Results for the half year ended 30 September 2023
PayPoint PlcResults for
the half year ended 30 September 2023
Strong revenue growth across the Group
and significant progress with ongoing business
transformation
FINANCIAL HIGHLIGHTS
- Group net revenue1 of £79.8 million (H1 FY23: £59.5 million)
increased by £20.3 million (34.1%)
- Net revenue from PayPoint segment of £62.3 million (H1 FY23:
£59.5 million) increased by £2.8 million (4.7%)
- Underlying EBITDA2 of £31.1 million (H1 FY23: £28.3 million)
increased by £2.8 million (9.9%)
- Underlying profit before tax (profit before tax excluding
adjusting items)3 of £21.8 million (H1 FY23: £23.6 million)
decreased by £1.8 million (7.5%) reflecting our continued
investment in the business for growth, increased financing costs,
the expected H1 loss from the Love2shop business, and depreciation
and amortisation from the core PayPoint business
- Underlying cash generation excluding exceptional items4 of
£15.6 million (H1 FY23: £28.3 million), reflecting a seasonal
increase in working capital of £12.6 million following the
Love2shop acquisition
- Net corporate debt5 of £83.2 million (H1 FY23: £39.4 million)
increased by £43.8 million. This is due to increased financing
costs related to the acquisition of Love2shop and seasonal working
capital movements, and is expected to reduce below the starting
position of £72.4m by the end of the current financial year
- Increased ordinary interim dividend of 19.0 pence per share
declared, consistent with our progressive dividend policy, and
representing an increase of 2.2% vs the final dividend declared on
28 July 2023 of 18.6 pence per share
|
|
|
|
Half year ended 30 September 2023 |
H1 FY24 |
H1 FY23 |
Change |
Revenue |
£126.5m |
£75.4m |
67.8% |
Net revenue1 |
£79.8m |
£59.5m |
34.1% |
Underlying EBITDA2 |
£31.1m |
£28.3m |
9.9% |
|
|
|
|
Underlying profit before tax (profit before tax excluding adjusting
items)3 |
£21.8m |
£23.6m |
(7.5)% |
Adjusting items6 |
£(4.6)m |
£(2.6)m |
n/m |
Profit before tax |
£17.2m |
£21.0m |
(17.9)% |
|
|
|
|
Diluted earnings per share excluding adjusting items |
22.1p |
27.8p |
(20.2)% |
Diluted earnings per share |
17.4p |
24.4p |
(28.7)% |
Ordinary paid dividend per share |
18.6p |
18.0p |
3.3% |
Cash generation excluding exceptional items4 |
£15.6m |
£28.3m |
(44.5)% |
Net corporate debt5 |
£(83.2)m |
£(39.4)m |
111.1% |
Nick Wiles, Chief Executive of PayPoint Plc, said:
“This has been a positive half year for the PayPoint Group with
a period of significant activity supporting a number of key
initiatives across the business: the acceleration of our sales
efforts delivering growth in each of our product estates; a strong
new business pipeline for our integrated payments platform; and
driving new opportunities which leverage our enhanced capabilities,
including the first initiatives live following the acquisition of
Love2shop. It is testimony to the transformation of the business
that we continue to deliver overall Group net revenue growth in a
period where energy sector net revenue has decreased by almost 20%
and against the background of uncertain consumer behaviour and
weakening confidence due to the Cost of Living challenges.
Our partnership philosophy across the Group, combined with an
intensity and focus on execution, is continuing to unlock new
markets and revenue opportunities for us, including successfully
launching our Park Super Agent network with The Fed to over 1,500
retailer partners; Love2shop physical gift cards now live in over
2,600 major multiple retailers; an expanded partnership with Yodel
and Vinted leveraging our Collect+ Store to Store service; our
success in Open Banking working with Ovo and the Department for
Energy Security and Net Zero; our first significant win in the
charity sector with East Anglian Air Ambulance; and the continued
momentum in our PayPoint Engage proposition, helping major brands
to connect with consumers in the convenience sector.
Following the acquisition of Love2shop, the seasonal balance to
profit and cash generation in our business has now changed,
resulting in a more H2 weighted performance and contribution to the
financial year as a whole. Encouragingly, our trading momentum in
the business has remained strong into the second half of the year.
We continue to identify new opportunities to innovate and leverage
our platform and the unique strengths of our extensive client base,
accelerate the onboarding of new client business, while delivering
a strong performance in our important seasonal businesses in
parcels, Park Christmas Savings, Love2shop and energy. Our
continued focus on execution underpins our confidence in delivering
a strong second half, further progress for the year and the Group
trading in line with expectations.” OPERATIONAL
HIGHLIGHTS
The Group has delivered significant progress in the half year in
a number of key business areas:
- Parcels – new multi-year partnership agreed
with Yodel and Vinted, delivering significant volume through our
new Store to Store service, with continued expansion of network and
investment in consumer experience through technology, in-store
label printers and retailer partner support
- Card processing – estate growth delivered in
both our EVO and Lloyds Cardnet merchant books, driven by positive
sales momentum, strengthened governance on pricing and retention,
leveraging analytics and AI tools, an enhanced proposition and
merchant engagement
- Open Banking – the Group is now one of the
leading Open Banking transaction processors in the UK, with further
wins for our Confirmation of Payee service with Lexis Nexis,
Cardstream, Think Money and the Department for Energy Security and
Net Zero, and the expansion of our PayPoint OpenPay service
supporting a growing number of clients, including Ovo and the
Department for Energy and Net Zero
- Park Christmas Savings – a return to growth in
billings delivered in core business with key additional sales
channel now launched in over 1,500 PayPoint Park Super Agents,
recruiting savers for the 2024 Christmas Savings season to
accelerate billings for FY25
- Love2shop – physical gift cards available for
first time in over 2,600 locations ahead of Christmas 2023 gifting
season, partnering with key multiple retailers, including One Stop,
MFG, Henderson’s Retail and CJ Lang. Love2shop Essentials added to
key government procurement frameworks and integrated into our
PayPoint OpenPay service as an important additional channel to
support vulnerable customers
- Integrated payments platform – key client wins
in target sectors of housing and charities, with POBL Housing,
Network Homes and East Anglian Air Ambulance, and a strong new
business pipeline building in these key growth sectors with
detailed plans to accelerate the onboarding of these clients in
H2
- FMCG – positive growth in our consumer
engagement proposition, PayPoint Engage, delivering brand campaigns
with Coca-Cola, Amazon, AG Barr and JTI, driving additional
footfall and sales for our retailer partners
- Business Finance – continued growth with over
£9m lent to our SME and retailer partners, partnering with YouLend,
support businesses during the current economic challenges
DIVISIONAL HIGHLIGHTS
Positive performance with increased Group net
revenue
Shopping
Shopping divisional net revenue increased by 4.2% to £32.1
million (H1 FY23: £30.8 million), driven by the growth of our
PayPoint One estate, service fee revenue and further enhancements
to our retailer and SME propositions.
- Service fee net revenue increased by 8.8% to £9.7million,
reflecting growth in the number of revenue-generating PayPoint One
sites to 18,786 (31 March 2023: 18,453 sites) and the impact of the
annual RPI increase which was capped to support our retailer
partners through the current economic challenges
- Card payment net revenue increased by 3.5% to £16.4 million,
with our positive sales momentum and increased focus on customer
retention delivering site growth, driven by AI and data
analytics
- Card payment sites in the Handepay EVO estate grew to 19,371
(31 March 2023: 18,397) and in the PayPoint Lloyds Cardnet estate
to 9,772 (31 March 2023: 9,541), driven by the strength of our
proposition, positive sales momentum and optimisation of our
retention programme
- UK retail network increased to 28,646 sites (31 March 2023:
28,478), with 70.0% in independent retailer partners and 30.0% in
multiple retail groups
E-commerce
E-commerce divisional net revenue increased strongly by 71.8% to
£5.1 million (H1 FY23: £3.0 million) and transactions grew by 83.1%
to 42.1 million (H1 FY23: 23.0 million) through our e-commerce
technology platform, Collect+. This is further evidence of the
growing importance of our out-of-home PUDO (Pick Up and Drop Off)
network, reflecting changes in consumer habits and accelerating
channel shift away from delivery to home.
- Excellent transaction volumes, achieving a milestone of a 2
million parcels week in August, driven by continued growth in
Vinted, the launch of Consumer Send for FedEx and an increase in
Amazon sites to over 7,600 in time for Prime Day 2023
- Store to store service launched for Yodel/Vinted, with strong
consumer take up of the service
- New partnership launched with OOHPod in Northern Ireland,
enabling Yodel Click & Collect customers to have their parcels
delivered to secure lockers when checking out online and returns
launched at the end of the half
- Zebra printer expansion plans underway to rollout a further
2,000 devices ahead of Christmas Peak 2023
- Number of initiatives underway to grow our network in support
of our carrier partners and growing in-store volumes
Payments & Banking
Payments & Banking divisional net revenue decreased by 2.3%
to £25.1 million (H1 FY23: £25.7 million), with further growth in
digital transactions offset by a reduction in cash bill payment
volumes in the energy sector.
- Continued digital payments growth with net revenue increasing
by 9.1% to £6.4 million (H1 FY23: £5.9 million), driven by our
MultiPay integrated payments platform
- Cash through to digital net revenue decreased slightly by 1.2%
to £3.3 million (H1 FY23: £3.4 million) and transactions decreased
by 5.2% to 4.1 million (H1 FY23: 4.3 million), with volumes now
returning to pre-Covid-19 levels and a new baseline set for the
category. In addition to our existing range of digital brands, we
are launching new partnerships with a number of neo-banks,
including JPMorgan Chase and Revolut, enabling withdrawals and
deposits across our extensive network of retailer partners
- Cash payments net revenue decreased by 9.3% to £15.4 million
(H1 FY23: £16.4 million) and transactions decreasing by 17.3% to
68.6 million (H1 FY23: 83.0 million)
- Legacy energy sector net revenue decreased by 19.4%, driven by
a shift in consumer topping up behaviour due to the Cost of Living
challenges and unseasonably warm weather over the period
Love2shop
Love2shop divisional net revenue was £17.5 million in the period
(H1 FY23: N/A), with Park Christmas Savings returning to growth for
the first time in six years and a refocused and strengthened team
in Love2shop Business building momentum.
- Park Christmas Savings delivered £29.9 million of billings year
to date, a return to growth after 6 years of decline
- Rollout of over 1,500 Park Super Agents across the PayPoint
retailer partner network, helping more families budget for the
newly launched Christmas 2024 season
- Love2shop Business – additional corporate APIs delivered to
unlock further sales growth, a restructured business development
team established to open up further opportunities and existing
client account performance ahead of plan
- Brand refresh for Love2shop delivered to drive further
awareness and advocacy in key consumer and corporate sectors.
RECONCILIATION OF REPORTED NUMBERS
£m |
H1 FY24 |
H1 FY23 |
Reported profit before tax from continuing operations |
17.2 |
21.0 |
Exceptional items |
0.6 |
1.5 |
Profit before tax from continuing operations excluding
exceptional items |
17.8 |
22.5 |
|
|
|
Amortisation of intangible assets arising on acquisition – PayPoint
(previous acquisitions) |
1.0 |
1.1 |
Amortisation of intangible assets arising on acquisition –
Love2shop |
3.0 |
- |
Underlying profit before tax (profit before tax excluding
adjusting items) |
21.8 |
23.6 |
Underlying EBITDA |
31.1 |
28.3 |
BUSINESS DIVISION NET REVENUE AND MIX
Net revenue by business division (£m) |
H1 FY24 |
H1 FY23 |
H1 FY22 |
Shopping |
32.1 |
30.8 |
29.8 |
E-commerce |
5.1 |
3.0 |
2.1 |
Payments & Banking |
25.1 |
25.7 |
24.2 |
PayPoint Segment Total |
62.3 |
59.5 |
56.1 |
Love2shop Segment Total |
17.5 |
- |
- |
PayPoint Group Total |
79.8 |
59.5 |
56.1 |
|
|
|
|
Business division mix |
H1 FY24 |
H1 FY23 |
H1 FY22 |
Shopping |
40.2% |
51.8% |
53.2% |
E-commerce |
6.4% |
5.0% |
3.7% |
Payments & Banking |
31.5% |
43.2% |
43.1% |
Love2shop |
21.9% |
- |
- |
Enquiries |
|
PayPoint
plc |
FGS
Global |
Nick Wiles, Chief
Executive (Mobile: 07442 968960) |
Rollo Head (Telephone:
0207 251 3801) |
Rob Harding,
Chief Financial Officer (Mobile: 07525 707970) |
James Thompson (Email:
PayPoint-LON@fgsglobal.com) |
A presentation for analysts is being held at 9.30am today (23
November 2023) via webcast. This announcement, along with details
for the webcast, is available on the PayPoint plc website:
corporate.paypoint.com
CHIEF EXECUTIVE’S REVIEW
Positive half year leveraging enhanced platform for
growth
This has been another positive half year for the PayPoint Group
with continued net revenue growth across the business, excellent
progress in parcels and digital payments, and good momentum in our
key growth areas of card processing, Open Banking and integrated
payments. Our integration of the Love2shop and Park Christmas
Savings businesses is largely complete and we have now launched the
first new business opportunities arising from the acquisition of
these businesses. Following the acquisition of Love2shop, the
seasonal balance to profit and cash generation in our business has
also now changed, resulting in a more H2 weighted performance and
contribution to the financial year as a whole, which is reflected
in the results we are reporting today.
