From GlobeNewswire: 2025-06-12 02:00:00

PayPoint Plc reported financial highlights for the year ended March 31, 2025, including revenue of £310.7m and underlying EBITDA of £90.0m, reflecting a 10.7% increase from the previous year. CEO Nick Wiles highlighted progress towards a £100m EBITDA goal by the end of FY26 and announced new growth targets for the Group until FY28.

The company plans to increase and extend its share buyback program, returning at least £30 million per annum to shareholders until the end of March 2028. This initiative aims to reduce the equity base by 20% over the period, driven by strong cash generation and confidence in achieving growth targets. Dividends will also increase, with a cover ratio exceeding 2.0 times earnings by FY28. The dividend policy has been enhanced to boost shareholder returns and maintain a balanced capital structure. Net revenue in the shopping division increased by 1.2% to £65.2 million, service fee net revenue rose by 10.7% to £21.8 million, and e-commerce divisional net revenue surged by 39.0% to £16.4 million.

The company saw a record year of parcels transactions, with a 33.3% growth to 133.4 million parcel transactions. The Collect+ network expanded to 14,213 sites, and partnerships with Chinese marketplaces are now live, offering UK PUDO services to Chinese communities. Payments & Banking divisional net revenue increased by 1.7% to £54.4 million.

Love2shop divisional net revenue increased by 0.8% to £51.7 million. Love2shop Business delivered £172.2 million of billings, up 5.8% from the previous year. Highstreetvouchers.com saw strong performance with a 12.8% increase in billings. Park Christmas Savings had a resilient outcome with final billings of £162.2 million. New partnership with InComm Payments enabled distribution of Love2shop gift cards into major grocers and High St brands, resulting in over £2.9 million of billings. Love2shop, a leading gift card technology platform, saw a significant increase in gift card value processed, reaching £123.2 million in the year. The company continues to serve major UK retailers like Greggs, B&M, and New Look, providing key distribution services for over 150 UK retailers’ gift cards.

PayPoint Group is focusing on several building blocks for growth in the current financial year, including parcels and network expansion, card processing and Lloyds Bank partnership, open banking and digital payments, Love2shop and Park Christmas Savings, access to cash and local banking, community services for retailer partners, and connecting capabilities to drive further growth.

The Group reported a profit before tax of £26.3 million in FY25, excluding exceptional items, with an underlying profit before tax of £68.0 million. Net revenue by business division in FY25 includes Shopping at £65.2 million, E-commerce Payments & Banking at £16.4 million, and PayPoint Segment Total at £136.0 million, among others.

PayPoint plc is aiming to achieve £100 million EBITDA by the end of FY26, with a focus on delivering net revenue growth in the range of 5% to 8% per annum across the Group. The company is confident in its growth prospects and is committed to enhancing returns for shareholders, setting new targets for the Group for the next three years to the end of FY28. The company predicts a 5-8% annual growth rate and plans to automate processes for better operational performance and customer service. They aim to reduce share capital by 20% and implement leverage of 1.2x to 1.5x for a share buyback program over three years. Divisions like Shopping and E-commerce show positive growth and engagement strategies. Yodel/Vinted partnership sees strong volume growth in Store-to-Store service, Zebra printer tech expanded to 93% of network. InPost acquires Yodel, diluting original investment to 4.5% minority stake. New partnerships with Chinese and South Asian marketplaces, SFExpress rollout in UK. Collect+ network expands to 14,213 sites, partnerships with major retailers and universities.

Payments & Banking division sees 4.5% net revenue growth with MultiPay platform. Focus on cross-selling payments services, wins in Housing and Charity sectors. DVLA International Driving Permit service successful. Cash through to digital category combines consumer brands with Love2shop gift cards for revenue opportunities.

Strong progress in Open Banking strategy post investment in obconnect. 28 clients live for Open Banking services, BBC live for Confirmation of Payee. obconnect wins contract for Confirmation of Payee ecosystem in New Zealand. Focus on developing next-gen Open Banking technology for future opportunities. Resilient legacy energy bill payments net revenue, moderation in decline expected to continue. The energy price cap for pre-pay customers has increased to £1,803 for April to June 2025. Love2shop division saw strong growth in Love2shop Business and Park Christmas Savings, with billings reaching £172.2 million. Distribution partnerships with InComm Payments and redemption partners like Dobbies Garden Centres and Wilko have enhanced the Love2shop brand.

