What is Paypoint?
PayPoint is a UK-based company that provides a range of
payment and retail services to businesses and consumers. It has grown to become a
major player in the payments industry, with a network of over
28,000
retail locations across the UK.
One of the main services offered by PayPoint is the ability to
pay bills and
top up mobile phones at participating retail outlets. Customers can visit a PayPoint location and make a payment using cash or a debit card,
eliminating the need to send a check or visit a payment website. PayPoint also offers a range of other payment services, including the ability to pay for goods and services online, pay council tax, and set up direct debits.
In addition to its payment services, PayPoint also operates a
network of retail locations that offer a range of products and services. These include convenience stores, newsagents, and other small retailers that offer a range of goods such as groceries, tobacco products, and lottery tickets.
PayPoint has a strong focus on
security and has implemented a number of measures to
protect its customers' personal and financial information. It is also committed to providing excellent
customer service, with a dedicated team available to assist customers with any issues or concerns they may have.
Overall, PayPoint is a
leading provider of payment and retail services in the UK, with a strong focus on
security and
customer service. Its wide range of services and extensive network of retail locations make it a convenient choice for businesses and consumers alike.
What about the financials?
PayPoint reported a
jump in revenues in November, supported by a
strong performance in its e-commerce arm. The
half year report said revenue from continuing operations increased
7% in the six months to 30 September, to
£75.4m, while pre-tax profits before exceptional items rose
2%
to
£22.5m.
PayPoint said it had benefited from an "excellent" performance in its e-commerce division, driven primarily by the clothing and fashion categories and the expansion of new services with carrier partners.
Net revenues in the division jumped
46% to
£3m, while its shopping unit reported a
3% jump to
£30.8m. Revenues at the payments and banking arm, which includes the Department for Work and Pension Payment Exception Service, improved
6% to
£25.7m.
PayPoint said
4.5m
vouchers were issued during the half year through the Payment Exception Service, which allows people without bank accounts to receive benefits and other payments. Its Cash Out service, meanwhile, was boosted by government Cost of Living payments.
Overall, pre-tax profits fell
62% to
£21m, however, this was due to last year's results being boosted by a one-off
£30m profit on the sale of PayPoint’s Romanian business.
Nick Wiles, chief executive, said: "This has been a positive half year, where we have continued to build momentum across the business and remain confident in delivering further progress in the current year."
"Against an uncertain market background in the second half, our compelling characteristics of strong cash flow, resilient earnings and growth mean we remain confident of the progress we are making in the transformation of our business and delivering expectations for the year."
Earlier this month, PayPoint agreed to buy gift card and Christmas savings club Appreciate Group in an
£83m deal. Wiles said the acquisition, which is slated to complete in the first half of the 2024 full year, would be immediately earnings enhancing and deliver "attractive" returns for shareholder.
How did the market react?
PayPoint reported a
jump in revenues in November, supported by a
strong performance in its e-commerce arm. The
half year report said revenue from continuing operations increased
7% in the six months to 30 September, to
£75.4m, while pre-tax profits before exceptional items rose
2%
to
£22.5m.
PayPoint said it had benefited from an "excellent" performance in its e-commerce division, driven primarily by the clothing and fashion categories and the expansion of new services with carrier partners.
Net revenues in the division jumped
46% to
£3m, while its shopping unit reported a
3% jump to
£30.8m. Revenues at the payments and banking arm, which includes the Department for Work and Pension Payment Exception Service, improved
6% to
£25.7m.
PayPoint said
4.5m
vouchers were issued during the half year through the Payment Exception Service, which allows people without bank accounts to receive benefits and other payments. Its Cash Out service, meanwhile, was boosted by government Cost of Living payments.
Overall, pre-tax profits fell
62% to
£21m, however, this was due to last year's results being boosted by a one-off
£30m profit on the sale of PayPoint’s Romanian business.
Nick Wiles, chief executive, said: "This has been a positive half year, where we have continued to build momentum across the business and remain confident in delivering further progress in the current year."
"Against an uncertain market background in the second half, our compelling characteristics of strong cash flow, resilient earnings and growth mean we remain confident of the progress we are making in the transformation of our business and delivering expectations for the year."
Earlier this month, PayPoint agreed to buy gift card and Christmas savings club Appreciate Group in an
£83m deal. Wiles said the acquisition, which is slated to complete in the first half of the 2024 full year, would be immediately earnings enhancing and deliver "attractive" returns for shareholder.
How did the market react?
Despite a set of positive results for the company, the share price has continued to tumble, down around
4.5% since the announcement.
Conclusion
Paypoint has had a
strong first half of the financial year. We believe it is set to
benefit from the current economic climate and will continue to
perform well
in 2023. The market's lack of reaction to these results provides with a potential
opportunity to buy in at a
discount. Lastly, a generous dividend yield of more than of
7% provides some peace of mind for this investment - if we hang in long enough, we are likely to see a
positive return at this rate, even if the share price decreases.
We will be adding it to our portfolio tomorrow morning.
Despite a set of positive results for the company, the share price has continued to tumble, down around
4.5% since the announcement.