First Appreciate Group initiatives live and continued
Open Banking progress
The materially enhanced platform we have built over the past
three years is opening up a wealth of opportunities, leveraging our
extensive capabilities with new and existing clients in multiple
sectors, and enabling the enhancement of our services proposition
for our SME and retailer partners.
Our new partnership, announced earlier in the year, with The
Federation of Independent Retailers (The Fed) to create a network
of Park Christmas Savings Super Agents has gained positive early
momentum and is one of the first major initiatives delivered since
the acquisition of Love2shop in FY23. Working in partnership, we
have established a network of over 1,500 Super Agents ready for the
Christmas 2024 savings season, with retailers recruiting savers in
their area and creating an additional opportunity to earn over
£1,000 per annum from the service. Park Christmas Savings plays an
important role in helping families budget for Christmas and
boosting their spending power through regular offers and discounts,
especially as families manage their money through the current cost
of living challenges. This additional savings channel is expected
to accelerate growth in billings for the Park Christmas Savings
business in FY25.
In addition, we were delighted to have delivered an important
first for Love2shop through rolling out physical gift cards to over
2,600 multiple retailer stores ahead of Christmas 2023, including
One Stop, Motor Fuels Group, Spar Scotland and Northern Ireland,
and several regional Co-Ops. This is a key part of our expansion
plans for Love2shop, and will be followed next year by a further
rollout into our independent retailer partners. We have now added
Love2shop Essentials to key government procurement frameworks
(Crown Commercial Service and Fund Administration and Disbursement
Services) and it has also been integrated with the PayPoint OpenPay
service, providing an important additional channel to support
vulnerable customers.
Our Open Banking partnership with OBConnect has enhanced our
integrated payments platform and already yielded positive results,
with PayPoint now one of the top 10 Open Banking transaction
processors in the UK. Our Confirmation of Payee service continues
to grow, with several client wins including Lexis Nexis,
Cardstream, Think Money and the Department for Energy Security and
Net Zero. Additionally, the PayPoint OpenPay service continues to
gain traction and new clients, notably Ovo to support Alternative
Fuel Payments, Sheffield City Council to distribute Household
Support Fund monies and the Department of Energy Security and Net
Zero for dispersing Cost of Living support to continuous cruisers,
with 97% of recipients opting to deposit into a bank account
through the PayPoint OpenPay service. We see Open Banking as a key
growth area where we can partner with organisations in the public
and private sector to enhance their payment offering, reduce costs
and improve customer support to those in need.
Accelerated momentum across all business
divisions
Shopping
In Shopping, our retailer partner and SME service propositions
have been enhanced further, with a strong take up and positive
feedback from our partners. The overall PayPoint network and
PayPoint One estate have grown again this half year and 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. New commission-generating
services and transaction volumes have driven this positive impact
to retailer partner revenues, including good growth in our FMCG
consumer engagement proposition, PayPoint Engage, delivering brand
campaigns with Coca-Cola, Amazon, AG Barr and JTI; our partnership
with Eurochange, offering foreign currency click and collect, which
is now in pilot; and the early rollout of our new technology
solution, PayPoint Connect, which integrates with leading, third
party EPoS suppliers including PointFour and the Retail Data
Partnership.
In our card processing business, we have continued the momentum
established at the end of the last financial year, with a strong
sales performance across Handepay and PayPoint delivering further
growth in the EVO merchant book, ending the half year at 19,371
sites, and in the Lloyds Cardnet book, growing to 9,772 sites. This
positive progress has been driven by the increased optimisation of
our sales efforts, including a new team established in London for
Handepay to capture the regional market opportunity; a
strengthening of key areas of business governance to optimise
pricing and retention; a new senior hire recruited to lead our
sales and retention efforts, supported by better data, AI tools and
analytics; and the leverage of our enhanced proposition, including
launching additional functionality like EPoS and loyalty for SMEs.
In addition, we are enhancing our pricing and governance framework
for our card processing across both Handepay and PayPoint to ensure
we optimise the value delivered from our growing estate. Our
Business Finance product continues to grow, delivered in
partnership with YouLend across both PayPoint and Handepay, with
over £9m of funding approved to support our retailer and SME
partners during the current economic challenges.
We have continued our extensive efforts to strengthen our
retailer partner relationships, including a refreshed approach to
the ‘early life’ support provided to our retailer partners to drive
adoption of new services, allied with our core commitments to
regular face to face store visits, more direct communications and
our strengthened relationships with the key trade associations,
including the Association of Convenience Stores (ACS), the Scottish
Grocers’ Federation (SGF) and the Federation of Independent
Retailers (the Fed). 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.
E-commerce
In E-commerce, our half year-on-year performance has been
excellent, driven by the continued growth in the second-hand
clothing market via Vinted; our new Store to Store service which is
being quickly adopted by customers; and an expansion of our Amazon
network to over 7,600 stores. A further rollout of Zebra printer
technology is underway to an additional 2,000 sites, underlining
our continuing commitment to invest in improving the consumer
experience in store. Operationally, we are in our strongest
position ever heading into the peak trading period, with the
business division on track to deliver a record year of transaction
growth.
Looking ahead, we are continuing to focus on our plans to
strengthen our carrier and retailer partnerships, as well as
expanding the Collect+ network into new locations and demographics,
including transport locations, ‘Home Hubs’ via the Park Christmas
Savings agent network, and our growing student presence working
with the top universities and student unions to bring a range of
tailored Group services to the student population.
Payments & Banking
In Payments and Banking, we continue to diversify our digital
payments client base and strengthen our integrated payments
platform as we expand the range of digital solutions that we can
deliver to support our clients across multiple sectors, including
government, local authorities and housing associations. We continue
to make good progress in the housing sector, with POBL Housing and
Network Homes adopting our MultiPay integrated payments platform to
serve their customers, and we have recently secured our first
significant win in the charity sector with East Anglian Air
Ambulance. We are building a strong new business pipeline in these
key growth sectors and have detailed plans to accelerate the
onboarding of these clients in H2.
Our Open Banking solutions, delivered in partnership with
OBConnect, continue to go from strength to strength: Ovo is our
first client live for PISP, 2 clients have signed for AIS services
(Ovo and Citizens Advice) and 13 clients signed for Confirmation of
Payee. In addition, we successfully tendered for the new government
framework (DPS) through the Crown Commercial Service. The PayPoint
OpenPay service has also been enhanced, now giving customers the
option to deposit funds directly into a bank account, exchange for
a Love2shop Essentials card or redeem in cash via our extensive
retailer partner network. Several clients have already successfully
deployed this service, including Sheffield City Council, replacing
cheques for the distribution of the Household Support Fund, and the
Department for Energy Security and Net Zero, helping to disperse
Cost of Living support for continuous cruisers with 97% of
recipients opting to deposit into a bank account via Open Banking.
These innovative solutions give us a highly differentiated
proposition that is opening up new sectors and growth.
Love2shop
In Love2shop, we have quickly integrated the business following
the completion of the acquisition at the end of FY23 and are making
positive progress in enhancing the core business performance. It’s
particularly pleasing that Park Christmas Savings has returned to
growth for the first time in six years, delivering £29.9m of
billings in H1 FY24 (H1 FY23: £24.9m), and we have taken important
steps to strengthen our corporate offering in Love2shop Business,
with investment in additional APIs delivered to unlock further
sales growth and a restructured business development team
established to better manage our existing relationships and drive
new business.
The enhanced capabilities that Love2shop has added to our
platform is already yielding positive results, including: the
rollout of 1,500 Park Super Agents across the PayPoint retailer
partner network, helping more families budget for the newly
launched Christmas 2024 season; the launch of physical Love2shop
gift cards in over 2,600 multiple retailers ahead of Christmas 2023
peak trading; and the addition of Love2shop Essentials cards to our
PayPoint OpenPay service as well as key government frameworks.
Furthermore, there are several new sector opportunities that are in
development, combining capabilities across the Group, including a
new partnership with Card Factory to combine Love2shop gift cards
with their greetings card offer through PayPoint’s extensive
network.
Further progress on our ESG commitments
Our Environment, Social and Governance (ESG) strategy and action
plan has progressed well in the half year, as we consider our
social responsibility and impact as a business and reflect on the
important role that the Group plays in delivering vital services in
communities across the UK. New hybrid cars were introduced to our
fleet in April 2023, replacing diesel company cars and petrol hire
cars and an electric car leasing scheme has now launched. We
continue to be mindful of the impact of the Cost of Living on our
people, with salaries reviewed again in July, ensuring that all of
our colleagues are paid in excess of the Real Living Wage. In
addition, we launched ‘My Pay, My Way’ with Wagestream to offer
further financial wellbeing support to our people. As part of our
‘Welcoming Everyone’ programme, we held a series of events to mark
Pride Month in June, and Love2shop was recognised as one of the
Best Workplaces for Women by Great Place to Work UK in June. The
Group recently participated in the Great Place to Work survey for
the first time, and we were delighted to achieve Great Place to
Work certification which recognises the work we have done to create
a dynamic environment for our people where we deliver for our
customers by collaborating and being good colleagues to each other,
creating a positive and inclusive environment where everyone can
learn, grow and shine.
Update on claims against PayPoint
Further to the update provided on 28 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 the
claims served by Utilita Energy Limited and Utilita Services
Limited (“Utilita”) and Global 365 plc and Global Prepaid Solution
Limited (“Global 365”). The focus of the CMC was to agree
disclosure and a timetable for proceedings.
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.
Given this position, the Group’s preference is for a swift and
expedient process, targeting a trial listing on the first available
date to be agreed with all parties.
The Group will continue to update the market on a quarterly
basis as part of its financial reporting cycle.
Outlook and dividend
We have delivered strong results in a growing number of key
areas in the first half. Our enhanced platform and expanded
capabilities across the Group, combined with our business-wide
partnership philosophy and intensity of execution, give the Board
confidence in delivering a strong second half, further progress for
the year and the Group trading in line with expectations.
The opportunity to deliver enterprise level solutions, combining
the extensive capabilities across the Group, is significant and is
enabling us to deepen our relationships with existing clients as
well as expanding into new verticals.
We have detailed execution plans in place to capitalise on the
positive momentum built up in our key growth areas of card
processing, Open Banking, parcels, integrated payments and the new
Love2shop division, delivering profitable growth in our retail and
card estates, further enhancements to our SME and retailer partner
proposition and positive new business growth in key target sectors.
Following the acquisition of Love2shop, the seasonal balance to
profit and cash generation in our business has also now changed,
resulting in a more H2 weighted performance and contribution to the
financial year as a whole.
The trading momentum in the business has remained strong into
the second half of the year, as we continue to identify new
opportunities to innovate and leverage our platform and the unique
strengths of our extensive client base, accelerate the onboarding
of new client business, all while delivering a strong performance
in our important seasonal businesses in parcels, Park Christmas
Savings, Love2shop and energy. The latter business is already
delivering a more resilient performance early in H2, in spite of
the shifts in consumer topping up behaviour due to the Cost of
Living challenges and unseasonably warm weather seen over H1.
Cash usage remains resilient in the UK, particularly for the
millions of consumers who rely on it on a daily basis, and we
remain committed to providing vital services that maintain access
to cash, as well as developing new services to support communities
across the UK. We also remain alert to the potential impact on
consumers from the broader economic challenges, including the
changes we have seen to behaviours in the energy sector and the
weakening consumer confidence reported across the UK, all of which
we monitor closely across the business. It is testimony to the
transformation of the business that we have delivered overall Group
net revenue growth in a period where energy sector net revenue has
decreased by almost 20%.
The Board has proposed an interim dividend of 19.0 pence per
share, an increase of 2.2% vs the final dividend declared on 28
July 2023 of 18.6 pence per share, consistent with our progressive
dividend policy of a target cover range of 1.5 to 2.0 times
earnings excluding exceptional items, reflecting our long-term
confidence in the business, the strength of our underlying cash
flow, and the enhanced growth prospects across the Group.
Our compelling characteristics of strong cash flow and resilient
earnings remain constant, and our materially enhanced platform is
positioned to deliver sustainable and profitable growth for our
shareholders, and further progress in the delivery of these
objectives in the current year.
Nick WilesChief
Executive 22 November 2023
PROGRESS AGAINST OUR STRATEGIC
PRIORITIES
SHOPPING BUSINESS DIVISION – H1 FY24 net revenue £32.1m
(H1 FY23: £30.8m)
PRIORITY 1: EMBED PAYPOINT GROUP AT THE HEART OF SME AND
CONVENIENCE RETAIL BUSINESSES
H1 FY24 Progress
- Further enhancements delivered to our SME and retailer
proposition, including good growth in our FMCG consumer engagement
proposition, PayPoint Engage, delivering brand campaigns with
Coca-Cola, Amazon, AG Barr and JTI; our partnership with
Eurochange, offering foreign currency click and collect, is now in
pilot; and the early rollout of our new technology solution,
PayPoint Connect, which integrates with leading, third party EPoS
suppliers including PointFour and the Retail Data Partnership.