Park Christmas Savings delivered billings of £162.2m for Christmas 2024, with average saver value up by 2.5% and customer retention at 91%. The 2025 savings season has started positively, with gross accounts up by 18,000. MBL, the gift card technology platform acquired by Love2shop, processed £123.2 million in gift card value in the year.

In FY24, PayPoint received claims from Utilita Energy Limited and Global-365 plc. PayPoint has settled with Utilita, withdrawing its claim and agreeing to a new 5-year contract. PayPoint remains confident in successfully defending against the claim by Global 365, citing a misunderstanding of the energy market and relationships with energy providers. The trial at the Competition Appeal Tribunal began on June 10, 2025. PayPoint Group aims for 5-8% annual net revenue growth, process automation, and a 20% reduction in share capital by FY28. New contracts in housing and strategic business pipeline growth are key focuses. A final dividend of 19.6p per share has been declared.

Key Performance Indicators for PayPoint Group include net revenue, underlying EBITDA, underlying profit before tax, net corporate debt, diluted underlying earnings per share, and ESG emissions. Financial review shows total revenue of £310.7 million, with net revenue up to £187.7 million in FY25. Costs increased slightly, and exceptional costs were £23.4 million. The Group’s prior year costs included legal fees, restructuring costs, and refinancing costs. Remeasuring investments and convertible loan notes resulted in a net charge of £9.6 million. Underlying profit before tax increased by £6.3 million, while profit before tax decreased by £21.9 million.

EBITDA decreased by 24.9%, but underlying EBITDA increased by £8.7 million. Cash generation rose by £11.1 million to £69.0 million, with a net working capital outflow of £10.3 million. Net corporate debt increased to £97.4 million, with loans and borrowings at £102.3 million.

In the PayPoint segment, revenue was £163.6 million, with underlying revenue increasing by £8.1 million. Shopping net revenue grew by 1.2%, while E-commerce net revenue increased by 39.0% to £16.4 million. Payments & Banking net revenue rose by 1.7% to £54.4 million.

Total costs in the PayPoint segment increased by 4.3% to £82.6 million. Shopping net revenue increased by £0.8 million, driven by growth in service fees. The number of PayPoint terminals in the UK increased to 30,712 sites.

Service fees from PayPoint terminals increased by 10.7% to £21.8 million. PayPoint had terminals in 30,712 UK sites, with an increase of 5.4%. Average weekly service fee per independent site was £19.9. This area remains a core growth focus for the Group. In the Card Services sector, net revenue increased by £2.1 million to £21.8 million, driven by additional revenue generating sites. Acquiring services saw a decrease in net revenue to £21.0 million, with overall transaction values down 4.2%. Terminal rentals revenue rose to £10.6 million due to a change in operating leases.

ATMs and Counter Cash net revenue decreased by £1.0 million to £7.8 million, with transactions down to 24.5 million. Other shopping services remained at £3.2 million. E-commerce net revenue soared by £4.6 million to £16.4 million, with parcel transactions up 33.3% to 133.4 million.

In Payments & Banking, net revenue increased by 1.7% to £54.4 million. Cash net revenue decreased to £25.9 million, with transactions down to 117.8 million. Digital net revenue rose to £15.5 million, with transactions down to 45.0 million. Cash through to digital remained flat at £6.8 million.

The Love2shop segment saw total billings of £367.5 million, with net revenue at £51.7 million. Underlying profit before tax increased by 30.4% to £14.6 million. Love2shop billings hit £204.5 million, reflecting improved performance in the corporate area. Park Christmas Savings achieved billings of £163.0 million.

The income tax charge on profit before tax of £26.3 million represents an effective tax rate of 26.6%. PayPoint Group’s financial position saw a decrease in net assets to £97.3 million, with current assets and liabilities shifting due to share buybacks and claim settlements. Corporate debt increased to £97.4 million, with total liabilities rising to £411.0 million. Cash flow improved to £69.0 million, driven by profit before tax of £26.3 million.

