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Annual Report and Financial Statements 2020

In compliance with Listing Rule 9.6.1, the Company announces that the following documents have today been submitted to the UK Listing Authority, and will shortly be available for inspection via the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism:

  • Annual Report and Financial Statements 2020
  • Notice of Annual General Meeting of the Company, which will be held at The Boulevard, 1 Shire Park, Welwyn Garden City, AL7 1EL at 12:00 noon on Friday 24 July 

In accordance with DTR 6.3.5(3) the Annual Report and Financial Statements 2020 and the Notice of Annual General Meeting are accessible at www.corporate.paypoint.com.

A condensed set of PayPoint plc’s financial statements and information on important events that have occurred during the year and their impact on the financial statements were included in the Company's preliminary results announcement on 28 May 2020. That information together with the information set out below which is extracted from the Annual Report and Financial Statements constitute the requirements of DTR 6.3.5 which is to be communicated via an RIS in unedited full text. This announcement is not a substitute for reading the full Annual Report and Financial Statements. To view the preliminary results announcement, visit the Company website www.corporate.paypoint.com

For further information, please contact:

Sarah Carne

Company Secretary

PayPoint plc

LEI: 5493004YKWI8U0GDD138

Tel: +44 (0)1707 600300

Additional Information

Principal risks and uncertainties

Below are details of our principal risks, their movement during the year, and key mitigating controls. They do not comprise all risks faced by the Group and are not set out in order of priority.

Risk area

Potential impact

Mitigation strategies


Credit and operational risk

PayPoint processes large volumes of payments creating significant credit risks and risk of fraud and error. Significant credit exposures exist with large retailers and other counterparties, and failure of a large retailer or counterparty may result in significant financial loss. Effective operational controls are essential to settle funds securely and timely, and inadequate or failed controls may result in fraud, liquidity risk, contractual breaches or other financial loss.

PayPoint has effective credit and operational procedures and controls in place. Retailers and counterparties are subject to ongoing credit assessments, and effective debt management processes are implemented. Settlement processes and controls are continually assessed and enhanced, and new systems and technology implemented. Effective governance is in place with segregation of duties and approval processes enforced to protect against fraud and error.

People and culture

Failure to attract and develop key talent and continue evolving our culture may impact service levels and delivery of strategic initiatives. If we do not develop our employees and maintain an appropriate culture our business performance and reputation may be damaged resulting in reduced revenue and growth.

The Executive Board define and advocate PayPoint’s values, and employee development and culture are key strategic priorities. Talent management and people development are well established, and employment guidelines and ethical principles are implemented to assist maintaining a strong culture. Values and ethical principles are aligned with employee objectives and employee and retailer engagement surveys are regularly conducted to assess how we deliver on our values. PayPoint is protecting its employees through the Covid-19 pandemic by allowing employees to work from home and offering additional support and flexibility.

Losing key clients and retailers

PayPoint has diversified portfolios of clients and retailers however some are more strategically important. Our business relies on an appropriate mix of clients and retailers and losing a key client or retailer, such as losing British Gas as an energy client in 2019, has the ability to adversely impact the business model and reduce revenue.

PayPoint builds strategic relationships with key clients and retailers and continually seeks to improve its service levels; including conducting retailer engagement surveys to monitor and enhance our performance. Key clients and retailers are on long term contracts, and new clients and retailers are routinely onboarded maintaining and diversifying portfolios. New products and channels are also developed to diversify revenue streams and mitigate the impact of losing key clients or retailers in particular markets.

Competition and markets

The markets in which PayPoint operates, and the competition in those markets continue to evolve. The decline in cash usage, and changes in consumer trends and Government policy may impact our core markets, and failure to implement effective strategies in response to changes will negatively impact revenue. Industry consolidation in the UK has increased the competitive environment, and our market proposition and service levels need to remain strong to maximise business performance.

