TIDMPAY
PayPoint Plc
Results for the year ended 31 March 2023
A strong year across the PayPoint Group establishing a
materially enhanced platform for future growth and reporting profit
before tax at the top end of range of market expectations
FINANCIAL HIGHLIGHTS
-- Net revenue1 from continuing operations of GBP128.9 million (FY22:
GBP115.1 million) increased by GBP13.8 million (11.9%)
-- Underlying EBITDA2 of GBP61.3 million (FY22: GBP58.2 million) increased
by GBP3.1 million (5.2%)
-- Underlying profit before tax (profit before tax excluding adjusting
items)3 of GBP50.8 million (FY22: GBP48.0 million) increased by GBP2.8
million (5.8%)
-- Strong underlying cash generation from continuing operations excluding
exceptional items4 of GBP62.3 million (FY22: GBP53.9 million)
-- Net corporate debt5 of GBP72.4 million (FY22: GBP43.9 million) increased
by GBP28.5 million, after cash of GBP61.9 million used in Appreciate
Group acquisition.
-- Increased ordinary final dividend of 18.6 pence per share declared,
consistent with our progressive dividend policy, and representing an
increase of 3.3% vs the final dividend declared on 26 May 2022 of 18.0
pence per share
-- Authority in place, and to be renewed at AGM on 7 September 2023, for any
future share buyback programme
Year ended 31 March 2023 FY23 FY22 Change
------------------------------------------
Revenue from continuing operations GBP167.7m GBP145.1m 15.6%
Net revenue from continuing operations(1) GBP128.9m GBP115.1m 11.9%
Underlying EBITDA(2) GBP61.3m GBP58.2m 5.2%
Underlying profit before tax (profit
before tax excluding adjusting
items)(3) -- PayPoint segment GBP50.3m GBP48.0m 4.8%
Underlying profit before tax (profit
before tax excluding adjusting
items)(3) -- Love2shop segment GBP0.5m - -
------------------------------------------
Underlying profit before tax (profit
before tax excluding adjusting
items)(3) GBP50.8m GBP48.0m 5.8%
Adjusting items(6) GBP(8.2)m GBP0.5m n/m
Profit before tax from discontinued
operation including exceptional
item - GBP30.0m n/m
Profit before tax GBP42.6m GBP78.5m (45.8)%
----------- -------
Diluted earnings per share from
continuing operations excluding
adjusting items 60.3p 55.4p 8.8%
Ordinary paid dividend per share 34.6p 33.6p 3.0%
Ordinary reported dividend per
share 37.0p 35.0p 5.7%
------------------------------------------
Cash generation from continuing
operations excluding exceptional
items(4) GBP62.3m GBP53.9m 15.6%
Net corporate debt(5) GBP(72.4)m GBP(43.9)m 65.0%
------------------------------------------
Nick Wiles, Chief Executive of PayPoint Plc, said:
"This has been another strong year for the PayPoint Group where
we have made significant steps to materially enhance our platform
and capabilities to deliver sustainable, profitable growth and
enhanced rewards for our shareholders. Our financial performance
has been positive, with net revenue growth across all our business
divisions, excellent progress in parcels and digital payments, and
good momentum in our key growth areas of card processing, Open
Banking, integrated payments and the prospect of new opportunities
delivered through the acquisition of the Appreciate Group.
Our partnership philosophy across the Group, combined with an
intensity and focus on execution, is already unlocking new markets
and revenue opportunities for us, including the recently announced
partnership with The Fed to launch a network of Park Christmas
Savings Super Agents, our success in Open Banking working with Ovo
and the Department for Energy Security and Net Zero, and several
emerging opportunities in new verticals combining our extensive
capabilities across payments and commerce.
We finished FY23 with good momentum, and trading has been
positive in the first quarter of FY24 as we continue to leverage
our enhanced platform and capabilities which includes: a
full-strength sales team delivering high conversion rates and
growing our respective estates in PayPoint and Handepay; healthy
pipelines for our FMCG and integrated payments propositions; and a
dynamic platform of innovative technology and solutions enabling
integrated payments and commerce for our extensive base of clients,
retailer partners and SMEs. We will continue to invest in growth
areas across the Group in the coming year to further enhance our
capabilities, unlock opportunities and accelerate our growth.
All of this underlines our confidence in delivering further
progress and a quickening momentum in the new financial year, with
the acquisition of Appreciate Group expected to be earnings
enhancing in our first full year of ownership, and the Group
trading in line with expectations."
STRATEGIC HIGHLIGHTS
We have materially enhanced our platform across the Group in the
past year: our integrated payments platform has expanded with the
addition of Open Banking and prepaid solutions to our capability in
card processing, Direct Debit and cash; our retailer and SME
proposition is now stronger than ever, with multiple opportunities
for partners to earn revenue; and our e-commerce offering has gone
from strength to strength, delivering record volumes and an
unparalleled in-store experience for consumers.
This enhanced platform will unlock future opportunities and
deliver sustainable and profitable growth for shareholders,
underpinned by our business-wide partnership philosophy and
intensity of execution.
-- Appreciate Group (now known as Love2shop) -- acquisition completed on 28
February 2023, opening up further revenue opportunities, expanding our
capabilities in the gifting, rewards and prepaid savings markets and
enabling the creation of enterprise level solutions into new markets,
combining our extensive payments and commerce capabilities
-- Open Banking - partnership with OBConnect has already yielded positive
results, particularly with our new PayPoint OpenPay service with Ovo to
support Alternative Fuel Payment, rolling out our Confirmation of Payee
service with the Department of Energy Security and Net Zero, launching a
trial of our AIS customer support tool with Citizen's Advice and a
growing number of additional clients onboarded
-- Central Government - over GBP246 million of Energy Bills Support Scheme
vouchers were redeemed across our extensive network of over 28,000
retailer partners from October 2022 to March 2023, providing a GBP400
payment over the winter months to households across the UK, all
underpinned with greater engagement with key stakeholders, including
Ofgem, UK Finance, Pay.UK and the Department of Energy Security and Net
Zero
-- Cards - new acquiring partnership with EVO, becoming the single acquirer
across the Group. The move enables our merchant estate acceleration plans
and mid-market segment focus, increases our efficiency as an ISO and
begins the journey to becoming a fully integrated Payment Facilitator
-- E-commerce - excellent volume growth year on year in Collect+, driven by
strong partnership approach with carrier partners, our positive
reputation as the leading carrier agnostic Out of Home network, and
backed up by continued investment into the in-store customer experience
-- Digital Payments - our Payment Exception Service, delivered for the
Department for Work and Pensions and enabling the digital disbursement of
benefit payments, recorded significant growth year on year and received
three industry accolades for Social Inclusion in Financial Services at
the recent Payment Awards, FSTech Awards and Card and Payments Awards,
underlining the vital role our solutions play in serving some of the most
vulnerable people in the UK
-- FMCG -- positive progress and partnerships established with Coca-Cola,
Amazon, AG Barr and JTI, delivering a number of FMCG brand campaigns in
the year and a strong pipeline of future activity. Our consumer
engagement solution, PayPoint Engage, leverages our PayPoint One platform,
advertising screens and imovo vouchering capability to help our retailer
partners drive sales and help brands engage thousands of consumers across
our network
-- New Sectors -- continued expansion of our integrated payments solution,
MultiPay, into the housing, charity and local authority sectors,
including launching Direct Debit for POBL Housing and Thames Hospice,
further Cash Out expansion across 6 new local authorities and delivering
Confirmation of Payee services for 4 new local authorities across the UK
DIVISIONAL HIGHLIGHTS
Strong performance across the Group with net revenue increases
across all divisions
Shopping
Shopping divisional net revenue increased by 5.6% to GBP62.0
million (FY22: GBP58.7 million), driven by the growth of our
PayPoint One estate, the annual RPI increase and further
enhancements to our retailer and SME propositions, including the
launch of the new Android terminal in the Handepay cards business
and the continued rollout of Counter Cash.
-- Service fee net revenue increased by 8.3% to GBP17.9 million, reflecting
growth in the number of revenue-generating PayPoint One sites to 18,453
(FY22: 18,120) and the impact of the annual RPI increase
-- Card payment net revenue increased by 4.3% to GBP31.8 million, with an
enhanced proposition for Handepay customers delivered, next day
settlement now live across PayPoint and an increased focus on customer
retention driven by AI and data analytics
-- Card payment sites in the Handepay EVO estate grew to 18,397 (31 March
2022: 17,499) driven by the enhanced proposition, the new Android
terminal and the increased optimisation of our sales efforts, now at full
headcount and in spite of recruitment challenges earlier in the financial
year
-- UK retail network increased to 28,478 sites (31 March 2022: 28,254), with
70.0% in independent retailer partners and 30.0% in multiple retail
groups
E-commerce
E-commerce divisional net revenue increased strongly by 46.5% to
GBP7.3 million (FY22: GBP4.9 million) and transactions grew by
69.6% to 56.4 million (FY22: 33.3 million) through our e-commerce
technology platform, Collect+, including regularly achieving over 1
million parcels processed per week. This was driven by our strength
in clothing/fashion categories, the continued expansion of new
services with carrier partners and the in-store experience
investments made in Zebra label printers over the past 18
months.
Payments & Banking
Payments & Banking divisional net revenue increased by 9.1%
to GBP56.2 million (FY22: GBP51.5 million), driven by continued
growth in digital transactions and a resilient performance in the
energy sector, partially offset by a reduction in cash through to
digital volumes as consumer behaviour has continued to reset post
Covid-19.
-- Continued digital payments growth to 52.3 million transactions (FY22:
34.2 million) and net revenue increasing by 102.7% to GBP15.7 million
(FY22: GBP7.8 million), with our Cash Out services and the DWP Payment
Exception Service, delivered via i-movo
-- Over GBP246 million of Energy Bills Support Scheme vouchers were redeemed
across PayPoint's extensive network of over 28,000 retailer partners,
providing a GBP400 payment over the winter months to households across
the UK, leveraging our Cash Out digital capability
-- Cash payments net revenue delivered a resilient performance, decreasing
by 5.4% to GBP33.6 million (FY22: GBP35.5 million) and transactions
decreasing by 1.2% to 176.3 million (FY22: 178.4 million), with energy
sector net revenue better than expected, only decreasing by 5% year on
year, and the continued reduction in consumers topping up mobile phones
in store
-- Cash through to digital net revenue decreased by 16.5% to GBP6.9 million
(FY22: GBP8.2 million) and transactions decreased by 19.6% to 8.5 million
(FY22: 10.6 million), with volumes returning to pre-Covid-19 levels and a
new baseline set for the category. In addition to the range of digital
brands we work with, we are launching new partnerships with neo-banks,
including JPMorgan Chase, enabling withdrawals and deposits across our
extensive network of retailer partners
RECONCILIATION OF RE-PRESENTED NUMBERS
GBPm FY23 FY22
Reported profit before tax from continuing
operations 42.6 48.5
---------------------------------------------------- ---- -----
Exceptional items 5.6 (2.9)
---------------------------------------------------- ---- -----
Profit before tax from continuing operations
excluding exceptional items 48.2 45.6
---------------------------------------------------- ---- -----
Amortisation of intangible assets arising
on acquisition -- PayPoint (previous acquisitions) 2.1 2.4
Amortisation of intangible assets arising
on acquisition -- Love2shop 0.5 -
Underlying profit before tax (profit before
tax excluding adjusting items) 50.8 48.0
---------------------------------------------------- ---- -----
Underlying EBITDA 61.3 58.2
---------------------------------------------------- ---- -----
BUSINESS DIVISION NET REVENUE AND MIX
Net revenue by business
division (GBPm) FY23 FY22 FY21
Shopping 62.0 58.7 40.2
E-commerce 7.3 4.9 3.6
Payments & Banking 56.2 51.5 53.3
PayPoint Segment Total 125.5 115.1 97.1
Love2shop Segment Total 3.4 N/A N/A
PayPoint Group Total 128.9 115.1 97.1
Business division mix FY23 FY22 FY21
------------------------ ----- ----- -----
Shopping 48.1% 51.0% 41.4%
E-commerce 5.6% 4.3% 3.7%
Payments & Banking 43.6% 44.7% 54.9%
Love2shop 2.7% N/A N/A
-----
Enquiries
PayPoint plc FGS Global
Nick Wiles, Chief Executive (Mobile: 07442 Rollo Head
968960)
Alan Dale, Finance Director (Mobile: 07778 James Thompson
043962)
(Telephone: 0207 251 3801)
(Email:
PayPoint-LON@fgsglobal.com)
A presentation for analysts is being held at 9.30am today (28
July 2023) via webcast. This announcement, along with details for
the webcast, is available on the PayPoint plc website:
https://www.globenewswire.com/Tracker?data=twDrjTsFQmA5qWLTCBU5rJIRMUAK_1UkCJo6qE6-3Bja1jNb59CntJrihKjmplTgrMd2Ldi5kXGJc7rPeKYhWBUs8TXmdBjQDkOevjEjZ_Y=
corporate.paypoint.com
CHAIRMAN'S STATEMENT
I am pleased to report that for the year under review, we have
consistently applied the Principles of Good Governance contained in
the 2018 UK Corporate Governance Code save that we have not
completed a review of the effectiveness of Appreciate Group's
("Appreciate") risk management and internal control systems (with
respect to Provision 29 of the Code) due to the proximity of the
acquisition of Appreciate, which occurred on 28 February 2023, to
our financial year-end.
The Board has carried out a review of the disclosures and
management of climate related risks for the Task Force on Climate
Related Financial Disclosures. Detailed disclosure is provided in
the Annual Report, along with the further progress made on
developing our broader ESG strategy.
The year in review
The business has maintained momentum in delivering against its
strategic plan as we have continued our strategic development and
diversification away from legacy cash bill payments, with growth in
recently acquired businesses and through the acquisition of
Appreciate. Effective governance together with the strong
leadership from the Board has provided structure and stability to
the business.
Executive and Plc Boards
The Board and Nomination Committee has continued to work on
succession planning and Board composition. We have worked actively
with Teneo People Advisory to ensure the Board has the necessary
skills, experience and knowledge and, following an extensive search
process, we were delighted to appoint Rob Harding as Chief
Financial Officer. Rob will be joining the Company on 1 August
20203 and will replace Alan Dale who is retiring. I would like to
express my gratitude for Alan's contribution to the Company.
We also welcome Guy Parsons as Non-Executive Director to the
Board having previously been Executive Chairman of Appreciate
Group.
During the year the Executive Board was strengthened in key
areas to: a) drive growth (Nick Williams-Parcels and Anthony
Sappor- Retail Proposition and Partnerships) and b) enhance
integration with Appreciate Group (Julian Coghlan and Talha Ahmed
-- respectively Managing Director and Finance Director of Love2shop
& Park Savings).
Board Evaluation
Following last year's internal evaluation, we have again this
year conducted an internal evaluation of the Board, its Committees
and the Chair, which confirmed that our Board and Committees
continue to operate effectively. More information on the process
and results of that evaluation can be found in the Annual Report.
We have completed a tender for an external third party to carry out
the Board evaluation in 2023-24. This is being progressed in H1 FY
2024.
Stakeholder Engagement
The success of PayPoint depends upon the Board making informed
decisions for the benefit of shareholders having regard to the
wider requirements of all our stakeholders. The Board receives
regular investor updates throughout the course of the year. The
Company's Annual General Meeting will be held at PayPoint's
registered office on 7 September 2023 where you will have the
opportunity to meet the Board and members of the Executive Board.
The matters to be approved by shareholders are set out in our
Notice of Annual General Meeting which will be mailed to
shareholders in August.
This year we continued to develop our work force engagement
activities including receiving a full briefing on the employee
engagement survey results and Directors meeting directly with
employees. Full details of our people and culture activities are
set out in our Annual Report.
Our retail partners and SMEs remain central to our business and
the Board continued to receive regular briefings throughout the
year on our retailer engagement proposition and the work we do to
enable clients to provide vital services in the community.
Conclusion
I would like to conclude by thanking my Board colleagues for
their continued support and commitment over the past year and to
thank Nick Wiles and the whole Executive team for their dynamic
management of a rapidly changing business environment in difficult
economic circumstances.
If you wish to discuss any aspect of our governance
arrangements, please contact me via our Company Secretary, Brian
McLelland, via email at CompanySecretary@paypoint.com
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.
Giles Kerr
Chairman
27 July 2023
CHIEF EXECUTIVE'S REVIEW
Strong year delivering an enhanced platform for growth
This has been another strong year for the PayPoint Group where
we have made significant steps to materially enhance our platform
and capabilities to deliver sustainable, profitable growth and
enhanced rewards for our shareholders. Our financial performance
has been positive, with net revenue growth across all our business
divisions, excellent progress in parcels and digital payments, and
good momentum in our key growth areas of card processing, Open
Banking, integrated payments, and the new opportunities delivered
through the acquisition of the Appreciate Group.
Expanded capabilities and partnership philosophy opening up new
revenue opportunities
Strategically, we were particularly delighted to complete the
acquisition of Appreciate Group (now known as Love2shop) in
February 2023, one of the UK's leading digital platforms for
employee and customer rewards, helping brands and businesses
attract, retain and delight customers and employees. Appreciate
Group has a well-established technology platform, more than 400,000
customers, a network of popular brand partners, and significant
headroom for growth across the large and growing UK gift card and
voucher market, which is valued in excess of GBP8 billion per
annum. As indicated previously, the acquisition is expected to be
earnings enhancing on an adjusted basis in FY24 and will deliver
attractive returns for shareholders, opening up further revenue
opportunities and expanding our capabilities in the gifting,
rewards and prepaid savings markets.
Our partnership philosophy across the Group, combined with an
intensity and focus on execution, is already unlocking new markets
and revenue opportunities for us. We were particularly delighted to
announce our new partnership with The Federation of Independent
Retailers (The Fed) on 3 May 2023 to create a network of Park
Christmas Savings Super Agents. This is the first major initiative
announced following the completion of the acquisition of Appreciate
Group. The deal will see our two organisations working together to
create an initial network of 1,500 Super Agents in FY24 for the
Christmas 2024 savings season, with retailers recruiting savers in
their area and creating an additional opportunity to earn over
GBP1,000 per annum from the service. This is reflective of the
strength of our relationship with The Fed, their executive team and
member base, and more broadly the partnership approach that we have
adopted across the Group to enhance our relationships and unlock
further growth opportunities across new and existing markets.
Furthermore, our Open Banking partnership with OBConnect has
enhanced our integrated payments platform and already yielded
positive results, particularly with our new PayPoint OpenPay
service with Ovo to support Alternative Fuel Payments and rolling
out our Confirmation of Payee service with the Department of Energy
Security and Net Zero. 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 and improve customer
support to those in need.
Accelerated revenue growth and momentum across all business
divisions
Shopping
In Shopping, our retailer partner and SME propositions have been
enhanced further with strong take up and positive feedback from our
partners. The overall PayPoint network and PayPoint One estate have
grown again this year and our broader commitment to our retailer
partners to deliver further value and opportunities to earn has
delivered an increase to retailer commission paid out of over +15%
year on year. New services and transaction volumes have driven this
positive impact to retailer partner revenues, including our Counter
Cash solution, which is now enabled in 5,680 sites, with 1,930
sites transacting regularly and over GBP42.9 million withdrawn in
the financial year, and good growth in our FMCG consumer engagement
proposition, PayPoint Engage, delivering brand campaigns leveraging
our PayPoint One platform, advertising screens and i-movo
vouchering capability.
In Handepay, we have ended the year with our strongest ever
sales performance in H2 FY23 and have returned the EVO merchant
book back to growth, ending the year at 18,397 sites, with the
sales team now at full headcount and in spite of recruitment
challenges experienced earlier in the financial year. This positive
progress since H1 FY23 has been driven by the enhanced proposition,
new Android terminal and the increased optimisation of our sales
efforts in the Handepay business; and in PayPoint, improved cards
pricing and next day settlement were launched for new and existing
merchants. As we move into the new financial year, we look forward
to accelerating our cards business further and proactively
targeting the mid-market merchant segment with a dedicated team. We
will continue our focus on equipping our people with better data,
AI tools and analytics to have quality conversations with retailer
partners/SMEs and a stronger focus on retention and yielding
improved conversion rates. In addition, the positive performance of
Business Finance via YouLend across both PayPoint and Handepay was
particularly pleasing, supporting our retailer and SME partners
during the current economic challenges.
We have continued our extensive efforts to strengthen our
retailer partner relationships and drive adoption of these new
opportunities to earn, including regular face to face store visits
and 'cash and carry' days, new retailer forums, 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). The feedback and support received
from these organisations has been critical to our continued
commitment to support our retailer partners in delivering vital
community services across the UK and responding to changing
consumer needs in the UK convenience sector.