Cash generation increased to £69.0 million, with higher taxation payments and dividend payouts. Capital expenditure rose to £18.8 million, primarily for software development. The final dividend has been increased by 2.1% to 19.6 pence per share. The company aims to balance returns to shareholders and investments in the business.

PayPoint Group’s capital allocation priorities include investments in innovation, progressive dividends, and a share buyback program returning at least £20 million annually. The company targets a leverage ratio of 1.2x to 1.5x net debt/EBITDA. Financial statements are prepared on a going concern basis, with sufficient funds to meet future needs.

Risk management is essential for PayPoint to achieve its business objectives. The Board determines the company’s risk appetite to align with strategic goals and financial returns. Continuous review of principal risks is crucial for effective governance. PayPoint’s risk appetite remains the same as last year, with impact on profit before tax categorized as Low, Medium, or High. Risks like Credit and Liquidity/Treasury Management have been updated, while ESG and Climate Risk remains an emerging concern. The company aims to be fully net-zero by 2040 and has integrated climate-related risks into their enterprise risk management framework.

Principal risks for PayPoint include Competition and Markets, Emerging Technology, IT Transformation, Client Services, and Legal and Regulatory compliance. The company closely monitors consumer trends and technological developments to adapt their services and mitigate risks. While the risk appetite varies for each area, the company continues to prioritize innovation and compliance to ensure operational resilience and growth. Increased regulatory supervision, new service offerings like open banking, and changing requirements have made the regulatory environment more complex. Legal and Compliance teams work closely with the business to ensure compliance and protect PayPoint. Risk is stable, with a management framework in place.

PayPoint faced two claims related to issues addressed by Ofgem in 2021, but no infringement findings were made. A settlement was reached with Utilita, while a trial with Global 365 is ongoing. PayPoint remains confident in successfully defending against the claim.

Employee engagement is stable, with a focus on retaining key talent to drive revenue growth. The Executive Board monitors key person dependency risks and invests in employee engagement. Positive actions like cost-of-living support and flexible working have been implemented to support employees.

Cyber security risk is increasing due to the growing volume and sophistication of cyber-attacks. PayPoint has a comprehensive IT security framework with ISO27001 and PCI DSS Level 1 certifications. Regular employee training, incident response frameworks, and engagement with stakeholders are in place to mitigate cyber security risks.

Business interruption risk is stable, with a low appetite for risk. PayPoint has a robust business continuity framework reviewed by the Executive Board. Plans for disaster recovery and major incidents are tested regularly, with failover capabilities in place across data centers and the cloud. Contractual arrangements manage risks from supplier failure. PayPoint acknowledges the increasing complexity of operations due to acquisitions and IT projects. The company has enhanced staff training and retention to improve service issue detection and recovery. Effective credit and liquidity management, including counter party risk management, is crucial for the group’s financial stability and cash flow management.

Operational delivery is stable with a low appetite for risk. Key initiatives and strategic objectives are essential for success. Supply chain management plays a vital role in achieving operational targets. The Executive Board has implemented robust reporting and business analysis tools for efficient management. Focus remains on integrating Love2shop and developing new services.

PayPoint maintains a stable focus on ESG and climate responsibilities. The company aims to reduce carbon emissions and environmental impact, aligning business strategies with ESG goals. Various policies govern social responsibility strategies, promoting low carbon strategies and environmentally friendly practices. Employee engagement in socially responsible initiatives is encouraged to ensure positive outcomes for stakeholders and the environment.

The Directors have assessed the viability of the group over a three-year period, considering financial position, risks, uncertainties, and strategic plans. The strategic planning period aligns with client renewal terms and financing facilities. The company evolves propositions in different divisions to meet client and merchant requirements, focusing on innovation and partnerships to drive growth. PayPoint Group is expanding its community cash banking solutions in the UK through retailer partners. The Group’s diversified proposition across sectors provides resilience to risk and opportunities for growth. The economic environment’s uncertainty impacts consumer behaviors, but the Group’s robust financial position with £59.3m headroom ensures viability. Various scenarios have been modeled, confirming the Group’s long-term viability. Directors expect the Group to continue operations over the next three years with no long-term prospects impact. The financial statements for the year ended March 31, 2025, show a total revenue of £324,919, with a gross profit of £150,636. The operating profit before adjusting items was £75,114. The profit before tax was £68,049, leading to a profit after tax of £50,618, with earnings per share of 26.6 pence.