- Strong sales performance in card processing business for
Handepay and PayPoint, delivering further growth in the EVO
merchant book, ending the half year at 19,371 sites, and in the
Lloyds Cardnet book, growing to 9,772 sites. This was driven by the
increased optimisation of our sales efforts, including a new team
established in London to capture the regional market opportunity; a
strengthening of key areas of business governance to optimise
pricing and retention; a new senior hire recruited to lead our
sales and retention efforts, supported by better data, AI tool and
analytics; and the leverage of our enhanced proposition, including
launching additional functionality like EPoS and loyalty for
SMEs
- Further expansion of Counter Cash, now enabled in 6,127 sites
and with 2,098 sites transacting regularly, and over £32.1 million
withdrawn in the half year, offering vital access to cash over the
counter and complementing the existing ATM estate
- Continued under performance of ATMs, due to broader shifts in
consumer cash usage, with net revenue decreased by 9.1% and
transaction volumes by 10.5%. Management in this area has been
recently strengthened, with a new hire secured to drive tighter
operational management of the estate and reduce churn
- Good progress on retailer engagement and service, with our Net
Promoter Score moving from negative to positive, a new in-life
management programme launched to drive retailer service adoption,
and several service improvements launched, including a new Chatbot
launched to support retailer partners achieving a 75% first time
resolution rate in its first weeks
- Positive year on year growth of Business Finance via YouLend
with over £9 million lent in the half year, supporting our retailer
and SME partners during the current economic challenges
E-COMMERCE BUSINESS DIVISION – H1 FY24 net revenue £5.1m
(H1 FY23: £3.0m)
PRIORITY 2: BECOME THE DEFINITIVE TECHNOLOGY-BASED
E-COMMERCE DELIVERY PLATFORM FOR FIRST AND LAST MILE CUSTOMER
JOURNEYS
H1 FY24 Progress
- Excellent transaction volumes, achieving milestone of a 2
million parcels week in August, driven by continued growth in
Vinted, the launch of Consumer Send for FedEx and an increase in
Amazon sites to 7,698 in time for Prime Day 2023
- Further network expansion to 11,263 sites, including Fed
retailer partners as part of Park Christmas Savings Super Agent
rollout and additional multiple retailers onboarded, including One
Stop
- DPD partnership expanded to over 2,000 sites, with API
integration into our parcels app and additional Print In Store
capability launched
- Store to store service launched for Yodel/Vinted, with strong
consumer take up of the service
- New partnership launched with OOHPod in Northern Ireland,
enabling Yodel Click & Collect customers to have their parcels
delivered to secure lockers in 12 sites when checking out online
and returns launched at the end of the half
- Zebra printer expansion plans underway to rollout a further
2,000 devices ahead of Christmas Peak 2023
PAYMENTS & BANKING BUSINESS DIVISION – H1 FY24 net
revenue £25.1m (H1 FY23: £25.7m)
PRIORITY 3: SUSTAIN LEADERSHIP IN ‘PAY-AS-YOU-GO’ AND
GROW DIGITAL BILL PAYMENTS
H1 FY24 Progress
- Continued progress in digital net revenue, with growth of +9.1%
versus H1 FY23
- Further expansion of our client relationships with our enhanced
integrated payments platform, including launching with POBL Housing
and Network Homes, rolling out our PayPoint OpenPay service to more
clients (Sheffield City Council, Ovo, Department for Energy
Security and Net Zero), expanding our Confirmation of Payee
services with Lexis Nexis, Cardstream, Think Money and the
Department for Energy Security and Net Zero and being established
as sole provider of cash disbursement services on Crown Commercial
Service, displacing Post Office
- Won award for Best Open Banking Partnership – Consumer at the
2023 Open Banking Awards, in conjunction with obconnect, for our
work delivering the Energy Bills Support Scheme
- Strong pipeline of client wins secured, for mobilisation over
H2 FY24, including Guinness Housing and East Anglia Air Ambulance
for our full suite of integrated payments solutions
- Cash through to digital – strong growth in the banking segment,
providing cash deposits and withdrawals to a number of neobanks,
with over £210 million deposited in the half year. Further progress
in expanding client base and services provided in gifting (Netflix
and Google Play) and additional neo banks (Revolut and JP Morgan
Chase) being onboarded in H2 FY24, to complement existing gaming
portfolio
- Legacy energy sector net revenue decreased by 19.4%, driven by
a shift in consumer topping up behaviour due to the Cost of Living
challenges and unseasonably warm weather over the period
LOVE2SHOP BUSINESS DIVISION - H1 FY24 net revenue £17.5m
(H1 FY23: N/A)
PRIORITY 4: REINFORCE LEADERSHIP POSITION IN GIFTING,
REWARDS AND PREPAID SOLUTIONS
- Park Christmas Savings - a return to growth in billings for the
first time since 2018, with the best retention rate for direct
customers delivered to date of 77.9% and a growth in the agency
size to 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
- Love2shop Business – positive half year with 13 new client wins
delivered, including Five Guys, existing managed client accounts
ahead of plan, and a restructured business development team now in
place, including a new Head of Business Development joining us from
Edenred
- First new initiatives launched into the PayPoint retailer
partner network following acquisition – over 1,500 Park Super
Agents now live to help recruit savers for the Christmas 2024
season and physical Love2shop gift cards now rolled out to over
2,600 multiple retailer sites, including One Stop, Motor Fuels
Group and several regional Co-ops
- New redemption partners added ahead of the Christmas peak,
including significant brands, such as B&Q, WH Smith, Rymans,
Matalan & Blackwell’s. Additionally, a successful refresh of
the Love2shop brand was delivered, with brand awareness now at a
high of 44.8%
PRIORITY 5: BUILDING A DELIVERY FOCUSED ORGANISATION AND
CULTURE
PAYPOINT GROUP
H1 FY24 Progress
- Good progress against our ESG programme, with new hybrid cars
introduced to our fleet in April 2023, replacing diesel company
cars and petrol hire cars, and an electric car leasing scheme now
launched
- A number of actions taken to mitigate the impact of the Cost of
Living on our people, with salaries reviewed again in July,
ensuring that all our colleagues are paid a minimum of the Real
Living Wage. In addition, we launched ‘My Pay, My Way’ with
Wagestream to offer further financial wellbeing support to our
people
- As part of our ‘Welcoming Everyone’ programme, we held a series
of events to mark Pride Month in June, and Love2shop was recognised
as one of the Best Workplaces for Women by Great Place to Work UK
in June
- The Group recently participated in the Great Place to Work
survey for the first time, and we were delighted to achieve Great
Place to Work certification which recognises the work we have done
to create a dynamic environment for our people where we deliver for
our customers by collaborating and being good colleagues to each
other, creating a positive and inclusive environment where everyone
can learn, grow and shine
- Integration of Love2shop largely complete, with first business
initiatives launched, a new Northern Hub established in Liverpool,
investment agreed and delivered in further APIs to open up
additional revenue opportunities in the Corporate business, and
first phase of organisational changes completed
- Continued focus on improving our IT service delivery through
the transformation into cross-functional product engineering teams
with full responsibility for service delivery and product
development of each service, a continued focus on cybersecurity,
and Love2shop IT employees now fully integrated
FINANCIAL REVIEW
|
|
2 |
|
£m |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change% |
|
|
|
|
PayPoint segment |
81.2 |
75.4 |
7.8% |
Love2shop segment |
45.3 |
- |
- |
Total revenue |
126.5 |
75.4 |
67.8% |
|
|
|
|
PayPoint segment |
62.3 |
59.5 |
4.7% |
Love2shop segment |
17.5 |
- |
- |
Total net revenue |
79.8 |
59.5 |
34.1% |
|
|
|
|
PayPoint segment |
(38.7) |
(35.9) |
7.8% |
Love2shop segment |
(19.3) |
- |
- |
Total costs continuing operations |
(58.0) |
(35.9) |
61.4% |
|
|
|
|
PayPoint segment |
23.6 |
23.6 |
- |
Love2shop segment |
(1.8) |
- |
- |
Underlying profit before tax |
21.8 |
23.6 |
(7.5)% |
Adjusting items:Amortisation of intangible assets arising on
acquisition |
(4.0) |
(1.1) |
277.4% |
Exceptional items |
(0.6) |
(1.5) |
64.1% |
Profit before tax |
17.2 |
21.0 |
(17.9)% |
|
|
|
|
Underlying EBITDA7 |
31.1 |
28.3 |
9.9% |
Cash generation from continuing operations excluding exceptional
items |
15.6 |
28.3 |
(44.5)% |
Net corporate debt8 |
(83.2) |
(39.4) |
111.1% |
Total revenue increased by £51.1 million (67.8%)
to £126.5 million (September 2022: £75.4 million). Net revenue
increased by £20.3 million (34.1%) to £79.8 million (September
2022: £59.5 million) with this being the first period including the
L2S segment contributing £17.5 million.
Total costs increased by £22.1 million to £58.0 million
(September 2022: £35.9 million). The increase in costs was driven
by the £19.3 million additional cost base from L2S segment together
with increases in borrowing costs following the acquisition of
Appreciate Group and investments in our field sales teams.
Exceptional costs of £0.6 million, which are one-off, non-recurring
and do not reflect current operational performance relate to legal
fees incurred as as result of the Group’s defence of claims served
against it. The prior year exceptional costs of £1.5 million
include a write down in relation to the disposal of Snappy Ltd in
October 2022 and fee associated with the acquisition of Appreciate
Group.
The underlying profit before tax decreased by
£1.8 million (7.5%) to £21.8 million (September 2022: £23.6
million). This result includes £1.8 million loss on the Love2shop
segment which includes an interest cost allocation. This is due to
the seasonal nature of the business where profit is primarily
generated in the second half of the financial year. In comparison,
the previous year before PayPoint acquired Love2Shop, Appreciate
Group PLC made a loss before tax of £1.2 million in the six month
period to September 2022. The historic PayPoint segment underlying
profit before tax was in line with the prior year.
Profit before tax of £17.2 million (September
2022: £21.0 million) decreased by £3.8 million (17.9%). The
decrease reflects current year adjusting items totalling of £4.6
million which includes six months amortisation of intangible assets
arising on the Appreciate acquisition following the acquisition in
February 2023.
|
3 |
|
EBITDA / Underlying EBITDA (£m) |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Profit before tax |
17.2 |
21.0 |
Add back: |
|
|
Net interest expense |
3.6 |
1.0 |
Depreciation & Amortisation - including amortisation of
intangible assets arising on acquisition |
9.7 |
4.8 |
EBITDA
(£m) |
30.5 |
26.8 |
Exceptional items |
0.6 |
1.5 |
Underlying
EBITDA (£m) |
31.1 |
28.3 |
Underlying EBITDA increased by £2.8 million to £31.1 million
(September 2022: £28.3 million), which is made up of £2.2 million
for the Love2Shop segment and £28.9 million for the PayPoint
segment.
Cash generation reduced to £15.6 million (September 2022: £28.3
million), delivered from underlying profit before tax of £21.8
million (September 2022: £23.6 million). There was a net working
capital outflow of £12.6 million, of this £2.0 million related to
payment of costs accrued for the Appreciate acquisition at the year
end, £2.7 million relating to extending payment terms with a key
customer and the remaining amount related to seasonal timing which
is expected to unwind in the second half of the year.
Net corporate debt increased by £43.8 million
from September 2022 to £83.2 million (March 2023: £72.4 million)
following working capital requirements in the first six months of
the year. At 30 September 2023 loans and borrowings were £101.8
million (September 2022: £43.2 million).
PAYPOINT SEGMENT
£m |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change% |
|
|
|
|
Total Revenue |
81.2 |
75.4 |
7.8% |
|
|
|
|
Shopping |
32.1 |
30.8 |
4.2% |
E-commerce |
5.1 |
3.0 |
71.8% |
Payments & Banking |
25.1 |
25.7 |
(2.3)% |
Net revenue |
62.3 |
59.5 |
4.7% |
|
|
|
|
Other costs of revenue |
8.1 |
7.1 |
14.1% |
Depreciation and amortisation (costs of revenue) |
4.3 |
3.4 |
26.5% |
Depreciation and amortisation (administrative expenses) excluding
amortisation of intangible assets arising on acquisition |
0.2 |
0.2 |
- |
Other administrative costs – excluding exceptional items |
24.7 |
24.2 |
2.1% |
Net finance costs – excluding exceptional costs |
1.4 |
1.0 |
40.0% |
Total costs |
38.7 |
35.9 |
7.8% |
|
|
|
|
Underlying profit before tax (excluding adjusting
items) |
23.6 |
23.6 |
- |
Shopping net revenue increased by £1.3 million
(4.2%) to £32.1 million (September 2022: £30.8 million). Service
fees net revenue increased by £0.8 million (8.8%) driven by
additional PayPoint One sites and implementing the annual RPI
increase. Cards net revenue increased by £0.5 million (3.5%) from
Handepay/Merchant Rentals performance, partially offset by PayPoint
cards. ATM and Counter Cash net revenue decreased by £0.3 million
(6.5%) due to a reduction in transactions driven by the continuing
trend of reduced demand for cash across the economy. FMCG revenue
increased by £0.3 million (416.0%) to £0.4 million (September 2022:
£0.1 million) following further campaigns run in the year.
E-commerce net revenue increased by £2.1 million (71.8%) to £5.1
million (September 2022: £3.0 million), driven by strong growth in
total transactions which increased by 83.1%. 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 £0.6 million
(2.3%) to £25.1 million (September 2022: £25.7 million). Cash bill
payments net revenue decreased by £2.0 million (16.4%) as a result
of a decrease in bill payment transactions from the increase in
energy prices and the continued switch to digital payments. Cash
top-ups net revenue decreased by £0.1 million (1.6%) with volumes
down 5.0% driven by the continuing structural declines in the
prepaid mobile sector. Digital net revenue increased by £0.5
million (9.1%) driven by our Cash Out services. Cash through to
digital, eMoney, net revenue decreased by £0.1 million (1.2%) as a
result of a 5.2% decrease in volumes.