PayPoint closely monitors consumer and technological trends and engages with clients and retailers to continually improve service levels. The Executive Board regularly reviews markets, trading opportunities, pricing and competitor activity, and the Board oversee and challenge strategic direction. PayPoint invests in new products, services and technology and adapts to consumer trends such as growing its parcel and online payments businesses to capitalise on market changes.

Innovation and implementation

Failure to innovate and implement new products, services and technology would impede business performance and our ability to achieve strategic goals. Our business relies on continued product enhancements and failing to improve products due to poor design, build or rollout would ultimately reduce revenue. Continued system infrastructure improvements are essential in maintaining resilient and effective services, and ineffective infrastructure upgrades may impact future performance.

PayPoint is committed to innovation and investing in new technology and products to support its continued growth. Products and services are continually reviewed and developed to enhance our proposition and service levels, consistent with customer needs and expectations. Various improvement programmes are underway and effective change management processes are deployed by dedicated project teams. The Executive Board oversees all major projects to ensure governance and implementation are effective.

Key partners and suppliers

PayPoint has a diverse range of suppliers and partners, however some suppliers and partners are more strategically important and not so easily substituted. If supply of goods or services is disrupted or relationships cease before alternative arrangements can be implemented, PayPoint may experience difficulty maintaining service levels potentially resulting in revenue loss, reputational damage or penalties. Uncertainties around the Covid-19 pandemic may significantly impact PayPoint’s partners and suppliers, increasing the trend of risk.

PayPoint has effective partner and supplier selection processes and long-term contacts are implemented for strategic partners and suppliers. We aim to develop strong relationships with key partners and suppliers, and single points of failure are avoided where practicable, with alternative suppliers and partners contracted and continuity plans implemented. Impact assessments are conducted for critical dependencies and mitigation measures implemented.

Business interruption

Service delivery interruption caused by system failure, loss of premises, or other disruption may impede performance and harm our reputation. Clients, retailers and consumers rely on resilient systems and continued service delivery, and failure to promptly recover services may result in revenue loss, contractual breaches, penalties and increased costs. Uncertainties around the Covid-19 pandemic and the significantly changes in working practices may impact PayPoint’s service delivery, increasing the trend of risk.

Comprehensive continuity plans have been implemented to mitigate risk of disruption from Covid-19. Systems are continually upgraded and resilience built into systems and processes. Effective change management processes are deployed minimising risk of disruption, and systems are regularly tested and continually monitored for outages. PayPoint has a Major Incident Response Plan and business continuity and disaster recovery plans are implemented and regularly tested. Third party data centres are used with failover capabilities, and business continuity premises and work from home arrangements are implemented.

Legal and regulatory

PayPoint is required to comply with numerous legal and regulatory requirements, and breaches of these obligations may result in costly corrective actions, reputational damage and prosecution. Regulatory landscapes continue to evolve, and changes in regulations and license requirements may adversely impact our business. PayPoint is subject to numerous contractual requirements and failure to meet obligations may result in penalties and financial loss.

PayPoint’s Legal team work closely with management to advise on regulatory matters and adopt strategies to ensure regulatory adherence. Legal teams are engaged on key contracts and legal matters, and Compliance teams oversee compliance programmes, monitoring and reporting. Emerging regulations are incorporated into strategic planning, and we engage with regulators to ensure we have appropriate frameworks to support new products and markets. External counsel is engaged where required.  

Cybersecurity and data protection

Cyberattacks on PayPoint’s systems and networks may significantly impact service delivery and data protection causing harm to PayPoint, our clients, retailer partners and other stakeholders. Although PayPoint continues to upgrade and enhance its cybersecurity capabilities, attacks are a constant threat, with increased ransomware attacks on businesses over the last 12 months. Covid-19 has heightened cyber risk with significant reliance on home working tools and criminals exploiting vulnerabilities. Failure to comply with service delivery, contractual requirements or data privacy requirements may result in significant fines and reputational damage.

