Annual Report 2023
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Enabling
payments and commerce
Who we are
The PayPoint Group enables payments and commerce for the public and private sector,
connecting millions of consumers online and offline with over 60,000 retailer partner
and SME locations.
Our Group businesses serve a diverse range of customers: from leading service
organisations like EDF and Monzo; retailers and SMEs from Asda to the best UK
independent stores; parcel carriers like Amazon and DPD; to the millions of consumers
who pay bills, get cash, make card payments or pick up parcels every day at thousands
of locations across the UK.
Our purpose
We deliver innovative services that make people’s lives a little easier every day.
Making
people’s lives
a little easier
For more information go to
corporate.paypoint.com
01
PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Financial highlights
Revenue from
continuing operations
Net revenue from
continuing operations1
Underlying EBITDA2
Underlying profit before tax3
(profit before tax excluding adjusting items)
Contents
£167.7m
+15.6%
(FY22: £145.1m)
£128.9m
+11.9%
(FY22: £115.1m)
£61.3m
+5.2%
(FY22: £58.2m)
£50.8m
+5.8%
(FY22: £48.0m)
Cash generation4
Net corporate debt5
Profit before tax
Ordinary reported
dividend per share
£62.3m
+15.6%
(FY22: £53.9m)
£72.4m
+65.0%
(FY22: £43.9m)
£42.6m
-45.8%
(FY22: £78.5m)
37.0p
+5.7%
(FY22: 35.0p)
Ordinary paid dividend
per share
Diluted earnings per share excluding
adjusting items
34.6p
+3.0%
(FY22: 33.6p)
60.3p
+8.8%
(FY22: 55.4p)
1 Net revenue is an alternative performance measure. Refer to note 4 to the financial information for a reconciliation to revenue.
2 Underlying EBITDA (EBITDA excluding adjusting items) is an alternative performance measure. Refer to note 1 for the definition and the Financial review for a reconciliation.
3 Underlying profit before tax (profit before tax excluding adjusting items) is an alternative performance measure. Refer to note 1 to the financial information for a reconciliation.
4 Cash generation is an alternative performance measure. Refer to the Financial review – cash flow and liquidity for a reconciliation from profit before tax.
5 Net corporate debt (excluding IFRS 16 liabilities) is an alternative performance measure. Refer to note 1 to the financial statements for a reconciliation to cash and cash equivalents.
Investment case
Strategic report
01 Financial highlights
02 PayPoint Group at a glance
04
06 Acquisition of Appreciate Group
10 Chief Executive’s review
14 Market overview
18 Our business model
20 Our strategy
36 Key performance indicators
38 Responsible business
61 Risk management
62 Principal risks and uncertainties
69 Viability statement
71 Financial review
Governance report
79
Introduction to the Corporate Governance report
from the Chairman
82 Board of Directors
84 Executive Board
88 Corporate Governance Report
94 Nomination Committee Report
96 Audit Committee Report
104 Directors’ Remuneration Report
124 Directors’ Report
127 Statement of Directors’ responsibilities
Financial statements
128 Independent Auditor’s Report
134 Consolidated statement of profit or loss
135 Consolidated statement of comprehensive income
136 Consolidated statement of financial position
137 Consolidated statement of changes in equity
138 Consolidated statement of cash flows
138 Reconciliation of cash and cash equivalents
139 Company statement of financial position
140 Company statement of changes in equity
141 Company statement of cash flows
142 Notes to the consolidated financial statements
Shareholder information
182 Notice of Annual General Meeting
185 Notes to the Notice of Annual General Meeting
187 Explanatory notes to certain of the resolutions to
be proposed at the Annual General Meeting
190 Officers and professional advisers
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PayPoint Plc Annual Report 2023
PayPoint Group at a glance
Enabling
payments and commerce for the
public and private sector
Our divisions:
We operate across four divisions:
Shopping
E-commerce
Payments & Banking
Love2shop
We provide digital solutions,
technology and payment
services for SMEs and
retailers to deliver vital
community services
How we do it
• Retail services – EPoS,
FMCG, Counter Cash, ATMs
• Card payments,
Home delivery
We provide a technology-based
delivery platform to deliver
best-in-class customer journeys
for e-commerce brands and
their customers over the
‘first and last mile’
How we do it
• E-commerce – Collect+
(Parcels Pick Up, Drop Off,
Send)
We deliver a channel agnostic
payment platform that gives
clients and consumers choice
We provide employee and
customer rewards and prepaid
savings solutions to thousands
of consumers and businesses
How we do it
• Digital payments – MultiPay
and PayPoint OpenPay
• Cash through to digital
payments – eMoney
• Cash payments – bill
payments and top-ups
How we do it
• Love2shop – the UK’s leading
digital platform for employee
and customer rewards
• Park Christmas Savings –
the UK’s biggest Christmas
Savings Club
Who we work with
Who we work with
Who we work with
Who we work with
Read more on page 20
Read more on page 24
Read more on page 28
Read more on page 32
This has been another
strong year for the
PayPoint Group
where we have made
significant steps to
materially enhance
our platform and
capabilities to deliver
sustainable, profitable
growth and enhanced
rewards for our
shareholders.
What we do:
We enable payments and commerce
for the public and private sector,
connecting millions of consumers
with over 60,000 retailer partner
and SME locations.
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Our approach:
Our purpose
Why we exist
We deliver innovative services
that make millions of people’s lives
a little easier every day
Our values
How we bring our vision to life
Ambitious
Results focused
Accountable
Collaborative
Can do
Good colleague
Our vision
What we aim to achieve
First-time delivery of outstanding technology
and services to our customers
Creating a dynamic place to work for
our people
Delivering positive outcomes for all
our stakeholders
Our strategy
Embed PayPoint Group at the heart of SME and
convenience retail businesses
Become the definitive technology-based e-commerce
delivery platform for first and last mile customer journeys
Grow integrated payments platform across cards,
Direct Debit and Open Banking
Reinforce leadership position in gifting, rewards and
prepaid solutions
Building a delivery-focused and inclusive organisation
Read more on page 18
ESG
Creating long-term value
for all our stakeholders
We are committed to delivering sustainable, essential services that have a positive
impact on our customers, UK communities and the world we live in
Read more on page 38
PayPoint Group
in numbers
PayPoint sites
28,478
Card payment sites
31,777
Parcel transactions
56.4m
Card payment
transactions
386.7m
Retailer partner and
SME locations
62,610
PayPoint Trustpilot
score
4.9/5
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04
PayPoint Plc Annual Report 2023
Investment case
We enable payments and commerce
for the public and private sector,
connecting
millions of consumers with
brands, retailers and SMEs
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Materially enhanced platform
and capabilities, underpinned
by partnership philosophy
In the past year, we have materially enhanced
our platform and capabilities across the Group,
including the new opportunities delivered through
the acquisition of the Appreciate Group. This
will unlock and deliver sustainable, profitable
growth and enhanced rewards for shareholders,
underpinned by our business-wide
partnership philosophy
and intensity of execution.
Strong SME and retailer
partner proposition
Expanded integrated
payments platform
Our expanded proposition helps our SMEs and
retailer partners keep pace with changing consumer
needs, expectations and demographics. We
continue to innovate and increase the range of
services provided through our in-store technology
to drive retention and deliver more opportunities
to earn for our partners.
We continue to diversify our digital payments
client base and expand the range of digital
solutions that we can deliver to support our
clients across multiple sectors, including local
and central government, local authorities,
housing associations and charities.
Excellence in e-commerce
customer experience
and technology
Collect+ is the number one carrier agnostic,
out-of-home network, driving excellent volume
growth and a superior in-store experience,
supported by the impactful investment in ‘print
in store’ devices over the last two years. The
service is a ‘must-have’ for retailer partners,
delivering additional revenue and footfall.
Enterprise platform for
future growth in new
and existing markets
With the addition of Love2shop and prepaid
solutions to our capabilities, our materially enhanced
platform gives us the potential to unlock new
markets, partners and revenue streams, combined
with our partnership philosophy and an intensity
and focus on execution.
Growth-focused
deployment of
financial resources
We remain committed to maintaining our
strong capital discipline and cash flow, whilst
continuing to invest in growth areas across
the Group to further enhance our capabilities,
unlock opportunities and accelerate our growth.
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06
PayPoint Plc Annual Report 2023
Acquisition of Appreciate Group
Creating further
value & opportunities
The UK’s number one digital platform for
employee and customer rewards, helping
brands and businesses attract, retain
and delight customers and employees.
• Customer engagement platform, driving consumer rewards, gifting and
retention across multiple channels.
• Employee rewards and engagement platform, helping businesses drive
satisfaction, retention and rewards for their people.
• Leading technology platform with powerful CRM and end to end customer
lifecycle management.
• 8 million prepaid products distributed every year, working in partnership with
over 140 retail brands online and on the High St in over 23,000 locations.
Corporate and Consumer
Consumer
• Employee rewards
and engagement
• Prepaid savings solutions
for key events
• Customer rewards, gifting
• Over 330,000 families helped
and retention
over last two year
• FY23 billings of £207m*
• FY23 billings of £161m*
* Full year of billings pre and post acquisition.
07
PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Q&Awith Julian Coghlan
Managing Director, Love2shop
Why do you think Love2shop are set
for further growth over the next
few years?
We have the market leading multi retailer prepaid
technology platform and product available in
a wide choice of formats (physical and digital)
for gifting, reward, recognition, incentives and
broader prepaid solutions. We are committed to
investing further in our brand, product, people
and technology to ensure our solutions remain
market-leading. In our Corporate business, we
help businesses solve real challenges around
the retention and acquisition of customers
along with helping businesses with their own
employee reward and recognition programmes.
Moreover, our prepaid Christmas model (Park
Christmas Saving) is relevant for today’s market
and economic challenges, and can expand to
help consumers with other events in the future.
What opportunities are you most
excited about for the next 12 months?
The whole team are looking forward to becoming
further integrated into the Group, taking
advantage of the clear customer and technology
synergies and getting deeper into the wider
capabilities that can help our current customer
base. I’m particularly excited about the Fed
(Federation of Independent Retailers) deal
recently announced, working together to create a
network of Park Super Agents within the PayPoint
retailer partner network – this is a great example
of what the PayPoint Group brings to help
expand and grow our propositions. Similarly, the
development of our broader prepayment products
and technology platform, to assist with innovative
payment opportunities beyond our current
propositions and verticals, is another area that
will have a big focus for us in the next 12 months.
What have been your first impressions
since joining the PayPoint Group
in February?
It’s clear from the first few months that there
is a fantastic cultural alignment between the
two businesses. The PayPoint Group has great,
experienced people at all levels and my team have
been made to feel very welcome. The breadth
of solutions that the wider Group now has is
powerful and Love2shop just adds to those
capabilities, creating lots of opportunities to
expand into new verticals and markets.
And what do you believe the benefits are
of being part of a larger business now?
One of the key benefits is about broadening our
reach much wider and further than we would
have operating as a standalone business. The
opportunities and connections to new markets,
customers and opportunities are significant, as
well as Love2shop benefitting from the breadth
of skills, experience and resources across the
PayPoint Group. This collaborative, partnership
approach is at the heart of how the Group does its
business, and I can see clearly how this will benefit
our extensive range of partners and clients.
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08
PayPoint Plc Annual Report 2023
Acquisition of Appreciate Group continued
The UK gifting market
Love2shop has a well-established technology platform, more than
400,000 customers, a network of popular brand partners and significant
headroom for growth across the large and growing UK gift card and
voucher market, which is valued in excess of £7.2 billion per annum.
Total current UK Gift card market
valued at over £8bn
Consumer
usage
67% B2C
33% B2B
Opportunity to grow market share
in key areas
Budget/Saving – Park Christmas
Savings proposition targeting
cost-conscious consumers
Corporate Rewards/Incentives –
Appreciate Business Services providing
employee reward solutions in a segment
forecasting long-term growth
B2C – Love2shop brand building
its position at the first choice for
consumer gifting
Source: UK Gift Card and Voucher Association
63.5% purchased via physical stores
70.8% for gifting
21.8% for self-use
Spend
and loyalty
66.7% spend more
than the value of
the gift card
31% of 35–54 year olds
become regular customers
after using a gift card with
the brand
Consumer
segments
16–34
25.9%
35–54
37.0%
55+
37.1%
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09
PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Growth in digital rewards and engagement
Significant revenue opportunities across three key areas
of the business identified at time of acquisition
Enabling enterprise
level solutions
Prepayment
saving
Corporate
rewards & gifting
Consumer
gifting
1.
2.
3.
1.
2.
3.
4.
1.
2.
FY24 cycle for Christmas saving – launch of digital tools
and proactive support for agents to reduce saver churn and
improve recruitment
Partnership launched with The Fed to establish third channel
of 1,500 PayPoint retailer Super Agents managing 30–50 new
savers each, saving c.£400 each, expanding geographical reach
through extensive PayPoint network
Leverage Collect+ network for distribution of vouchers, inc.
on-demand print/greeting card solution maximising existing
investment in label printers
Continuing Appreciate Business Services in broadening
out corporate client base and open up opportunities within
PayPoint client base for rewards and gifting
Add Appreciate services to existing PayPoint government
frameworks, inc. G-Cloud
Develop white-label solutions and further uses of prepaid
cards for corporates/large retailers in public and private sector
specific use vouchers for credit unions to issue for purchase
of white goods
Cross-sell of PayPoint integrated payments platform into
Appreciate client base
Expansion of physical gift cards into retailer partner network
of over 18.000 independent retail stores and opportunity to
displace incumbents within larger retailers
Develop Love2shop Local proposition, enabling redemption
across a range of SMEs and retailers across the PayPoint Group
Adding Love2shop and prepaid solutions to our capabilities creates
a materially enhanced platform across the Group, which gives us the
potential to unlock new markets, partners and revenue streams
Retail
Clients
Carriers
The Fed – new partnership announced to create a Park Christmas Savings
Super Agent network of 1,500 retailer partners, combining PayPoint One,
Parcels and Park Savings and creating an earning opportunity of circa £1k
per annum for participating retailers
Local Authorities – expanding range of disbursement solutions
to local authorities with Love2shop Essentials, leveraging prepaid solutions
and enabling funds to be issued for specific uses
e.g. clothing, food
Parcel Carriers – in addition to our core Pick Up Drop Off service, we are
enhancing our proposition with Love2shop gift card solutions to enable
carriers to issue customers rewards/service apologies and improve their
employee engagement programmes
New Sectors
Multi-channel retailer – combining our expertise in gifting, loyalty, card
processing and technology to provide online and in-store solutions,
supporting their multichannel growth ambitions and strategic goals
Events and Brand Activation – enhancing a successful major events
business with our prepaid solutions and PayFac capability to expand
their offering, improve the event-goer experience and expand their
brand activation programme via our network of 28k stores
10
PayPoint Plc Annual Report 2023
Chief Executive’s review
Building
a materially enhanced
platform to deliver sustainable
and profitable growth
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Expanded capabilities and partnership
philosophy opening up new
revenue opportunities
Strategically, we were particularly delighted to
complete the acquisition of Appreciate Group
(now known as Love2shop) in February 2023,
one of the UK’s leading digital platforms for
employee and customer rewards, helping brands
and businesses attract, retain and delight
customers and employees. Appreciate Group
has a well-established technology platform, more
than 400,000 customers, a network of popular
brand partners, and significant headroom for
growth across the large and growing UK gift card
and voucher market, which is valued in excess of
£8 billion per annum. As indicated previously, the
acquisition is expected to be earnings enhancing
in FY24 and will deliver attractive returns for
shareholders, opening up further revenue
opportunities and expanding our capabilities in
the gifting, rewards and prepaid savings markets.
Our partnership philosophy across the Group,
combined with an intensity and focus on
execution, is already unlocking new markets and
revenue opportunities for us. We were particularly
delighted to announce our new partnership
with The Federation of Independent Retailers
(The Fed) on 3 May 2023 to create a network
of Park Christmas Savings Super Agents. This
is the first major initiative announced following
the completion of the acquisition of Appreciate
Group. The deal will see our two organisations
working together to create an initial network of
1,500 Super Agents in FY24 for the Christmas
2024 savings season, with retailers recruiting
savers in their area and creating an additional
opportunity to earn over £1,000 per annum from
the service. This is reflective of the strength of
our relationship with The Fed, their executive
team and member base, and more broadly the
partnership approach that we have adopted
across the Group to enhance our relationships
and unlock further growth opportunities across
new and existing markets.
Furthermore, our Open Banking partnership
with OBConnect has enhanced our integrated
payments platform and already yielded positive
results, particularly with our new PayPoint
OpenPay service with Ovo to support Alternative
Fuel Payments and rolling out our Confirmation
of Payee service with the Department of Energy
Security and Net-zero. We see Open Banking
as a key growth area where we can partner with
organisations in the public and private sector
to enhance their payment offering and improve
customer support to those in need.
Accelerated revenue growth and
momentum across all business divisions
Shopping
In Shopping, our retailer partner and SME
propositions have been enhanced further with
strong take up and positive feedback from our
partners. The overall PayPoint network and
PayPoint One estate have grown again this year
and our broader commitment to our retailer
partners to deliver further value and opportunities
to earn has delivered an increase to retailer
commission paid out of over +15% year on year.
New services and transaction volumes have
driven this positive impact to retailer partner
revenues, including our Counter Cash solution,
which is now enabled in 5,680 sites, with 1,930
sites transacting regularly and over £42.9 million
withdrawn in the financial year, and good growth
in our FMCG consumer engagement proposition,
PayPoint Engage, delivering brand campaigns
leveraging our PayPoint One platform, advertising
screens and i-movo vouchering capability.
In Handepay, we have ended the year with our
strongest ever sales performance in H2 FY23 and
have returned the EVO merchant book back to
growth, ending the year at 18,397 sites, with the
sales team now at full headcount and in spite of
recruitment challenges experienced earlier in the
financial year.
This positive progress since H1 FY23 has been
driven by the enhanced proposition, new Android
terminal and the increased optimisation of our
sales efforts in the Handepay business; and in
PayPoint, improved cards pricing and next day
settlement were launched for new and existing
merchants. As we move into the new financial
year, we look forward to accelerating our cards
business further and proactively targeting
the mid-market merchant segment with a
dedicated team. We will continue our focus on
equipping our people with better data, AI tools
and analytics to have quality conversations with
retailer partners/SMEs and a stronger focus on
retention and yielding improved conversion rates.
In addition, the positive performance of Business
Finance via YouLend across both PayPoint and
Handepay was particularly pleasing, supporting
our retailer and SME partners during the current
economic challenges.
We have continued our extensive efforts to
strengthen our retailer partner relationships and
drive adoption of these new opportunities to
earn, including regular face to face store visits and
‘cash and carry’ days, new retailer forums, more
direct communications and our strengthened
relationships with the key trade associations,
including the Association of Convenience Stores
(ACS), the Scottish Grocers’ Federation (SGF) and
the Federation of Independent Retailers (the Fed).
The feedback and support received from these
organisations has been critical to our continued
commitment to support our retailer partners in
delivering vital community services across the UK
and responding to changing consumer needs in
the UK convenience sector.
“This has been another
strong year for the
PayPoint Group where we
have made significant steps
to materially enhance our
platform and capabilities
to deliver sustainable,
profitable growth and
enhanced rewards for
our shareholders.”
Nick Wiles
Chief Executive
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12
PayPoint Plc Annual Report 2023
Chief Executive’s review continued
E-commerce
In E-commerce, our year-on-year performance
has been excellent, driven by our strength in the
clothing and fashion categories, the continued
expansion of new services with carrier partners,
including Amazon and Wish.com, and the in-store
experience from investment made in Zebra label
printers over the past 18 months. In each of our
carrier relationships, we have developed plans for
the year ahead to grow volumes further through
our network and to continue enhancing the in-
store customer experience. We were also pleased
to support Royal Mail business customers in 1,455
sites in September and October to keep mail
moving during the recent industrial action.
Payments & Banking
In Payments and Banking, we continue to diversify
our digital payments client base and strengthen
our integrated payments platform as we expand
the range of digital solutions that we can deliver
to support our clients across multiple sectors,
including government, local authorities and
housing associations. Our Payment Exception
Service, delivered for the Department for Work
and Pensions, recorded significant growth year on
year, after launching in August 2021 and making a
contribution for half of the previous financial year.
We were delighted that the service received three
industry accolades for Social Inclusion in Financial
Services at the recent Payment Awards, FSTech
Awards and Card and Payments Awards, underlining
the vital role our solutions play in serving some of
the most vulnerable people in the UK.
Similarly, over £246 million of Energy Bills Support
Scheme vouchers were redeemed across our
extensive network of over 28,000 retailer partners
from October 2022 to March 2023, providing
a £400 payment over the winter months to
households across the UK. This vital support
for consumers to help with the Cost of Living
leveraged our CashOut digital capability. All of
these efforts have been underpinned with greater
engagement with key senior stakeholders across
the sectors we operate in, including Ofgem, UK
Finance, Pay.UK and the Department of Energy
Security and Net-zero.
Further progress on our ESG
commitments
Our Environment, Social and Governance (ESG)
strategy has also developed further in the year, as
we consider our social responsibility and impact
as an Executive team and business towards each
of these key areas. In July 2022, we fulfilled our
commitment to ensure all employees are paid a
minimum of the Real Living Wage and Electric
Vehicle charging points have now been installed
at our head office, supporting the use of electric
vehicles by our employees and visitors. An
inaugural Pride Month programme was launched in
June 2022, as part of our ‘Welcoming Everyone’
activities, providing educational content, further
meetings of our LGBTQ+ network and events
to bring colleagues together, building on our
commitments to diversity, equity and inclusion and
supporting our vision to create a dynamic place
to work. We also partnered with Citizens Advice
and Advice Scotland to support important Cost
of Living targeted consumer campaigns across our
network, via receipt advertising, social media and
retailer communications.
Update on claims against PayPoint
As announced on 29 March 2023, the Group
received ‘letter before action’ correspondence
from a small number of market participants
relating to issues addressed by commitments
accepted by Ofgem as a resolution of its concerns
raised in Ofgem’s Statement of Objections
received by the Group in September 2020. The
Ofgem resolution to the case did not include any
infringement findings.
Claims have now been served by Utilita Energy
Limited and Utilita Services Limited (“Utilita”)
and Global-365 plc and Global Prepaid Solutions
Limited (“Global-365”). The Group is continuing
to take legal advice on these two claims and its
position is unchanged. It rejects both claims in
their entirety and intends to vigorously defend
its position.
The Group is confident that it will successfully
defend the claim by Utilita, which does not provide
any clear evidence to support the cause of
action or the amount claimed, and also that it will
successfully defend the claim by Global 365, which
fundamentally misunderstands the energy market
and the relationships between the relevant Group
companies and the major energy providers, whilst
also over-estimating the opportunity available, if
any, for the products offered by Global 365.
The Group will continue to update the market
on a quarterly basis as part of its financial
reporting cycle.
Outlook and dividend
Our enhanced platform and expanded capabilities
across the Group, combined with our business-
wide partnership philosophy and intensity of
execution, give the Board confidence in delivering
further progress in the current financial year and
meeting expectations.
The opportunity to deliver enterprise level
solutions, combining our extensive capabilities,
is significant and enables us to deepen our
relationships with existing clients as well as
expanding into new verticals.
Trading early in the current financial year has been
positive, as we have confirmed in our Q1 FY24
trading update, continuing the performance seen
in FY23. We have detailed execution plans in place
to capitalise on the positive momentum built up
in our key growth areas of card processing, Open
Banking, parcels, integrated payments and the
new Love2shop division, delivering profitable
growth in our retail and card estates, further
enhancements to our proposition and positive
new business growth in key target sectors.
As we continue to integrate the Appreciate Group
into our business, we have been giving careful
thought as to the key performance metrics for
the L2S activities, considering the importance of
growing billings as an early indicator of progress,
strong cash generation and its contribution to
the EBITDA of the business as a whole and the
recognition of profit from a business model
which incorporates, management / service fees,
interest on cash balances and revenue from
non-redemption income. In the current year
we are focused on driving the immediate key
performance indicator of billings in Park Christmas
Savings and Love2shop through our extensive
plans to grow the core business, expand areas
of cooperation across the business and unlock
new revenue opportunities as we leverage the
expanded capabilities of the wider Group.
In confirming our own positive trading outlook,
we are alert to the potential impact on consumers
from the broader economic challenges, including
any changes to consumer behaviours in the energy
sector, all of which we monitor closely across
the business.
The Board has proposed an ordinary final dividend
of 18.6p per share, an increase of 3.3% vs the
final dividend declared on 26 May 2022 of 18.0
pence per share, consistent with our progressive
dividend policy of a target cover range of 1.5
to 2.0 times earnings excluding exceptional
items, reflecting our long-term confidence in the
business, the strength of our underlying cash
flow, and the enhanced growth prospects across
the Group.
Our compelling characteristics of strong cash
flow and resilient earnings remain constant, and
our materially enhanced platform is positioned to
deliver sustainable and profitable growth for our
shareholders, and further progress in the delivery
of these objectives in the current year.
Nick Wiles
Chief Executive
27 July 2023
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
14
PayPoint Plc Annual Report 2023
Market overview
Our markets
Expanding
opportunities
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 15
PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Key trends and
changes in the
FY22/23 financial year
in the UK markets
in which PayPoint
operates include:
“We are committed to
supporting our clients,
retailer partners,
and consumers in
navigating the current
macroeconomic
challenges. We offer a
wide range of solutions
to help them manage
their finances, grow their
businesses, and succeed
in the long-term.”
Steve O'Neill
Corporate Affairs and
Marketing Director
Macro economic factors
• The Consumer Prices Index (CPI) grew to
10.2% in March 2023, driven by increased
food and energy costs1.
• The GfK UK Consumer Confidence Index
rose six points to -30 in April 2023 (vs -36 in
March 2023), and up 19 points from a historic
low of -49 in September 2022 and -45 in
January20232.
• UK retail sales volumes rose by 0.6% in the
three months to March 2023 when compared
with the previous three months; the first three-
month on three-month rise since August 20213.
• GDP is projected to contract in 2023 as
tighter financial conditions weigh on consumer
spending – which accounts for around
two-thirds of the economy4.
Convenience retail
• Lumina Intelligence's current full-year valuation
estimate for the UK convenience market
is £47.1 billion, up 4.1% from £45.2 billion
in 20225.
• Convenience shoppers are reducing frequency
of visits (-4%). However, high inflation and an
increase in basket size has driven an increase
in average basket spend of £7.70, +12.7%
year-on-year with the average basket size
up 4% to 2.8 items6.
In-store purchasing has increased year-on-year
up 2.4%, with delivery occasions losing 2.2%
of share. Shoppers are using delivery services
less frequently due to a shift towards returning
to pre-pandemic habits as well as increased
price sensitivity7.
•
• PayPoint One basket data shows the average
goods only convenience store average basket
spend (May 2022 to April 2023) increased to
£7.06 vs £6.92 the previous period. 66% of
the purchases were made by cash and 34%
by card which is a 3% decrease in cash use on
the previous period8.
•
• Total UK convenience store numbers remained
resilient in 2022, with marginal growth of 0.6%
to 47,8619.
In 2022 the sector saw the biggest growth in
the number of Co-Operatives up 78 (+2.3%)
to 3,394 and a decline of 71 (-1.5%) to 4,790
in Forecourt convenience stores10.
In a Consumer Home Delivery review 2022/23,
IMRG found consumers prefer to collect
orders, purchased via click and collect from a
convenience store (60%) than a retailer’s own
store (48.7%)11.
•
Card payments
•
In 2021, 57% of all payments in the UK were
made using cards12.
•
• From February 2022 to February 2023, there
were 25.8 billion card transactions in the UK13.
In the financial year, card payment volumes
increased by 4.5% year on year across the
PayPoint Group, with growth seen across the
Handepay, PayPoint and RSM 2000 books.
• Latest UK Finance data shows £57.7 billion
was spent on debit cards in February 2023
up 8.2% on February 2022 and £17.3 billion
on credit cards which was a 9.8% increase on
the previous year. The number of debit card
transactions were up 9% to 1,800 million and
credit transactions were up 7.1% year on year
to 304 million transactions14.
In the SME markets that our Handepay
business serves, businesses employing 0–49
people, account for 99% (5.47 million) of the
total UK business population, 77% (4.1 million)
of the businesses have no employees, with
12% (1.1 million) classed as micro-businesses
with 0–9 employees. Retail, auto trade and
hospitality businesses make up circa 14%
of the SME sector15.
•
Cash Economy
• From October 2022 to March 2023, £249
million in £400 payments were distributed
across our network of 28,000 stores for the
Governments Energy Bills Support Scheme.
• Our Payment Exception Service, run for the
Department for Work and Pensions won
three industry awards for Social Inclusion
in Financial Services and has grown year on
year underlining the continuing importance
of delivering cash payments to those without
access to a standard bank account.
• Latest data from LINK’s March 2023 report
show ATM transactions were 127 million, 5.4%
lower than March 2022 and that each month in
2023 has seen volumes below 2022, however
it was 11% higher than March 2021 which was
still during a period of lockdown. The value
withdrawn also fell by 1.7% compared to March
2022, a smaller reduction than volumes as the
average withdrawal value continued to rise and
the £6.8 billion withdrawn in March remains a
very significant amount of cash.
• ATM coverage across the UK in 2023 continues
to be broadly stable and consistent, with a
very slow decline in non-branch free-to-use
ATMs in the last year. Branch and charging ATM
numbers continue to decline at a faster rate as
bank branches close and host locations decide
they no longer need charging ATMs or no
longer take in enough cash to replenish them16.
• PayPoint’s Counter Cash service, which offers
cashback without purchase and balance
enquiries over the counter continues to grow
and is now available in over 5,680 PayPoint
stores across the UK with over £1m of
withdrawals per week with almost a third of the
withdrawals for amounts not available from
traditional cash machines.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 16
PayPoint Plc Annual Report 2023
Market overview continued
Parcels
• According to IMRG’s Consumer Home Delivery
Report UK, online retail sales fell -10.5% year
on year in 2022.
• Consumers choosing a third-party click and
collect location prefer a staffed location (55%)
rather than a self-serve locker-type site (13%),
and they generally would travel two to five
miles (68.2%) to pick up the item17.
• Click & collect from a retailer’s store is the
standout consumer choice, but when asked
if they could choose a click & collect location,
more consumers selected a convenience store/
supermarket (60%) than the retailer’s own
store (48.7%)18.
• UK, non-food retail sales are forecasted
to increase from £242.7bn to £248.9bn in
2023 – an increase of £6.2bn or 2.6% in value
terms. However, volume growth is predicted to
decline 4.9% which reflects an inflationary rise
in prices rather than an actual increase in the
quantity of goods purchased19.
• This contrasts with the strong performance
seen in the Collect+ network which has
seen excellent volume growth year on year
in Collect+, driven by strong partnership
approach with carrier partners, our positive
reputation as the leading carrier agnostic
Out of Home network, and backed up by
continued investment into the in-store
customer experience.
• The Out of Home (OOH) market comprises
click and collect, returns and send propositions.
The click and collect market is 11% of all
volumes with 150 million parcels per year and
is expected to double by 202520. Returns
and send volumes are estimated at c.185
million and c.380 million parcels per year
respectively21.
Bill payments and top-ups
• 2022 was a much more stable year for the
•
•
energy supplier market with only four suppliers
exiting the market leaving 23 active suppliers,
down from 51 suppliers at the beginning
of 202122.
In October 2022, the UK Government
introduced the Energy Bills Support Scheme
which gave every household a £400 discount
on their household energy bills which was
paid in instalments over six months from
October 2022 to March 2023.
In August 2022, Ofgem announced the Default
Tariff Cap would be updated on a quarterly
basis rather than every six months so that
it can reflect the changes in the cost of
energy sooner.
• The dual fuel energy price cap for prepay
customers for April to June 2023 decreased
to £3,325 from the high of January to March
2023 of £4,35823.
• Non-Big Six energy providers combined market
share increased marginally to 29.6% at the end
of January 2022 (29% as of 31 March 2021)24.
• At the end of 2022, 31.3 million smart
and advanced meters were in homes and
businesses across the UK, with 55% of all
meters are now smart or advanced. A total
of 3,7 million meters were installed in 2022
a decrease of 4% on 2021 total25.
• PayPoint data shows the average number of
customer energy top-ups per year is slightly
down at 38.3 vs. 38.9 top-up transactions
with the overall average spend increasing to
£708.25 vs £578.80 the previous year due to
the increase in energy prices26.
• The number of mobile prepay (pay-as-you-go)
subscriptions declined to 21.5 million in April
2022, from 22.2 million in April 202127.
•
Open Banking
• Over 7 million consumers and businesses
(of which 750,000 are SMEs) are using
innovative Open Banking enabled products
and services to manage their money and to
make payments28.
In 2022, Authorised Push Payment (APP) fraud
losses were £485.2 million (down 17%) with
protections such as Confirmation of Payee
cited as having an impact on the reduction.
With our partners obconnect we have
processed 25 million CoP requests in the last
year, with an estimated 12% of those could
have prevented fraudulent transactions29.
• Open Banking payments have more than
doubled, with over 68 million Open Banking
payments in 2022 (up from 25 million in
2021)28.
• Since going live with our PISP payment
solution at the beginning of May 23, PayPoint
has processed over 57,000 payments for our
first energy client with the number rising each
day as customers begin to adopt this new
payment method.
• OpenBanking.org have highlighted some of
the most common financial challenges and
how Open Banking enabled tools can offer
ways for consumers to take greater control
of their finances, by consenting to share their
banking data, they can get a clear view of all
their incomings and outgoings to help them
better understand their finances, access
affordable credit, particularly if they don’t meet
traditional lending criteria and to understand
their eligibility to switch to an affordable
energy tariff30.
Gift Cards and Vouchers
• The UK Gift Card market is estimated to be
worth £7.2 billion in 2022, up from £6.8 billion
in 2021. The year-on-year growth was driven
by the rise of contactless payments, and the
growing trend of employers offering gift cards
as a perk to employees31.
• Gift cards continue to encourage additional
spend, with around two-thirds of shoppers
typically spending more than the value of
gift card they received over 2022. Younger
shoppers (Gen Z) are willing to spend triple
the amount of a gift card they are redeeming32.
• The B2C market has grown 13.3% against
a backdrop of retail sales that have faced
difficulties due to inflation and cost of living32.
• The B2B sector represents 57.4% of the total
market in 2022 below the highs of 67.3% seen
in 2020 which bring the market more in line
with the B2C market post Covid-1932.
• The average monthly proportion of UK
consumers purchasing gift cards for someone
else remained robust over 2022, at 18.0% vs
18.5% in 202132.
• UK retail spend forecasted to be £380bn
+3% on PY due to inflation +7.7%, triggering
a -4.6% decline in volume of shoppers
(particularly the less affluent)32.
In April 2023, 34.5% of UK consumers bought
gifts and gift cards. A decline on PY April
from 37.5%32.
•
• 11% of those that did not purchase gift cards
said this was because they have cut back on
non-essential spending32.
• Proportion of consumers purchasing gift cards
for someone else in April was 15.8% compared
to 16.7% on PY April (a notable decline)32.
• 7.4% purchasing for self use was also lower
than 7.8% on PY April32.
• Digital continues to increase in popularity.
The proportion of digital cards through
employee benefit programme was 12.2%,
+9.3% on the month prior32.
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17
PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
• Proportion of gift card buyers purchasing digital
cards in April increased to 26.8% from 25.9%
during the month prior – a continuing trend32.
• This is at the expense of online purchasing
on physical gift cards: 33.1% of gift buyers
in April 2023 compared to 40.4% in PY32.
• Multistore gift cards see more significant YOY
decline: share of 33.9% in April 2023 compared
to 41.1% in April 2022. However, they should be
well placed to benefit from the post pandemic
return to physical shopping as a hobby. Retail
gift cards have experienced a lower decline as a
result of this activity32.
• 18.2% purchased experience gift cards in April
compared to 26.6% in 2022. Those purchasing
for leisure activities also saw a decline from
18.2% in 2022 to 14% in 202332.
• 39.5% of consumers receiving at least one gift
card over the last three years through work
rewards or incentives33.
Open Banking Payments
68m in 2022
– more than
double the
25m in 2021
https://www.gfk.com/press/UK-Consumer-confidence-up-six-points-in-April 3 https://www.gfk.com/press/UK-consumer-confidence-tumbles-to-new-low-of-49-in-September
https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/march2023
https://www.natwest.com/content/dam/natwest/business-insights/documents/nw-retail-and-leisure-outlook-2023.pdf page 5
1 https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/march2023
2
3
4
5 Source: Lumina Intelligence Convenience Market Data 2023
Lumina Intelligence CTP 12WE-05.03.23 & Convenience Strategy Forum Debrief – Q1 2023
6
Lumina Intelligence CTP 12WE-05.03.23 & Convenience Strategy Forum Debrief – Q1 2023
7
PayPoint internal data
8
9
Source: PayPoint Dashboard Report page 25 (Lumina Intelligence, July 2022)
10 Source: PayPoint Dashboard Report page 25 (Lumina Intelligence, July 2022)
11 IMRG Consumer Home Delivery Review 2022/23 – page 27
12 https://www.ukfinance.org.uk/system/files/2022-8/UKF%20Payment%20Markets%20Summary%202022.pdf page 3
13 UK Finance Card Spending Update for February 2023
14
UK Finance Card Spending Update for February 2023
15 https://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf page 4
https://www.link.co.uk/media/2199/monthly-report-mar-23-final.pdf 17.
16
17
IMRG’s Consumer Home Delivery Report UK
18 IMRG’s Consumer Home Delivery Report UK
19 Metapack e-commerce delivery report 2023
20
21
22
23
24
25
26
27
28
29 https://www.ukfinance.org.uk/system/files/2023-05/Annual%20Fraud%20Report%202023_0.pdf
30 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1150988/JROC_report_recommendations_and_actions_paper_April_2023.pdf
31
32 GCVA Consumer Report May 2023
33 GCVA-State-of-the-Nation-March-2022
https://www.imrg.org/uploads/mediadefault/0001/08/2477f50ad2fee946cdf5ed23ebb8df21f2489d09.pdf?st.
OC&C analysis
https://www.ofgem.gov.uk/retail-market-indicators
https://www.ofgem.gov.uk/energy-data-and-research/data-portal/all-available-charts?keyword=breakdown%20of%20the%20default%20tariff%20price%20cap&sort=relevance
https://www.ofgem.gov.uk/energy-data-and-research/data-portal/all-available-charts?keyword=breakdown%20of%20the%20default%20tariff%20price%20cap&sort=relevance
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1143890/Q4_2022_Smart_Meters_Statistics_Report.pdf
PayPoint Data – Databased on regular customers only, ones transacting before the beginning of the two-year period and in the last three months of the date range
https://www.ofcom.org.uk/__data/assets/pdf_file/0018/240930/Communications-Market-Report-2022.pdf
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1150988/JROC_report_recommendations_and_actions_paper_April_2023.pdf
https://www.openbanking.org.uk/insights/how-open-banking-can-help-consumers-manage-cost-of-living-challenges/
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 18
PayPoint Plc Annual Report 2023
Our business model
How we create value
Our four business divisions
driving growth in the UK
Innovating
How we deliver innovative services
Our purpose is to deliver innovative services that make
millions of people’s lives a little easier every day
Connecting millions of consumers with over
60,000 retailer partner and SME locations
Shopping
Creating a better
in-store experience
E-commerce
Payments & Banking
Love2shop
Delivering great
customer journeys
Delivering a channel-agnostic
payment platform
Delivering gifting and rewards
for the moments that matter
We provide digital solutions to
help our retailer and SME partners
keep pace with changing shopper
needs, service expectations and
demographics, offering everything
a modern business needs, including
EPoS, parcel services, Counter
Cash, card and bill payments, home
delivery and digital vouchering
We enable the delivery of best-
in-class customer journeys for
e-commerce brands over the first
and last mile in c.10,000 locations
through our Collect+ brand, helping
consumers pick up and drop off
online shopping or send parcels
across the UK
We have continued our
diversification to digital payments,
helping organisations seamlessly
and effectively serve their
customers. Our market-leading
omnichannel solution – MultiPay –
is an integrated solution offering
a full suite of digital payments
We provide gifting, employee
engagement, consumer incentive
and prepaid savings solutions
to thousands of consumers
and businesses
Read more on page 20
Read more on page 24
Read more on page 28
Read more on page 32
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 19
PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Our drivers
of success
The value
we create
What makes our model work
Delivered to your stakeholders
Unparalleled network of retailer partners
and SMEs
• The enlarged PayPoint Group now delivers technology and services to a
universe of over 60,000 SME and retailer partner locations across multiple
sectors, including food services, convenience retail, garages and hospitality.
A diverse range of clients and brands
• Our Shopping division serves the best SMEs and retailers in the UK, delivering digital
solutions and essential services from large retailers, like Asda, The Co-operative
Group and EG Group, to the best independent store owners across the country.
• Our E-commerce division enables the delivery of best-in-class customer
journeys for e-commerce brands over the first and last mile, including Amazon,
eBay, Yodel, FedEx, DPD, DHL, HubBox, Royal Mail, Wish.com and Parcels2Go.
• Our Payments & Banking division delivers digital payment solutions to clients
across diverse sectors, including energy, housing, local authorities and a growing
portfolio of digital brands such as Amazon, PlayStation, Xbox and Monzo.
• Our Love2shop division provides gifting and rewards solutions for thousands of
consumers and employees, working with the biggest retailers and brands, such
as M&S, Primark, Aldi and John Lewis.
Cutting-edge technology
• We pride ourselves on delivering innovative technology and services across all
our business divisions, whether through PayPoint One, helping our convenience
retailer partners run their businesses more efficiently, or our proprietary
e-commerce software solutions that have a singular focus on the delivery of
great consumer experiences and confidence in the crucial first and last mile of
parcel journeys.