Total costs (excluding adjusting items) increased by £2.8
million (7.8%) to £38.7 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) |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change % |
Service fees |
9.7 |
8.9 |
8.8% |
Card payments |
16.4 |
15.9 |
3.5% |
ATMs and Counter Cash |
4.5 |
4.8 |
(6.5)% |
Other shopping |
1.5 |
1.2 |
20.8% |
Total net
revenue (£m) |
32.1 |
30.8 |
4.2% |
Net revenue increased by £1.3 million (4.2%) to
£32.1 million (September 2022: £30.8 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 |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change % |
Net Revenue (£m) |
9.7 |
8.9 |
8.8% |
PayPoint terminal sites (No.) |
|
|
|
PayPoint One
Base |
6,533 |
7,090 |
(7.9)% |
PayPoint One EPoS
Core |
11,509 |
10,223 |
12.6% |
PayPoint One EPoS
Pro |
744 |
992 |
(25.0)% |
Total PayPoint One – revenue generating |
18,786 |
18,305 |
2.6% |
PayPoint One Base non-revenue generating |
667 |
691 |
(3.5)% |
Total PayPoint OneLegacy (T2).PPoS |
19,453199,174 |
18,9961409,259 |
2.4%(86.4)%(0.9)% |
Total terminal sites in PayPoint network |
28,646 |
28,395 |
0.9% |
|
|
|
|
PayPoint One average weekly service fee per site
(£) |
19.1 |
17.7 |
7.3% |
|
|
|
|
As at 30 September 2023, PayPoint had a live
terminal in 28,646 UK sites, an increase of 0.9% primarily as a
result of new PayPoint One sites which increased by 2.4% to 19,453
sites.
Service fees is a core growth area and consists
of service fees from PayPoint One and our legacy terminals. Service
fee net revenue increased by £0.8 million (8.8%) to £9.7 million
driven by the additional 481 PayPoint One revenue generating sites
compared to the prior period. The higher price point EPoS Core
sites increased by 1,286 due to new sales and upselling whilst EPOS
Pro sites decreased by due to normal churn and no longer being
actively marketed.
The PayPoint One average weekly service fee per
site increased by 7.3% to £19.1, benefiting from the increase in
EPoS Core sites which are charged at a higher rate and the annual
RPI increase.
Card payments and leases |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change % |
Net Revenue (£m) |
|
|
|
Card payments and leases – Handepay and Merchant Rentals |
10.6 |
9.8 |
8.8% |
Card payments – PayPoint and RSM 2000 |
5.8 |
6.1 |
(5.1)% |
Services in Live sites (No.) |
|
|
|
Card payments – Handepay |
22,615 |
22,065 |
2.5% |
Card terminal lessees – Merchant Rentals |
35,386 |
34,648 |
2.1% |
Card payments – PayPoint |
9,772 |
9,514 |
2.7% |
Card payments – RSM 2000 |
129 |
145 |
(11.3)% |
Transactions (Millions) |
|
|
|
Card payments – Handepay |
84.7 |
78.0 |
8.5% |
Card payments – PayPoint |
126.4 |
118.5 |
6.6% |
Card payments – RSM 2000 |
3.6 |
3.6 |
- |
Handepay and Merchant Rentals generated £10.6
million net revenue in the period. Handepay card payments
transactions increased by 8.5% to 84.7 million, maintaining strong
transaction volumes seen in the previous year but at a lower
average transaction value of £28.01 (September 2022: £29.20). There
were 22,625 Handepay card payments sites, an increase of 550 sites
(2.5%) since September 2022. Handepay EVO sales increased in the
year supported by the one-month operating lease proposition, but
sites overall have been impacted by higher churn, particularly in
our Worldpay back book in this very competitive market. The sales
momentum increased due to the sales team being fully staffed and
the launch of the new Android device.
PayPoint card payments transactions increased by 6.6% to 126.4
million while net revenue decreased by 5.6% to £5.2 million,
maintaining strong transaction volumes seen in the previous year
but at a lower average transaction value £10.40 (September 2022:
£10.60). Across our network there were 9,772 PayPoint card payments
sites, an increase of 258 sites (2.7%) since 30 September 2022.
ATMs and Counter Cash |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change % |
Net Revenue (£m) |
4.5 |
4.8 |
(6.6)% |
Services in Live sites (No.) |
9,639 |
8,060 |
19.6% |
Transactions (Millions) |
14.7 |
15.5 |
(5.6)% |
Net revenue reduced by £0.3m (6.6%) to £4.5
million (September 2022: £4.8 million) as transactions reduced by
5.6% to 14.7 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 sites
increased 19.6% to 9,639 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. Counter Cash contributed 10.4% of transactions
(September 2022: 5.5%).
Other: Other shopping services
increased by £0.3 million (20.3%) to £1.5 million (September 2022:
£1.2 million) this includes the partnership with Snappy Shopper and
FMCG campaigns.
E-COMMERCE
Parcels |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change % |
Net Revenue (£m) |
5.1 |
3.0 |
71.8% |
Services in Live sites (No.) |
11,263 |
9,891 |
13.9% |
Transactions (Millions) |
42.1 |
23.0 |
83.1% |
E-commerce net revenue increased by £2.1 million
(71.8%) to £5.1 million due to the increase in total parcels
transactions by 83.1% to 42.1 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 Wish.com and InPost. Parcel sites increased by 13.9% to 11,263
sites.
PAYMENTS & BANKING
|
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change % |
Net revenue (£m) |
|
|
|
Cash – bill payments |
10.3 |
12.3 |
(16.4)% |
Cash – top-ups |
3.6 |
3.7 |
(1.6)% |
Digital |
6.4 |
5.9 |
9.1% |
Cash through to digital |
3.3 |
3.4 |
(1.2)% |
Other payments and banking |
1.5 |
0.4 |
229.9% |
Total net revenue (£m) |
25.1 |
25.7 |
(2.3)% |
Payments & Banking divisional net revenue decreased by 2.3%
to £25.1 million as a result of fewer cash bill payments and top up
transactions and margin erosion from prior year client contract
renewals partially offset by continued growth in digital
transactions, particularly within the cash-out sector.
Cash – bill payments |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change% |
Net revenue (£m) |
10.3 |
12.3 |
(16.4)% |
Transactions (millions) |
59.4 |
73.3 |
(18.9)% |
Transaction value (£m) |
1,828.2 |
1,963.8 |
(6.9)% |
Average transaction value (£) |
30.8 |
26.8 |
14.8% |
Net revenue per transaction (pence) |
17.3 |
16.8 |
3.2% |
Cash – bill payments net revenue decreased by £2.0 million
(16.4%) to £10.3 million. Cash – bill payments transactions
decreased by 13.9 million (18.9%) to 59.4 million as a result of
changing consumer behaviour leading to lower top ups following the
support in FY23 from the Governments Energy Bills Support Scheme
(EBSS).
Cash – top-ups |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change% |
Net revenue (£m) |
3.6 |
3.7 |
(1.6)% |
Transactions (millions) |
9.2 |
9.7 |
(5.0)% |
Transaction value (£m) |
115.2 |
120.0 |
(4.1)% |
Average transaction value (£) |
12.5 |
12.4 |
1.0% |
Net revenue per transaction (pence) |
39.1 |
38.1 |
2.6% |
Cash – top-ups net revenue decreased by £0.1
million (1.6%) to £3.6 million. Cash top-ups transactions decreased
by 0.5 million (5.0%) to 9.2 million due to further market declines
in the prepaid mobile sector whereby UK direct debit pay-monthly
options displace UK prepay mobile.
Digital |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change% |
Net revenue (£m) |
6.4 |
5.9 |
9.1% |
Transactions (millions) |
23.5 |
23.5 |
- |
Transaction value (£m) |
534.1 |
482.9 |
10.6% |
Average transaction value (£) |
22.7 |
20.5 |
10.9% |
Net revenue per transaction (pence) |
27.2 |
25.1 |
8.5% |
Digital (MultiPay, Cash Out and Direct Debits) net revenue
increased by £0.5 million (9.1%) to £6.4 million and digital
transactions remained in line with the prior period. MultiPay net
revenue increased by £0.4 million to £2.2 million (September 2022:
£1.8 million) with transactions growing by 0.1 million to 16.3
million. The DWP Payment Exception Service contributed £2.0 million
net revenue in the period (September 2022: £2.4 million) following
the expected decline of customers. Cashout revenue increased by
£0.5 million (45.6%) to £1.5 million (September 2022: £1.0 million)
driven by a higher number of councils using the service to provide
cash out vouchers.
Cash through to digital |
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change% |
Net revenue (£m) |
3.3 |
3.4 |
(1.2)% |
Transactions (millions) |
4.1 |
4.3 |
(5.2)% |
Transaction value (£m) |
265.0 |
244.1 |
8.6% |
Average transaction value (£) |
64.6 |
56.4 |
14.5% |
Net revenue per transaction (pence) |
80.5 |
79.1 |
1.8% |
Cash through to digital (eMoney) net revenue
decreased by £0.1 million (1.2%) to £3.3 million (September 2022:
£3.4 million) and transactions decreased by 0.2 million (5.2%) to
4.1 million (September 2022: 4.3 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 SIM sales, interest generated by investing cash received
on client funds and other ad-hoc items which contributed £1.4
million (September 2022: £0.4 million) net revenue.
LOVE2SHOP SEGMENT
£m |
Six months to 30 September
2023 |
|
|
Billings |
105.1 |
Revenue |
45.3 |
|
|
Net revenue |
17.5 |
|
|
Other costs of revenue |
(5.7) |
Depreciation and amortisation (administrative expenses) excluding
amortisation on intangible assets arising on acquisition |
(1.2) |
Other administrative costs |
(10.2) |
Net finance costs |
(2.2) |
Total costs |
(19.3) |
|
|
Underlying profit before tax (excluding adjusting
items) |
(1.8) |
Love2shop (L2s) has generated £105.1 million of total billings
in the period – a measure of total value of balance sold on cards
and vouchers. 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 HY was £17.5 million.
The business is seasonal in nature, and profit
is primarily generated In H2 of the financial year, which
represents the peak trading period for L2s corporate business and
of the dispatch of Park Christmas savings prepaid products around
Christmas.
PROFIT BEFORE TAX AND TAXATION
The income tax charge of £4.4 million (September 2022: £3.9
million) on profit before tax of £17.2 million (September 2022:
£21.0 million) represents an effective tax rate of 25.5% (September
2022: 18.7%). This is higher than the UK statutory rate of 25% due
to adjustments in respect of share based payments.
GROUP STATEMENT OF FINANCIAL POSITION
Net assets of £110.8 million (September 2022: £88.4 million)
increased by £22.4 million reflecting the shares issued as part of
the acquisition of Appreciate and the growth in retained earnings.
Current assets increased by £226.4 million to £335.7 million
(September 2022: £109.3 million) due to the monies held in trust
and voucher deposits acquired with the Appreciate acquisition.
Non-current assets of £224.2 million (September 2022: £123.1
million) increased by £101.1 million due to the Appreciate
acquisition goodwill and intangible assets and the investment in
terminals. Current liabilities increased by £260.8 million due to
the liabilities matching the cash held on behalf of clients and
monies held in trust and an increase in borrowings from the RCF
drawdown, required for the acquisition. Non-current liabilities of
£53.9 million (September 2022: £9.5 million) increased by £44.4
million due to the new £36.0 million amortising term loan taken out
to fund the acquisition and deferred tax liabilities arising from
the acquisition.
Net
debt |
At 30 September |
At 31 March |
At 30 September |
|
2023 |
2023 |
2022 |
Cash and cash equivalents - net corporate cash |
18.6 |
22.0 |
3.8 |
Less: |
|
|
|
Loans and borrowings |
(101.8) |
(94.4) |
(43.2) |
Net debt |
(83.2) |
(72.4) |
(39.4) |
At 30 September 2023, net corporate debt was
£83.2 million (September 2022: £39.4 million) and has increased by
£10.8 million from the year end position. This is as a result of
positive cash generation offset by working capital requirements in
the first six months along with tax, capex and dividend
requirements. Total loans and borrowings of £101.8 million, which
have increased by £7.4 million from 31 March 2023, consisted of a
£41.4 million amortising term loans, £59.5 million drawdown of the
£75.0 million revolving credit facility and £0.9 million of asset
financing balances and accrued interest (September 2022: £26.0
million drawdown from the revolving credit facility, £16.3 million
amortising term loan and £0.9 million of asset financing
balances).
GROUP CASH FLOW AND LIQUIDITY
The following table summarises the cash flow movements during
the period.
|
|
|
|
|
Six months to 30 September
2023 |
Six months to 30 September 2022 |
Change % |
Profit
before tax |
17.2 |
21.0 |
(18.2)% |
Exceptional items |
0.6 |
1.5 |
(60.0)% |
Depreciation and
amortisation |
9.7 |
4.7 |
106.4% |
Share-based
payments and other items |
0.7 |
0.3 |
133.3% |
Working capital
changes (corporate) |
(12.6) |
0.8 |
n/m |
|
|
|
|
Cash
generation |
15.6 |
28.3 |
(44.9)% |
Taxation
payments |
(5.1) |
(1.3) |
292.3% |
Capital expenditure |
(7.1) |
(6.0) |
18.3% |
Contingent consideration cash paid |
- |
(1.0) |
- |
Purchase of convertible loan note and other investment |
- |
(3.0) |
- |
Lease
payments |
(0.7) |
(0.1) |
600.0% |
Dividends paid |
(13.5) |
(12.4) |
8.9% |
Net
(increase)/decrease in net debt |
(10.8) |
4.5 |
- |
|
|
|
|
Net
corporate debt at the beginning of the period |
(72.4) |
(43.9) |
|
Net (increase)/decrease in net debt |
(10.8) |
4.5 |
|
Net corporate debt at the end of the period |
(83.2) |
(39.4) |
111.2% |
Cash generation reduced to £15.6 million (September 2022: £28.3
million) delivered from profit before tax of £17.2 million
(September 2022: £21.0 million). There was a net working capital
outflow of £12.6 million, of this £2.0 million related to payment
of costs accrued for the Appreciate acquisition at the year end,
£2.7m relating to extending payment terms with a key customer and
the remaining amount related to seasonal timing which is expected
to unwind in the second half of the year.
