PayPoint plc

Ladies and gentlemen, welcome to the PayPond Preliminary Results Conference Call. I am Valentina, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by 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 and 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, Valentina. Good morning, everyone, and welcome to our full year results presentation for the 12 months to March 2025. In terms of our agenda this morning, I will give a brief overview of our results and our updated financial targets for the business for the three years out to March 28. Rob will then cover the group financials in more detail, followed by an update on strategy and where our focus is in the current year, our business review, and then finally our outlook for the current year before we open up for Q&A. Turning to our full year highlights, a resilient financial performance for the year as a whole, building on our strong first half, and really despite a more challenging trading environment in the second half and a rather stalled recovery in consumer confidence. I think delivering for the year as a whole, a double-digit increase in EBITDA and underlying PBT, I think does reflect the resilience of our business, some good operational management, the continued momentum in the growth areas of our business, and I think continued strong cost disciplines. Our increase in net debt reflects the impact of our investments over the year, in addition to our ongoing share buyback. And we've increased our second interim dividend by 2.1% to 19.6 pence, making a total dividend for the year of 39 pence per share. In terms of divisional highlights, we've delivered net revenue growth in each of our four operating businesses. And I will go into more detail in terms of the underlying changes and mix within each business in the business review section later in the presentation. I'm turning to our new targets for the three years out to FY28. We are establishing today new targets for the business for the next three years, which we believe reflect our ambition, our confidence and our growing capabilities. and our continued commitment to delivering enhanced returns for our shareholders. These targets are clearly in addition to our EBITDA target of £100 million for the current year. Firstly, we set ourselves the target of achieving net revenue growth in the range of 5% to 8% per annum, a target in our view which brings to light the strategy we've implemented over the past five years to transform the business and our capabilities from our cash legacy bill payments routes to create a more robust and higher growth organic platform and a mix of business and growth building blocks that together support consistent and attractive growth. Secondly, to support the delivery of our growth plans, establish a modern organisational framework designed to deliver better and lower cost operational performance and a higher level of customer service and experience. To achieve this, we've needed outside expertise to support us such that we can develop and execute on a plan to deliver greater automation, simpler business processes, and agility in the way we do our business. This step and the need for the business to modernize is critical in our view to the delivery of our longer term plans. And we will continue to update shareholders further on these plans as they take shape in the coming months. And our final target is to accelerate our share buyback program with a clear objective of reducing our issued share capital by at least 20% over the next three years within a prudent capital structure of 1.2 to 1.5 times leverage. As I said already, we believe these new targets are ambitious, clear, and provide a pathway for the business over the next three years. And with that, I'll now hand to Rob. We'll take you through the financials in more detail.

Thank you Nick and good morning everybody. If I start with the income statement. Net revenue of 187.7 million is up 3.7% on the prior year of 181 million. Total costs are broadly flat year on year 119.7 million. So this combination drives double digit increase to our underlying profit before tax from 61.7 million to 68 million or up 10.2%. I'll cover the key revenue and cost deltas in the slides to follow, but you can see from this slide the breakdown of profits into our two segments, with pay point profits up 5.7% to 53.4 million, and love to shop profits up 30.4% to 14.6 million. Further down this page, in terms of adjusting items, the key drivers of the 41.7 million are 20.6 million respective legal costs, which includes a provision of £14.2 million for the settlement reached with the utility in May 25, £9.6 million net movements on our convertible load notes and other instruments, and £8.7 million in respective amortisation of acquired intangibles. Deducting these items gives profits on a statutory basis of £26.3 million. Our underlying profit growth supports underlying EBITDA growth of 10.7% to £90 million, and diluted underlining earnings per share up 10.4% to 69.1 pence. Finally, on this page, net debt of 97.4 million lands within market expectations of a below 100 million, and I'll cover this in more detail shortly. Moving on to net revenue analysis, this slide breaks revenue down by segment and business area. Starting with shopping, revenues rose 1.2% to 65.2 million, with double-digit growth in service fee income. E-commerce revenues grew 39% to 16.4 million, off the back of strong transaction growth of 33.3%. Payments and banking revenue rose 1.7%, driven by double-digit growth in digital, which includes 1.8 million in-year contribution from OBI Connect. These three areas drive 4.9% revenue growth for the PayPoint segment, Love to Shop revenues of 51.7 million were marginally up year on year, with overall billings up 2.3%. So combined, these two segments give overall group revenue of 187.7 million. This slide gives an underlying profit progression view from the 61.7 million in FY24 to the 68 million for FY25. The first four blocks are revenue related, which I've covered already. 0.8 million revenue growth from shopping, 4.6 million from parcels, 0.9 million from payments and banking, and 0.4 million from love to shop. The last column is costs, and you can see that costs only grew by 400,000 year on year, with pay point segment costs growth of 4.3%, and love to shops costs actually falling by 7.5%. So this gives overall profits of 68 million. This slide gives the main drivers of the 400,000 delta in terms of cost year on year and how we managed to maintain this broadly flat. The first block you can see is inflationary cost pressures of 2.8 million. The next block is OB Connect's cost, including those is 1.5 million for the year. We then have 2.1 million more depreciation and amortization. That's primarily from our cards business. And lastly, we can see the impact of streamlining our organizational structure which we commented on last year's results. The impact of this being a 6 million reduction to our costs, with the majority of this benefiting the lot to shop segment. In terms of cash generation and net debt. Overall, you can see midway down this slide that cash generation of 69 million for the year is up 11.1 million on FY24 after various ad backs of adjusting items, DNA, share based payments and a working capital outflow of £10.3 million. The working capital outflow is a combination inventory bill, which is largely in our cards and love to shop business, and also receivables growth to support parcels growth and other revenue initiatives. Further down, we have outflows from tax, capital expenditure of £19.7 million, acquisitions and investments of £25.1 million, which was in respect of Yodel, AperiData and ObiConnect. share by a back of 14.9 which is the 9 12 of the year 120 million we commenced in july of last year and 27.8 million in respect of dividends this gives an overall cash outflow for the year of 29.9 million and a closing net debt of 97.4 in terms of the balance sheet the key movements year on year are goodwill increasing by 12.3 million and intangibles by 4.8 million And that's really driven by the inclusion of OB Connect following our majority stake in year. Corporate cash and cash equivalents are covered in the cash flow slide. Cash is down 21.5 million and loans are up 8.4. And that gives the overall outflow of 29.9 that we saw on the previous slide. Non-corporate cash, cash equivalents is down 32.1 million as we shifted our cash to restricted funds, which are up 33.3 million. And that's really to give the group access to higher interest income. Further down the balance sheet, the main swing is working capital, where you see the outflow of 13.9, and that's driven by the inventories and receivables that I covered previously. And at the bottom of this slide, overall assets of 97.3 at year end. Finally, before I pass back to Nick, on capital allocation, we are targeting leverage of 1.2 to 1.5 times, and with normal increase of dividends of circa 2%, we expect to see dividend cover to move from its current range of 1.5 to two times to above two over the next three years. On the share buyback, returning at least 30 million per year for the next three years, targets a reduction of over 20% in our equity base. And this level of buyback will be based on business performance, market conditions, and the overall capital needs of the business. To the right of this slide, our future cash requirements are similar to the prior year. We'll have an outflow in respect of dividends, the share buyback and capex as well, which normalizes around about 20 million. Finally, on our facility, we exercised a plus one year extension to this, so it now ends in June of 2029. As part of this extension, we've added MUFG or Mitsubishi to our banking group, and the facility is now a 75 million non-amortizing loan and 90 million RCF, and this fully supports our capital allocation policy and the future needs of our business. I'll now pass you back to Nick.