Talented and committed people
• We have a talented, diverse and committed workforce with years of experience
from a wide range of industries.
Consumers
We serve millions of consumers every day, online and in-store, helping
them make payments and send/pick up parcels through our digital
payments platforms and extensive retailer partner network
Transactions per year
698.6m
Retailers and SMEs
We enhance the retailer proposition and consumer experience, driving
footfall, new commission opportunities and better store management
tools for thousands of SMEs and retailers across the UK
Retailer and SME locations
62,610
Employees
We create a dynamic and innovative place to work for our employees
across the PayPoint Group
No. of employees
944
Investors
We aim to deliver a sustainable and rewarding business model and
superior returns for our investors
Dividends paid per share
34.6p
Local communities
We provide essential services to hundreds of communities across the UK,
at over 28,000 locations, with 99.3% of the population living within one
mile of a PayPoint location in urban areas
Population within one mile
99.3%
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20
PayPoint Plc Annual Report 2023
Our strategy
Shopping
Strategic Priority:
Embed the PayPoint
Group at the heart of
SME and convenience
retail businesses
We provide digital solutions, technology and payment services
for SMEs and retailers to deliver vital community services.
Retail services – we help our retailer and SME partners keep pace with
changing consumer needs, service expectations and demographics.
Our retail services platform, PayPoint One, is live in over 18,453 stores
across the UK and offers everything a modern convenience store needs,
including EPoS, parcel services, card and bill payments, home delivery
and digital vouchering.
This empowers our retailer partners to grow their businesses profitably, achieving
higher footfall and increased spend. We also provide access to cash solutions via our
network of 3,470 ATMs and our pioneering Counter Cash service, offering cashback
without purchase and balance enquiries over the counter, is now enabled in 5,680 sites.
Card payments – we provide card payments services for over 30,000 SMEs and
convenience retailers across the hospitality, convenience retail, auto trade, clothing
and household goods sectors via our PayPoint, Handepay, Merchant Rentals and RSM
2000 brands.
FY23 Progress
• Further expansion of Counter Cash, now enabled in 5,680 sites
and with 1,930 sites transacting regularly in the year, with over
£42.9 million withdrawn in the financial year, offering vital access
to cash over the counter and complementing existing ATM estate.
• SME and retailer proposition enhanced across Handepay and
PayPoint card services: new Android terminal launched in Handepay
with positive merchant feedback, supported by one-month contracts
and next day settlement delivered in last financial year; improved
pricing and next day settlement launched for new PayPoint card
payment merchants from 1 July 2022 and to existing customers
in October 2022, boosting cash flow to our retailer partners.
• Strongest ever sales performance delivered by end of the financial
year and a largely full-strength sales team recruited across Handepay
and PayPoint, following recruitment challenges experienced in H1
FY23. This positive momentum has been supported by our most
competitive and attractive proposition ever and allied with a more
detailed focus on customer service and retention, leveraging our
AI and data analytics capabilities.
• Positive performance of Business Finance via YouLend with over £12.5 million lent,
supporting our retailer and SME partners during the current economic challenges.
• New acquiring partnership with EVO, becoming the single acquirer across the Group.
The move enables our merchant estate acceleration plans and mid-market segment
focus, increases our efficiency as an ISO and begins the journey to becoming a fully
integrated Payment Facilitator.
• FMCG – good progress with a number of FMCG brand campaigns delivered in the
second half and strong pipeline of future activity, partnering with Coca-Cola, Amazon,
AG Barr and JTI. Our consumer engagement solution for brands, PayPoint Engage,
leverages our PayPoint One platform, advertising screens and i-movo vouchering
capability to help our retailer partners drive sales and help brands engage thousands
of consumers across our network, with redemption rates of up to 40%.
• Retailer engagement – positive progress made on retailer partner Net
Promoter Score and satisfaction, supported by regular engagement with key
trade associations, launch of new retailer forums with the Scottish Grocer’s
Federation and National Federation of Retail Newsagents and a comprehensive
communications programme to drive new services and opportunities to drive
revenue for our retailer partners.
FY24 Priorities
• Continue to enhance retailer proposition, driving retention
• Build on strong momentum in Cards business, with a continued focus on sales and
and delivering more opportunities to earn for retailer partners.
• Launch next generation retail technology into PayPoint network.
retention and the development of our SME proposition.
• Begin the process to become a Payment Facilitator, bringing all new business under
a single acquirer.
21
PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
The transformation
of the PayPoint Group
over the past few
years has driven new
growth opportunities
Key drivers
• Growth in PayPoint One and service fee.
• Growth in card payments and acquisition
of Handepay/Merchant Rentals.
• Enhancement of retailer proposition and
engagement, inc. Counter Cash, FMCG,
MyStore+, Home Delivery.
KPI’s
PayPoint One sites
18,453
(FY22: 18,120)
Card payment transactions
386.0m
(FY22: 369.3m)
Risks
1
4
Competition and Markets
Operating Model
10
Operational Delivery
FY22
FY23
Net revenue
Net revenue
£58.7m
+5.6%
£62.0m
Percentage of Group
Percentage of Group
51.0%
48.1%
How we deliver
Retail Services
• PayPoint One, EPoS, Counter Cash, FMCG, ATMs, Business Finance,
Card payments
• PayPoint & Handepay/Merchant Rentals & RSM 2000.
Home Delivery.
Subdivision Performance
Retail Service
FY22
FY23
Cards
FY22
FY23
Net revenue
Net revenue
Net revenue
Net revenue
£28.3m
+6.7%
£30.2m
£30.4m
+4.6%
£31.8m
Percentage of Group
Percentage of Group
Percentage of Group
Percentage of Group
24.6%
23.4%
26.4%
24.7%
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PayPoint Plc Annual Report 2023
Our strategy continued
Shopping continued
Enhancing
the retailer proposition
& consumer experience
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Case study
Shopping
Q&Awith Anthony Sappor
Retail Proposition and Partnerships Director
What’s the one big future opportunity
that you’re working on?
With the addition of the Love2shop gifting
capability to the Group, there are many
opportunities to enhance and grow the solutions
that we offer to support FMCG brands through
our PayPoint Engage platform. This already
leverages our PayPoint One platform, advertising
screens and i-movo vouchering capability to help
our retailer partners drive sales and help leading
brands engage thousands of consumers across
our network.
What have been the key developments
for PayPoint’s retailer proposition over
the last 12 months?
We have continued to evolve and improve
our proposition to deliver more value and
opportunities to earn for our retailer partners,
whether through our Counter Cash service, the
fantastic growth in parcels, our most competitive
cards proposition or the new opportunities that
we have delivered via our FMCG activity working
with leading brands in the sector.
How are you looking to evolve your
technology offer in the future?
It’s important to never stand still when it comes
to in-store technology and we have spent a lot
of time listening to feedback from our retailer
partners on how we develop our next generation
of technology. The first step will be delivered this
year through our PayPoint Connect proposition,
creating an improved, integrated technology offer
into third party EPoS systems which will enable an
enhanced customer experience, greater access to
new services and a growing opportunity for cards
business. This will be supported through a new,
mobile device, PayPoint Mini, which will become
our principal in-store device for new customers
later this year.
PayPoint One Sites
18,453
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PayPoint Plc Annual Report 2023
Our strategy continued
E-commerce
Strategic Priority:
Become the definitive
technology-based
e-commerce delivery
platform for first and last
mile customer journeys
FY23 Progress
We provide a technology-based platform to deliver best-in-class
customer journeys for e-commerce brands and their customers
over the ‘first and last mile’, leveraging our proprietary software
capability and expertise with continuous investment and innovation
in the in-store experience.
We deliver all of this in over 10,000 locations through our Collect+ brand,
helping consumers pick up and drop off online shopping or send parcels
across the UK.
• Excellent parcel transaction growth of +69.8% year on year, driven by
our strength in clothing/fashion categories, the continued expansion
of new services with carrier partners and the in-store experience from
investment made in Zebra label printers over the past 18 months.
• New partnerships launched in Q4 FY23 with InPost for locker to store
parcels and Yodel for store to store parcels.
• Partnership launched with Wish.com in H1 FY23, one of the largest
e-commerce marketplaces in the world, enabling consumers to click-
and-collect at over 1,600 Collect+ sites.
We work with a comprehensive range of partners, including Amazon, eBay,
Yodel, Fedex, DPD, DHL, HubBox, Wish.com, Royal Mail and Parcels2Go.
Our proprietary PUDO software solutions are built in-house, with a
singular focus on the delivery of great consumer experiences and
confidence in the crucial first and last mile of parcel journeys. These
solutions are easily deployable in thousands of diverse locations across
multiple sectors through the PayPoint Group. Our unique blend of in-
depth parcel operations experience, consumer interaction and agile IT
development capability has been built over years of delivering best-in-class
customer experiences.
• Amazon returns rollout expanded to over 2,000 sites and further
integrations rolled out for Print In Store, which saw significant growth
in H2 FY23.
• Rapid rollout of 1,455 Collect+ sites in September and October to
support Royal Mail business customers, helping keep mail moving
during industrial action.
FY24 Priorities
• Deliver carrier expansion plans ahead of peak 2023 trading, including
rolling out additional sites and volume for Amazon, DPD and Yodel.
• Expand successful print in-store service to entire Collect+ store network.
• Launch new Yodel Store to Store service for Vinted, building on excellent
volume growth over last 12 months.
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Collect+ is our
technology-based
platform to deliver
best-in-class
customer journeys
for e-commerce
brands and their
customers over the
‘first and last mile’
FY22
FY23
Net revenue
£4.9m
Net revenue
£7.3m
+46.5%
Percentage
of Group
4.3%
Percentage
of Group
5.6%
Key drivers
How we deliver
• Consumer parcel pick up, drop off and send.
• No.1 carrier-agnostic Out Of Home (OOH) network, with best-in-class technology and consumer experience.
• Leadership in consumer data and insights to drive sector innovation.
Our partners
• Development of e-commerce delivery platform
yielding strong year on year transaction growth.
• Continued investment in technology and
in-store experience, inc. label printers and app.
• Reshaped carrier relationships, expansion of
brand portfolio and service provision.
KPI’s
Parcel
transactions
Parcel net
revenue
56.4m
(FY22: 33.3m)
£7.3m
(FY22: £4.9m)
Risks
1
2
3
Competition and Markets
Emerging Technology
Transformation
10
Operational Delivery
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PayPoint Plc Annual Report 2023
Our strategy continued
E-commerce continued
Providing
best-in-class
e-commerce journeys
27
PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Case study
E-commerce
Q&Awith Nick Williams
Parcel Services Director
What have been the key factors in
the success of parcels over the past
12 months?
Our positive performance has been driven by
three important areas: the investment we have
made over the past few years in ‘print-in-store’
technology which has unlocked additional volume;
the strong relationships we have with our carrier
partners; and, of course, our fantastic retailer
partners who do such a great job of providing an
exemplary service to consumers across the UK
every day.
What’s your focus for the next
12 months?
Clearly we want to build on the positive
momentum in the past year to provide further
opportunities for our retailer partners. Given it’s
success, we want to expand our print in-store
service to the entire Collect+ store network, which
will support the launch of a new Yodel Store to
Store service for Vinted. We will also continue our
expansion into student union sites in selected
universities, as well as trialling a locker solution
with OOHPod in Northern Ireland.
Parcel transactions
56.4m
Parcel net revenue
£7.3m
Why do you think the Collect+
proposition is so attractive for your
retailer partners?
Parcels is an important part of any modern
convenience store’s offering and Collect+ has
the widest range of carriers, fits seamlessly into
the operations of a store and delivers incremental
revenue for participating retailers. Consumers
increasingly want greater convenience when
shopping online and our retailer network is ideally
placed to meet that need, right at the heart of
communities nationwide.
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PayPoint Plc Annual Report 2023
Our strategy continued
Payments & Banking
Strategic Priority:
Grow integrated
payments platform
across cards,
Direct Debit and
Open Banking
We deliver a channel-agnostic payment platform that gives clients
and consumers choice.
Digital – we have continued our diversification to digital payments, helping
organisations seamlessly and effectively serve their customers. Our channel
agnostic, multisector payments platform (MultiPay) has delivered strong growth
year on year, supporting integrated payments across cash, Direct Debit, cards,
Open Banking and support tools. Our CashOut service, delivered via i-movo, also
enables the rapid dispersal of funds through secure digital channels and is actively
used by local and central government, including over £246 million of Energy Bills
Support Scheme vouchers to support consumers with their energy bills over the
winter period and the Department for Work and Pensions Payment Exception
Service, digitising benefit payments and replacing the Post Office Card Account.
Cash through to digital – we enable consumers to access digital brands and
services through a comprehensive portfolio of gifting, e-banking and gaming
partners, including Amazon, Google Play, Monzo, Revolut, JPMorgan Chase, Xbox,
PlayStation, Paysafe, Monzo and Love2shop. Consumers simply pay for a ‘pin on
receipt’ code in cash in any of our 28,478 retail locations and then can use that
value online with the digital brand or service chosen. For our challenger bank
partners, consumers can deposit cash into their accounts across our extensive
retail network.
Cash – we provide vital access to cash payment services across the UK by helping
millions of people every week control their household finances, make essential
payments and access in-store services. Our UK retail network of more than
28,000 stores is bigger than all banks, supermarkets and Post Offices put together,
putting us at the heart of communities nationwide.
FY23 Progress
• Continued strong progress in digital transactions, with growth of +53.0% year
on year, and further expansion of our client relationships with our enhanced
integrated payments platform, including launching Direct Debit with POBL
Housing, our new PayPoint OpenPay service with Ovo to support Alternative Fuel
Payments, and rolling out our Confirmation of Payee service with the Department
of Energy Security and Net-zero, leveraging our Open Banking capability.
• Our Payment Exception Service, delivered for the Department for Work and
Pensions, recorded significant growth year on year with net revenue +179%
to £4.4m (FY22: £1.6m) and transactions +317% to 12.5m (FY22: 3.0m).
The service received three industry accolades for Social Inclusion in Financial
Services at the recent Payment Awards, FSTech Awards and Card and Payments
Awards, underlining the vital role our solutions play in serving some of the most
vulnerable people in the UK.
• Over £246 million of Energy Bills Support Scheme vouchers redeemed across
our extensive network of over 28,000 retailer partners from October 2022 to
March 2023. PayPoint partnered with 9 energy providers to deliver the Energy
Bills Support Scheme, providing a £400 payment over the winter months to
households across the UK. This vital support for consumers to help with the
Cost of Living leveraged our CashOut digital capability.
• Cash through to digital – good progress in expanding client base and services
provided in gifting (Netflix and Google Play) and neo banks (Monzo and JP
Morgan Chase), to complement existing gaming portfolio.
• Cash through to digital consumer awareness campaign for gifting expanded
with over 10,000 display units rolled out to stores across the UK ahead of
key Christmas trading period, including major multiple groups like Midcounties
Co-operative.
FY24 Priorities
• Drive further growth in our integrated payments platform, MultiPay, with
a continued sector focus on housing, charities and local government.
• Build on strong momentum in Open Banking, working with obconnect,
to expand services for existing and new clients.
• Reinforce PayPoint’s position as the leader in disbursement services for
central and local government.
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
We deliver a channel-
agnostic payment
platform that
gives clients and
consumers choice
Key drivers
• Built payment channel agnostic platform,
•
supporting diversification to digital.
Investment in capabilities to secure business
in new sectors, including government,
newspapers, housing and charities.
• Further strengthen relationships and new
service adoption in energy and existing clients.
• Accelerated decline of cash in legacy business.
Subdivision Performance
FY22
FY23
Digital
FY22
Net revenue
Net revenue
£51.5m
+9.1%
£56.2m
Net revenue
£7.8m
FY23
Net revenue
+102.7%
£15.7m
Percentage of Group
Percentage of Group
Percentage of Group
Percentage of Group
44.7%
43.6%
6.8%
12.2%
KPI’s
Subdivision Performance
Digital transactions
52.3m
(FY22: 34.2m)
Digital transaction value
£1.3bn
(FY22: £756.6m)
Cash through to digital
FY22
FY23
Cash
FY22
FY23
Net revenue
8.2m
Net revenue
£6.9m
-16.5%
Net revenue
Net revenue
£35.5m
-5.4%
£33.6m
Risks
Percentage of Group
Percentage of Group
Percentage of Group
Percentage of Group
1
2
3
Competition and Markets
Emerging Technology
Transformation
10
Operational Delivery
7.1%
5.4%
30.8%
26.0%
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PayPoint Plc Annual Report 2023
Our strategy continued
Payments & Banking continued
Creating
a payment channel
agnostic platform
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Case study
Payments
& Banking
Q&Awith Jo Toolan
Client Services Director
How do you think PayPoint’s integrated
payments platform has evolved over the
past 12 months?
Our enhanced capabilities, particularly in Open
Banking, Direct Debit and digital payments,
have given us fantastic opportunities to expand
the range of services we provide to our existing
clients and as well as providing new opportunities
in new sectors, particularly in housing, local and
central government.
What’s the one big future opportunity
that you’re working on?
Open Banking will continue to grow in importance,
working closely with our partner, OBConnect.
We are all excited by what Open Banking enables
for our clients in how they service their customers,
building on the positive results we have seen
with our new PayPoint OpenPay service delivered
with Ovo to support Alternative Fuel Payments
and rolling out Confirmation of Payee for the
Department for Energy Security and Net-zero.
What do you think has driven the
success here?
We have worked hard to develop our partnership
philosophy with our clients, taking the time to
understand their needs, challenges and how
we can help address them with our extensive
solutions and enhanced platform. The other key
factor here has been our improved engagement
with our broader industry stakeholders, including
Ofgem, UK Finance, Pay.UK and the Department
of Energy Security and Net-zero. PayPoint is
very much at the heart of delivering vital digital
services across the UK.
Digital transactions
52.3m
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PayPoint Plc Annual Report 2023
Our strategy continued
Delivering
gifting and rewards for the
moments that matter
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PayPoint Plc Annual Report 2023
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Financial statements
Shareholder information
Strategic Priority:
Reinforce leadership
position in gifting,
rewards and prepaid
solutions
FY23 Progress
Love2shop
We provide gifting, employee engagement, consumer incentive and
prepaid savings solutions to thousands of consumers and businesses.
• Park Christmas Savings completed fulfilment of its Christmas 2022
• Building on the strong momentum in both Park Christmas Savings
order book – this was 2% lower than prior year which was a significant
improvement on recent trends and ahead of expectations, underpinned
by record levels of retention and conversion. The savings cycle for
Christmas 2023 is well under way and as part of the strategy to return
to growth, the order book is expected to be c2% higher than prior year,
the first growth in the order book in 6 years.
• Love2shop Business saw strong levels of new business growth in client
and Love2shop, integration work is already well under way, unlocking
commercial revenue enhancements and continuing our focus on
organisational alignment.
• A small profit was generated in March 2023, before taking into account
any acquisition related amortisation and financing costs. This is due to
the seasonal nature of the business where profit is primarily generated
in Q3 of the financial year.
numbers, increasing by 19% on prior year.
• 49 new retail partners added across the Love2shop platforms, adding
to appeal and breadth of choice for consumers, including Sports Direct,
The Entertainer and B&M, and Trustpilot score increased to 4.8/5.
FY24 Priorities
• Strengthen Love2shop’s position as the market-leading, multi-retailer
• Accelerate technology development plans to enhance client integrations
gifting provider.
and capabilities.
• Grow Park Christmas Savings billings, through enhanced marketing
activity and launch of Super Agent network across PayPoint retailer base.
• Unlock further growth in Corporate business for Love2shop, leveraging
client base across PayPoint Group.
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PayPoint Plc Annual Report 2023
Our strategy continued
Building
a delivery-focused
and inclusive organisation
KPI’s
Employee engagement –
collaboration score
71
(FY22: 72)
Risks
6
People
10
Operational Delivery
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
PayPoint Group
Strategic Priority:
Building a delivery-
focused and inclusive
organisation
FY23 Progress
Underpinning the PayPoint Group’s future success is the
continued development and investment in our people,
systems and organisation.
We aim to create a dynamic place to work for our people, enabling us to
deliver for our customers by collaborating and being good colleagues to
each other, creating a positive and inclusive environment where everyone
can learn, grow and shine.
• Good progress against our ESG programme, including commitment
to ensure all employees are paid a minimum of the Real Living Wage
delivered in July 2022, 5 electric vehicle charging points installed at
our Welwyn Garden City head office in November 2022, and Diversity,
Equity and Inclusion training delivered in January 2023.
• Comprehensive programme of ‘Welcoming Everyone’ activities
delivered, building on our commitments to diversity, equity and inclusion
and supporting our vision to create a dynamic place to work: including
our inaugural Pride Month programme launched in June 2022, providing
educational content and further meetings of our LGBTQ+ network;
International Women’s Day events across the Group; and an external
speaker session focused on life over 50.
• Love2shop (formerly known as Appreciate Group) recognised as one
of the UK’s Best Workplaces™ 2023 by Great Place to Work® UK.
• Partnered with Citizens Advice and Advice Scotland to support
important Cost of Living targeted consumer campaigns
across our network, via receipt advertising, social media and
retailer communications.
• Continued progress on improving our IT service delivery through the
transformation into cross-functional product engineering teams with
full responsibility for service delivery and product development of each
service, the completion of infrastructure consolidation work resulting
in reduced energy use at the PayPoint head office, the highest levels
of service availability delivered with 100% uptime achieved on core
processing systems and a continued focus on cyber-security, with the
rollout of a new SAST and DAST scanning tool across engineering teams
and the launch of a Bug Bounty programme.
FY24 Priorities
• Complete successful integration of Love2shop and launch of
Northern Hub.
• Continue our ‘Welcoming Everyone’ programme.
• Execute with intensity and accountability.
• Deliver secure and resilient technology platform and services to all
partners and launch improvements to core billing/settlement systems.
• Make further progress on our ESG approach across the enlarged business
to deliver responsible and sustainable value for shareholders.
36
PayPoint Plc Annual Report 2023
Key performance indicators
The PayPoint
Group has
identified the
following KPIs to
measure progress
of business
performance:
Financial
Cash generation from continuing
operations excluding exceptional
items (£ million) (UK)
£62.3m
15.6%
Net revenue
(£ million) (UK)
£128.9m
11.9%
Underlying EBITDA
(£ million) (UK)
£61.3m
5.2%
Underlying profit before tax (profit
before tax excluding adjusting items)
(£ million) (UK)
£50.8m
5.8%
FY23
FY22
FY21
128.9
115.1
97.1
FY23
FY22
FY21
61.3
58.2
46.6
FY23
FY22
FY21
50.8
48.0
36.9
Description and purpose: Revenue from continuing
operations less commissions paid to retailers and
Park Christmas agents and costs where the Group is
principal for SIM cards and single retailer vouchers.
This reflects the benefit attributable to the Group’s
performance eliminating pass-through costs and is
an important measure of the overall success of our
strategy. FY23 includes one month contribution of
Appreciate Group.
See Financial Review –
‘Overview’ on page 72
Description and purpose: This measures our
earnings from continuing operations before interest,
tax, depreciation and amortisation and exceptional
items. This is an important measure as it is widely used
by investors, analysts and other interested parties to
evaluate profitability of companies.
See Financial Review –
‘EBITDA’ on page 73
Description and purpose: Underlying profit before
tax (profit before tax excluding adjusting items),
provides a measure of the operational performance
of the Group. This reflects the rebalancing of the
business towards growth opportunities, the shift
away from our legacy cash payments business and
is an important measure of the overall success of
our strategy.
See Financial Review –
‘Overview’ on page 72
Net corporate debt
(£ million) (UK)
Dividends paid per share
(pence) (Group)
£72.4m
65.0%
34.6p
3.0%
Diluted earnings per share
excluding adjusting items
(pence) (Group)
60.3p
8.8%
FY23
FY22
FY21
62.3
53.9
46.9
FY23
FY22
FY21
43.9
72.4
68.2
FY23
FY22
FY21
34.6
33.6
31.2
FY23
FY22
FY21
60.3
55.4
43.4
Description and purpose: Profit before tax from
continuing operations excluding exceptional items,
tax, depreciation and amortisation, and adjusted
for corporate working capital movements (excludes
movement in clients’ funds, retailers’ deposits, and
card and voucher deposits). This represents the
cash generated by operations which is available for
investments, capex, taxation and dividend payments.
See Financial Review –
‘Group cash flow and liquidity’ on page 77
Description and purpose: Net corporate debt
represents cash and cash equivalents excluding cash
recognised as clients’ funds, retailer partners’ deposits,
and cash and voucher deposits, less amounts borrowed
under financing facilities (excluding IFRS 16 liabilities).
This shows how the Group is utilising its finance
facilities to invest in growth, and will be an important
measure of how the Group intends to deleverage over
the next few years.
See Financial Review –
‘Net corporate debt’ on page 76
Description and purpose: Dividends (ordinary and
additional) paid during the financial year divided by
number of ordinary shares in issue at reporting date.
Dividends paid per share provides a measure of the
return to shareholders.
See Financial Review –
‘Dividends’ on page 78
Description and purpose: Diluted earnings per share
excluding adjusting items (earnings from continuing
operations before adjusting items) divided by the
weighted average number of ordinary shares in issue
during the year (including potentially dilutive ordinary
shares). Earnings per share is a measure of the profit
attributable to each share.
See note 12 to the financial statements
on page 163
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Non-financial
Network stability one-mile
urban population cover (%)
Network stability five-mile rural
population cover (%) (UK)
99.3%
0.1ppts
FY23
FY22
FY21
98.5%
0.3ppts
99.3
99.2
99.4
FY23
FY22
FY21
98.5
98.2
98.3
Description and purpose: Total urban population
covered within a one-mile radius of a PayPoint site.
This is monitored to ensure PayPoint is above our
minimum service level agreement of 95%.
Description and purpose: Total rural population
covered within a five-mile radius of a PayPoint site.
This is monitored to ensure PayPoint is above our
minimum service level agreement of 95%.
Retailer partner site churn
(%) (UK)
Employee engagement
(%) (UK)
7.2%
1.9ppts
71%
(0.1)ppts
FY23
FY22
FY21
5.3
3.6
7.2
FY23
FY22
FY21
71.0
72.0
77.0
Description and purpose: The percentage of the
retailer partner network that on an annual basis exits
PayPoint. This is calculated by taking the number of
retailers which exited PayPoint in the period (excluding
suspended sites), divided by the average number of
total UK retailer partner sites for the period. This helps
track the movement in total UK retailer partner sites.
Description and purpose: Measures the overall
employee engagement, calculated by our survey
provider. The survey provides insight into the health
of our organisation, enabling the identification of
what is important to our people so that appropriate
action can be taken.
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PayPoint Plc Annual Report 2023
Responsible business
How we operate
efficiently & responsibly
We hold ourselves accountable for delivering positive
outcomes for all of our stakeholders through the
implementation of a meaningful ESG strategy and measures.
The PayPoint Group has always had ESG at
its core, particularly given the diverse range
of stakeholders and customers that we
serve, as well as the important role that we
play at the heart of communities across the
UK. Central to this is our purpose of ‘making
people’s lives a little easier’ and how we deliver
innovative, sustainable services and value for
all our stakeholders.
During the year we made good progress towards
delivering the commitments outlined in last
year’s report including the installation of electric
charging points, ensuring all of our people are
paid a minimum of the Real Living Wage and the
development of a more energy efficient terminal
to replace the PayPoint One. Further information
regarding our progress along with targets for the
current financial year can be found on pages 39
and 40.
The ESG Working Group has been expanded to
include colleagues from Love2shop following
the acquisition of Appreciate in February
2023. The purpose of the Working Group is
to review policies and approaches across the
Group, analyse cross-industry best practice,
seek feedback from external stakeholders and
investors, and recommend workstreams and
targets for the business to prioritise for the
coming year. Updated targets incorporating
Love2shop can be found on pages 39 and 40.
All of our environmental commitments are now
aligned with the Task Force on Climate-related
Financial Disclosures (TCFD) framework.
Transparency
Anti-bribery
& corruption
Natural
resources
Waste
management
Climate
change
Innovation
Environment
ESG
Governance
Social
Our people
Diversity &
inclusion
Regulation
Partners
Risk management
Society
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PayPoint Plc Annual Report 2023
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Financial statements
Shareholder information
Our commitments and targets
The PayPoint Group is a low impact, low carbon intensive business.
We remain committed to improving what we do, including achieving Net-zero in
our own operations by 2030 and Net-zero across our entire value chain by 20401.
We commit to:
By
Delivered in year
23/24 priorities & targets
1. Achieve Net-zero in our own
operations (scope 1 and 2
emissions) by 2030. For us, this
means reducing CO2 emissions
as much as possible, and then
ensuring that any ongoing
emissions are balanced by removals
2. Achieve a 30% reduction in
emissions generated by use
of sold products by 2030,
compared to 2022
• Moving to carbon-neutral gas and
electricity contracts in Haydock at contract
renewal in 2024 (already achieved in
Welwyn Garden City). This is energy that
has been generated in a way that offsets
the CO2 emitted.
• Retiring diesel company cars, introducing
an electric company car option in addition
to hybrid model in FY23 and stopping
ordering new hybrid models by the end
of 2025, subject to the required charging
infrastructure being in place.
• Assessing options to reduce company
car mileage.
• New hybrid vehicles introduced to fleet in April 2023
replacing diesel company cars and petrol hire cars.
• Territory optimisation dashboard rolled out which, in
conjunction with Salesforce Maps, helps to ensure that
field sales journeys are planned efficiently and therefore
reduce unnecessary mileage.
• Actions taken to reduce energy usage in offices
including closure of under utilised office space. Sub
metering solution installed in WGC offices to identify
opportunities for further reductions.
• Carbon neutral gas and
renewable electricity to be
procured for Haydock at
contract renewal.
• Year on year reduction in
emissions per fleet car.
• Update business travel policy
to reflect environmental
considerations and promote
use of public transport and
car sharing.
• Continue to identify and
implement actions to
reduce electricity usage
in company premises.
• Replacing PayPoint One devices with
alternatives that are more energy efficient.
• Considering energy consumption in
• Good progress made with development of more energy
efficient terminal to replace the PayPoint One – roll out
to commence in 2023.
• Reduction in average emissions
per new retailer network terminal
to be achieved by March 2024.
product design.
• Encouraging retailer partners
to use renewable energy and
minimise consumption.
• New Saturn card terminals rolled out to replace legacy
card terminal. Emissions are greater than the legacy
terminals due to the additional capabilities required to
integrate additional services such as EPoS and loyalty
which avoids the need for additional separate devices
in store.
• Regular communications to retailers including Citizens
Advice Bureau campaign and pointing to advice issued
by trade organisations.
1
Our goal of achieving Net-zero in our own operations by 2030, and across our entire value chain by 2040, will be achieved by eliminating where possible
GHG emissions as calculated under GHG Protocol emission factors, and offsetting residual GHG emissions that cannot be eliminated.
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PayPoint Plc Annual Report 2023
Responsible business continued
We commit to:
By
Delivered in year
23/24 priorities & targets
3. Support a reduction in employee
commuting emissions by
encouraging the transition
to electric vehicles
• Charging points to be installed at office
locations in FY23.
• Electric car leasing scheme to be
considered for introduction in FY23.
• Relaunching our cycle-to-work scheme
with an enhanced purchase limit in FY23.
• Continue hybrid working policy delivered
•
in 2021.
‘Think before you travel’ guidance to be
developed and issued.
• Electric car charging points installed at our Welwyn
Garden City offices with plans to introduce at other
sites where possible.
• Cycle to work scheme relaunched.
• Electric car leasing scheme agreed and will be rolled
out during 2023.
• Hybrid working continues albeit with some teams
spending more time in the office.
• Electric charging point to be
installed at Haydock premises.
• Roll out electric/hybrid car
leasing scheme to all employees.
• Promotion of car sharing and
cycle to work scheme.
4. Engage and educate our people on
ESG matters to drive engagement
and build ESG considerations into
our every day
• Regular programme of communication
• ESG commitments and progress shared in
and training to be implemented.
Staff briefings.
• Diversity and inclusion training rolled out in
January 2023.
• Online training module to be
completed by all employees.
• Commitment to offer every
employee a volunteering
opportunity during the year.
5. Achieve Net-zero across our
entire value chain by 2040
• Achieving the targets set out above.
•
Identifying additional actions to reduce
emissions as our strategy evolves and we
benefit from advancements in technology
and the transition to renewable energy
more generally.
• CO2 equivalent emissions reduced from 9,548 tonnes
in the year ending March 2022 to 7,129 tonnes for the
year ending March 2023. Reductions achieved as a result
of the switch to 100% carbon neutral gas and 100%
renewable electricity in Welwyn Garden City premises,
lower levels of procurement and the sale of PayPoint’s
investment in Snappy Shopper.
• Understand digital data storage
and take action to reduce it
as a way of reducing scope
3 emissions.
• Demonstrate progress in
transition from board to
digital cards in Love2shop.
6. Ensure all of our employees are
paid a minimum of the Real Living
Wage from July 2022
•
Increasing salaries at pay review in July
2022 and reviewing annually thereafter.
• Salaries increased in July 2022 and again in January
2023 in recognition of the increased cost of living. All
employees paid a minimum of £11.14 per hour with
salaries to be reviewed again in July 2023.
• Continue with commitment to
pay all employees a minimum
of the Real Living Wage.
7. Continue to develop an
inclusive culture
• Embedding of ‘Welcoming Everyone’
approach to inclusion (see page 52).
• Launch Women in Tech forum to
identify and implement actions
in support of increasing the
number of women in technology
roles across the Group.
• Pride month recognised with a number of activities
including an online forum, educational learning and colour
the rainbow day to increase awareness and support
inclusivity in the workplace.
• Online event held with external speaker from 55
redefined, celebrating live for the over 50’s and
challenging ageism.
• Score of the Employee Survey question ‘I feel
comfortable being myself at work’ was 81, 7 higher than
the external benchmark. This was also recognised as our
top strength.
• Women’s network event held for international Women’s
Day with attendance from all sites including our new
colleagues in Liverpool.
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Shareholder information
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PayPoint Plc Annual Report 2023
Responsible business continued
PayPoint is a low-impact,
low-carbon-intensive business that
aims to reduce its environmental impact
by reducing carbon emissions, waste
and considering environmental and
sustainability issues.
Environment
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PayPoint Plc Annual Report 2023
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GHG emissions
Scope 1 (fuel combustion)
Scope 2 (purchased electricity)
Total scope 1 & 2
No. of employees 31 March 2023
Total scope 1 & 2 per employee
Scope 3
Total scope 1,2 & 3 per employee
Units
tonnes CO2e
tonnes CO2e
tonnes CO2e
tonnes CO2e
tonnes CO2e
tonnes CO2e
Year ended
31 March
2023
Year ended
31 March
2022
Year ended
31 March
2021
101
71
172
714
0.24
6,957
10
151
293
444
670
0.66
9,104
14.25
60
320
380
519
0.73
4,740
9.87
NB. Data for the year ended 31 March 2023 includes data for Love2shop with effect from 28th February 2023.
A pro rata number of Love2shop employees has been included in order to calculate scope per employee
Climate change
The PayPoint Group is a low impact, low carbon
intensive business. We remain committed
to improving our environmental impact as
demonstrated by the commitments and actions
outlined on pages 39 and 40.
Our GHG emissions
In this section we report on all required GHG
emissions in accordance with the Companies Act
2006 (Strategic Report and Directors’ Report)
Regulations 2013. The Streamlined Energy &
Carbon Reporting (‘SECR’) regulations came
into effect on 1 April 2019 and we follow the
guidelines to comply with these new regulations.
We report using a financial-control approach
to define our organisational boundary. A range
of approaches can be taken to determine the
boundaries of an organisation for the purposes
of GHG reporting, including financial control,
operational control or equity share.
In line with our climate strategy, tonnes CO2e
per employee in our own operations (scope 1
and 2) reduced during the year from 0.66 to
0.24 tonnes CO2e per employee. This reflects
continued energy saving initiatives in our offices
and switching energy contracts for our head office
to carbon-neutral gas and renewable electricity.
Emissions from gas and electricity used in
company facilities have reduced by over 70%
as a result of these actions.
Tonnes CO2e per employee across our entire
value chain (scope 1, 2 and 3) decreased during
the year from 14.25 to 10 tonnes CO2e per
employee which is driven by a reduction in the
purchase of manufactured goods, the sale of the
company’s investment in Snappy Shopper as well
as benefitting from the transition to renewable
energy more generally.
All gas and electricity used in the Welwyn Garden
City offices is now carbon-neutral/renewable,
and we are committed to implementing this in
our Haydock office at contract renewal in 2024.
We have introduced new hybrid company cars to
our car fleet in April 2023, replacing diesel cars
and petrol hire cars and have installed electric
charging points at our offices in Welwyn Garden
City. We will be rolling out an electric/hybrid car
leasing scheme to all employees in 2023 and
continue to promote sustainable travel options
including cycle to work, car sharing and the use
of public transport where viable. Our Salesforce
platform optimises the journeys of our field team
and we continue to seek options to reduce their
CO2 emissions even further.
Being a responsible business means that we need
to be mindful of our environmental impact beyond
our own operations. An ESG questionnaire is used
in our procurement process to ensure that ESG
matters are considered in decision-making and to
ensure that our existing suppliers are aligned with
our ESG policies and commitments.
Our next phase 3 Energy Saving Opportunity
Scheme assessment is due in December 2023
(the last assessment was completed in
November 2019).
Natural resources
Water
We use water for domestic purposes such as
washroom facilities. Our current measures to
reduce usage include time-controlled taps and
dishwashers and reduced-flush toilets.
Waste management
We recycle wherever possible, including paper,
cans, plastic, cardboard, computer equipment and
PayPoint terminals.
Redundant equipment is recycled by ISO
27001 accredited firms which are certified by
the Asset Disposal and Information Security
Alliance (‘ADISA’). ADISA recycles as much of the
equipment as possible. Any parts which are not
recyclable are disposed of in line with the Waste
Electric and Electronic Equipment Regulations
2013 (‘WEEE’). ATMs which have reached the
end of their life are disposed of via Cennox.
All surrounding materials are segregated into
four key material types: metal; circuitry boards;
wires; and WEEE. Cennox operates an internal
recycling process for all of these materials with the
exception of WEEE waste which is collected by
their licensed waste carrier.
Innovation
Our innovative digital solutions support
a reduction in our environmental impact.
Recent examples include:
•
Increased use of our CashOut secure
digital vouchering capability which enabled
over £246 millions of Energy Bills Support
Scheme vouchers to be redeemed across
the PayPoint Network.
• Growth in our pioneering Counter Cash
Service, a ‘cashback without purchase’ solution
that enables cash withdrawals without the
need for ATMs. This service is now enabled
in 5,680 sites.
• Our parcels service enables carriers to reduce
their journeys by delivering multiple parcels
to a single store for collection.
Our Green Team of volunteers works with
us to identify opportunities and implement
sustainability initiatives in our offices.
They promote sustainable practice throughout
the office including recycling.
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Responsible business continued
TCFD
For our TCFD disclosures, we are reporting in line with the FCA listing
rule for premium listed companies LR 9.8.6(8), which requires us to report
on a ‘comply or explain’ basis against the TCFD Recommended Disclosures
for the year ended 31 March 2023.
We consider our climate-related financial disclosures to be consistent with the TCFD
Recommendations and Recommended Disclosures and are therefore compliant with the
requirements of Listing Rule 9.8.6(8).
Our disclosures have all been made within the ‘Responsible Business’ section of this Annual report,
and locations are detailed in the table below. We have considered all relevant material in the TCFD
guidance, including Section C of the Annex (Guidance for all Sectors).
In preparing our disclosures, we have made several judgements, and while we are satisfied that
they are consistent with the Recommendations and Recommended Disclosures, we will continue
to evaluate our options for future TCFD disclosures.
PayPoint supports the TCFD recommendations and is committed to implementing them, providing
stakeholders with information on our exposure to climate-related risks and opportunities, helping
them make informed decisions.
In addition to developing and embedding our broader ESG strategy across the business, we have
complied with the TCFD Recommendations and Recommended disclosures, with the exception of
the year-on-year comparatives for GHG emissions, as we did not have directly comparable data
for the period before the acquisition of the Appreciate Group.
The TCFD framework is as below:
Governance
Describe the Board’s oversight
of climate-related risks and
opportunities
The Board sets the Group’s overall strategy and risk appetite including in relation to sustainability, the environment and carbon emissions. The Executive Board sets PayPoint’s climate
and TCFD responsibility agendas and recommends strategy to the Board, thus ensuring ESG considerations are embedded into strategic decision-making. Our ESG Working Group,
which includes Executive Board members, oversees PayPoint’s environment, climate and TCFD matters and provides formal updates to the Board at least twice a year. This feeds into
strategic decisions around procurement for our own use (in particular energy contracts), management of our employees and offices, and the CO2 emissions of the equipment that we
supply to our retailer partners and agents. The corporate governance organisation chart on page 89 provides more details.
Describe management’s role in
assessing and managing climate-
related risks and opportunities
The CEO and the Executive Board have overall accountability for PayPoint’s sustainability, environment and carbon-emission strategy. The ESG Working Group that was formed last
year is now fully embedded and has overseen various sustainability initiatives throughout the year. The Group’s members are informed about climate related issues through reviews of
emerging regulation sand trends. See the corporate governance organisation chart on page 89 for more details.
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Strategy
Describe the climate-related risks
and opportunities the organisation
has identified over the short,
medium, and long-term
Describe the impact of climate-
related risks and opportunities
on the organisation’s businesses,
strategy, and financial planning
PayPoint has furthered its comprehensive assessment of its business activities to identify any climate-related physical and transition risks and opportunities over the short, medium,
and long-term. For the assessment, we considered the short-term to be 0–5 years, the medium-term 5–15 years and the long-term 15–30 years. These timelines align with our
business strategy planning schedules. These risks all arise from our UK operations in Financial and Retail Services. They do not currently have a material financial impact.
