PayPoint update regarding COVID-19
This announcement contains inside information for the purposes of EU Regulation 596/204
19 March 2020
PayPoint update regarding COVID-19
PayPoint continues to provide vital services to the community during this un-precedented period of uncertainty. Our priority is to continue to support our clients, retailer network and people so that communities are able to access the services they need and our business continues to function effectively.
Our recent trading across the business has continued to be robust and most recently we have seen areas of increased activity across our network, with consumers currently making higher levels of energy top-ups and increasingly using cards as their preferred payment method. As a result the Board remains confident that progress will be made in profit before tax and exceptional items for the financial year ending 31 March 2020.
PayPoint has quickly moved to an operating model which combines remote working, continued activity in the field in support of our retailer network and some essential office based activity. We are seeking to minimise the disruption of service and support we can provide clients and our retailer network at this time, whilst taking the appropriate steps to safeguard our people. Our contact centre remains fully operational and we are considering a range of measures to support our retailers and clients during this period.
However, the Board recognises that as one of the UK’s leading Bill Payment services providers, measures taken by the government through this period to provide financial support to UK households, such as a waiver on utility bill payments, may have as yet unclear and potentially adverse consequences for our bill payments volumes.
Further, as we look ahead to the next financial year, our initiatives to grow parcels, develop our EPoS proposition and other new services across our retailer network will inevitably be slower than had been anticipated. As a result, the business will find it challenging to mitigate the impact from the loss of the British Gas contract and pricing pressure from other utility clients. The Board is currently reviewing the impact of these challenges on our outlook for the financial year ending 31 March 2021 but at this stage cannot give precise guidance as to the impact.
The Board will continue to keep the market updated as the situation develops and its impact on the business and our plans for the next financial year become clearer. The analysis is based on information and data currently available and may change dependent on how the COVID-19 situation develops over the coming weeks.
Balance sheet and liquidity
PayPoint remains in a strong financial position, the Group had net debt of £13.3 million (excluding cash held in respect of short term client settlement obligations) as at 31 December 2019. To ensure PayPoint remains in the best possible position to withstand a sustained period of disruption to trading, the £70 million revolving credit facility (forming part of our overall £75 million financing facility) has been fully drawn down.
Additional dividend payments have been suspended until further notice and an immediate review of short term cost reduction measures will be undertaken across the business. The Board will continue to review the appropriate level of ordinary dividend to be paid, recognising its importance to our shareholders and will make a final decision ahead of our full year results announcement 28 May 2020.
The actions taken will leave the business in the strongest position possible to manage through this current crisis.
Leadership and continuity
The Board has decided in the current environment that maintaining clarity and continuity in the leadership of the business is the most appropriate course of action. Nick Wiles will remain in the role of executive chairman during this period, in support of the executive team. Consequently, the CEO search process has been temporarily suspended and will be resumed once the situation becomes clearer.
Nick Wiles, Executive Chairman (Tel: 01707 600 317)
Rachel Kentleton, Finance Director (Tel: 07843 074 906)
Rollo Head/Andy Parnis (Tel: 0207 251 3801)
In thousands of retail locations, at home and on the move, we make life more convenient for everyone.
For retailers, we offer innovative and time-saving technology that empowers convenience retailers in the UK and Romania to achieve higher footfall and increased spend so they can grow their businesses profitably. Our innovative retail services platform, PayPoint One, is now live in over 16,000 stores in the UK and offers everything a modern convenience store needs, from parcels and contactless card payments to EPoS and bill payment services. Our technology helps retailers to serve customers quickly, improve business efficiency and stay connected to their stores from anywhere.
We help millions of people to control their household finances, make essential payments and access in-store services, like parcel collections and drop-offs. Our UK network of almost 28,000 stores is bigger than all banks, supermarkets and Post Offices together, putting us at the heart of communities nationwide.
For clients of all sizes we provide cutting-edge payments technologies without the need for capital investment. Our seamlessly integrated multichannel payments solution, MultiPay, is a one-stop shop for customer payments. PayPoint helps c500 consumer service providers to save time and money while making it easier for their customers to pay – via any channel and on any device.