E-commerce
In E-commerce, our year-on-year performance has been excellent,
driven by our strength in the clothing and fashion categories, the
continued expansion of new services with carrier partners,
including Amazon and Wish.com, and the in-store experience from
investment made in Zebra label printers over the past 18 months. In
each of our carrier relationships, we have developed plans for the
year ahead to grow volumes further through our network and to
continue enhancing the in-store customer experience. We were also
pleased to support Royal Mail business customers in 1,455 sites in
September and October to keep mail moving during the recent
industrial action.
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. Our Payment
Exception Service, delivered for the Department for Work and
Pensions, recorded significant growth year on year, after launching
in August 2021 and making a contribution for half of the previous
financial year. We were delighted that the service received three
industry accolades for Social Inclusion in Financial Services at
the recent Payment Awards, FSTech Awards and Card and Payments
Awards, underlining the vital role our solutions play in serving
some of the most vulnerable people in the UK.
Similarly, over GBP246 million of Energy Bills Support Scheme
vouchers were redeemed across our extensive network of over 28,000
retailer partners from October 2022 to March 2023, providing a
GBP400 payment over the winter months to households across the UK.
This vital support for consumers to help with the Cost of Living
leveraged our Cash Out digital capability. All of these efforts
have been underpinned with greater engagement with key senior
stakeholders across the sectors we operate in, including Ofgem, UK
Finance, Pay.UK and the Department of Energy Security and Net
Zero.
Further progress on our ESG commitments
Our Environment, Social and Governance (ESG) strategy has also
developed further in the year, as we consider our social
responsibility and impact as an Executive team and business towards
each of these key areas. In July 2022, we fulfilled our commitment
to ensure all employees are paid a minimum of the Real Living Wage
and Electric Vehicle charging points have now been installed at our
head office, supporting the use of electric vehicles by our
employees and visitors. An inaugural Pride Month programme was
launched in June 2022, as part of our 'Welcoming Everyone'
activities, providing educational content, further meetings of our
LGBTQ+ network and events to bring colleagues together, building on
our commitments to diversity, equity and inclusion and supporting
our vision to create a dynamic place to work. We also partnered
with Citizens Advice and Advice Scotland to support important Cost
of Living targeted consumer campaigns across our network, via
receipt advertising, social media and retailer communications.
Update on claims against PayPoint
As announced on 29 March 2023, the Group received 'letter before
action' correspondence from a small number of market participants
relating to 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 Ofgem
resolution to the case did not include any infringement
findings.
Claims have now been served by Utilita Energy Limited and
Utilita Services Limited ("Utilita") and Global-365 plc and Global
Prepaid Solutions Limited ("Global-365"). The Group is continuing
to take legal advice on these two claims and its position is
unchanged. It rejects both claims in their entirety and intends to
vigorously defend its position.
The Group 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.
The Group will continue to update the market on a quarterly
basis as part of its financial reporting cycle.
Outlook and dividend
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
further progress in the current financial year and meeting
expectations.
The opportunity to deliver enterprise level solutions, combining
our extensive capabilities, is significant and enables us to deepen
our relationships with existing clients as well as expanding into
new verticals.
Trading early in the current financial year has been positive,
as we have confirmed in our Q1 FY24 trading update, continuing the
performance seen in FY23. 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
proposition and positive new business growth in key target
sectors.
As we continue to integrate the Appreciate Group into our
business, we have been giving careful thought as to the key
performance metrics for the L2S activities, considering the
importance of growing billings as an early indicator of progress,
strong cash generation and its contribution to the EBITDA of the
business as a whole and the recognition of profit from a business
model which incorporates, management / service fees, interest on
cash balances and revenue from non-redemption income. In the
current year we are focused on driving the immediate key
performance indicator of billings in Park Christmas Savings and
Love2shop through our extensive plans to grow the core business,
expand areas of cooperation across the business and unlock new
revenue opportunities as we leverage the expanded capabilities of
the wider Group.
In confirming our own positive trading outlook, we are alert to
the potential impact on consumers from the broader economic
challenges, including any changes to consumer behaviours in the
energy sector, all of which we monitor closely across the
business.
The Board has proposed an ordinary final dividend of 18.6p per
share, an increase of 3.3% vs the final dividend declared on 26 May
2022 of 18.0 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 Wiles
Chief Executive
27 July 2023
MARKET OVERVIEW
Key trends and changes during the FY22/23 financial year in the
UK markets in which PayPoint operates include:
Macro-economic factors
-- The Consumer Prices Index (CPI) grew to 10.2% in March 2023, driven by
increased food and energy costs.7
-- The GfK UK Consumer Confidence Index2 rose six points to -30 in April
2023 (vs -36 in March 2023), and up 19 points from a historic low of -49
in September 22 and -45 in January.8
-- UK retail sales volumes rose by 0.6% in the three months to March 2023
when compared with the previous three months; the first three-month on
three-month rise since August 2021.9
-- GDP is projected to contract in 2023 as tighter financial conditions
weigh on consumer spending -- which accounts for around two-thirds of the
economy.10
Convenience retail
-- Lumina Intelligence's current full-year valuation estimate for the UK
convenience market is GBP47.3 billion, up 4.6% from GBP45.2 billion in
2022.11
-- Convenience shoppers are reducing frequency of visits (-4%). However,
high inflation and an increase in basket size has driven an increase in
average basket spend of GBP7.70, +12.7% year-on-year with the average
basket size up 4% to 2.8 items.12
-- In-store purchasing has increased year-on-year up 2.4%, with delivery
occasions losing 2.2% of share. Shoppers are using delivery services less
frequently due to a shift towards returning to pre-pandemic habits as
well as increased price sensitivity.13
-- PayPoint One basket data shows the average goods only convenience store
average basket spend (May 22 to April 23) increased to GBP7.06 vs GBP6.92
the previous period. 66% of the purchases were made by cash and 34% by
card which is a 3% decrease in cash use on the previous period.14
-- Total UK convenience store numbers remained resilient in 2022, with
marginal growth of 0.6% to 47,861.15
-- In 2022 the sector saw the biggest growth in the number of Co-Operatives
up 78 (+2.3%) to 3,394 and a decline of 71 (-1.5%) to 4,790 in Forecourt
convenience stores.16
-- In a Consumer Home Delivery review 2022/23, IMRG found consumers prefer
to collect orders, purchased via click and collect from a convenience
store (60%) than a retailer's own store (48.7%)17
Card payments
-- In 2021, 57% of all payments in the UK were made using cards.18
-- From February 2022 to Februray 2023, there were 25.8 billion card
transactions in the UK.19
-- In the financial year, card payment volumes increased by 4.5% year on
year across the PayPoint Group, with growth seen across the Handepay,
PayPoint and RSM 2000 books.
-- Latest UK Finance data shows GBP57.7 billion was spent on debit cards in
February 2023 up 8.2% on February 2022 and GBP17.3 billion on credit
cards which was a 9.8% increase on the previous year. The number of debit
card transactions were up 9% to 1,800 million and credit transaction were
up 7.1% year on year to 304 million transactions.20
-- In the SME markets that our Handepay business serves, businesses
employing 0-49 people, account for 99% (5.47 million) of the total UK
business population, 77% (4.1 million) of the businesses have no
employees, with 12% (1.1 million) classed as micro-businesses with 0-9
employees. Retail, auto trade and hospitality businesses make up circa
14% of the SME sector.21
Cash Economy
-- From October 22 to March 2023, GBP249 million in GBP400 payments were
distributed across our network of 28,000 stores for the Governments
Energy Bills Support Scheme.
-- Our Payment Exception Service, run for the Department for Work and
Pensions, won three industry awards for Social Inclusion in Financial
Services and has grown year on year underlining the continuing importance
of delivering cash payments to those without access to a standard bank
account.
-- Latest data from LINK's March 2023 report show ATM transactions were 127
million, 5.4% lower than March 22, and that each month in 2023 has seen
volumes below 2022, however it was 11% higher than March 21, which was
still during a period of lockdown. The value withdrawn also fell by 1.7%
compared to March 22, a smaller reduction than volumes as the average
withdrawal value continued to rise and the GBP6.8 billion withdrawn in
March remains a very significant amount of cash.
-- ATM coverage across the UK in 2023 continues to be broadly stable and
consistent, with a very slow decline in non-branch free-to-use ATMs in
the last year. Branch and charging ATM numbers continue to decline at a
faster rate as bank branches close and host locations decide they no
longer need charging ATMs or no longer take in enough cash to replenish
them.22
-- PayPoint's Counter Cash service, which offers cashback without purchase
and balance enquiries over the counter continues to grow and is now
available in over 5,680 PayPoint stores across the UK with over GBP1m of
withdrawals per week with almost a third of the withdrawals for amounts
not available from traditional cash machines.
Parcels
-- According to IMRG's Consumer Home Delivery Report UK, online retail sales
fell -10.5% year on year in 2022
-- Consumers choosing a third-party click and collect location prefer a
staffed location (55%) rather than a self-serve locker-type site (13%),
and they generally would travel two to five miles (68.2%) to pick up the
item.23
-- Click & collect from a retailer's store is the standout consumer choice,
but when asked if they could choose a click & collect location, more
consumers selected a convenience store/supermarket (60%) than the
retailer's own store (48.7%).24
-- UK, non-food retail sales are forecasted to increase from GBP242.7bn to
GBP248.9bn in 2023 -- an increase of GBP6.2bn or 2.6% in value terms.
However, volume growth is predicted to decline 4.9% which reflects an
inflationary rise in prices rather than an actual increase in the
quantity of goods purchased.25
-- This contrasts with the strong performance seen in the Collect+ network
which has seen excellent volume growth year on year in Collect+, driven
by strong partnership approach with carrier partners, our positive
reputation as the leading carrier agnostic Out of Home network, and
backed up by continued investment into the in-store customer experience.
-- The Out of Home (OOH) market comprises click and collect, returns and
send propositions. The click and collect market is 11% of all volumes
with 150 million parcels per year and is expected to double by 202526.
Returns and send volumes are estimated at c.185 million and c.380 million
parcels per year respectively.27
Bill payments and top-ups
-- 2022 was a much more stable year for the energy supplier market with only
four suppliers exiting the market, leaving 23 active suppliers, down from
51 suppliers at the beginning of 2021.28
-- In October 2022, the UK Government introduced the Energy Bills Support
Scheme which gave every household a GBP400 discount on their household
energy bills which was paid in installments over six months from October
22 to March 23.
-- In August 22, Ofgem announced the Default Tariff Cap would be updated on
a quarterly basis rather than every six months so that it can reflect the
changes in the cost of energy sooner.
-- The dual fuel energy price cap for pre-pay customers for April to June
2023 decreased to GBP3,325 from the high of January to March 2023 of
GBP4,358.29
-- Non-Big Six energy providers combined market share increased marginally
to 29.6%17 at the end of January 2022 (29% as of 31 March 2021).30
-- At the end of 2022, 31.3 million smart and advanced meters were in homes
and businesses across the UK, with 55% of all meters are now smart or
advanced. A total of 3,7 million meters were installed in 2022 a decrease
of 4% on 2021 total.31
-- PayPoint data shows the average number of customer energy top up-ups per
year is slightly down at 38.3 vs. 38.9 top up transactions with the
overall average spend increasing to GBP708.25 vs GBP578.80 the previous
year due to the increase in energy prices.32
-- The number of mobile pre-pay (pay-as-you-go) subscriptions declined to
21.5 million in April 2022, from 22.2 million in April 202133
Open Banking
-- Over 7 million consumers and businesses (of which 750,000 are SMEs) are
using innovative Open Banking enabled products and services to manage
their money and to make payments. 34
-- In 2022, Authorised Push Payment (APP) fraud losses were GBP485.2 million
(down 17%) with protections such as Confirmation of Payee sighted as
having an impact on the reduction. With our partners, obconnect, we have
processed 25 million CoP requests in the last year, with an estimated 12%
of those helping to prevent fraudulent transactions35
-- Open Banking payments have more than doubled, with over 68 million open
banking payments in 2022 (up from 25 million in 2021)36
-- Since going live with our PISP payment solution at the beginning of May
23, we have processed over 57,000 payments for our first energy client
with the number rising each day as customers begin to adopt this new
payment method.
-- OpenBanking.org have highlighted some of the most common financial
challenges and how Open Banking enabled tools can offer ways for
consumers to take greater control of their finances, by consenting to
share their banking data, they can get a clear view of all their
incomings and outgoings to help them better understand their finances,
access affordable credit, particularly if they don't meet traditional
lending criteria and to understand their eligibility to switch to an
affordable energy tariff.37
Gift Cards and Vouchers
-- The UK Gift Card market is estimated to be worth GBP7.2 billion in 2022,
up from GBP6.8 billion in 2021. The year-on-year growth was driven by the
rise of contactless payments, and the growing trend of employers offering
gift cards as a perk to employees.38
-- Gift cards continue to encourage additional spend, with around two-thirds
of shoppers typically spending more than the value of gift card they
received over 2022. Younger shoppers (Gen Z) are willing to spend triple
the amount of a gift card they are redeeming.32
-- The B2C market has grown 13.3% against a backdrop of retail sales that
have faced difficulties due to inflation and cost of living.32
-- The B2B sector represents 57.4% of the total market in 2022 below the
highs of 67.3% seen in 2020 which bring the market more in line with the
B2C market post Covid. 32
-- The average monthly proportion of UK consumers purchasing gift cards for
someone else remained robust over 2022, at 18.0% vs 18.5% in 2021.32
-- UK retail spend forecasted to be GBP380bn +3% on PY due to inflation
+7.7%, triggering a -4.6% decline in volume of shoppers (particularly the
less affluent)32
-- In April 2023, 34.5% of UK consumers bought gifts and gift cards. A
decline on PY April from 37.5%32
-- 11% of those that did not purchase gift cards said this was because they
have cut back on non-essential spending32
-- Proportion of consumers purchasing gift cards for someone else in April
was 15.8% compared to 16.7% on PY April (a notable decline)32
-- 7.4% purchasing for self use was also lower than 7.8% on PY April32
-- Digital continues to increase in popularity. The proportion of digital
cards through employee benefit programme was 12.2%, +9.3% on the month
prior32
-- Proportion of gift card buyers purchasing digital cards in April
increased to 26.8% from 25.9% during the month prior -- a
continuing trend32
-- This is at the expense of online purchasing on physical gift cards: 33.1%
of gift buyers in April '23 compared to 40.4% in PY32
-- Multistore gift cards see more significant YOY decline: share of 33.9% in
April'23 compared to 41.1% in April 2022. However, they should be well
placed to benefit from the post pandemic return to physical shopping as a
hobby. Retail gift cards have experienced a lower decline as a result of
this activity32
-- 18.2% purchased experience gift cards in April compared to 26.6% in 2022.
Those purchasing for leisure activities also saw a decline from 18.2% in
2022 to 14% in 202332
-- 39.5% of consumers received at least one gift card over the last three
years through work rewards or incentives.39
PROGRESS AGAINST OUR STRATEGIC PRIORITIES
SHOPPING BUSINESS DIVISION -- FY23 net revenue GBP62.0m (FY22:
GBP58.7m)
PRIORITY 1: EMBED PAYPOINT GROUP AT THE HEART OF SME AND
CONVENIENCE RETAIL BUSINESSES
FY23 Progress
-- SME and retailer proposition enhanced across Handepay and PayPoint card
services: new Android terminal launched in Handepay with positive
merchant feedback, supported by one-month contracts and next day
settlement delivered in FY23; improved pricing and next day settlement
launched for new PayPoint card payment merchants from 1 July 2022 and to
existing customers in October 2022, boosting cash flow to our retailer
partners
-- Strongest ever sales performance delivered in H2 FY23 and a largely
full-strength sales team recruited across Handepay and PayPoint,
following recruitment challenges experienced in H1 FY23. This positive
momentum has been supported by our most competitive and attractive
proposition ever and a more detailed focus on customer service and
retention, leveraging our AI and data analytics capabilities
-- Further expansion of Counter Cash, now enabled in 5,680 sites and with
1,930 sites transacting regularly in the year, with over GBP42.9 million
withdrawn in the financial year, offering vital access to cash over the
counter and complementing the existing ATM estate
-- Positive performance of Business Finance via YouLend with over GBP12.5
million lent, supporting our retailer and SME partners during the current
economic challenges
-- FMCG -- good progress with a number of FMCG brand campaigns delivered in
the second half and strong pipeline of future activity, partnering with
Coca-Cola, Amazon, AG Barr and JTI. Our consumer engagement solution for
brands, PayPoint Engage, leverages our PayPoint One platform, advertising
screens and i-movo vouchering capability to help our retailer partners
drive sales and help brands engage thousands of consumers across our
network, with redemption rates of up to 40%
-- Retailer engagement - positive progress made on retailer partner Net
Promoter Score and satisfaction, supported by regular engagement with key
trade associations, launch of new retailer forums with the Scottish
Grocer's Federation and National Federation of Retail Newsagents and a
comprehensive communications programme to drive new services and
opportunities to drive revenue for our retailer partners
E-COMMERCE BUSINESS DIVISION --FY23 net revenue GBP7.3m (FY22:
GBP4.9m)
PRIORITY 2: BECOME THE DEFINITIVE TECHNOLOGY-BASED E-COMMERCE
DELIVERY PLATFORM FOR FIRST AND LAST MILE CUSTOMER JOURNEYS
FY23 Progress
-- New partnerships launched in Q4 FY23 with Yodel for store-to-store
parcels and InPost for locker to store parcels
-- Partnership launched with Wish.com in H1 FY23, one of the largest
ecommerce marketplaces in the world, enabling consumers to
click-and-collect at over 1,600 Collect+ sites
-- Amazon returns rollout expanded to over 2,000 sites and further
integrations rolled out for Print In Store, which saw significant growth
in H2 FY23
-- Rapid rollout of 1,455 Collect+ sites in September and October to support
Royal Mail business customers, helping keep mail moving during industrial
action
PAYMENTS & BANKING BUSINESS DIVISION -- FY23 net revenue
GBP56.2m (FY22: GBP51.5m)
PRIORITY 3: SUSTAIN LEADERSHIP IN 'PAY-AS-YOU-GO' AND GROW
DIGITAL BILL PAYMENTS
FY23 Progress
-- Continued strong progress in digital transactions, with growth of +53.0%
year on year, and further expansion of our client relationships with our
enhanced integrated payments platform, including launching direct debit
with POBL Housing, our new PayPoint OpenPay service with Ovo to support
Alternative Fuel Payments, and rolling out our Confirmation of Payee
service with the Department of Energy Security and Net Zero, leveraging
our Open Banking capability
-- Our Payment Exception Service, delivered for the Department for Work and
Pensions, recorded significant growth year on year with net revenue +179%
to GBP4.4m (FY22: GBP1.6m) and transactions +317% to 12.5m (FY22: 3.0m).
