PayPoint plc

Welcome to the Paypoint Preliminary Results conference call. I'm Mello, the chorus call operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star, then 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Nick Wiles, CEO. Please go ahead. Thank you very much, and good morning, everyone.

Welcome to our interim results presentation for six months to September 2024. Our agenda this morning will follow the usual format. I'll give an overview of the results. We'll then cover the financials in more detail, followed by an update on strategy, our business review, and then an updated outlook before we open up for Q&A. In terms of our first half highlights, the results show a continued strong performance from the business, which certainly underpins our confidence in meeting expectations for the year as a whole. Our strategic investments in both the Oval and OB Connect, which we've made in the first half, have strengthened our growth opportunities in both parcels and open banking, and we continue to enhance our proposition in a number of our key growth areas, such as cards, open banking, our retailer community services, I Love to Shop. And we're doing this whilst retaining our capital allocation discipline as we invest in the business, grow our dividend, and continue our share buyback program, all within a financial framework of around one times EBITDA. Turning to the headline numbers, our financial performance across the business is strong. underlying EBITDA up over 20%, underlying PBT up over 23%, our interim dividend growing by more than 2% to 19.4 pence per share of the interim stage. And we've achieved this within a modest increase in our net debt to 86.8 million pounds, which reflects the investments we've made during the first half. At a divisional level, in terms of the net revenue performance, solid performances from both shopping and payments and banking, and strong performances from both Love to Shop and our e-commerce businesses. And with this, I'll hand on to Rob, who will take you through the numbers in more detail.

Thank you, Nick, and good morning, everyone. I'll start with the key financial highlights. Net revenue of $84.6 million is up 6% on the prior half of $79.8 million. I've got more details on this in the slide to follow, but we've delivered top-line growth across both of our business segments, and love to shop up 7.4%. Underlying EBITDA of 37.5 million is up 6.4 million or 20.6% on the prior half, with this increase a combination of higher underlying profitability of 5.1 million plus higher depreciation and amortization. Underlying profits, as I mentioned, are up 5.1 million or 23.4%, half on half, from 21.8 million to 26.9 million. I'll cover this in a few slides in more detail. Reported profits before tax of £23.1 million are after £3.8 million of deductions to underlying numbers, and that comes from £4 million of amortisation of acquired intangibles, plus £2.5 million of exceptional items, and that's primarily legal costs in relation to claims against Paypoint, less £2.7 million of favourable fair value adjustments on convertible loan notes in respect of OB Connect and Optus. And that gives overall £3.8 million of net deductions, and therefore reported profits of 23.1 million, which is a 34.3% increase on the prior half profits of 17.2 million. On earnings per share, diluted underlying EPS at 27.4 pence is up 24% on the prior half of 22.1 pence, and diluted EPS of 23.5p is up 35.1% on the prior half of 17.4%. This increase in EPS is purely attributable to the increase in profitability as the weighted average diluted shares increased half and half. Lastly, on net debt, this landed at 86.8 million for half one, which is an increase on the prior half and the FY24 year end as we anticipated. Again, I'll cover this in a few more slides time. This slide breaks down net revenue into a little more detail and the drivers behind the 6% top line growth. As I mentioned previously, the pay point segment revenue is up 5.6% on the prior half. And you can see from this slide that our e-commerce business has been the driver of this growth, with revenue increasing 56.9% to 8 million. Shopping also experienced 2.5% top-line growth in a challenging macro environment, with solid growth coming from service fee income, which was up 1 million half and half. Payments and banking revenue dropped 200k half and half, with legacy cash flow payments driving this drop, falling 500K half and half from 13.1 million to 12.6. So combined, the pay point segment revenue of 65.8 million for half one is up 3.5 million, or 5.6%. Loft of shop revenue increased 7.4% on the prior half. This increase is primarily phasing in nature, with the shortening of some of our card product expiry dates bringing forward revenue from half two into half one. As we've highlighted previously, the business adopted a much more conservative approach to breakage, only recognising non-redemption revenue at the end of the product life or expiry. So this is a really positive outcome for half on. At the bottom of the slide, this gives overall group revenue of £84.6 million, which is up £4.8 million or 6% half on half.