A minority of the bonus award made to Executive Board members including Executive Directors may be based on strategic/personal/ESG targets. An ESG target was introduced for
the financial year ended March 2023 to reward progress made in the delivery of ESG commitments including climate related commitments. Further detail can be found on page 115.
When risks and opportunities are identified, we assess the impact on our carbon emissions and how these impact our Net-zero target by 2040 and also the potential financial impacts
see table on pages 48 to 49.
Our business is a low-carbon-intensive business particularly in our own operations, but even across our entire value chain, our absolute carbon emissions and our intensity measure
per employee are relatively low. Physical climate related risk is also considered low. Therefore, our assessment of business activities did not identify significant climate related risks, but
did identify potential risks and opportunities as the UK moves towards a Net-zero target by 2050. Accordingly, climate risk is considered an emerging risk rather than a principal risk as
detailed on page 68 of the risk management section. Climate and carbon emissions form part of our financial and strategic planning and decision-making process as follows:
• We review our own energy usage and replace contracts with lower carbon emitting alternatives as the current ones come up for renewal. The pricing of these new contracts may
represent additional costs or savings compared to the current ones.
• We consider climate impact from our working practices and as a result have replaced our car fleet with hybrid vehicles, installed car charging points where possible and reviewed our
hybrid office and field sales working arrangements.
• We take climate considerations into account when renewing the equipment that we supply to our retailer partners so that overall, we are reducing the emissions from our terminals.
• We recognise that income from our energy payments businesses fluctuate with the weather and have, over the last few years, diversified our business to reduce reliance on
this sector.
Describe the resilience of the
organisation’s strategy, taking
into consideration different
climate-related scenarios,
including a 2°C or lower scenario
As a low-carbon-intensive business, we consider our organisation to be resilient and have assessed two climate-related scenarios in the financial year:
A rise of up to of up to 2°C, which would create some risks and uncertainties for our business, for example we have a number of clients in the energy sector who may be impacted with
potential knock-on impacts for PayPoint. However, we consider the risk is low as there would be sufficient time to evolve our business model and activities to mitigate the risks.
The “BAU” scenario as described in the Representative Concentration Pathway 8.5 which would see global mean temperature to rise by 2.6 to 4.8°C and the global mean sea level to
rise by 0.45 to 0.82 metres by the late-21st century was considered. This scenario is now thought to be unlikely but has been modelled as an extreme eventuality. It could impact about
450 (out of over 28,000) of our retailers in our low-lying coastal areas. This would have a small impact on our revenue from terminals. As with the first scenario, some of our clients may
be impacted, with knock on impacts for the volume and value of our energy transactions. However, the likelihood is considered low, and we actively monitor changes in this area and
include mitigating strategies in our business. Key inputs used to model this scenario were an analysis of the geographical location of our retailer partners, overlaid with a map of areas
likely to flood in the event of the aforementioned rise in global temperatures.
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PayPoint Plc Annual Report 2023
Responsible business continued
Risk management
Describe the organisation’s
processes for identifying and
assessing climate-related risks
PayPoint recognises the impact climate change is having globally and that it presents a risk and uncertainty to our business. As last year, we still consider climate change as an
emerging risk to our business rather an immediate principal risk. Risk management is an integral part of our governance and we focus on key risks which could impact achievement
of our strategic goals and business performance. We identify and assess climate-related risks and opportunities as part of our financial planning processes, business cases and as
part of our overall risk identification and management framework. Key inputs into this process are data on our Scope1–3 emissions, and analyses of emerging regulations, consumer
trends and societal shifts. These are reviewed bythe ESG Working Group.
Describe the organisation’s
processes for managing
climate-related risks
We have an established risk management framework in place to help us capture, document and manage risks facing our business and the Audit Committee oversees the effectiveness
of risk management throughout the organisation. See our risk management framework on page 61 for further detail. We work towards a medium to low risk profile, ensuring we have
mitigating controls to bring each risk within the risk appetite set by the Board. The Board are updated on climate risks and set targets to reduce carbon emissions in alignment with
perceived risks. We have modelled the potential impact on our revenue if climate related risks were to crystallise. As described above, we monitor it closely so that we can amend our
strategy as necessary. Climate change could also impact our costs, especially our energy usage and the potential cost of offsetting in order to meet targets. We have implemented
several measures to reduce our CO2 emissions as much as possible. The ESG working group continues to monitor this closely and will seek to implement further measures as necessary.
Describe how processes for
identifying, assessing, and
managing climate-related risks are
integrated into the organisation’s
overall risk management
Metrics and targets
Disclose the metrics used by the
organisation to assess climate-
related risks and opportunities
in line with its strategy and risk
management process
Disclose scope 1, scope 2 and, if
appropriate, scope 3 greenhouse
gas (GHG) emissions and the
related risks
We have embedded into our culture the consideration of climate and environmental risks and opportunities as part of all business decisions. Risks presented by climate change
have been embedded into our risk management framework and material business cases including an assessment of climate-related risks and opportunities. Annual financial plan
and strategic review processes include assessments of the impact climate transition and physical risks are expected to have on costs and revenue, and scope 1, 2 and 3 carbon
emission reduction targets are set by the Board.
The primary metric we have used to assess climate related risks and opportunities across our value chain is tonnes of CO2 emitted, in line with the GHG emissions disclosures.
We use third party sustainability software to accurately calculate carbon emissions based on input metrics collected from across the Group. In addition to carbon emission metrics,
we also use monetary metrics in our financial and strategic planning where climate risk and opportunities across our revenue, costs and balance sheet are attributed with a £ figure.
Scope 1, 2 and 3 carbon emissions are detailed in the table on page 43. The largest scope 3 areas are Purchased Goods & Services covering terminal and IT purchases and
Use of Sold Products covering electricity used by our terminals while at retailers and merchants.
Describe the targets used by the
organisation to manage climate-
related risks and opportunities and
performance against targets
PayPoint sets absolute targets during the year to manage climate-related risks and opportunities which were approved by the Board. The targets include reducing carbon
emissions in our own business, scope 1 and 2, and across our value chain with the target of being fully Net-zero by 2040. We have also set more detailed targets of how we
plan to achieve our Net-zero aims and these are detailed on pages 39 and 40. The ESG Working Group monitors performance against targets throughout the year and reports
performance to the Executive Board and Board.
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As a responsible business, we consider
climate-related risks and opportunities across
our organisation and embed these into the
strategy set by the Board. We identify risks
and opportunities over short-term (0–5 years),
medium-term (5–15 years) and long-term
(15+years) horizons and incorporate these into
our strategy to ensure we operate responsibly and
reinforce our commitment to building sustainable
growth. These time-frames were selected as they
align with our business strategy planning timelines.
These timelines differ from those considered
in our viability assessment because these are
not the most material risks to our viability. Our
responsible business strategy is supported by
several policies including our Environmental and
Sustainability Policy.
Strategy
Short-term (0–5 years)
In the short-term, we will continue
to take a proactive approach in our
contribution to climate change and
maximising opportunities.
Key risks and opportunities over this
time horizon include:
•
Increase in climate related regulations
and emissions reporting obligations.
Increased energy prices as we switch
to carbon-neutral energy contracts for
our offices.
•
• Substitution of existing products and
services with lower emissions options.
Medium-term (5–15 years)
Over the medium-term, we are focused on
identifying and further managing financial
risks associated with climate change as well
as monitoring opportunities. We continually
assess market trends and investment
opportunities to ensure our business
model is sustainable into the future.
Increased manufacturing costs.
•
• Lost business opportunities if unable
to meet customer and partner
climate requirements.
Long-term (over 15 years)
For the long-term, we consider various
scenarios across physical climate conditions,
market trends and government policy to
ensure we provide a resilient and sustainable
investment choice for the future.
• Shift in market trends and
customer behaviour.
• Changes in precipitation patterns and
extreme variability in weather patterns.
Increased concern from shareholders
and other stakeholders.
•
• Changes to markets and consumer trends.
• Rising temperatures.
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PayPoint Plc Annual Report 2023
Responsible business continued
Risk Management
We have conducted a comprehensive assessment of climate-related risks and opportunities, including any potential financial impact.
The table below lists our most important risks and opportunities. These do not currently have a material financial impact.
However, they are closely monitored by our ESG Working Group and mitigations are implemented as described below.
Risks
Transition risks
Risk
Potential impact
Mitigation strategy
Governance
and regulatory
Non-compliance with increased emissions
regulations and reporting obligations
Potential impact on costs, such as for energy use or
replacement of energy inefficient stock or equipment.
Revenue may be impacted by changes in customer demand
driven by changes in regulations, and business operations
may need to be amended to make them more energy
efficient. Staff or consultancy costs may increase as
reporting obligations increase
Integration of legislative compliance costs into business plans.
Implementation of reporting structures and procedures to manage compliance risk.
• Annual review of legislative landscape.
•
•
• Quarterly review of energy and emissions data.
• Review of energy contracts when the existing contracts expire to lower carbon but still cost
effective alternatives.
Technology
Substitution of existing products and
services with lower emissions options
Costs to adopt and implement new products
and processes
• Careful management of the roll out of more energy efficient terminals.
Market
Changes to markets and consumer trends
Some of PayPoint’s retailer partners are large forecourt
operators and the transition to electric cars may impact
these retailers and PayPoint’s revenue
Approximately 14% of PayPoint’s revenue is from energy
clients and the transition to carbon neutral energy may
impact these clients and PayPoint’s
• Ongoing review of our retailer network with new retailers contracted outside the forecourt sector.
• Ongoing review of our client portfolio with new clients contracted outside the energy sector.
Increased manufacturing costs
Increased cost of purchasing terminals and other
physical assets
• Ongoing review of terminal and physical asset requirements.
• Transition to smaller terminals and new products like Counter Cash with reduced manufacturing.
Increased energy prices
Increased operating costs from our own energy usage, and
potentially lower demand for our energy related products
• We keep the amount of office space utilised under close review and close sections of the
office where feasible, to reduce heating and cooling requirements.
• Ongoing assessment of office gas and electricity usage to identify reduction opportunities.
• Ongoing assessment of business travel requirements to minimise car journeys and identify
reduction opportunities.
Reputation
Lost business opportunities if unable to meet
customer and partner climate requirements
Reduction in revenue
• Environmental policy continually assessed and updated to ensure PayPoint meets customer
and partner climate requirements.
Increased concern from shareholders and
other stakeholders
Reduction in capital availability
• Transparency through our annual TCFD disclosures in the Annual Report.
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Physical Risks
Risk
Potential impact
Mitigation strategy
Weather
Changes in precipitation patterns and
extreme variability in weather patterns
Increased costs from damage to buildings
• Ongoing improvement of our buildings.
Rising temperatures
Increased cooling costs
• Switch to renewable electricity contract at our main office.
• Assessing air conditioning requirements for our offices.
Opportunities
The table below details the main climate-related opportunities and their potential impact on our business, along with the current status.
Resource
efficiency
Opportunity
Recycling
Potential impact
Status
Reduced construction costs
• We engage with our electrical waste suppliers to ensure there is a high component of reuse and recycling of our
retired terminal and IT equipment.
Office space kept under review
Reduced office costs
• We keep the amount of office space utilised under close review and close sections of the office where feasible to
reduce heating and cooling requirements. One floor of one of our head office buildings has been closed for the last
year as our warehousing requirements have reduced.
Reduced water consumption
Reduced office costs
• We keep the amount of water used at our offices under close review and have fitted timed flow taps to ensure taps
are not left running.
Terminal economic life
Reduced manufacture, logistics
and disposal costs
• Our terminals have a long economic life and are used for many years, some for over ten years, which reduced
manufacturing requirements, transport and disposal costs.
• We refurbish all our terminal models to ensure their economic life is maximised.
Energy source
Use of lower-emission energy sources
Increased reputational benefits
• We have already switched our electricity and gas contracts to carbon neutral contracts for our head office and plan to
do the same for our Northern offices as they come up for renewal.
Use of new technologies
Increased reputational benefits
Reduced office costs
Products
and services
Development and migration to lower
emission products and services
Increased revenue through demand for
lower emissions products and services
• We encourage the use of more efficient modes of transport through the installation of Electric Vehicle ‘EV’ charging
stations at our offices. We have increased our car fleet to over 30 hybrid cars which will reduce our car fleet CO2 by
close to 50%. We have one diesel car left in circulation, and plan to retire it this year.
• We have reused an existing air conditioning system to replace the door cooling system in our server room to reduce
emissions. We have also installed a sub-metering solution to identify areas of high energy usage. We will continue to
closely review the heating and cooling systems used in our offices.
• We have rolled out a territory optimisation dashboard which helps to ensure that field sales journeys are planned
efficiently and therefore reduce unnecessary mileage.
• Our new Counter Cash product enables cash withdrawals through card payment terminals which use far less energy
than ATMs. This product also reduces the level of ATM manufacturing required in the future.
• Our latest terminals are far more energy efficient than older terminals.
• Our expanding digital proposition enables transactions without the need for physical terminals which require
manufacturing, transporting and disposal which all impact the environment.
• Ongoing review of our client portfolio with new clients contracted outside the energy sector.
Data storage
Reduced electricity consumption
Reduced operating costs
• We have reviewed the amount, type, and storage method of our electronic data. By deleting duplicative or obsolete
data, we have reduced our stored electronic data by a third. We are also migrating from our old server file to Microsoft
OneDrive and Sharepoint. These measures have contributed to reducing our data centre energy consumption.
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PayPoint Plc Annual Report 2023
Responsible business continued
We hold ourselves accountable for
delivering positive and inclusive outcomes
for society including our people, retailer
and client partners, consumers and the
wider community.
Social
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Strategic report Governance
Financial statements
Shareholder information
People and culture
Gender balance as at 31 March 2023
Board
Executive Board
All employees
Female
Male
25%
75%
Female
Male
24%
76%
Female
Male
43%
57%
Our people
We aim to create a dynamic environment for
our people where we deliver for our customers
by collaborating and being good colleagues
to each other, creating a positive and inclusive
environment where everyone can learn, grow and
shine. We were delighted to welcome employees
from Appreciate Group to the PayPoint Group
in February 2023 meaning that we now employ
c1,000 people across the Group. Talent retention
and attraction remained a key priority during
the year although employee turnover reduced
compared to the prior year as the external
recruitment market slowed.
A key focus during the year has been how we
support our people with the cost of living. A
number of actions were implemented to support
our people including:
• All employees paid in excess of the Real Living
Wage with effect from July 2022.
• C175 employees received an additional pay
rise in January 2023 when our minimum salary
was increased to £11.14 per hour.
• Promotion of existing benefits and free advice.
• Wagestream launched in June in 2023 offering
financial planning, budgeting tools, advice and
salary advances.
• A simple food offering was made available
in offices from December 2022.
• A bonus advance of £300 was paid in
December 2022 to participants below
Executive Board.
Engagement
We continued to use the Glint engagement
survey to monitor the engagement of our people
with 82% of people responding to our employee
survey conducted in September 2022. The
overall engagement score remained stable at 71
and we were delighted to receive very positive
scores in the areas of authenticity, communication
and performance management which were all
significantly ahead of external benchmarks. We
were particularly proud of the feedback received
in relation to authenticity which reflects the
impact of our ‘Welcoming Everyone’ approach
and in particular the work of our LGBTQ+ forum
(see page 52).
Each team is responsible for developing and
implementing actions that are relevant to them
and at a Group level plans are developed in
conjunction with our employee forum. This
year the actions were focused on supporting
employees with the cost of living and building
connection and engagement in a hybrid setting.
Our employee forum held two formal meetings
during the year to discuss topics including Group
strategy and priorities, the employee survey and
supporting employees with the cost of living.
New representatives were elected in July 2022
and the forum now consists of 14 representatives
from around the business. The forum is chaired
by our HR Director, and Gill Barr, who represents
the Board, attends the meetings. The purpose of
the employee forum is to give feedback to the
Board and Executive Board about how it feels
to work in the business, what is working well and
ideas for change, to ensure that the employee
voice is considered in decision making. The forum
also meets informally and provides feedback on
and suggestions for employee-related activities
and events.
Love2shop participate in the Great Place to Work
survey and were delighted to be named as one of
the UK’s best places to work in April 2023. 81% of
Love2shop employees agreed that it is indeed a
Great Place to Work and the business achieved a
score of 78% in the Trust Index.
We continue to see a high level of participation in
our share incentive plan with a 40% participation
rate across the Group. We also continued to
operate a discretionary all-employee bonus
scheme in order to engage all of our people
in delivering our objectives for the year. In
recognition of the hard work and commitment
of all of our people in delivering our performance
during the period and the continued cost of living
crisis, all eligible employees received an enhanced
bonus of £700.
Promoting mental health and wellbeing
Wellbeing at the PayPoint Group provides
resources and opportunities to support our
people across four key pillars of wellbeing,
enabling them to be their best self and in turn,
deliver brilliant results. Our strategy was updated
during the year to include support for social
wellbeing in addition to physical, mental and
emotional wellbeing and financial wellbeing.
We update people regularly with useful resources
and awareness events including support for
financial wellbeing in light of the increased cost
of living and resources to support with stress
during stress awareness month. Our Employee
Assistance Programme was relaunched to the
business including ‘My Healthy Advantage App’
offering support in all areas of wellbeing. We have
also launched ‘My pay my way’ with Wagestream
offering further financial wellbeing support to
our people.
Developing our people
We continue to be committed to supporting
the development of our people through a
combination of online courses, apprenticeships,
further education and in-house and external
courses based on business and individual need.
We currently have apprentices studying for a
variety of qualifications including Team Leading,
Software Development, Accounting and Project
Management. During the period we hired a number
of apprentices into our technology team. We also
ran a Management Development Programme for
line managers and aspiring line managers across
the group.
Supporting human rights
PayPoint supports fundamental human rights,
such as the right to privacy, safety and to be
treated fairly, with dignity and respect. Our
employment standard sets out our commitment
to good employment practices and the principles
to govern the practices adopted in each of our
businesses. All employees have a right to safe
working conditions, consideration of their welfare,
fair terms of employment, reward and treatment,
clarity and openness about what is expected. We
have a zero-tolerance approach to modern slavery
and we are committed to acting ethically and
with integrity in all of our business dealings and
relationships. PayPoint’s statement on modern
slavery can be found on our website¹.
1 https://www.paypoint.com/modern-slavery-act.
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PayPoint Plc Annual Report 2023
Responsible business continued
Diversity and inclusion
At PayPoint we are committed to building a
diverse and inclusive business where all of
our people are treated fairly and with respect,
and where the contributions of everyone are
recognised and valued. This commitment is
captured in our vision to create a dynamic place
to work, with a positive and inclusive environment
where everyone can learn, grow and shine.
Everyone who works at the PayPoint Group should
feel respected and able to give their best, and we
embrace people with different backgrounds and
identities, valuing their contribution to achieving
our strategic priorities. At the PayPoint Group, we
call this ‘Welcoming Everyone’.
We aim to achieve our vision by taking three
clear actions:
1 Ensuring that all of our people understand
what we mean by diversity, equity and
inclusion, are supported with training to
develop inclusive behaviours and feel
confident to challenge any behaviours that
they see in the workplace that are not in
alignment with this.
2 Supporting the creation and development of
forums for people from under-represented
communities, enabling them to discuss
shared challenges, help educate and raise
awareness in the business of issues relevant
to the community and implement appropriate
actions to increase equity, inclusion and
allyship around the business.
3 Building inclusion into our every day by
ensuring that we listen to diverse voices
and consider diversity, equity and inclusion
with regards to our policies and practises,
both internally and externally, including the
employee lifecycle, product and service
design and marketing.
During the year we embedded our Welcoming
Everyone approach supported by updated
equality & diversity training rolled out to all
employees and the launch of an updated and
rolled out to all employees in December 2022.
Our LGBTQ+ forum, open to all employees, was
launched to provide a safe space for people to
share experiences and suggest and discuss ideas
to enhance inclusivity at the PayPoint Group
for those in the LGBTQ+ community including a
number of events to recognise Pride month.
We introduced a new question to our employee
survey to measure inclusivity and were delighted
that ‘I feel comfortable being myself at work’
achieved a score of 81 which is 7 points above the
external benchmark and recognises the positive
impact of the LGBTQ+ forum within the business.
We also continued to support other aspects
of diversity and inclusion within the business
including a session led by an external speaker from
55 Redefined to address age related bias and the
opportunity for older people to contribute in the
workforce, and Women’s Network and Menopause
Support Group sessions facilitated by HR. We also
continue to work with local schools to support
the development of aspirations in young people
(socio-economic diversity).
The overall gender balance across all employees
within the business on 31 March 2023 was 43%
female and 57% male. We recently published our
sixth gender pay gap report, which can be found
on our website2.We were pleased to see our gap
reduce during the year, however a pay gap persists
within the organisation driven by the fact that we
have more men than women in higher paid roles
such as roles in IT, sales and senior management
positions. The talent pool for IT and field sales
remains predominantly male and progress has
therefore been slow.
We are launching a new Women in Tech forum
in order to better understand the challenges
facing women in these roles and identify what
more can be done to support the development
of our existing people as well as attract more
diverse applicants.
PayPoint is committed to treating applicants
with disabilities equally and supporting people
who become disabled during their career with
the Company. This includes making reasonable
adjustments both to the recruitment process
for applicants and to the working environment,
including offering appropriate training, in order
that disabled employees can achieve their
full potential.
Principles
Our success is built on a reputation for high
standards in all areas of business which we
achieve by working in accordance with our ethical
principles. These principles apply throughout
the PayPoint Group and are used to define the
standards and working practices that we adopt.
They guide our day to-day actions and give our
people clarity on acceptable behaviour. Our
statements on ethical principles and modern
slavery can be found on our website3. Our 2023
modern slavery statement will be available on our
website in September 2023.
We operate an anti-bribery and corruption policy
which was put in place in response to the UK
Bribery Act 2010. Further information regarding
this can be found on page 96 in the Audit
Committee report.
2 https://corporate.paypoint.com/downloads/csr/gender_pay_report_2020.pdf.
3 https://corporate.paypoint.com/downloads/investorcentre/ethical-principles-2020.pdf.
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
A strong and
supportive
proposition for retailer
partners and SMEs
We provide a broad range of innovative services and
technology, connecting millions of consumers with over 60,000
retailer partner and SME locations across multiple sectors.
We provide a leading and differentiated set
of services, through highly reliable technology
that enables our retailer partners to run their
businesses more efficiently as well as generating
consumer footfall from their surrounding
communities. The breadth of products and
services offered by PayPoint is greater than any
other provider.
We continue to enhance our retailer partner
proposition to help respond to consumer trends
and drive revenue opportunities in a challenging
economic environment. During the period, this
included the launch of the new Saturn Android
terminals in the Handepay Cards Business, the
continued roll out of Counter Cash, which is now
enabled in 5,680 sites, and PayPoint Engage –
our FMCG consumer engagement proposition,
delivering brand campaigns leveraging our
PayPoint One platform, advertising screens
and i-movo vouchering capability. Further
enhancements to our proposition following the
acquisition of Love2shop include the recently
announced partnership with The Fed to launch a
network of Park Christmas Savings Super Agents.
Our Business Finance offering via Youlend across
both PayPoint and Handepay provides support
to our retailer and SME partners during the
challenging economic environment.
We have continued our extensive efforts to
strengthen our retailer partner relationships and
drive adoption of these new opportunities to
earn, including regular face to face store visits and
‘cash and carry’ days, new retailer forums, more
direct communications and our strengthened
relationships with key trade associations including
the Association of Convenience Retail Stores
(ACS), the Scottish Grocers’ Federation, ‘SGF’
and the National Federation of Retail Newsagents
‘The Fed’. We continue to offer free ACS
membership to PayPoint One retailer partners,
providing access to industry events, advice and
best practice.
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PayPoint Plc Annual Report 2023
Responsible business continued
Enabling clients to provide vital
services in the community
We partner with over 500 clients in the UK,
providing omnichannel payment solutions that
enable them to seamlessly and effectively serve
their customers. Our contracts with clients contain
clear obligations with respect to the services
being provided, underpinned by measurable
service levels which are set to ensure a high
standard of delivery across key elements, including
system and service availability, file delivery and
funds settlement.
We enable the delivery of best-in-class customer
journeys for e-commerce brands over the first
and last mile in over 10,000 locations through our
Collect+ brand, helping consumers pick up and
drop off online shopping or send parcels across
the UK. We were pleased to support Royal Mail
business customers in 1,455 sites in September
and October to keep mail moving during the
recent industrial action.
During the reporting period, we delivered further
expansion of our client relationships. In total 46
new client services went live with 42 taking digital
payments/CashOut solutions including the launch
of Direct Debit with POBL Housing.
Our integrated payments platform MultiPay was
further enhanced as a result of our Open Banking
partnership with OB Connect which enabled the
introduction of our new PayPoint OpenPay service
with Ovo to support Alternative Fuel Payments
and the roll out of our Confirmation of Payee
service with the Department of Energy Security
and Net-zero.
Our Payment Exception Service, delivered for
the Department for Work and Pensions, received
three industry accolades for Social Inclusion in
Financial Services at the recent Payment Awards,
FSTech Awards and the Card and Payments
Awards, underlining the vital role our solutions play
in serving some of the most vulnerable people in
the UK.
Similarly, over £246 million of Energy Bills Support
Scheme vouchers were redeemed across our
extensive network of over 28,000 retailer partners
from October 2022 to March 2023, providing
a £400 payment over the winter months to
households across the UK providing vital support
for consumers to help with the Cost of Living.
We continue to have a dedicated Client
Management team, enhancing our engagement
with clients to ensure we are able to align our
strategy and roadmaps to the needs of the
clients we partner with.
Enabling consumers, including some
of the most vulnerable in society,
to access the services they need
Open early until late seven days a week, we serve
millions of consumers every day, helping them to
make and receive payments and access parcel
services conveniently through our retailer partner
network and omnichannel payments solutions.
Our UK retail network of more than 28,000
stores is bigger than all banks, supermarkets and
post offices together, putting us at the heart of
communities nationwide. Our cash bill payment
solutions enable less privileged people to access
services that may otherwise be unavailable
to them and our CashOut service enables the
rapid dispersal of funds through secure digital
channels and is actively used by local authorities
and charities to distribute emergency funds.
The Payment Exception Service, run for the
Department for Work and Pensions via our i-movo
business, further underlines the continuing
importance of delivering cash payments to those
without access to a standard bank account.
The PayPoint Counter Cash service, offering
cashback without purchase and balance enquiries
over the counter, is now live in over 5,600 stores,
with over £42.9 million withdrawn in the last
financial year.
Park Christmas Savings, now part of the PayPoint
Group, is the UK’s biggest Christmas savings club,
helping over 330,000 families manage the cost of
Christmas, by offering a huge range of gift cards
and vouchers from some of the biggest high
street names. Our recently launched partnership
with The Fed will see the creation of an initial
network of 1,500 Super Agents for the Christmas
2024 savings season, enabling retailer partners
to offer another vital service to customers in
their community.
Our MultiPay platform is designed to provide a
simpler and more convenient way for consumers
to pay essential bills such as gas, electricity and
rent. We are uniquely placed to be able to provide
consumers with complete flexibility to choose to
pay using whichever method is most convenient
for them.
Over 85% of our ATM network is ‘speech enabled’,
enabling people with visual impairments to
withdraw cash independently.
Supporting the communities where
we live and work
We support the communities where our people
live and work by providing them with financial
support to serve their causes. PayPoint has
a charity committee made up of volunteers
which leads and provides support to fundraising
activities carried out by our people for charities
which are important to them.
During the year the Committee organised a
number of company-wide events including a
World Food Festival in aid of Cancer Research,
Haydock Charity Quiz Night, Sepsis Awareness
month and numerous bake sales. The Committee
also continued to support our people with their
own fundraising efforts. In total over £22,000 was
donated to local and national charities.
In April 2023 we signed a partnership with
Children With Cancer and are working with them
to develop a plan that achieves our objectives of:
1 Align closely with ESG, purpose and
business strategy.
2 Engage, motivate and be relevant and
meaningful to our employees.
3 Raise the profile of PayPoint with our clients,
customers and the local communities in which
we operate.
4 Provide development and teambuilding
opportunities for our employees via
volunteering activities and events as well
as fundraising.
We continue to offer our network to collect for the
BBC’s Children in Need telethon free of charge.
Championing the employability
of young people
Externally we continue to support young people
in our community with a commitment to the
local schools community and the continued
development of young talent. PayPoint started to
work as an enterprise adviser to a local secondary
school in 2016, supporting students with the
transition from school to the workplace. Our
support has since expanded to other schools in
the community and in the last year we provided
support with a number of virtual careers fairs
and interview skills events. Face to face events
returned in 2022 and we were able to support a
number of workshops and careers fairs in the local
community with positive feedback received from
the schools involved, as well as hosting a Work
Experience Week held in July 2022 for students
from local schools. PayPoint has also signed The
Tech She Can Charter which is a PwC initiative
designed to encourage more girls to study IT and
view it as a career choice.
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Purpose, vision
and values
In delivering our purpose we hold ourselves accountable for
delivering positive outcomes for all our stakeholders through
the implementation of a meaningful ESG strategy and measures.
Further information can be found in the Responsible
Business section on page 38.
We actively engage with our people to bring
our values to life in the work that we do. Our
values are incorporated into our recruitment
and induction processes, and demonstration
of the values forms a key element of our
performance reviews. People who role model
our values are recognised via our values
award programme.
Value award winner: Zoe Smallshaw
Value award winner: Chris Sadler
Zoe works in the recruitment team and was nominated under the
collaborative and good colleague values. Zoe works relentlessly
sourcing great candidates to support headcount growth in field
sales and was recognised for her strong internal relationships,
communication and positivity.
Chris is a software engineer who was instrumental in building the
Confirmation of Payee service. He was nominated for his can do and
results focussed approach to get the service live on a tight deadline
and support the first clients to use the service.
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PayPoint Plc Annual Report 2023
Responsible business continued
Q&A with Simon Coles, Chief Technology Officer
Innovating
How we deliver vital financial support to customers
What key innovations have you
been most proud of the team
delivering in the past year?
There are three that stand out: the
fantastic work we did to deliver the
Government’s Energy Bills Support
Scheme, the launch of PayPoint
OpenPay, and the creation of a store-
to-store Collect+ delivery service.
All of these leveraged our extensive
capabilities such as our voucher
and parcel management platforms,
combined with strong supply-chain
partnerships we’ve worked hard to
create over the past couple of years.
EBSS and OpenPay are making a real
positive impact to customers lives
across the UK, and Collect+ store-
to-store helps retail marketplaces
optimise last mile deliveries and better
manage their carbon impact.
Increasingly, innovation in embedded
finance will require us to combine our
own capabilities with those of our key
partners, and I’m very optimistic about
the opportunities this approach is
creating for us.
How important were PayPoint to
the delivery of the Energy Bills
Support Scheme (EBSS)?
PayPoint have always played a pivotal
role in supporting some of the most
vulnerable customers in society, and
this scheme was no different. As a
response to the Cost of Living crisis,
the Government put in place a support
package to provide a £400 payment
to all households over the winter
months. We worked collaboratively
with industry partners, including the
Department for Energy Security and
Net-zero and 9 energy suppliers, to
mobilise our CashOut service across
our extensive network of retailer
partners. Over £246 million of EBSS
vouchers were redeemed over 6
months and with 94% of customers
saying they found it easy to use and
receive this vital support.
What role did the new PayPoint
OpenPay service play this year?
One of our strengths has always been
how we combine existing capabilities
in our integrated payments platform
with newer solutions, such as Open
Banking – PayPoint OpenPay is a
perfect example of that.
Working in partnership with OVO to
help deliver Alternative Fuel payments
to their customers, the service delivered
a unique, cost-effective alternative
to cheques and bank transfers, giving
them the means to offer customers the
choice of depositing the payment into
their bank account using a QR code or
collecting payments in cash at one of
PayPoint’s 28,000 retailers. In addition,
OVO commissioned the use of our
Confirmation of Payee name and bank
account checking service, part of our
extensive Open Banking solutions, to
protect their customers against fraud.
Over 30% of customers redeemed
payments straight into their bank
account, and their feedback confirmed
the ease and convenience of the
PayPoint OpenPay service. For the
customers who opted for cash, the
service provides a quick, simple,
and familiar in-store experience.
Supporting Access to Cash is very
important to PayPoint and the way
OpenPay blends cash access with
digital innovation has made it easy for
our customers to access these funds
in whichever way works best for them.
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Governance
The Executive Board, as PayPoint’s team with responsibility for the day-
to-day operational management of the Group, is accountable for the ESG
strategy to help drive change and a more sustainable future for PayPoint.
The framework through which PayPoint provides transparency on
how it operates its business, which is in line with current regulations, is
set out in the Corporate Governance Report on pages 79 to 127 and
in the Risk Management Report, on pages 61 to 68. In addition, our
anti-bribery and corruption policy is set out in the Audit Committee
Report on page 96. The ESG Working Group provides regular updates
on progress to the Board. A summary of progress over the past year
can be found on pages 39 to 40. Compliance with current mandatory
disclosures for our greenhouse gas emissions are detailed on page 43.
PayPoint recognises that driving better corporate behaviours
provides improved returns over the longer-term and ESG is therefore
a key focus of our Board. We have agreed ESG commitments and
metrics which can be found on pages 39 to 40.
Updated disclosures in accordance with TCFD can be found on
pages 44 to 49.
PayPoint Plc, and certain of its subsidiaries, are signatories to the
Prompt Payment Code, a voluntary code of practice for payment
practices whereby signatories undertake to pay 95% of their
supplier invoices within 60 days. Our payment practices are reported
on a six-monthly basis and details can be found at www.gov.uk/
check-when-businesses-pay-invoices. In 2022 we received a Fast
Payer Award from Good Business Pays which recognised that
PayPoint was one of only 8% of 5000 reporting businesses that pay
not just on time but quickly.
Finally, the following table sets out our Group Non-Financial
Information statement, prepared in order to comply with sections
414C and 414CB of the Companies Act 2006. A description of
our business model and strategy, as well as the non-financial KPIs
relevant to our business, can be found on pages 18 to 37.
Reporting requirement
Where to find further information
Environmental matters
Employees
Responsible business
Responsible business
Principal risks
Audit Committee Report
Page
38 to 49
52
65
96 to 103
Relevant policies if applicable
Environmental
Diversity
Recruitment and Selection
Health and Safety
Whistleblowing
Code of Ethics
Society and communities
Respect for human rights
Responsible business
50 to 55
Charitable donations
Responsible business and
https://www.paypoint.com/modern-slavery-act
51
–
Modern Slavery Statement
Human Rights
Anti-bribery and corruption
Audit Committee Report
96 to 103
Anti-bribery and Corruption
58
PayPoint Plc Annual Report 2023
Responsible business continued
Section 172(1) statement
Board decision-making
Section 172 of the Companies Act 2006 requires
a director of a company to act in the way he or she
considers, in good faith, would most likely promote
the success of the company for the benefit of its
members as a whole. In doing this, section 172
requires directors to have regard to, amongst
other matters, the:
• Likely consequences of any decisions in
the long-term.
•
Interests of the company’s employees.
• Need to foster the company’s business
relationships with suppliers, customers
and others.
Impact of the company’s operations on
the community and environment.
•
• Desirability of the company maintaining
a reputation for high standards of
business conduct.
• Need to act fairly as between members
of the company.
In discharging our section 172 duties, we have
regard to the factors set out above. In addition,
we also have regard to other factors which we
consider relevant to the decisions being made.
Those factors, for example, include the interest
and views of our clients; our retailer partners;
regulatory bodies; and our relationship with
our lenders.
By considering the Company’s purpose, vision and
values together with its strategic priorities and
having a process in place for decision making, we
aim to make sure that our decisions are consistent
and appropriate in all circumstances.
We delegate authority for day-to-day
management of the Company to the Executive
Board and then engage management in setting,
approving and overseeing execution of the
business strategy and related policies. Board
meetings are held periodically at which the
Directors consider the Company’s activities and
make decisions. For example, each year we make
an assessment of the strength of the Company’s
balance sheet and future prospects relative to
market uncertainties and make decisions about
the payment of dividends. For the year ended
31 March 2023, we are recommending a final
dividend of 18.6 pence per share.
How we consider our stakeholders
Engaging regularly with our stakeholders is
fundamental to the way we do business, enabling
us to consider their needs, concerns and the
potential impact on stakeholders when making
decisions in the Boardroom.
Employees are consulted via the Employee Forum
and in the last year Nick Wiles, Chief Executive, Gill
Barr, Non Executive Director and Rakesh Sharma,
SID and Chair of the Remuneration Committee,
have all met with the forum to discuss topics
including business strategy & priorities, executive
remuneration and the results of the employee
survey. Feedback from the forum has influenced
decision including the action taken by the
company to support employees with the cost of
living as outlined on page 51. Further information
about how the Company engages with all of its
stakeholders can be found on pages 59 to 60 of
this report.
The Strategic Report was approved by the
Board of Directors and signed on its behalf by:
Nick Wiles
Chief Executive
27 July 2023
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Engaging
with our stakeholders
By understanding our stakeholders we can consider their needs, concerns and
the potential impact on stakeholders when making decisions in the Boardroom.
Our stakeholders
How we engage
Key topics discussed
How the Board engages/is kept informed
Key outcomes in 2023
People
We have a talented, diverse
and committed workforce
with experience from a
wide range of industries.
Our employee forum is a communication platform attended
by employee representatives elected by their colleagues. In
addition, we hold regular staff briefings and functions hold
their own team meetings and engagement forums (see page
51 for more information on how we engage with our people).
The employee forum discusses the issues
raised by the engagement survey and any
business-related issues.
Key topics discussed included business
strategy and priorities, the results of
the employee survey and supporting
employees with the cost of living. In April
2023, Rakesh Sharma attended the forum
to discuss Executive Remuneration.
Gill Barr, the Board representative of the Employee
Forum, facilitates the flow of communication
between the forum and the Board. During the
year the Chief Executive met with the forum to
discuss strategy and priorities and in April 2023
Rakesh Sharma attended the forum to discus
Executive Remuneration.
The HR Director updates the Board on results of
engagement surveys and people matters generally
in a formal presentation to the Board each January
and as required throughout the year.
The employee forum helped shape
survey actions with a particular
focus on the cost of living. Actions
implemented included an additional
salary increase to lower paid
employees in January 2023, an
advance bonus payment in December
2022 and the introduction of a simple
food offering in our offices.
Shareholders
We aim to deliver a sustainable
and rewarding business model.
Through our investor relations programme, our Annual
Report and Accounts and our annual general meeting, we
ensure shareholder views are brought into our Boardroom
and considered in our decision-making.
Financial performance, strategy and
business model, dividend policy and ESG.
The Chief Executive updates the Board on any
shareholder feedback received and on investor
sentiment following each roadshow. The approach
to ongoing shareholder engagement is agreed by
the Board. All members of the Board are available
for questions by the shareholders at the annual
general meeting and Giles Kerr has held several
investor meetings.
We have made significant steps to
materially enhance our platform and
capabilities to deliver sustainable,
profitable growth and enhanced
rewards for shareholders.
A final dividend of 18.6 pence per
share has been declared for approval
by shareholders.
Convenience
retailer partners
Our retailer partners offer
their consumers one or more
PayPoint services. Ranging
from independent retailer
partners with one store to
large multiple retailer partners.
An Account Management team develops our relationships
with multiple retailer partners, whilst our Retail Services
Hub and Retail Relationship Management team supports
independent retailer partners. Independent retailers are also
represented by a retailer partner forum, which has regular
meetings across the year. In addition we actively engage
with trade bodies including the Association of Convenience
Stores ‘ACS’, Scottish Grocers Federation ‘SGF’ and
National Federation of Retail Newsagents ‘NFRN’.
Performance reviews, market trends and
insights, sharing best practice, new clients
and product development.
The Executive Board keeps the Board informed of
our relationships with convenience retailer partners
throughout the year.
Enhancements to the retailer
proposition include the continued
roll out of Counter Cash, introduction
of PayPoint Engage and Park
Christmas Savings.
Positive progress made in retailer
partner net promoter score.
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PayPoint Plc Annual Report 2023
Responsible business continued
Our stakeholders
How we engage
Key topics discussed
How the Board engages/is kept informed
Key outcomes in 2023
SMEs
We provide card payments
services for over 30,000
SMEs across various sectors.
Our field team is always available to support and engage
with business owners across all the sectors we serve. We
use a range of channels and methods to communicate
with and seek feedback from new and existing customers
including social media, customer referrals and case studies.
Performance, support, pricing and
service enhancements.
Updates on enhancements to current and future
services for SMEs are provided to the Board by
the Executive Board.
Consumers
We serve millions of consumers
every day, helping them to make
payments and collect parcels
conveniently through our retailer
partner network and omnichannel
payments solutions.
Clients
Our client base operates across
a broad and diverse range of
sectors including commercial,
not-for-profit and the public
sector. They are critical to
our business. Understanding
their needs and requirements
is essential to retention
and development.
Our communication platforms provide the environment
for us to engage with consumers. Through our Retail
Services Hub we inform, update and quickly resolve issues
with consumers at first-point-of-contact where possible.
Feedback, queries and data gathered from surveys are all
collated to improve the consumer experience.
Services and partnerships, performance,
network expansions, product
portfolio, systems and support on
customer complaints.
The Executive Board provides updates to the
Board on the levels of transactions, performance
and overall services provided to our consumers.
Dedicated Account Managers have client review meetings
throughout the year to discuss performance and future
innovations. We also have daily operational contact where
required to resolve business as usual queries. For the larger
strategic accounts, we will hold a mixture of operational,
tactical, and strategic meetings throughout the year.