The service received three industry accolades for Social Inclusion in
Financial Services at the recent Payment Awards, FSTech Awards and Card
and Payments Awards, underlining the vital role our solutions play in
serving some of the most vulnerable people in the UK
-- Over GBP246 million of Energy Bills Support Scheme vouchers redeemed
across our extensive network of over 28,000 retailer partners from
October 2022 to March 2023. PayPoint partnered with 9 energy providers to
deliver the Energy Bills Support Scheme, providing a GBP400 payment over
the winter months to households across the UK. This vital support for
consumers to help with the Cost of Living leveraged our Cash Out digital
capability
-- Cash through to digital -- good progress in expanding client base and
services provided in gifting (Netflix and Google Play) and neo banks
(Monzo and JP Morgan Chase), to complement existing gaming portfolio
-- Cash through to digital - consumer awareness campaign for gifting
expanded with over 10,000 display units rolled out to stores across the
UK ahead of key Christmas trading period, including major multiple groups
like Midcounties Co-operative, promoting our portfolio including Amazon,
Xbox, PlayStation, Paysafe and Love2shop
PRIORITY 4: BUILDING A DELIVERY FOCUSED ORGANISATION AND
CULTURE
PAYPOINT GROUP
FY23 Progress
-- Good progress against our ESG programme, including commitment to ensure
all employees are paid a minimum of the Real Living Wage delivered in
July 2022, 5 electric vehicle charging points installed at our Welwyn
Garden City head office in November 2022, and Diversity, Equity and
Inclusion training delivered in January 2023
-- Delivered a comprehensive programme of 'Welcoming Everyone' activities,
building on our commitments to diversity, equity and inclusion and
supporting our vision to create a dynamic place to work: including our
inaugural Pride Month programme launched in June 2022, providing
educational content and further meetings of our LGBTQ+ network;
International Women's Day events across the Group; and an external
speaker session focused on life over 50
-- Love2shop (formerly known as Appreciate Group) recognised as one of the
UK's Best Workplaces(TM) 2023 by Great Place to Work(R) UK
-- Partnered with Citizens Advice and Advice Scotland to support important
Cost of Living targeted consumer campaigns across our network, via
receipt advertising, social media and retailer communications
-- Continued progress 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, the completion of infrastructure consolidation work resulting in
reduced energy use at the PayPoint head office, the highest levels of
service availability delivered with 100% uptime achieved on core
processing systems and a continued focus on cyber-security, with the
rollout of a new SAST and DAST scanning tool across engineering teams and
the launch of a Bug Bounty programme
LOVE2SHOP DIVISION (FORMERLY KNOWN AS APPRECIATE GROUP)
NB. Progress in this division is shown for the full financial
year pre-acquisition. There is a one-month contribution to FY23
preliminary results following completion of the acquisition on 28
February 2023
FY23 Progress
-- Park Christmas Savings completed fulfilment of its Christmas 2022 order
book - this was 2% lower than prior year which was a significant
improvement on recent trends and ahead of expectations, underpinned by
record levels of retention and conversion. The savings cycle for
Christmas 2023 is well underway and as part of the strategy to return to
growth, the order book is expected to be c2% higher than prior year, the
first growth in the order book in 6 years
-- Love2shop Business saw strong levels of new business growth in client
numbers, increasing by 19% on prior year
-- 49 new retail partners added across the Love2shop platforms, adding to
appeal and breadth of choice for consumers, including Sports Direct, The
Entertainer and B&M, and Trustpilot score increased to 4.8/5
-- Building on the strong momentum in both Park Christmas Savings and
Love2shop, integration work is already well underway, unlocking
commercial revenue enhancements and continuing our focus on
organisational alignment
-- A small profit was generated in March 2023, before taking into account
any acquisition related amortisation and financing costs. The business is
of a seasonal nature where profit is primarily generated in Q3 of the
financial year
FY24 STRATEGIC PRIORITIES
Our strategic priorities have been refreshed for the FY24
financial year to reflect the expansion of our business and
materially enhanced platform across the Group delivering
sustainable, profitable growth and enhanced rewards for our
shareholders.
SHOPPING BUSINESS DIVISION
PRORITY 1 - EMBED PAYPOINT GROUP AT THE HEART OF SME AND
CONVENIENCE RETAIL BUSINESSES
-- Continue to enhance the retailer proposition, driving retention and
delivering more opportunities to earn for retailer partners
-- Launch next generation retail technology into PayPoint network
-- Build on the strong momentum in Cards business, with a continued focus on
sales and retention and the development of our SME proposition
-- Begin the process to become a Payment Facilitator, bringing all new
business under a single acquirer
E-COMMERCE BUSINESS DIVISION
PRIORITY 2: BECOME THE DEFINITIVE TECHNOLOGY-BASED E-COMMERCE
DELIVERY PLATFORM FOR FIRST AND LAST MILE CUSTOMER JOURNEYS
-- Deliver carrier expansion plans ahead of peak 2023 trading, including
rolling out additional sites and volume for Amazon, DPD and Yodel
-- Expand successful print in-store service to entire Collect+ store network
-- Launch new Yodel Store to Store service for Vinted, building on excellent
volume growth over last 12 months
PAYMENTS & BANKING BUSINESS DIVISION
PRIORITY 3: GROW INTEGRATED PAYMENTS PLATFORM ACROSS CARDS,
DIRECT DEBIT AND OPEN BANKING
-- Drive further growth in our integrated payments platform, MultiPay, with
a continued sector focus on housing, charities and local government
-- Build on the strong momentum in Open Banking, working with OBConnect, to
expand services for existing and new clients
-- Reinforce PayPoint's position as the leader in disbursement services for
central and local government
LOVE2SHOP BUSINESS DIVISION
PRIORITY 4: REINFORCE LEADERSHIP POSITION IN GIFTING, REWARDS
AND PREPAID SOLUTIONS
-- Strengthen Love2shop's position as the market-leading, multi-retailer
gifting provider
-- Grow Park Christmas Savings billings, through enhanced marketing activity
and launch of Super-Agent network across PayPoint retailer base
-- Unlock further growth in Corporate business for Love2shop, leveraging the
client base across PayPoint Group
-- Accelerate technology development plans to enhance client integrations
and capabilities
PAYPOINT GROUP
PRIORITY 5: BUILDING A DELIVERY FOCUSED AND INCLUSIVE
ORGANISATION
-- Complete successful integration of Love2shop and launch of Northern Hub
-- Deliver secure and resilient technology platform and services to all
partners and launch improvements to core billing/settlement systems
-- Make further progress on our ESG approach across the enlarged business to
deliver responsible and sustainable value for shareholders
-- Continue our 'Welcoming Everyone' programme
-- Execute with intensity and accountability
KEY PERFORMANCE INDICATORS
PayPoint Group has identified the following KPIs to measure
progress of business performance:
KPI Description, purpose and reference 2022/23 2021/22 2020/21
-------------- -------------------- -------------------------------------------------- ------- ------- -------
Revenue from continuing operations less
commissions paid to retailers and Park
Christmas agents and costs where the Group
is principal for SIM cards and single retailer
vouchers. This reflects the benefit attributable
to the Group's performance eliminating
Net revenue pass-through costs and is an important
from continuing measure of the overall success of our strategy.
Overall operations (See Financial review -- 'Overview' on
performance (GBP million) page 16) 128.9 115.1 97.1
-------------- -------------------- -------------------------------------------------- ------- ------- -------
This measures our earnings from continuing
operations before interest, tax, depreciation
and amortisation and exceptional items.
This is an important measure as it is widely
used by investors, analysts and other interested
Underlying parties to evaluate profitability of companies
EBITDA (See Financial review -- 'Overview' on
(GBP million) page 17) 61.3 58.2 46.6
-------------------- ----------------------------------------------------------------- ------- ------- -------
Underlying profit before tax (profit before
tax excluding adjusting items), provides
Underlying a measure of the operational performance
profit before of the Group. This reflects the rebalancing
tax (profit of the business towards growth opportunities,
before tax the shift away from our legacy cash payments
excluding business and is an important measure of
adjusting the overall success of our strategy.
items) (See Financial review -- 'Overview' on
(GBP million) page 16) 50.8 48.0 36.9
-------------------- ----------------------------------------------------------------- ------- ------- -------
Net corporate debt represents cash and
cash equivalents excluding cash recognised
as clients' funds, retailer partners' deposits,
and cash and voucher deposits, less amounts
borrowed under financing facilities (excluding
IFRS 16 liabilities). This shows how the
Group is utilising its finance facilities
to invest in growth, and will be an important
measure of how the Group intends to deleverage
Net corporate over the next few years.
debt (See Financial review -- 'Group statement
(GBP million) of financial position' on page 22) 72.4 43.9 68.2
-------------------- ----------------------------------------------------------------- ------- ------- -------
Profit before tax from continuing operations
excluding exceptional items, tax, depreciation
and amortisation, and adjusted for corporate
working capital movements (excludes movement
Cash generation in clients' funds, retailers' deposits,
from continuing and card and voucher deposits). This represents
operations the cash generated by operations which
excluding is available for investments, capex, taxation
exceptional and dividend payments.
items (See Financial review -- 'Group Cash flow
(GBP million) and liquidity' on page 22) 62.3 53.9 46.9
-------------------- ----------------------------------------------------------------- ------- ------- -------
Diluted earnings per share excluding adjusting
items (earnings from continuing operations
excluding adjusting items) divided by the
Diluted earnings weighted average number of ordinary shares
per share in issue during the year (including potentially
from continuing dilutive ordinary shares). Earnings per
operations share is a measure of the profit attributable
excluding to each share.
Shareholder adjusted items (See note 7 to the financial information
returns (Pence) on page 45) 60.3 55.4 43.4
-------------- -------------------- -------------------------------------------------- ------- ------- -------
Dividends (ordinary) paid during the financial
year divided by number of ordinary shares
in issue at reporting date. Dividends paid
Dividends per share provides a measure of the return
paid per share to shareholders.
(Pence) (See Financial review -- 'Dividends' on
(Group) page 23) 34.6 33.6 31.2
-------------------- ----------------------------------------------------------------- ------- ------- -------
Network stability
one-mile urban Total urban population covered within a
population one-mile radius of a PayPoint site. This
cover is monitored to ensure PayPoint are above
Non-financial (%) our minimum SLA of 95%. 99.3 99.2 99.4
-------------- -------------------- -------------------------------------------------- ------- ------- -------
Network stability
five-mile Total rural population covered within a
rural population five-mile radius of a PayPoint site. This
cover is monitored to ensure PayPoint are above
(%) our minimum SLA of 95%. 98.5 98.2 98.3
-------------------- ----------------------------------------------------------------- ------- ------- -------
The percentage of the retailer partner
network, that on an annual basis, exits
PayPoint. This is calculated by taking
the number of retailers who exited PayPoint
in the period (excluding suspended sites),
divided by the average number of total
Retailer partner UK retailer partner sites for the period.
site churn This helps track the movement in total
(%) UK retailer partner sites. 7.2 5.3 3.6
-------------------- ----------------------------------------------------------------- ------- ------- -------
Measures the overall employee engagement,
calculated by our survey provider. The
survey provides insight into the health
of our organisation, enabling the identification
Employee engagement of what is important to our people so that
(%) appropriate action can be taken. 71.0 72.0 77.0
-------------------- ----------------------------------------------------------------- ------- ------- -------
FINANCIAL REVIEW
The completion of the acquisition of Appreciate Group plc
(Appreciate)
in February 2023 was the latest step in the three years of our transformation away from our traditional cash markets towards digital. Our Corporate activity started in April 2020 with the buyout of our JV partner in Collect+, our parcels business, then acquisitions of i-movo for digital vouchering, Handepay/Merchant Rentals for cards business and RSM2000 for Direct Debits. In addition, investments have been made in OBConnect, our Open Banking partner and Optus Homes in the Housing sector. PayPoint sold its Romanian business at the start of the prior year and that is the discontinued operations in the table below, the focus of the review therefore is on continuing operations.
The Appreciate acquisition is now referred to as our Love2shop
(L2S) division and is reported as a separate segment. The financial
review discusses the whole Group as well as the two segments so
that shareholders can understand the one-month L2S impact
separately from our historic PayPoint business which had another
strong year.
2
Re-presented(40)
Year ended Year ended
31 March 31 March Change
GBPm 2023 2022 %
----------------------------------------------------------
PayPoint segment 160.1 145.1 10.3%
Love2shop segment 7.6 - n/m
----------------------------------------------------------
Total revenue continuing operations 167.7 145.1 15.6%
---------------------------------------------------------- ----------- ---------------- -------
PayPoint segment 125.5 115.1 9.1%
Love2shop segment 3.4 - n/m
Total net revenue continuing operations 128.9 115.1 11.9%
PayPoint segment (75.2) (67.1) 12.1%
Love2shop segment (2.9) - n/m
----------------------------------------------------------
Total costs continuing operations (78.1) (67.1) 16.4%
---------------------------------------------------------- ----------- ---------------- -------
PayPoint segment 50.3 48.0 4.8%
Love2shop segment 0.5 - n/m
Underlying profit before tax 50.8 48.0 5.8%
Adjusting items:
Amortisation of intangible assets arising on acquisition (2.6) (2.4) 8.3%
Exceptional items (5.6) 2.9 n/m
----------------------------------------------------------
Profit before tax from continuing operations 42.6 48.5 (12.4)%
Profit before tax from discontinued operations - 30.0 n/m
Profit before tax 42.6 78.5 n/m
---------------------------------------------------------- ----------- ---------------- -------
Underlying EBITDA(41) 61.3 58.2 5.2%
Cash generation 62.3 53.9 15.6%
Net corporate debt(42) (72.4) (43.9) 65.0%
Profit before tax from continuing operations of GBP42.6 million
(2022: GBP48.5 million) decreased by GBP5.9 million (12.4%). The
decrease reflects current year exceptional costs incurred of GBP5.6
million against the prior year exceptional income of GBP2.9
million.
The underlying profit before tax increased by GBP2.8 million
(5.8%) to GBP50.8 million (2022: GBP48.0 million). This result
includes GBP0.5 million profit on the Love2shop segment for one
month. This is due to the seasonal nature of the business where
profit is primarily generated in Q3 of the financial year. The
historic PayPoint segment underlying profit before tax increased by
GBP2.3 million (4.8%) to GBP50.3 million (2022: GBP48.0
million).
Total revenue from continuing operations increased by GBP22.6
million (15.6%) to GBP167.7 million (2022: GBP145.1 million). Net
revenue from continuing operations increased by GBP13.8 million
(11.9%) to GBP128.9 million (2022: GBP115.1 million), the one month
of L2S segment contributing GBP3.4 million. There were increases
across all our PayPoint segment business divisions with E-commerce
doing particularly well with 46.3% increase in net revenue over the
year.
Total costs from continuing operations increased by GBP11.0
million to GBP78.1 million (2022: GBP67.1 million). The increase in
costs was driven by the GBP2.9 million one-month additional cost
base from L2S segment together with increases in transactional
costs of revenue in relation to the growth of net revenue in
Payments and Banking. Exceptional costs of GBP5.6 million, which
are one-off, non-recurring and do not reflect current operational
performance, consisted of GBP4.0 million acquisition costs plus
GBP0.3 million interest cost as part of the acquisition proof of
funds requirement and GBP1.3 million in relation to the loss on
disposal of our investment in Snappy Shopper Ltd in October 2022.
The prior year exceptional income was the reversal of the i-movo
deferred, contingent consideration liability.
During the year, the Group updated its presentation of the
expense for amortisation of intangible assets arising on
acquisition. In order for the user to better understand the
operational performance of the business, the Group has changed from
presenting "Operating Profit before exceptional items" to
"Operating Profit before adjusting items". The impact of the
re-presentation is to decrease prior year "Administrative expenses
-- excluding adjusting items" by GBP2.4 million.
EBITDA is a new performance indicator highlighted this year, as
it is widely used by investors, analysts and other interested
parties to evaluate profitability of companies. Our key focus and
KPI is on Underlying EBITDA to understand the operational
performance, which excludes exceptional items and amortisation of
intangible assets arising on acquisition.
3
Year ended Year ended
EBITDA / Underlying EBITDA (GBPm) 31 March 2023 31 March 2022
-----------------------------------------------------
Profit before tax 42.6 48.5
Add back:
Net interest expense 2.6 2.0
Depreciation 4.9 4.8
Amortisation -- including amortisation of intangible
assets arising on acquisition 5.6 5.8
-----------------------------------------------------
EBITDA (GBPm) 55.7 61.1
----------------------------------------------------- -------------- --------------
Exceptional items 5.6 (2.9)
----------------------------------------------------- -------------- --------------
Underlying EBITDA (GBPm) 61.3 58.2
----------------------------------------------------- -------------- --------------
Cash generation grew to GBP62.3 million (2022: GBP53.9 million),
delivered from underlying profit before tax of GBP50.8 million
(2022: GBP48.0 million). There was a net working capital inflow of
GBP1.2 million primarily as a result of the net investment in
finance lease receivable reducing in line with expected repayments
and new terminal lease sales being made under the one month
operating lease proposition.
Net corporate debt increased by GBP28.5 million to GBP72.4
million (2022: GBP43.9 million) due to financing the acquisition of
Appreciate which had a GBP61.9 million cash element. At 31 March
2023 loans and borrowings were GBP94.4 million (2022: GBP51.5
million) which included GBP0.6 million (2022: GBP2.1 million) of
asset financing in Merchant Rentals.
PAYPOINT SEGMENT
Year ended Year ended
Continuing operations 31 March 31 March Change
GBPm 2023 2022 %
-----------------------------------------------------------
Revenue 160.1 145.1 10.3%
-----------------------------------------------------------
Shopping 62.0 58.7 5.6%
E-commerce 7.3 4.9 46.3%
Payments & Banking 56.2 51.5 9.1%
-----------------------------------------------------------
Net revenue 125.5 115.1 9.1%
----------------------------------------------------------- ---------- ---------- ------
Other costs of revenue (17.6) (11.0) 60.1%
Depreciation and amortisation (costs of revenue) (7.2) (7.6) (5.2)%
Depreciation and amortisation (administrative expenses)
excluding amortisation of intangible assets arising
on acquisition (0.4) (0.5) (5.0)%
Other administrative costs -- excluding exceptional
items (47.7) (46.0) 3.6%
Net finance costs -- excluding exceptional costs (2.3) (2.0) 14.7%
-----------------------------------------------------------
Total costs (75.2) (67.1) 12.1%
----------------------------------------------------------- ---------- ---------- ------
Underlying profit before tax (excluding adjusting
items) 50.3 48.0 4.8%
----------------------------------------------------------- ---------- ---------- ------
Shopping net revenue increased by GBP3.3 million (5.6%) to
GBP62.0 million (2022: GBP58.7 million). Service fees net revenue
increased by GBP1.3 million (8.3%) driven by additional PayPoint
One sites and implementing the annual RPI increase. Cards net
revenue increased by GBP1.3 million (4.3%) from Handepay/Merchant
Rentals performance partially offset by PayPoint cards. ATM and
Counter Cash net revenue decreased by GBP0.4 million (4.2%) due to
a reduction in transactions driven by the continuing trend of
reduced demand for cash across the economy. FMCG revenue also
increased by GBP0.3 million (330.0%) to GBP0.4 million (2022:
GBP0.1 million) following further campaigns run in the year.
E-commerce net revenue increased by GBP2.4 million (46.3%) to
GBP7.3 million (2022: GBP4.9 million), driven by strong growth in
total transactions which increased by 69.6% 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 increased by GBP4.7 million
(9.1%) to GBP56.2 million (2022: GBP51.5 million). Cash bill
payments net revenue decreased by GBP1.7 million (6.5%) as a result
of a decrease in bill payment transactions from the increase in
energy prices, Energy Bills Support Scheme (EBSS) and the continued
switch to digital payments. Cash top-ups net revenue decreased by
GBP0.5 million (6.2%) with volumes down 10.3% driven by the
continuing structural declines in the prepaid mobile sector.
Digital net revenue increased by GBP7.9 million (102.7%) driven by
our Cash Out services including a full year of the DWP Payment
Exception Service, delivered via i-movo, and MultiPay transactions
increased 24.6% as a result of more clients taking the digital
services. Cash through to digital, eMoney, net revenue decreased by
GBP1.3 million (16.5%) as a result of a 19.6% decrease in volumes
as the category is returning to pre-Covid-19 levels and a new
baseline is set for the category.
Commission to retailers cost increased by GBP4.6 million (15.2%)
to GBP34.4 million (2022: GBP29.8 million). This increase in
payment to our retailer partners is as a result of them processing
increased transactions as well as ones with higher commission rates
per transaction (e-Commerce and digital)
Total costs from continuing operations (excluding adjusting
items) increased by GBP8.1 million (12.1%) to GBP75.2 million,
primarily driven by transactional costs of revenue in relation to
the growth of net revenue, in particular the Energy Bills Support
Scheme printing and postage. There were inflationary cost increases
in administrative expenses of GBP1.0 million along with a one-off
provision of GBP0.7 million for outstanding funds due from McColls
with a claim for full recovery being progressed with the
administrator. This was partially offset by GBP0.5 million lower
depreciation and amortisation with some legacy assets coming to the
end of their life.
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.
Year ended Year ended
Net revenue (GBPm) 31 March 2023 31 March 2022 Change %
---------------------------------
Service fees 17.9 16.6 8.3%
Card payments 31.8 30.4 4.3%
ATMs and Counter Cash 9.4 9.8 (4.2)%
Other shopping 2.9 1.9 56.6%
---------------------------------
Total net revenue (GBPm) 62.0 58.7 5.6%
--------------------------------- -------------- -------------- --------
Net revenue increased by GBP3.3 million (5.6%) to GBP62.0
million (2022: GBP58.7 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.
Year ended Year ended
Service fees from terminals 31 March 2023 31 March 2022 Change %
------------------------------------
Net Revenue (GBPm) 17.9 16.6 8.3%
PayPoint terminal sites (No.)