In the consolidated statement of comprehensive income, the total comprehensive income for the year was £18,862. This was attributable to the owners of the parent with £18,753 and non-controlling interests with £109. The profit for the year was £19,300, with 19,300 attributable to the owners of the parent.

The consolidated statement of financial position as of March 31, 2025, shows total assets of £508,349 and total liabilities of £411,028. The net assets were £97,321, with total equity of £97,321. Share capital was £102, share premium £101,000, and retained earnings £70,255.

The consolidated statement of cash flows for the year ended March 31, 2025, shows net cash inflow from operating activities of £24,394. Investing activities resulted in a net cash outflow of £43,896, while financing activities led to a net cash outflow of £34,079. The net decrease in cash and cash equivalents was £53,581.

The financial statements were approved by the Board of Directors and authorized for issue on June 11, 2025. The statements have been prepared in accordance with UK-adopted IFRS and the Companies Act 2006. The auditor’s report was unqualified, and the financial statements will be delivered to the Registrar of Companies. The Pound Sterling is the primary currency in the Group’s economic environment. New standards adopted include amendments to IAS1, IAS7, and IFRS16. No new standards were adopted in the year ended March 2025. Anticipated standards in 2025-2027 may not materially impact the Group except for IFRS18. The Group’s financial statements are prepared on a going concern basis, with a sound capital structure.

The Group’s refinancing efforts in June 2024 and June 2025 led to a revised borrowing facility structure. As of March 2025, £58.0 million was drawn from a £90.0 million revolving credit facility. The Group’s statement of financial position shows net assets of £97.3 million, with a profit after tax of £19.3 million for the year ended March 2025.

Directors confirm a reasonable expectation of the Group’s ability to continue operations and meet liabilities over the next twelve months. Mitigating actions include achievable expenditure reductions and lower future dividends. The financial statements are prepared on a going concern basis. Judgements and estimates are used in applying the Group’s accounting policies, based on historical experience and relevant factors. PayPoint reviews estimates and assumptions continuously. Critical judgement is needed to recognize cash and restricted funds held on deposit, ensuring they are accurately reflected in financial statements. Corporate and non-corporate cash, including clients’ cash, gift card voucher cash, and more, are detailed in the Consolidated statement of financial position.

Restricted funds held on deposit, such as gift card voucher cash and prepay savers’ cash, must be retained for a minimum of three months and are not included in cash and cash equivalents on the Consolidated statement of financial position. The financial position as of March 31, 2025, shows the breakdown of various cash categories and funds held on deposit.

The Group reassessed its Cards division cash generating units (CGUs) following a new partnership with Lloyds Banking Group’s “Cardnet” division. This led to the creation of a new Cards CGU, impacting the impairment testing of goodwill. The valuation of acquired intangible assets, including customer relationships, brand, and developed technology, on the acquisition of obconnect Ltd, is considered a critical estimate due to the risk of material adjustment. The fair value of customer relationships is £7.6m, derived from assumptions like a 17.1% discount rate and 3.0% attrition rate, impacting the value by +£1.1m / -£0.9m and +£1.4m / -£1.1m respectively. Goodwill of £12.2m represents future benefits not separately recognized. Judge Logistics Ltd’s convertible loan note was re-measured at £2.2m. Management exercised judgement in assigning probabilities and estimating fair value, resulting in a charge of £12.8m. Equity investment in Judge was also re-measured at £0.5m, with a gain of £0.5m. Future impact on investments remains subject to estimation. Non-IFRS measures are used to analyze performance, providing additional information to shareholders. Underlying performance measures exclude one-off and exceptional items for operational performance analysis. Adjusting items between statutory and underlying performance measures include exceptional items like revenue and legal fees. The financial report for the year ended March 31, 2025, shows exceptional items, amortization costs, and net movements on convertible loan notes and other investments totaling £41,758, with Love2shop billings representing the value of goods and services shipped during the year. The report includes non-IFRS measures such as net revenue, total costs, EBITDA, adjusted EBITDA, underlying earnings per share, profit before tax, and net corporate debt.