Service and performance versus key
performance indicators, business
challenges where we may be able to
provide support, short and long-term
strategic goals to drive alignment, and
PayPoint service evolution to enhance our
clients’ own service performance to their
end users.
The Executive Board provides updates to the
Board when required.
Local communities
Our network places us at the
heart of local communities.
We support fundraising events by providing financial
support to causes that are important to employees.
We act as an enterprise adviser to a local secondary
school, supporting the transition between school
and the workplace.
Our Charity Committee agrees which
charities we should support.
The HR Director updates the Board via a formal
presentation each January.
Maintaining an excellent Trustpilot
score in Handepay.
New Saturn Android terminal
launched and loyalty app being
rolled out.
Continued evolution of retailer
proposition in response to consumer
needs including continued growth in
Counter Cash, redemption of EBSS
vouchers providing vital support with
the cost of living and the introduction
of Park Christmas Savings.
Further enhancements to MultiPay
platform as a result of Open Banking
partnership with OB Connect
enabling new OpenPay service to
support Alternative Fuel Payments
and Confirmation of Payee services.
Payment Exception Service
delivered for the Department
for Work and Pensions received
three industry accolades.
46 new client services went live in
the year.
Page 52 details our charitable work
and support provided for young
people in the community.
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PayPoint Plc Annual Report 2023
Risk management
Strategic report Governance
Financial statements
Shareholder information
Robust approach to
managing risk
Strategy
Strategic and operational benefits of proactively
managing risk are achieved when Enterprise
Risk Management is aligned with the strategic
and operational goals of the organisation, and
our process and governance structure achieve
this. Risks are assessed through PayPoint’s risk
management and internal control framework
which are designed to identify and manage risk.
Processes apply throughout the Group and are
designed to mitigate rather than eliminate risk,
and provide assurance to stakeholders regarding
PayPoint’s ability to deliver its objectives and
manage risks. The Board is responsible for
overseeing risk management and approves levels
of acceptable risk. The Board is also responsible
for maintaining an appropriate internal control
environment to manage risk effectively. The Audit
Committee supports the Board in reviewing the
effectiveness of risk management and internal
controls and performs an annual assessment.
The results of this year’s assessment are detailed
on page 98 of the Audit Committee section.
Risk appetite
PayPoint’s risk appetite is set by the Board and
aligns the level of risk considered acceptable
in achieving strategic objectives, increasing
financial returns and adhering with statutory
requirements. The Board and the Executive Board
have key roles in ensuring the internal control
framework maintains risk within the appetite
set. Internal controls are embedded across the
Group’s core processes including policies and
procedures, delegated authorities, PayPoint
values and training.
Risk identification and management
The risk management process assesses strategic,
financial, IT, regulatory and operational risk across
all areas of the business. PayPoint’s risk framework
includes a bottom-up risk assessment managed
through risk and control registers, and a top-down
risk assessment and horizon scanning process
to identify emerging risks. Functional and entity
risk and control registers are maintained and
form an important component of our governance
framework. Risks and controls are determined
by senior management and Head of Risk and
Executive Board members and discussed with
Internal Audit. Risk and control registers contain
risk descriptions, assessment of materiality,
probability, mitigating controls, residual risk and
risk owners.
At least annually, risks identified through the top
down and bottom up risk assessment process
are agreed with Executive Board members to
determine principal and emerging risks. The Audit
Committee receives and reviews information on
the risk framework and principal and emerging
risks and advises the Board on risks.
This year, attention will be focussed on
aligning the Appreciate and legacy PayPoint
risk frameworks, and around streamlining the
processes for identifying and controlling risks
in readiness for compliance with HMRC’s SAO
framework and the expected ‘UK SOX’ regime.
The Board
Oversees risk management, sets the risk appetite and
maintains a control environment to effectively manage risk
Risk
Appetite
1. Risk identification
Identifying risks which may impede
achieving objectives
2. Inherent risk assessment
Assessing the level of inherent risk
3. Control assessment
Assessing the existence and strength
of controls to mitigate risks
4. Residual risk assessment
Assessing the level of residual risk
after mitigation from controls
Executive Board
Monitors key risks facing
the business and agrees
internal controls
Risk
Monitoring
& Control
Risk
Framework
Risk
Oversight
The Audit Committee
Oversees the risk framework and
monitors assurance activity and
internal control effectiveness
5. Risk reporting
Reporting the status of the most
significant risks to the Executive
Board and Audit Committee
Management
Responsible for identifying
and managing risks and ensuring the
effective operation of internal controls
Risk
Identification
& Mitigation
Risk
Assessment
Risk & Internal Audit
Manages the risk framework
and assesses internal control
effectiveness
6. Monitoring and review
Monitoring of risks and controls by the
Executive Board and Audit Committee
who advise the Board
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PayPoint Plc Annual Report 2023
Principal risks and uncertainties
Mitigating risk
effectively
Like all businesses, we face a number of risks and uncertainties
and successful management of existing and emerging risks is
critical to the achievement of strategic objectives and to the
long-term success of any business. Therefore, risk management
is an integral part of PayPoint’s Corporate Governance.
Changes to principal risks
New risks and disclosures
This year, principal risks from the Love2Shop
business have been considered and incorporated,
and our risks are assessed below on a Group-wide
basis.
Our risk appetite remains the same as last year.
It is defined as:
Risk appetite
Impact on profit before tax
Low
Medium
High
Under £2 million
Under £5 million
Over £5 million
Changing risks
Credit and Operational – This risk is renamed as
Credit and Liquidity / Treasury Management as
operations are now considered under Operational
Delivery. This is because operation of our
processes and controls are now more intrinsically
linked with operational delivery of key projects
than with credit management.
Other principal risks have remained the same
as last year, although they now include a
consideration of how they affect Love2Shop as
well as the existing PayPoint business.
Receding risks
There were no receding risks. The outlook of all
the risks has been reassessed, as shown in the
table below.
Emerging risks
ESG and Climate Risk remains an emerging
risk. We recognise the impact climate change
is having globally; however, we are intrinsically
a low-carbon producing company and climate
change does not pose an immediate risk to
our operations. However, we have embedded a
strategy of reducing our carbon emissions, with
a goal of becoming fully net-zero by 2040 (2030
for our own operations). Details of how we plan
to achieve this can be found on page 39.
Last year we implemented The Task Force on
Climate-related Financial Disclosures (TCFD)
which provides companies with a framework to
improve reporting on climate-related risks and
opportunities. The risks presented by climate
change have been embedded into our enterprise
risk management framework including financial
planning processes, business cases and our overall
risk identification and management processes
detailed on page 48.
The table on pages 63 to 68 sets out our principal
and emerging risks, including details of the
potential impact, mitigation strategies and status.
The table also details risk movement during the
year and risk appetite. They do not comprise all
risks faced by the Group and are not set out in
order of priority.
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Principal risks
Change in status and trend
Increased
Stable
Decreased
Market
PayPoint risks
Group risks
Mitigation strategies
Status
Change
1.
Competition
and markets
PayPoint’s markets and competitors continue to evolve;
failure to anticipate and respond to these will reduce market
share, revenue and profits. The decline in cash usage is
expected to continue, which will reduce revenue from those
affected business areas. Inflationary and cost of living
pressures may impact fee margins and discretionary spend,
which will in turn affect growth opportunities in parts of the
business. Keen pricing by competitors may further serve to
narrow profit margins, as would excessive reliance on key
clients or market segments.
The Executive Board regularly reviews markets, competitor
activity, trading opportunities and potential acquisitions
and so oversees and challenges strategic direction. It also
closely monitors consumer and technological trends and
engages with clients, retailers and other stakeholders to
improve our proposition. PayPoint continually develops
products, services and systems to adapt to changes in
consumer trends and technology and make strategic
acquisitions where appropriate.
Risk is increasing as competition has intensified, and
cost of living pressures are causing a downward push on
margins. Also, the use of cash continues to decrease, which
reduces our income from certain parts of the business.
However, we continue to strengthen our card and digital
payment businesses. Levels of global investment in our
Fintech competitors slowed in the last year, which presents
opportunities for PayPoint in the digital space. Finally, the
recent acquisition has further diversified the Group into the
gifting and rewards business.
2.
Emerging
technology
There is risk to our business if our offering fails to keep pace
and we do not exploit new technologies and markets to
evolve our proposition. New and emerging technologies are
changing the way consumers pay for goods and services;
failure to keep up with alternative payment solutions will
reduce our market share and profitability.
PayPoint continually develops products with the latest
technology and evolves them to take advantage of new
and expanding markets. The Executive Board closely
monitors emerging technologies and the impact they may
have on PayPoint. We also develop and implement our own
innovative technology where possible. Emerging technology
from recent acquisitions has been developed further and
used to deepen and widen our customer relationships.
Risk is stable as recent acquisitions have accelerated our
ability to mitigate the impact of emerging technologies,
and the re-platforming of our digital proposition will better
enable us to expand our presence in digital payment
markets. We are engaged in various government schemes
involving new technology, for example, the Department for
Work and Pensions Payment Exception Service. We are
rolling out a new, updated version of our retailer terminal –
the PayPoint mini, and have developed solutions in our open
banking and open pay propositions. We are also tracking the
fast evolution of generative AI, as this has potential to be
highly transformative.
Risk appetite
Medium
Risk appetite
Medium
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PayPoint Plc Annual Report 2023
Principal risks and uncertainties continued
Principal risks
Change in status and trend
Increased
Stable
Decreased
Strategic
PayPoint risks
Group risks
Mitigation strategies
Status
Change
3.
Transformation
Our business relies on implementation of continued
innovation to keep pace with emerging technology and
changing markets. Furthermore, we need to remain agile to
continually improve our processes and controls, as failure to
do so would reduce efficiency, increase costs, and increase
the likelihood of poor customer service. Failure to invest
and improve would also reduce our capacity to capitalise
on opportunities for growth.
The Executive Board drives, challenges and assesses
our response to change as part of the strategic planning
process. PayPoint is committed to diversifying its
product offering and client base by delivering innovative,
efficient and robust processes in a range of sectors,
and by continuous improvement in existing systems
and processes.
Risk is increasing; the acquisition of Appreciate is
now complete and work has started to integrate their
operations where appropriate, and to add their system
improvements into the Group roadmap. Our other major
projects include Payment Facilitation and the roll out of the
PayPoint mini terminal, a project that started in 2021.These
require considerable investment in technology and systems
as well as infrastructure channels and in developing people.
Risk appetite
Medium
Business
PayPoint risks
Group risks
Mitigation strategies
Status
Change
4.
Operating
model
It is important we have a diversified and varied operating
model, so we are not overly exposed to any particular
markets, clients, suppliers or SMEs. Our core business
relies on an appropriate mix of clients operating in diverse
industry sectors, retailers and redemption partners,
supported by a robust supply chain and operating
processes. Failure to maintain attractive propositions for
clients retailers and redemption partners may result in
losses of key clients, or a reduction in fees and margins.
PayPoint builds and carefully manages strategic
relationships with key clients, retailers, redemption partners
and suppliers. We continually seek to improve and diversify
services through new initiatives, products and technology.
We have further diversified our business this year through
the acquisition of Appreciate Group which gives us access
to new markets, SMEs, retailers, clients and technology.
We maintain strong relationships with suppliers to reduce
concentration risk in this area.
Risk is stable; recent acquisitions have diversified our
operations into the gifting ad rewards business. We
continue to renew contracts with clients and onboard new
retailers, merchants and redemption partners in line with
expectations. We have built on the counter cash, FMCG and
newspaper propositions with campaigns and onboarding
new SMEs, with more in the pipeline. We have however
noted that retailers and SMEs are under increasing financial
pressure, which may lead to an increase in defaults. We are
monitoring this situation carefully.
Risk appetite
Medium
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Principal risks
Change in status and trend
Increased
Stable
Decreased
PayPoint risks
Group risks
Mitigation strategies
Status
Change
5.
Legal and
regulatory
PayPoint is required to comply with numerous contractual,
legal, and continuously evolving regulatory requirements.
Failure to anticipate and meet obligations may result in
fines, penalties, prosecution and reputational damage.
Recent acquisitions have increased the number
of regulated entities, which further increases the
regulatory risk.
Commitments made to Ofgem in 2021 regarding its
Competition law concerns have been implemented.
Our Legal and Compliance teams work closely with
management on all legal and regulatory matters and adopt
strategies to ensure PayPoint is appropriately protected
and complies with regulatory requirements. The teams
advise on all key contracts and legal matters and oversee
regulatory compliance, monitoring and reporting. Emerging
regulations are incorporated into strategic planning, and
we engage with regulators to ensure our frameworks are
appropriate to support new products and initiatives. The
compliance team has been expanded and developed to
meet the ever-changing requirements of both existing and
new legislation, and external counsel is engaged where
required. We respond promptly and comprehensively to
all legal and regulatory enquiries.
Risk is increasing due to two key factors.
Firstly, following completion of the Appreciate acquisition,
additional support has been required to ensure a coherent
group approach to compliance is implemented.
Secondly, as referenced in Note 34, two claims have now
been served on a number of companies in the Group
in relation to the matters addressed by commitments
made to Ofgem in 2021 in resolution of Ofgem’s
competition concerns.
Key new regulations this year have been the PSR and
Consumer Duty, which we are addressing in line with
regulatory deadlines.
6.
People
Failure to attract and retain key talent impacts many areas
of our business including service delivery and achieving
strategic objectives. Maintaining a strong culture of ethical
behaviours and employee wellbeing is also vital in ensuring
our business, people, customers and other stakeholders
are safeguarded, and our operations remain efficient and
profitable. Maintaining competitive remuneration levels
ensures we retain our talent pool.
The Executive Board defines and advocates PayPoint’s
purpose, vision and values, and an employee forum
comprising employees from across the business engages
directly with the Executive Board on employee matters. We
continue to invest in, and support our people. We have well
established processes for recruiting and retaining key talent
and developing our people, and there is continued focus on
culture, ethics and diversity.
Risk is increasing. Following completion of the Appreciate
Group acquisition, we announced a rationalisation of our
Northern offices, which has caused some staff turnover.
Inflationary pressures mean salaries remain high and, hybrid
working serves to exacerbate this trend. Therefore, there
remain a number of vacancies, especially in specialist fields.
However, we have recruited some extra staff in accordance
with our planned headcount increase for the year.
Recruitment and retention have eased somewhat from
earlier in the year due to redundancies and recruitment
freezes elsewhere.
Employee engagement surveys remain positive and key
actions around cost-of-living support, better employee
interaction and flexible working have been implemented.
Risk appetite
Low
Risk appetite
Low
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PayPoint Plc Annual Report 2023
Principal risks and uncertainties continued
Principal risks
Change in status and trend
Increased
Stable
Decreased
Operational
PayPoint risks
Group risks
Mitigation strategies
Status
Change
7.
Cyber Security
Cyber-attacks may significantly impact service delivery and
data protection causing harm to PayPoint, our customers
and other stakeholders. Recent acquisitions have increased
the number of IT environments, products and systems
we need to protect. PayPoint has multiple cyber security
systems, capabilities and controls however cyber-attacks
are constantly evolving and remain a persistent threat.
The Executive Board assesses PayPoint’s cyber
security and data protection framework, and the Cyber
Security and IT Sub-Committee of the Audit Committee
maintain oversight.
Our IT security framework is comprehensive, with multiple
security systems and controls deployed across the Group.
We are ISO27001 and PCI DSS Level 1 certified, and
systems are constantly monitored for attacks with
response plans implemented and tested.
Employees receive regular cyber security training, and
awareness is promoted through phishing simulations and
other initiatives. We have implemented simple reporting
tools to assist in quick identification of potential threats.
We operate a robust incident response framework to
address potential and actual breaches in our estate or
within our supply chain. We engage with stakeholders,
including suppliers on cyber-crime and proactively
manage adherence with data protection requirements.
Risk is increasing because of the growing volume and
sophistication of cyber-attacks, coupled with our
expanding digital footprint. Due to the current geopolitical
instability, the NCSC has issued a warning regarding
targeted threats to organisations supporting critical
services in the UK.
Group security standards and systems are being applied to
our acquired IT environments and we continue to enhance
our architecture, systems, processes and cyber monitoring
and response capabilities. We regularly engage third parties
to assess and assist on our cyber defences and strengthen
our controls.
Risk appetite
Low
8.
Business
interruption
Our clients and stakeholders rely on our systems, products
and services being resilient to maintain continuous
service delivery. Failure to maintain stable infrastructure
or processes, or to promptly recover services following an
incident may result in financial loss, reputational harm and
potential regulatory scrutiny.
Interruptions may be caused by system failure, cyber-
attack, failure by a third party, or failure of an internal
process. Recovery may be hampered by a lack of resilience
planning and testing.
The Executive Board reviews PayPoint’s business
continuity framework and the Cyber Security and IT Sub-
Committee of the Audit Committee maintains oversight.
Business continuity, disaster recovery and major incident
response plans are maintained and tested with failover
capabilities across third party data centres and the cloud.
Systems are routinely upgraded with numerous change
management processes deployed and resilience embedded
where possible. Risk from supplier failure is managed
through contractual arrangements, alternative supplier
arrangements and business continuity plans.
Risk is increasing. The acquisition of Appreciate and our
expansion into different product contribute to an increasing
complexity of our operations. We have not suffered any
significant outages during the year, however system
disruption is an inherent business risk. Therefore, we have
upgraded the processing environments for our core switch
and some core services that are hosted in the data centres.
This has resulted in a reduction in critical incidents, and
availability of the core processing switch has improved. Better
staff training and retention has enhanced our ability to detect
and recover from service issues.
Risk appetite
Low
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Principal risks
Change in status and trend
Increased
Stable
Decreased
PayPoint risks
Group risks
Mitigation strategies
Status
Change
9.
Credit and
liquidity /
Treasury
management
PayPoint has material credit exposures with large retailers,
redemption partners, and other counterparties; in the
event of a default, significant financial loss may result,
as demonstrated with the McColl’s collapse.
We process large volumes of payments daily, therefore
effective operational controls are essential to ensure
funds are settled accurately, securely and promptly.
We have a number of debt / banking covenants and
interest expenses which must be managed carefully.
Absent or ineffective controls in these processes could
result in fraud, liquidity risk, reputational damage or other
financial loss.
PayPoint has effective credit and operational processes
and controls.
Retailers and counterparties are subject to ongoing credit
reviews, and effective debt management processes are
implemented. Residual risk associated with potential
default of gift card providers is mitigated through
insurance. Settlement systems and controls are continually
assessed and enhanced with new systems and technology.
We have effective governance with oversight committees,
delegated authorities and policies for key processes.
Segregation of duties and approvals are implemented
for all areas where fraud or material error may occur.
Risk is stable. Credit losses remain low. Cost of living
pressures may impact our retailers, which may increase the
default rate. However, we have robust monitoring and an
increase in support payment processing in place to reduce
default rates and impacts.
The risk profile of our business operations remains stable.
We continue to review and enhance our operational
processes and controls, and relationships with our
funding partners. We successfully refinanced to support
the acquisition of Appreciate and our cash generation
remains robust.
Risk appetite
Low
10.
Operational
delivery
Successful delivery of key initiatives and strategic
objectives is central to achieving our day-to-day and
transformation aims. Successful operational delivery
depends on effective forecasting, planning and well
controlled execution both within the Group and in its
supplier chain. Failure to manage this risk would hamper
our business performance, impact our stakeholders,
and lead to regulatory or legal sanctions.
The Executive Board has overall responsibility for delivering
key initiatives implementing a robust control framework
over BAU activities.
Our project management methodology ensures projects
are prioritised and governed effectively. Our existing
processes are continuously reviewed to make sure they
are efficient and well controlled.
Risk is stable. The Appreciate acquisition will require
considerable management time and effort to integrate. The
combined group is now large enough to qualify for the SAO
regime, which means the risk and control documentation
must be reviewed and brought in line with HMRC
requirements. There have been a number of new products
in the year, e.g. EBSS and Open Banking, which have been
challenging and demanded prioritisation of resources.
Risk appetite
Low
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PayPoint Plc Annual Report 2023
Principal risks and uncertainties continued
Principal risks
Change in status and trend
Increased
Stable
Decreased
Emerging risks
PayPoint risks
Group risks
Mitigation strategies
Status
Change
11.
ESG and
Climate
Focus on environmental, social and governance matters
continues to increase, and our business needs to be
environmentally responsible to create shared value for
all stakeholders.
Climate risk is a key priority for governments and
organisations globally, and PayPoint needs to play its part
in reducing carbon emissions and its environmental impact.
Approximately 17% of our revenue is derived from energy
and fuel markets and as the UK transitions to Net-zero
carbon emission economy by 2050, we need to closely
monitor the impacts on our business to ensure our revenue
streams remain sustainable.
The CEO and the Executive Board have overall
accountability for PayPoint’s climate and social
responsibility agendas, and they recommend strategy
to the Board. PayPoint aligns its business with reducing
carbon emissions, and continually assesses its approach
to environmental risk and social responsibility, which are
embedded in our decision-making processes. We have
multiple policies and processes governing our social
responsibility strategy and we continually assess and
evolve our strategy and working practices to ensure the
best outcomes for stakeholders and the environment.
Our ESG working group has implemented various measures
as we embed low carbon strategies into our working
practices and business strategy. We will be rolling out our
new PayPoint terminal, which generates lower emissions
than previous models. We are moving toward electric cars
for our company fleet and helping our field team to travel
in more environmentally friendly ways.
We run an employee forum and have implemented various
measures as a result, such as cost of living support.
Love2shop was named one of the UK’s best places to work
in April 2023.
Risk appetite
Medium
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Viability statement
In accordance with the 2018 UK Corporate
Governance Code, the Directors have assessed
the viability of the Group over a three-year
period, taking account of the Group’s current
financial and trading position, the principal risks
and uncertainties (as set out on pages 63 to 68)
and the strategic plans that are reviewed at least
annually by the Board.
Assessment period
The Directors have determined that the Group’s
strategic planning period of three years remains
an appropriate time frame over which to assess
viability. This broadly aligns to average client
renewal terms, new client prospecting and
onboarding cycles and the development-through-
to-maturity evolution of new products and service
lines. The current financing facilities are in place
until February 2026 broadly in line with this period.
Assessment of prospects
The Directors assess the Group’s prospects
through the annual strategy day and review of
the Group’s three-year Plan. The strategy day
in February 2023 and Plan review day in March
2023 both considered the impact on future
plans of the Appreciate Group acquisition on
28 February 2023. The planning process forecasts
the Group’s financial performance including cash
flows which allows the Directors to assess both
the Group’s liquidity and adequacy of funding.
In its assessment of the Group’s prospects, the
Directors have considered the following:
The Group’s strategy and how it addresses
changing economic environments in the
context of our clients, parcel partnerships,
merchants and retailer requirements
We continue to evolve and execute our strategy
and invest for growth. We recently acquired
the Appreciate Group and are integrating this
business at pace so that the commercial synergies
can commence realisation in the 2023/24 financial
year including the launch of super-agents via our
retailer partner network.
Through a broad range of products and services
combined with our effective sales team we
continue to successfully embed PayPoint Group
at the heart of SME and convenience retail
businesses. In the e-Commerce division, we are
continuing to roll out Zebra printers which will
enable store to store deliveries, further improving
the e-commerce delivery platform for first and
last mile customer journeys. In the Payments
and Banking division, we continued facilitating
government support in the current economic
climate and grew our integrated payments
solution across cards and Direct Debit together
with the addition of Open Banking to our portfolio
of payment methods.
The Group’s inherent resilience to risk
The Group has an inherent resilience to risk,
provided by the diversified nature of our
operations across many sectors. The business
remains highly cash generative which has enabled
the Group to continue to invest in key areas of
growth and support its longer-term viability.
The Appreciate acquisition has further broadened
our products set, client base and has enabled
more opportunities to provide more key services
across all our customers (retailers, SMEs, clients,
redemption partners and parcel partnerships).
This will ensure we are more integral to all of
our customers.
Expectations of the future economic
environment
Uncertainty remains over macroeconomic risks.
This has resulted in higher inflation and cost
of borrowing, reduced consumer confidence
and the UK government facing higher budget
deficits. However, the diversity of our proposition
ensures the business can adapt to ongoing and
unexpected changes. This was demonstrated this
year as we supported the government with its
cost-of-living support.
The Group’s financial position
The Group retains a strong financial position and
has a £75m revolving credit facility (RCF) expiring
February 2026 together with a total of £46.8m
amortising term loans. The arrangement also
includes a £30m accordion (uncommitted) facility.
At 30 June 2023 the Group had utilised £44.5m
of the RCF. The available balance of £30.5m
and the corporate cash provides the Group with
liquidity of c£35m. This level of liquidity is deemed
sufficient for all the viability scenarios analysed.
The Group has proven robust performance and
cash generation in previous economic downturns.
Assessment of viability
To assess our viability, we modelled different
scenarios identified by considering the potential
impact of the principal risks (as shown in the
table on pages 63 to 68). Our development of
scenarios included reviewing the risks of both the
PayPoint and Appreciate businesses. Risks are
broadly unchanged and the additional investments
required to realise our integration and targets
are included in the Plan financial projections. We
have reassessed the enlarged group’s scenarios
to reflect the progress made in delivering our
strategy. In total, nine principal risks were used in
our modelling. They were chosen because they
combine to represent plausible scenarios covering
a range of different operational and financial
impacts on the business.
The principal risk not specifically modelled was
Risk 6 – people as failure in recruiting and retaining
the right talent in the organisation would have
similar impacts to scenario A and B.
In total, four severe but plausible individual
scenarios have been modelled, with a fifth reverse
stress test scenario. These scenarios and the
assumptions within are detailed in the table on
page 70.
We also considered the combined impact of
scenarios A and B as these are the most likely
to materialise together. Theoretically all these
scenarios, with differing causes could occur
together, with varying levels of impact. However,
we have not included a combined scenario of
scenarios A to D, due to the one-off nature
of scenarios C and D, with scenario A already
including a significant one-off item creating similar
financial pressure.
None of the separate scenarios modelled was
found to impact the long-term viability of the
Group over the assessment period. In assessing
each of the scenarios, we have taken account of
the mitigating actions available to us, including,
but not limited to, reducing discretionary
operating spend, reducing non-committed
capital expenditure, repricing our products and
services, freezing recruitment and reducing
variable incentives and temporary suspension of
dividend payments.
Conclusion
Having assessed the Group’s current position,
potential impacts of principal risks, proven
management of adverse conditions in the past,
potential mitigating actions and prospects of
the Group, the Directors confirm they have a
reasonable expectation that the Group will be able
to continue in operation, remain solvent and meet
its liabilities as they fall due over the three-year
assessment period.
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PayPoint Plc Annual Report 2023
Viability statement continued
Scenario modelled
Linked to principal risk
Assumptions
Scenario A
A sharp economic decline in
the economy and our markets
causes material divergence on
planned product growth rates
or accelerated declines.
Risk (1) Competition and markets
Risk (2) Emerging technology
Risk (4) Operating model
Risk (9) Credit and operational
Transactions/merchants/estate
In areas of the business where declines have been experienced, these have been doubled. In areas of the business in growth, this
growth has been reduced to zero.
Margins, revenue rates per transaction/merchants or estate
In areas where there is a decline, this has been doubled and growth reduced to zero.
Economic backdrop will also cause a credit risk of c£11m if several of our largest retailers fail.
Costs
No cost savings assumed.
All the above are assumed to impact for FY23/24 with a slow recovery in FY24/25 back to planned levels in FY25/26.
Dividends
Dividends are reduced in line with dividend policy.
Scenario B
Failure with our transformation
and integration projects impacts
the profit delivery from the
planned growth.
Risk (3) Transformation
Risk (10) Operational delivery
Revenue Growth
Planned transformational revenue growth rates are assumed to halve over the life of the plan.
Costs/synergies
Costs are assumed to increase by 20% and the benefit of synergies halved across the three-year plan.
Scenario C
Legislation or regulatory
reforms cause a situation
of non-compliance.
Risk (5) Regulatory and legal
(grouping all the one-off hits together)
Revenue
No impact is assumed as PayPoint would adjust to change or correct any breach so that level of business could continue.
Costs
It is assumed that an average amount of the possible fines and associated costs of £30m is incurred in FY23/24.
Scenario D
Cybersecurity and
business continuity.
Risk (7) Cyber security
Risk (8) Business interruption
Dividends
Reduced in line with dividend policy.
Revenue
No revenue generation for three weeks.
Costs
Compensation payment equal to the lost revenue.
Dividends
Reduced in line with dividend policy.
Scenario E
Reverse stress test.
N/A
Adopting the principles of Scenarios A and B, a continuous monthly impact has been modelled to understand when our funding limits
would be reached. Similarly, for scenarios C and D, which are one offs, a single month impact has been calculated to reach funding limits.
In this stress test, it is assumed no dividends are paid. The outcome of these tests were a sustained EBITDA reduction of £3m per
month, indefinitely or a one-off reduction in EBITDA of £40m would take the Group to its funding limits. At this point the Group would
require further mitigations to those listed above and engaging financiers for further support or relaxation of covenants.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 71
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Financial review
The transformation of the business continues
apace, with our compelling characteristics
of strong cash flow and resilient earnings
remaining constant.
Growing
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PayPoint Plc Annual Report 2023
Financial review continued
“The Group has delivered
a strong performance,
with net revenue growth
across all divisions and
a profit before tax
excluding adjusting items
in the PayPoint segment
of £50.3 million, up 4.8%
vs FY22.”
Alan Dale
Finance Director
£m
PayPoint segment
Love2shop segment
Total revenue continuing operations
PayPoint segment
Love2shop segment
Total net revenue continuing operations1
PayPoint segment
Love2shop segment
Total costs continuing operations
PayPoint segment
Love2shop segment
Underlying profit before tax
Adjusting items:
Amortisation of intangible assets arising on acquisition
Exceptional items
Profit before tax from continuing operations
Profit before tax from discontinued operations
Profit before tax
Underlying EBITDA3
Cash generation from continuing operations excluding
exceptional items
Net corporate debt2
Year ended
31 March
2023
Year ended
31 March
2022
Change
%
10.3%
n/m
15.6%
9.1%
n/m
11.9%
12.1%
n/m
16.4%
4.8%
n/m
145.1
–
145.1
115.1
–
115.1
(67.1)
–
(67.1)
48.0
–
48.0
5.8%
(2.4)
2.9
48.5
30.0
78.5
58.2
–
n/m
(12.4)%
n/m
n/m
5.2%
160.1
7.6
167.7
125.5
3.4
128.9
(75.2)
(2.9)
(78.1)
50.3
0.5
50.8
(2.6)
(5.6)
42.6
–
42.6
61.3
62.3
(72.4)
53.9
(43.9)
15.6%
65.0%
1
2
Net revenue is an alternative performance measure. Refer to note 4 to the financial information for a reconciliation to revenue.
Net corporate debt (excluding IFRS 16 liabilities) is an alternative performance measure. Refer to note 1 to the financial information
for a reconciliation to cash and cash equivalents.
3 Underlying EBITDA is an alternative performance measure. Refer to note 1 to the financial information for a reconciliation.
The completion of the acquisition of Appreciate
Group plc (Appreciate) in February 2023 was the
latest step in the three years of our transformation
away from our traditional cash markets towards
digital. Our Corporate activity started in April 2020
with the buyout of our JV partner in Collect+, our
parcels business, then acquisitions of i-movo for
digital vouchering, Handepay/Merchant Rentals for
cards business and RSM2000 for Direct Debits.
In addition, investments have been made in
OBConnect, our Open Banking partner and Optus
Homes in the Housing sector.
PayPoint sold its Romanian business at the start
of the prior year and that is the discontinued
operations in the table above. The focus of the
review therefore is on continuing operations.
The Appreciate acquisition is now referred to as
our Love2shop (L2S) division and is reported as a
separate segment. The financial review discusses
the whole Group as well as the two segments so
that shareholders can understand the one-month
L2S impact separately from our historic PayPoint
business which had another strong year.
Profit before tax from continuing operations of
£42.6 million (2022: £48.5 million) decreased by
£5.9 million (12.4%). The decrease reflects current
year exceptional costs incurred of £5.6 million
against the prior year exceptional income of
£2.9 million.
The underlying profit before tax increased by
£2.8 million (5.8%) to £50.8 million (2022:
£48.0 million). This result includes £0.5 million
profit on the L2S segment for one month. This is
due to the seasonal nature of the business where
profit is primarily generated in Q3 of the financial
year. The historic PayPoint segment underlying
profit before tax increased by £2.3 million (4.8%)
to £50.3 million (2022: £48.0 million).
Total revenue from continuing operations
increased by £22.6 million (15.6%) to
£167.7 million (2022: £145.1 million). Net revenue
from continuing operations increased by
£13.8 million (11.9%) to £128.9 million (2022:
£115.1 million), the one month of L2S segment
contributing £3.6 million. There were increases
across all our PayPoint segment business divisions
with E-commerce doing particularly well with
46.3% increase in net revenue over the year.
Total costs from continuing operations
increased by £11.0 million to £78.1 million
(2022: £67.1 million). The increase in costs was
driven by the £2.9 million one-month additional
cost base from L2S segment together with
increases in transactional costs of revenue in
relation to the growth of net revenue in Payments
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 73
PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
and Banking. Exceptional costs of £5.6 million, which are one-off, non-recurring and do not reflect current
operational performance, consisted of £4.0 million acquisition costs plus £0.3 million interest cost as part
of the acquisition proof of funds requirement and £1.3 million in relation to the loss on disposal of our
investment in Snappy Shopper Ltd in October 2022. The prior year exceptional income was the reversal of
the i-movo deferred, contingent consideration liability.
PayPoint segment
Continuing operations
During the year the Group updated its presentation of the expense for amortisation of intangible
assets arising on acquisition. In order for the user to better understand the operational performance of
the business, the Group has changed from presenting “Operating Profit before exceptional items” to
“Operating Profit before adjusting items”. The impact of the re-presentation is to decrease prior year
“Administrative expenses – excluding adjusting items” by £2.4 million.
EBITDA is a new performance indicator highlighted this year, as it is widely used by investors, analysts
and other interested parties to evaluate profitability of companies. Our key focus and KPI is on Underlying
EBITDA to understand the operational performance, which excludes exceptional items and amortisation
of intangible assets arising on acquisition.
EBITDA / Underlying EBITDA (£m)
Profit before tax
Add back:
Net interest expense
Depreciation
Amortisation – including amortisation of intangible assets arising on
acquisition
EBITDA (£m)
Exceptional items
Underlying EBITDA (£m)
Year ended
31 March
2023
Year ended
31 March
2022
42.6
48.5
2.6
4.9
5.6
55.7
5.6
61.3
2.0
4.8
5.8
61.1
(2.9)
58.2
Cash generation from continuing operations excluding exceptional items grew to £62.3 million
(2022: £53.9 million), delivered from underlying profit before tax of £50.8 million (2022: £48.0 million).
There was a net working capital inflow of £1.2 million primarily as a result of the net investment in finance
lease receivable reducing in line with expected repayments and new terminal lease sales being made
under the one month operating lease proposition.
Net corporate debt increased by £28.5 million to £72.4 million (2022: £43.9 million) due to financing
the acquisition of Appreciate which had a £61.9 million cash element. At 31 March 2023 loans and
borrowings were £94.4 million (2022: £51.5 million) which included £0.6 million (2022: £2.1 million) of
asset financing in Merchant Rentals.
£m
Revenue
Shopping
E-commerce
Payments & Banking
Net revenue
Other costs of revenue
Depreciation and amortisation (costs of revenue)
Depreciation and amortisation (administrative expenses)
excluding amortisation of intangible assets arising on
acquisition
Other administrative costs – excluding exceptional items
Net finance costs – excluding exceptional costs
Total costs
Underlying Profit before tax (excluding adjusting items)
Year ended
31 March
2023
Year ended
31 March
2022
160.1
145.1
62.0
7.3
56.2
125.5
(17.6)
(7.2)
(0.4)
(47.7)
(2.3)
(75.2)
50.3
58.7
4.9
51.5
115.1
(11.0)
(7.6)
(0.5)
(46.0)
(2.0)
(67.1)
48.0
Change
%
10.3%
5.6%
46.3%
9.1%
9.1%
60.1%
(5.2)%
(5.0)%
3.6%
(14.7)%
12.1%
4.8%
Shopping net revenue increased by £3.3 million (5.6%) to £62.0 million (2022: £58.7 million). Service fees
net revenue increased by £1.3 million (8.3%) driven by additional PayPoint One sites and implementing
the annual RPI increase. Cards net revenue increased by £1.3 million (4.3%) from Handepay/Merchant
Rentals performance partially offset by PayPoint cards. ATM and Counter Cash net revenue decreased by
£0.4 million (4.2%) due to a reduction in transactions driven by the continuing trend of reduced demand
for cash across the economy. FMCG revenue also increased by £0.3 million (330.0%) to £0.4 million
(2022: £0.1 million) following further campaigns run in the year.
E-commerce net revenue increased by £2.4 million (46.3%) to £7.3 million (2022: £4.9 million), driven by
strong growth in total transactions which increased by 69.6% This was due to our strength in clothing/
fashion categories, the investment in the in-store experience with Zebra label printers over the past 18
months and the continued expansion from new services and carrier partners.
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PayPoint Plc Annual Report 2023
Financial review continued
Payments & Banking net revenue increased by £4.7 million (9.1%) to £56.2 million (2022: £51.5 million).
Cash bill payments net revenue decreased by £1.7 million (6.5%) as a result of a decrease in bill payment
transactions from the increase in energy prices, Energy Bills Support Scheme (EBSS) and the continued
switch to digital payments. Cash top-ups net revenue decreased by £0.5 million (6.2%) with volumes
down 10.3% driven by the continuing structural declines in the prepaid mobile sector. Digital net revenue
increased by £7.9 million (102.7%) driven by our Cash Out services including a full year of the DWP
Payment Exception Service, delivered via i-movo, and MultiPay transactions increased 24.6% as a result
of more clients taking the digital services. Cash through to digital, eMoney, net revenue decreased by
£1.3 million (16.5%) as a result of a 19.6% decrease in volumes as the category is returning to pre-
Covid-19 levels and a new baseline is set for the category.
Commission to retailers cost increased by £4.6 million (15.2%) to £34.4 million (2022: £29.8 million).
This increase in payment to our retailer partners is as a result of them processing increased transactions
as well as ones with higher commission rates per transaction (e-Commerce and digital).
Total costs from continuing operations (excluding adjusting items) increased by £8.1 million (12.1%) to
£75.2 million, primarily driven by transactional costs of revenue in relation to the growth of net revenue, in
particular the Energy Bills Support Scheme printing and postage. There were inflationary cost increases
in administrative expenses of £1.0 million along with a one-off provision of £0.7 million for outstanding
funds due from McColls with a claim for full recovery being progressed with the administrator. This was
partially offset by £0.5 million lower depreciation and amortisation with some legacy assets coming to
the end of their life.
Sector analysis
Net revenue increased by £3.3 million (5.6%) to £62.0 million (2022: £58.7 million) primarily due to the
growth in service fees and Handepay/Merchant Rentals card payments. The net revenue of each of our
key products is separately addressed below.
Service fees from terminals
Net Revenue (£m)
PayPoint terminal sites (No.)
PayPoint One Base
PayPoint One EPoS Core
PayPoint One EPoS Pro
Total PayPoint One – revenue generating
PayPoint One Base non-revenue generating
Total PayPoint One
Legacy (T2)
PPoS
Total terminal sites in PayPoint network
Year ended
31 March
2023
Year ended
31 March
2022
Change %
17.9
16.6
8.3%
6,787
10,775
891
18,453
709
19,162
142
9,174
28,478
7,392
9,639
1,089
18,120
671
18,791
214
9,249
28,254
(8.2%)
11.8%
(18.2%)
1.8%
5.7%
2.0%
(33.6%)
(0.8%)
0.8%
PayPoint One average weekly service fee per site (£)
17.8
17.0
4.7%
As at 31 March 2023, PayPoint had a live terminal in 28,478 UK sites, an increase of 0.8% primarily as a
result of new PayPoint One sites which increased by 2.0% to 19,162 sites.
Shopping
Shopping consists of services PayPoint provides to retailer partners, which form part of PayPoint’s
network, and SME partners. Services include providing the PayPoint One platform (which has a basic till
application), EPoS, card payments, terminal leasing, ATMs, Counter Cash and FMCG vouchering.
Service fees is a core growth area and consists of service fees from PayPoint One and our legacy
terminals. Service fee net revenue increased by £1.3 million (8.3%) to £17.9 million driven by the
additional 333 PayPoint One revenue generating sites compared to the prior year. The higher price point
EPoS Core sites increased by 1,136 due to new sales and upselling whilst EPOS Pro sites decreased by
198 due to normal churn and no longer being actively marketed.
Net revenue (£m)
Service fees
Card payments
ATMs and Counter Cash
Other shopping
Total net revenue (£m)
Year ended
31 March
2023
Year ended
31 March
2022
17.9
31.8
9.4
2.9
62.0
16.6
30.4
9.8
1.9
58.7
Change %
8.3%
4.3%
(4.2%)
56.6%
5.6%
The PayPoint One average weekly service fee per site increased by 4.7% to £17.8, benefiting from the
increase in EPoS Core sites which are charged at a higher rate and the annual RPI increase. Retailers
taking the Core version of the product represent 56.2% (2022: 51.3%) of all PayPoint One sites and
the Pro version now just represent 4.6% (2022: 5.8%). Legacy terminals now just remain in a few of
our multiple retailer partners but are being actively replaced.
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Card payments and leases
Net Revenue (£m)
Card payments – Handepay and Merchant Rentals
Card payments – PayPoint and RSM 2000
Services in Live sites (No.)