PayPoint One Base 6,787 7,392 (8.2)%
PayPoint One EPoS Core 10,775 9,639 11.8%
PayPoint One EPoS Pro 891 1,089 (18.2)%
------------------------------------
Total PayPoint One -- revenue
generating 18,453 18,120 1.8%
PayPoint One Base non-revenue
generating 709 671 5.7%
------------------------------------
Total PayPoint One 19,162 18,791 2.0%
Legacy (T2) 142 214 (33.6)%
PPoS 9,174 9,249 (0.8)%
Total terminal sites in PayPoint
network 28,478 28,254 0.8%
PayPoint One average weekly service
fee per site (GBP) 17.8 17.0 4.7%
------------------------------------
As at 31 March 2023, PayPoint had a live terminal in 28,478 UK
sites, an increase of 0.8% primarily as a result of new PayPoint
One sites which increased by 2.0% to 19,162 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 GBP1.3 million (8.3%) to GBP17.9 million driven by the
additional 333 PayPoint One revenue generating sites compared to
the prior year. The higher price point EPoS Core sites increased by
1,136 due to new sales and upselling whilst EPOS Pro sites
decreased by 198 due to normal churn and no longer being actively
marketed.
The PayPoint One average weekly service fee per site increased
by 4.7% to GBP17.8, benefiting from the increase in EPoS Core sites
which are charged at a higher rate and the annual RPI increase.
Retailers taking the Core version of the product represent 56.2%
(2022: 51.3%) of all PayPoint One sites and the Pro version now
just represent 4.6% (2022: 5.8%). Legacy terminals now just remain
in a few of our multiple retailer partners but are being actively
replaced.
Year ended Year ended
Card payments and leases 31 March 2023 31 March 2022 Change %
--------------------------------------------------
Net Revenue (GBPm)
Card payments and leases -- Handepay and Merchant
Rentals 19.9 18.5 7.2%
Card payments -- PayPoint and RSM 2000 11.9 11.9 (0.2)%
--------------------------------------------------
Services in Live sites (No.)
Card payments -- Handepay 22,236 22,796 (2.5)%
Card terminal lessees -- Merchant Rentals 34,132 35,403 (3.6)%
Card payments -- PayPoint 9,541 9,666 (1.3)%
Card payments -- RSM 2000 138 147 (6.1)%
--------------------------------------------------
Transactions (Millions)
Card payments -- Handepay 150.1 145.0 3.9%
Card payments -- PayPoint 228.8 217.8 5.1%
Card payments -- RSM 2000 7.1 6.5 9.0%
--------------------------------------------------
Handepay and Merchant Rentals generated GBP19.9 million net
revenue in the year. Handepay card payments transactions increased
by 3.9% to 150.1 million, maintaining strong transaction volumes
seen in the previous year but at a lower average transaction value
of GBP29.30 (2022: GBP30.90). There were 22,236 Handepay card
payments sites, a decrease of 560 sites (2.5%) since 31 March 2022.
Handepay EVO sales increased in the year supported by the one-month
operating lease proposition but sites have been impacted by higher
churn, particularly in our Worldpay back book in this very
competitive market. The sales momentum in the second half of the
year has increased following the sales team being fully staffed and
the launch of the new android device.
PayPoint card payments transactions increased by 5.1% to 228.8
million while net revenue decreased by 3.1% to GBP10.7 million,
maintaining strong transaction volumes seen in the previous year
but at a lower average transaction value GBP10.70 (2022: GBP11.30).
Across our network there were 9,541 PayPoint card payments sites, a
decrease of 125 sites (1.3%) since 31 March 2022.
Year ended Year ended
ATMs and Counter Cash 31 March 2023 31 March 2022 Change %
-----------------------------
Net Revenue (GBPm) 9.4 9.8 (4.2)%
Services in Live sites (No.) 9,150 6,310 45.0%
Transactions (Millions) 30.1 30.6 (1.7%)
----------------------------- -------------- -------------- --------
Net revenue reduced by GBP0.4m (4.2%) to GBP9.4 million (2022:
GBP9.8 million) as transactions reduced by 1.7% to 30.1 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 45.0% to
9,150 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 7% of transactions (2022: 1%) with over
GBP42.9 million withdrawn in the financial year.
Other: Other shopping services increased by GBP1.0 million
(56.6%) to GBP2.8 million (2022: GBP1.8 million) this includes the
partnership with Snappy Shopper and FMCG campaigns.
E-COMMERCE
Year ended Year ended
Parcels 31 March 2023 31 March 2022 Change %
-----------------------------
Net Revenue (GBPm) 7.3 4.9 46.5%
Services in Live sites (No.) 10,514 10,049 4.6%
Transactions (Millions) 56.4 33.3 69.6%
----------------------------- -------------- -------------- --------
E-commerce net revenue increased by GBP2.4 million (46.5%) to
GBP7.3 million due to the increase in total parcels transactions by
69.6% to 56.4 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 4.6% to 10,514
sites.
PAYMENTS & BANKING
Year ended Year ended
31 March 2023 31 March 2022 Change %
---------------------------
Net revenue (GBPm)
Cash -- bill payments 25.0 26.7 (6.5)%
Cash -- top-ups 7.3 7.8 (6.2)%
Digital 15.7 7.8 102.7%
Cash through to digital 6.9 8.2 (16.5)%
Other payments and banking 1.3 1.0 42.3%
Total net revenue (GBPm) 56.2 51.5 9.1%
--------------------------- -------------- -------------- --------
Payments & Banking divisional net revenue increased by 9.1%
to GBP56.2 million as a result of continued growth in digital
transactions, particularly within the cash-out sector, partially
offset by fewer cash bill payments and top up transactions and
margin erosion from prior year client contract renewals.
Year ended
Year ended 31 March Change
Cash -- bill payments 31 March 2023 2022 %
------------------------------------
Net revenue (GBPm) 25.0 26.7 (6.5)%
Transactions (millions) 146.3 157.2 (6.9)%
Transaction value (GBPm) 4,245.9 3,932.3 8.0%
Average transaction value (GBP) 29.0 25.0 16.0%
Net revenue per transaction (pence) 17.1 17.0 0.6%
------------------------------------
Cash - bill payments net revenue only decreased by GBP1.7
million (6.5%) to GBP25.0 million changing from the much larger
decrease trends seen in recent years. The increase in energy
prices had seen customers in the front half of the year topping up
more frequently and with increased average transaction values.
Transactions were impacted in the second half of the year with the
government's Energy Bills Support Scheme (EBSS), although this
benefitted our digital business and the continued switch to digital
payment methods. Cash - bill payments transactions decreased by
10.9 million (6.9%) to 146.3 million. Cash - bill payments net
revenue per transaction increased by 0.1 pence (0.6%) due to higher
average transaction value.
Year ended
Year ended 31 March Change
Cash -- top-ups 31 March 2023 2022 %
------------------------------------
Net revenue (GBPm) 7.3 7.8 (6.2)%
Transactions (millions) 19.0 21.2 (10.3)%
Transaction value (GBPm) 236.8 257.6 (8.1)%
Average transaction value (GBP) 12.4 12.1 2.5%
Net revenue per transaction (pence) 38.4 36.8 4.4%
------------------------------------
Cash - top-ups net revenue decreased by GBP0.5 million (6.2%) to
GBP7.3 million. Cash top-ups transactions decreased by 2.2 million
(10.3%) to 19.0 million due to further market declines in the
prepaid mobile sector whereby UK direct debit pay-monthly options
displace UK prepay mobile.
Year ended
Year ended 31 March Change
Digital 31 March 2023 2022 %
------------------------------------
Net revenue (GBPm) 15.7 7.8 102.7%
Transactions (millions) 52.3 34.2 53.0%
Transaction value (GBPm) 1,307.6 756.6 72.8%
Average transaction value (GBP) 25.0 22.2 13.0%
Net revenue per transaction (pence) 30.4 22.5 35.0%
------------------------------------
Digital (MultiPay, Cash Out and Direct Debits) net revenue
increased by GBP7.9 million (102.7%) to GBP15.7 million and digital
transactions increased by 18.1 million (53.0%) to 52.3 million.
MultiPay net revenue increased by GBP0.9 million to GBP4.1 million
(2022: GBP3.3 million) with transactions growing by 6.6 million to
33.6 million. The DWP Payment Exception Service contributed GBP4.4
million net revenue in the year (2022: GBP1.6 million) following a
full year of transactions compared to six months in FY22. Cashout
revenue increased by GBP4.2 million (258.4%) to GBP5.9 million
(2022: GBP1.6 million) driven by Governments EBSS scheme in the
second half of the year with over GBP246 million worth of vouchers
redeemed.
Year ended
Year ended 31 March Change
Cash through to digital 31 March 2023 2022 %
------------------------------------
Net revenue (GBPm) 6.9 8.2 (16.5)%
Transactions (millions) 8.5 10.6 (19.6)%
Transaction value (GBPm) 496.3 505.2 (1.8)%
Average transaction value (GBP) 58.1 47.5 22.2%
Net revenue per transaction (pence) 81.2 77.4 4.9%
------------------------------------
Cash through to digital (eMoney) net revenue decreased by GBP1.3
million (16.5%) to GBP6.9 million (2022: GBP8.2 million) and
transactions decreased by 2.1 million (19.6%) to 8.5 million (2022:
10.6 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 GBP1.3 million (2022: GBP1.0
million) net revenue.
LOVE2SHOP SEGMENT
Year ended
Continuing operations 31 March
GBPm 2023
-----------------------------------------------------------
Revenue 7.6
-----------------------------------------------------------
Net revenue 3.4
-----------------------------------------------------------
Other costs of revenue (0.6)
Depreciation and amortisation (administrative expenses)
excluding amortisation on intangible assets arising
on acquisition (0.2)
Other administrative costs (1.8)
Net finance costs (0.3)
Total costs (2.9)
----------------------------------------------------------- ----------
Underlying profit before tax (excluding adjusting
items) 0.5
----------------------------------------------------------- ----------
Love2shop (L2S) results reflect the one month since the
acquisition on 28 February 2023. L2S had GBP14.8 million of
Billings which represents value of goods and services sold. This
reduces to GBP7.6 million of revenue to adjust for the portion
where the performance obligation occurs later as the cards and
vouchers are redeemed. When L2S sells a card or voucher that can be
redeemed at a single retailer the full value is treated as revenue
as L2S acts as the principal. When the product is multi-retailer,
L2S only recognises the service fee earned as agent rather than the
full sales value, along with other revenue, comprising interest
income and non-redemption income. Net revenue is then stated after
deducting the costs for the single retailer product. The business
is seasonal and profit is primarily generated in Q3 of the
financial year.
Other costs of revenue are the production and distribution costs
of the cards and vouchers, with administrative costs being the
regular costs to run the business. Finance costs include the costs
of borrowings specifically for the acquisition. Amortisation of
intangible assets arising on acquisition is an adjusting item and
excluded from the underlying profit in the table above.
PROFIT BEFORE TAX AND TAXATION
The income tax charge of GBP7.9 million (2022: GBP9.0 million)
on profit before tax from continuing operations of GBP42.6 million
(2022: GBP48.5 million from continuing operations) represents an
effective tax rate of 18.5% (2022: 18.5% for continuing
operations). This is lower than the UK statutory rate of 19% due to
adjustments in respect of prior year, non-taxable exceptional items
and disallowable expenses.
GROUP STATEMENT OF FINANCIAL POSITION
Net assets of GBP111.7 million (2022: GBP83.3 million) increased
by GBP28.4 million reflecting the shares issued as part of the
acquisition of Appreciate and the GBP10.5 million growth in
retained earnings. Current assets increased by GBP147.1 million to
GBP251.9 million (2022: GBP104.8 million) due to the monies held in
trust and cash held on behalf of clients of GBP119.7 million
acquired with Appreciate. Non-current assets of GBP227.9 million
(2022: GBP127.3 million) increased by GBP100.6 million due to the
Appreciate acquisition goodwill and intangible assets and the
investment in terminals. Current liabilities increased by GBP181.9
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 GBP52.9 million (2022: GBP15.7 million) increased by
GBP37.2 million due to the new GBP36.0 million amortising term loan
taken out to fund the acquisition and deferred tax liabilities
arising from the acquisition.
Net debt is a key measure for the business and has increased to
finance the acquisition of Appreciate. Although the cash element of
the purchase price was GBP61.9 million the net increase is only
GBP28.5 million due to our strong cash generation and cash
acquired.
Year ended Year ended
Net debt 31 March 31 March
Change
2023 2022 %
Cash and cash equivalents - net corporate
cash from continuing operations 22.0 7.6 187.7%
Less:
Loans and borrowings (94.4) (51.5) 83.2%
Net debt (72.4) (43.9) 65.0%
-------------------------------------------- ---------- ---------- ------
Total loans and borrowings of GBP94.4 million have increased by
GBP42.8 million and consist of a GBP10.8 million amortising term
loan A, GBP36.0 million amortising term loan B, GBP46.5 million
drawdown of the GBP75.0 million revolving credit facility and
GBP1.1 million of asset financing balances and accrued interest
(2022: GBP27.0 million drawdown from the revolving credit facility,
GBP21.7 million amortising term loan A and GBP2.9 million of asset
financing balances).
GROUP CASH FLOW AND LIQUIDITY
The following table summarises the cash flow movements during
the year.
Year ended
Year ended 31 March
31 March 2023 2022 Change %
Profit before tax from continuing and discontinued
operations 42.6 78.5 (45.7)%
Ofgem provision -- cash payment - (12.5) -
Non-cash exceptional items 1.3 (2.9) 144.8%
Gain on disposal of investments Romania - (30.0) -
Depreciation and amortisation 10.5 10.6 (0.9)%
Share-based payments and other items 2.4 0.9 166.7%
Working capital changes (corporate) 3.6 (3.2) 215.6%
Cash generation 60.4 41.4 46.1%
Taxation payments (6.2) (9.2) (32.6)%
Capital expenditure (12.7) (10.8) 17.6%
Acquisitions of subsidiaries net of cash
acquired (45.6) (4.5) n/m
Contingent consideration cash paid (1.0) (2.0) (50.0)%
Sale/(purchase) of investment in associate 5.5 (6.7) n/m
Purchase of convertible loan note and other
investment (3.3) (0.8) n/m
Disposals of business net of cash disposed - 20.2 -
Movement in loans and borrowings 42.4 (35.0) (221.1)%
Lease payments (0.2) (0.2) -
Dividends paid (25.1) (23.1) 8.7%
Net increase/(decrease) in corporate cash
and cash equivalents 14.2 (30.7) 146.3%
Net change in clients' funds and retailers'
deposits 39.3 (9.7) 505.2%
Net increase/(decrease) in cash and cash
equivalents 53.5 (40.4) 232.4%
Cash and cash equivalents at the beginning
of year 24.4 64.8 (62.3)%
Cash and cash equivalents at the end of
year 77.9 24.4 -
---------------------------------------------------- -------------- ---------- --------
Comprising:
Corporate cash net of overdraft 22.0 7.7 185.7%
Clients' funds and retailers' deposits 55.9 16.7 236.7%
--------
The following table summarises the cash generation from
continuing operations excluding exceptional items
Year ended
Year ended 31 March
31 March 2023 2022 Change %
Profit before tax from continuing operations 42.6 48.5 (12.2)%
Exceptional items 5.6 (2.9) n/m
------------------------------------------------------
Profit before tax from continuing operations
excluding exceptional items 48.2 45.6 5.7%
Depreciation and amortisation 10.5 10.6 (0.9)%
Share-based payments and other items 2.4 0.9 166.7%
Working capital changes (corporate, excluding
exceptional items) 1.2 (3.2) (135.3)%
Cash generation from continuing operations
excluding exceptional items 62.3 53.9 15.6%
------------------------------------------------------ -------------- ---------- --------
Cash generation grew to GBP60.4 million (2022: GBP41.4 million)
delivered from profit before tax from continuing operations of
GBP42.6 million (2022: GBP48.5 million). The previous year cash
generation was impacted by the GBP12.5 million payment in relation
to the Ofgem Statement of Objections. Adjusting for exceptional
items, cash generation from continuing operations improved by 15.6%
to GBP62.3 million. There was a net working capital inflow of
GBP2.5 million related to costs incurred for the Appreciate
acquisition that will cause an outflow of working capital in
FY24.
Taxation payments on account of GBP6.2 million (2022: GBP9.2
million) are lower compared to the prior period due to a tax refund
of GBP3.3 million following the closure of March 2021 tax filings
which do not impact the prior year tax charge. Dividend payments
were higher compared to the prior period due to the increase in the
current year interim and the final ordinary dividend paid per share
for the prior year ended 31 March 2022.
Capital expenditure of GBP12.7 million (2022: GBP10.8 million)
was GBP1.9 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 driven
by the roll out of terminals in Merchant Rentals where the
principal product is now an operating lease rather than finance
lease.
DIVIDS
Year ended Year ended
31 March 2023 31 March 2022 Change %
------------------------------------
Ordinary reported dividends per
share (pence)
Interim (paid) 18.4 17.0 8.2%
Final (proposed) 18.6 18.0 3.3%
Total reported dividend per share
(pence) 37.0 35.0 5.7%
Total dividends paid per share
(pence) 34.6 33.6
Total dividends paid in year (GBPm) 25.1 23.1
We have declared an increase of 3.3% in the final dividend to
18.6 pence per share (2022: 18.0 pence per share). One to be paid
as an interim dividend and one to paid as a final dividend. This is
payable in equal instalments of 9.3 pence per share (2022: 9.0
pence per share) on 1 September 2023 and 22 September 2023 to
shareholders on the register on 11 August 2023. The final dividend
is subject to the approval of shareholders at the annual general
meeting on 7 September 2023.
The final dividend will result in GBP13.5 million (2022: GBP12.4
million) being paid to shareholders from the standalone statement
of financial position of the Company which, as at 31 March 2023,
had approximately GBP45.0 million (2022: GBP67.9 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 2.0.43
times earning 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 and viability statement on page 30. Our cash and
borrowing capacity provides sufficient funds to meet the
foreseeable needs of the Group including dividends.
Alan Dale
Finance Director
27 July 2023
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.
Changes to principal risks
New risks and disclosures
This year, principal risks from the Appreciate Group have been
considered and incorporated, and our risks are assessed below on a
Group-wide basis. Our risk appetite remains the same as last
year.
It is defined as:
Risk appetite Impact on profit before tax
------------- ---------------------------
Low Under GBP2 million
------------- ---------------------------
Medium Under GBP5 million
------------- ---------------------------
High Over GBP5 million
------------- ---------------------------
Changing risks
Credit and Operational -- This risk has been renamed as Credit
and Liquidity / Treasury Management as Operations are now
considered under Operational Delivery. This is because operation of
our processes and controls are more intrinsically linked with
operational delivery of key projects than they were with credit
management.
Other principal risks have remained the same as last year,
although they now include a consideration of how they affect the
Appreciate Group as well as the existing PayPoint companies.
Receding risks
There were no receding risks. The outlook of all the risks has
been reassessed, as shown in the table below.
Emerging Risks
ESG and Climate Risk remains an emerging risk. We recognise the
impact climate change is having globally; however, we are
intrinsically a low-carbon producing company and they do not pose
an immediate risk to our operations. However, we have embedded a
strategy of reducing our carbon emissions, with a goal of becoming
fully net-zero by 2040 (2030 for our own operations). Details of
how we plan to achieve this will be set out in our Annual
Report.
Last year, we implemented The Task Force on Climate-related
Financial Disclosures (TCFD) which provides companies with a
framework to improve reporting on climate-related risks and
opportunities. Risks presented by climate change have been embedded
into our enterprise risk management framework including financial
planning processes, business cases and our overall risk
identification and management processes detailed in our Annual
Report.
The table on pages 25 to 29 sets out our principal and emerging
risks including details of the potential impact, mitigation
strategies and status. The table also details risk movement during
the year and risk appetite. They do not comprise all risks faced by
the Group and are not set out in order of priority.
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.
