PayPoint earnings rise as it announces share buyback

13th Jun 2024 10:19

(Sharecast News) - PayPoint reported significant progress towards its EBITDA targets in its full-year results on Thursday, and took the wraps off a three-year share buyback programme, starting with at least £20m over the next 12 months.

The London-listed firm recorded underlying EBITDA of £81.3m for the 12 months ended 31 March - a 32.6% increase from the prior year.

Underlying profit before tax rose 21.5% to £61.7m, while net corporate debt decreased £4.9m to £67.5m.

The final dividend declared was 19.2p per share, up from 18.6p in the 2023 financial year.

Revenue for the year reached £306.4m - an 82.7% increase, with net revenue up 40.4% to £181m.

Adjusting items amounted to -£13.5m, leading to a profit before tax of £48.2m, a 13.1% rise.

Diluted underlying earnings per share increased 3.8% to 62.6p, though diluted earnings per share decreased 1.6% to 48.8p.

The new share buyback programme meanwhile was on the back of PayPoint's strong cash generation, as well as the board's confidence in achieving growth targets for the 2025 to 2027 financial years.

It said the programme would initially return £20m to shareholders over the next year, with potential increases in subsequent years based on performance, market conditions, and capital needs.

Additionally, PayPoint said it aimed to increase dividends at a nominal rate and grow the cover ratio to over 2x earnings by 2027, maintaining an efficient capital structure with a leverage ratio around 1x net debt-to-EBITDA.

On the operational front, PayPoint reported an expansion in parcels and network with strategic partnerships with Royal Mail and Yodel/Vinted, increasing network sites to 11,786.

It also noted growth in card processing, including a major partnership with Lloyds Cardnet, as well as advancements in Open Banking and digital payments, with notable client additions and new business wins.

The integration and expansion of Love2shop and Park Christmas Savings was also reported, including a return to billings growth and the launch of new corporate APIs.

There was also continued growth in Access to Cash and Local Banking, with increases in ATM and Counter Cash sites and substantial consumer deposits processed.

It launched the PayPoint Mini device as well as its FMCG consumer engagement solution, PayPoint Engage.

In the shopping division, net revenue increased 3.9% to £64.4m, driven by growth in service fees and card payment revenue.

The e-commerce division saw a 61.6% increase in net revenue to £11.8m, with a record year for Collect+ parcel transactions.

However, the Payments & Banking division experienced a 4.8% decrease in net revenue to £53.5m, despite growth in the MultiPay platform.

Love2shop recorded £51.3 million in net revenue, with Park Christmas Savings returning to growth and MBL processing £59.7m of gift card value.

The company said it was well-positioned for future growth, with encouraging early trading in FY25 and a strategic focus on enhancing shareholder returns through both the buyback programme and dividend growth.

"This has been another year of progress for PayPoint where we have delivered a robust financial performance and made further progress towards delivering £100m EBITDA by the end of the 2026 financial year," said chief executive officer Nick Wiles.

"These results reflect both the resilience of our businesses and the transformation delivered over the past three years as we unlock further opportunities and growth across our four business divisions.

"In the current year, consumer behaviour across a number of our businesses remains subdued, reflecting continued tighter family budgets and a generally flat economy."

Wiles said its expectation was that the consumer outlook would improve during the course of the year.

"Against this background, our streamlined organisational structure and cost base will support the delivery of our medium-term growth plans.

"Strong earnings growth and cash flow generation, combined with a sustainable dividend policy provide a robust platform for the board to propose further steps to enhance shareholder returns through a share buyback programme of at least £20m over the next 12 months, all underpinned by the delivery of further progress in the current year."

At 1055 BST, shares in PayPoint were up 7.96% at 612.14p.

Reporting by Josh White for Sharecast.com.