Card payments – Handepay
Card terminal lessees – Merchant Rentals
Card payments – PayPoint
Card payments – RSM 2000
Transactions (Millions)
Card payments – Handepay
Card payments – PayPoint
Card payments – RSM 2000
Year ended
31 March
2023
Year ended
31 March
2022
Change %
19.9
11.9
22,236
34,132
9,541
138
150.1
228.8
7.1
18.5
11.9
22,796
35,403
9,666
147
145.0
217.8
6.5
7.2%
(0.2%)
(2.5%)
(3.6%)
(1.3%)
(6.1%)
3.9%
5.1%
9.0%
Handepay and Merchant Rentals generated £19.9 million net revenue in the year. Handepay card
payments transactions increased by 3.9% to 150.1 million, maintaining strong transaction volumes seen
in the previous year but at a lower average transaction value of £29.30 (2022: £30.90). There were
22,236 Handepay card payments sites, a decrease of 560 sites (2.5%) since 31 March 2022. Handepay
EVO sales increased in the year supported by the one-month operating lease proposition but sites have
been impacted by higher churn, particularly in our Worldpay back book in this very competitive market.
The sales momentum in the second half of the year has increased following the sales team being fully
staffed and the launch of the new android device.
PayPoint card payments transactions increased by 5.1% to 228.8 million while net revenue decreased
by 3.1% to £10.7 million, maintaining strong transaction volumes seen in the previous year but at a lower
average transaction value £10.70 (2022: £11.30). Across our network there were 9,541 PayPoint card
payments sites, a decrease of 125 sites (1.3%) since 31 March 2022.
ATMs and Counter Cash
Net Revenue (£m)
Services in Live sites (No.)
Transactions (Millions)
Year ended
31 March
2023
Year ended
31 March
2022
9.4
9,150
30.1
9.8
6,310
30.6
Change %
(4.2%)
45.0%
(1.7%)
Net revenue reduced by £0.4m (4.2%) to £9.4 million (2022: £9.8 million) as transactions reduced by
1.7% to 30.1 million. This is attributable to the continued reduced demand for cash across the economy
although our new product, Counter Cash, continues to grow. ATM and Counter Cash sites increased
45.0% to 9,150 mainly as a result of the continued roll out of Counter Cash sites and PayPoint continued
to optimise its ATM network by relocating existing machines to better performing locations. Counter
Cash contributed 7% of transactions (2022: 1%) with over £42.9 million withdrawn in the financial year.
Other: Other shopping services increased by £1.0 million (56.6%) to £2.8 million (2022: £1.8 million)
this includes the partnership with Snappy Shopper and FMCG campaigns.
E-commerce
Parcels
Net Revenue (£m)
Services in Live sites (No.)
Transactions (Millions)
Year ended
31 March
2023
Year ended
31 March
2022
7.3
10,514
56.4
4.9
10,049
33.3
Change %
46.5%
4.6%
69.6%
E-commerce net revenue increased by £2.4 million (46.5%) to £7.3 million due to the increase in total
parcels transactions by 69.6% to 56.4 million. This was driven by our strength in clothing/fashion
categories and the investment in the in-store experience with Zebra label printers over the past
18 months. There has been continued expansion from new services, Yodel store to store and Amazon
returns, and new carrier partnerships with Wish.com and Inpost. Parcel sites increased by 4.6% to
10,514 sites.
Payments & Banking
Net revenue (£m)
Cash – bill payments
Cash – top-ups
Digital
Cash through to digital
Other payments and banking
Total net revenue (£m)
Year ended
31 March
2023
Year ended
31 March
2022
25.0
7.3
15.7
6.9
1.3
56.2
26.7
7.8
7.8
8.2
1.0
51.5
Change %
(6.5%)
(6.2%)
102.7%
(16.5%)
42.3%
9.1%
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PayPoint Plc Annual Report 2023
Financial review continued
Payments & Banking divisional net revenue increased by 9.1% to £56.2 million as a result of continued
growth in digital transactions, particularly within the cash-out sector, partially offset by fewer cash bill
payments and top up transactions and margin erosion from prior year client contract renewals.
Cash – bill payments
Net revenue (£m)
Transactions (millions)
Transaction value (£m)
Average transaction value (£)
Net revenue per transaction (pence)
Year ended
31 March
2023
Year ended
31 March
2022
25.0
146.3
4,245.9
29.0
17.1
26.7
157.2
3,932.3
25.0
17.0
Change
%
(6.5%)
(6.9%)
8.0%
16.0%
0.6%
Cash – bill payments net revenue only decreased by £1.7 million (6.5%) to £25.0 million changing from
the much larger decrease trends seen in recent years. The increase in energy prices had seen customers
in the front half of the year topping up more frequently and with increased average transaction values.
Transactions were impacted in the second half of the year with the government’s Energy Bills Support
Scheme (EBSS), although this benefitted our digital business and the continued switch to digital
payment methods. Cash – bill payments transactions decreased by 10.9 million (6.9%) to 146.3 million.
Cash – bill payments net revenue per transaction increased by 0.1 pence (0.6%) due to higher average
transaction value.
Cash – top-ups
Net revenue (£m)
Transactions (millions)
Transaction value (£m)
Average transaction value (£)
Net revenue per transaction (pence)
Year ended
31 March
2023
Year ended
31 March
2022
7.3
19.0
236.8
12.4
38.4
7.8
21.2
257.6
12.1
36.8
Change
%
(6.2%)
(10.3%)
(8.1%)
2.5%
4.4%
Digital (MultiPay, CashOut and Direct Debits) net revenue increased by £7.9 million (102.7%) to
£15.7 million and digital transactions increased by 18.1 million (53.0%) to 52.3 million. MultiPay net
revenue increased by £0.9 million to £4.1 million (2022: £3.3 million) with transactions growing by 6.6
million to 33.6 million. The DWP Payment Exception Service contributed £4.4 million net revenue in the
period (2022: £1.6 million) following a full year of transactions compared to six months in FY22. Cashout
revenue increased by £4.2 million (258.4%) to £5.9 million (2022: £1.6 million) driven by Governments
EBSS scheme in the second half of the year with over £246 million worth of vouchers redeemed.
Cash through to digital
Net revenue (£m)
Transactions (millions)
Transaction value (£m)
Average transaction value (£)
Net revenue per transaction (pence)
Year ended
31 March
2023
Year ended
31 March
2022
6.9
8.5
496.3
58.1
81.2
8.2
10.6
505.2
47.5
77.4
Change
%
(16.5)%
(19.6)%
(1.8)%
22.2%
4.9%
Cash through to digital (eMoney) net revenue decreased by £1.3 million (16.5%) to £6.9 million (2022: £8.2
million) and transactions decreased by 2.1 million (19.6%) to 8.5 million (2022: 10.6 million) with volumes
returning to pre-Covid-19 levels and a new baseline set for the category. eMoney transactions derive a
substantially higher fee per transaction than traditional top-up transactions as they are more complex to process.
Other payments & banking net revenue includes SIM sales, interest generated by investing cash received
on client funds and other ad hoc items which contributed £1.3 million (2022: £1.0 million) net revenue.
Love2shop segment
Continuing operations
Cash top-ups net revenue decreased by £0.5 million (6.2%) to £7.3 million. Cash top-ups transactions
decreased by 2.2 million (10.3%) to 19.0 million due to further market declines in the prepaid mobile
sector whereby UK Direct Debit pay-monthly options displace UK prepay mobile.
£m
Revenue
Net revenue
Digital
Net revenue (£m)
Transactions (millions)
Transaction value (£m)
Average transaction value (£)
Net revenue per transaction (pence)
Year ended
31 March
2023
Year ended
31 March
2022
15.7
52.3
1,307.6
25.0
30.4
7.8
34.2
756.6
22.2
22.5
Change
%
102.7%
53.0%
72.8%
13.0%
35.0%
Other costs of revenue
Depreciation and amortisation (administrative expenses)
Other administrative costs
Net finance costs
Total costs
Underlying profit before tax (excluding adjusting items)
1
Effective tax rate is the tax cost as a percentage of profit before tax.
Year ended
31 March
2023
7.6
3.4
(0.6)
(0.2)
(1.8)
(0.3)
(2.9)
0.5
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PayPoint Plc Annual Report 2023
Strategic report Governance
Financial statements
Shareholder information
Love2shop (L2S) results reflect the one month since the acquisition on 28 February 2023. L2S had
£14.8 million of Billings which represents value of goods and services sold. This reduces to £7.6 million
of revenue to adjust for the portion where the performance obligation occurs later as the cards and
vouchers are redeemed. When L2S sells a card or voucher that can be redeemed at a single retailer the
full value is treated as revenue as L2S acts as the principal. When the product is multi-retailer, L2S only
recognises the service fee earned as agent rather than the full sales value, along with other revenue,
comprising interest income and non-redemption income. Net revenue is then stated after deducting the
costs for the single retailer product. The business is seasonal and profit is primarily generated in Q3 of
the financial year.
Other costs of revenue are the production and distribution costs of the cards and vouchers, with
administrative costs being the regular costs to run the business. Finance costs include the costs of
borrowings specifically for the acquisition. Amortisation of intangible assets arising on acquisition is an
adjusting item and excluded from the underlying profit in the table above.
Profit before tax and taxation
The income tax charge of £7.9 million (2022: £9.0 million) on profit before tax from continuing operations
of £42.6 million (2022: £48.5 million from continuing operations) represents an effective tax rate of
18.5% (2022: 18.5% for continuing operations). This is lower than the UK statutory rate of 19% due to
adjustments in respect of prior year, non-taxable exceptional items and disallowable expenses.
Group statement of financial position
Net assets of £111.7 million (2022: £83.3 million) increased by £28.4 million reflecting the shares issued
as part of the acquisition of Appreciate and the £10.5 million growth in retained earnings. Current
assets increased by £147.1 million to £251.9 million (2022: £104.8 million) due to the monies held in
trust and cash held on behalf of clients of £119.7 million acquired with Appreciate. Non-current assets
of £227.9 million (2022: £127.3 million) increased by £100.6 million due to the Appreciate acquisition
goodwill and intangible assets and the investment in terminals.
Current liabilities increased by £181.9 million due to the liabilities matching the cash held on behalf of
clients and monies held in trust and an increase in borrowings from the RCF drawdown, required for the
acquisition. Non-current liabilities of £52.9 million (2022: £15.7 million) increased by £37.2 million due to
the new £36.0 million amortising term loan taken out to fund the acquisition and deferred tax liabilities
arising from the acquisition.
Net debt is a key measure for the business and has increased to finance the acquisition of Appreciate.
Although the cash element of the purchase price was £61.9 million the net increase is only £28.5 million
due to our strong cash generation and cash acquired.
Cash and cash equivalents-net corporate cash from
continuing operations
Less:
Loans and borrowings
Net debt
Year ended
31 March
2023
Year ended
31 March
2022
Change
%
22.0
7.6
187.7%
(94.4)
(72.4)
(51.5)
(43.9)
83.2%
65.0%
Total loans and borrowings of £94.4 million have increased by £42.8 million and consist of a £10.8 million
amortising term loan A, £36.0 million amortising term loan B, £46.5 million drawdown of the
£75.0 million revolving credit facility and £1.1 million of asset financing balances and accrued interest
(2022: £27.0 million drawdown from the revolving credit facility, £21.7 million amortising term loan A and
£2.9 million of asset financing balances).
Group cash flow and liquidity
The following table summarises the cash flow movements during the year.
Profit before tax from continuing and
discontinued operations
Ofgem provision – cash payment
Non-cash exceptional items
Gain on disposal of investments Romania
Depreciation and amortisation
Share-based payments and other items
Working capital changes (corporate)
Cash generation
Taxation payments
Capital expenditure
Acquisitions of subsidiaries net of cash acquired
Contingent consideration cash paid
Sale/(purchase) of investment in associate
Purchase of convertible loan note and other investment
Disposals of business net of cash disposed
Movement in loans and borrowings
Lease payments
Dividends paid
Net increase/(decrease) in corporate cash and cash
equivalents
Net change in clients’ funds and retailers’ deposits
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at the end of year
Comprising:
Corporate cash net of overdraft
Clients’ funds and retailers’ deposits
Year ended
31 March
2023
Year ended
31 March
2022
Change
%
42.6
–
1.3
–
10.5
2.4
3.6
60.4
(6.2)
(12.7)
(45.6)
(1.0)
5.5
(3.3)
–
(42.4)
(0.2)
(25.1)
14.2
39.3
53.5
24.4
77.9
22.0
55.9
78.5
(12.5)
(2.9)
(30.0)
10.6
0.9
(3.2)
41.4
(9.2)
(10.8)
(4.5)
(2.0)
(6.7)
(0.8)
20.2
(35.0)
(0.2)
(23.1)
(30.7)
(9.7)
(40.4)
64.8
24.4
7.7
16.7
(45.97)
–
144.8%
–
(0.9%)
166.7%
215.6%
46.1%
(32.6%)
17.6%
n/m
(50.0%)
n/m
n/m
–
(221.1%)
–
8.7%
146.3%
505.2%
139.1%
(62.3%)
–
185.7%
236.7%
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PayPoint Plc Annual Report 2023
Financial review continued
The following table summarises the cash generation from continuing operations excluding
exceptional items:
Dividends
Profit before tax from continuing operations
Exceptional items
Profit before tax from continuing operations excluding
exceptional items
Depreciation and amortisation
VAT and other non-cash items
Share-based payments and other items
Working capital changes (corporate)
Cash generation from continuing operations excluding
exceptional items
Year ended
31 March
2023
Year ended
31 March
2022
Change
%
42.6
5.6
48.2
10.5
2.4
1.2
48.5
(12.2%)
(2.9)
n/m
45.6
10.6
5.7%
(0.9%)
0.9
(3.2)
166.7%
(135.3%)
62.3
53.9
15.6%
Cash generation grew to £60.4 million (2022: £41.4 million) delivered from profit before tax from
continuing operations of £42.6 million (2022: £48.5 million). The previous year cash generation was
impacted by the £12.5 million payment in relation to the Ofgem Statement of Objections. Adjusting
for exceptional items, cash generation from continuing operations improved by 15.6% to £62.3 million.
There was a net working capital inflow of £2.5 million related to costs incurred for the Appreciate
acquisition that will cause an outflow of working capital in FY24.
Taxation payments on account of £6.2 million (2022: £9.2 million) are lower compared to the prior period
due to a tax refund of £3.3 million following the closure of March 2021 tax filings. Dividend payments
were higher compared to the prior period due to the increase in the current year interim and the final
ordinary dividend paid per share for the prior year ended 31 March 2022.
Capital expenditure of £12.7 million (2022: £10.8 million) was £1.9 million higher than the prior year.
Capital expenditure primarily consists of PayPoint One and card terminals, terminal development, the
enhancement to the Direct Debit platform and IT hardware. The increase in capital expenditure is primarily
driven by the roll out of terminals in Merchant Rentals where the principal product is now an operating
lease rather than finance lease.
Ordinary reported dividends per share (pence)
Interim (paid)
Final (proposed)
Total reported dividend per share (pence)
Total dividends paid per share
Total dividends paid in year (£m)
Year ended
31 March
2023
Year ended
31 March
2022
Change
%
18.4
18.6
37.0
34.6
25.1
17.0
18.0
35.0
33.6
23.1
8.2%
3.3%
5.7%
3.0%
8.7%
We have declared an increase of 3.3% in the final dividend to 18.6 pence per share (2022: 18.0 pence
per share). One to be paid as an interim dividend and one to paid as a final dividend. This is payable in
equal instalments of 9.3 pence per share (2022: 9.0 pence per share) on 1 September 2023 and 22
September 2023 to shareholders on the register on 11 August 2023. The final dividend is subject to the
approval of shareholders at the annual general meeting on 7 September 2023.
The final dividend will result in £13.5 million (2022: £12.4 million) being paid to shareholders from
the standalone statement of financial position of the Company which, as at 31 March 2023, had
approximately £45.0 million (2022: £67.9 million) of distributable reserves.
Capital allocation
The Board’s immediate priority is to continue to preserve PayPoint’s balance sheet strength. The Group
maintains a capital structure appropriate for current and prospective trading over the medium-term that
allows a healthy mix of dividends and cash for investment through capital expenditure and acquisitions.
The Board’s approach to the setting of the ordinary dividend has been updated since the prior year in
relation to cover ratio to strengthen the capital position and now follows the following capital allocation
priorities:
•
Investment in the business through capital expenditure in innovation to drive future revenue streams
and improve the resilience and efficiency of our operations.
Investment in opportunities such as the acquisition of Appreciate in February 2023 and investment
in OBConnect convertible loan.
•
• Progressive ordinary dividends targeting a cover ratio of 1.5 to 2.0 times earnings from continuing
operations excluding exceptional items.
Going concern
The financial statements have been prepared on a going concern basis having regard to the identified
principal risks and uncertainties and viability statement on page 69. Our cash and borrowing capacity
provides sufficient funds to meet the foreseeable needs of the Group including dividends.
Alan Dale
Finance Director
27 July 2023
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Introduction to the Corporate Governance report from the Chairman
Dear Shareholders,
I am pleased to introduce the governance section of this year’s
Annual Report. This section gives more detail on the governance
structure we have in place and how we comply with the UK
Corporate Governance Code. I am pleased to report that for the year
under review, we have consistently applied the Principles of Good
Governance contained in the 2018 UK Corporate Governance Code
save that we have not carried out a review of the effectiveness of
Appreciate Group’s (“Appreciate”) risk management and internal
control systems (with respect to Provision 29 of the Code) due to
the proximity of the acquisition of Appreciate, which occurred on 28
February 2023, to our financial year end.
The Board has carried out a review of the disclosures and
management of climate related risks for the Task Force On Climate
Related Financial Disclosures. Detailed disclosure is provided in the
Annual Report, along with the further progress made on developing
our broader ESG strategy.
The year in review
The business has maintained momentum in delivering against
its strategic plan as we have continued our diversification away
from legacy cash bill payments with growth in recently acquired
businesses and through the acquisition of Appreciate. Effective
governance together with the strong leadership from the Board
has provided structure and stability to the business.
Executive and Plc Boards
The Board and Nomination Committee has continued to work on
succession planning and Board composition. We have worked
actively with Teneo People Advisory to ensure the Board has
the necessary skills, experience and knowledge and following an
extensive search process we were delighted to appoint Rob Harding
as Chief Financial Officer. Rob will be joining the Company on 1
August 2023 and will replace Alan Dale who is retiring. I would like to
express my gratitude for Alan’s contribution to the company.
We also welcome Guy Parsons as Non-Executive Director
to the Board having previously been Executive Chairman of
Appreciate Group.
Board Evaluation
Following last year’s internal evaluation, we have again this year
conducted an internal evaluation of the Board, its Committees and
the Chair, which confirmed that our Board and Committees continue
to operate effectively. More information on the process and results
of that evaluation can be found on page 80. We have also completed
a tender for an external third party to carry out the Board evaluation
in 2023–24. This is being progressed in H1 FY 2024.
Stakeholder Engagement
The success of PayPoint depends upon the Board making informed
decisions for the benefit of shareholders having regard to the wider
requirements of all our stakeholders. The Board receives regular
investor updates throughout the course of the year. The Company’s
Annual General Meeting will be held at PayPoint’s registered office
on 7 September 2023 where you will have the opportunity to meet
the Board and members of the Executive Board. The matters to be
approved by shareholders are set out in our Notice of Annual General
Meeting which will be mailed to shareholders in August.
This year we continued to develop our work force engagement
activities including receiving a full briefing on the employee
engagement survey results and Directors meeting directly with
employees. Full details of our people and culture activities are set
out in the strategic report.
Our retail partners and SMEs remain central to our business and the
Board continued to receive regular briefings throughout the year on
our retailer engagement proposition and the work we do to enable
clients to provide vital services in the community.
Conclusion
I would like to conclude by thanking my Board colleagues for their
continued support and commitment over the past year and to
thank Nick Wiles and the whole Executive team for their dynamic
management of a rapidly changing business environment in difficult
economic circumstances.
If you wish to discuss any aspect of our governance arrangements,
please contact me via our interim Company Secretary, Brian
McLelland, via email at CompanySecretary@paypoint.com.
During the year the Executive Board was strengthened in key areas
to: a) drive growth (Nick Williams-Parcels-and Anthony Sappor-
Retail Proposition and Partnerships) and b) enhance integration with
Appreciate Group (Julian Coghlan and Talha Ahmed-respectively
Managing Director and Finance Director of Love2shop & Park Savings).
Giles Kerr
Chairman
27 July 2023
Giles Kerr
Chairman
“This has been another
strong year for the
PayPoint Group as the
business has built on
the transformation and
strategic step change
delivered over the past
three years.”
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PayPoint Plc Annual Report 2023
Performance evaluation of the PayPoint Board and its Committees
In accordance with the Code, the Board and its Committees undertake an external evaluation every three years, with internal evaluations being undertaken in the intervening years. The last such external evaluation
was carried out in 2021 and the Board in 2023 carried out tendering for an agency to carry out the external board evaluation in 2024. A preferred agency has been chosen and the process is due to commence in
November/December 2023.
2023 internal evaluation process and output
The Chairman, supported by the Company Secretary, circulated a questionnaire to each Director for their views on the performance of the Board and its Committees which covered: delivery and implementation of
strategic plan; integration of newly acquired businesses; approach to ESG; performance of management; and the composition, quality and processes of the Board and its Committees.
The Chairman presented the findings of the evaluation at the February 2023 Board meeting and the following actions were agreed:
Key issues identified
Proposed action plan
Challenging audit process and
significant workload and resource
required from both the auditors
and the Group.
General risk and controls reporting
needs strengthening and greater
challenge from risk function needed.
Board should improve wider
engagement with management
and staff.
Resource constraints given the scale
of projects in the past 12 months
having an impact on timely reporting
to the Board.
Earlier and more detailed planning, earlier audit resource, strengthening the finance team and greater efforts from auditors and Plc to identify potential audit
challenges and their remedy earlier.
Actions to date:
Additional resourcing for finance has been provided at Welwyn Garden City and Haydock. Additional time allowed to complete the audit and further audit
resources applied.
Appointment of new Head of Risk and Internal Audit.
Actions to date:
Tutu Kamara was appointed as Head of Risk and Internal Audit in February 2023. She was joined by Nigel Tuppen as a new Risk & Controls Manager on 2 May
2023. Work has commenced to make the risk framework more robust and consistent across the Group, including in Appreciate. This will enable greater support
and challenge to ongoing operational activities, project delivery and strategic risks.
NEDs should attend employee fora and a series of business workshops was to be added to the Board calendar giving added exposure to management team.
Actions to date:
NEDs have been invited to future fora. See 3) on p81.
Business workshops have also been diarised and the first two have occurred-see p81 5) Deep Dives.
Better recognition from within the Executive of the importance of timely report delivery and better resourcing to address constrained areas.
Actions to date:
Reports have been provided on time for the Board for the period November 2022 – June 2023.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
The actions of the 2022 internal evaluation have also been progressed accordingly:
1) Presentation of risk:
2) Engagement with stakeholders:
3) Extend the employee forum for the NEDs:
4) ESG:
5) Deep Dives:
It was agreed that deep dives of various
business sectors should occur.
Actions to date:
Deep dive workshops from various
parts of the business occurred
(e.g. Newspapers) during the year
and three are scheduled for the 2023
calendar year to focus on:
1) Digital Payments and Open Banking
(held in March 2023).
2) Parcels (held in June 2023).
3) Retail Proposition and Technology.
Further actions on ESG reporting and
monitoring would continue in 2023/24
including monitoring initiatives in
equality, diversity and inclusion, the
gender pay gap, the structure of
rewards, recruitment and retention,
corporate actions on culture and
engagement, monitoring and assessing
climate risk and issues relating to
integration of the businesses acquired
during the financial year.
Work continues-see page 38 for more.
The Company’s ESG Strategy was
presented to the Board twice during
the year so that progress could be
monitored, analysed and challenged.
The ESG Working Group continues to
meet regularly to progress actions and
membership has been broadened by
participation from Appreciate Group.
The work on risk was felt to be good
with a high level of diligence but it was
considered that the presentations
to the Board could be snappier with
greater focus on four or five key issues
which could be pre-agreed with the
Audit Committee Chair/Finance Director
prior to the meeting.
Actions to date:
This progression will continue following
the appointment in February 2023
of Tutu Kamara as Head of Risk
and Internal Audit. See General
risk and controls reporting needs
strengthening-p80 Actions to date.
The Board acknowledged it was
important to engage with stakeholders.
It was thought beneficial for the NEDs
to attend some employee fora to
engage one-to-one.
Actions to date:
Gill Barr continued her attendance of
the meetings as she has done for the
last three years and invitations have
been extended to other NEDs to attend
in future.
During the year the SID and Chair of
the Remuneration Committee attended
a meeting of the employee forum to
discuss remuneration. Nick Wiles also
attended and presented on operations
and strategy and Guy Parsons as part of
his induction has been invited to attend.
Actions to date:
We have made efforts to strengthen
our retailer partner relationships and
drive adoption of new opportunities to
earn, including regular ‘cash and carry’
days, more direct communications
and more regular meetings with the
key trade associations, including the
Association of Convenience Stores
(ACS), the Scottish Grocers’ Federation
(SGF) and the National Federation of
Retail Newsagents (NFRN). The Board
for instance met with the CEO of the
ACS in February 2023 to learn more
about the ACS and to discuss areas
of opportunity.
Earlier in the financial year the Board
also received a presentation from Chris
Hemsley, Managing Director of the
Payment Systems Regulator, and was
able to engage with the same on future
regulatory developments and how such
could impact the Company.
The Chairman of the Board and the
CEO engaged with key shareholders
throughout the year and reported to the
Board on issues discussed.
Members of the Board, Executive Board
and senior management met with the
Company’s shareholders and presented
on a number of business matters
throughout the year. The Remuneration
Committee Chair also engaged with
shareholders on executive pay including
the proposed Remuneration Policy for
approval at the 2023 AGM.
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PayPoint Plc Annual Report 2023
Board of Directors
Giles Kerr (ACA)
Chairman
Nick Wiles
Chief Executive
Alan Dale (ACA)
Finance Director
Appointed to the Board in November 2015 as
an Independent Non-Executive Director and
Chairman of the Audit Committee. Assumed
the role of Senior Independent Director in
May 2017 and became Chairman in May 2020.
Career
Giles’ former roles include chief financial officer at
the University of Oxford, Group finance director at
Amersham plc and Arthur Andersen & Co and non-
executive director roles at BTG plc, Victrex plc, Elan
Corporation Inc and Adaptimmune Therapeutics plc.
Board skills and experience
Corporate finance, accounting, risk management.
Other principal roles
Non-executive director of Senior plc, Abcam plc and
Arix Bioscience plc.
Committee memberships
Chairman of the Nomination Committee and
a member of the Remuneration Committee.
Appointed to the Board in October 2009,
Chairman in May 2015, Executive Chairman
in December 2019 and Chief Executive in
May 2020.
Career
Nick retired as Chairman of Nomura in 2012 after
more than 25 years in investment management and
banking. His career started as an analyst and fund
manager at Mercury Asset Management before
moving to Cazenove, where he spent the majority of
his career and was a partner prior to incorporation and
becoming a vice chairman of JP Morgan Cazenove.
He was previously a non-executive director of Strutt
& Parker and Picton Property Income Ltd and senior
independent director at Primary Health Properties plc,
prior to its merger with MedX plc.
Board skills and experience
Investment banking, corporate finance, equity
markets, investor sentiment and relations.
Other principal roles
None.
Committee memberships
Member of the Market Disclosure Committee.
Appointed to the Board as Finance
Director in November 2020 having acted as
Interim Finance Director since July 2020.
He joined PayPoint in August 2017 as Head
of UK Finance.
Career
Alan is a chartered accountant with over 30 years’
experience in the financial services sector. Prior to
joining PayPoint he held a number of senior finance
roles with financial institutions including GE Capital.
Board skills and experience
Corporate finance, accounting, risk management.
Other principal roles
None.
Committee memberships
Member of the Market Disclosure Committee,
the Cyber Security & Information Technology
Sub-Committee and ESG Working Group.
Gill Barr
Independent Non-Executive Director
Appointed to the Board in June 2015.
Career
Gill has held senior strategy, marketing and business
development positions at the Co-operative Group,
John Lewis, Kingfisher, Mastercard and KPMG. She
was previously a non-executive director of Morgan
Sindall plc and McCarthy & Stone plc.
Board skills and experience
Gill brings her extensive experience as a retailer and
offers a strategic perspective on drivers of growth.
As a Non-Executive Director she is able to provide
remuneration expertise owing to her chairmanship
of the remuneration committees of the companies
detailed below.
Other principal roles
Senior independent director of N Brown Group plc
(retired 10 July 2023) and non-executive director of
Wincanton and DFS Furniture plcs.
Committee memberships
Member of the Audit, Nomination and Remuneration
Committees. Board representative for the
employee forum.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Board experience
Cyber security
and IT
Risk
management
25%
50%
Finance
Operational
62.5%
37.5%
Rakesh Sharma
(OBE FREng CPhys MInstP)
Senior Independent Director
Ben Wishart
Independent Non-Executive
Director
Rosie Shapland (FCA)
Independent Non-Executive
Director
Guy Parsons
Independent Non-Executive
Director
Appointed to the Board in May
2017 becoming Senior Independent
Director in May 2020.
Career
Rakesh was chief executive of Ultra
Electronics Holdings Plc (‘Ultra’) having
previously held several senior and
management positions within Ultra and has
managed businesses and divisions across
the full range of that company’s wide
portfolio including in the B2B fintech sector.
Board skills and experience
Rakesh brings executive management and
cultural change experience to the Board.
Additionally, his long association in the global
security sector brings skills in cyber security
and information technology. Rakesh supports
the younger generation though his pro bono
activities for a multi academy trust and
Riverbank Academy, a special educational
needs school. He is also a Lay Council
member at The University of Nottingham.
Other principal roles
Chairman of Kromek Group plc.
Committee memberships
Chairman of the Remuneration Committee
and a member of the Audit, Nomination
Committees and Cyber Security &
Information Technology Sub-Committee.
Appointed to the Board in
November 2019.
Appointed to the Board in
October 2020.
Appointed to the Board in March
2023.
Career
Ben has previously served as chief
information officer (C.I.O) of Morrisons
plc and Whitbread plc and has held
various senior information technology
roles at Tesco plc. He is currently global
CIO of Ahold Delhaize.
Board skills and experience
Ben brings a deep understanding
of technology to the Board. He has
proven leadership and governance
skills on technology matters within
a global business.
Other principal roles
Global CIO Ahold Delhaize.
Committee memberships
Member of the Audit, Nomination and
Remuneration Committees. Chair of the
Cyber Security & Information Technology
Sub-Committee.
Career
Rosie is a chartered accountant and was
a former audit partner at PwC. She has
over 30 years of audit experience across
multiple sectors.
Board skills and experience
Rosie brings extensive knowledge of
accounting, financial reporting, risk
management and governance.
Career
Guy is formerly Executive Chair of
Appreciate Group. Guy held senior
sales, marketing and operations roles
at Accor UK and Whitbread plc, before
becoming CEO of first Travelodge and
then easyHotel plc. He was previously
Chair at online sofa retailer, Snug and
Non-Executive Director at Yorkshire
Building Society.
Other principal roles
Senior independent director and audit
committee chair of Foxtons Group plc
and Workspace Group Plc.
Board skills and experience
Guy brings extensive knowledge of
leadership, strategy, management,
sales and marketing.
Board diversity
Gender
Female
Male
25%
75%
Committee memberships
Chair of the Audit Committee and
a member of the Remuneration and
Nomination Committees.
Other principal roles
None.
Committee memberships
A member of the Audit, Remuneration
and Nomination Committees.
Ethnicity
Ethnic minority British
White British
1
7
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PayPoint Plc Annual Report 2023
Executive Board
Nick Wiles
Chief Executive
Simon Coles
Chief Technology Officer
See Board of Directors for biography.
Simon joined the Executive Board in
April 2021. He was appointed as Chief
Technology Officer in May 2017, having
previously managed the IT team at
PayPoint’s Mobile and Online subsidiary
prior to its sale.
Simon has worked in both the payments
and retail wealth management sectors for
over 30 years as an engineer, manager,
consultant and IT executive. He has
launched and managed card processing
systems for several banks and consulted
on payments in the UK, USA and Australia.
Prior to joining PayPoint, Simon was
a management consultant for several
years and has delivered significant IT
programmes for several banks, wealth
managers and insurance firms.
Alan Dale
Finance Director
See Board of Directors for biography.
Danny Vant
Managing Director,
Client Services
Danny joined the business in 2019
and was promoted to his current role
of Managing Director, Client Services
in 2023, leading the commercial and
strategic development of the client
portfolio and managing relationships
with the multiple retailers.
Before joining PayPoint Danny worked
for Mitie plc in the FM sector managing
a number of businesses, predominantly
within the security sector. Danny also
worked in consultancy for Newton
Europe specialising in process efficiency
improvements across a diverse range
of sectors, including healthcare
and defence.
Prior to this Danny started his career
as a graduate in the logistics industry,
spending six years working in the parcel
carrier industry for Target Express.
Katy Wilde
HR Director
Katy joined PayPoint as HR Director
in 2012 with responsibility for the
development and implementation
of our people agenda.
Prior to joining PayPoint, Katy worked
for RSA Insurance Group where she
held a number of senior business
partnering roles in the UK and latterly in
the emerging markets business where
she was responsible for ensuring the
delivery of the HR agenda across 22
countries in Central and Eastern Europe,
Asia, the Middle East and Latin America.
Prior to that Katy spent seven years
at General Electric where she held HR
roles in both its consumer finance and
insurance businesses. Katy has a degree
in International Business and Modern
Languages from Aston University and
is a Chartered Member of the CIPD.
Katy is a member of the ESG Working
Group and chairs the Employee Forum.
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Financial statements
Shareholder information
Ben Ford
Customer Experience Director
Tanya Murphy
General Counsel and Head
of Compliance
Mark Latham
Managing Director,
Card Services
Anna Holness
Sales & Customer
Life Cycle Director
Ben Ford joined the Executive Board in
July 2020 as Retail Services Director
and transitioned to the role of Customer
Experience Director in October 2021
following the acquisition of Handepay
and Merchant Rentals. Ben is responsible
for ensuring that our proposition is
underpinned by the delivery of excellent
customer service to our retailers,
merchants and consumers.
Ben was previously at Addison Lee
where he was head of Global Customer
Experience and Operations responsible
for global service delivery of customers,
clients, drivers, and fleet. Prior to joining
Addison Lee Ben worked in similar roles
for companies including Premier Inn,
Danone, Joules and Boden.
Tanya joined PayPoint as General
Counsel and Head of Compliance in
September 2020 and leads PayPoint’s
Legal and Compliance teams advising all
companies across the PayPoint Group on
legal and regulatory matters relating to
their businesses.
Prior to joining PayPoint, Tanya worked
at Zurich Insurance for 11 years where
she held a number of roles including
Head of the UK Corporate & Commercial
Legal team.
Tanya qualified as a solicitor in 1996 at
the international law firm Lovell White
Durrant, now Hogan Lovells LLP, where
she worked as a solicitor for 12 years
specialising in corporate and commercial
law across a number of business sectors.
Mark joined the Executive Board in
February 2021 following the acquisition
of Handepay and Merchant Rentals and
was appointed Banking Services Director
in October 2021 in recognition of our
growing banking proposition including
ATMs and Counter Cash and he retains
his responsibility for our cards business.
Prior to this, Mark was chief commercial
officer at Handepay from 2013 where he
developed the market-leading customer
proposition and led the marketing and
customer management teams.
Mark has previously held international
product management positions with
global payment processor Elavon, where
he was responsible for mobile payment,
currency conversion and gift card
solutions. Mark began his career in the
payment industry in 2002, supporting
major acquiring and retail customers
for Ingenico.
Anna joined PayPoint as Sales Director
in January 2022 before being promoted
to her current role in March 2023. Anna
has responsibility for new business
generation for all our products and
services, customer retention and also
relationship management across the
current PayPoint estate. Prior to joining
PayPoint, Anna worked for Worldpay from
FIS, where as VP of SME sales Anna was
responsible for new business generation
across SME and mid market sectors.
Before moving into Payments, Anna spent
over 20 years in the telecommunications
sector, predominantly at Telefonica/
O2 where Anna held a number of senior
positions across both B2B and B2C
(Retail), including head of franchising,
head of stores, head of global sales. Anna
has a broad experience; from leading
stores teams of up to 800 in retail and
managing relationships with some of
the world’s largest organisations across
multiple global locations, from her time
in global sales.
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Steve O’Neill
Corporate Affairs and
Marketing Director
Chris Paul
Head of Corporate Finance
Steve joined PayPoint originally in 2014,
and then again in 2020 as Corporate
Affairs and Marketing Director, leading
our marketing, PR and investor relations
efforts for the Group.
Chris joined PayPoint in 2016 and
is Head of Corporate Development,
leading the organisation’s growth and
development activities and overseeing
treasury strategy.
Jay Payne
IT Service & Operations
Director
Jay joined PayPoint in January 2019 as
IT Service and Operations Director and
leads the delivery of IT services across
the PayPoint Group.
With over 25 years’ experience, Jay
has been responsible for delivery and
design of services supporting card
issuing, merchant acquiring and specialist
subscription billing for clients across
all industries.
Jo Toolan
Client Services Director
Jo joined PayPoint in 2011 and is
currently Client Services Director, with
responsibility for a portfolio of client
service sectors including energy, local
authorities, DWP and eMoney.
Prior to PayPoint, she supported
bluechip organisations with their CSR
programmes in schools, including
developing programmes for BT and
Grant Thornton, following her early
career in the education sector.
He has spent over 20 years in
marketing and PR leadership roles
for large consumer organisations in
the UK and Europe, across the retail,
telecommunications and financial
services sectors. After starting his career
at the John Lewis Partnership on their
graduate scheme, Steve has worked for
Orange, Carphone Warehouse, HSBC
and Amigo.
Steve is also a member of the ESG
Working Group.
Prior to joining PayPoint, Chris worked
at LMAX as Head of Financial Reporting,
where he was responsible for developing
the finance function following its MBO
from Betfair.
He is a qualified accountant with 20
years’ experience in senior finance
positions in financial services, telecoms
and gaming sectors, including TalkTalk
and Tsogo Sun Gaming.
Previous positions have included
responsibility for the delivery of payment
optimisation consultancy for clients in
publishing and broadcasting with a focus
on subscription churn reduction.
Prior to commencing his career in
payments, Jay spent eight years
serving with the Royal Navy.
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Financial statements
Shareholder information
Julian Coghlan
Managing Director Love2Shop
& Park Savings
Talha Ahmed
Finance Director Love2Shop
& Park Savings
Anthony Sappor
Retail Proposition and
Partnerships Director
Nick Williams
Parcels Services Director
Julian joined PayPoint as Managing
Director of Love2shop and Park
Christmas Savings following the
successful acquisition of Appreciate
Group PLC in February 2023. Julian is
responsible for the Strategy, Commercial
performance, Clients and Sales &
Marketing functions with a focus on
driving revenues in line with key financial
targets. Julian successfully served as
Interim CEO of Appreciate Group plc
(AG) throughout the acquisition period.
Julian joined AG in August 2017, initially
as Group Operations Director then as
Chief Commercial Officer. Prior to this,
he held senior commercial executive
roles at Adare Group, the customer
communications services group, for
18 years following a career in the
automotive and electronics industry.
Talha qualified as a Chartered Accountant
in Pakistan in 2009 and spent over
fifteen years working in professional
services firms with experience in four
countries, including roles in Aberdeen and
Manchester with EY and PwC, working
with companies in both the regulated
financial services and consumer product
sectors. Talha joined Appreciate Group
Plc in November 2021 as Director of
Finance and was appointed to the role
of Interim Chief Financial Officer on 6
July 2022 but was not appointed as a
statutory Board director at that time.
He has since been appointed to the
Executive Board as Finance Director
of Love2Shop and Park Savings.
Anthony joined the business in 2013
following seven years with convenience
retailer SPAR. Since joining PayPoint
he has held a number of leadership
roles across retail relationships and
product management, culminating in
his appointment to the Board as Retail
Proposition & Partnerships Director in
April 2023. Anthony leads the strategic
development of our retail devices
and accompanying services, our ATM
business, our consumer engagement
proposition, and our partnerships with
large-scale corporate retail groups such
as Asda, Co-op, and One-Stop.
Nick Williams joined PayPoint in
September 2017 and is currently Parcel
Services Director, having previously
managed the parcels operational team
before taking on responsibility for the
wider PayPoint parcels product. Nick
has overseen the transformation and
growth of the Collect+ brand in recent
years into a truly carrier agnostic and
customer centric solution.With 30 years
industry experience Nick formerly held
key positions within both Hermes and
TNT where he was responsible for various
commercial and operational teams.
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Corporate Governance Report
The Board considers that throughout the year under review it has complied with the provisions of the UK
Corporate Governance Code (the ‘Code’) as published by the Financial Reporting Council in July 2018
save that we have not carried out a review of the effectiveness of Appreciate’s risk management
and internal control systems (with respect to Provision 29 of the Code) due to the proximity of the
acquisition of Appreciate to the year end, which occurred on 28 February 2023.
This report describes how the provisions of the Code have been applied by the Company.
Board composition
At the date of this report, the Board comprises eight Directors: the Chairman; the Chief Executive; the
Finance Director; the Senior Independent Director; and four Independent Non-Executive Directors.
The size of our Board allows time for full discussion and debate of matters and enables all Directors’
views to be heard. The Non-Executive Directors have a broad range of skills and experience bringing
balance and diversity to the Board. The biographies, skills and competences of each of our Directors are
set out on pages 82 to 83.
Membership and attendance at scheduled Board meetings held during the year
The table below shows Directors’ attendance of the scheduled Board meetings held during the year.