Risk Trend Potential Impact Mitigation Strategies Status
& Appetite
--------------- ---------------------------------- ---------------------------------- --------------------------------
Principal Risks
-----------------------------------------------------------------------------------------------------------------------------
Market Risks
-----------------------------------------------------------------------------------------------------------------------------
1 Competition PayPoint's markets and The Executive Board Risk is increasing as
and Markets competitors continue regularly reviews markets, competition has intensified,
Trend = to evolve; failure to competitor activity, and cost of living pressures
Increasing anticipate and respond trading opportunities are causing a downward
Appetite to these will reduce and potential acquisitions push on margins. Also,
= market share, revenue and so oversees and the use of cash continues
Medium and profits. The decline challenges strategic to decrease, which reduces
in cash usage is expected direction. It also closely our income from certain
to continue, which will monitors consumer and parts of the business.
reduce revenue from technological trends However, we continue
those affected business and engages with clients, to strengthen our card
areas. Inflationary retailers and other and digital payment
and cost of living pressures stakeholders to improve businesses. Levels of
may impact fee margins our proposition. PayPoint global investment in
and discretionary spend, continually develops our Fintech competitors
which will in turn affect products, services and slowed in the last year,
growth opportunities systems to adapt to which presents opportunities
in parts of the business. changes in consumer for PayPoint in the
Keen pricing by competitors trends and technology digital space. Finally,
may further serve to and make strategic acquisitions the recent acquisition
narrow profit margins, where appropriate. has further diversified
as would excessive reliance the Group into the gifting
on key clients or market and rewards business.
segments
--------------- ---------------------------------- ---------------------------------- --------------------------------
2 Emerging There is risk to our PayPoint continually Risk is stable as recent
Technology business if our offering develops products with acquisitions have accelerated
Trend = fails to keep pace and the latest technology our ability to mitigate
Stable we do not exploit new and evolves them to the impact of emerging
Appetite technologies and markets take advantage of new technologies, and the
= Medium to evolve our proposition. and expanding markets. re-platforming of our
New and emerging technologies The Executive Board digital proposition
are changing the way closely monitors emerging will better enable us
consumers pay for goods technologies and the to expand our presence
and services; failure impact they may have in digital payment markets.
to keep up with alternative on PayPoint. We also We are engaged in various
payment solutions will develop and implement government schemes involving
reduce our market share our own innovative technology new technology, for
and profitability where possible. Emerging example, the Department
technology from recent for Work and Pensions
acquisitions has been Payment Exception Service.
developed further and We are rolling out a
used to deepen and widen new, updated version
our customer relationships. 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-formation Our business relies The Executive Board Risk is increasing;
Trend = on implementation of drives, challenges and the acquisition of Appreciate
Increasing continued innovation assesses our response is now complete and
Appetite to keep pace with emerging to change as part of work has started to
= Medium technology and changing the strategic planning integrate their operations
markets. Furthermore, process. PayPoint is where appropriate, and
we need to remain agile committed to diversifying to add their system
to continually improve its product offering improvements into the
our processes and controls, and client base by delivering Group roadmap. Other
as failure to do so innovative, efficient major projects include
would reduce efficiency, and robust processes Payment Facilitation
increase costs, and in a range of sectors, and the roll out of
increase the likelihood and by continuous improvement the PayPoint mini terminal,
of poor customer service. in existing systems a project that started
Failure to invest and and processes. in 2021.These require
improve would also reduce considerable investment
our capacity to capitalise in technology and systems
on opportunities for as well as infrastructure
growth. channels and in developing
people.
--------------- ---------------------------------- ---------------------------------- --------------------------------
Business Risks
-----------------------------------------------------------------------------------------------------------------------------
4 Operating It is important we have PayPoint builds and Risk is stable; recent
Model a diversified and varied carefully manages strategic acquisitions have diversified
Trend = operating model, so relationships with key our operations into
Stable we are not overly exposed clients, retailers, the gifting ad rewards
Appetite to any particular markets, redemption partners business. We continue
= Medium clients, suppliers or and suppliers. We continually to renew contracts and
SMEs. Our core business seek to improve and onboard new retailers,
relies on an appropriate diversify services through clients merchants and
mix of clients operating new initiatives, products redemption partners
in diverse industry and technology. We have in line with expectations.
sectors, retailers and further diversified We have built on the
redemption partners, our business this year counter cash, FMCG and
supported by a robust through the acquisition newspaper propositions
supply chain and operating of Appreciate Group with campaigns and onboarding
processes. Failure to which gives us access new SMEs, with more
maintain attractive to new markets, SMEs, in the pipeline. We
propositions for clients retailers, clients and have however noted that
retailers and redemption technology. We maintain retailers and SMEs are
partners may result strong relationships under increasing financial
in losses of key clients, with suppliers to reduce pressure, which may
or a reduction in fees concentration risk in lead to an increase
and margins. this area. in defaults. We are
monitoring this situation
carefully.
--------------- ---------------------------------- ---------------------------------- --------------------------------
5 Legal and PayPoint is required Our Legal and Compliance Risk is increasing due
Regulatory to comply with numerous teams work closely with to two key factors.
Trend = contractual, legal, management on all legal Firstly, following completion
Increasing and continuously evolving and regulatory matters of the Appreciate acquisition,
Appetite regulatory requirements. and adopt strategies additional support has
= Low Failure to anticipate to ensure PayPoint is been required to ensure
and meet obligations appropriately protected a coherent group approach
may result in fines, and complies with regulatory to compliance is implemented.
penalties, prosecution requirements. The teams Secondly, as referenced
and reputational damage. advise on all key contracts in Note 34, two claims
Recent acquisitions and legal matters and have now been served
have increased the number oversee regulatory compliance, on a number of companies
of regulated entities, monitoring and reporting. in the Group in
which further increases Emerging regulations relation to the matters
the regulatory risk. are incorporated into addressed by commitments
Commitments made to strategic planning, made to Ofgem in 2021
Ofgem in 2021 regarding and we engage with regulators in resolution of Ofgem's
its Competition law to ensure our frameworks competition concerns.
concerns have been implemented are appropriate to support Key new regulations
new products and initiatives. this year have been
The compliance team the PSR and Consumer
has been expanded and Duty, which we are addressing
developed to meet the in line with regulatory
ever-changing requirements deadlines.
of both existing and
new legislation, and
external counsel is
engaged where required.
We respond promptly
and comprehensively
to all legal and regulatory
enquiries.
--------------- ---------------------------------- ---------------------------------- --------------------------------
6 People Failure to attract and The Executive Board Risk is increasing.
Trend = retain key talent impacts defines and advocates Following completion
Increasing many areas of our business PayPoint's purpose, of the Appreciate Group
Appetite including service delivery vision and values, and acquisition, we announced
= Low and achieving strategic an employee forum comprising a rationalisation of
objectives. Maintaining employees from across our Northern offices,
a strong culture of the business engages which has caused some
ethical behaviours and directly with the Executive staff turnover. Inflationary
employee wellbeing is Board on employee matters. pressures mean salaries
also vital in ensuring We continue to invest remain high and, hybrid
our business, people, in, and support our working serves to exacerbate
customers and other people. We have well this trend. Therefore,
stakeholders are safeguarded, established processes there remain a number
and our operations remain for recruiting and retaining of vacancies, especially
efficient and profitable. key talent and developing in specialist fields.
Maintaining competitive our people, and there However, we have recruited
remuneration levels is continued focus on some extra staff in
ensures we retain our culture, ethics and accordance with our
talent pool. diversity. 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 Cyber Cyber-attacks may significantly The Executive Board Risk is increasing because
Security impact service delivery assesses PayPoint's of the growing volume
Trend = and data protection cyber security and data and sophistication of
Increasing causing harm to PayPoint, protection framework, cyber-attacks, coupled
Appetite our customers and other and the Cyber Security with our expanding digital
= Low stakeholders. Recent and IT Sub-Committee footprint. Due to the
acquisitions have increased of the Audit Committee current geopolitical
the number of IT environments, maintain oversight. instability, the NCSC
products and systems Our IT security framework has issued a warning
we need to protect. is comprehensive, with regarding targeted threats
PayPoint has multiple multiple security systems to organisations supporting
cyber security systems, and controls deployed critical services in
capabilities and controls across the Group. the UK.
however cyber-attacks We are ISO27001 and Group security standards
are constantly evolving PCI DSS Level 1 certified, and systems are being
and remain a persistent and systems are constantly applied to our acquired
threat. monitored for attacks IT environments and
with response plans we continue to enhance
implemented and tested. our architecture, systems,
Employees receive regular processes and cyber
cyber security training, monitoring and response
and awareness is promoted capabilities. We regularly
through phishing simulations engage third parties
and other initiatives. to assess and assist
We have implemented on our cyber defences
simple reporting tools and strengthen our controls..
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.
--------------- ---------------------------------- ---------------------------------- --------------------------------
8 Business Our clients and stakeholders The Executive Board Risk is increasing.
Interruption rely on our systems, reviews PayPoint's business The acquisition of Appreciate
Trend = products and services continuity framework and our expansion into
Increasing being resilient to maintain and the Cyber Security different products contribute
Appetite continuous service delivery. and IT SubCommittee to an increasing complexity
= Low Failure to maintain of the Audit Committee of our operations. We
stable infrastructure maintains oversight. have not suffered any
or processes, or to Business continuity, significant outages
promptly recover services disaster recovery and during the year, however
following an incident major incident response system disruption is
may result in financial plans are maintained an inherent business
loss, reputational harm and tested with failover risk. Therefore, we
and potential regulatory capabilities across have upgraded the processing
scrutiny. third party data centres environments for our
Interruptions may be and the cloud. Systems core switch and some
caused by system failure, are routinely upgraded core services that are
cyberattack, failure with numerous change hosted in the data centres.
by a third party, or management processes This has resulted in
failure of an internal deployed and resilience a reduction in critical
process. Recovery may embedded where possible. incidents, and availability
be hampered by a lack Risk from supplier failure of the core processing
of resilience planning is managed through contractual switch has improved.
and testing. arrangements, alternative Better staff training
supplier arrangements and retention has enhanced
and business continuity our ability to detect
plans. and recover from service
issues.
--------------- ---------------------------------- ---------------------------------- --------------------------------
9 Credit and PayPoint has material PayPoint has effective Risk is stable. Credit
Liquidity/ credit exposures with credit and operational losses remain low. Cost
Treasury large retailers, redemption processes and controls. of living pressures
Management partners, and other Retailers and counterparties may impact our retailers,
Trend = counterparties; in the are subject to ongoing which may increase the
Stable event of a default, credit reviews, and default rate. However,
Appetite significant financial effective debt management we have robust monitoring
= Low loss may result, as processes are implemented. and an increase in support
demonstrated with the Residual risk associated payment processing in
McColl's collapse. with potential default place to reduce default
We process large volumes of gift card providers rates and impacts.
of payments daily, therefore is mitigated through The risk profile of
effective operational insurance. Settlement our business operations
controls are essential systems and controls remains stable. We continue
to ensure funds are are continually assessed to review and enhance
settled accurately, and enhanced with new our operational processes
securely and promptly. systems and technology. and controls, and relationships
We have a number of We have effective governance with our funding partners.
debt / banking covenants with oversight committees, We successfully refinanced
and interest expenses delegated authorities to support the acquisition
which must be managed and policies for key of Appreciate and our
carefully. processes. Segregation cash generation remains
Absent or ineffective of duties and approvals robust.
controls in these processes are implemented for
could all areas where fraud
result in fraud, liquidity or material error may
risk, reputational damage occur.
or other
financial loss.
--------------- ---------------------------------- ---------------------------------- --------------------------------
10 Operational Successful delivery The Executive Board Risk is stable. The
Delivery of key initiatives and has overall responsibility Appreciate acquisition
Trend = strategic objectives for delivering key initiatives will require considerable
Stable is central to achieving implementing a robust management time and
Appetite our day-to-day and transformation control framework over effort to integrate.
= Low aims. Successful operational BAU activities. The combined group is
delivery Our project management now large enough to
depends on effective methodology ensures qualify for the SAO
forecasting, planning projects are prioritised regime, which means
and well controlled and governed effectively. the risk and control
execution both within Our existing documentation must be
the Group and in its processes are continuously reviewed and brought
supplier chain. Failure reviewed to make sure in line with HMRC requirements.
to manage this risk they There have been a number
would hamper our business are efficient and well of new products in the
performance, impact controlled. year, e.g. EBSS and
our stakeholders, and Open Banking, which
lead to regulatory or have been challenging
legal sanctions. and demanded prioritisation
of resources.
--------------- ---------------------------------- ---------------------------------- --------------------------------
Emerging Risks
-----------------------------------------------------------------------------------------------------------------------------
11 ESG and Focus on environmental, The CEO and the Executive Our ESG working group
Climate social and governance Board have overall accountability has implemented various
Trend = matters continues to for PayPoint's climate measures as we embed
Stable increase, and our business and social responsibility low carbon strategies
Appetite needs to be environmentally agendas, and they recommend into our working practices
= Medium responsible to create strategy to the Board. and business strategy.
shared value for PayPoint aligns its We will be rolling out
all stakeholders. business with reducing our new PayPoint terminal,
Climate risk is a key carbon emissions, and which generates lower
priority for governments continually assesses emissions than previous
and organisations globally, its approach to environmental models. We are moving
and PayPoint needs to risk and social responsibility, toward electric cars
play its part in reducing which are embedded in for our company fleet
carbon emissions and our decision-making and helping our field
its environmental impact. processes. We have multiple team to travel in more
Approximately 17% of policies and processes environmentally friendly
our revenue is derived governing our social ways.
from energy and fuel responsibility strategy We run an employee forum
markets and as the UK and we continually assess and have implemented
transitions to Net-zero and evolve our strategy various measures as
carbon emission economy and working practices a result, such as cost
by 2050, we need to to ensure the best outcomes of living support. Love2shop
closely monitor the for stakeholders and was named one of the
impacts on our business the environment. UK's best places to
to ensure our revenue work in April 2023.
streams remain sustainable.
--------------- ---------------------------------- ---------------------------------- --------------------------------
VIABILITY STATEMENT
In accordance with the 2018 UK Corporate Governance Code, the
Directors have assessed the viability of the Group over a
three-year period, taking account of the Group's current financial
and trading position, the principal risks and uncertainties (as set
out on pages 25 to 29) and the strategic plans that are reviewed at
least annually by the Board.
Assessment period
The Directors have determined that the Group's strategic
planning period of three years remains an appropriate time frame
over which to assess viability. This broadly aligns to average
client renewal terms, new client prospecting and onboarding cycles
and the development-through-to-maturity evolution of new products
and service lines. The current financing facilities are in place
until February 2026 broadly in line with this period.
Assessment of prospects
The Directors assess the Group's prospects through the annual
strategy day and review of the Group's three-year Plan. The
strategy day in February 2023 and Plan review day in March 2023
both considered the impact on future plans of the Appreciate Group
acquisition on 28 February 2023. The planning process forecasts the
Group's financial performance including cash flows which allows the
Directors to assess both the Group's liquidity and adequacy of
funding. In its assessment of the Group's prospects, the Directors
have considered the following: --
The Group's strategy and how it addresses changing economic
environments in context of our clients, parcel partnerships,
merchants and retailer requirements.
We continue to evolve and execute our strategy and invest for
growth. We recently acquired the Appreciate Group and are
integrating this business at pace so that the commercial synergies
can commence realisation in the 2023/24 financial year including
the launch of super-agents via our retailer partner network.
Through a broad range of products and services combined with our
effective sales team we continue to successfully embed PayPoint
Group at the heart of SME and convenience retail businesses. In the
e-Commerce division we are continuing to roll out Zebra printers
which will enable store to store deliveries, further improving the
e-commerce delivery platform for first and last mile customer
journeys. In the Payments and Banking division, we continued
facilitating government support in the current economic climate and
grew our integrated payments solution across cards and Direct Debit
together with the addition of Open Banking to our portfolio of
payment methods.
The Group's inherent resilience to risk.
The Group has an inherent resilience to risk, provided by the
diversified nature of our operations across many sectors. The
business remains highly cash generative which has enabled the Group
to continue to invest in key areas of growth and support its
longer-term viability. The Appreciate acquisition has further
broadened our products set, client base and has enabled more
opportunities to provide more key services across all our customers
(Retailers, SMEs, Clients and Parcel partnerships). This will
ensure we are more integral to all of our customers.
Expectations of the future economic environment.
Uncertainty remains over macroeconomic risks. This has resulted
in higher inflation and cost of borrowing, reduced consumer
confidence and the UK government facing higher budget deficits.
However, the diversity of our proposition ensures the business can
adapt to ongoing and unexpected changes. This was demonstrated this
year as we supported the government with its cost-of-living
support.
The Group's financial position.
The Group retains a strong financial position and has a GBP75m
revolving credit facility (RCF) expiring February 2026 together
with a total of GBP46.8m amortising term loans. The arrangement
also includes a GBP30m accordion (uncommitted) facility. At 30 June
2023 the Group had utilised GBP44.5m of the RCF. The available
balance of GBP30.5m and the corporate cash provides the Group with
liquidity of cGBP35m. This level of liquidity is deemed sufficient
for all the viability scenarios analysed. The Group has proven
robust performance and cash generation in previous economic
downturns.
Assessment of viability
To assess our viability, we modelled different scenarios
identified by considering the potential impact of the principal
risks (as shown in the table on pages 25 to 29). Our development of
scenarios included reviewing the risks of both the PayPoint and
Appreciate businesses. Risks are broadly unchanged and the
additional investments required to realise our integration and
targets are included in the Plan financial projections. We have
reassessed the enlarged group's scenarios to reflect the progress
made in delivering our strategy. In total, nine principal risks
were used in our modelling. They were chosen because they combine
to represent plausible scenarios covering a range of different
operational and financial impacts on the business.
The principal risk not specifically modelled was Risk 6 --
people as failure in recruiting and retaining the right talent in
the organisation would have similar impacts to scenario A and
B.
In total, four severe but plausible individual scenarios have
been modelled, with a fifth reverse stress test scenario. These
scenarios and the assumptions within are detailed in the table
below. We also considered the combined impact of scenarios A and B
as these are the most likely to materialise together. Theoretically
all these scenarios, with differing causes could occur together,
with varying levels of impact. However, we have not included a
combined scenario of scenarios A to D, due to the one-off nature of
scenarios C and D, with scenario A already including a significant
one-off item creating similar financial pressure.
None of the separate scenarios modelled was found to impact the
long-term viability of the Group over the assessment period. In
assessing each of the scenarios, we have taken account of the
mitigating actions available to us, including, but not limited to,
reducing discretionary operating spend, reducing non-committed
capital expenditure, repricing our products and services, freezing
recruitment and reducing variable incentives and temporary
suspension of dividend payments.
Conclusion
Having assessed the Group's current position, potential impacts
of principal risks, proven management of adverse conditions in the
past, potential mitigating actions and prospects of the Group, the
Directors confirm they have a reasonable expectation that the Group
will be able to continue in operation, remain solvent and meet its
liabilities as they fall due over the three-year assessment
period.
Scenario modelled Linked to principal Assumptions
risks
----------------------- ------------------------ -------------------------------------------------
Scenario A Risk (1) Competition Transactions/merchants/estate
A sharp economic and markets In areas of the business where declines
decline in the Risk (2) Emerging have been experienced, these have been
economy and our technology doubled. In areas of the business in
markets causes Risk (4) Operating growth, this growth has been reduced
material divergence model to zero.
on planned product Risk (9) Credit and Margins, revenue rates per transaction/merchants
growth rates operational or estate
or accelerated In areas where there is a decline this
declines has been doubled and growth reduced to
zero.
Economic backdrop will also cause a credit
risk of cGBP11m if several our largest
retailers fail.
Costs
No cost savings assumed.
All of the above are assumed to impact
for FY23/24 with a slow recovery in FY24/25
back to planned levels in FY25/26.
Dividends are reduced in line with dividend
policy.
----------------------- -------------------------------------------------
Scenario B Risk (3) Transformation Revenue Growth
Failure with Risk (10) Operational Planned transformational revenue growth
our transformation delivery rates are assumed to halve over the life
and integration of the plan.
projects impacts Costs/ synergies
the profit delivery Costs are assumed to increase by 20%
from the planned and the benefit of synergies halved across
growth the three-year plan.
----------------------- -------------------------------------------------
Scenario C Risk (5) Regulatory Revenue
Legislation or and legal (grouping No impact is assumed as PayPoint would
regulatory reforms all the one-off hits adjust to change or correct any breach
cause a situation together) so that level of business could continue
of non-compliance Costs
It is assumed that an average amount
of the possible fines and associated
costs of GBP30m is incurred in FY23/24
Dividends
Reduced in line with dividend policy
----------------------- -------------------------------------------------
Scenario D Risk (7) Cyber security, Revenue
Cybersecurity Risk (8) Business No revenue generation for three weeks
and business interruption Costs
continuity Compensation payment equal to the lost
revenue.
Dividends
Reduced in line with dividend policy
----------------------- -------------------------------------------------
Scenario E N/A Adopting the principles of Scenarios
Reverse stress A and B, a continuous monthly impact
test has been modelled to understand when
our funding limits would be reached.
Similarly, for scenarios C and D, which
are one offs, a single month impact has
been calculated to reach funding limits.
In this stress test, it is assumed no
dividends are paid. The outcome of these
tests were a sustained EBITDA reduction
of GBP3m per month, indefinitely, or
a one off reduction in EBITDA of GBP40m
would take the Group to its funding limits.
At this point the Group would require
further mitigations to those listed above
and engaging financiers for further support
or relaxation of covenants.