Taxation payments on account of £5.1 million (September 2022:
£1.3 million) are higher compared to the prior period which
included a tax refund of £3.3 million following the closure of
March 2021 tax filings which do not impact the prior year tax
charge. The Corporation tax rate in the year has increased from 19%
to 25%. Dividend payments were higher compared to the prior period
due to the increase in the final ordinary dividend paid per share
for the prior year ended 31 March 2023.
Capital expenditure of £7.1 million (September 2022: £6.0
million) was £1.1 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 Love2shop, which accounts for £0.8
million of the £1.1 million.
DIVIDENDS
In the six months to 30 September 2023, total dividend payments
of £13.5 million or 18.6 pence per share (September 2022: £12.4
million or 18.0 pence per share) were made, representing the final
ordinary dividend for the year ended 31 March 2023. This is a 3.3%
increase in the final dividend since last year.
We have declared an increased interim dividend of 19.0 pence per
share (September 2022: 18.4 pence) payable in equal instalments of
9.5 pence per share on 29 December 2023 and 5 March 2024 (to
shareholders on the register on 1 December 2023 and 2 February 2024
respectively). This is an increase of 2.2% compared to the final
dividend declared of 18.6 pence per share, and an increase of 3.3%
compared to the same period last year (September 2022: 18.4
pence).
The interim dividends will result in £13.8 million (September
2022: £12.7 million) being paid to shareholders from the standalone
statement of financial position of the Company which, as at 30
September 2023, had approximately £36.0 million (September 2022:
£62.7 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 dividends and cash for
investment through capital expenditure and acquisitions. The
Board’s approach to the setting of the ordinary dividend has been
updated since the prior year in relation to cover ratio to
strengthen the capital position and follows the following capital
allocation priorities:
- Investment in the business through capital expenditure in
innovation to drive future revenue streams and improve the
resilience and efficiency of our operations;
- Investment in opportunities such as the acquisition of
Appreciate in February 2023 and investment in OBConnect convertible
loan;
- Progressive ordinary dividends targeting a cover ratio of
1.5 to 2.0.9 times earnings from continuing operations excluding
exceptional items.
GOING CONCERN
The financial statements have been prepared on a going concern
basis having regard to the identified principal risks and
uncertainties. Our cash and borrowing capacity provides sufficient
funds to meet the foreseeable needs of the Group including
dividends.
Rob HardingChief Financial Officer
22 November 2023
PayPoint Plc
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR
LOSS
|
Note |
6 monthsended 30
September 2023£000 |
Re-presented16 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
Revenue |
3 |
113,988 |
75,385 |
165,220 |
Other revenue |
3 |
12,513 |
- |
2,503 |
Total revenue |
|
126,501 |
75,385 |
167,723 |
Cost of revenue |
|
(64,554) |
(26,602) |
(64,257) |
Gross profit |
|
61,947 |
48,783 |
103,466 |
Administrative expenses – excluding adjusting items |
|
(36,566) |
(24,168) |
(50,083) |
Operating profit before adjusting items |
|
25,381 |
24,615 |
53,383 |
Adjusting
items: |
|
|
|
|
Exceptional items
- administrative expenses |
5 |
(558) |
(1,553) |
(5,317) |
Amortisation of
intangible assets arising on acquisition – administrative
expenses |
|
(4,038) |
(1,069) |
(2,574) |
Operating profit |
|
20,785 |
21,993 |
45,492 |
Finance income |
|
463 |
71 |
87 |
Finance
costs |
|
(4,066) |
(1,088) |
(2,718) |
Exceptional item
– finance costs |
5 |
- |
- |
(287) |
Profit before tax |
|
17,182 |
20,976 |
42,574 |
Tax |
6 |
(4,376) |
(3,931) |
(7,864) |
Profit for
the period |
|
12,806 |
17,045 |
34,710 |
|
|
|
|
|
|
|
|
|
|
Earnings per share (pence) |
|
|
|
|
Basic |
|
17.6 |
24.7 |
50.1 |
Diluted |
|
17.4 |
24.4 |
49.6 |
Underlying earnings per share – before adjusting items
(pence) |
|
|
|
|
Basic |
|
22.4 |
28.1 |
61.0 |
Diluted |
|
22.1 |
27.8 |
60.3 |
1Amortisation of intangible assets arising on acquisition was
not identified as an adjusting item in the September 2022 financial
statements (see note 1).
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME |
|
|
6 monthsended 30
September 2023£000 |
6 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
Items that will not be reclassified to the consolidated
statement of profit or loss: |
|
|
|
Remeasurement of
defined benefit pension scheme |
|
(845) |
- |
353 |
Deferred tax on
defined benefit pension scheme |
|
211 |
- |
(86) |
Foreign exchange |
|
7 |
|
|
Other comprehensive (loss) / income for the period |
|
(627) |
- |
267 |
Profit for the period |
|
12,806 |
17,045 |
34,710 |
Total comprehensive income for the period attributable to
equity holders of the parent |
|
12,179 |
17,045 |
34,977 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
|
Note |
30 September
2023£000 |
30 September 2022£000 |
31 March2023£000 |
Non-current assets |
|
|
|
|
Goodwill |
|
117,427 |
57,668 |
117,427 |
Other intangible
assets |
|
71,157 |
35,886 |
75,293 |
Convertible loan
notes |
|
3,750 |
3,750 |
3,750 |
Other
investment |
|
251 |
- |
251 |
Property, plant
and equipment |
|
30,729 |
22,551 |
29,257 |
Net investment in
finance lease receivables |
|
915 |
3,233 |
1,711 |
Retirement
benefit asset |
|
- |
- |
411 |
Total non-current assets |
|
224,229 |
123,088 |
228,100 |
Current assets |
|
|
|
|
Inventories |
|
8,417 |
66 |
3,152 |
Trade and other
receivables |
|
97,887 |
81,830 |
82,055 |
Current tax
asset |
|
7,691 |
1,562 |
6,231 |
Cash and cash
equivalents – clients’ funds, retailer partners’ deposits and card
and voucher deposits |
|
118,410 |
16,636 |
55,905 |
Cash and cash
equivalents – corporate cash |
|
20,325 |
3,752 |
22,546 |
Monies held in trust |
|
83,000 |
- |
82,000 |
|
|
335,730 |
103,846 |
251,889 |
Asset held for sale |
|
- |
5,502 |
- |
Total current assets |
|
335,730 |
109,348 |
251,889 |
Total assets |
|
559,959 |
232,436 |
479,989 |
Current liabilities |
|
|
|
|
Trade and other
payables |
|
327,222 |
96,990 |
255,526 |
Lease
liabilities |
|
728 |
157 |
862 |
Loans and
borrowings |
|
65,585 |
37,336 |
58,245 |
Bank overdraft |
|
1,757 |
- |
525 |
Total current liabilities |
|
395,292 |
134,483 |
315,158 |
Non-current liabilities |
|
|
|
|
Trade and other
payables |
|
106 |
- |
115 |
Lease
liabilities |
|
4,522 |
- |
4,617 |
Loans and
borrowings |
|
36,165 |
5,818 |
36,170 |
Retirement
benefit liability |
|
355 |
- |
- |
Deferred tax liability |
|
12,763 |
3,687 |
12,215 |
Total non-current liabilities |
|
53,911 |
9,505 |
53,117 |
Total liabilities |
|
449,203 |
143,988 |
368,275 |
Net assets |
|
110,756 |
88,448 |
111,714 |
Equity |
|
|
|
|
Share
capital |
8 |
242 |
230 |
242 |
Share
premium |
8 |
1,000 |
1,000 |
1,000 |
Merger
reserve |
8 |
18,243 |
999 |
18,243 |
Share-based
payment reserve |
|
2,042 |
1,560 |
2,286 |
Retained earnings |
|
89,229 |
84,659 |
89,943 |
Total equity attributable to equity holders of the
parent |
|
110,756 |
88,448 |
111,714 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
|
Note |
Sharecapital£000 |
Sharepremium£000 |
Merger reserve£000 |
Share- based payment reserve£000 |
Retained earnings£000 |
Total equity £000 |
Opening equity 1 April 2022 |
|
230 |
1,000 |
999 |
1,570 |
79,459 |
83,258 |
Profit for the period |
|
- |
- |
- |
- |
17,045 |
17,045 |
Comprehensive
income for the period |
|
- |
- |
- |
- |
17,045 |
17,045 |
Equity-settled
share-based payment expense |
|
- |
- |
- |
556 |
- |
556 |
Vesting of share
scheme |
|
- |
- |
- |
(566) |
566 |
- |
Dividends |
|
- |
- |
- |
- |
(12,411) |
(12,411) |
Closing equity 30 September
2022 |
|
230 |
1,000 |
999 |
1,560 |
84,659 |
88,448 |
Profit for the
period |
|
- |
- |
- |
- |
17,665 |
17,665 |
Total other
comprehensive income |
|
- |
- |
- |
- |
267 |
267 |
Comprehensive income for the period |
|
- |
- |
- |
- |
17,932 |
17,932 |
Issue of
shares |
|
12 |
- |
17,244 |
- |
- |
17,256 |
Equity-settled
share-based payment expense |
|
- |
- |
- |
774 |
- |
774 |
Vesting of share
scheme |
|
- |
- |
- |
(48) |
48 |
- |
Dividends |
|
- |
- |
- |
- |
(12,696) |
(12,696) |
Closing equity 31 March 2023 |
|
242 |
1,000 |
18,243 |
2,286 |
89,943 |
111,714 |
Profit for the
period |
|
- |
- |
- |
- |
12,806 |
12,806 |
Total other
comprehensive income |
|
- |
- |
- |
- |
(627) |
(627) |
Comprehensive income for the period |
|
- |
- |
- |
- |
12,179 |
12,179 |
Equity-settled
share-based payment expense |
|
- |
- |
- |
690 |
- |
690 |
Vesting of share
scheme |
|
- |
- |
- |
(934) |
623 |
(311) |
Dividends |
|
- |
- |
- |
- |
(13,516) |
(13,516) |
Closing equity September
2023 |
|
242 |
1,000 |
18,243 |
2,042 |
89,229 |
110,756 |
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
|
Note |
6 monthsended 30
September 2023£000 |
Re-presented16 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
Net cash generated by operations |
9 |
81,545 |
29,391 |
102,182 |
|
|
|
|
|
Corporation tax
paid |
|
(5,095) |
(1,321) |
(6,204) |
Interest
received |
|
46 |
71 |
609 |
Interest paid |
|
(3,527) |
(1,126) |
(2,973) |
Net cash inflow from operating activities |
|
72,969 |
27,015 |
93,614 |
|
|
|
|
|
Investing activities |
|
|
|
|
Purchases of property, plant and equipment |
|
(4,827) |
(3,075) |
(7,802) |
Purchases of intangible assets |
|
(2,233) |
(2,950) |
(4,900) |
Acquisitions of subsidiaries net of cash acquired |
|
- |
- |
(45,580) |
Contingent consideration cash paid |
|
- |
(1,000) |
(1,000) |
Disposal of investment in associate |
|
- |
- |
5,487 |
Purchase of convertible loan note |
|
- |
(3,000) |
(3,000) |
Purchase of other investment |
|
- |
- |
(251) |
Net cash used in investing activities |
|
(7,060) |
(10,025) |
(57,046) |
|
|
|
|
|
Financing activities |
|
|
|
|
Dividends paid |
|
(13,516) |
(12,411) |
(25,107) |
Proceeds from issue of share capital |
|
- |
- |
1 |
Payment of lease liabilities |
|
(677) |
(110) |
(261) |
Repayment of loans and borrowings |
|
(7,664) |
(8,380) |
(22,074) |
Proceeds from loans and borrowings |
|
15,000 |
- |
64,500 |
Net cash (used in) / generated from financing
activities |
|
(6,857) |
(20,901) |
17,059 |
|
|
|
|
|
Net
increase / (decrease) in cash and cash equivalents |
|
59,052 |
(3,911) |
53,627 |
Cash and cash
equivalents at beginning of year |
|
77,926 |
24,299 |
24,299 |
Cash and cash equivalents at period end |
|
136,978 |
20,388 |
77,926 |
1Interest received was presented within the heading “Investing
activities” in the prior period. |
Reconciliation of cash and cash equivalents |
|
|
|
|
Corporate
cash |
|
20,325 |
3,752 |
22,546 |
Clients’ funds,
retailer partners’ deposits and card and voucher deposits |
|
118,410 |
16,636 |
55,905 |
Bank overdraft |
|
(1,757) |
- |
(525) |
Cash and cash equivalents on the condensed consolidated
statement of financial position |
|
136,978 |
20,388 |
77,926 |
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Accounting
policiesReporting entity PayPoint plc
(‘PayPoint’ or the ‘Company’) is a public limited company,
incorporated and registered in the UK under the Companies Act 2006.
Its registered office is at Unit 1, The Boulevard, Welwyn Garden
City, Hertfordshire, AL7 1EL. Its shares are listed on the London
Stock Exchange.
These condensed consolidated interim financial statements
(‘interim financial statements’) as at and for the six months ended
30 September 2023 are made up of the Company and its subsidiaries
(together referred to as the ‘Group’). They were approved for issue
on 22 November 2023.
These interim financial statements do not comprise statutory
accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 March 2023 were
approved by the board of directors on 27 July 2023 and delivered to
the Registrar of Companies. The report of the auditor on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statements under section 498 of
the Companies Act 2006.
