PayPoint – payment services provider is moving ahead, its shares are rising too, now 851p, brokers TP 1100p

30.06.2025

Eleven months ago, in late July last year, I wrote that I was awaiting a bullish AGM statement from PayPoint (LON:PAY), certainly good enough to help to push the group’s shares up through my 750p Target Price.

The shares of the UK’s leading multichannel payment and community services provider were then trading at just 688p, so the price aim was not too far off.

The subsequent AGM Trading Update was really quite positive and presaged a good year for the group to end-March 2025.

Recent Results

On Thursday 12th June the group reported that its last trading year had shown a 1.4% increase in revenues to £310.7m (£306.4m), with a 10.2% improvement in underlying pre-tax profits at £68.0m (£61.7m), with earnings up 10.4% at 69.1p (62.6p) per share.

The Business

Founded in 1996 and floated in 2003, this business offers a system for paying bills in UK, Ireland and Romania.

It was set up with the aim of enabling customers to load gas and electricity onto their pre-paid energy meters in cash at their local convenience store, PayPoint prepayment meters are intended to help customers to manage energy use, thereby helping the environment, and control their spending, thereby enabling to live within their limited means.

The system, which was first tested in Northern Ireland, was expanded to London in 1997 and in 1998, British Gas prepayment meter customers were able to charge their Quantum smart cards at PayPoint retailers.

For tens of thousands of businesses and millions of consumers, it delivers innovative technology and services that make life a little easier.

The PayPoint Group serves a diverse range of organisations, from SME and convenience retailer partners, to local authorities, government, multinational service providers and e-commerce brands.

It has over 500 major clients for its services.

Its products are split across four core business divisions:

In Shopping, it enhances retailer propositions and customer experiences through its PayPoint One/Mini devices, card payment technology, Counter Cash, ATMs and FMCG partnerships in over 60,000 SME and retailer partner locations across multiple sectors, while it services a retail network of over 28,000 convenience stores which is larger than all the banks, supermarkets and Post Offices put together;

In E-commerce, the group delivers best-in-class customer journeys through Collect+, a tech-based delivery solution that allows parcels to be picked up, dropped off and sent at thousands of local stores;

In Payments and Banking, the company gives its clients and their customers choice in how to make and receive payments quickly and conveniently, which includes its channel-agnostic digital payments platform, MultiPay, offering solutions to clients across Open Banking, card payments, direct debit and cash, it also supports its eMoney clients with purchase and redemption of eMoney across its retail network;

In Love2shop, the business provides gifting, employee engagement, consumer incentive and prepaid savings solutions to thousands of consumers and businesses. Love2shop is the UK’s number one multi-retailer gifting provider, offering consumers the choice to spend at more than 140 high-street and online retail partners. In this section Park Christmas Savings is the UK’s biggest Christmas savings club, helping over 350,000 families manage the cost of Christmas, by offering a huge range of gift cards and vouchers from some of the biggest high street names.

Together, these solutions enable the PayPoint Group to create long-term value for all stakeholders, including customers, communities and the world in which we live.

Management Comment

CEO Nick Wiles stated that:

“This has been another year of progress for PayPoint where we have delivered a resilient financial performance and made further significant steps towards delivering £100m EBITDA by the end of FY26.

These results reflect both the resilience of our businesses in the current challenging economic environment and the impact of our growing capabilities as we unlock further opportunities and growth across our four business divisions.

Looking ahead, in addition to our existing target of £100m EBITDA for the current year, we have now established new targets for the Group for the next three years to the end of FY28, underlining our confidence in the future growth prospects of the business: achieving net revenue growth in the range of 5% to 8% per annum across the Group; establishing an organisational framework which will deliver greater automation of processes and greater agility to support the delivery of our plan; and delivering a reduction of at least 20% of our issued share capital through an enhanced share buyback programme, consistent with a prudent capital structure and leverage in the range of 1.2x to 1.5x.

We have had an encouraging start to the current financial year in each of our business divisions and have already secured a number of important new contract wins, particularly within the Housing sector.

In addition to our focus on the organic building blocks for growth, significant energy is being directed into: building strong new business pipelines, particularly in Love2shop Business, Housing and Charities; successful delivery of our Local Banking service, with at least two banks due to go live in H1; continued parcels growth, driving volume opportunities with each carrier and growing Out of Home consumer adoption; optimising our retailer network performance, through better adoption of services, our new Store Growth Specialist team and further site growth; and the further upselling of our enhanced payment capabilities into our existing client base, including utilities.  

Our continued confidence in the growth opportunities in the business and the execution of our plan to deliver strong earnings growth and cash flow generation, combined with a sustainable dividend policy, provide a robust platform for the Board to further enhance shareholder returns through an increased and extended share buyback programme of at least £30 million per annum till the end of March 2028, all underpinned by our confidence and clear operational plans to deliver further progress in the current year and our £100m EBITDA target.”  

The Equity

There are some 71.19m shares in issue.

The larger holders include Invermob Coruna (30.75%), Inversis Gestion (9.04%), Schroder Investment Management (7.69%), Santander Asset Management (7.00%), Brown Capital Management (6.65%), Liontrust Investment Partners (5.11%), Credit Suisse Asset Management (5.07%), BlackRock Investment Management (4.53%), Premier Fund Managers (4.24%), and Harwood Capital (4.02%).

Broker’s Views

Four analysts follow the company, with the consensus average Target Price of 858p, the lowest being 520p, while the highest is 1100p.

Analysts Joe Brent and Joe Walker, at Panmure Liberum, rate the group’s shares as a Buy, with a Target Price of 1100p a share.

Their estimates for the current year to end-March 2026 are for group revenues to rise to £199.0m (£188.0m), with pre-tax profits of £72.1m (£68.0m), earnings of 75.7p (69.1p) and paying a dividend of 39.4p (39.0p) per share.

For the 2027 year, they see £211.0m sales, £80.3m profits, 90.2p earnings and 39.8p in dividends per share.

My View

Now having cleared my 750p Target Price, with the group’s shares at 851p, just 14p shy of the year’s 865p High, it does seem to have some good wind behind the recent price move.

I would expect to see the group’s shares ‘backing and filling’ between now and Wednesday 6th August when it is due to announce its First Quarter Trading Update.

If the shares fall back below the 800p level between now and then, I suggest that at such levels the shares would make a very appealing investment.

In the meantime, the shares are a good firm Hold, in anticipation of another price extension, possibly above 900p and higher.

(Profile 17.02.21 @ 598p set a Target Price of 750p*)

Asterisk * denotes Target Price has been achieved since Profile publication.