----------------------- -------------------------------------------------
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Re-presented(1)
Year ended Year ended
31 March 31 March
2023 2022
Note GBP'000 GBP'000
Continuing operations
Revenue 2,3 165,220 145,144
Other revenue 2,3 2,503 -
Total revenue 167,723 145,144
Cost of revenue (64,257) (48,725)
Gross profit 103,466 96,419
Administrative expenses - excluding adjusting items (50,083) (46,357)
Operating profit before adjusting items 53,383 50,062
Adjusting items:
Exceptional items - administrative expenses 4 (5,317) 2,880
Amortisation of intangible assets arising on acquisition
-- administrative expenses (2,574) (2,394)
Operating profit 45,492 50,548
Finance income 5 87 13
Finance costs 5 (2,718) (2,046)
Exceptional item -- finance costs 4 (287) -
Profit before tax from continuing operations 42,574 48,515
Tax on continuing operations 6 (7,864) (8,986)
Profit from continuing operations 34,710 39,529
Discontinued operation
Profit from discontinued operation, net of tax - 148
Exceptional item -- gain on disposal of discontinued
operation, net of tax - 29,863
Profit for the year attributable to equity holders
of the parent 34,710 69,540
--------------------------------------------------------- -------------- ---------- ----------------
(1) Amortisation of intangible assets arising on acquisition
were not identified as adjusting items in the prior year financial
statements (see note 1).
Year ended Year ended
31 March 31 March
Earnings per share (pence) 2023 2022
--------------------------- ---------- ----------
Basic 50.1 101.3
--------------------------- ---------- ----------
Diluted 49.6 100.2
--------------------------- ---------- ----------
Year ended Year ended
31 March 31 March
Earnings per share -- continuing operations (pence) 2023 2022
---------------------------------------------------- ---------- ----------
Basic 50.1 57.6
---------------------------------------------------- ---------- ----------
Diluted 49.6 57.0
---------------------------------------------------- ---------- ----------
Year ended Year ended
Underlying earnings per share -- continuing operations before 31 March 31 March
adjusting items (pence) 2023 2022
-------------------------------------------------------------- ---------- ----------
Basic 61.0 56.0
-------------------------------------------------------------- ---------- ----------
Diluted 60.3 55.4
-------------------------------------------------------------- ---------- ----------
Year ended Year ended
31 March 31 March
Earnings per share -- discontinued operations (pence) 2023 2022
------------------------------------------------------ ---------- ----------
Basic - 43.7
------------------------------------------------------ ---------- ----------
Diluted - 43.2
------------------------------------------------------ ---------- ----------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Items that will not be reclassified to the consolidated
statement of profit or loss:
Remeasurement of defined benefit pension scheme 353 --
Deferred tax on defined benefit pension scheme (86) --
Items that may subsequently be reclassified to the
consolidated statement of profit or loss:
Exchange differences on disposal of discontinued operation
reclassified to profit or loss - 1,645
Other comprehensive income for the year 267 1,645
Profit for the year 34,710 69,540
Total comprehensive income for the year attributable
to equity holders of the parent 34,977 71,185
------------------------------------------------------------ ---------- -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 March 31 March
2023 2022
Note GBP'000 GBP'000
Non-current assets
Goodwill 8 117,427 57,668
Other intangible assets 75,293 35,990
Investment in associate - 6,739
Convertible loan notes 3,750 750
Other investment 251 --
Property, plant and equipment 29,257 21,782
Net investment in finance lease receivables 1,711 4,407
Retirement benefit asset 411 --
Total non-current assets 228,100 127,336
------------------------------------------------------ ---- -------- ---------
Current assets
Inventories 3,152 332
Trade and other receivables 10 82,055 75,975
Current tax asset 6,231 4,191
Cash and cash equivalents -- clients' funds, retailer
partners' deposits and card and voucher deposits 55,905 16,646
Cash and cash equivalents -- corporate cash 22,546 7,653
Monies held in trust 82,000 --
Total current assets 251,889 104,797
------------------------------------------------------ ---- -------- ---------
Total assets 479,989 232,133
------------------------------------------------------ ---- -------- ---------
Current liabilities
Trade and other payables 11 255,526 92,375
Deferred consideration liability - 1,000
Lease liabilities 862 200
Loans and borrowings 12 58,245 39,643
Bank overdraft 525 --
Total current liabilities 315,158 133,218
------------------------------------------------------ ---- -------- ---------
Non-current liabilities
Trade and other payables 115 -
Lease liabilities 4,617 60
Loans and borrowings 12 36,170 11,891
Deferred tax liability 12,215 3,706
Total non-current liabilities 53,117 15,657
------------------------------------------------------ ---- -------- ---------
Total liabilities 368,275 148,875
------------------------------------------------------ ---- -------- ---------
Net assets 111,714 83,258
Equity
Share capital 13 242 230
Share premium 13 1,000 1,000
Merger reserve 13 18,243 999
Share-based payment reserve 2,286 1,570
Retained earnings 89,943 79,459
Total equity attributable to equity holders of the
parent 111,714 83,258
------------------------------------------------------ ---- -------- ---------
These financial statements were approved by the Board of
Directors and authorised for issue on 27 July 2023 and were signed
on behalf of the Board of Directors.
Nick Wiles
Chief Executive
27 July 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-based
Share Share Merger payment Translation Retained Total
capital premium reserve reserve reserve earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening equity at 1 April
2021 229 4,975 999 2,005 (1,645) 26,737 33,300
Profit for the year -- -- -- -- -- 69,540 69,540
Exchange differences on
translation of foreign operation -- -- -- -- 1,645 -- 1,645
Comprehensive income for
the year -- -- -- -- 1,645 69,540 71,185
Issue of shares 13 1 1,000 -- -- -- -- 1,001
Equity-settled share-based
payment expense -- -- -- 868 -- -- 868
Vesting of share scheme -- -- -- (1,303) -- 1,303 --
Reclassification of share
premium into retained earnings -- (4,975) -- -- -- 4,975 --
Dividends 14 -- -- -- -- -- (23,096) (23,096)
Closing equity at 31 March
2022 230 1,000 999 1,570 -- 79,459 83,258
---------------------------------- ---- -------- -------- -------- ----------- ----------- --------------- ------------
Profit for the year -- -- -- -- -- 34,710 34,710
Total other comprehensive
income -- -- -- -- -- 267 267
Comprehensive income for
the year -- -- -- -- -- 34,977 34,977
Issue of shares 13 12 -- 17,244 -- -- -- 17,256
Equity-settled share-based
payment expense -- -- -- 1,330 -- -- 1,330
Vesting of share scheme -- -- -- (614) -- 614 -
Dividends 14 -- -- -- -- -- (25,107) (25,107)
Closing equity at 31 March
2023 242 1,000 18,243 2,286 -- 89,943 111,714
---------------------------------- ---- -------- -------- -------- ----------- ----------- --------------- ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
Re-presented(1)
Year ended Year ended
31 March 31 March
2023 2022
Note GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 15 102,182 33,626
Corporation tax paid (6,204) (9,161)
Interest received 609 13
Interest paid (2,973) (1,913)
Net cash inflow from operating activities 93,614 22,565
----------------------------------------------------- ---- ---------- ----------------
Investing activities
Purchases of property, plant and equipment (7,802) (5,185)
Purchases of intangible assets (4,900) (5,627)
Acquisitions of subsidiaries net of cash acquired 9 (45,580) (4,543)
Contingent consideration cash paid (1,000) (2,000)
Disposal / (acquisition) of investment in associate 5,487 (6,739)
Purchase of convertible loan note (3,000) (750)
Purchase of other investment (251) -
Proceeds from disposal of discontinued operation net
of cash disposed - 20,159
Net cash used in investing activities (57,046) (4,685)
----------------------------------------------------- ---- ---------- ----------------
Financing activities
Dividends paid 14 (25,107) (23,096)
Proceeds from issue of share capital 13 1 1
Payment of lease liabilities (261) (243)
Repayments of loans and borrowings (22,074) (61,469)
Proceeds from loans and borrowings 12 64,500 26,420
Net cash generated / (used) in financing activities 17,059 (58,387)
----------------------------------------------------- ---- ---------- ----------------
Net increase / (decrease) in cash and cash
equivalents 53,627 (40,507)
Cash and cash equivalents at beginning of year 24,299 64,806
Cash and cash equivalents at end of year 77,926 24,299
----------------------------------------------------- ---- ---------- ----------------
(1) Interest received was presented within "Investing
activities" in the prior year financial statements.
Reconciliation of cash and cash equivalents
31 March 31 March
2023 2022
GBP'000 GBP'000
Continuing operations
Corporate cash 22,546 7,653
Clients' funds, retailer partners' deposits and card
and voucher deposits 55,905 16,646
Bank overdraft (525) -
Cash and cash equivalents 77,926 24,299
------------------------------------------------------ -------- --------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting policies
Basis of preparation
This preliminary announcement does not constitute the Company's
statutory accounts for the years ended 31 March 2023 or 31 March
2022, but is derived from the statutory accounts. This announcement
does not contain sufficient information to fully comply with
UK-adopted International Accounting Standards ("UK-adopted IFRS").
The Company expects to publish full financial statements that
comply with IFRS in due course.
Statutory accounts for 2022 have been delivered to the Registrar
of Companies and those for 2023 will be delivered following the
Company's annual general meeting. The auditors have reported on
those accounts and the report was unqualified, did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their opinion and did not contain a
statement under s498(2) or (3) of the Companies Act 2006.
Adoption of standards and policies
This preliminary announcement complies with the recognition and
measurement criteria of UK-adopted IFRS, and with the accounting
policies of the Group which are set out in the Group's Annual
Report for the year ended 31 March 2022. The accounting policies
applied are consistent with the prior year with the exception of
the policies set out below and are applicable for the first time in
the year ended 31 March 2023 following the acquisition of
Appreciate Group PLC: i) Pension costs -- defined benefit schemes;
ii) Revenue recognised by Love2shop in respect of vouchers and
cards.
Pension costs -- defined benefit schemes
Defined benefit pension schemes create an obligation on the
entity to provide agreed benefits to current and past employees.
The Group's defined benefit pension schemes are accounted for in
accordance with IAS19 Employee Benefits, under the principle that
the cost of providing employee benefits should be recognised in the
period in which the benefit is earned.
The present value of the defined benefit obligation is measured
by applying an actuarial valuation method, using a set of actuarial
assumptions. The fair value of the scheme assets is deducted from
the present value of the defined benefit obligation to determine
the net deficit or surplus to be recognised on the statement of
financial position.
Service cost attributable to current and past periods is
recognised in the Statement of profit or loss, as is net interest
on the net defined benefit asset or liability. Actuarial gains and
losses, and returns on scheme assets, are recognised through Other
comprehensive income.
Revenue recognised by Love2shop in respect of vouchers and
cards
The Group offers single-retailer and multi-retailer redemption
products. The Group is a principal for single-retailer products, on
which revenue is recognised on a gross basis. For multi-retailer
products, the Group acts in the capacity of an agent, recording as
revenue the net amount that it retains for its agency services.
Multi-retailer products may be partially or fully redeemed and
the unused amount (i.e. the non-refundable unredeemed or unspent
funds on a voucher, card or e-code at expiry) is referred to as
'non-redemption income'. Non-redemption income is recognised as
revenue when the card has expired and the right of refund has
lapsed.
Prior year re-presentation of administrative expenses for
amortisation of acquired intangible assets arising on
acquisition
For the current year the Group has updated its presentation of
the expense for amortisation of intangible assets arising on
acquisition. In order for the user to understand the operational
performance of continuing business, the Group is changing from
presenting "Operating Profit before exceptional items" to
"Operating Profit before adjusting items". Adjusting items
represents exceptional items and amortisation of intangible assets
arising on acquisition and so this latter expense is shown
separately on the face of the Consolidated statement of profit or
loss as an adjusting item. The prior year results have been
re-presented on this basis.
Prior year re-presentation of interest received
For the current year the Group updated its presentation of
interest received. In the prior year Consolidated statement of cash
flows it was presented as "Investment income" within "Investing
activities". In the current year it is presented as "Interest
received" within "Net cash inflows from operating activities". The
impact of the restatement is to increase both "Net cash inflows
from operating activities" and "Net cash used in investing
activities" by GBP13,000. Similarly, interest received relating to
interest earned on deposits is now included in "other revenue". The
Group has made this change as this better reflects the operating
nature of interest earned on cash deposits, following the
acquisition of Appreciate Group during the year.
Going concern
The 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 and equity attributable to equity holders of the parent
company comprising capital, reserves and retained earnings.
The Group's policy is to borrow centrally to meet anticipated
funding requirements. Our cash and borrowing capacity provides
sufficient funds to meet the foreseeable needs of the Group. At 31
March 2023, the Group had cash and cash equivalents of GBP78.4
million, consisting of GBP22.5
million corporate cash and GBP55.9 million of clients' funds,
retailer partners' deposits and card and voucher deposits. In
addition, the Group carried out a refinancing in the year to
support the acquisition of Appreciate Group PLC. The Group's
borrowing facilities consist of:
-- GBP10.8 million amortising term loan which is due to be repaid in
quarterly instalments over the next financial year, completing in
February 2024
-- GBP36.0 million amortising term loan repayable from May 2024 to February
2026, in equal, quarterly instalments until the final, double payment
-- GBP75.0 million unsecured revolving credit facility with an additional
GBP30.0 million accordion facility (uncommitted) expiring in February
2026
-- GBP0.6 million block loan balances. The block loans are to be repaid by
September 2024
At 31 March 2023, GBP46.5 million (2022: GBP27.0 million) was
drawn down from the revolving credit facility.
The Group has net assets of GBP111.7 million as at 31 March
2023, having made a profit of GBP34.7 million and delivered a net
cash inflow from operating activities of GBP93.6million for the
year then ended. The Group had net current liabilities of GBP63.3
million (2022: GBP28.4 million).
The Directors have prepared cash flow forecast scenarios for a
period of at least 12 months from the date of approval of these
financial statements, 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 16 and concluded that it is not appropriate to extend the
going concern assessment beyond 12 months on the basis that the
timing of conclusion of the legal proceedings is so uncertain.
As detailed in the Financial Review, the Group has many product
lines which delivered a profitable result and strong cash
generation. The 'base case' scenario considered the trends
identified and explained in the Review and included improved
operating profit and related cash flows.
The key assumptions were:
-- In Shopping, the level of service fee continues to grow through sales and
RPI increases, card revenues continue to grow on increased number of
merchants through sales growth and increased retention and the cash
withdrawal proposition continues to decline in line with use of cash
-- In e-commerce, transactions and net revenue increase although not by as
much as the rate in the current year
-- In Payments and Banking, revenues from digital increase, especially
through Open Banking, whilst cash declines in line with use of cash
-- In Love2shop, with a full year contribution, billings to increase with
the new initiatives outlined in the strategic report. As previously
announced, Love2shop is expected to be earnings enhancing (on an adjusted
basis) in the 23/24 financial year
-- Costs increase reflecting the current economic pressures and growth in
revenue
-- Finance revenue and finance costs both increase reflecting current rates
in the market
Additionally, the Directors have carried out an assessment of
the principal risks and uncertainties and applied several severe
but plausible scenarios to test the Group viability further, as
detailed on pages 30 to 31 in the Group's Viability confirmation
section. These included a reduction in the volume of transactions,
loss of key contracts and under-performance of acquisitions and new
products or service lines. As mitigating actions, we have assumed
achievable reductions in expenditure and a reduction in the level
of future dividends following the payment of the final dividend of
18.6 pence per share declared in respect of financial year ended 31
March 2023. The cash flow forecasts included stress tests for the
above scenarios to ensure working capital movements within a
reporting period do not trigger a covenant breach.
In both the 'base case' and severe but plausible scenarios, the
forecasts indicated that there was sufficient headroom and
liquidity for the Group to continue with the existing facilities
outlined above. None of the significant judgements and estimates
detailed on pages 37 to 39 made by the Directors casts any doubt on
the assessment to continue as a going concern.
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
financial statements and therefore have prepared the financial
statements on a going concern basis.
Use of judgements and estimates
In the application of the Group's accounting policies, the
Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered relevant. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Critical judgement: recognition of cash and cash equivalents and
monies held in trust
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
The Group evaluated the April 2022 IFRIC agenda decision on
demand deposits with restrictions on use arising from a contract
with a third party and concluded that it did not have any impact on
the Group's existing accounting policy for cash and cash
equivalents.
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, except where they are deposits repayable on
demand.
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 31 March 2023 are as follows:
-- Cash and cash equivalents - clients' funds GBP12.0 million (2022: GBP9.8
million)
-- Cash and cash equivalents -- card and voucher deposits GBP37.7 million
(2022: GBPnil)
-- Cash and cash equivalents - retailers' deposits GBP6.2 million (2022:
GBP6.8 million)
-- Cash and cash equivalents - corporate cash GBP22.5 million (2022: GBP7.7
million)
-- Monies held in trust GBP82.0 million (2022: GBPnil)
Clients' funds and card and voucher deposits held in trust off
the statement of financial position as at 31 March 2023 are
GBP124.3 million (2022: GBP55.9 million).
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 recoverable amount (based on value in use) of the Handepay
CGU is GBP57.6m, which is GBP12.0m higher than the carrying value.
Therefore, the CGU and its assets continue to be measured at their
carrying value.
The assumptions underpinning the recoverable amounts that are
most sensitive to a reasonable change include:
1. The average revenue growth assumption of 14.5% p.a.
2. Pre-tax discount rate of 15.7% p.a.
1. Revenue growth is primarily determined by the increased salesforce and
sales efficiency, ultimately driving the number of new merchants
acquired. Over the five-year forecast period, headcount is planned to
grow by 31% with sales efficiency being based on historic rates. Merchant
churn is forecast to reduce by 14 percentage points from recent
historical rates. This is driven by enhancing the businesses retention
teams, utilising algorithms, and the continuous improvement in the
product offering. The forecasts included existing revenue per merchant
rates uplifted for approved repricing activities. The Group prepares
five-year cash flow forecasts derived from the most recent three-year
financial budgets approved by the Board which are extrapolated for a
further two years and subsequently extended to perpetuity.
2. The pre-tax risk-adjusted discount rate of 15.7% has been used to
discount the forecast cash flows calculated by reference to Handepay's
weighted average cost of capital ('WACC'). The Group engaged an external
advisor to produce a WACC. The cost of equity is based on the risk-free
rate for long-term UK Government bonds adjusted for the beta (reflecting
the systemic risk of Handepay relative to the market as a whole) and the
equity market risk premium (reflecting the required return over and above
a risk-free rate by an investor who is investing in the market as a
whole). An alpha factor has also been included in the discount rate to
capture the risks in the cash flows not already captured in the cost of
equity and the cash flows. The recoverable amount would equal the
carrying value if the discount rate increased to 18.7%.
Reasonably possible changes in the above key assumptions can
affect the recoverable amount (using the value in use method) as
follows:
Change of assumption: Value of impairment
of Handepay CGU
------------------------------------------------------- -------------------
Increase in pre-tax discount rate of 3.0% GBP0.2m
------------------------------------------------------- -------------------
Decrease in average revenue growth rate of 2.2% in each GBP5.3m
of years 1-5
------------------------------------------------------- -------------------
The 2.2% reduction in average revenue growth rate in each of
years 1-5 is a reasonably possible decrease considering the
competitive nature of the merchant acquiring sector, the current
market share and the current proposition.
A 3.0% increase in the pre-tax discount rate is considered to be
a reasonably possible outcome considering the alpha factor which
captures the risks in the cash flows not already captured in the
cost of equity and the cash flows.
Critical estimate: Valuation of acquired intangible assets on
acquisition of Appreciate Group PLC
The fair value of acquired intangible assets (brands, customer
relationships and developed technology) recognised on the
acquisition of Appreciate amounted to GBP40.4 million, with a
related deferred tax liability of GBP10.1 million. Together with
other assets acquired and liabilities assumed, this resulted in
goodwill of GBP59.8 million. The aggregate of the acquired
intangible assets and the goodwill exceeds the consideration paid
due to net other liabilities having been acquired on acquisition
(see note 9). The estimate of fair value measurements of certain
acquired intangible assets is considered by management a critical
estimate due to a significant risk of material adjustment in the
measurement period. The fair values are derived from assumptions,
changes to which would have a material impact on the fair values.