The composition of the Board is subject to ongoing review and a key consideration for any new Board
appointment will be the additional breadth a new Director could bring.
Current members
Role
Eligible to attend
Attended
Attendance at scheduled
meetings during the year
Executive Directors
Nick Wiles
Alan Dale
Non-Executive Directors
Giles Kerr
Gill Barr
Guy Parsons1
Rosie Shapland
Rakesh Sharma
Ben Wishart
Chief Executive
Finance Director
Chairman
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Senior Independent Director
Independent Non-Executive Director
9
9
9
9
1
9
9
9
9
9
9
9
1
9
9
9
1 Guy Parsons attended one Board meeting of the financial year upon his appointment as of 23 March 2023.
The terms and conditions of appointment of the Non-Executive Directors and the Executive Directors’
service contracts are available for inspection at the Company’s registered office during normal
business hours and at the annual general meeting. In accordance with the provisions of the Code all
Directors submit themselves for election or re-election at each annual general meeting. The Board’s
recommendations in respect of the election/re-election of each Director can be found in the Notice
of Annual General Meeting on page 180.
Tenure of Board
Under 12 months
1 to 3 years
4+ years
1
3
4
In addition to the nine scheduled meetings, the Board met a further seven times during the year to give
consideration to and to approve ad hoc matters including the Appreciate Group acquisition in accordance
with the schedule of matters reserved to the Board.
The Directors have disclosed all their significant external commitments which the Board has considered
and the Board is satisfied that all the Directors are able to allocate sufficient time to the Company to
discharge their responsibilities effectively.
Corporate governance framework
The Board provides effective leadership to the Group within a wider corporate governance framework
with clearly defined roles and responsibilities as illustrated in the chart opposite. The governance
framework supports the rigorous challenge by the Board of strategy, performance and accountability,
which encourages the proper implementation of the strategic aims of the Company. This results in
the growth of the business and protection of the interests of shareholders and wider stakeholders.
Independence statement
The Board considers its Non-Executive Directors to be independent. The Board has determined that
each is independent in character and judgement and is free from any business or other relationship which
could affect the exercise of his/her judgement.
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Governance
Financial statements
Shareholder information
Corporate Governance Framework
The Board
The Board is collectively responsible for the long-term success of the Group and is accountable to the shareholders of the Group. The Board provides effective leadership by setting the strategic aims of the
Group and overseeing the efficient implementation of these aims in order to achieve sustainable growth of the business. It monitors operational and financial performance against agreed goals and objectives
whilst ensuring that the appropriate controls and systems exist to manage risk. The Board ensures that there are the necessary financial resources and people with the necessary skills to achieve the strategic
goals the Board has set. The Nomination, Audit and Remuneration Committees support the Board in carrying out its role, which is formally set out in ‘the Matters Reserved to the Board’, full details of which can
be found on the Company’s website www.corporate.paypoint.com. The details of the roles of each of those Committees can be found on pages 94-123.In addition, the Executive Board carries out strategic
objectives delegated to it by the Board and the roles of each member of the Executive Board are set out on pages 84-87.
Audit Committee
The key role of this Committee is to ensure the
integrity of the Company’s financial reporting to
shareholders. Read more on pages 96-103.
Nomination Committee
The Nomination Committee is responsible for
reviewing the composition of the Board to
ensure its members have the right skills and
experience to implement the strategy of the
Company. Read more on pages 94-95.
Remuneration Committee
The Committee’s key responsibility is to
determine and apply the Remuneration Policy to
ensure it promotes the delivery of the Group’s
strategy. Read more on pages 104-123.
Market Disclosure Committee
This Committee oversees the disclosure of
information by the Company to ensure that
it meets its obligations under the Market
Abuse Regulations. Its members are the
Chief Executive, Finance Director, Company
Secretary and the General Counsel and Head
of Compliance.
Cyber Security & Information Technology
Sub-Committee
This is a sub-committee of the Audit Committee.
The role of the Committee is to oversee Group
cyber-security and IT matters.
Executive Board
The Executive Board is led by the Chief Executive and comprises: the Finance Director, the HR Director, the Managing Director of Client Services, the
Customer Experience Director, the Managing Director of Card Services, the General Counsel and Head of Compliance, the Chief Technology Officer; the
Sales & Customer Life cycle Director, the IT Service & Operations Director; the Client Services Director; the Corporate Affairs & Marketing Director, the Head
of Corporate Finance, the Retail Propositions and Partnerships Director, the Parcel Services Director, the Managing Director of Love2Shop and the Finance
Director of Love2Shop. The Executive Board is responsible for the day-to-day operational management of the Group and supports the Chief Executive in
implementing the Group’s strategic aims. The Board oversees the activities of the Executive Board.
Regulated entities within the Group
The Group has five regulated entities as detailed below. The Managing Directors of each of these regulated entities report to the Chief Executive:
• PayPoint Payment Services Limited1
• Handepay Limited2
• Merchant Rentals Limited3
• RSM 2000 Limited4
• Park Card Services Limited5
1
2
3
4
5
This an authorised payment institution regulated by the FCA with permission to provide regulated payment services (including certain CashOut services) under the Payment Services
Regulations 2017.
This is an authorised Consumer Credit (Consumer Hire) company regulated by the FCA with credit broking permissions under the Consumer Credit Act. This is a Limited Permission
Consumer Credit firm.
This is an authorised Consumer Credit (Consumer Hire) company regulated by the FCA with permission to enter into Regulated Consumer Hire Agreements as owner and to exercise
or have the right to exercise the owner’s rights and duties under regulated Consumer Hire Agreement permissions. This is a Limited Permission Consumer Credit firm.
This is an authorised Consumer Credit company regulated by the FCA with permissions for credit broking, debt collecting, debt administration, entering into Regulated Consumer
Hire Agreements as owner and exercising or having the right to exercise the owner’s rights and duties under a regulated Consumer Hire Agreement. This is a Full Permission Consumer
Credit Firm and also an authorised payment institution regulated by the FCA with permission to provide regulated payment services under the Payment Services Regulations 2017.
This is an Authorised Electronic Money Institution regulated by the FCA with permissions to issue electronic money (e-money) and provide payment services.
ESG Working Group
The Board of Directors retains oversight on all issues of ESG
including setting strategy and meaningful targets, reporting
on TCFD and engagement with key stakeholders.
The Executive Board has overall day to day control on ESG
and hears progress reports from the ESG Working Group
(a working party of the Executive Board comprising the
Finance Director, the HR Director, the Head of Risk and
Internal Audit, the Corporate Affairs and Marketing Director,
the Company Secretary and others to progress ESG matters
and TCFD Reporting through regular meetings). The Group
met throughout 2022–23 and progressed various aspects
on TCFD and ESG that were considered and approved by the
Executive Board and Group Board. The ESG Working Group
monitors performance against targets throughout the year
and reports performance to the Executive Board and Board.
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Induction
On joining the Board, all new Directors receive a full, formal and tailored induction. Meetings are held
with each member of the Executive Board and other senior management in the business and external
advisers as appropriate. The induction includes the provision of relevant current and historical information
about the Company together with applicable business policies. In addition as part of their induction new
Directors are provided with a number of retail site visits with Sales teams to better acquaint themselves
with PayPoint products and services and to receive first hand customer feedback. The Company
Secretary assists in the induction of new Directors and undertakes a review with new Directors post
induction to consider any initiatives which would improve the process. This was carried out this year
following the appointment of Guy Parsons and feedback provided to the Chair.
Training and support
Directors are provided with clear and accurate information on matters to be considered at the Board and
its Committee meetings. This information is provided in a timely manner to ensure an appropriate level of
review by each Director ahead of the meetings.
In the course of the year, the Board is briefed on any significant changes in the law, regulations,
governance, best practice or developments within PayPoint which affect their roles both on the Board
and on the Board Committees. Experts and advisers are brought in as necessary to present to the Board
or its Committees on technical subject matters.
The Non-Executive Directors are provided with schedules of relevant training by external providers which
they are encouraged to attend at their convenience.
Members of the Executive Board receive training on site from external providers. During the period
data management, cyber risks, IT and outsourcing and legal and regulatory aspects were covered and
a financial crime and anti-money laundering workshop was also held.
The Directors have access to the Company Secretary as well as members of the Executive Board and
senior management, and they can also seek independent professional advice if this is deemed necessary
for the proper performance of their duties.
Insurance
The Company maintains appropriate insurance cover in respect of legal action against the Directors.
Conflicts of interest
Under the Articles of Association, the Board has authority to approve any conflicts or potential conflicts
of interest that are declared by individual Directors prior to and during appointment. Conditions may be
attached to such approvals and Directors will generally not be entitled to participate in discussions or
vote on matters in which they have or may have a conflict of interest. Guy Parsons was asked to continue
serving as an executive director of Park Card Services Limited temporarily following the acquisition of
Appreciate Group Plc to provide continuity whilst a new, PayPoint aligned, post acquisition governance
framework is implemented. He will step down when Rob Harding is appointed to the role which is
expected to take place in August 2023. His role in Park Card Services is unremunerated and the Board
considers that no conflict of interest exists and he remains independent in character and judgement.
A register of conflicts of interest is maintained by the Company Secretary. No material conflicts were
reported by the Directors during the year.
Meetings
The Board and its Committees meet regularly throughout the year with meetings scheduled around key
dates in the Company’s corporate calendar, and when necessary to consider key corporate transactions
or events that may arise.
Two strategy sessions are also held each year, the first in September followed by a session in February.
The Board is updated on progress against the strategic plan and any new initiatives to grow and develop
the PayPoint Group.
The Chairman sets the agenda for the Board and ensures that adequate time is available for discussion of
all agenda items. He ensures informed decisions are reached in an effective manner by facilitating open
discussion and debate of agenda items by Board members. The Non-Executive Directors meet ahead
of each Board meeting to discuss the business of the meeting and any related issues. Consultations
with management and with external advisers are held when necessary to aid the Board’s decision-
making process. The table that follows shows the key areas of Board activity during the year ended
31 March 2023.
Strategy and business review
• Two scheduled strategy sessions followed by progress reviews throughout the year.
• Regular business and performance updates across all divisions.
• Divestment of Snappy Shopper, acquisition of Appreciate Group Plc and investment in OB Connect.
• Received regular updates with respect to the acquisition of Appreciate.
Internal control and risk management
• Assessed the IT infrastructure and cyber risks generally and specifically.
• Assessed the effectiveness of the internal controls and risk management process within the Group.
• Approved the renewal of insurance policies for the Group.
• Carried out a robust assessment of the nature and extent of emerging and principal risks and
uncertainties facing the Group and how these risks could affect the business, financial condition
or operations of the Group.
Financial
• Approved half-year and full-year financial statements and quarterly trading updates.
• Approved dividends paid to shareholders during the financial year ended 31 March 2023.
• Reviewed management presentations to analysts for the full and half-year results.
• Considered and approved the plan for the financial year ending 31 March 2024.
• Reviewed Group forecasts and scrutinised the built-in risks and opportunities.
• Received monthly management accounts.
• Received management reports.
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Governance
• Approved the Notice of Annual General Meeting.
• Reviewed and approved the Board policy on Diversity and Inclusion.
• Reviewed investor feedback from the full and half-year roadshows.
• Approved the Modern Slavery Statement.
• Approved scope 1, 2 & 3 GHG reduction targets.
• Approved Net-zero targets.
• Considered the feedback received from the employee fora when making decisions regarding working
patterns, engagement surveys and ESG.
• Carried out an internal performance evaluation of the Board and its Committees.
• Approved revisions to the terms of reference of the Audit, Remuneration and Nomination Committees
and the Cyber Security and IT Sub-Committee.
• Approved revisions to various policies and the Board’s delegated authority in accordance with the
Matters Reserved for the Board.
• Considered shareholder analysis summary reports.
People
• Reviewed the Group health and safety reports.
• Annual people update delivered by the HR Director in January of each year.
• Received regular updates on employee forum matters from Gill Barr, Non-Executive Director, the
Board leadership
Chairman – Giles Kerr
Giles Kerr is responsible for the effective leadership, operation and governance of the Board and its
Committees. He ensures that the Board as a whole plays a full and constructive part in the development and
determination of the Group’s strategy and overall commercial objectives. His current responsibilities include:
• Setting the Board’s agenda and ensuring the Board receives accurate, timely and clear information on
all matters reserved to its decision and on the Group’s performance and operations.
• Ensuring compliance with the Board’s approved procedures.
• Arranging informal meetings of the Directors, including meetings of the Non-Executive Directors
at which the Executive Directors are not present, as required to ensure that sufficient time and
consideration are given to complex, contentious or sensitive issues.
• Chairing the Nomination Committee, and, in that role, initiating change and succession planning to
retain and build an effective and complementary Board, and to facilitate the appointment of effective
and suitable members and Chairs of Board Committees.
• Ensuring effective communication with shareholders led by the Chief Executive and ensuring that
members of the Board develop an understanding of the views of major investors.
• Meeting a number of key investors.
• Promoting the highest standards of integrity, probity and corporate governance at Board level and
appointed Board representative for the employee forum.
throughout the Group.
• Reviewed the PayPoint Gender Pay Gap report and approved the commitments and actions therein,
prior to publication of the report.
• Reviewed proposals to support employees with the cost of living.
• Discussed the composition of the Executive Board and reviewed succession planning.
Division of roles and responsibilities
There is clear and effective division of roles and responsibilities of the Board as shown opposite:
Finance Director – Alan Dale
Alan Dale is responsible for all financial reporting,
tax, treasury and financial control aspects of the
Group. As a member of the Executive Board he
also provides support to the Chief Executive
in the development and implementation of the
strategy, and in the wider activities of the Group
as required. Alan is also a Chair and Director of
various subsidiaries of the Group and a member of
the ESG Working Group. He also acts as Consumer
Duty Champion.
Running the business
Chief Executive – Nick Wiles
Nick Wiles is responsible for running the Group’s
business and for proposing and developing the
Group’s strategy and overall commercial objectives.
He leads the Executive Board, the responsibilities
of which are set out on page 89. His other main
responsibilities include:
• Providing input to the Board’s agenda and ensuring
that the Executive Board gives appropriate priority
to providing timely reports to the Board containing
clear and accurate information.
Implementing the agreed strategy with the
support of the Executive Board.
•
• Ensuring that the Chairman is alerted to
forthcoming complex, contentious or sensitive
issues affecting the Group.
• Providing information and advice to the
Chairman in respect of succession planning
for membership of the Executive Board.
• Leading the communication programme
with shareholders.
• Acting as Director of various subsidiaries
of the Group.
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Corporate Governance Report continued
Constructive challenge and independent oversight
Board support
Senior Independent Director – Rakesh Sharma
Rakesh Sharma supports the Chairman in his role
by acting as a sounding board for the Chairman
and a trusted intermediary for other Directors in
resolution of any significant issues that may arise.
His other main responsibilities include:
• Chairing the Nomination Committee when it is
considering succession to the role of Chairman
of the Board.
• Chairing the Remuneration Committee.
• Meeting with the Non-Executive Directors at
least once a year to appraise the Chairman’s
performance and on such other occasions
as are deemed appropriate.
• Being available to shareholders if they have
concerns which contact through the normal
channels of the Chief Executive or Finance
Director has failed to resolve or for which such
contact is inappropriate.
• Having sufficient contact with major
shareholders to obtain a balanced understanding
of the issues and concerns of such shareholders.
Independent Non-Executive Directors –
Gill Barr, Rosie Shapland, Ben Wishart
and Guy Parsons
The Independent Non-Executive Directors bring
a strong independent element to the Board and
provide constructive challenge and support
to strategic and other matters addressed by
the Board. They are expected to attend all
scheduled Board and Committee meetings, and
to devote such time as is necessary for the proper
performance of their duties.
During the year, the Chairman held meetings
with the Non-Executive Directors without the
presence of the Executive Directors. There were
no unresolved concerns about the running of
the Company.
Interim Company Secretary – Brian McLelland
Brian was appointed as Interim Company Secretary
to the Board and all its Committees in January
2022. He provides advice and assistance to the
Board to ensure good governance practices
and compliance with company law, Listing Rules,
Disclosure Guidance and Transparency Rules
and the Market Abuse Regulations. His other
responsibilities include:
• Supporting the Board and Committee Chairs in
setting the agendas and ensuring information
is made available to the Board members in a
timely fashion.
• Arranging the induction of new Directors and
coordinating training requirements for the
Non-Executive Directors as required.
• Organising internal Board and Committee
evaluations at the request of the Chairman.
• Membership of the Market Disclosure
Committee of the Board.
• Acting as secretary to the subsidiaries of
the Group.
• Membership of the ESG Working Group.
Accountability
Financial and business reporting
Please refer to the following pages of this annual report for information on how the Board has carried out
the financial and business reporting obligations as stipulated under the Code:
• Page 127 for the Board’s responsibility statement setting out the steps taken to present a fair,
balanced and understandable assessment of the Company’s position and prospects.
• Pages 18 to 36 for the strategy and business model which explains how the Company generates and
preserves value over the longer term and the strategy for delivering the objectives of the Company.
• Page 125 for the statement that the financial statements have been prepared on a going
concern basis.
Risk management and internal control
The Board has overall responsibility for establishing and maintaining sound risk management and internal
control systems and the monitoring of these systems to ensure that they are effective and fit for
purpose. The Audit Committee provides support to the Board in this regard and oversees the monitoring
process. Further information on the risk management and internal control system is set out in the Risk
Management Report on page 61.
The Board has carried out a robust assessment of the nature and extent of the emerging and principal
risks facing the Group and how these risks could affect the business, financial condition or operations of
the Group. The explanation of these principal risks including how they are being mitigated can be found
on pages 62 to 68 and a statement on how the Directors have assessed the prospects of the Group
taking into account the current position and principal risks is on page 69.
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Financial statements
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Remuneration
Details of how the provisions of the Code have been applied in respect of Directors’ remuneration are set
out in the Remuneration Committee Report on pages 104 to 124.
Engagement with stakeholders
In its decision-making, the Board has regard to each Director’s duty to promote the success of the
Company on behalf of the Company’s stakeholders, to foster the Company’s relationships with its
people, shareholders, convenience retailer partners, SMEs, consumers, clients and local communities and
to consider the effect of the principal decisions taken by the Company during the financial year on the
Company’s stakeholders. For more information see pages 51 to 52.
Engagement with and feedback from our people across the business is vital. This year the employee
forum continued to provide feedback on cost of living pressures, the results from the employee
engagement survey, the conditions of the working environment and general engagement. Gill Barr, our
Board representative for the employee forum, feeds back issues raised by the members of the forum for
consideration by the Board. During the year the Chief Executive and the Senior Independent Director
attended meetings of the employee forum to discuss operations, strategy and remuneration.
Shareholder relations
The Directors consider that the annual report and accounts play an important role in providing
shareholders with an evaluation of the Company’s position and prospects. The Board aims to achieve
clear reporting of its financial performance to all shareholders.
The PayPoint website provides comprehensive information for current and potential shareholders and the
annual general meeting is an ideal forum for interaction between the Board and shareholders. In addition,
the Company maintains a full investor relations programme, including formal roadshows following the full
and half-year results and regular one-to-one meetings with current and potential investors.
The Board acknowledges the importance of an open dialogue with its institutional shareholders and
welcomes engagement from private investors. Meetings are held with investors throughout the year both
at their offices and in the form of site visits to PayPoint’s operations. The Senior Independent Director is
available to address any unresolved shareholder concerns.
Brian McLelland
Interim Company Secretary
27 July 2023
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PayPoint Plc Annual Report 2023
Nomination Committee Report
Membership and attendance
Attendance at meetings
during the year
Current members
Date appointed as member
Eligible to attend
Attended
Giles Kerr (Chairman)
20 November 2015, assuming
chairmanship in May 2020
Gill Barr
Guy Parsons1
Rosie Shapland
Rakesh Sharma
Ben Wishart
1 June 2015
23 March 2023
2 October 2020
12 May 2017
14 November 2019
5
5
1
5
5
5
5
5
1
5
5
5
1 Guy Parsons attended one Nomination Committee of the financial year upon his appointment as of 23 March 2023.
Giles Kerr
Chairman, Nomination Committee
“A key area of focus
has been on succession
planning for the Board,
Executive Board and
management to ensure
we have the right pipeline
of talent coming through
the business.”
Nomination Committee responsibilities
The Committee’s key role is to ensure that the Board
has the appropriate skills, knowledge and experience
to operate effectively and deliver our strategy. It is
responsible for regularly reviewing the size, structure
and composition of both the Board and its Committees
taking into account the challenges and opportunities
facing the Company. The Committee identifies and
recommends to the Board candidates to fill Board
vacancies based on merit and objective criteria, and
ensures that appointment processes are formal,
rigorous and transparent. The Committee also oversees
the development of a diverse pipeline for succession.
The Chairman invites the Chief Executive to attend its
meetings and the HR Director as and when required. The
Company Secretary acts as secretary to the Committee.
Further details of the Committee’s responsibilities can be
found in its terms of reference, on the Company’s website
www.corporate.paypoint.com.
Dear Shareholders,
On behalf of the members of the Nomination Committee, I am
pleased to present the Nomination Committee Report for the year
ended 31 March 2023.
The Committee met five times during the year. The key areas of
focus included the:
• Review of the structure and development of the Board and the
Executive Board.
• Review of the result of the 2022 internal performance evaluation.
• Approval of the report of the Committee for inclusion in the 2023
annual report and accounts.
• Review of the Board’s policy on diversity, equity and inclusion.
• Annual review of the Directors’ length of service.
• Annual review of the Directors’ conflicts of interest register and
number of external directorships held.
• Annual review of its terms of reference.
• Appointment of Rob Harding as Chief Financial Officer
succeeding Alan Dale who is retiring.
• Appointment of Guy Parsons as Non-Executive Director.
During the year, a review of the training programme for directors
and succession planning was covered at a meeting of the Board
of Directors.
Following each Committee meeting, a summary of the
Committee’s activity is provided to the Board together with
any recommendations.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Succession planning
We have succession planning in place for the Board and Executive
Board to ensure we have the right pipeline of talent coming through
the business to support the future needs of the Group.
Board changes
I am delighted to welcome Rob Harding to the Board. Rob is a
Chartered Accountant with more than 25 years’ experience across
financial services and is currently Chief Financial Officer at De La Rue
Plc. Rob was chosen following an extensive external search process
conducted by Teneo People Advisory (“Teneo”). Rob will replace
Alan Dale who is retiring and I would like to express my gratitude for
Alan’s contribution to the company.
The Board has also been strengthened by the appointment of
Guy Parsons. Formerly Executive Chairman of Appreciate Group plc,
Guy also served as CEO of Travelodge and easyHotel plc and was a
Non-Executive Director at Yorkshire Building Society.
Diversity
The Board’s policy on diversity, equity and inclusion, which is
reviewed annually by the Committee, sits alongside PayPoint’s
employee policy, which sets out the Company’s commitments to
create a positive and inclusive environment where everyone can
learn, grow and shine. The Board policy addresses the specific
requirements of the UK Corporate Governance Code in relation to
the Board and the recommended targets set out by the FCA and
Sir John Parker. The targets are:
• At least 40% of the Board should be women.
• At least one of the senior Board positions (Chair, Chief Executive
Officer (‘CEO’), Senior Independent Director (‘SID’) or Chief
Financial Officer (‘CFO’) should be a woman.
• At least one member of the Board should be from a minority
ethnic background (which is defined by reference to categories
recommended by the Office for National Statistics (‘ONS’)
excluding those listed, by the ONS, as coming from a white
ethnic background.
All Board appointments are made on merit, in the context of the
balance of skills, experience, independence and knowledge which
the Board as a whole requires to be effective, taking account of
diversity in the manner described above.
Responsibility has been delegated to our HR Director for the
operation of the diversity and inclusion policy across the rest of the
Group and ensuring its maintenance and review. Efforts to increase
diversity in the senior management pipeline towards Executive
Board positions continues to be supported, and the development of
diversity in senior management roles within the Group is encouraged.
Directors’ time commitment and length of service
All Directors are aware of the need to allocate sufficient time to
PayPoint Plc in order to discharge their responsibilities effectively.
The Nomination Committee monitors attendance, Committee
composition, length of service and the extent of the Directors’
external commitments on an ongoing basis.
As at the date of this report, PayPoint Plc continues to have two
female members on the Board who represent 25% of the Board
members. The percentage of female members of the Board declined
from last year due to the appointment of Guy Parsons on 23 March
2023 following the acquisition of Appreciate Group. The Board has
appointed a male Chief Financial Officer (“CFO”), Rob Harding, who
will take over from Alan Dale later in the year. Teneo People Advisory
(Teneo”) were selected to carry out the search.
Teneo are committed to DE&I and their work is underpinned by a
conviction that diverse and inclusive teams create more value and
deliver better results for businesses and their stakeholders. Two
out of the five shortlisted candidates for the role were female with
the successful candidate selected based on merit. The Board is
committed to making progress towards achieving the FCA targets
on gender diversity and has approved the appointment of a further
female Non-Executive Director to the Board and will engage with
executive search firms in a manner which enhances opportunities
for diverse candidates to be considered for appointment. The Board
will also consider female appointments to the senior Board positions
identified by the FCA above, at the next available opportunity.
PayPoint Plc meets the targets set out in the Parker Review and
the FCA in respect of ethnic diversity on UK boards.
During the year the Board received a presentation from Teneo
(executive search consultants) to provide feedback on the CFO
recruitment process and to discuss market trends, opportunities
and challenges in the recruitment of senior executives and
non-executives. Discussion occurred on diversity, hybrid
working, senior employment retention and succession planning.
For more information on our diversity, equity and inclusion policy
please refer to page 52.
Ben Wishart’s first three-year term expired on 14 November 2022.
Following Ben’s agreement, the Committee recommended to the
Board that he be reappointed for a further three years. Following this
on the same basis the Committee also recommended to the Board
the reappointments of Rakesh Sharma and Rosie Shapland for a
further three year period.
All Directors who are not retiring, in accordance with the Code,
will be offering themselves for re-election or election, as relevant,
at the annual general meeting on 18 August 2023.
The terms and conditions of appointment of Non-Executive
Directors and the service contracts of Executive Directors are
made available for inspection at the annual general meeting.
Directors’ conflicts of interest
The Nomination Committee annually reviews and considers the
interests and other external appointments held by the members of
the Board. Conflicts declared are recorded in our register of conflicts
of interest and this was reviewed and approved by the Committee
at its meeting in March 2023. The Directors have a continuing
duty to inform the Board of any potential conflicts immediately so
that such conflicts may be considered and, if authorised, included
within the register of conflicts of interest. We recognise that the
Non-Executive Directors have other business interests outside of
PayPoint Plc and that other directorships bring significant benefits
to the Board. All key external roles are given within the Director
biographies on pages 82-83. Non-Executive Directors are required
to obtain the approval of the Chairman before accepting any
further appointments.
A register of related parties is also maintained and updated by the
Company Secretary in order that any related party transactions are
identified and the necessary disclosures made.
The Nomination Committee Report was approved by the Board on
27 July 2023.
Giles Kerr
Chairman, Nomination Committee
27 July 2023
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PayPoint Plc Annual Report 2023
Audit Committee Report
Membership and attendance1
Attendance at meetings
during the year
Current members
Date appointed as member
Eligible to attend
Attended
Rosie Shapland (Chair)
2 October 2020, becoming
Chair in December 2020
Gill Barr
Guy Parsons
Rakesh Sharma
Ben Wishart
1 June 2015
23 March 2023
12 May 2017
14 November 2019
5
5
1
5
5
5
5
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1
The Audit Committee invites the Head of Risk and Internal Audit to attend and provide updates to the Committee at
each meeting covering the matters set out in the risk management section of this report. The external auditors KPMG
are also in attendance at each meeting along with the Chief Executive, Finance Director and Chair of the Board. Other
members of management attend as and when requested. The Company Secretary acts as secretary to the Committee.
Rosie Shapland
Chair, Audit Committee
“We have sought to
ensure the annual
report is fair, balanced
and understandable to
provide the information
necessary for shareholders
to assess the Company’s
performance, business
model and strategy.”
Audit Committee responsibilities
The Committee’s key role is to support the Board in
fulfilling its oversight responsibilities by reviewing and
monitoring the integrity of the Company’s financial
reporting to shareholders and any formal announcements
relating to the Company’s financial performance. The
Committee also supports the Board in matters relating to
the relationship with the external auditor and in respect
of the internal control and risk management systems of
the business. Significant financial reporting issues and
judgements, together with any changes in accounting
principles and policies, are reviewed by the Committee
and reported through to the Board.
As requested by the Board, the Committee reviews
the content of the annual report and accounts and
advises the Board on whether, taken as a whole, it is
fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Company’s performance, business model and strategy.
Further details of the Committee’s responsibilities can be
found in its terms of reference, on the Company’s website
https://corporate.paypoint.com.
The Committee has satisfied itself that the PayPoint Plc
2023 annual report and accounts is fair and balanced.
We have sought to make the annual report as clear,
understandable and informative as possible to provide
the information necessary for shareholders to assess the
Company’s performance, business model and strategy.
The Committee therefore supports the Board in making
its formal statement on page 127.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Dear Shareholders,
As Chair of the Audit Committee (the ‘Committee’) I am pleased to
present the Audit Committee Report for the year ended 31 March
2023. The report sets out the remit of the Committee, its areas of
focus for this financial year and the Company’s relationship with its
external auditors, KPMG LLP.
particularly following the acquisition of Appreciate. Management
has enhanced the accounting policy and revenue note
disclosures to aid understanding of this important area.
• Considered findings as set out in the reports from the
external auditor.
Risk management and internal controls
• Carried out a review of the Group’s insurance coverage and
approved amendments to include Appreciate.
• Approved various policies including (but not limited to)
whistleblowing and anti-bribery and corruption.
• Considered and recommended to the Board the going concern
• Considered any reported frauds and any concerns raised via the
The Committee met five times during the year, with meetings timed
to coincide with the financial and reporting cycles of the Company.
We also met on 18 May to consider progress with the year end
financial reporting and the audit, 29 June 2023 to review the 31
March 2023 annual report and accounts and the findings of the
external auditor, and 27 July 2023 to consider the final report from
the external auditor and to recommend the Annual Report and
Accounts to the Board prior to approval. In addition, the Committee
met with both the Company’s external auditor and Head of Risk and
Internal Audit during the year without management being present.
The Company completed the acquisition of Appreciate Group plc
(“Appreciate”) on 28 February 2023, following FCA approval.
This created significant additional work for the Group’s finance team
and our auditor, in finalising the year-end reporting. Consequently,
we took the decision to extend our reporting timetable for six weeks
to enable the work for the enlarged group to be completed. As
detailed on pages 99 to 100, the Committee has had to consider a
number of accounting judgements and estimates, both in relation to
the acquisition accounting itself and to our segmental reporting and
areas of accounting specific to Appreciate. In the period since our
previous report the work undertaken by the Audit Committee was
as follows:
Financial reporting
• Reviewed the annual and interim financial statements, including
the impact of the February 2023 acquisition of Appreciate.
• Considered significant accounting policies, financial reporting
issues, judgements and estimates, most notably in relation to the
acquisition of Appreciate.
• The Committee continued to focus on revenue recognition
during the year due to the level of transactions, the complexity
of the systems and the number of different revenue streams,
basis for preparation of the financial statements.
• Considered and recommended to the Board the viability
statement and the period over which the Group viability
is measured. In doing so the Committee had regard to an
assessment which modelled the possible occurrence of
significant risks and events, and which showed that the
Group would continue to be viable and profitable over the
three-year period.
• Considered the disclosure in respect of the letters before
action and subsequent claims served by Utilita and Global-365
(as further described on page 181) relating to the matters
addressed by commitments made by PayPoint and accepted
by Ofgem in 2021 in resolution of its competition concerns.
• Reviewed PayPoint’s treasury policy.
• Approved PayPoint’s annual tax strategy. Following the
acquisition of Appreciate, HMRC’s SAO regime now applies
to the enlarged PayPoint Group.
Company’s whistleblowing process.
• Reviewed the Company’s risk management framework and any
changes thereto prior to approving the principal and emerging
risks for inclusion in the annual report.
• Approved proposed project plans for compliance with the HMRC
SAO regime for the year ended 31 March 2024, to ensure it
incorporates appropriate processes and controls.
• Considered quarterly updates from the Group’s Compliance
Officer which provide an overview of compliance within the
Group’s regulated entities.
• Received reports from the Chairman of the Cyber Security and
Information Technology Sub-Committee. See page 89 for details
on the role of the Sub-Committee.
Governance
• Considered quarterly updates from the Head of Risk and Internal
Audit on the Group risks.
• Reviewed the results of the annual safeguarding audit
• Carried out an annual review of the Committee’s terms
for Appreciate.
of reference.
Internal audit
• Appointed Tutu Kamara in February 2023 to lead the Risk and
Internal Audit functions.
• Monitored progress against the year’s audit plan.
• Received copies of audit reports and assessed key findings and
implementation of recommendations.
• Assessed the audit universe and audit cycle.
• Approved the annual audit plan for FY2024.
• Monitored resource requirements for internal audit, including
for Appreciate, and approved the annual internal audit budget
for FY2024.
• Reviewed and approved the internal audit charter.
• Approved arrangements for including Appreciate into the
annual audit plan, including bringing their Internal Audit function
in-house.
• Carried out reviews of the Board Delegated Authority.
• Kept up to date with developments following the BEIS
consultation on restoring trust in audit and corporate
governance, including the proposed changes to the Combined
Code, particularly in relation to internal controls.
The Audit Committee and Cyber Security and IT Sub-Committee
support the Board with monitoring risk management and internal
control systems and reviewing their effectiveness. Internal controls
are used to mitigate risks faced by the Group within the risk appetite
set by the Board in order to safeguard shareholders’ investments
and Group assets. The Audit Committee reviews effectiveness of
the risk management and internal control framework by receiving
regular and comprehensive reports and information from Risk and
Compliance teams. The Board has defined its risk appetite for all
principal risks, as described on page 62. A standard risk assessment
methodology is applied across the Group to evaluate gross and
residual risk and comparing residual risk against risk appetite.
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PayPoint Plc Annual Report 2023
Audit Committee Report continued
Review of risk management framework and internal controls
The Board via the Audit Committee, has carried out a robust assessment of the principal and emerging
risks facing the Group, including those that could threaten its business model, future performance,
solvency or liquidity. This is more fully described on pages 62 to 68. For the legacy PayPoint Group the
following key procedures and monitoring processes are in place to provide effective internal control:
• The Board approves key Group policies and authorities delegated to the Executive Board and senior
management. Internal audits assess adherence and exceptions are reported in Internal Audit reports
which are made available to the Audit Committee.
• There is an ongoing process to identify, evaluate and manage risks via functional and entity Risk and
Control registers and significant risks are reported to the Board and Audit Committee.
• The Group’s Risk and Compliance teams continuously monitor that processes have been correctly
followed across the Group. Exceptions are reported to the Audit Committee and Cyber Security and
IT Sub-Committee.
• on behalf of the Board, the Audit Committee reviews fraud, anti-bribery and whistleblowing – there
were no instances of significant fraud, whistleblowing or identified instances of bribery or corruption
within the Group during the year.
• During the year the Environmental, Social and Governance (‘ESG’) Working Group continued to
oversee the Group’s environmental and social related risks and to make recommendations to the
Board, as well as reviewing the TCFD disclosures in the 2023 annual report and accounts.
• Executive and Finance management annually attest that to their knowledge they and their teams
adhered with Group policies, delegated authorities and year-end procedures; and that relevant Risk
and Controls registers are a fair representation of risks, and the controls listed operated effectively
during the year. Attestation details are reported to the Audit Committee.
• The Audit Committee reviews risk appetite for principal risks and compliance with risk appetite is
monitored through the Group’s risk assessment processes.
• The Audit Committee reviews key risks presented by the Head of Risk and Internal Audit at each
meeting to ensure management effectively implements preventative and detective controls to
monitor and mitigate risk.
• The Cyber Security and IT Sub-Committee reviews key IT and cyber risks to ensure the Group’s IT
function effectively implements preventative and detective controls to monitor and mitigate risk.
• The Chair of the Sub-committee reports to the Committee after each of the Sub-
Committee meetings.
On the basis of the above procedures and monitoring processes, the Board, supported by the Audit
Committee, has reviewed the effectiveness of the PayPoint risk management and internal control
systems. The Directors confirm that the processes described have been in place during the financial
year and up to the date of the approval of the annual report and accounts.
For Appreciate, it has not been possible for the Committee to perform a full assessment of the operating
effectiveness of the risk management framework and internal controls, due to the timing of the
acquisition. However, the Head of Risk and Internal audit has reported to the Committee on the review of
Appreciate that she and her team have completed. This covered their review of:
• The existing Appreciate risk management and internal controls framework, which has largely remained
in place since acquisition and included risk identification and mitigation procedures.
• The internal audit reports completed in FY2023 by KPMG and the follow up of their
recommendations, which are now reported to the Committee at each meeting.
• The policies and procedures in place and the delegated authorities.
• The IT and information security governance framework.
The Committee has also discussed the findings of the Company’s external auditor, arising from their
work over the acquisition and year-end balance sheets of Appreciate and the loss for the one-month
period since acquisition. From the above procedures, no significant control failings or weaknesses
were identified.
As part of the ongoing integration, the Appreciate functional areas are being absorbed into the
equivalent PayPoint functions, to ensure policies and supporting frameworks and procedures are applied
consistently across the enlarged Group.
External audit
• Agreed the scope of the 2023 audit together with the fees and terms of engagement. Details of the
amounts paid to the external auditor for the audit and other services for 2023 are given on page 161
note 8 to the financial statements.
• Received the external auditor’s plan for the financial year, reviewing materiality thresholds and areas
of risk where the auditor would focus their work, including the updated plan following the acquisition
of Appreciate.
• Reviewed the effectiveness of the external audit process, by discussing the results of the auditor’s
work and their views on material accounting issues and key judgements and estimates.
• Reviewed the robustness of the audit process and reviewed the 2022 Audit Quality Review Report,
regarding the overall quality of audit work provided by KPMG for listed companies.
• Reviewed and monitored the independence of the external auditor and approved their provision of
non-audit services.
Significant judgements and critical estimates in relation to the financial statements
In preparing the financial statements for 2023, there were several areas requiring the exercise by
management of judgement or a high degree of estimation. Throughout the year, the finance team
worked closely with the external auditor to ensure the Company provides the required level of disclosure.
The tables below outline the significant areas of judgement and estimation together with other financial
reporting matters that have been considered by the Committee in discussion with management and the
external auditor.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Significant financial judgements and critical estimates for the year ended 31 March 2023
How the Audit Committee addressed these significant financial judgements and critical estimates
Business combinations: recognition of goodwill and intangible assets
(Critical estimate)
On 28 February 2023, PayPoint acquired Appreciate Group plc (“Appreciate”).
Accounting for each business acquisition requires an assessment of the existence, fair value and
expected useful economic lives of separable intangible assets such as brands, customer relationships
and developed technology assets at the date of acquisition.
The fair value attributed to intangible assets arising on acquisition is recognised in accordance with
IAS 38 Intangible Assets and is based on a number of estimates, including the long-term revenue
growth rate of the related business and discount rate. In forecasting future revenues, management have
considered the accounting policy for revenue recognition for each of the relevant revenue streams.
Management have assessed the useful economic lives of each asset based on a number of factors
including the expected usage of the asset, typical product life cycles for the asset, technical,
technological, commercial or other types of obsolescence, expected actions by competitors and
the period of the contractual or other legal rights over which the entity expects to use the asset
including renewal.
As a result of the acquisition the Group identified £30.3 million of acquired intangible assets (net of
deferred tax) and £59.8 million of goodwill. The Committee reviewed and approved management’s
paper on the acquisition accounting supported by a report from a third-party valuation specialist.
The Committee considered and discussed the valuation methodology for the acquired assets, with
particular focus on the intangible assets arising on acquisition, brands and customer relationships,
including the revenue recognition policy applied to the different revenue streams.
The Committee challenged management on the key assumptions that drive the valuation of acquired
assets; for customer relationships, the expected future income streams and discount rate; for brands,
the royalty rate and for developed software, the cost to recreate. The Committee have also reviewed
and challenged management’s assessment of useful economic lives.
The Committee is satisfied that the acquisition accounting and related disclosures are appropriate.
Recognition of cash and cash equivalents (Critical judgement)
The nature of payments and banking services means that PayPoint collects and holds funds on behalf
of clients as those funds pass through the settlement process and retains retailer partners’ deposits as
security for those collections. Following the acquisition of Appreciate, it also holds monies in trust on
behalf of agents, customers, cardholders and redeemers.
A critical judgement in this area is whether clients’ funds, retailer partners’ deposits and monies held in
trust are recognised in the statement of financial position. This includes evaluating:
(a) The existence of a binding agreement clearly identifying the beneficiary of the funds.
(b) The identification of funds, ability to allocate and separability of funds.
(c) The identification of the holder of those funds at any point in time.
(d) Whether the Group bears the credit risk.
The Committee reviewed and approved the accounting policy on cash and cash equivalents and
considered management’s approach to the treatment of monies held in trust following the acquisition
of Appreciate.
Where there is a binding agreement specifying that PayPoint holds funds on behalf of the client
(i.e. acting in the capacity of a trustee) and those funds have been separately identified as belonging to
that beneficiary, the cash and the related liability are not included in the statement of financial position.
Following the Appreciate acquisition, a new caption was introduced on the face of the statement of
financial position, Monies held in trust. The Committee reviewed and agreed with management’s decision
to categorise cash and cash equivalents and monies held in trust separately. This was after considering
the legal status of the trust, who has access to the interest and the terms and conditions around
movement of funds.