The financial statements have been reviewed, not audited.
Basis of preparationThe interim financial
statements for the half-year reporting period ended 30 September
2023 have been prepared in accordance with the UK-adopted
International Accounting Standard 34 Interim Financial Reporting
and the Disclosure Guidance and Transparency Rules sourcebook of
the UK’s Financial Conduct Authority.
Adoption of standards and policiesThe
accounting policies applied by the Group in the interim financial
statements for the period ended 30 September 2023 are consistent
with those set out in the Group’s Annual Report for the year ended
31 March 2023.
Going concern The interim 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 and equity attributable to equity holders of
the parent 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 30
September 2023, the Group had cash and cash equivalents of £136.9
million, consisting of £20.3 million corporate cash, £118.4 million
clients’ fund, retailer partners’ deposits and card and voucher
deposits and £1.8 million bank overdraft. The Group’s borrowing
facilities consist of:
- £5.4 million amortising term loan which is due to be repaid in
quarterly instalments, completing in February 2024.
- £36.0 million amortising term loan repayable from May 2024 to
February 2026 in equal, quarterly instalments until the final,
double payment.
- £75.0 million unsecured revolving credit facility with an
additional £30.0 million accordion facility (uncommitted) expiring
in February 2026.
- £0.3 million block loan balances, to be repaid within 6 months
of the period-end.
At 30 September 2023, £59.5 million (31 March 2023: £46.5
million) was drawn down from the revolving credit facility and the
Group also had £0.3 million block loan balances.
The Group has a strengthened statement of financial position,
with net assets of £110.8 million as at 30 September 2023 (30
September 2022: £88.4 million), having made a profit for the period
of £12.8 million (30 September 2022: £17.0 million) and delivered
net cash flows from operating activities of £72.7 million for the
period then ended (30 September 2022: £27.0 million). Net debt
increased from £72.4m to £83.2m in the period, the £10.8m increase
comprising a net, pre-dividend inflow of £2.7m and dividend
payments of £13.5m. In the prior period, net debt decreased by
£4.5m, comprising a net, pre-dividend inflow of £16.9m and dividend
payments of £12.4m. The Group has net current liabilities of £59.6
million at 30 September 2023 (30 September 2022: £25.1 million),
which includes the drawn down revolving credit facility balance of
£59.5 million (31 March 2023: £46.5 million). This balance is
classified as a current liability at 31 March 2023 and at each of
the comparative dates, reflecting the fact that each individual
borrowing tranche drawn down from the revolving credit facility is
for a period of less than 12 months. The net current liability
position does not affect the Group’s ability to continue as a going
concern as the facility is not required to be repaid until February
2026
The Directors have prepared cash flow forecast scenarios for a
period of at least 12 months from the date of this announcement,
taking into account the Group’s current financial and trading
position, the impact of current economic conditions, 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. The Directors have
also considered the matters described in note 10 and concluded that
it is not appropriate to extend the going concern assessment beyond
the 12 months on the basis that the timing of conclusion of legal
proceedings is so uncertain.
In addition to the ‘base case’ scenarios, the Directors have
also prepared a ‘downside’ scenario which includes the following
assumptions:
Shopping
- No growth in the PayPoint One estate
- Double the decline in cards merchant count which was
experienced in the year-ended 31 March 2023
- Double the decline in the ATM estate which was experienced in
the year-ended 31 March 2023
- No growth or management challenge achieved in other areas
E-commerce
- No growth or management challenge achieved
Payments and banking
- Double the transaction decline which was experienced in the
year-ended 31 March 2023
- Management challenge not achieved
Love2Shop
- 10% decline in billings across all channels
Even with the above assumptions, the forecasts indicated that
there was sufficient headroom and liquidity for the Group to
continue with the existing facilities outlined above.
Based on these assessments, 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
interim financial statements and therefore have prepared the
interim financial statements on a going concern basis.
Alternative performance
measuresNon-IFRS measures or alternative performance
measures are used by the Directors and management for performance
analysis, planning, reporting and incentive setting purposes which
have remained consistent with the alternative performance measures
disclosed in the Annual Report for the year ended 31 March 2023.
These measures are included in these interim 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,
or superior to, 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 measures 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
revenue. This is due to billings being recognised at a different
time to revenue from multi-retailer products and 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
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 which
creates 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
revenue to net revenue is included in note 4.
Adjusting items (non-IFRS measure)Adjusting
items consist of exceptional items and amortisation of intangible
assets arising on acquisition. 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.
Further details of the exceptional items are provided in note
5.
|
30 September
2023£000 |
Re-presented130 September 2022£000 |
31 March2023£000 |
Exceptional item – professional fees |
558 |
- |
- |
Exceptional
item – acquisition costs expensed |
- |
300 |
4,065 |
Exceptional
item – impairment loss on reclassification of investment in
associate to asset held for sale |
- |
1,253 |
1,252 |
Exceptional
item – finance costs |
- |
- |
287 |
Amortisation of intangible assets arising on acquisition |
4,038 |
1,069 |
2,574 |
Total adjusting items |
4,596 |
2,622 |
8,178 |
1Amortisation of intangible assets arising on acquisition were
not identified as adjusting items in the September 2022 financial
statements (see note 1).
See note 5 for explanations of the above exceptional items.
Effective tax rate (non-IFRS measure)Effective
tax rate (note 6) is the tax charge as a percentage of the net
profit before tax.
Reported dividends (non-IFRS measure)Reported
dividends for an interim reporting period are based on that
period’s results from which the dividend is declared and consist of
the interim dividend declared. This is different to statutory
dividends where the final dividend on ordinary shares is recognised
in the following interim period when it is approved by the
Company’s shareholders.
Cash generation (non-IFRS measure)Cash
generation reflects earnings before tax, depreciation, amortisation
and non-cash exceptional items adjusted for working capital
(excluding movement in clients’ funds, retailers partners’ deposits
and card and voucher deposits) as detailed in the financial review.
This measures the cash generated which can be used for tax
payments, new investments, payment of dividends and financing
activities.
Total costs (non-IFRS measure)Total costs
comprise other cost of revenue, administrative expenses, financing
income and financing 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 from continuing operations before interest,
tax, depreciation and amortisation.
Underlying earnings before interest, tax, depreciation
and amortisation (Underlying EBITDA) (non-IFRS measure)The
Group also now presents underlying EBITDA, which comprises EBITDA,
as defined above, excluding exceptional items.
Underlying earnings per share (non-IFRS
measure)Underlying earnings per share is calculated by
dividing the net profit from continuing operations before
exceptional items and amortisation of intangible assets arising on
acquisition 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)The calculation of underlying profit before tax is
as follows:
|
30 September
2023£000 |
30 September 2022£000 |
31 March2023£000 |
Profit before tax |
17,182 |
20,976 |
42,574 |
Total adjusting items |
4,596 |
2,622 |
8,178 |
Underlying profit before tax |
21,778 |
23,598 |
50,752 |
Underlying profit after tax (non-IFRS
measure)The calculation of underlying profit after tax is
as follows:
|
30 September
2023£000 |
30 September 2022£000 |
31 March2023£000 |
Profit after tax |
12,806 |
17,045 |
34,710 |
Total
adjusting items |
4,596 |
2,622 |
8,178 |
Tax on adjusting items |
(1,149) |
(267) |
(644) |
Underlying profit after tax |
16,253 |
19,400 |
42,244 |
Net corporate debt (non-IFRS measure)Net
corporate debt represents cash and cash equivalents excluding cash
recognised as clients’ funds and retailer partners’ deposits, 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:
|
30 September
2023£000 |
30 September 2022£000 |
31 March2023£000 |
Cash and cash equivalents - corporate cash |
20,325 |
3,752 |
22,546 |
Less: |
|
|
|
Bank
overdraft |
(1,757) |
- |
(525) |
Loans and borrowings |
(101,750) |
(43,154) |
(94,415) |
Net corporate debt |
(83,182) |
(39,402) |
(72,394) |
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 to be 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
The 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 card and voucher deposits on
behalf of agents, cardholders and redeemers, some of which is held
in trust.
A critical judgement in this area is whether clients’ funds,
retailer partners’ deposits and monies held in trust are recognised
in the 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 and the related liability
are not included in the statement of financial position.
Where funds are held in trusts set up for the purpose of
ring-fencing monies belonging to agents, cardholders and redeemers,
they are recognised as monies held in trust on the statement of
financial position, as the Group has access to the interest on such
monies and can, having met certain conditions, withdraw the funds.
However, given the restrictions over these monies, the amounts held
in trust and ring-fenced are not included in cash and cash
equivalents.
In all other situations the cash and corresponding liability are
recognised on the statement of financial position. Corporate cash
and clients’ funds, retailer partners’ deposits and card and
voucher deposits are presented as separate line items within cash
and cash equivalents on the statement of financial position.
The amounts recognised on the Statement of financial position as
at 30 September 2023 are as follows:
- Cash and cash equivalents - clients’ funds £15.8 million (31
March 2023: £12.0 million)
- Cash and cash equivalents - retailers’ deposits £0.5 million
(31 March 2023: £6.2 million
- Cash and cash equivalents – card and voucher deposits £102.1
million (31 March 2023: £37.7 million)
- Cash and cash equivalents - corporate cash £20.3 million (31
March 2023: £22.5 million
- Monies held in trust £83.0 million (31 March 2023: £82.0
million)
The increase in the card and voucher deposits balance since 31
March 2023 reflects the seasonality of Love2Shop’s business. Its
clients purchase redemption products most heavily in the peak
September to December period, resulting in a higher balance at
September than in March each year.
Clients’ funds held in trust off the statement of financial
position as at 30 September 2023 are £49.2 million (31 March 2023:
£124.3 million). The 31 March 2023 amount included total one-off
balances of £50m arising from the Group’s participation in the
Government’s Energy Bills Support Scheme.
Critical estimate: Valuation of the goodwill relating to
the Handepay cash generating unit
Handepay’s principal activity is that of an independent sales
organisation in the merchant acquiring industry. It is a growth
business that has strong cash generation and limited capital
expenditure requirements. The market in which it operates is highly
competitive and facing several regulatory changes. Handepay has a
relatively small market share, however it continues to develop its
proposition, sales force, and operations with an ambition to
accelerate the growth of its market share. Handepay is a CGU for
the purposes of impairment testing.
The Handepay CGU generated a value in use (VIU) in excess of its
carrying value, therefore, the CGU and its assets continue to be
measured at their carrying value. Sensitivity analysis was applied
to determine the impacts of reasonably possible changes in the
assumptions used for the VIU calculation. A reasonable change in
these assumptions could give rise to an impairment as was the case
at the 31 March 2023 year-end.
The key assumptions underpinning the recoverable amounts that
are most sensitive to a reasonable change, as was the case in March
2023, continue to be:
1. The average revenue growth assumption 2. Pre-tax discount
rate
2. Segmental
reporting The Group provides a number of different
services and products. However, prior to the acquisition of
Appreciate Group PLC on 28 February 2023, the different services
and products provided by the Group did not meet the definition of
different operating segments under IFRS 8, as the chief operating
decision maker (CODM), the Executive Board, did not review them
separately to make decisions about resource allocation and
performance. Therefore, the Group had only one operating
segment.
The Group considers the Appreciate business, now known as
Love2Shop, to be a separate segment from its pre-acquisition
PayPoint business, since discrete financial information is prepared
and it offers different products and services. Furthermore, the
CODM reviews separate monthly internal management reports
(including financial information) for both PayPoint and Love2Shop
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, for the period
ended 30 September 2023 and as at that date, is set out below.
Segment profit / (loss) before tax, exceptional items and
amortisation of intangible assets arising on acquisition 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.
The Group operates exclusively in the UK.