Management estimate that the following acquired intangible assets
fall into this category:
-- Non-contractual customer relationship: Appreciate Business Services (ABS)
-- Brand: Park
-- Brand: Love2shop
The table below summarises, for each of the above intangible
assets, the fair values recognised, the key assumptions used in
deriving those fair values and the range of fair values obtained by
changing one or more of the assumptions:
Non-contractual
customer relationship: Brand: Brand:
ABS Park Love2shop
----------------------------- ----------------------- -------- ------------
Fair value GBP8.8m GBP4.2m GBP7.6m
----------------------------- ----------------------- -------- ------------
Discount rate assumption 12.5% 14.0% 14.0%
----------------------------- ----------------------- -------- ------------
Attrition rate 22.6% - -
----------------------------- ----------------------- -------- ------------
Pre-tax royalty rate - 4.5% 4.5%
----------------------------- ----------------------- -------- ------------
Impact of 2%-point change to +/- GBP0.5m +GBP0.5m +GBP0.8m / -
discount rate / GBP0.7m
-GBP0.4m
----------------------------- ----------------------- -------- ------------
Impact of 2%-point change to +/- GBP0.2m - -
attrition rate
----------------------------- ----------------------- -------- ------------
Impact of 0.5%-point change - -GBP0.5m +/- GBP0.9m
to pre-tax royalty rate /
+GBP0.4m
----------------------------- ----------------------- -------- ------------
Value with both assumptions GBP9.1m GBP5.2m GBP9.3m
at favourable end of range
----------------------------- ----------------------- -------- ------------
Value with both assumptions GBP8.5m GBP3.3m GBP6.2m
at adverse end of range
----------------------------- ----------------------- -------- ------------
Given that the acquired intangible assets were not purchased in
separate transactions, but rather as part of the wider Appreciate
business combination, the 'market participant' perspective is
hypothetical. Therefore, in measuring the acquired intangible
assets at fair value, management considered the types of potential
market participants (e.g. competitors and comparable companies) to
apply assumptions that were consistent with the assumptions that
market participants would use when pricing the intangible assets.
Given that the acquired intangible assets are not traded on an
active market, have no recent market transactions and are unique to
Appreciate, management valued them using the following
approaches:
Brands - using a relief from royalty method. In setting the
pre-tax royalty rate, management considered the perceived strengths
of the brands, based on factors including the level of brand
awareness, their longevity and profitability. The pre-tax royalty
rate of 4.5% applied reflects market observable royalty rates for
other brands and trademarks in similar sectors.
Non-contractual customer relationships - using a multi-period
excess earnings (MEEM) method, which reflects market participant
fair value by including forecast lifetime earnings which were
specifically attributable only to the non-contractual customer
relationships existing at the acquisition date. The discount rate
applied to the MEEM incorporates general market rates of return at
the acquisition date as well as industry risks and the risks of the
asset to typical market participant, based on an analysis of
comparable companies.
The residual GBP59.8 million goodwill represents the future
economic benefits arising from the acquisition that were not
individually identified and separately recognised at the
acquisition date. The buyer-specific synergies subsumed into
goodwill did not exist at the market-participant level at the
acquisition date because i) they result from combining PayPoint and
Appreciate, enabling PayPoint to cross-sell to the Appreciate
customer base and ii) the new customer relationships and sectors
are anticipated to arise post-acquisition but were not identifiable
at the acquisition date. The workforce and operating expertise are
not separately identifiable intangible assets and are also included
in goodwill.
Alternative performance measures
Non-IFRS measures or alternative performance measures are used
by the Directors and management for performance analysis, planning,
reporting and incentive-setting purposes. They have remained
consistent with the prior year with the exception of the addition
of the Billings measure, following the acquisition of Appreciate we
have also added EBITDA and pulled out amortisation of intangible
assets arising on acquisition as well as exceptional items. These
measures are included in these financial statements to provide
additional useful information on performance and trends to
shareholders.
These measures are not defined terms under IFRS and therefore
they may not be comparable with similarly titled measures reported
by other companies. They are not intended to be a substitute for,
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 measure relating solely to the
Love2shop segment)
Billings represents the value of goods and services shipped and
invoiced to customers during the year and is recorded net of VAT,
rebates and discounts. Billings is an alternative performance
measure, which the directors believe provides an additional measure
of the level of activity other than total revenue. This is due to
revenue from multi-retailer redemption products being reported on a
'net' basis, whilst revenue from single-retailer redemption
products and other goods are reported on a 'gross' basis.
Net revenue (non-IFRS measure)
Net revenue is total revenue less commissions paid (to retailer
partners and Park Christmas agents) and the cost of revenue for
items where the Group acts in the capacity as principal (including
single-retailer vouchers and SIM cards). This reflects the benefit
attributable to the Group's performance, eliminating pass-through
costs 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 total revenue to net revenue is included in note 3.
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.
Re-presented(1)
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Exceptional items -- acquisition costs expensed 4,065 -
Exceptional items -- impairment loss on reclassification
of investment in associate to asset held for sale 1,252 -
Exceptional items -- finance costs 287 -
Exceptional items -- revaluation of deferred, contingent
consideration liability - (2,880)
Amortisation of intangible assets arising on acquisition 2,574 2,394
Total adjusting items 8,178 (486)
--------------------------------------------------------- ----------- ---------------
(1) Amortisation of intangible assets arising on acquisition is
reported separately on the face of the Consolidated statement of
profit or loss as an adjusting item. The prior year results has
been re-presented on this basis. (see note 1).
Effective tax rate (non-IFRS measure)
Effective tax rate (note 6) is the tax cost as a percentage of
the net profit before tax.
Reported dividends (non-IFRS measure)
Reported dividends are based on a financial year's results from
which the dividend is declared and consist of the interim dividend
paid and final dividend declared (note 14). This is different to
statutory dividends where the final dividend on ordinary shares is
recognised in the following year 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 and retailer
partners' deposits) as detailed in the financial review. This
measures the cash generated which can be used for tax payments, new
investments and financing activities.
Total costs (non-IFRS measure)
Total costs comprise other costs of revenue, administrative
expenses, finance income and finance costs. Total costs exclude
adjusting items, being exceptional costs and amortisation of
intangible assets arising on acquisition.
Earnings before interest, tax, depreciation and amortisation
(EBITDA) (non-IFRS measure)
The Group now presents EBITDA as it is widely used by investors,
analysts and other interested parties to evaluate profitability of
companies. This measures earnings from continuing operations before
interest, tax, depreciation and amortisation. See page 17 for a
reconciliation from profit before tax to EBITDA.
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. See page 17
for a reconciliation from profit before tax to adjusted EBITDA.
Underlying earnings per share from continuing operations
(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)
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Profit before tax from continuing operations 42,574 48,515
Total adjusting items 8,178 (486)
Underlying profit before tax from continuing
operations 50,752 48,029
------------------------------------------------------ ---------- ----------
The calculation of underlying profit before tax is as
follows:
Underlying profit after tax (non-IFRS measure)
The calculation of underlying profit after tax is as
follows:
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Profit after tax from continuing operations 34,710 39,529
Total adjusting items 8,178 (486)
Tax on adjusting items (644) (599)
Underlying profit after tax 42,244 38,444
-------------------------------------------- ---------- ----------
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:
31 March 31 March
2023 2022
GBP'000 GBP'000
Cash and cash equivalents -- corporate cash from continuing
operations 22,546 7,653
Less:
Bank overdraft (525) -
Loans and borrowings (note 12) (94,415) (51,534)
Net corporate debt (72,394) (43,881)
------------------------------------------------------------ -------- --------
2. Segmental reporting
Segmental information
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 is set out below.
Segment profit / (loss) before tax and exceptional items is used to
measure performance because management believes that this
information is the most relevant in evaluating the results of the
respective segments relative to other entities that operate in the
same industries.
PayPoint L2S Total
Year-ended 31 March 2023 GBP'000 GBP'000 GBP'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
The L2S result is only one month, as the acquisition completed
on 28 February 2023.
A business division analysis of revenue has been provided in
note 3.
Geographic information
Year ended Year ended
31 March 31 March
2023 2022
Total Revenue GBP'000 GBP'000
Continuing operations - UK 167,723 145,144
Discontinued operation(1) -- Romania - 1,258
Total 167,723 146,402
------------------------------------- ---------- ----------
(1) The prior year revenue from the discontinued operation
represents the revenue from Romania between 1 and 8 April 2021
prior to disposal.
The total GBP227.9 million (2022: GBP127.3 million) non-current
assets at 31 March 2023 are geographically located within the
UK.
3. Alternative performance measures
Net Revenue
The reconciliation between total revenue and net revenue is as
follows:
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Continuing operations
Service revenue - Shopping 66,057 62,886
Service revenue -- e-commerce 16,085 10,949
Service revenue -- Payments and banking 71,994 67,475
Service revenue -- multi-retailer redemption products 1,217 -
Service revenue - other 128 -
Sale of goods -- single-retailer redemption products 4,325 -
Sale of goods - other 1,316 1,183
Royalties - e-commerce 4,098 2,651
Other revenue -- multi-retailer non-redemption income 1,603 -
Other revenue -- interest on clients' funds, retailer partners'
deposits and card and voucher deposits 900 -
Total revenue from continuing operations 167,723 145,144
less:
Retailer partners' commissions (34,369) (29,827)
Cost of single-retailer cards and vouchers (4,208) -
Cost of SIM card and e-money sales as principal (199) (205)
Net revenue from continuing operations 128,947 115,112
---------------------------------------------------------------- ---------- ----------
Discontinued operation(1)
Service revenue - 366
Sale of goods - 892
Total revenue from discontinued operation - 1,258
less:
Retailer partners' commissions - (101)
Cost of mobile top-ups and SIM card sales as principal - (897)
Net revenue from discontinued operation - 260
---------------------------------------------------------------- ---------- ----------
Total net revenue 128,947 115,372
(1) The prior year revenue and net revenue from the discontinued
operation represents the revenue and net revenue from Romania
between 1 and 8 April 2021 prior to disposal.
Total Costs
Total costs from continuing operations, excluding adjusting
items, comprises:
Re-presented(1)
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Other costs of revenue 25,481 18,693
Administrative expenses -- excluding adjusting
items 50,083 46,357
Finance income (note 5) (87) (13)
Finance costs (note 5) 2,718 2,046
Total costs 78,195 67,083
------------------------------------------------- ---------- ---------------
(1) Amortisation of intangible assets arising on acquisition was
reported separately on the face of the Consolidated statement of
profit or loss as an adjusting item. The prior year results have
been re-presented on this basis. (see note 1).
Love2shop billings
Billings 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 revenue
is as follows:
Year ended
31 March 2023
GBP'000
Love2shop billings 14,807
Multi-retailer redemption products -- gross to net revenue
recognition (7,515)
Other revenue -- interest on clients' funds and retailer
partners' deposits 325
Total Love2shop revenue from continuing operations 7,617
----------------------------------------------------------- --------------
4. Exceptional items
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Acquisition costs expensed - administrative expenses 4,065 -
Impairment loss on reclassification of investment in associate
to asset held for sale 1,252 -
Revaluation of deferred, contingent consideration liability - (2,880)
Total exceptional items included in operating profit 5,317 (2,880)
Gain on disposal of discontinued operation, net of tax - (29,863)
Refinancing costs expensed -- finance costs 287 -
Total exceptional items included in profit or loss 5,604 (32,743)
--------------------------------------------------------------- ---------- ----------
The tax impact of the exceptional items is GBPnil (2022:
GBPnil).
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.
5. Finance income and costs
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Finance income
Interest income on clients' funds, retailer partners' deposits
and card and voucher deposits -- reported as Other revenue 900 -
Interest income on defined benefit pension scheme assets 58 -
Other interest 29 13
Total interest income reported as Finance income 87 13
Total 987 13
--------------------------------------------------------------- ---------- -----------
Finance costs
Bank interest payable 2,631 2,024
Interest expense on defined benefit pension scheme obligations 55 -
Lease and other interest 32 22
Total finance costs 2,718 2,046
--------------------------------------------------------------- ---------- -----------
6. Tax
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Continuing operations
Current tax
Charge for current year 7,829 8,254
Adjustment in respect of prior years (806) 86
Current tax charge 7,023 8,340
----------------------------------------------------------- ----------- -----------
Deferred tax
Charge for current year 1,144 577
Adjustment in respect of prior years (303) 69
Deferred tax charge 841 646
----------------------------------------------------------- ----------- -----------
Total income tax charge on continuing operations 7,864 8,986
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Tax charged directly to other comprehensive income
Deferred tax on actuarial gains on defined benefit pension 86 --
plans
The income tax charge is based on the UK statutory rate of
corporation tax for the year of 19% (2022: 19%). Deferred tax has
been calculated using the enacted tax rates that are expected to
apply when the liability is settled, or the asset realised. During
the prior financial year, an increase in the main rate of UK
corporation tax from 19% to 25% with effect from 1 April 2023 was
enacted. Deferred tax has been calculated based on the rate
applicable at the date timing differences are expected to
reverse.
The income tax charge of GBP7.9 million (2022: GBP9.0 million)
on profit before tax of GBP42.6 million (2022: GBP48.5 million from
continuing operations) represents an effective tax rate(1) of 18.5%
(2022: 18.5% for continuing operations). This is lower than the UK
statutory rate of 19% due to adjustments in respect of prior year
and capital allowance super deduction, partially offset by
disallowable expenses.
The tax charge on continuing operations for the year is
reconciled to profit before tax from continuing operations, as set
out in the consolidated statement of profit or loss, as
follows:
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Profit before tax 42,574 48,515
Tax at the UK corporation tax rate of 19% (2022: 19%) 8,089 9,218
Tax effects of:
Disallowable expense/(non-taxable income) -- exceptional
items 1,119 (547)
Disallowable expense/(non-taxable income) -- other 1 (726)
Adjustments in respect of prior years (1,109) 155
Capital allowance super deduction (390) --
Tax impact of share-based payments (121) (3)
Revaluation of deferred tax liability 275 889
Actual amount of tax charge on continuing operations 7,864 8,986
--------------------------------------------------------- ---------- ----------
(1) Effective tax rate is the tax cost as a percentage of profit
before tax on continuing operations.
7. Earnings per share
Basic and diluted earnings per share are calculated on the
following profit and number of shares.
Re-presented(1)
Year ended Year ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Total profit for basic and diluted earnings per share is
the net profit attributable to equity holders of the parent 34,710 69,540
------------------------------------------------------------- ---------- ---------------
Continuing operations
Profit for basic and diluted earnings per share is the net
profit from continuing operations attributable to equity
holders of the parent 34,710 39,529
Continuing operations -- underlying
Profit for basic and diluted earnings per share is the net
profit from continuing operations before adjusting items
attributable to equity holders of the parent 42,244 38,444
Discontinued operation
Profit for basic and diluted earnings per share is the net
profit from discontinued operation attributable to equity
holders of the parent - 30,011
(1) The prior year profit after tax for "Continuing operations
-- underlying" has been re-presented to exclude amortisation on
acquired intangible assets.
31 March 31 March
2023 2022
Number Number
of shares of shares
Thousands Thousands
Weighted average number of ordinary shares in issue (for
basic earnings per share) 69,281 68,631
Potential dilutive ordinary shares:
Long-term incentive plan - 164
Restricted share awards 588 408
Deferred annual bonus scheme 104 108
SIP and other 60 58
Weighted average number of ordinary shares in issue (for
diluted earnings per share) 70,033 69,369
--------------------------------------------------------- ---------- ----------
The SIP and other dilutive shares only have a passage of time
restriction on them, hence are included above but not in the total
number of outstanding share awards at the end of the year.
8. Goodwill
The Group tests goodwill for impairment annually and more
frequently if there are indicators of impairment as set out in note
1. The Group's cash-generating units ('CGUs') have been assessed
based on independently managed cash flows. When testing for
impairment, recoverable amounts for the Group's CGUs are measured
at their value-in-use by discounting the future expected cash flows
from the assets in the CGUs. The Group prepares five-year cash flow
forecasts derived from the most recent three-year financial budgets
approved by the Board which are extrapolated for a further two
years and subsequently extended to perpetuity. A key source of
estimation in the impairment tests is the short-term revenue growth
rates applied within the cash flow forecasts, which are determined
using an estimate of future results based on the latest business
forecasts and appropriately reflect expected performance of the
CGU. The estimates of future cash flows are based on past
experience, adjusted for estimates of future performance, including
the continued shift from cash to digital payments.
Terminal values are based on long-term growth rates that do not
exceed 2%, which appropriately reflects the expected long-term rate
of GDP growth in the UK. The pre-tax risk-adjusted discount rates
have been used to discount the forecast cash flows calculated by
reference to the weighted average cost of capital ('WACC') of each
CGU. The cost of equity is based on the risk-free rate for
long-term UK government bonds, which is adjusted for the beta
(reflecting the systemic risk of PayPoint relative to the market as
a whole) and the equity market risk premium (reflecting the
required return over and above a risk-free rate by an investor who
is investing in the market as a whole).
All CGUs assessed generate value-in-use in excess of their
carrying values. Sensitivity analysis applied to discount rate and
short-term growth rate demonstrated that a combination of adverse
changes in assumptions for the Handepay CGU could cause its
carrying value to exceed its recoverable amount, as explained
below. The headroom between the Handepay CGU valuation and its
recoverable amount is GBP12.0 million, calculated using the
assumptions below. For the other CGUs, no reasonably possible
change in any of the assumptions would cause their carrying values
to exceed their recoverable amounts. Management does not consider
that climate change factors would adversely impact its goodwill
impairment assessments.
Merchant Digital
Group -- Love2shop i-movo Handepay Rentals payments
goodwill CGU CGU CGU CGU CGU Total CGUs
values GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 March
2021 -- 6,867 35,632 9,586 -- 52,085
-------------- --------- -------- -------- -------- --------- ----------
Acquisition of
business -- -- -- -- 5,583 5,583
At 31 March
2022 -- 6,867 35,632 9,586 5,583 57,668
-------------- --------- -------- -------- -------- --------- ----------
Acquisition of
business 59,759 - - - - 59,759
-------------- --------- -------- -------- -------- --------- ----------
At 31 March
2023 59,759 6,867 35,632 9,586 5,583 117,427
-------------- --------- -------- -------- -------- --------- ----------
The key assumptions used in the estimation of the recoverable
amount are set out below. The values assigned to the key
assumptions represent management's assessment of future trends in
the relevant industries and have been based on historical data from
both external and internal sources.
Assumptions used for annual impairment tests
Merchant Digital
Love2shop i-movo Handepay Rentals payments
CGU CGU CGU CGU CGU
At 31 March 2023
Recoverable amount of cash generating
unit GBP68.0m GBP8.6m GBP45.6m GBP23.7m GBP11.7m
Pre-tax risk adjusted discount
rate 16.0% 16.6% 15.7% 14.6% 15.1%
Terminal growth rate 2.0% (8.0)%-2.0% 2.0% 2.0% 2.0%
At 31 March 2022
Recoverable amount of cash generating
unit -- GBP8.8m GBP46.8m GBP22.6m GBP10.5m
Pre-tax risk adjusted discount
rate -- 15.0% 11.8% 11.8% 15.6%
Terminal growth rate -- 0.0% 2.0% (5.0)%-2.0% 2.0%
Given the proximity of the timing of the Appreciate acquisition
to the year end, fair value less costs of disposal was also
considered as an alternative measure of recoverable amount and
indicated that no impairment was required at the year end.
9. Acquisition of subsidiaries
A) Appreciate Group PLC
On 28 February 2023, PayPoint acquired 100% of the share capital
of Appreciate Group PLC for consideration of GBP79.2 million,
comprising cash of GBP61.9 million plus equity of GBP17.3 million
in the form of 3.6 million issued shares, and based on the closing
share price of GBP4.84 per share at 28 February 2023. The
acquisition resulted in a net GBP45.6 million cash outflow (net of
cash and borrowings acquired) in the current year.
The primary reasons for the acquisition were to open up a range
of growth opportunities, leveraging Appreciate's well-established
and well-regarded offerings in the gift card, voucher and prepay
savings markets.
The following intangible assets have been recognised and are
being amortised over useful lives as shown:
Fair value Useful
GBP million life
---------------------- ------------ -----------
Brands 11.8 12-15 years
---------------------- ------------ -----------
Customer relationships 21.6 2-13 years
---------------------- ------------ -----------
Developed technology 7.0 5 years
---------------------- ------------ -----------
In the period since acquisition, Appreciate contributed total
revenue of GBP7.6 million and nil profit before tax to the Group's
results. Had the acquisition taken place on the first day of the
financial year, Appreciate would have contributed revenue of
GBP135.3 million and profit before tax of GBP0.7 million (on an
unconsolidated basis).
Acquisition costs incurred in the year in relation to Appreciate
totalled GBP3.6 million, which are reported within exceptional
items in profit or loss.