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PayPoint Plc Annual Report 2023
Audit Committee Report continued
Significant financial judgements and critical estimates for the year ended 31 March 2023
How the Audit Committee addressed these significant financial judgements and critical estimates
Valuation of the goodwill relating to cash generating units (Critical estimate)
In the current and prior years PayPoint has acquired five businesses. An annual impairment review is
required on the carrying value of goodwill relating to each of the resulting five cash generating units
that have been identified.
Impairment models have been built which consider future cash flows based on the Board-approved Plan
and these are discounted to a net present value for comparison to the carrying value.
The Board-approved Plan forecasts cash flows for the initial three years and then appropriate
assumptions are applied to forecast a further two years, before prudent long-term growth rates are
applied to the fifth year to calculate terminal values. Sensitivity analysis has been applied to determine
the impacts of reasonably possible changes in the assumptions used for the value.
The most sensitive of these models was the Handepay CGU. Key input assumptions into the model were
the discount rate and sales growth rates applied.
For the Love2Shop CGU management decided that given the proximity of the timing of the
acquisition to the year end, fair value less costs of disposal was an appropriate alternative measure
of recoverable amount.
The Committee reviewed and approved a paper setting out management’s impairment assessments for
the carrying values of goodwill, acquired intangible assets and investments associated with
the relevant acquisition.
The Committee has challenged the key assumptions that drive the models for the impairment tests
including specific growth drivers for each business, discount rates applied and long-term growth rates.
As part of the process the Committee requested the calculation of the appropriate discount rates to be
used in each model, to be supported by third-party valuation specialists. These rates were reviewed and
challenged by the Committee.
Having challenged and discussed the methodology and assumptions set out in the paper for the
impairment tests, the Committee is satisfied that the valuation of CGU recoverable amounts, impairment
headroom and related disclosures of key sensitivities are appropriate.
The Audit Committee concurs with management’s decision to use an alternate valuation technique for
the Love2Shop CGU.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Other financial reporting matters for the year ended 31 March 2023
How the Audit Committee addressed these financial reporting matters
Pensions (defined benefit scheme from Appreciate acquisition)
Following the acquisition of Appreciate, PayPoint now has to account for a defined benefit pension
scheme which includes a judgement on the recognition of the current surplus, while estimates are
required for the valuation of the pension assets and liabilities.
Cash Generating Units (CGU’s) for Love2Shop
With the acquisition of Appreciate, management has considered the appropriate approach for CGUs
for the Love2Shop business for the purposes of allocating the goodwill on acquisition and for future
reporting. Love2Shop operates through several channels to provide its products and services.
Management has performed a detailed review considering the requirements of the accounting standards,
previous external reporting by Appreciate, the acquisition business case, current management reporting,
how business performance is measured and decisions taken both at divisional and Group levels.
Management’s conclusion is that the entire Love2Shop business should be considered a single CGU as
cash inflows from its various sales channels are not largely independent of each other and the resources
that generate those cash flows are not separable. The lowest level of aggregation of assets that
generate largely independent cash flows is the Love2Shop segment.
The Committee reviewed and approved a paper setting out management’s accounting for the defined
benefit pension scheme in line with IAS19, as at the year-end and for the one-month period ended on
that date, and at the date of the Appreciate acquisition. The valuations were supported by reports from
a third-party valuation specialist.
The Committee agrees with management’s conclusion that the pension surplus can be recognised in
full at the year-end and acquisition dates and estimates used by management are in line with the advice
provided by the third-party valuation specialists in this area.
The Committee reviewed management’s assessment of Love2Shop’s CGUs. This included:
• A review of the business model.
• Assessment of cash inflows.
• Historic approach.
•
• Relevant technical guidance.
Internal management reporting.
The Committee concurs with management’s conclusion that the business should be treated as one CGU.
Segmental reporting
The Group provides a number of different services and products. Prior to the acquisition of Appreciate on
28 February 2023, the different services and products provided by the Group did not meet the definition
of separate operating segments under IFRS 8.
The Group considers the Appreciate business to be a separate segment from the existing PayPoint
business, since discrete financial information is prepared and it offers different products and services.
Furthermore, the CODM reviews monthly internal management reports (including financial information)
for each of PayPoint (pre-Appreciate acquisition) and Love2Shop, to allocate resources and
assess performance.
The Committee considered management’s assessment of segmental reporting and the introduction of a
new segment. This included:
• A review of the information flow (internal reports) that the entity’s Chief Operating Decision Maker
(CODM) regularly reviews in allocating resources to segments and in assessing their performance.
• Reviewing historic Appreciate reporting and considering how the business will be managed
going forward.
The proposed disclosure in the annual report.
•
The Committee agrees with management’s conclusion that there are two operating segments, one for
historic PayPoint, consistent with prior years, and one for the newly acquired Love2Shop.
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PayPoint Plc Annual Report 2023
Audit Committee Report continued
Other financial reporting matters for the year ended 31 March 2023
How the Audit Committee addressed these financial reporting matters
Viability and going concern
Each year the Directors are required to consider the Group’s viability over a three-year period.
This is consistent with the Group’s strategic planning period. Additionally, management carry
out an assessment of the principal risks and uncertainties.
For the purposes of assessing the going concern assumption, cash flow forecast scenarios are
prepared by management for a period of at least 12 months from the date of approval of these
financial statements, taking into account the Group’s current financial and trading position, the
principal risks and uncertainties and the strategic plans.
The Group’s viability has been further tested by applying a number of severe but plausible downside
scenarios, performing a reverse stress test and considering mitigating actions and the impact of such
scenarios on the Group’s future financial position.
The Committee reviewed management’s assessment of going concern, the viability statement and the
proposed disclosures for the Annual Report and Accounts.
The review included consideration of forecast cash flows, relevant sensitivities and the impacts of these
on the Group’s cash position.
The Committee reviewed and discussed the various scenarios and the potential mitigations, and
considered the results of the reverse stress tests.
The Committee reviewed the increased disclosures for both going concern and viability to ensure they
are in line with the FRC recommendations.
The Committee concurs with management’s conclusion that they have a reasonable expectation that the
Group will be able to continue in operation, remain solvent and meet its liabilities as they fall due over the
three-year assessment period.
Based on a satisfactory assessment management has concluded that it is appropriate to prepare the
financial statements on a going concern basis and that they have a reasonable expectation the Group will
be able to continue in operation over the three-year assessment period.
The Committee made a recommendation to the Board to approve the going concern basis of accounting
for the financial statements and the viability statement drafted by management.
Cyber Security & Information Technology Sub-Committee
The Cyber Security & Information Technology Sub-Committee (‘Sub-Committee’) is a sub-committee of
the Audit Committee overseeing Group cyber security and IT matters. Its key responsibilities include to:
• Advise the Audit Committee on cyber and information security risks faced by the Group.
• Assess the adequacy of policies, resources and funding for cyber and information security.
• Review the Group’s cyber and information security breach response plan.
• Review cyber incident reports and assess the adequacy of proposed actions.
• Ensure effective business continuity plans.
• oversee cyber security training and awareness.
The Sub-Committee comprises two Non-Executive Directors: Rakesh Sharma and Ben Wishart as
Chairman of the Sub-Committee; the Finance Director, the Chief Technology Officer (who is a member
of the Executive Board) and the IT & Service Operations Director (who joined the Executive Board in the
year). The Company Secretary is the secretary to the Sub-Committee.
During the year the Sub-Committee held two meetings at which the Head of IT Risk, the Head of Risk
and Internal Audit and the Chair of the Audit Committee were also in attendance by invitation. The
matters considered by the Sub-Committee during the year included: the monitoring of cyber security
issues and vulnerabilities and implementing remediation and improvements as required; assessing the
Company’s security controls and overall IT governance & control framework; results of IT audits carried
out by Internal Audit and implementing improvements that were recommended; and the annual review of
both the cyber security policy and the Sub-Committee’s terms of reference and membership.
External audit
The effectiveness of the audit process is underpinned by appropriate audit planning and risk
identification at the outset of the audit cycle. The auditor provides a detailed audit plan identifying
their assessment of the risks and other key matters for review. For the year ended 31 March 2023,
the significant audit risks identified were: Appreciate purchase price allocation; Recoverability of
goodwill related to Handepay; Management override of controls; Handepay investment impairment
(Parent Company).
The Committee reviews and challenges the work undertaken by the auditor to test management’s
assumptions on these matters. An assessment of the effectiveness of the audit process in addressing
these items is based on the auditor’s reports for the half-year and full year. The Chair of the Committee
meets regularly with the auditor throughout the audit process and during the year, the auditor attends all
Committee meetings to present their audit plan and the results of their work, and the Committee seeks
feedback from management on the effectiveness of the audit process. No significant issues were raised
with respect to the audit process for the period and the quality of the audit process was assessed to
be good.
In accordance with its policy on auditor independence and the provision of non-audit services by the
external auditor, the Committee reviews and monitors the auditor’s independence and objectivity. This
is done by considering the auditor’s statement of confirmation of independence, and discussing any
identified threats to independence and the safeguards applied to mitigate those threats. The Committee
also considers all relationships between the Company and the audit firm, including their network firms
and whether those relationships appear to impair the auditor’s independence and objectivity.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
When PayPoint acquired Appreciate, KPMG was providing Internal Audit services and BDO LLP was
providing risk consultancy services, including a risk management system. Due to their involvement in the
audits of the financial statements at the acquisition date and at the Group year end, they were required
to resign from providing these services.
As part of the audit planning process, the auditor provided a statement of confirmation of independence
to the Board and the Audit Committee, which confirmed that in their professional judgement KPMG was
independent within the meaning of regulatory and professional requirements and the objectivity of the
partner and audit staff remained unimpaired.
During the year the Committee tendered the Group’s external audit. Four firms were initially invited to
tender and in compliance with Ethical Standards, the firms invited to tender were informed that the main
focus of their remit was for the provision of audit services. A data room was provided and interested
firms were given wide access to the business, including meetings with members of the Board, Executive
Board and finance team personnel, in order to develop their audit approach, prior to presenting to a panel
comprising the Committee Chair, and certain members of the Executive Board.
Following this process, a recommendation based on quality, knowledge and experience and structure
of the team was made to the Board which then considered and approved the appointment of PwC as
auditor for the financial year ending 31 March 2024, subject to shareholder approval at the 2023 AGM.
KPMG will therefore not be appointed at the forthcoming AGM.
Non-audit services
In accordance with the FRC Revised Ethical Standard 2019, the Committee has a policy on auditor
independence and the provision of non-audit services by the external auditor. This policy is a guide
to the types of work that are acceptable for the external auditor to undertake, and provides clarity on
the process to be followed for approval of the provision of non-audit services by the external auditor.
The policy also covers the 70% cap on non-audit fees as prescribed by the FRC Revised Ethical
Standard 2019. It states that subject to prior approval by the Finance Director, the fees for permitted
non-audit services provided by the external auditor must not exceed a specified amount and must have
a cumulative annual total of less than 70% of the average audit fee over the three proceeding years.
The ratio of non-audit fees to audit fees paid to the auditor for the year was 3.1%, with non-audit
services limited to assurance services for the half year review. Details of the auditor’s remuneration
for the statutory audit and non-audit services are set out in note 8 to the financial statements.
Risk management and internal control
The Board is responsible for establishing and maintaining the Group’s internal control framework
and regularly reviewing its effectiveness. The Board has delegated responsibility for reviewing the
effectiveness of risk management and internal controls to the Committee. The Committee performs
robust assessments of the risks which could significantly impact the Group’s performance, future
prospects and reputation.
The Company’s management of risks and its internal control framework are detailed on page 61.
Internal audit
Internal audit is an independent assurance function providing services to the Committee and all levels
of management. Internal audit helps the Group accomplish its objectives by bringing a systematic,
disciplined approach to risk management. Its remit is to provide independent and objective assurance,
assist management in implementing effective controls and help protect the Group. Internal audit’s
responsibilities include delivering the annual audit plan, driving remediation of audit issues, assessing
effectiveness of internal controls, the prevention and detection of fraud, and supporting management
in assessing and mitigating risks.
The Committee is responsible for ensuring the Group has a rigorous internal audit programme covering all
business areas and risks.
Whistleblowing
PayPoint continuously seeks to prevent malpractice in its business. However, if it occurs, whistleblowing
processes have been implemented to provide employees with guidance and ensure concerns raised are
appropriately addressed. Our whistleblowing policy ensures colleagues are encouraged to raise concerns
about the conduct of others, breaches and irregularities, without fear of reprisal. Whistleblowing is
discussed at each Committee meeting and all whistleblowing occurrences are reported to the Committee
together with details of investigations and any corrective action necessary.
Anti-bribery and corruption
PayPoint has a zero-tolerance approach to bribery and has an anti-bribery and corruption policy
detailing employee responsibilities to ensure the Group’s employees remain compliant with anti-bribery
and corruption laws. All employees undertake anti-bribery and corruption training at induction and
ongoing role-based training is provided. Anti-bribery and corruption risk management is discussed
at Committee meetings.
The Audit Committee Report was approved by the Board on 27 July 2023.
Rosie Shapland
Chair, Audit Committee
27 July 2023
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PayPoint Plc Annual Report 2023
Directors’ Remuneration Report
Membership and attendance1
Attendance at meetings
during the year
Current members
Date appointed as member
Eligible to attend
Attended
Rakesh Sharma (Chairman)
12 May 2017
Gill Barr
Giles Kerr
Guy Parsons
Rosie Shapland
Ben Wishart
1 June 2015
20 November 2015
23 March 2023
2 October 2020
14 November 2019
5
5
5
1
5
5
5
5
5
1
5
5
1
Guy Parsons attended one Remuneration Committee meeting in the year ended 31 March 2023 following his
appointment on 23 March 2023.
Rakesh Sharma
Chairman, Remuneration Committee
'The Committee continues
to ensure the clear linkage
of Executive Directors’
pay and performance
to the strategy and
enhancement of
shareholder value.'
Remuneration Committee responsibilities
The Committee’s key roles are to ensure that the
Remuneration Policy and practices of the Company
are aligned with the Company’s purpose and business
strategy, promote long-term sustainable success
and reward fairly and responsibly with a clear link to
corporate and individual performance. The Committee’s
decision-making process takes account of legislation,
regulation, corporate governance standards, guidance
issued by regulators, shareholders and shareholder
representative bodies and has access to the advice
of independent remuneration consultants. To avoid
conflicts of interest, no Committee member or attendee
is present when matters relating to his or her own
remuneration are discussed. Full terms of reference for
the Committee are available on the Company’s website
www.corporate.paypoint.com.
The members of the Committee and their attendance at
meetings are set out in the table above. In addition to
the members of the Committee, the HR Director and the
Company’s independent adviser from FIT Remuneration
Consultants LLP (‘FIT’), may attend and receive papers for
each meeting. The Company Secretary acts as secretary
of the Committee. After each meeting, the Chairman
of the Committee reports to the Board on the matters
discussed and recommendations and/or actions to
be taken.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Annual Statement
Dear Shareholders,
I am pleased to present our Directors’ Remuneration Report for
the financial year ended 31 March 2023 which has been prepared
in accordance with Schedule 8 of the Large and Medium-sized
Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013, the Listing Rules of the UK Listing Authority and the
prevailing UK Corporate Governance Code (the ‘Code’). The Directors’
Remuneration Report will be subject to an advisory shareholder vote at
the annual general meeting (‘AGM’) on 7 September 2023.
The report is divided into three sections:
• This Annual Statement of the Remuneration Committee
Chairman for the year ended 31 March 2023, which summarises
remuneration outcomes for the year ended 31 March 2023.
• The Directors’ Remuneration Policy – (the “Policy”), which presents
our proposed Remuneration Policy given that our current Policy,
originally approved by shareholders at the 2020 annual general
meeting, will shortly reach the end of its three-year life.
• The Annual Report on Remuneration, which provides further
detail on how the Remuneration Policy was implemented in the
year ended 31 March 2023 and how the proposed Policy will be
implemented in the year ending 31 March 2024.
The Directors’ Remuneration Report excluding the Policy will be
subject to an advisory shareholder vote at the 2023 AGM. The
proposed Policy, which is intended to last for three years from the
forthcoming AGM or until another Policy is approved in a general
meeting, will be subject to a binding vote at the same meeting.
Committee activities during the year
The Committee met five times during 2022/23. The main Committee
activities during the year (full details of which are set out in the
relevant sections of this report) included:
• Approving the 2021/22 Directors’ Remuneration Report.
• Agreeing Executive Director base salary increases from July 2022.
• Reviewing and agreeing the salary review applied to the
workforce below Board level including the increases applied to
the Executive Board.
• Carrying out a review and update of the Remuneration Policy for
approval by shareholders.
• Communicating with and considering feedback from key
investors on the proposed Policy.
• Approving the release of the 2019 deferred bonus awards.
• Confirming the lapse of the 2019 Long-Term Incentive Plan
(‘LTIP’) awards due to the respective performance conditions
not being met.
• Approving the vesting of the below Board 2019 restricted share
plan awards.
• Agreeing the 2022 Restricted Share Plan awards.
• Agreeing the performance against targets and payout for the
2021/22 annual bonus.
• Setting the performance targets for the 2022/23 annual bonus
and bonus deferral levels.
• Approving leaver treatments for relevant senior executives.
• Agreeing the remuneration package for Rob Harding as Chief
Financial Officer.
• Carrying out an internal evaluation of its performance and
reviewing its terms of reference.
Pay and performance
In accordance with its terms of reference, the Committee continues
to ensure the clear linkage of Executive Directors’ pay and
performance to the strategy and enhancement of shareholder value.
In assessing the performance of the 2022/23 annual bonus, the
Committee considered the financial and operational performance of
the Group as well as the progress made in the continuing delivery of
the strategy. Annual bonuses for the year have been awarded at 89%
of maximum, reflecting the delivery of a strong financial performance
with accelerated revenue growth across all three business divisions
and profit before tax at the top end of market expectations. This was
supported by the delivery of strategic objectives that have materially
enhanced growth opportunities for the current financial year,
particularly in card processing, Open Banking and digital payments.
No Executive Director deferred annual bonus awards are due to vest
in 2023 as a result of the Executive Board waiving their entitlement
to a bonus in respect of the year 2019/20 in light of the challenges
facing the business at that time due to Covid-19.
RSA awards granted in 2020 will vest in July 2023, subject to the
Committee being satisfied in respect of performance against the
discretionary underpin.
In accordance with its terms of reference, the Committee continues
to ensure the clear linkage of Executive Directors’ pay and
performance to the strategy and enhancement of shareholder value
and is comfortable that remuneration for the year ended 31 March
2023 is appropriately aligned to the Company’s performance.
Discretion
No discretion has been exercised in respect of the year ended
31 March 2023.
Directors’ Remuneration Policy-Proposed changes
to the Policy
Following a review of the Policy, which is nearing the end of its three-
year life, and following consultation with major investors and investor
representatives, the following changes to the Policy will be proposed:
• Restricted Share Awards (RSAs) – A simplification of the vesting
profile for RSAs granted to Executive Directors. Under the current
RSA Policy, RSAs granted to Executive Directors vest over three
years (50% of awards), four years (25% of awards) and five years
(25% of awards) subject to an assessment of the discretionary
underpin. Once RSAs have vested, a holding period applies such that
any resulting shares, other than those sold to pay employee taxes,
may not be sold until at least five years from the grant date. However,
going forward, the Committee wishes to simplify the vesting
such that RSAs granted to Executive Directors after the 2023
AGM will vest after three years from grant (subject to satisfaction
of the underpin) with a two-year post vesting holding period.
No changes will be made to existing awards. Such a change will
simplify the approach going forwards, significantly reducing the
administration surrounding multiple vesting dates across multiple
awards, and will align with the approach to granting RSAs below
Board level. In addition, as evidenced during the recent search for
our incoming CFO, a three-year vesting with a two-year holding
period will more closely align PayPoint’s approach to evolving RSA
market practice.
• Pension Policy – The maximum value of pension provision in the
current Policy for current Executive Directors is 15% of salary.
However, noting that the Chief Executive has received, and the
incoming Chief Financial Officer will receive, a workforce-aligned
pension provision from appointment, the 15% of salary Policy
maximum will be replaced by a requirement to offer workforce
aligned pension provision (which is currently 5% of salary) to
Executive Directors.
• Annual bonus – Annual bonus potential for Executive Directors
will continue to be capped at 106% of salary (noting that this is
below the 150% of salary permitted under the Policy). Reflecting
the below market annual bonus maximum for Executive Directors,
and as per past practice and as aligned to practice below Board,
on-target bonus potential will continue to operate at 80% of the
maximum. However, noting that the on-target bonus is higher than
typical, and maximum potential is lower than market, should bonus
potential be increased from 106% of salary to a more market-
aligned 150% of salary in the future (and as permitted under the
current Policy), the on-target bonus potential will be reduced to
50% of maximum in line with market norms.
Introduction of ESG Performance Metrics – A widening of
potential performance metrics in respect of both the annual
bonus and RSA underpin to explicitly permit the operation of
ESG-based targets going forward to the extent that this is
considered appropriate.
•
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PayPoint Plc Annual Report 2023
Directors’ Remuneration Report continued
Policy implementation for the year ending 31 March 2024
Noting the above, a summary of how the Committee intends to implement the new Policy for the year
ending 31 March 2024, subject to shareholder approval at the 2023 AGM, is as follows:
• Salary – Nick Wiles’ base salary will be increased by 3% to £498,623 from 1 July 2023, consistent
with the minimum increase applied to the general workforce. Rob Harding, the incoming Chief Financial
Officer, will receive a salary of £320,000 from appointment with his first salary review date expected
to be 1 July 2024.
• Pension – The Chief Executive will continue to receive a 5% of salary workforce-aligned pension
contribution (with the incoming Chief Financial Officer receiving the same).
• Annual bonus – The maximum annual bonus opportunity will remain at 106% of base salary, with the
majority of the bonus opportunity based on a profit measure and a minority based on the achievement
of net revenue and strategic/ESG-based targets. Bonus deferral, at 25% of any award for 3 years, will
continue to operate. Full retrospective disclosure of the performance metrics, targets and outturns
will be provided in the Directors’ Remuneration Report for the year ending 31 March 2024.
• RSAs – The Committee intends to grant the 2023 RSAs following the 2023 AGM at 75% of salary for
Nick Wiles and 62.5% of salary for Rob Harding. As detailed above, subject to shareholder approval of
the revised Policy, RSAs granted after the 2023 AGM will normally vest after three years, subject to
continued service and the Committee being satisfied in respect of performance against the underpin,
with a two year holding period. A specific reference to the delivery of the Company’s ESG strategy will
be added to the RSA underpin for 2023 RSAs onwards.
• Malus and clawback – Provisions will continue to operate for both the annual bonus, deferred bonus
and RSAs.
Consultation in respect of the new Policy
In formulating our proposed Policy, the Committee consulted with our largest (c.15) shareholders and the
main representative bodies. Feedback received from shareholders was considered in the development of
the final proposals and the Committee is grateful for the level of engagement received.
Conclusion
I hope you are supportive of our proposed Policy and the approach to Policy implementation for the year
ending 31 March 2024 which is a continuation of our considered approach to remuneration at PayPoint,
and that you will therefore vote in favour of the remuneration-related resolutions that will be tabled at
the forthcoming AGM.
Rakesh Sharma
Chairman, Remuneration Committee
27 July 2023
The Directors’ Remuneration Policy
Policy scope
The Policy applies to the Chairman, Executive Directors and Non-Executive Directors.
Policy duration
Given that the current Directors’ Remuneration Policy (approved at the 2020 AGM) will shortly reach the
end of its three-year life, a new Policy will be put to shareholders for approval at the 2023 AGM. Subject
to approval, the new Policy will apply from that date for a maximum of three years.
Changes from the current Policy
Following consultation with the Company’s major investors and the main representative bodies, the
Committee has concluded that the current Policy should continue to operate albeit with a small number
of proposed changes.
The Committee’s rationale for continuing to operate the Restricted Share Plan is as follows:
• The Committee favours the simplicity of Restricted Share Awards compared with LTIPs.
• Rewards are much less volatile and therefore significantly more effective over time in respect of
•
retention and incentivisation.
it achieves the desirable objective of internal alignment, given that the RSA is operated widely
below Board.
In addition, while the difficulties of setting robust, three year performance targets during the pandemic
are behind us, the current market volatility and broader macro economic landscape make the setting of
robust three-year targets for incentive purposes challenging.
The proposed changes to the Policy are included in the summary table overleaf and set out below
as follows:
• Restricted Share Awards ('RSAs') – Under the current RSA Policy, RSAs granted to Executive
Directors vest over three years (50% of awards), four years (25% of awards) and five years (25% of
awards) subject to an assessment of the performance underpin. Once RSAs have vested, a holding
period applies such that any resulting shares, other than those sold to pay employee taxes, may not
be sold until at least five years from the grant date. However, going forward, the Committee wishes to
simplify the vesting such that RSAs granted to Executive Directors after the 2023 AGM will vest after
three years from grant (subject to satisfaction of the discretionary underpin) with a two-year post
vesting holding period. No changes will be made to existing awards.
• Pension Policy – A reduction to the pension policy from 15% of salary to a workforce-aligned
pension (currently 5% of salary) to reflect current and future practice.
• Annual Bonus – A formal commitment that should bonus potential be increased from 106% of salary
to a more market-aligned 150% of salary in the future (as permitted under the current Policy), the on-
target bonus potential will be reduced to 50% of maximum in line with market norms.
Introduction of ESG Performance Metrics – In respect of both the annual bonus and RSA underpin,
the Policy will permit the introduction of ESG-based targets going forward.
•
Consideration of conditions elsewhere in the Company
When making decisions on Executive Director remuneration, the Committee considers pay and
conditions across PayPoint. In particular, it is anticipated that salary increases for senior executives
will have regard to those of salaried employees as a whole.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Consideration of shareholder views
The Remuneration Committee maintains a regular dialogue with its major shareholders and when determining remuneration, takes into account the guidelines of investor bodies and shareholder views. The Committee
continues to monitor trends and developments in corporate governance and market practice to ensure the structure of the executive remuneration remains appropriate and commits to undergo a shareholder
consultation in advance of any material changes to the Policy.
Executive Directors’ remuneration
The table below summarises our policy on each element of the remuneration package for Executive Directors.
Element and link to strategy
Operation
Opportunity
Performance metrics
Fixed
Base salary
Takes account of personal
contribution and performance
against Company strategy.
Reviewed annually, with account taken of responsibility and skills, the
individual Director’s performance and experience, pay for comparable roles
and pay and conditions throughout the Company.
Pension
Provides market
appropriate benefits.
Benefits
Provides market appropriate
benefits.
The Company makes contributions to personal pension plans or cash
allowance in lieu of pension.
Benefits may include, but are not limited to car allowance, health insurance
and employee share plans.
In certain circumstances, the Committee may also approve the provision of
additional allowances relating to the relocation of an Executive Director and
other expatriate benefits to perform his or her role.
All reasonable business related expenses will be reimbursed (including any
tax due thereon).
The salary review takes into account individual and
Company performance.
None.
None.
Any base salary increases
are applied in line with the
outcome of the annual review
and normal salary increases
will have regard to those of
salaried employees as a whole.
Salary increases will be limited
to no more than 15% a year,
unless there is an exceptional
change in the size or structure
of the business which
materially changes the scope
of responsibilities (there will be
no cap on salary levels for new
recruits or promotions to the
Board, or promotions within
the Board).
In line with the general
workforce (as a percentage
of salary).
Benefits vary by role and
individual circumstances and
are reviewed periodically.
Benefits will not normally
exceed 15% of salary.
The Committee retains
discretion to approve a
higher cost in exceptional
circumstances (e.g. relocation)
or in circumstances where
factors outside the Company’s
control have changed
materially (e.g. increases
in insurance premiums).
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PayPoint Plc Annual Report 2023
Directors’ Remuneration Report continued
Element and link to strategy
Operation
Opportunity
Performance metrics
Variable
Annual bonus and Deferred
Annual Bonus Scheme ('DABS')
Rewards delivery of the Group’s
annual financial and strategic
goals and supports retention.
Restricted share awards
Drives sustained long-term
performance, aids retention and
aligns the interests of Executive
Directors with shareholders.
Shareholding guidelines
Encourages a long-term focus and
aligns the interests of Executive
Directors with shareholders.
All-employee share plans
Encourage share ownership
across all employees.
The Remuneration Committee reviews and agrees measures, targets and
weightings at the beginning of each financial year.
At the end of the year, the Remuneration Committee determines the extent
to which targets have been achieved.
Under the DABS at least 25% of any annual bonus award is deferred into
conditional share awards, deferred cash or nil-cost options for at least
three years, subject to continued employment.
Dividends accrue on deferred awards as additional share entitlements over
the deferral period to the extent that awards vest.
Awards are subject to clawback and malus provisions (see notes to the
Policy table).
A minority of the bonus would
be payable for achieving
threshold performance.
Where appropriate, a sliding
scale between threshold and
maximum performance will be
used to determine the payout
under each metric.
Awards will normally vest on the third anniversary of grant.
75% of salary.
Once vested, awards may not be sold until at least five years from the
grant date.
Dividends may accrue as additional share entitlements over the vesting
period and any holding period to the extent that awards vest.
Shareholding guidelines require Executive Directors to acquire a
specified shareholding.
In employment: Executive Directors are required to retain 50% of any share
award acquired on vesting (net of tax) until the guideline level is achieved.
Acquired holdings may be held by spouses or dependent family members.
Post-employment: Executive Directors will need to retain shares equal
to 100% of the shareholding guideline up until the first anniversary of
cessation. Between the first and second anniversary of cessation they will
need to retain shares equal to 50% of the guideline. Own shares purchased,
shares acquired through buyout awards and share awards granted prior to
the 2020 AGM will be excluded from the post cessation guideline2.
Operation of an HMRC approved all-employee share plan (currently a SIP).
Executive Directors may participate on the same basis as all other
eligible employees.
200% of salary.
N/A
Up to the prevailing HMRC
approved limits.
None.
150% of salary1.
The majority of the award will be based on financial targets.
A minority of the award may be based on strategic/personal/
ESG targets. The Remuneration Committee reviews and
agrees targets at the beginning of each financial year and may
subsequently adjust those targets as detailed in the notes to
this table.
The Remuneration Committee also has the discretion to
adjust the formulaic bonus outcomes both upwards (within
the plan limits) and downwards, to ensure that payments
are a true reflection of performance of the Company over
the performance period, e.g. in the event of unforeseen
circumstances outside of management control. Any use of
discretion will be explained in the respective Annual Report
on Remuneration.
Although no formal performance measures apply to RSAs,
the extent to which an award vests may be reduced by the
Committee if a discretionary underpin assessed to the end of
the financial year preceding the date of vesting is not achieved.
In addition, the Committee may reduce the extent to which
an award vests if it believes this better reflects the underlying
performance of the Company over the relevant period.
1
2
The Committee’s current intention is that annual bonus potential for Executive Directors will continue to be capped at 106% of salary (noting that this is below the 150% of salary permitted under the Policy). Reflecting the below-market annual bonus maximum for
Executive Directors, and as per past practice and as aligned to practice below Board, on-target bonus potential will continue to operate at 80% of the maximum. However, noting that the on-target bonus is higher than typical, and maximum potential is lower than market,
should bonus potential be increased from 106% of salary to a more market aligned 150% of salary in the future, the on-target bonus potential will be reduced to 50% of maximum in line with market norms.
Executive Directors leaving the employment of PayPoint would normally be required to self-certify annually in writing post-cessation that they still hold the required shares as part of their termination agreement.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 109
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Notes to the policy table
Payments from previous awards
The Company will honour any commitments entered into prior to the approval and implementation of the
Policy as detailed in this report. Executive Directors will be eligible to receive payment from any historical
share awards made.
Clawback (aka recovery) and malus (aka withholding) provisions
Clawback and malus provisions operate based on the following triggers:
• Misconduct
• Material misstatement
• Error in calculation
• Serious reputational damage to the Company
• Corporate failure
•
insolvency
Use of discretion
The Remuneration Committee may exercise discretion in two broad areas for each element
of remuneration:
• To ensure fairness and align Executive Director remuneration with underlying individual and Company
performance, the Committee may adjust upwards or downwards the outcome of any short-term or
long-term incentive plan payment within the limits of the relevant plan rules. Any adjustments in light
of corporate events will be made on a neutral basis, i.e. the intention of any adjustment will be that
the event is not to the benefit or detriment of participants. Adjustments to underlying performance
may be made in exceptional circumstances to ensure outcomes are fair, both to shareholders
and participants.
In the case of a non-regular event occurring, the Committee may apply its discretion to ensure
fairness and seek alignment with business objectives. Non-regular events in this context include, but
are not limited to: corporate transactions; changes in the Company’s accounting policies; minor or
administrative matters; internal promotions and external recruitment and terminations. Any use of
discretion by the Committee during the financial year will be detailed in the relevant Annual Report
on Remuneration.
•
Performance measure selection
Profit and net revenue are normally the primary financial measures for the annual bonus plan. At the sole
discretion of the Remuneration Committee, exceptional items may be removed from operating profit and
revenue where the inclusion of such items would be inconsistent with fair measurement, and actual tax
may be adjusted to normalised rates if they are considered unsustainable. Performance targets relating
to the annual bonus plan are set from the Company’s annual budget, which is reviewed and signed off by
the Board prior to the start of each financial year. Targets are based on a number of internal and external
reference points. Targets are set to be stretching but achievable, with regard to the particular strategic
priorities and economic environment in a given year.
Strategic, personal and/or ESG targets for the annual bonus may be set each year based on the
Company’s prevailing strategic objectives at that time. Targets will be set on a measurable, quantifiable
basis where possible, but due to the nature of the objective, may require some subjective assessment.
In respect of the RSAs granted to Executive Directors, the Committee must be satisfied that PayPoint’s
underlying performance and delivery against its strategy and plans is sufficient to justify the level
of vesting having regard to such factors as the Committee considers to be appropriate in the round
(including revenue, earnings, share price performance and the delivery of the Company’s ESG strategy)
and the shareholder experience more generally.
The Committee retains the discretion to alter the weighting, substitute or use new performance
measures for future incentive awards, if they are believed to better support the strategy of the business
at that time.
Remuneration policy for other employees
PayPoint’s approach to annual salary reviews is consistent across the Group, with consideration given to
the level of experience, responsibility, individual performance and salary levels in comparable companies.
All UK employees are eligible to participate in the Company’s SIP. Senior managers participate in the
annual bonus scheme with the same profit measure as is set for the Executive Directors. Members of
the Executive Board and senior managers (c.15 individuals) are eligible to receive RSAs as part of their
reward package. Performance conditions are consistent for all participants, while award sizes vary by
organisational level. One-off RSA awards are made to other employees below the Executive Board who
are critical to the success of the business.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 110
PayPoint Plc Annual Report 2023
Directors’ Remuneration Report continued
Non-Executive Director remuneration
The remuneration of the Non-Executive Directors is within the limits set by the Articles of Association. Non-Executive Directors do not participate in any bonus plan or share incentive programme operated by the
Company and are not entitled to pension contributions or other benefits provided by the Company.
Element and link to strategy
Operation
Opportunity
Performance metrics
Fees
To attract and retain
Non-Executive Directors of
the highest calibre with broad
commercial and other experience
relevant to the Company.
Fee levels are normally reviewed annually. The
remuneration of the Non-Executive Directors is
determined by the Board based upon recommendations
from the Chairman and Chief Executive (or, in the
case of the Chairman, based on recommendations
of the Committee).
Additional fees are payable for roles with additional
responsibilities including, but not limited to, the SID and
the Chairs of the Audit and Remuneration Committees.
Fee levels are benchmarked against sector comparators
and companies of similar size and complexity. Time
commitment and responsibility are taken into account
when reviewing fee levels.
Non-Executive Director fee increases are applied in line
with the outcome of the annual fee review. Fees paid in
respect of the year under review (and for the following
year) are disclosed in the Annual Report on Remuneration.
It is expected that Non-Executive Director fee levels will
generally be positioned around the median but may fall
within the second and third quartiles. Any increases will
also have regard to general increases in Non-Executive
Directors’ fees across the market. In the event that there
is a material misalignment with the market or a change
in the complexity, responsibility or time commitment
required to fulfil a Non-Executive Director role, or
specific recruitment needs, the Board has discretion to
make an appropriate adjustment to fee levels.
All reasonable business-related expenses may be
reimbursed (including any tax due thereon).
Aggregate fees are also limited by the cap contained in
the Company’s Articles of Association.
Continued strong and objective contribution.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 111
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Pay scenario charts
The charts below provide an illustration of the potential annual future reward opportunities for the
Chief Executive and Chief Financial Officer, and the potential split between the different elements of
remuneration under four different performance scenarios: minimum, target, maximum and maximum with
share price.
Approach to recruitment remuneration
External appointment
In the cases of hiring or appointing a new Executive Director from outside the Company, the
Remuneration Committee may make use of all the existing components of remuneration, as follows:
Remuneration
(£’000)
£1,800
£1,600
£1,400
£1,200
£1,000
£800
£600
£400
£200
£0
Chief Executive
Chief Financial Officer
11%
25%
22%
27%
39%
31%
36%
32%
11%
20%
22%
38%
34%
25%
33%
36%
Maximum
N/A
Component
Approach
Base salary
Pension
Benefits
SIP
The base salaries of new appointees will be determined by reference
to similar positions with comparative status, responsibility and skills
in parallel with the individual Director’s performance, experience and
responsibilities, and pay conditions throughout the Company. Where
new appointees have initial basic salaries set below market, any
shortfall may be managed with phased increases over a period of two
to three years, subject to the individual’s development in the role.
New appointees will receive contributions to personal pension plans in
line with the workforce.
New appointees will be eligible to receive benefits in line with existing
policy. Reasonable relocation support may be provided if necessary.
New appointees will be eligible to participate in the SIP in line with
existing policy.
Annual bonus The structure described in the policy table will apply to new
150% of salary
appointees with the relevant maximum being prorated to reflect the
proportion of employment over the year. Depending on the timing
of the appointment, it may be appropriate to operate different
performance measures for the remainder of that initial bonus period.
61%
42%
39%
35%
64%
42%
40%
35%
RSA
New appointees will be granted awards under the RSP on the same
terms as other executives, as described in the policy table.
75% of salary
Minimum –
£957,521
Target –
£1,380,354
Maximum –
£1,486,062
Maximum
with share
price growth
– £1,673,045
Minimum –
£551,000
Target –
£822,360
Maximum –
£890,200
Maximum
with share
price growth
– £990,200
Fixed pay
Annual bonus
RSA
Share price growth
Assumptions:
• Base salary: As at 1/7/2023 (or date of joining if later).
• An approximated annual value of benefits.
• 5% of salary pension.
• 106% of salary maximum annual bonus (with target assumed to be 80% of the maximum).
• A 75% of salary RSA for the Chief Executive and a 62.5% of salary RSA for the Chief Financial Officer.
• Share appreciation of 50% for the RSA.
• For simplicity, the values of any SIP awards are excluded.
In determining appropriate remuneration, the Remuneration Committee will take into consideration
all relevant factors (including quantum, nature of remuneration and the jurisdiction from which the
candidate was recruited) to ensure that arrangements are in the best interests of both PayPoint and
its shareholders. In addition to the above elements of remuneration, the Committee may consider it
appropriate to grant an award under a different structure in order to facilitate the recruitment of an
individual, exercising the discretion available under the relevant Listing Rule (LR 9.4.2 R) to replace
incentive arrangements forfeited on leaving a previous employer. Such buyout awards would have a
fair value no higher than that of the awards forfeited. In doing so, the Committee will consider relevant
factors including any performance conditions attached to these awards, the likelihood of those
conditions being met and the proportion of the vesting period remaining.
Internal appointment
In cases of appointing a new Executive Director by way of internal promotion, the Remuneration
Committee and Board will be consistent with the policy for external appointees detailed above. Where
an individual has contractual commitments made prior to their promotion to the Board, the Company will
continue to honour these arrangements.
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PayPoint Plc Annual Report 2023
Directors’ Remuneration Report continued
Non-Executive Directors
In recruiting a new Non-Executive Director, the Remuneration Committee will utilise the prevailing
shareholder-approved Policy.
Service contracts and exit policy
Executive Directors
Executive Director service contracts, including arrangements for early termination, are carefully
considered by the Committee. Nick Wiles has a rolling service contract requiring 12 months’ notice of
termination on either side. In line with current market practice, Rob Harding, the incoming Chief Financial
Officer, has a rolling service contract requiring 6 months’ notice on either side. Executive Director service
contracts are available to view at the Company’s registered office. Details of the service contracts of the
Executive Directors of the Company are as follows:
Name
Nick Wiles
Rob Harding
Company notice period
Contract date
12 months
6 months
19 May 2020
30 January 2023
Event
Timing/vesting of award
Calculation of vesting/payment
DABS
Good leaver
Continue until the normal
vesting date. In the event
of death of a participant,
the award would vest
immediately.
Outstanding awards normally vest at the normal
vesting date on a time prorated basis to reflect the
length of the vesting period served, although time
prorating may be disapplied.
Bad leaver
Outstanding awards lapse.
Not applicable.
Change
of control
RSA
Good leaver
Paid immediately on the
effective date of change
of control.
Outstanding awards normally vest on a time prorated
basis to reflect the length of the vesting period served,
although time prorating may be disapplied.
Continue until the normal
vesting date or vest
immediately, at the discretion
of the Committee.
Outstanding awards vest and the awards are prorated
to reflect the length of the vesting period served,
unless the Board decides otherwise.
There are no special provisions in service contracts relating to cessation of employment or change of
control. The policy on termination is that the Company does not make payments beyond its contractual
obligations and Executive Directors will be expected to mitigate their loss. In addition, the Remuneration
Committee ensures that there are no unjustified payments for failure. Under normal circumstances,
Executive Directors may receive termination payments in lieu of notice equal to pay and benefits for the
length of their contractual notice period.
