Release Date: November 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PayPoint PLC (FRA:PAN, Financial) reported a strong financial performance with underlying EBITDA up over 20% and underlying PBT up over 23%.
- The company has made strategic investments in Yodel and OBConnect, enhancing growth opportunities in parcels and Open Banking.
- Net revenue increased by 6% to GBP84.6 million, driven by growth in both the PayPoint segment and Love2Shop.
- The interim dividend increased by more than 2% to 19.4p per share, reflecting confidence in future performance.
- The company is expanding its Collect+ network, targeting 15,000 locations by year-end, which includes partnerships with universities and Royal Mail.
Negative Points
- Net debt increased to GBP86.8 million, reflecting the investments made during the first half.
- Payments and Banking revenue experienced a slight decline due to a drop in legacy cash bill payments.
- The ATM business continues to underperform, with optimization efforts yet to yield significant results.
- Consumer confidence and spending are not as strong as expected, potentially impacting future performance.
- The company anticipates an increase in net debt in the second half due to further investments and share buybacks.
Q & A Highlights
Q: Could you talk us through the strategic rationale for the Yodel acquisition?
A: Nicholas Wiles, CEO: Yodel has been a long-term partner of Collect+, and we have developed a strong store-to-store proposition. The acquisition was strategic to support Yodel's management in reducing costs, increasing efficiency, and driving volume. While we are not committed to being a long-term investor, it was the right move to ensure Yodel's success as a partner in our network.
Q: What impact will the employers' National Insurance (NI) have on the business?
A: Nicholas Wiles, CEO: The impact is estimated at GBP1 million if no action is taken. However, we plan to mitigate this impact through appropriate business actions, demonstrating our adaptability and agility.
Q: Could you discuss the opportunity with OBConnect in New Zealand and other international prospects?
A: Nicholas Wiles, CEO: OBConnect has built an Open Banking data-sharing ecosystem in New Zealand, which is set to go live soon. Success there could lead to interest from other jurisdictions. We expect OBConnect to develop a strong pipeline of opportunities internationally over the next few years.
Q: Can you update us on the progress towards the 15,000 Collect+ location target, particularly in universities, hospitals, and transport hubs?
A: Nicholas Wiles, CEO: The most exciting growth is around universities, driven by data analytics and the Chinese marketplace. We have 19 universities involved and are expanding around these locations. We are also piloting hospital locations and focusing on transport hubs as people return to offices.
Q: What is the expected shape and size of the working capital movement at the full year?
A: Rob Harding, CFO: We anticipate a seven-digit outflow for the full year, primarily due to inventory build for site expansions and the InComm partnership. However, we are managing working capital effectively and expect to maintain a target gearing ratio of around 1 times.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
