Loss on
disposal of fixed assets |
|
111 |
1,090 |
|
Finance
income |
|
(1,390) |
(987) |
|
Finance
costs |
|
8,408 |
2,718 |
|
Share-based
payment charge |
|
1,669 |
1,330 |
|
Cash-settled
share-based remuneration |
|
(339) |
- |
|
Operating cash flows before movements in working
capital |
|
77,492 |
58,454 |
|
|
|
|
|
|
Movement in
inventories |
|
(108) |
737 |
|
Movement in
trade and other receivables |
|
(4,638) |
(1,301) |
|
Movement in
finance lease receivables |
|
2,018 |
2,366 |
|
Movement in
contract assets |
|
(536) |
(853) |
|
Movement in
contract liabilities |
|
(443) |
(78) |
|
Movement in
provisions |
|
1,850 |
- |
|
Movement in
trade and other payables - corporate |
|
(9,929) |
3,688 |
|
Movement in lease liabilities |
|
- |
(90) |
|
Movement in working capital - corporate |
|
(11,786) |
4,469 |
|
|
|
|
|
|
Cash generated from operations |
|
65,706 |
62,923 |
|
1 See note 1
for an explanation of the restatement. |
|
|
|
|
10. Contingent liability
Ofgem’s Statement of ObjectionsIn FY24, a number of companies in
the PayPoint Group, including PayPoint Plc, received two claims
relating to issues addressed by commitments accepted by Ofgem in
November 2021 as a resolution of Ofgem’s concerns raised in its
Statement of Objections received by the PayPoint Group in September
2020. The Ofgem resolution did not include any infringement
findings.
The first claim was served by Utilita Energy Limited and Utilita
Services Limited (subsequently renamed Luxion Sales Limited)
(“Utilita”) on 16 June 2023. The second claim was served by
Global-365 plc and Global Prepaid Solution Limited (“Global 365”)
on 18 July 2023. PayPoint can confirm that a first Case Management
Conference (CMC) was held on 31 October 2023 at the Competition
Appeal Tribunal relating to these claims. The focus of the first
CMC was to agree disclosure and a timetable for proceedings.
PayPoint can also confirm that a second CMC was held on 26 April
2024 to agree further disclosure and the appointment of expert
witnesses for all parties. A provisional date for a third CMC was
set for 28 October 2024. Both claims have been listed for a joint
trial at the Competition Appeal Tribunal starting on
10 June 2025.
The Group’s position remains unchanged: it is confident that it
will successfully defend the claim by Utilita, which does not
provide any clear evidence to support the cause of action or the
amount claimed, and also that it will successfully defend the claim
by Global 365, which fundamentally misunderstands the energy market
and the relationships between the relevant Group companies and the
major energy providers, whilst also over-estimating the opportunity
available, if any, for the products offered by Global 365. As a
result, no accounting provision has been made for these claims.
The Group will continue to update the market on a quarterly
basis as part of its financial reporting
cycle. HMRC
assessmentIn February 2024, HMRC raised an assessment on the
Group’s tax position for the accounting period ended 31 March 2021.
The Group has appealed the assessment on the grounds that it is not
valid from a tax technical and administrative perspective and no
provision has therefore been recognised.
11. Events after the reporting dateShare
buy-backOn 12 June 2024 the Group approved a share buy-back
programme of up to £20 million over the next 12 months. See page 1
for details of the programme. This is a non-adjusting event, having
no impact on the current period financial statements.
Investment in Aperidata LimitedOn 20 May 2024, the Group
acquired, for consideration of £0.2 million, a 19.9% equity stake
in the ordinary shares of Aperidata Limited, which provides its
customers with credit rating and open banking services. On 23 May
2024 the Group purchased a convertible loan note of nominal amount
£1.0 million from Aperidata Limited. The loan note has the option
to convert into ordinary shares on 23 May 2027, increasing the
Group’s stake to 42.8%. The May 2024 transactions referred to above
are non-adjusting events, having no impact on the current period
financial statements.
RefinancingOn 6 June 2024 the Group completed a refinancing,
which provides total financing facilities of £135 million. Details
of the facility are set out in note 1.
1 Underlying EBITDA (EBITDA excluding adjusting items) is an
alternative performance measure. Refer to note 1 to the financial
information for the definition and the Financial review for a
reconciliation to profit before tax.2 Underlying profit before tax
(profit before tax excluding adjusting items) is an alternative
performance measure. Refer to note 1 to the financial information
for a reconciliation.3 FY23 comparatives contain only one month
contribution from Love2shop business post-acquisition4 Net revenue
is an alternative performance measure. Refer to note 4 to the
financial information for a reconciliation to revenue.5 Adjusting
items comprises exceptional items (£2.1 million for legal costs
related to claims against PayPoint, £1.1 million of refinancing
fees and £2.0 million of restructure costs), £0.2 million for the
net fair value adjustment to the convertible loan note (OBConnect
and Optus), and amortisation of intangible assets arising on
acquisition (£6.0m for Love2shop and £2.1 million for PayPoint’s
previous acquisitions). Refer to note 1 for a reconciliation.6
Diluted underlying earnings per share is an alternative performance
measure, Refer to note 1 to the financial information.7 Net
corporate debt (excluding IFRS 16 liabilities) is an alternative
performance measure. Refer to note 1 to the financial statements
for a reconciliation to cash and cash equivalents8 NB. Full year
number is shown for comparison. Only 1 month of contribution in
FY23 from Love2shop following completion of acquisition9 NB. Full
year number is shown for comparison. Only 1 month of contribution
in FY23 from Love2shop following completion of acquisition10
Exceptional items comprises £2.1 million for legal costs related to
claims against PayPoint, £1.1 million of refinancing fees and £2.0
million of restructure costs11 FY23 contained only one month
contribution from Love2shop business post-acquisition12 Net revenue
is an alternative performance measure. Refer to note 4 to the
financial information for a reconciliation to revenue.13 Underlying
profit before tax is an alternative performance measure. Refer to
note 1 to the financial information for a reconciliation14
Underlying EBITDA is an alternative performance measure. Refer to
note 1 to the financial information for a reconciliation.15 Net
corporate debt (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.16 Card payment
and leases analysis has been re-presented to better aggregate
revenue streams and key KPIs 17 Payments & Banking analysis has
been re-presented to better aggregate revenue streams and key
KPIs
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