PayPoint has a robust IT security framework and deploys industry standard security systems with cyber intelligence capabilities. Systems are constantly monitored for attacks with teams in place to respond to incidents, and cybersecurity response plans are regularly tested. Home working tools, security alert process and employee cyber awareness were enhanced in response to specific Covid-19 threats. We engage with law enforcement and partners on cybercrime, and proactively manage compliance with data privacy requirements. Additionally, PayPoint’s Audit Committee has a Cyber Security and IT sub-committee which oversees cybersecurity capability.


The global Covid-19 pandemic continues to significantly impact individuals, businesses, markets and economies, and the unprecedented period of uncertainty presents significant risk to PayPoint across all business areas. Whilst the majority of PayPoint retailer partners have remained open during the pandemic to provide vital services to communities, transaction volumes for some products have been impacted and may continue to be impacted. Although PayPoint has taken affirmative action to mitigate numerous risks arising from the pandemic, there remains a high degree of uncertainty over future events and the consequences for PayPoint. The table below details the strategic, financial, operational and cybersecurity risks resulting from Covid-19 and the strategies to mitigate risk.

Potential impact

Mitigation strategies

Strategic risk

Cash usage has significantly declined during the Covid-19 lockdown reducing PayPoint’s revenue for ATMs and other cash-based products. It is anticipated Covid-19 will accelerate a structural decline in cash usage which will impact our business model and revenue. Covid-19 may also result in other market changes which could potentially impact PayPoint.

PayPoint continually diversifies its product range to reflect market changes and our card payment revenue significantly increased during the Covid-19

lockdown. Our online MultiPay platform continues to grow in significance, with the recent introduction of innovative new features including PayByLink. The acquisition in April 2020 of the 50% of shares in Collect+ PayPoint did not previously own has significantly strengthened our parcels proposition in order to take advantage of the growth in online sales.

Financial risk

During the Covid-19 lockdown PayPoint has experienced reduced revenues which is expected to continue until an effective Covid-19 vaccine is available. Reduced revenue heightens PayPoint’s liquidity risk, and the deterioration in economic conditions also heightens credit risk.

To maintain liquidity through a sustained period of disruption, the £70 million revolving credit facility was fully drawn down and additional dividend payments and employee bonuses cancelled. Government Covid-19 support schemes are closely monitored, and a review of short-term cost reduction and deferment measures is being conducted across the business. There is also increased focus on settlement process to ensure

heightened credit risk is appropriately mitigated.

Operational risk

Covid-19 has heightened the risk of supplier failure, potentially impacting PayPoint’s service delivery. The sales pipeline and new initiatives have also been impacted with prospects delaying new ventures and other sales initiatives also temporarily postponed. Additionally, increased working from home has impacted the robustness of settlement processes and employee welfare remains a heightened risk.

IT and operational processes have been enhanced to ensure effective service delivery and robust control. PayPoint is working closely with suppliers to ensure continued service delivery with contingencies being

assessed for areas at risk. Most employees are working from home and safety measures have been implemented to ensure the safety of employees working in the office.

Cybersecurity risk

Covid-19 has increased cyber threats from cybercriminals and other malicious groups who are targeting individuals, businesses and organisations by deploying Covid-19 related scams and phishing

emails. Significant working from home has also heightened cybersecurity risks.

PayPoint has effective cybersecurity controls and has increased focus on addressing security alerts as soon as they arise. Security education has been increased with more frequent emails sent to employees highlighting increased security dangers. The IT change portfolio has also been reviewed with higher risk projects temporarily postponed.

Directors' Responsibility Statement

The 2020 Annual Report contains the following statements regarding responsibility for the financial statements in compliance with DTR 4.1.12. Responsibility is for the full Annual Report and Financial Statements 2020 and not the condensed statements required to be set out in the Annual Financial Report announcement.

The directors are responsible for the maintenance and integrity of the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Each of the directors, whose names and functions are listed on pages 46 and 47 of the Annual Report, confirm that, to the best of their knowledge: 

  • The Group financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole.
  • The Management Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
  • The Annual Report, taken as a whole, is fair, balanced and understandable, and provides the necessary information for shareholders to assess the Group's performance, business model and strategy.