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Paypoint lifts dividend as new tech rollout continues
Payment services and technology firm Paypoint issued its preliminary results for the year ended 31 March on Thursday, reporting 5% growth in revenue to £213.5m.
The London-listed company said its net revenue grew 1.8% to £119.6m, attributable to underlying net revenue growth of £6.3m.
That growth was itself underpinned by UK retail services, driven by: the rollout of the PayPoint One platform; along with "good progress" for Paypoint's cards proposition, a strong performance in UK bill payments and top-ups where net revenue grew 1% to £70m, and Romania where net revenue grew 29.8% to £11.9m.
Costs declined by £1.0m in the second half of the year compared to the second half of the prior year, the board reported.
Its full-year cost base grew by £2.4m to £66.6m, however, which it said reflected continued investment in PayPoint One, MultiPay, and improving customer service.
The company's gross margin fell to 46.8% due to the Payzone acquisition - excluding Payzone it said its gross margin was broadly stable at 49.2%.
Operating profit rose 0.4% to £53.5m, with a profit before tax of £52.9m slightly ahead of expectations.
Paypoint's operating cash flow improved 6.5% to £65.1m.
A new financing facility was secured until March 2023 during the year, for £75m at improved margins.
The board confirmed a final ordinary interim dividend of 30.6p per share - an increase of 2% year-on-year - alongside the additional interim dividend of 15.3p per share.
Total dividends of £55.9m were paid to shareholders during the period, which was said to have been supported by strong cash generation of £65.1m, up on the prior year by £4.0m.
Cash at period end stood at £46.0m, or £18.5m excluding client funds.
On the strategic front, Paypoint said it successfully continued the rollout of its new retail platform PayPoint One, with 8,550 sites live as at 31 March and 9,026 today as of Thursday.
Growth of 70p was seen in the average weekly PayPoint One service fee per site.
Agreements had been reached with Nisa and Booker to provide back office links for the PayPoint One platform.
Paypoint also reported a "strong" pipeline of parcel opportunities, with contract discussions underway with the intention to have at least one live before Christmas, the peak season for parcels.
Payzone Romania integration was progressing following its acquisition in October 2017, which complemented strong organic growth in the market, according to the board.
The reorganisation of the business was also implemented during the year to deliver faster and more efficient innovation and execution.
"There is now strong momentum across PayPoint One, MultiPay and Romania, in addition to a compelling parcel proposition reflected in a strong pipeline of client deals, all of which will underpin the future growth of our business," said chief executive Dominic Taylor.
"PayPoint One is already creating value for over 9,000 retailers and our new EPoS Pro product allows retailers to benefit from significant additional efficiencies and drive value within their own businesses.
"We are delighted to have made good progress in parcels with the Collect+ network now in over 7,400 sites."
Taylor said the company was continuing to see strong growth in card payments, whilst its omni-channel payment solution MultiPay had now processed more than 33.9 million transactions since launch in 2016.
"We have also made significant progress in developing a more efficient organisation and improving service delivery to our retailers.
"Our Romanian business has advanced since the acquisition of Payzone with the integration progressing and new revenues bolstering organic growth."
Taylor pointed to a number of non-recurring items which would impact Paypoint's operating profit performance in the financial year ending 31 March 2019, including the closure by the Department for Work and Pensions of the Simple Payment Service worth £4.0m per annum in net revenue, and the second-year impact of a £1.0m reduction in net revenue from the agreement to lower Yodel parcel fees.
"Despite these headwinds, and whilst final performance for the forthcoming financial year will be influenced by the timing of and volumes from new parcel contracts, the board anticipates a progression in profit before tax in this financial year as the growth drivers in our business continue to develop."