PayPoint shares slide despite first-half growth

21st Nov 2024 08:51

(Sharecast News) - Shares in PayPoint were sliding on Thursday morning, even after it reported a 20.6% improvement in first-half underlying EBITDA to £37.5m on the back of continued operational momentum across its divisions.

The FTSE 250 company said revenue for the six months ended 30 September was ahead 6.7% to £135m, while net revenue grew 6% to £84.6m.

Underlying profit before tax climbed 23.4% to £26.9m, and diluted earnings per share rose 35.1% to 23.5p.

The company raised its interim dividend by 2.1% to 19.4p per share.

Net corporate debt widened to £86.8m, primarily driven by investments to support growth initiatives.

PayPoint said its shopping division recorded net revenue growth of 2.5% to £32.9m, driven by higher service fee revenue and an expanded network of PayPoint One/Mini sites.

E-commerce was a standout performer, with net revenue surging 56.9% to £8m, supported by a 47% increase in Collect+ parcel transactions and the expansion of its network to 13,421 sites.

Meanwhile, payments and banking net revenue dipped slightly by 0.8% to £24.9m, although open banking revenue more than doubled, and the MultiPay platform continued to gain traction.

Love2shop achieved a 7.4% increase in net revenue to £18.8m, buoyed by strong corporate billings and enhanced gift card distribution.

Strategically, the company said it continued to execute on its growth pillars, including network expansion, card processing, Open Banking, and loyalty solutions.

A significant partnership with Lloyds Cardnet was expected to drive growth in its card processing business, while pilots for High Street bank deposit services were set to launch in early 2025.

PayPoint also added a seventh growth focus aimed at leveraging its integrated capabilities across multichannel payments, loyalty programs, and retail networks.

The company reaffirmed its confidence in achieving its target of £100m EBITDA by the 2026 financial year, citing its diversified revenue base, expanding customer offerings, and disciplined cost management.

"This has been a strong half year for PayPoint where we have delivered a positive financial performance and made further progress towards our medium-term target of delivering £100m underlying EBITDA by the end of 2026," said chief executive officer Nick Wiles.

"The strategic investments made in Yodel and obconnect strengthen two core areas of our business, enhancing future growth and opportunities in parcels and Open Banking.

"The resilience of our businesses combined with the growing opportunities to deliver value-add solutions to our clients, continue to underline our confidence in building further momentum in our key growth building blocks."

Wiles added that the company was now putting "greater focus" on harnessing its "enhanced platform" through better connecting its increased capabilities and achieving greater collaboration across the business as a whole, in a bid to open up more revenue opportunities.

"Over the half, consumer behaviour has improved from a slow start in April although remains subdued, with broader economic indicators demonstrating the continuing challenging environment for UK consumers.

"We continue to monitor this closely as we head into the important second-half period for a number of our more seasonal businesses."

Nick Wiles noted that the company's share buyback programme started on 1 July, returning at least £20m over the next 12 months, which, combined with the firm's growing dividend, should further enhance shareholder returns.

"Our core characteristics of strong earnings growth, cash flow generation and capital discipline, along with the continued growth across the group, give the board confidence in delivering further progress in the year and meeting expectations."

At 0844 GMT, shares in PayPoint were down 6.78% at 778.4p.

Reporting by Josh White for Sharecast.com.