6 months ended 30 September 2023 and as at 30 September
2023 |
PayPoint£000 |
Love2Shop£000 |
Total£000 |
Revenue |
80,232 |
33,756 |
113,988 |
Other revenue |
1,010 |
11,503 |
12,513 |
Segment
revenue |
81,242 |
45,259 |
126,501 |
|
|
|
|
Segment profit /
(loss) before tax and adjusting items |
23,564 |
(1,786) |
21,778 |
Exceptional
items |
(558) |
- |
(558) |
Amortisation of intangible assets arising on acquisition |
(1,069) |
(2,969) |
(4,038) |
Segment profit / (loss) before tax |
21,937 |
(4,755) |
17,182 |
|
|
|
|
Interest
income |
46 |
417 |
463 |
Interest
expense |
1,439 |
2,617 |
4,066 |
Depreciation and
amortisation |
5,519 |
4,204 |
9,723 |
Capital
expenditure |
6,240 |
820 |
7,060 |
|
|
|
|
Segment
assets |
241,231 |
318,728 |
559,959 |
Segment
liabilities |
138,570 |
310,633 |
449,203 |
Segment equity |
102,661 |
8,095 |
110,756 |
Year ended 31 March 2023 and as at 31 March 2023 |
PayPoint£000 |
Love2Shop£000 |
Total£000 |
Revenue |
159,531 |
5,689 |
165,220 |
Other revenue |
575 |
1,928 |
2,503 |
Segment
revenue |
160,106 |
7,617 |
167,723 |
|
|
|
|
Segment profit
before tax and adjusting items |
50,296 |
456 |
50,752 |
Exceptional
items |
(5,604) |
- |
(5,604) |
Amortisation of intangible assets arising on acquisition |
(2,139) |
(435) |
(2,574) |
Segment profit before tax |
42,553 |
21 |
42,574 |
|
|
|
|
Interest
income |
29 |
58 |
87 |
Interest
expense |
2,303 |
415 |
2,718 |
Depreciation and
amortisation |
9,819 |
658 |
10,477 |
Capital
expenditure |
12,349 |
354 |
12,703 |
|
|
|
|
Segment
assets |
219,649 |
260,340 |
479,989 |
Segment
liabilities |
125,113 |
243,162 |
368,275 |
Segment equity |
94,536 |
17,178 |
111,714 |
3. Revenue
Disaggregation of revenue
|
6 monthsended 30
September 2023£000 |
6 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
Shopping |
|
|
|
Card
payments |
12,360 |
12,390 |
24,293 |
Terminal lease
income |
4,026 |
3,467 |
7,542 |
Service
fees |
9,695 |
8,910 |
17,947 |
ATMs |
6,093 |
6,727 |
12,920 |
Other shopping |
1,895 |
1,424 |
3,355 |
Shopping total |
34,069 |
32,918 |
66,057 |
|
|
|
|
e-commerce total |
14,141 |
8,143 |
20,183 |
|
|
|
|
Payments
and banking |
|
|
|
Cash – bill
payments |
13,381 |
16,928 |
34,135 |
Cash –
top-ups |
5,811 |
6,046 |
11,959 |
Digital |
8,442 |
6,842 |
18,081 |
Cash through to
digital |
3,776 |
3,844 |
7,769 |
Other payments and banking |
612 |
664 |
1,347 |
Payments and banking total |
32,022 |
34,324 |
73,291 |
|
|
|
|
Love2Shop – card and voucher service fee |
33,756 |
- |
5,689 |
Total |
113,988 |
75,385 |
165,220 |
Management fees, set-up fees and up-front lump sum payments of
£0.5 million (September 2022: £0.3 million) are recognised on a
straight-line basis over the period of the contract. Service fee
revenue is recognised on a straight-line basis over the period of
the contract. Card terminal leasing revenue 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
fourteen-day terms. The usual timing of Love2Shop’s corporate
customers is fifteen-day terms; its consumer customers pay on
ordering.
Revenue subject to variable consideration of £6.7 million
(September 2022: £7.0 million) exists where the consideration which
PayPoint is entitled to 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
prices 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.
Seasonality of
operationsFollowing the Group’s acquisition of Love2Shop
on 28 February 2023, its performance is now considered “highly
seasonal” under IAS 34 Interim Financial Reporting. The Love2Shop
business is heavily weighted towards the second half of the current
financial year, in particular the peak September to December
pre-Christmas period when revenues from card, voucher and e-code
redemptions are at their highest.
The PayPoint business is far less seasonal, although its
e-commerce division also generates its highest revenues in the
pre-Christmas months. Bill payments transactions, which were
historically higher during the winter months (H2), continue to be
impacted by the shift in consumer behaviour towards making fewer,
larger payments and structural changes in this market. Card
payments typically generates higher value processed and revenue in
the summer months (H1). Card terminal leasing revenue is relatively
unaffected by seasonality.
Other revenue
|
6 monthsended 30
September 2023£000 |
6 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
PayPoint |
|
|
|
Interest
revenue |
1,010 |
- |
575 |
|
|
|
|
Love2Shop |
|
|
|
Interest
revenue |
3,374 |
- |
325 |
Non-redemption revenue |
8,129 |
- |
1,603 |
Love2Shop total |
11,503 |
- |
1,928 |
Other revenue comprises:
Payments and banking
- Interest earned on clients’ funds and retailer partners’
deposits.
Love2Shop
- Multi-retailer non-redemption revenue (where the end-user has
the right of refund), recognised when the product has expired and
the right of refund lapsed.
- Multi-retailer non-redemption revenue (where the end-user has
no right of refund), recognised on expiry.
- Interest generated by investing cash received from customers.
This applies both to cash received for the Park Christmas Saver
business where customers save with the Group throughout the year,
and to all other pre-paid products. Funds associated with customers
are included in both monies held in trust and cash and cash
equivalents.
4. Alternative
performance measuresNet revenueThe
reconciliation between total revenue and net revenue is as
follows:
|
6 monthsended 30
September 2023£000 |
6 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
|
|
|
|
Service revenue – Shopping |
34,069 |
31,286 |
66,057 |
Service revenue – e-commerce |
13,609 |
8,143 |
16,085 |
Service revenue – Payments and banking |
31,425 |
33,687 |
71,994 |
Service revenue – multi-retailer redemption products |
2,938 |
- |
1,217 |
Service revenue – other |
2,040 |
- |
128 |
Sale of goods – single-retailer redemption products |
28,776 |
- |
4,325 |
Sale of goods – other |
599 |
637 |
1,316 |
Royalties – e-commerce |
532 |
1,632 |
4,098 |
Other revenue – multi-retailer non-redemption income |
8,129 |
- |
1,603 |
Other revenue – interest on clients’ funds, retailer partners’
deposits and card and voucher deposits |
4,384 |
- |
900 |
Total revenue |
126,501 |
75,385 |
167,723 |
less: |
|
|
|
Retailer partners’ commissions |
(18,960) |
(15,818) |
(34,369) |
Cost of single-retailer cards and vouchers |
(27,657) |
- |
(4,208) |
Cost of SIM cards and e-money sales as principal |
(83) |
(95) |
(199) |
Net revenue from continuing operations |
79,801 |
59,472 |
128,947 |
|
|
|
|
Total costsTotal costs,
excluding adjusting items, comprises:
|
6 monthsended 30
September 2023£000 |
Re-presented16 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
|
|
|
|
Other costs of revenue |
17,854 |
10,689 |
25,481 |
Administrative expenses – excluding adjusting items |
36,566 |
24,168 |
50,083 |
Finance income |
(463) |
(71) |
(87) |
Finance costs |
4,066 |
1,088 |
2,718 |
Total costs |
58,023 |
35,874 |
78,195 |
1Amortisation of intangible assets arising on acquisition were
not identified as adjusting items in the September 2022 financial
statements (see note 1).
Love2Shop billingsBillings
relates solely to Love2Shop and represents the value of goods and
services dispatched and invoiced to customers during the year. The
reconciliation between Love2Shop’s billings and total revenue is as
follows, with the 31 March 2023 comparative figures representing
only one month’s trading after Love2Shop’s acquisition by PayPoint
on 28 February 2023:
|
6 monthsended 30
September 2023£000 |
6 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
|
|
|
|
Love2Shop billings |
105,064 |
- |
14,807 |
Multi-retailer redemption products – gross to net revenue
recognition |
(63,179) |
- |
(7,515) |
Other revenue – interest on card and voucher deposits |
3,374 |
- |
325 |
Love2Shop total revenue |
45,259 |
- |
7,617 |
5. Exceptional
items
|
6 monthsended 30
September 2023£000 |
Re-presented16 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
Legal fees - administrative expenses |
558 |
- |
- |
Acquisition costs expensed - administrative expenses |
- |
300 |
4,065 |
Impairment loss on reclassification of investment in associate to
asset held for sale |
- |
1,253 |
1,252 |
Total exceptional items included in operating
profit |
558 |
1,553 |
5,317 |
Refinancing costs expensed – finance costs |
- |
- |
287 |
Total exceptional items included in profit or
loss |
558 |
1,553 |
5,604 |
The tax impact of the exceptional items is £0.14 million
(September 2022: £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 2
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.
The prior period acquisition costs related to the acquisition of
Appreciate Group PLC on 28 February 2023.
The prior period impairment loss arose on the reclassification
of the Group’s interest in Snappy Shopper Ltd from an investment in
associate to an asset held for sale. The Group subsequently
disposed of its interest in Snappy Shopper on 14 October 2022.
The prior period refinancing costs related to the acquisition of
Appreciate Group PLC.
6. Tax
|
6 monthsended 30
September 2023£000 |
6 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
Current tax |
3,617 |
3,949 |
7,023 |
Deferred tax |
759 |
(18) |
841 |
Total |
4,376 |
3,931 |
7,864 |
Effective tax rate |
25.5% |
18.7% |
18.5% |
|
|
|
|
Tax
charged directly to other comprehensive income |
|
|
|
Deferred tax (credit) / charge on actuarial (losses) / gains on
defined benefit pension plans |
(211) |
- |
86 |
The tax charge was £4.4 million (September 2022: £3.9 million)
resulting in an effective tax rate of 25.5% (September 2022:
18.7%). This is higher than the UK statutory rate of 25% due to
adjustments relating to share-based payments.
An increase in the main rate of UK corporation tax from 19% to
25% was enacted in June 2021 with effect from 1 April 2023.
Deferred tax has been calculated based on the rate applicable at
the date timing differences are expected to reverse.
7. Earnings per
shareBasic and diluted earnings per share are calculated
on the net profit attributable to equity holders of the parent and
the weighted average number of ordinary shares in issue as
follows:
|
6 monthsended 30
September 2023£000 |
6 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
Net profit attributable to equity holders of the
parent |
|
|
|
Profit after
tax |
12,806 |
17,045 |
34,710 |
Underlying
profit after tax |
16,253 |
19,400 |
42,244 |
|
|
|
|
30 September 2023 |
30 September 2022 |
31 March2023 |
|
Number of
SharesThousands |
Number of SharesThousands |
Number of SharesThousands |
Weighted average number of ordinary shares in issue (for basic
earnings per share) |
72,603 |
69,051 |
69,281 |
Potential dilutive ordinary shares: |
|
|
|
Long-term
incentive plan |
- |
59 |
- |
Restricted
share awards |
772 |
605 |
588 |
Deferred annual
bonus scheme |
185 |
120 |
104 |
SIP and other |
60 |
36 |
60 |
Weighted average number of ordinary shares in issue (for
diluted earnings per share) |
73,620 |
69,871 |
70,033 |
8. Share capital,
share premium and merger reserve
|
30 September
2023£000 |
30 September 2022£000 |
31 March2023£000 |
Called
up, allotted and fully paid share capital |
|
|
|
72,672,845 (September 2022: 68,978,647) ordinary shares of 1/3p
each |
242 |
230 |
242 |
Total |
242 |
230 |
242 |
In the current period 90,222 shares were issued
(of 1/3p each) for share awards which vested in the period and
19,389 matching shares were issued (of 1/3p each) under the
Employee Share Incentive Plan.
The share premium of £1.0 million (September
2022: £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 (September 2022: £1.0
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. Notes to the
condensed consolidated statement of cash flows
|
6 monthsended 30
September 2023£000 |
6 monthsended 30 September 2022£000 |
Year ended31 March2023£000 |
Profit before tax from continuing operations |
17,182 |
20,976 |
42,574 |
|
|
|
|
Adjustments for: |
|
|
|
Depreciation of property, plant and equipment |
3,354 |
2,375 |
4,922 |
Amortisation of intangible assets |
6,369 |
2,341 |
5,555 |
Exceptional item – non-cash impairment loss on reclassification of
investment in associate to asset held for sale |
- |
1,538 |
1,252 |
Loss on disposal of fixed assets |
- |
40 |
1,090 |
Finance income |
(463) |
(71) |
(987) |
Finance costs |
4,066 |
1,088 |
2,718 |
Share-based payment charge |
713 |
556 |
1,330 |
Operating cash flows before movements in corporate working
capital |
31,221 |
28,843 |
58,454 |
|
|
|
|
Movement in inventories |
(5,264) |
267 |
737 |
Movement in trade and other receivables |
(6,140) |
125 |
(1,301) |
Movement in finance lease receivables |
511 |
1,495 |
2,366 |
Movement in contract assets |
(409) |
(474) |
(853) |
Movement in contract liabilities |
(116) |
67 |
(78) |
Movement in payables |
(1,024) |
(787) |
3,688 |
Movement in lease liabilities |
261 |
1 |
(90) |
Cash generated by operations |
19,040 |
29,537 |
62,923 |
Movement in clients’ funds, retailer partners’ deposits and card
and voucher deposits |
62,505 |
(146) |
39,259 |
Net cash generated by operations |
81,545 |
29,391 |
102,182 |
10. Contingent
liability
Further to the update provided on 28 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 the
claims served by Utilita Energy Limited and Utilita Services
Limited (“Utilita”) and Global 365 plc and Global Prepaid Solution
Limited (“Global 365”). The focus of the CMC was to agree
disclosure and a timetable for proceedings.
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.
Given this position, the Group’s preference is for a swift and
expedient process, targeting a trial listing on the first available
date to be agreed with all parties.
The Group will continue to update the market on a quarterly
basis as part of its financial reporting cycle.
PRINCIPAL RISKS AND
UNCERTAINTIES
Like all businesses, we face a number of risks and uncertainties
and successful management of existing and emerging risks is
critical to the achievement of strategic objectives and to the
long-term success of any business. Therefore, risk management is an
integral part of PayPoint’s Corporate Governance. The Group’s
principal risks and uncertainties remain the same as those
disclosed in the Strategic Report section of its Annual Report for
the year ended 31 March 2023, which are as follows:
|
Risk Trend & Appetite |
Potential Impact |
Mitigation Strategies |
Status |
Principal Risks |
Market Risks |
1 |
Competitionand MarketsTrend =
Increasing Appetite =Medium |
PayPoint’s markets and competitors continue to evolve; failure to
anticipate and respond to these will reduce market share, revenue
and profits. The decline in cash usage is expected to continue,
which will reduce revenue from those affected business areas.
Inflationary and cost of living pressures may impact fee margins
and discretionary spend, which will in turn affect growth
opportunities in parts of the business. Keen pricing by competitors
may further serve to narrow profit margins, as would excessive
reliance on key clients or market segments |
The Executive Board regularly reviews markets, competitor activity,
trading opportunities and potential acquisitions and so oversees
and challenges strategic direction. It also closely monitors
consumer and technological trends and engages with clients,
retailers and other stakeholders to improve our proposition.