Segmental reporting for PayPoint and Love2shop reveals that the Love2shop business is considered a separate segment due to different products and services offered. Love2shop offers shopping vouchers, cards, e-codes, and a Christmas savings club, while PayPoint provides card payment services, bill payments, parcel delivery, and digital payments. The report includes revenue, profit before tax, interest income and expense, capital expenditure, and balance sheet information for each segment.

The revenue disaggregation for the year ended March 31, 2025, shows total revenue of £280,714, with shopping service fees, card payments, card terminal leases, ATMs, and other shopping categories contributing to the revenue. Service fee revenue, management fees, card terminal leasing revenue, and multi-retailer voucher service fee revenue are recognized over the contract period, while the remaining revenue is recognized at the time of transaction processing.

Overall, the financial report highlights the performance and financial position of PayPoint and Love2shop segments, showcasing revenue sources, cost breakdown, and non-IFRS measures to provide a comprehensive view of the company’s operations and financial health for the year. Love2shop’s revenue of £28.4 million includes variable consideration based on transaction volumes and rates. Revenue is recognized at a constrained amount to avoid future reversals. Net revenue for the year ended March 2025 was £187.7 million. Exceptional items include a claim settlement and legal fees totaling £14.2 million and £6.4 million, respectively.

Other revenue for Love2shop includes interest on clients’ funds and non-redemption revenue. Total costs for the year ended March 2025 were £119.7 million. Exceptional items like a claim settlement and legal fees amounted to £9.2 million. The tax impact of exceptional items was £5.9 million.

Love2shop’s tax charge for the year ended March 2025 was £7.3 million. Deferred tax credits/charges and adjustments from prior years impacted the total income tax charge of £7 million. The income tax charge is based on the UK statutory rate of corporation tax at 25%. Deferred tax was calculated using enacted tax rates expected when liabilities are settled. The tax charge for the year ending March 31, 2025 was £6,991, higher than the UK statutory rate due to adjustments. The Group’s effective tax rate indicates no impact from the OECD’s Pillar Two tax regime. Investments in Judge Logistics Ltd, obconnect Ltd, and Aperidata Ltd show movements in fair values and conversions into equity stakes. Judge Logistics Ltd’s fair value was revalued to £2.2 million, obconnect Ltd’s loan converted to a 22.5% equity stake, and Aperidata Ltd’s fair value was £1.0 million. Other investments in equity also showed gains and conversions into equity stakes.

Judge Logistics Ltd’s investment was revalued to £0.5 million, obconnect Ltd’s fair value increased to £516,000, and Aperidata Ltd’s investment was valued at £0.2 million. PayPoint acquired 52.8% of obconnect Ltd for £17.2 million, resulting in a net cash outflow of £8.9 million. The acquisition aimed to leverage obconnect’s technology platform for Open Banking services. In the current year, obconnect contributed £1.8 million in revenue. Identifiable net assets acquired totalled £8.9 million. Goodwill recognised was £12.2 million.

A non-controlling interest of £4.0 million arose on the acquisition, representing 44.7% of the fair value of net assets acquired. The NCI’s share of post-acquisition profit was £0.1 million, resulting in an NCI balance of £4.1 million. Provisions for Chapel St. lease costs and claim settlement totalled £15.3 million. The Group utilised £1.85 million in provisions during the year.

The Group’s share buy-back programme, announced on 13 June 2024, amounted to at least £20.0 million over 12 months. By 31 March 2025, £14.9 million had been used to purchase 2,031,817 shares. The programme’s liability was initially recognised for the full amount, with a corresponding reduction in retained earnings. PayPoint Group reduced its Share capital by £6,773 and created a Capital redemption reserve balance. In FY24, Ofgem issued a Statement of Objections to PayPoint Group, leading to claims filed by Utilita Energy and Global-365 plc. PayPoint settled with Utilita, while defending the claim by Global 365 at trial. HMRC raised an assessment on the Group’s tax position for the period ended 31 March 2021, which the Group is appealing. The Company’s convertible loan note investment in Judge Logistics Ltd converted to an equity share, and the share buy-back programme was extended until March 2028. The Group settled a legal claim with Utilita for £14.2 million, recorded as an exceptional revenue deduction and provision.



Read more at GlobeNewswire:: Results for the year ended 31 March 2025