The following table summarises the provisional fair values of
the identifiable assets purchased and liabilities assumed at the
acquisition date:
28 February
2023
GBP'000
Acquired brands 11,790
Acquired customer relationships 21,648
Acquired developed technology 7,006
Retirement benefit asset 1,573
Property, plant and equipment 5,631
Trade and other receivables 10,650
Inventories 3,557
Current tax asset 2,099
Monies held in trust 47,000
Cash and cash equivalents -- corporate cash 17,469
Cash and cash equivalents -- card and voucher deposits 64,960
Payables in respect of cards and vouchers (108,489)
Other trade and other payables (49,923)
Lease liabilities (5,448)
Retirement benefit liability (1,395)
Borrowings (1,124)
Deferred tax liabilities (7,582)
Total identifiable net assets acquired at fair value 19,422
------------------------------------------------------- -----------
Cash consideration 61,925
Equity consideration 17,256
Total consideration 79,181
------------------------------------------------------- -----------
Goodwill recognised on acquisition 59,759
Cash outflows in respect of acquisition
-------------------------------------------------------
Cash consideration (61,925)
Cash acquired 17,469
Bank overdraft acquired (1,124)
Acquisition of subsidiary net of cash acquired (Group) (45,580)
------------------------------------------------------- -----------
Acquisition of subsidiary (Company) (1) (61,925)
------------------------------------------------------- -----------
(1) Excludes GBP3.6million acquisition costs, capitalised in
investments in the Company statement of financial position but
expensed in the Group statement of profit and loss.
The acquired identifiable assets and liabilities have been
recognised at their fair values at acquisition date and in
accordance with the Group's accounting policies (note 1):
-- The acquired customer relationships including contractual
customer relationships have been valued using the multi-period
excess earnings method ("MEEM approach") by estimating the total
expected income streams from the customer relationship and
deducting portions of the cash flow that can be attributed to
supporting, or contributory, assets (including workforce). The
contractual customer relationships asset relates to cards existing
at the acquisition date, some of which will be redeemed post
acquisition and on which a service fee will be earned and some of
which (including those only partially redeemed) will expire with
unredeemed balances on which unredeemed income will be earned. It
is estimated based on the expected revenue to be received, less the
costs to deliver the service. The residual income streams are
discounted. No tax amortisation benefit is applied. The key inputs
to this method are the customer churn rate and discount rate
applied to future forecasts of the businesses. Contractual customer
relationships have a fair value of GBP7.7 million and a useful
economic life (UEL) of two years. Non-contractual customer
relationships have a fair value of GBP14.0 million (GBP8.8 million
relating to Appreciate Business Services and
GBP5.2 million relating to Park) and a UEL of eleven to thirteen
years.
-- Acquired brands have been valued using the
relief-from-royalty method.
-- Acquired software intangible assets and property, plant and
equipment have been valued using the depreciated replacement cost
method, considering factors including economic and technological
obsolescence.
-- Inventories, trade receivables and trade payables have been
assessed at fair value on the basis of the contractual terms and
economic conditions existing at the acquisition date, reflecting
the best estimate at the acquisition date of contractual cash flows
not expected to be collected. The fair value assessment of trade
receivables reflects estimated uncollectable amounts of
GBP251,000.
-- The retirement benefit asset has been measured in accordance
with IAS19 at the date of acquisition.
-- The deferred tax liability comprises GBP10.1 million
liability recognised on the GBP40.4 million of acquired intangible
assets, less GBP2.5 million of deferred tax asset relating
principally to acquired losses, measured in accordance with
IAS12.
-- Lease liabilities are valued at the present value of the
remaining lease payments as if the acquired leases were new leases
at the acquisition date. The related right of use assets are
measured at the same amount, adjusted to reflect terms which are
either favourable or unfavourable compared to market terms. The
fair value of the right of use asset relating to the Chapel St.
premises differs from that of the associated lease liability due to
favourable terms for rent-free and discounted periods.
The following acquired assets and liabilities were valued using
management's best estimates based on information available at the
acquisition date, which are therefore subject to adjustment within
the measurement period if new information about facts and
circumstances that existed at the acquisition date is obtained and,
if known, would have resulted in the recognition of those assets
and liabilities at that date.
-- Trade and other receivable
-- Trade and other payables
-- Intangible assets (and the deferred tax liability thereon)
Of the GBP59.8 million of goodwill acquired during the period,
no goodwill is expected to be deductible for tax purposes. The
goodwill arising on acquisitions is attributable to workforce,
synergies, growth from new customers and other assets not
separately recognised.
10. TRADE AND OTHER RECEIVABLES
31 March 31 March
2023 2022
GBP'000 GBP'000
Trade receivables 17,703 10,316
Items in the course of collection(1) 47,771 55,449
Revenue allowance for expected credit losses (1,058) (1,058)
64,416 64,707
Other receivables 1,822 134
Net investment in finance lease receivables 2,144 1,814
Contract assets -- capitalisation of fulfilment costs 2,910 2,057
Accrued income 5,241 4,315
Prepayments 5,522 2,948
Total 82,055 75,975
------------------------------------------------------ -------- --------
(1) Items in the course of collection represent amounts
collected for clients by retailer partners. An equivalent balance
is included within trade and other payables (settlement
payables).
11. TRADE AND OTHER PAYABLES
31 March 31 March
2023 2022
GBP'000 GBP'000
Amounts owed in respect of clients' funds and retailer partners'
deposits(1) 18,197 16,646
Settlement payables(2) 47,771 55,449
Client payables 65,968 72,095
Payables in respect of cards and vouchers(3) 101,454 -
Trade payables(4) 63,133 4,789
Other taxes and social security 4,874 3,314
Other payables 4,117 901
Accruals 15,171 10,087
Deferred income 214 401
Contract liabilities -- deferral of set-up and development
fees 710 788
Total 255,641 92,375
----------------------------------------------------------------- -------- --------
Disclosed as:
Current 255,526 92,375
Non-current (payables in respect of vouchers and cards) 115 --
Total 255,641 92,375
----------------------------------------------------------------- -------- --------
(1) Relates to monies collected on behalf of clients where the
Group has title to the funds (clients' funds and retailer partners'
deposits). An equivalent balance is included within cash and cash
equivalents.
(2) Payable in respect of amounts collected for clients by
retailer partners. An equivalent balance is included within trade
and other receivables (items in the course of collection).
(3) Payables in respect of cards and vouchers include balances
due to both customers (GBP19.7 million (2022: GBP18.7 million)) and
retailers in respect of flexecash (c) cards and amounts due to
retailers for Love2shop vouchers and cards.
(4) Trade payables includes L2S savers' prepayment balances for
products that will be supplied prior to Christmas 2023, upon
confirmation of order. Until orders are confirmed, savers'
prepayments are repayable on demand.
12. LOANS AND BORROWINGS
GBP'000
At 31 March 2022 51,534
Repayments of revolving credit facility (9,000)
Drawdowns on revolving credit facility 28,500
Repayment of amortising term loan (10,833)
Drawdown of new amortising term loan 36,000
Interest charge 2,612
Interest paid (2,157)
Repayment of block loans (2,241)
At 31 March 2023 94,415
---------------------------------------- --------
Disclosed as:
Current
----------------------------------------
Revolving credit facility 46,500
Amortising term loan 10,833
Accrued interest 455
Block loans 457
Total - current 58,245
---------------------------------------- --------
Non-current
----------------------------------------
Amortising term loan 36,000
Block loans 170
Total -- non-current 36,170
---------------------------------------- --------
Balance at end of year 94,415
---------------------------------------- --------
Other liability-related changes
Interest paid (2,157)
GBP'000
At 31 March 2021 86,583
Repayments of revolving credit facility (47,000)
Drawdowns on revolving credit facility 24,500
Repayment of amortising term loan (10,833)
Interest charge 1,913
Interest paid (1,913)
Repayment of block loans (3,636)
Funding from block loans 1,920
At 31 March 2022 51,534
---------------------------------------- --------
Disclosed as:
Current
----------------------------------------
Revolving credit facility 27,000
Amortising term loan 10,833
Block loans 1,810
Total - current 39,643
---------------------------------------- --------
Non-current
----------------------------------------
Amortising term loan 10,833
Block loans 1,058
Total -- non-current 11,891
---------------------------------------- --------
Balance at end of year 51,534
---------------------------------------- --------
Other liability-related changes
Interest paid (1,913)
13. SHARE CAPITAL, SHARE PREMIUM AND MERGER RESERVE
31 March 31 March
2023 2022
GBP'000 GBP'000
Called up, allotted and fully paid share capital
72,563,234 (2022: 68,915,949) ordinary shares of 1/3p each 242 230
The increase in share capital in the current year resulted from
3,565,382 shares issued (of 1/3p each) as part of the consideration
for Appreciate Group PLC, 47,899 shares issued (of 1/3p each) for
share awards which vested in the year and 34,004 matching shares
issued (of 1/3p each) under the Employee Share Incentive Plan.
The share premium of GBP1.0 million (2022: GBP1.0 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 GBP18.2 million (2022: GBP1.0 million)
comprises GBP1.0 million initial share consideration in excess of
the nominal value of shares issued on the initial acquisition of
i-movo and GBP17.2 million share consideration in excess of the
nominal value of shares issued in relation to the Appreciate
acquisition.
14. DIVIDS
Year ended 31 Year ended 31
March 2023 March 2022
pence pence
GBP'000 per share GBP'000 per share
------- ---------- ------- ----------
Reported dividends on ordinary shares:
Interim ordinary dividend 12,693 18.4 11,687 17.0
Proposed final ordinary dividend 13,497 18.6 12,405 18.0
Total ordinary reported dividends (non-IFRS
measure) 26,190 37.0 24,092 35.0
Dividends paid on ordinary shares:
Final ordinary dividend for the prior year 12,414 18.0 11,409 16.6
Interim dividend for the current year 12,693 18.4 11,687 17.0
Total ordinary dividends paid (financing cash
flows) 25,107 36.4 23,096 33.6
Number of shares in issue used for proposed final
ordinary dividend per share calculation 72,563,234 68,915,949
The proposed final ordinary dividend is subject to approval by
shareholders at the Annual General Meeting and has not been
included as a liability in these financial statements.
15. Notes to the cash flow statement
Year ended Year ended
31 March 31 March
2023 2022
Group Note GBP'000 GBP'000
Profit before tax from continuing operations 42,574 48,515
Profit before tax from discontinued operation -- 30,011
Adjustments for:
Depreciation of property, plant and equipment 4,922 4,768
Amortisation of intangible assets 5,555 5,801
Profit from discontinued operation -- (30,011)
R&D and VAT credits -- (15)
Exceptional item -- revaluation of deferred, contingent
consideration liability -- (2,880)
Exceptional item -- non-cash impairment loss on reclassification
of investment in associate to asset held for sale 1,252 --
Loss on disposal of fixed assets 1,090 59
Finance income 5 (987) (13)
Finance costs 5 2,718 2,046
Share-based payment charge 1,330 868
Operating cash flows before movements in working capital 58,454 59,149
Movement in inventories 737 70
Movement in trade and other receivables (1,301) (526)
Movement in finance lease receivables 2,366 4,354
Movement in contract assets (853) (24)
Movement in contract liabilities (78) (684)
Movement in provisions -- (12,500)
Movement in payables 3,688 (6,488)
Movement in lease liabilities (90) (7)
Cash generated from operations 62,923 43,344
Movement in clients' funds, retailer partners' deposits
and card and voucher deposits 39,259 (9,718)
Net cash inflow from operations(1) 102,182 33,626
----------------------------------------------------------------- ---- ---------- ----------
1 Items in the course of collection, settlement payables and
card and voucher balances are included in this reconciliation on a
net basis through the client cash line. The Directors have included
these items on a net basis to best reflect the operating cash flows
of the business.
16. CONTINGENT LIABILITY
As announced in our RNS on 29 March 2023, the Group received
'letter before action' correspondence in March 2023 from a small
number of market participants relating to 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 Ofgem resolution to the case did not include
any infringement findings.
The Group responded robustly to both sets of allegations. A
claim has now been served on a number of companies in the Group in
relation to each matter: Utilita Energy Limited and Utilita
Services Limited ("Utilita") served a formal claim on 16 June 2023
and Global-365 plc and Global Prepaid Solutions Limited
("Global-365") served a formal claim on 18 July 2023. Consideration
has been given, in these financial statements, to the possibility
of any liabilities arising from each claim. The Group is continuing
to take legal advice with regard to these two claims. 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 and also over-estimates
the opportunity, if any, available for the products offered by
Global-365. As a result, no provision has been recognised in
respect of either claim.
The Group intends to continue to robustly defend its position in
both claims. However, if the Group was unable to successfully
defend either claim, any liabilities could have a material adverse
impact on the Group.
(1) Net revenue is an alternative performance measure. Refer to
note 3 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 tax
(5) 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 equivalents
(6) Adjusting items comprises exceptional items and amortisation
of intangible assets arising on acquisition. Refer to note 1 for a
reconciliation.
(7)
https://www.globenewswire.com/Tracker?data=7p9dEMzZ0SsvqU40EGm6QrFcVYzckcHoTTUPuUKoIkcCNCtRWypYIQFx36ofBHLmJ6jOGBvDuFcgjj5DK3cvbmPBzv85bSZi09kbztlRMZlK8dVClTBWhL0Evt3vh43fTON0om79w6asqPZ4FwJz-ykXyq8dPw1Nq5u1XIuA86j2tDaBsJ7fvK9uhWJxNSUaSAU53ta3FYSVFmVe8idTXCb8VcrQY5zFt-CK1kT5SPqcwev8rF575ucsphOUlPT1Lsm8_BskEOGEs39hwYeQ4Jbj-7_1XfE2vMeqmVfx4oA=
https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/march2023
(8)
https://www.globenewswire.com/Tracker?data=7p9dEMzZ0SsvqU40EGm6QtFS6TUodeDP11AkOICkPuR5poS2rZLbWAj_YfjA4TqpEAMrMFKkN9oqnqPjuqU1JhJQJ3aGX_xhuVOERn0cPZWG22DO6LVqpZUycNSRKDHuWVum_6mWbHxKsicreNlmLR2VTBsN32SF_-9mZDaZegGmI43nRuJVcfF_rAFPpXZt7ma15BZxkE91jiF3CEBM2MheNkaOD7vKyyb3iJVLHBc=
https://www.gfk.com/press/UK-Consumer-confidence-up-six-points-in-April
https://www.globenewswire.com/Tracker?data=7p9dEMzZ0SsvqU40EGm6QtFS6TUodeDP11AkOICkPuS4a6FCzpAftdA6Z40j4QL2DJIQqp2T7-_ruPxdIOCLQaAKGDatQ4R4wkABho14iS_Ks_Vo3ZIC6i939DrzKcIU8uUmMfxliJ9Utd2l7rgo6JsB0NIMuFb5TSiwnep1ODeacF1AdXtsAl5X2CPEY-vb35-FARByelIi9zPBnPa_xk2aK-4lsbcA24mQXeOJNjlttdakzzmRtTiUUWYXk0jgHBQCLyW2dOY8oja6QHG6wg==
https://www.gfk.com/press/UK-consumer-confidence-tumbles-to-new-low-of-49-in-September
(9)
https://www.globenewswire.com/Tracker?data=7p9dEMzZ0SsvqU40EGm6QrFcVYzckcHoTTUPuUKoIkfyYHWH13E3cit_XyhuD59GsYyJtoSmxv4_ozFvWJ2uYBOvFKsEdgryKMhkL_R8LPJw_3bQDGjpYkVTGlw-tGEuEAyUBbgS1rEZuQTtRW14yegEPfVZvHGhFZ6ITRzyVXxf3RkWvKjbGEUCYbBKL62h1kJb7IpvMak1hknMlXMCb_K2E_IgRX4wAKvyANM5q8zPTKTJhd7kl_j8NcGMYSyiuT6JH4UiNjl9UpBWRObKaO8aAswTUi6hrR4jHKgnIe4=
https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/march2023
(10)
https://www.globenewswire.com/Tracker?data=7p9dEMzZ0SsvqU40EGm6Qul6DVNtNVhA0d81uYxVnRBfX6GgKlFv-NmK8mjEV7MZpRx9EtJ42KTJ3Sr5oxYlKc2qwJ1UzUDoNmyztEv6EXuZX734pub_TZ4mxss2gyy271YHXpJ3qdbxGBVS4q_5TyBqKx6B_1qwmnGuFBjsfdtn14e2jsE4QI2s_2TgLW1yLSCTqfc7C_hLLVGU3mTXEbJm9f56gE1PeuFOn1H31Kiqn3QsEFl3S1wOR_qe5m5kZ5DQc6S-Z0JgllzGu-D-YJNYHCO5C_4NoWBANs1_A5xqiSUejtRb58F9-7MtnBvr0MMmKtix63KiHMbd6de_xQ==
https://www.natwest.com/content/dam/natwest/business-insights/documents/nw-retail-and-leisure-outlook-2023.pdf
page 5
(11) Source: Lumina Intelligence, July 2023
(12) Lumina Intelligence CTP 12WE-05.03.23 & Convenience
Strategy Forum Debrief -- Q1 2023
(13) Lumina Intelligence CTP 12WE-05.03.23 & Convenience
Strategy Forum Debrief -- Q1 2023
(14) PayPoint internal data
(15) Source: PayPoint Dashboard Report page 25 (Lumina
Intelligence, July 2022)
(16) Source: PayPoint Dashboard Report page 25 (Lumina
Intelligence, July 2022)
(17) IMRG Consumer Home Delivery Review 2022/23 -- page 27
(18)
https://www.ukfinance.org.uk/system/files/2022-8/UKF%20Payment%20Markets%20Summary%202022.pdf
page 3
(19) UK Finance Card Spending Update for February 2023
(20) UK Finance Card Spending Update for February 2023
(21)
https://www.globenewswire.com/Tracker?data=7p9dEMzZ0SsvqU40EGm6QpZDBYtakTZT4aPQ1QI-vTpKt3OI8YynDF_QTnjQ2YijyoOgRBPF8dNJkIOAq_zCYCzeAOCwTXZidekuTdT8sIagrnPIUsjQqqcCKS1MyLxvvD_TxT316-uHh7xsvEea_EzE3pw4ifAl7ij3SA7jQ_3bJRRVaDWBUTi1dPmfWa217KDWhjab9ZmBoRi2J33xHZlTgpr8MeW6UCsvKonWVcRd_PMd3AjKEPbyPFMAwYQU
https://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf
page 4
(22)
https://www.link.co.uk/media/2199/monthly-report-mar-23-final.pdf
(23) IMRG's Consumer Home Delivery Report UK
(24) IMRG's Consumer Home Delivery Report UK
(25) Metapack ecommerce delivery report 2023
(26)
https://www.imrg.org/uploads/mediadefault/0001/08/2477f50ad2fee946cdf5ed23ebb8df21f2489d09.pdf?st.
(27) OC&C analysis
(28)
https://www.globenewswire.com/Tracker?data=7p9dEMzZ0SsvqU40EGm6QkQt723BnRA5AMgOasZlyK1iVdHh3BKX9-L989fL9TA-zLcbmgdADnYavGwz8yYK3pNp_A3p1PN0cj-foV0vDya8rFGtrET_i7TPXgA-FbMrn2q4eZjP2GF14WP9e3j1jTZqh0hJfqAcQmVtXSzkNZc=
https://www.ofgem.gov.uk/retail-market-indicators
(29)
https://www.ofgem.gov.uk/energy-data-and-research/data-portal/all-available-charts?keyword=breakdown%20of%20the%20default%20tariff%20price%20cap&sort=relevance
(30)
https://www.ofgem.gov.uk/energy-data-and-research/data-portal/all-available-charts?keyword=breakdown%20of%20the%20default%20tariff%20price%20cap&sort=relevance
(31)
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1143890/Q4_2022_Smart_Meters_Statistics_Report.pdf
(32) PayPoint Data -- Data based on regular customers only, ones
transacting before the beginning of the two-year period and in the
last three months of the date range
(33)
https://www.ofcom.org.uk/__data/assets/pdf_file/0018/240930/Communications-Market-Report-2022.pdf
(34)
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1150988/JROC_report_recommendations_and_actions_paper_April_2023.pdf
(35)
https://www.ukfinance.org.uk/system/files/2023-05/Annual%20Fraud%20Report%202023_0.pdf
(36)
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1150988/JROC_report_recommendations_and_actions_paper_April_2023.pdf
(37)
https://www.openbanking.org.uk/insights/how-open-banking-can-help-consumers-manage-cost-of-living-challenges/
(38) GVCA Consumer Report May 2023
(39) GCVA-State-of-the-Nation-March-2022
40 Amortisation of intangible assets arising on acquisition were
not identified as adjusting items in the prior year financial
statements (see note 1).
41 Adjusted EBITDA is an alternative performance measure. Refer
the finance review for a reconciliation.
(42) 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.
(43) Dividend cover represents profit after tax divided by
reported dividends.
Attachment
-- FY23 RNS - Final
https://ml-eu.globenewswire.com/Resource/Download/5607195c-04a0-4f43-b2a7-4f3ca32eb2be
(END) Dow Jones Newswires
July 28, 2023 02:00 ET (06:00 GMT)
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