PayPoint continually develops products, services and systems to
adapt to changes in consumer trends and technology and make
strategic acquisitions where appropriate. |
Risk is increasing as competition has intensified, and cost of
living pressures are causing a downward push on margins. Also, the
use of cash continues to decrease, which reduces our income from
certain parts of the business.However, we continue to strengthen
our card and digital payment businesses. Levels of global
investment in our Fintech competitors slowed in the last year,
which presents opportunities for PayPoint in the digital space.
Finally, the recent acquisition has further diversified the Group
into the gifting and rewards business. |
2 |
Emerging TechnologyTrend = Stable Appetite =
Medium |
There is risk to our business if our offering fails to keep pace
and we do not exploit new technologies and markets to evolve our
proposition. New and emerging technologies are changing the way
consumers pay for goods and services; failure to keep up with
alternative payment solutions will reduce our market share and
profitability |
PayPoint continually develops products with the latest technology
and evolves them to take advantage of new and expanding markets.
The Executive Board closely monitors emerging technologies and the
impact they may have on PayPoint. We also develop and implement our
own innovative technology where possible. Emerging technology from
recent acquisitions has been developed further and used to deepen
and widen our customer relationships. |
Risk is stable as recent acquisitions have accelerated our ability
to mitigate the impact of emerging technologies, and the
re-platforming of our digital proposition will better enable us to
expand our presence in digital payment markets. We are engaged in
various government schemes involving new technology, for example,
the Department for Work and Pensions Payment Exception Service. We
are rolling out a new, updated version of our retailer terminal –
the PayPoint mini, and have developed solutions in our open banking
and open pay propositions. We are also tracking the fast evolution
of generative AI, as this has potential to be highly
transformative. |
Strategic Risks |
3 |
Trans-formationTrend = Increasing Appetite =
Medium |
Our business relies on implementation of continued innovation to
keep pace with emerging technology and changing markets.
Furthermore, we need to remain agile to continually improve our
processes and controls, as failure to do so would reduce
efficiency, increase costs, and increase the likelihood of poor
customer service. Failure to invest and improve would also reduce
our capacity to capitalise on opportunities for growth. |
The Executive Board drives, challenges and assesses our response to
change as part of the strategic planning process. PayPoint is
committed to diversifying its product offering and client base by
delivering innovative, efficient and robust processes in a range of
sectors, and by continuous improvement in existing systems and
processes. |
Risk is increasing; the acquisition of Appreciate is now complete
and work has started to integrate their operations where
appropriate, and to add their system improvements into the Group
roadmap. Other major projects include Payment Facilitation and the
roll out of the PayPoint mini terminal, a project that started in
2021.These require considerable investment in technology and
systems as well as infrastructure channels and in developing
people. |
Business Risks |
4 |
Operating Model Trend = Stable Appetite =
Medium |
It is important we have a diversified and varied operating model,
so we are not overly exposed to any particular markets, clients,
suppliers or SMEs. Our core business relies on an appropriate mix
of clients operating in diverse industry sectors, retailers and
redemption partners, supported by a robust supply chain and
operating processes. Failure to maintain attractive propositions
for clients retailers and redemption partners may result in losses
of key clients, or a reduction in fees and margins. |
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. We have further diversified
our business this year through the acquisition of Appreciate Group
which gives us access to new markets, SMEs, retailers, clients and
technology. We maintain strong relationships with suppliers to
reduce concentration risk in this area. |
Risk is stable; recent acquisitions have diversified our operations
into the gifting ad rewards business. We continue to renew
contracts and onboard new retailers, clients merchants and
redemption partners in line with expectations. We have built on the
counter cash, FMCG and newspaper propositions with campaigns and
onboarding new SMEs, with more in the pipeline. We have however
noted that retailers and SMEs are under increasing financial
pressure, which may lead to an increase in defaults. We are
monitoring this situation carefully. |
5 |
Legal andRegulatoryTrend =
Increasing 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. Recent acquisitions have
increased the number of regulated entities, which further increases
the regulatory risk. Commitments made to Ofgem in 2021 regarding
its Competition law concerns have been implemented |
Our Legal and Compliance teams work closely with management 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. The
compliance team has been expanded and developed to meet the
ever-changing requirements of both existing and new legislation,
and external counsel is engaged where required. We respond promptly
and comprehensively to all legal and regulatory enquiries. |
Risk is increasing due to two key factors.Firstly, following
completion of the Appreciate acquisition, additional support has
been required to ensure a coherent group approach to compliance is
implemented.Secondly, as referenced in Note 34, two claims have now
been served on a number of companies in the Group inrelation to the
matters addressed by commitments made to Ofgem in 2021 in
resolution of Ofgem’s competition concerns.Key new regulations this
year have been the PSR and Consumer Duty, which we are addressing
in line with regulatory deadlines. |
6 |
People Trend = Increasing Appetite = Low |
Failure to attract and retain key talent impacts many areas of our
business including service delivery and achieving strategic
objectives. Maintaining a strong culture of ethical behaviours and
employee wellbeing is also vital in ensuring our business, people,
customers and other stakeholders are safeguarded, and our
operations remain efficient and profitable. Maintaining competitive
remuneration levels ensures we retain our talent pool. |
The Executive Board defines and advocates PayPoint’s purpose,
vision and values, and an employee forum comprising employees from
across the business engages directly with the Executive Board on
employee matters. We continue to invest in, and support our people.
We have well established processes for recruiting and retaining key
talent and developing our people, and there is continued focus on
culture, ethics and diversity. |
Risk is increasing. Following completion of the Appreciate Group
acquisition, we announced a rationalisation of our Northern
offices, which has caused some staff turnover. Inflationary
pressures mean salaries remain high and, hybrid working serves to
exacerbate this trend. Therefore, there remain a number of
vacancies, especially in specialist fields.However, we have
recruited some extra staff in accordance with our planned headcount
increase for the year. Recruitment and retention have eased
somewhat from earlier in the year due to redundancies and
recruitment freezes elsewhere.Employee engagement surveys remain
positive and key actions around cost-of-living support, better
employee interaction and flexible working have been
implemented.. |
Operational Risks |
7 |
CyberSecurity Trend = Increasing
Appetite = Low |
Cyber-attacks may significantly impact service delivery and data
protection causing harm to PayPoint, our customers and other
stakeholders. Recent acquisitions have increased the number of IT
environments, products and systems we need to protect. PayPoint has
multiple cyber security systems, capabilities and controls however
cyber-attacks are constantly evolving and remain a persistent
threat. |
The Executive Board assesses PayPoint’s cyber security and data
protection framework, and the Cyber Security and IT Sub-Committee
of the Audit Committeemaintain 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 simple
reporting 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. Due
to the current geopolitical instability, the NCSC has issued a
warning regarding targeted threats to organisations supporting
critical services in the UK.Group security standards and systems
are being applied to our acquired IT environments and 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.. |
8 |
BusinessInterruptionTrend =
Increasing Appetite = Low |
Our clients and stakeholders rely on our systems, products and
services being resilient to maintain continuous service delivery.
Failure to maintain stable infrastructure or processes, or to
promptly recover services following an incident may result in
financial loss, reputational harm and potential regulatory
scrutiny.Interruptions may be caused by system failure,
cyberattack, failure by a third party, or failure of an internal
process. Recovery may be hampered by a lack of resilience planning
and testing. |
The Executive Board reviews PayPoint’s business continuity
framework and the Cyber Security and IT SubCommittee of the Audit
Committee maintains oversight. 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. The acquisition of Appreciate and our expansion
into different products contribute to an increasing complexity of
our operations. We have not suffered any significant outages during
the year, however system disruption is an inherent business risk.
Therefore, we have upgraded the processing environments for our
core switch and some core services that are hosted in the data
centres. This has resulted in a reduction in critical incidents,
and availability of the core processing switch has improved. 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 |
PayPoint has material credit exposures with large retailers,
redemption partners, and other counterparties; in the event of a
default, significant financial loss may result, as demonstrated
with the McColl’s collapse.We process large volumes of payments
daily, therefore effective operational controls are essential to
ensure funds are settled accurately, securely and promptly.We have
a number of debt / banking covenants and interest expenses which
must be managed carefully.Absent or ineffective controls in these
processes couldresult in fraud, liquidity risk, reputational damage
or otherfinancial loss. |
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.
Residual risk associated with potential default of gift card
providers is mitigated through insurance. Settlement systems and
controls are continually assessed and enhanced with new systems and
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. |
Risk is stable. Credit losses remain low. Cost of living pressures
may impact our retailers, which may increase the default rate.
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 Appreciate and our cash generation
remains robust. |
10 |
Operational Delivery Trend = Stable
Appetite = Low |
Successful delivery of key initiatives and strategic objectives is
central to achieving our day-to-day and transformation aims.
Successful operational deliverydepends on effective forecasting,
planning and well controlled execution both within the Group and in
its supplier chain. Failure to manage this risk would hamper our
business performance, impact our stakeholders, and lead to
regulatory or legal sanctions. |
The Executive Board has overall responsibility for delivering key
initiatives implementing a robust control framework over BAU
activities.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. The Appreciate acquisition will require
considerable management time and effort to integrate. The combined
group is now large enough to qualify for the SAO regime, which
means the risk and control documentation must be reviewed and
brought in line with HMRC requirements. There have been a number of
new products in the year, e.g. EBSS and Open Banking, which have
been challenging and demanded prioritisation of resources. |
Emerging Risks |
11 |
ESG and Climate Trend = Stable Appetite = Medium |
Focus on environmental, social and governance matters continues to
increase, and our business needs to be environmentally responsible
to create shared value forall stakeholders.Climate risk is a key
priority for governments and organisations globally, and PayPoint
needs to play its part in reducing carbon emissions and its
environmental impact.Approximately 17% of our revenue is derived
from energy and fuel markets and as the UK transitions to Net-zero
carbon emission economy by 2050, we need 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. We will be rolling out our new PayPoint terminal, which
generates lower emissions than previous models. We are moving
toward electric cars for our company fleet and 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. Love2shop was named one of the UK’s
best places to work in April 2023. |
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge
this set of interim financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as contained in
UK-adopted IFRS and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom’s Financial Conduct Authority and
that the interim management report includes a fair review of the
information required by DTR 4.2.7 (indication of important events
during the first half and description of principal risks and
uncertainties for the remaining half of the year) and DTR 4.2.8
(disclosure of related parties’ transactions and changes
therein).
Nick Wiles
Chief Executive |
Rob
HardingFinance Director |
INDEPENDENT REVIEW REPORT TO PAYPOINT PLC
Report on the condensed consolidated interim financial
statements
Our conclusionWe have reviewed
PayPoint PLC’s condensed consolidated interim financial statements
(the “interim financial statements”) in the Results for the half
year ended 30 September 2023 of PayPoint PLC for the period from
1 April 2023 to 30 September 2023 (the
“period”).
Based on our review, nothing has come to our
attention that causes us to believe that the interim financial
statements are not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom’s Financial
Conduct Authority.
The interim financial statements comprise:
- the Condensed
Consolidated Statement of Financial Position as at
30 September 2023;
- the Condensed
Consolidated Statement of Profit or Loss and Condensed Consolidated
Statement of Comprehensive Income for the period then ended;
- the Condensed
Consolidated Statement of Changes in Equity for the period then
ended;
- the Condensed
Consolidated Statement of Cash Flows for the period then ended;
and
- the explanatory
notes to the interim financial statements.
The interim financial statements included in the
Results for the half year ended 30 September 2023 of Paypoint PLC
have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority.
Basis for conclusionWe
conducted our review in accordance with International Standard on
Review Engagements (UK) 2410, ‘Review of Interim Financial
Information Performed by the Independent Auditor of the Entity’
issued by the Financial Reporting Council for use in the United
Kingdom (“ISRE (UK) 2410”). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and, consequently, does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
We have read the other information contained in
the Results for the half year ended 30 September 2023 and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the interim
financial statements.
Conclusions relating to going concernBased on
our review procedures, which are less extensive than those
performed in an audit as described in the Basis for conclusion
section of this report, nothing has come to our attention to
suggest that the directors have inappropriately adopted the going
concern basis of accounting or that the directors have identified
material uncertainties relating to going concern that are not
appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However,
future events or conditions may cause the group to cease to
continue as a going concern.
Responsibilities for the interim financial statements
and the review
Our responsibilities and those of the
directors
The Results for the half year ended 30 September
2023, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The
directors are responsible for preparing the Results for the half
year ended 30 September 2023 in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom’s
Financial Conduct Authority. In preparing the Results for the half
year ended 30 September 2023, including the interim financial
statements, the directors are responsible for assessing the group’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on
the interim financial statements in the Results for the half year
ended 30 September 2023 based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on
procedures that are less extensive than audit procedures, as
described in the Basis for conclusion paragraph of this report.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
PricewaterhouseCoopers LLPChartered
AccountantsWatford22 November 2023
1 Net revenue is an alternative performance measure. Refer to
note 4 to the financial information for a reconciliation to
revenue.2 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.3 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.4 Cash generation is an
alternative performance measure. Refer to the Financial review –
cash flow and liquidity for a reconciliation to profit before tax5
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 equivalents6
Adjusting items comprises exceptional items and amortisation of
intangible assets arising on acquisition. Refer to note 1 for a
reconciliation.7 Adjusted EBITDA is an alternative performance
measure. Refer the finance review for a reconciliation.8 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.9 Dividend cover
represents profit after tax divided by reported dividends.
- H1 FY24 RNS - Final (004)
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