Bad leaver
Outstanding awards lapse.
Not applicable.
Change
of control
Vest immediately on the
effective date of change
of control.
Outstanding awards vest at the effective date of
change of control, and the award is prorated for
the proportion of the vesting period served to the
effective date of change of control, unless the Board
decides otherwise.
When considering exit payments, the Committee reviews all potential incentive outcomes to ensure
they are fair to both shareholders and participants. The table below summarises how the awards under
the annual bonus and share incentive plans are typically treated in specific circumstances. Whilst the
Committee retains overall discretion on determining good leaver status, it typically defines a good leaver
in circumstances such as death, ill health, injury or disability, retirement with the Company’s consent,
redundancy or any other reason that the Committee determines. Bad leavers include those leaving
employment due to resignation or misconduct, and retirement without agreement of the Company.
Final treatment is subject to the Committee’s discretion:
Event
Timing/vesting of award
Calculation of vesting/payment
Annual bonus
Good leaver
Paid at the same time as
continuing employees.
Eligible for an award to the extent that performance
targets are satisfied and the award is normally pro-
rated for the proportion of the financial year served.
Bad leaver
No annual bonus payable.
Not applicable.
Change of
control
Paid immediately on the
effective date of change
of control.
Eligible for an award to the extent that performance
targets are satisfied up to the change of control and
the award is normally prorated for the proportion
of the financial year served to the effective date
of change of control.
Non-Executive Directors
The Non-Executive Directors do not have service contracts, rather they have letters of appointment
which are subject to a three-year term. Details of the terms of appointment of the Non-Executive
Directors are set out in the table below:
Name
Effective date of letter
Gill Barr
Giles Kerr
Guy Parsons
Rosie Shapland
Rakesh Sharma
Ben Wishart
2 June 2021
20 November 2021
23 March 2023
2 October 2020
12 May 2020
14 November 2022
Unexpired term as
at 31 March 2023
14 months
19 ½ months
35 months
6 months
1½ months
31 ½ months
Date of appointment
Notice period
1 June 2015
20 November 2015
23 March 2023
2 October 2020
12 May 2017
14 November 2019
One month
One month
One month
One month
One month
One month
Under the Company’s Articles of Association, all Directors are required to submit themselves for
re-election every three years. However, in order to comply with the Code, all Directors will be subject
to annual re-election. Non-Executive Directors’ letters of appointment are available to view at the
Company’s registered office.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 113
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Annual Report on Remuneration
The following section provides details of how PayPoint’s Remuneration Policy was implemented
during the financial year ended 31 March 2023 and how it will be implemented for the year ending
31 March 2024. The following pages contain information that is required to be audited in compliance
with the Directors’ remuneration requirements of the Companies Act 2006. All narrative and
quantitative tables are unaudited, unless otherwise stated.
Role of the Remuneration Committee
The Remuneration Committee is responsible for developing policy on remuneration for Executive
Directors, the Executive Board and senior managers, and for determining specific remuneration packages
for each of the Executive Directors. The Committee also reviews workforce remuneration and related
policies and the alignment of incentives and rewards with culture. The Remuneration Committee is
formally constituted with written terms of reference which set out the full remit of the Committee.
The terms of reference are also available on the Company’s website at www.corporate.paypoint.com.
During the year, the Committee sought internal support from the Chief Executive and the HR Director,
who attended Committee meetings by invitation from the Chairman, to advise on specific questions
raised by the Committee and on matters relating to the performance and remuneration of the Executive
Board and senior managers. Neither of the above were present for any discussions that related directly to
their own remuneration. The Company Secretary attended each meeting as secretary to the Committee.
In undertaking its responsibilities, the Committee seeks independent external advice as necessary. To this
end, the Committee continued to retain the services of FIT Remuneration Consultants LLP as the principal
external advisers to the Committee during the financial year. The Committee is comfortable that the FIT team
provide independent remuneration advice to the Committee and do not have any other connections with
PayPoint that may impair their independence. FIT is a founding member and signatory of the Code of Conduct
for Remuneration Consultants, details of which can be found at www.remunerationconsultantsgroup.com.
During the year, FIT provided independent advice on a range of remuneration matters including remuneration
benchmarking. FIT provides no other services to the Company. The fees paid to FIT (on the basis of time and
materials) in respect of work carried out for the year under review were £39,245 (excluding VAT).
Summary of shareholder voting
The following table shows the results of the binding vote on the Remuneration Policy Report at
the 24 July 2020 AGM and the advisory vote on the 2022 Annual Report on Remuneration at the
20 July 2022 AGM:
Remuneration Policy
Remuneration Report
Total number
of votes
% of
Total number
votes cast
of votes
% of
votes cast
For (including discretionary)
Against
Total votes cast
(excluding withheld votes)
Total votes withheld1
Total votes cast
(including withheld votes)
45,225,049
6,565,202
51,790,251
315,310
52,105,561
87.3%
12.7%
51,711,637
667,708
98.7%
1.3%
52,379,345
3,537,958
55,917,303
1 A withheld vote is not a vote in law and is not counted in the calculation of the proportion of votes cast for and against a resolution.
Single total figure of remuneration for Executive Directors (audited)
The table below sets out a single figure for the total remuneration received by each Executive Director for
the year ended 31 March 2023 and the prior year:
Base salary1
Taxable benefits2
Pension3
Total fixed pay
Annual bonus4
Long-term incentives5
Other6
Total variable pay
Total remuneration
Nick Wiles
£’000
Alan Dale
£’000
2023
481
61
24
566
459
147
2
608
1,174
2022
470
36
23
529
380
–
2
382
911
2023
307
14
15
336
293
46
2
341
677
2022
300
15
15
330
242
–
2
244
574
1 A base salary increase of 3% was awarded to the Chief Executive and Finance Director in July 2022, in line with the minimum
2
3
4
5
6
increase awarded to the general workforce.
Taxable value of benefits received in the year by Executive Directors relates to a benefits allowance and hotel costs
(Chief Executive), car allowance, petrol, medical insurance, life assurance and permanent health insurance (Finance Director).
Pension during the year: the pension rate for Executive Directors was 5% of base salary, in line with the rate offered to the
wider workforce.
Annual bonus: this is the total bonus earned in respect of performance during the relevant year, including any deferred amounts
(25% of the annual bonus is normally deferred into shares under the DABS. Awards vest after 3 years).
Long-term incentives reflects the value of Restricted Share Awards granted in 2020 which are due to vest in July 2023 subject to
an assessment of the discretionary underpin. The value of the awards has been calculated based on the three month average share
price to 31 March 2023 (£4.93).
SIP matching and dividend shares awarded in the period valued at the average share price calculated over three months to
31 March 2023 of £4.93 (2022: £6.35). The SIP is an HMRC-approved plan that allows participants to purchase shares using
gross salary and receive matching awards from the Company. There are no performance conditions.
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114
PayPoint Plc Annual Report 2023
Directors’ Remuneration Report continued
Single total figure of remuneration for the Chairman and Non-Executive Directors (audited)
The table below sets out a single figure for the total remuneration received by the Chairman and each Non-Executive Director for the year ended 31 March 2023 and the prior year:
Chairman
Giles Kerr
Non-Executive Directors
Gill Barr
Guy Parsons1
Rosie Shapland
Rakesh Sharma
Ben Wishart
Total
Base fee
£’000
Committee Chair fees
£’000
Senior Independent
Director fees
£’000
Total fixed remuneration
£’000
Total Variable Remuneration
£’000
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
169
165
50
1
50
50
50
49
–
49
49
49
–
–
–
9
9
–
–
–
–
9
9
–
370
361
18
18
–
–
–
–
6
–
6
–
–
–
–
6
–
6
169
165
50
1
59
65
50
49
–
58
64
49
394
385
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Guy Parsons was appointed as a Non-Executive Director on 23 March 2023.
Fees paid to Non-Executive Directors were increased by 3% from 1 July 2022. Non-Executive Directors do not receive any variable remuneration.
Incentive outcomes for the year ended 31 March 2023
Annual bonus in respect of 2022/2023 performance (audited)
The annual bonus for the year ended 31 March 2023 was based on a combination of PayPoint segment profit before tax excluding exceptional items (‘PBT’), net revenue and strategic targets.
Details of the performance against the PayPoint segment profit before tax, net revenue and strategic targets are set out below.
Profit before tax and net revenue targets:
Measure
Maximum value
Threshold (20% of max)
£’000
Target (80% of max)
£’000
Stretch (100% of max)
£’000
Actual achieved
£’000
Nick Wiles
Alan Dale
PayPoint segment profit before tax1
64% of salary
Net revenue
16% of salary
46,000
(96.8% of target)
121,500
(96.8% of target)
47,500
(100% of target)
125,500
(100% of target)
49,000
(103.2% of target)
129,500
(103.2% of target)
48,1831
124,990
57% of salary
(89% of max)
12% of salary
(72% of max)
57% of salary
(89% of max)
12% of salary
(72% of max)
1 The Group profit before tax value stated above is for the PayPoint segment and excludes exceptional items which do not reflect underlying performance.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 115
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Strategic targets:
Strategic targets for the annual bonus are set each year based on the Company’s prevailing strategic objectives at that time. Targets are set on a measurable, quantifiable basis where possible, but due to the nature
of the objective, may require some subjective assessment.
Target
Retailer relationships
Maximum value
5.3% of salary
ESG
Maximum value
5.3% of salary
Performance and bonus earned
Implement ‘opportunities to earn’ and cyclical retailer visits to enhance retailer relationships and build understanding of proposition leading to reduced churn.
Delivered: Opportunities to earn implemented along with cyclical RRM visits. Retention test and learn demonstrated value of dedicated resourcing leading to
increase in revenue from low/non transacting sites. Permanent team now created.
Assessment: Retailer relationships significantly enhanced. Payout 5.3% of salary (100% of maximum).
Deliver in year ESG commitments.
Delivered: The Committee noted strong progress in year in respect of retiring diesel company cars, installation of electric charging points, progress made
in development of a more energy-efficient terminal, real living wage implemented and 'welcoming everyone' approach embedded. See page 52 for more
information.
Assessment: Material ESG progress delivered. Payout 5.3% of salary (100% of maximum).
IT Service and Operations model
Strengthen operating model in IT Service & Operations to deliver improved monitoring and availability.
Maximum value
5.3% of salary
Delivered: Team restructured to created dedicated information security team, embed service resiliency and availability responsibilities into platform
engineering and strengthened leadership. Significant progress made with infrastructure projects resulting in improved availability across Postilion and the core
on premises infrastructure and network.
Assessment: IT Service and Operations model restructured and enhanced. Payout 5.3% of salary (100% of maximum).
Digital payments platform
Continue to enhance digital payments offering in order to generate additional revenue opportunities.
Maximum value
5.3% of salary
Cards proposition
Maximum value
5.3% of salary
Maximum value
% of potential award
% of salary award
Delivered: Enhancements include a fully integrated Open Banking solution (with a prepayment solution for energy companies), APM capability being
added to the payment journey (Apple Pay and Google Pay), and an MVP proposition for charities with Gift Aid capability. Open banking also introduced
into platform (COP, AISP, and PISP). A number of opportunities won including EBSS energy schemes and pipeline of potential customers has grown and
diversified significantly.
Assessment: Significant progress made. Payout 5.3% of salary (100% of maximum).
Continue to enhance cards proposition by launching a new cards terminal and adding a new service.
Delivered: New Android terminal launched, EPoS app piloted in March, Payfac discovery phase underway.
Assessment: Target met in full. Payout 5.3% of salary (100% of maximum).
27% of salary.
100% of max.
27% of salary.
Given the progress made in respect of retailer relationships, delivering ESG commitments, strengthening the IT Service & Operations model and enhancing the digital payments platform and cards proposition,
the above objectives have been assessed as achieved and the Remuneration Committee approved a payout of 100% of maximum of this part of the bonus award.
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PayPoint Plc Annual Report 2023
Directors’ Remuneration Report continued
Total bonus awards
The above performance resulted in the following bonus awards for the year:
PBT
Net revenue
Strategic targets
Total
% of award
Maximum
Actual
60%
15%
25%
100%
64% of salary
16% of salary
27% of salary
106% of salary
57% of salary
12% of salary
27% of salary
95% of salary
(89% of max)
The Committee considers that the outcomes indicated above are reflective of the performance delivered over the year.
25% of the total bonus awarded to the Executive Directors will be deferred into shares which will vest after three years from grant, subject to continued employment.
2020 RSA awards vesting
With respect to the RSA awards granted on 27 July 2020, 50% of the awards made to Nick Wiles are due to vest after three years from grant on 27 July 2023, 25% after four years from grant and 25% after five
years from grant. RSAs made to Executive Directors once vested may not be sold until at least five years from grant date other than to settle any tax due.
Details of awards due to vest in July 2023 can be found in the table below:
Director
Nick Wiles
Alan Dale2
Interests held in 2020
RSA
59,443
9,274
Vesting
50%
100%
Number of shares
due to vest (% of
award granted)
29,721 (50%)
9,274 (100%)
Value1
£146,525
£45,721
1
2
Value calculated based on the three-month average share price to 31 March 2023 of £4.93. In addition to this, dividend equivalents will be credited to shares under award to the extent they vest.
The RSA awards granted to Alan Dale were granted before his appointment as an Executive Director. These awards vest in full after three years from grant on 27 July 2023 and are not subject to a post-vesting holding period.
Vesting is subject to continued service, satisfactory individual performance and a positive assessment of performance against the following underpin:
For RSAs granted to Executive Directors to vest, in addition to continued service, the Committee must be satisfied that PayPoint’s underlying performance and delivery against its strategy and plans are sufficient
to justify the level of vesting, having regard to such factors as the Committee considers to be appropriate in the round (including revenue, earnings and share price performance) and the shareholder experience more
generally (including the risk of windfall gains).
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
The Committee considered a near-final assessment of the underpin as at 31 March 2023 and found no cause to reduce the vesting outcome. Details of the Committee’s assessment (which will be revisited just prior
to vesting) in respect of the 50% of the CEO’s July 2020 grant which is expected to vest in July 2023, are as follows:
Underlying performance
Over the three-year vesting period:
• Net revenue has increased by 29% since 2021 with accelerated revenue growth across all three business divisions for the year ended March 2023.
• Profit Before Tax from continuing operations (excluding exceptional items) has grown by 36% since 2021 to £48.2 million for the year ended 31 March 2023,
at the top end of the range of market expectations.
Strategic delivery
• The business has executed a significant transformation to deliver a rapid transition from the legacy cash business towards a broader digital payments and
services business supporting a wider range of client sectors and strengthened retailer proposition. Highlights include:
– A renewed purpose, vision and values that clearly reflect the aspirations for the business and the culture required to deliver them.
– Delivery of a significant M&A agenda during the period with the disposal of PayPoint Romania and acquisitions of i-movo, Handepay & Merchant Rentals,
RSM2000 and Appreciate Group.
– Significant progress has been made in respect of the development of MultiPay, PayPoint’s channel-agnostic, multi-sector payments platform, supporting
integrated payments across cash, Direct Debit, card payments, Open Banking and support tools.
– PayPoint’s Retailer & SME network has grown to over 60,000, supported by a range of tailored propositions, including bill payments, card services, parcels,
ATMs, Counter Cash, eMoney and FMCG.
– The business has entered the new financial year in a materially enhanced position across the Group: a full-strength sales team delivering high conversion
rates; healthy pipelines for our FMCG and integrated payments propositions; a business-wide partnership philosophy yielding further revenue opportunities;
and a dynamic platform of innovative technology and solutions enabling integrated payments and commerce for our extensive base of clients, retailer
partners and SMEs.
Shareholder experience and windfall gains
• PayPoint’s Total Shareholder Return (i.e. share price plus dividends) over the three years to 31 March 2023 was 0.2%. which is not considered to be reflective of
the strategic progress made.
• PayPoint’s ordinary reported dividend per share has grown from 32.2p to 37.0p since 2021 following the end of the additional dividend programme.
• On the basis that the share price is below the £5.93 grant price, there is no windfall gain as at the date of this report.
Scheme interests awarded in the year ended 31 March 2023 (audited)
RSAs
In the year under review, RSAs were granted on 10 June 2022 with a face value of 75% of salary for the Chief Executive and 62.5% of salary for the Finance Director. The RSAs made to Executive Directors once
vested may not be sold until at least five years from grant date other than to settle any tax due.
Executive Director
Basis of award
Number of shares
Nick Wiles
Alan Dale
75% of salary
62.5% of salary
61,842
32,894
Face value1
£352,499
£187,495
Vesting profile
Performance measures
50% after three years from grant,
25% after four years from grant and
25% after five years from grant
(a) continued service
(b) satisfactory individual performance
(c) a positive assessment of performance against the underpin2
1 Face value is based on the middle market quotation of a share in the capital of the Company on the preceding dealing day of award of £5.70.
2
Underpin: The Committee must be satisfied that PayPoint’s underlying performance and delivery against its strategy and plans are sufficient to justify the level of vesting, having regard to such factors as the Committee considers to be appropriate in the round (including
revenue, earnings and share price performance) and the shareholder experience more generally (including the risk of windfall gains).
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 118
PayPoint Plc Annual Report 2023
Directors’ Remuneration Report continued
Board Changes
As per the announcements on 22nd September 2022 and 31 January 2023, Alan Dale informed the Board of his intention to retire from his position as Finance Director and Executive Director of the Company during
2023 and he will step down from the Board following the publication of PayPoint’s annual results, continuing as an employee until 31 December 2023 to ensure a thorough transition and handover.
In respect of Alan’s retirement arrangements, he will continue to receive his base salary, benefits and pension until cessation of employment on 31 December 2023, be entitled to participate in the annual bonus plan in
respect of the period worked and be treated as a good leaver in respect of his RSA and deferred annual bonus awards with awards vesting on the normal vesting dates, and in respect of the RSA, subject to time prorating.
He will not be eligible to receive an RSA in 2023. Details of Alan’s remuneration arrangements will be published at the point Alan steps down from the Board in accordance with section 430(2B) of the Companies Act 2006
and in next year’s Directors’ Remuneration Report.
As per the announcement on 31 January 2023, Rob Harding has been appointed as Chief Financial Officer and Executive Director of the Company and will join in August 2023. A summary of the main elements of his
remuneration arrangements is as follows:
• Base salary – £320,000.
• Pension – 5% of salary per annum in line with the current workforce pension provision.
• Annual bonus – maximum bonus potential of 106%.
• RSA – Annual RSA award of 62.5% of salary with the first award to be granted as soon as practicable after joining.
In addition, Rob will receive a buyout out in PayPoint Plc shares equivalent to the value of deferred share awards forfeited upon cessation of his previous employment. Details of the awards forfeited, and the terms of
the buyout award intended to mirror the value forgone, will be set out in the relevant RNS and in next year’s Directors’ Remuneration Report.
Payments to past Directors (audited)
Rachel Kentleton stepped down from her position as Finance Director in June 2020 and details of her termination arrangements were noted in the 2021 report. On 10 June 2022, her 2019 deferred annual bonus
awards vested and she received 6,908 shares with a gross value at vesting of £39,194. Her 2019 LTIP award granted in 2019 lapsed in full as a result of the threshold performance conditions not being met.
CEO pay ratio
The data shows how the Chief Executive’s single figure remuneration for the year ended 31 March 2023 (as taken from the single figure remuneration table) compares to the equivalent single figure remuneration for
full-time equivalent UK employees, on a Group basis, ranked at the 25th, 50th and 75th percentiles.
The increase in the pay ratio since 2022 is driven by the increase in the annual bonus award and the vesting of the 2020 RSA award in 2023.
CEO single figure: £1,172,831
Year
2023
2022
2021
Method
Option A
Option A
Option A
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
44:1
34:1
42:1
29:1
23:1
29:1
18:1
15:1
17:1
No components of pay and benefits have been omitted for the purpose of the above calculations. Option A was selected given that this method of calculation was considered to be the robust approach in respect of
gathering the required data.
The underlying quartiles for salary and total remuneration numbers for full-time equivalent UK employees are set out below. Note that the employee at the 75th percentile has a lower salary than the employee at
median because they work in a sales role with a higher proportion of variable pay.
Year
2023
2022
2021
Salary
Total pay and benefits
25th percentile
Median
75th percentile
25th percentile
Median
75th percentile
£24,783
£22,255
£21,935
£35,732
£30,000
£30,000
£30,675
£51,587
£53,321
£26,564
£27,073
£23,663
£40,514
£39,138
£34,977
£64,339
£60,798
£59,399
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 119
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
The data for the three employees identified has been considered and fairly reflects pay at the relevant quartiles amongst the employee population.
Annual percentage change in remuneration of Directors and employees
The table below shows the percentage change in Director remuneration, comprising salary, taxable benefits and annual bonus, and comparable data for the average of all employees on a full-time equivalent basis
within the Company. The data in this table has been calculated based on a combined total of the values paid for both the Chief Executive and Finance Director roles as disclosed in the single total figure table above.
Executive Directors
Alan Dale
Nick Wiles
Non-Executive Directors
Gill Barr
Giles Kerr
Guy Parsons
Rosie Shapland
Rakesh Sharma
Ben Wishart
Employee population5
2020–2021
2021–2022
2022–2023
Base
Base
Base
salary/Fee
Benefits6
Annual bonus
salary/Fee
Benefits6
Annual bonus
salary/Fee
Benefits6
Annual bonus
N/A1
N/A1
0%
135.9%3
N/A1
N/A1
8.6%4
N/A1
0.5%
N/A1
N/A1
N/A2
N/A2
N/A2
N/A2
N/A2
N/A2
-6.5%6
N/A1
N/A1
N/A2
N/A2
N/A2
N/A2
N/A2
N/A2
100%7
N/A1
N/A1
0%
N/A1
N/A1
N/A1
N/A1
0%
6.2%
N/A1
N/A1
N/A2
N/A2
N/A2
N/A2
N/A2
N/A2
-3.3%6
N/A1
N/A1
N/A2
N/A2
N/A2
N/A2
N/A2
N/A2
-0.3%
2.3%
2.3%
2.3%
2.3%
N/A1
2.3%
2.3%
2.3%
6.1%
-1.33%
43.4%
N/A2
N/A2
N/A2
N/A2
N/A2
N/A2
5.3%
21.1%
21.1%
N/A2
N/A2
N/A2
N/A2
N/A2
N/A2
37.1%
1 Appointed to the role in year or prior year, so no full year comparison.
2 Non-Executive Directors receive fixed fees rather than salary and do not receive any variable pay.
3 Giles Kerr was appointed as Chairman from 20 May 2020 and his annual fee was increased to £165,000 p.a.
4 Rakesh Sharma was appointed as Senior Independent Director effective 20 May 2020 and receives an additional fee for this role.
5 Based on employees who were employed by PayPoint for the entirety of both financial years but excludes those who were promoted to a new role.
6 There have been no changes to taxable benefits offered but the cost of providing these has varied during the period.
7 No bonus payout was made to UK-based employees for FY2019/20.
Relative importance of spend on pay
The table below shows the Company’s actual expenditure on shareholder distributions (including dividends and share buybacks) and total employee pay expenditure for the financial years ended 31 March 2022 and
31 March 2023.
2023
2022
% change
The 12% increase in employee pay expenditure includes one month of Appreciate Group. Excluding Appreciate Group, total employee pay expenditure increased by 8%.
Total employee pay
expenditure
£’000
38,234
34,076
12%
Distributions
to shareholders
£’000
25,107
23,096
9%
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 120
PayPoint Plc Annual Report 2023
Directors’ Remuneration Report continued
Pay for performance
The graph below compares the value of £100 invested in PayPoint shares, including reinvested dividends, with the FTSE 250 Index (excluding investment trusts) over the last ten years. This index was selected
because it is considered to be the most appropriate index against which the Total Shareholder Return of PayPoint could be measured.
Total Shareholder Return (’TSR’) (rebased to 100)
n
r
u
t
e
r
l
r
e
d
o
h
e
r
a
h
s
l
a
t
o
T
)
0
0
1
o
t
d
e
s
a
b
e
r
(
200
100
0
31 March 2013
31 March 2014
31 March 2015
31 March 2016
31 March 2017
31 March 2018
31 March 2019
31 March 2020
31 March 2021
31 March 2022
31 March 2023
PayPoint Plc
FTSE 250 Index (excluding Investment Trusts)
Source: Datastream (a Refinitive product)
Chief Executive single figure of remuneration (£’000)
Annual bonus payout (as % of maximum)
LTIP vesting (as % of maximum)
RSA vesting (as % of maximum)
2014
91%
100%
–
2015
88%
0%
–
2016
31%
0%
–
2017
64%
0%
–
2018
66%
30%
–
2019
71%
100%
–
2020
0%
32%
–
2021
100%
0%
–
2022
76%
0%
–
2023
89%
–
100%
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
121
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Directors’ shareholdings (audited)
The shareholdings of the Directors and their connected persons in the ordinary shares of the Company against their respective shareholding requirement as at 31 March 2023:
Gill Barr
Alan Dale
Giles Kerr
Guy Parsons
Rosie Shapland
Rakesh Sharma
Nick Wiles
Ben Wishart
Owned outright
or vested1
Unvested DABS and SIP awards
subject to holding period2
Unvested RSA awards subject to
holding period and underpin
Current
shareholding3
Guideline %
of salary
Guideline number
of shares4
Shares held
Shareholding guidelines
2,595
14,284
7,500
5,136
–
4,270
90,633
–
–
19,067
–
–
–
–
37,166
–
–
71,882
–
23,080
–
–
–
–
–
–
–
–
177,148
109,643
–
–
–
200
–
–
–
–
200
–
–
125,355
–
–
–
–
196,389
–
Met?
–
No
–
–
–
–
No
–
Includes SIP shares other than SIP matching shares and SIP dividend shares subject to a holding period.
Includes unvested DABS shares, SIP matching shares and SIP dividend shares subject to a holding period.
1
2
3 Current shareholding includes unvested deferred bonus shares and SIP shares not subject to a holding period, on a net of tax basis.
4 A three-month average share price to 31 March 2023 of £4.93 has been used to calculate the holding relative to this guideline.
The market price of the Company’s shares on 31 March 2023 was £4.55 per share (31 March 2022: £5.82 per share) and the low and high share prices during the period were £4.55 and £6.52 respectively.
Directors’ interests in shares in PayPoint long-term incentive plans and all-employee plans
Long-Term Incentive Awards and Restricted Share Awards (audited)
Nick Wiles
Alan Dale2
Type of awards
31 March 20221
Number of
shares at
Number of
shares awarded
during the period
Number of
shares released
during the period
Number of
shares lapsed
during the period
Number of
shares at
31 March 2023
Share price
at grant
£
Value of
shares awarded
Date of grant
Lapse/Release
RSA 20201
RSA 20211
RSA 20221
LTIP 20193
RSA 20201
RSA 20211
RSA 20221
59,443
55,863
–
4,502
9,274
29,714
–
–
–
61,842
–
–
–
32,894
–
–
–
–
–
–
–
–
–
–
4,502
–
–
–
59,443
55,863
61,842
–
9,274
29,714
32,894
5.93
6.31
5.70
10.50
5.93
6.31
5.70
352,497
352,495
352,499
47,271
54,995
187,495
187,496
27.07.20
13.08.21
10.06.22
10.06.19
27.07.20
13.08.21
10.06.22
27.07.23–27.07.25
13.08.24–13.08.26
10.06.25–10.06.27
10.06.22
27.07.23
13.08.24–13.08.26
10.06.25–10.06.27
1
2
3
For RSAs to vest the Committee must be satisfied that PayPoint’s underlying performance and delivery against its strategy and plans are sufficient to justify the level of vesting having regard to such factors as the Committee considers to be appropriate in the round
(including revenue, earnings and share price performance) and the shareholder experience more generally (including the risk of windfall gains).
The awards granted to Alan Dale in 2019 and 2020 were made prior to his appointment to the Board.
LTIP awards granted in 2019 lapsed as the TSR and EPS performance conditions were not met.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
122
PayPoint Plc Annual Report 2023
Directors’ Remuneration Report continued
Deferred Annual Bonus Scheme1 (audited)
Nick Wiles
Alan Dale2
Number of
shares at
31 March 2022
Number of
shares awarded
during the period
Number of
shares released
Number of
shares lapsed
Number of
shares at
during the period3
during the period
31 March 2023
Share price
at grant
£
Value of shares
awarded
£
19,785
–
1,025
7,231
–
–
16,645
–
–
10,625
–
–
1,025
–
–
–
–
–
–
–
19,785
16,645
–
7,231
10,625
6.31
5.70
10.50
6.31
5.70
124,843
94,876
10,763
45,627
60,562
Date of grant
Lapse/Release
13.08.21
10.06.22
10.06.19
13.08.21
10.06.22
13.08.24
10.06.25
10.06.22
13.08.24
10.06.25
1 The release of shares is dependent upon continuous employment for a period of three years from the date of grant.
2 The awards granted to Alan Dale in 2018 and 2019 were made prior to his appointment to the Board.
3 Alan Dale received 267 dividend shares on his exercised award with a value of £1,516.
Share Incentive Plan (audited)
Number of partnership
shares purchased at
31 March 2022
Number of matching
shares awarded at
31 March 2022
Number of dividend
Shares1 acquired at
31 March 2022
Total shares at
31 March 2022
Number of partnership
shares2 purchased
during the period
Number of matching
Shares3 awarded
during the period
Number of dividend
Shares acquired
during the period
Dates of release of matching
and dividend Shares4
Total shares at
31 March 2023
Nick Wiles
Alan Dale
361
997
361
997
32
320
754
2,314
272
271
272
271
71
179
22.04.2025–22.03.2026
22.04.2025–22.03.2026
1,369
3,035
1 Dividend shares are ordinary shares of the Company purchased with the value of dividends paid in respect of all other shares held in the plan.
2 Partnership shares are ordinary shares of the Company purchased on a monthly basis during the period (at prices from £4.64 to £6.35).
3 Matching shares are ordinary shares of the Company awarded conditionally on a monthly basis during the period (at prices from £4.64 to £6.35).
4 The dates used are based on the earliest allocation of the matching shares.
Service contracts and exit policy
Executive Directors
Executive Director service contracts, including arrangements for early termination, are carefully considered by the Committee. The Chief Executive and Finance Director both have a rolling service contract requiring
12 months’ notice of termination on either side. In line with market practice, Rob Harding, the incoming Chief Financial Officer, has a rolling service contract requiring 6 months’ notice on either side. Executive Director
service contracts are available to view at the Company’s registered office. Details of the service contracts of the Executive Directors of the Company are as follows:
Name
Nick Wiles
Alan Dale
Rob Harding
Company notice period
12 months
12 months
6 months
Contract date
19 May 2020
20 November 2020
30 January 2023
There are no special provisions in service contracts relating to cessation of employment or change of control. The policy on termination is that the Company does not make payments beyond its contractual
obligations and Executive Directors will be expected to mitigate their loss. In addition, the Remuneration Committee ensures that there are no unjustified payments for failure. Under normal circumstances,
Executive Directors may receive termination payments in lieu of notice equal to pay and benefits for the length of their contractual notice period.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 123
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Non-Executive Directors
The Non-Executive Directors do not have service contracts, rather they have letters of appointment
which are subject to a three-year term. Details of the terms of appointment of the Non-Executive
Directors are set out in the table below:
RSA
RSAs to be granted in 2023 will be:
• set at 75% of salary for the Chief Executive and 62.5% of salary for the Chief Financial Officer; and
• subject to shareholder approval of the remuneration policy, awards will vest after three years from
Name
Gill Barr
Giles Kerr
Guy Parsons
Rosie Shapland
Rakesh Sharma
Ben Wishart
Start of current
three-year term
Unexpired term as
at 31 March 2023
2 June 2021
20 November 2021
23 March 2023
2 October 2020
12 May 2020
14 November 2022
14 months
19½ months
35 months
6 months
1½ months
31½ months
Date of appointment
Notice period
1 June 2015
20 November 2015
23 March 2023
2 October 2020
12 May 2017
14 November 2019
One month
One month
One month
One month
One month
One month
Under the Company’s Articles of Association, all Directors are required to submit themselves for
re-election every three years. However, in order to comply with the Code, all Directors will be subject
to annual re-election. Non-Executive Directors’ letters of appointment are available to view at the
Company’s registered office.
Implementation of Remuneration Policy for year ending 31 March 2024
Base salary
Current base salary levels, and those from 1 July 2023 (the normal salary review date), are as follows:
Nick Wiles1
Rob Harding2
From 1 July 2023
From 1 July 2022
% increase
£498,623
£320,000
£484,100
–
3%
–
the grant date, subject to continued employment, satisfactory individual performance and a positive
assessment of performance against the discretionary underpin (see below).
No shares may be sold until at least five years from grant, other than those required to settle any taxes.
For RSAs granted to Executive Directors in 2023 to vest, in addition to continued service, the Committee
must be satisfied that PayPoint’s underlying performance and delivery against its strategy and plans
are sufficient to justify the level of vesting, having regard to such factors as the Committee considers to
be appropriate in the round (including revenue, earnings and share price performance and the delivery
of the Company’s ESG strategy) and the shareholder experience more generally (including the risk of
windfall gains).
Chairman and Non-Executive Director fees
Chairman and Non-Executive Director fees are as follows:
Base fees
Chairman
Non-Executive Director
Additional fees
Chairman, Audit Committee
Chairman, Remuneration Committee
Senior Independent Director
From 1 July 20231
From 1 July 20221
% Increase
£175,049
£51,454
£169,950
£49,955
£9,760
£9,760
£6,471
£9,476
£9,476
£6,283
3%
3%
3%
3%
3%
1 Nick Wiles’ salary will be increased by 3% in line with the minimum increase applied to the general workforce.
2 Rob Harding as been appointed Chief Financial Officer and is due to commence his position in summer 2023. His salary at
commencement will be £320,000.
1
A 3% increase in Non-Executive Director fees has been agreed in line with the minimum increase being applied to the
general workforce.
Benefits
No changes will be made to benefits provision which will be in line with the Policy.
This Report covers the remuneration of all Directors who served during the period and was approved by
the Board on 27 July 2023.
Pension
Pension provision will be 5% of salary, offered in the form of pension and/or a salary supplement.
Annual bonus
Annual bonus potential will continue to be set at 106% of salary. Full details of the annual bonus targets
for the 2023/24 financial year and performance against the targets will be disclosed in next year’s
Annual Report on Remuneration.
Rakesh Sharma
Chairman, Remuneration Committee
27 July 2023
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 124
PayPoint Plc Annual Report 2023
Directors’ Report
PayPoint Plc (the ‘Company’) is a public limited company incorporated in England and Wales, registration
number 3581541. The Company is a holding company and its subsidiaries (a complete list of which can
be found in note 15 on pages 165 to 168) are engaged in providing innovative services and technology
connecting millions of consumers with over 60,000 retailer partner and SME locations across multiple
sectors. The Strategic Report on pages 1 to 78 provides a review of the business, the Group’s trading for
the period ended 31 March 2023, key performance indicators and an indication of future developments.
Directors’ Report content
As required by the Companies Act 2006 and the Disclosure Guidance and Transparency Rule (‘DTR’)
4.1.8.R, the Directors’ Report for PayPoint Plc comprises these pages 124 to 126 together with
information in the following sections of the annual report and accounts, all of which are incorporated
into this Directors’ Report by reference:
Information
Location in annual report
Review of the business, principal risks and
uncertainties, emerging risks and KPIs
Strategy and business model
Future business developments
GHG emissions and non-financial reporting:
Environmental matters
Anti-corruption and anti-bribery
Employment for disabled persons and employee
engagement throughout the workforce
Gender diversity
Chief Executive’s Review; Our Business Model;
Year in Review; Our Strategy; Key Performance
Indicators, Financial Review and Principal Risks
and Uncertainties (includes emerging risks)
Our Strategy; Our Business model
Our Strategy
Responsible Business and Audit Committee Report
Responsible business,
Corporate Governance Report
S.172(1) Statement
Responsible Business
Business relationships, stakeholders and their
effect on decisions
Engagement with stakeholders and
S.172(1) Statement
Use of financial instruments and credit
Financial Review and note 27
This annual report has been prepared for, and only for, the members of the Company, as a body, and
no other persons. The Company, its Directors, employees, agents or advisers do not accept or assume
responsibility to any other person to whom this document is shown or into whose hands it may come
and any such responsibility or liability is expressly disclaimed.
By their nature, the statements concerning the risks and uncertainties facing the Group in this annual
report involve uncertainty since future events and circumstances can cause results and developments
to differ materially from those anticipated. The forward-looking statements reflect knowledge and
information available at the date of preparation of this annual report and the Company undertakes
no obligation to update these forward-looking statements. Nothing in this annual report should be
construed as a profit forecast.
Substantial shareholdings
The Company had been notified of the following disclosable interests in the voting rights of the
Company as required by DTR 5 of the FCA’s Disclosure Guidance and Transparency Rules.
As at 31 March 2023:
Name of holder
Asteriscos Patrimonial and its group
Liontrust Asset Management
Schroder Investment Management
Columbia Threadneedle Investments
Brown Capital Management
Premier Miton Investors
Credit Suisse Private Banking
Number of
ordinary shares
Percentage of
issued capital
18,887,911
7,606,699
5,264,667
5,166,552
4,506,212
3,007,427
2,724,535
26.03%
10.48%
7.26%
7.12%
6.21%
4.14%
3.75%
The following notification(s) have been received since 1 April 2023 up to 10 July 2023. Any subsequent
notifications can be found on our website: corporate.paypoint.com/investor-centre/announcements.
Name of holder
Asteriscos Patrimonial and its group
Liontrust Asset Management
Schroder Investment Management
Brown Capital Management
Columbia Threadneedle Investments
Credit Suisse Private Banking
Premier Miton Investors
Number of
ordinary shares
Percentage of
issued capital
19,597,482
6,073,861
5,452,146
4,716,645
4,412,166
3,591,035
3,007,427
27.01%
8.37%
7.51%
6.50%
6.08%
4.95%
4.14%
All notifications made to the Company under DTR 5 are published via a Regulatory Information Service
and made available on the Company’s website.
Share capital
As at 31 March 2023 72,563,234 ordinary shares of 0.03 pence each have been issued and fully paid-up and
are quoted on the London Stock Exchange. During the year ended 31 March 2023, 76,770 ordinary shares
were issued under the Company’s share schemes and 3,565,382 shares were issued following the acquisition
of Appreciate Group on 28 February 2023. The rights and obligations attaching to the Company’s ordinary
shares, as well as the powers of the Company’s Directors are set out in the Company’s Articles of Association,
copies of which can be obtained from Companies House or by writing to the Company Secretary.
There are no restrictions on the voting rights attaching to the ordinary shares or on the transfer of
securities in the Company. No person holds securities in the Company carrying special rights with regard
to control of the Company. The Company is not aware of any agreements between holders of securities
that may result in restrictions on the transfer of securities or on voting rights. Unless expressly specified
to the contrary in the Articles of Association of the Company, the Company’s Articles of Association may
be amended by a special resolution of the Company’s shareholders.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
As at 31 March 2023, the PayPoint Network Limited Employee Incentive Trust (the ‘Trust’) held 769
ordinary shares in the Company for allocation under the Company’s share schemes. Any voting or other
similar decisions in relation to the shares held by the Trust would be taken by the trustees, who may
take account of any recommendations of the Company. The Trustees have waived their right to receive
dividends of the shares held in the Company.
Suppliers’ payment policy
Terms of payment are agreed with individual suppliers prior to supply. The Group aims to pay its creditors
promptly, in accordance with terms agreed for payment, provided the supplier has provided the goods
or services in accordance with the agreed terms and conditions. Further information on the PayPoint
segment can be obtained from the Government’s payment practice reporting portal.
At the annual general meeting on 20 July 2022, the Directors were given authority to purchase up to
10% of the Company’s issued share capital, allot relevant securities up to an aggregate nominal amount
of £137,854 and to disapply pre-emption rights in respect of allotments of relevant securities up to an
aggregate nominal amount of £10,339 with a further £10,339 for limited purposes. Resolutions to renew
these authorities in accordance with the updated Pre-Emption Group guidelines and model provisions
will be proposed at the 2023 annual general meeting, details of which are set out in the Notice of Annual
General Meeting on pages 185 to 187.
Directors
The names of the Directors at the date of this report and their biographical details are on pages 82 to
83. Their interests in the ordinary shares of the Company are on page 121. Directors are appointed and
replaced in accordance with the Company’s Articles of Association, the Companies Act 2006 and the Code.
The powers of the Directors are set out in the Articles of Association and the Companies Act 2006.
Results for the year
The consolidated statements of profit or loss, comprehensive income, financial position, changes in
equity and cash flows for the year ended 31 March 2023 are set out on pages 138 to 145. An analysis of
risk is set out on pages 63 to 68, and of risk management on page 62.
Indemnity provisions for the benefits of Directors
In addition to the indemnity provisions in the Articles of Association, the Company has entered into direct
indemnity agreements with each of the Directors. These indemnities constitute qualifying indemnities
for the purposes of the Companies Act 2006 and remain in force at the date of approval of this report
without any payment having been made under them. The Company also maintains directors’ and officers’
liability insurance which gives appropriate cover for any legal action brought against its Directors.
Change of control
All of the Company’s share schemes contain provisions relating to a change of control. Outstanding
options and awards would be prorated for time and normally vest on a change of control, subject to the
satisfaction of any performance conditions at that time.
The Company has a revolving term credit facility for £75 million and a £10.8 million term loan, which
expires on 11 February 2024, and a £36.0 million term loan which expires on 11 February 2026. The terms
of the facility (which includes the ancillary facilities and loan) allow for termination on a change of control,
subject to certain conditions.
There are no other significant contracts in place that would take effect, alter or terminate on the change
of control of the Company, including compensation for loss of office as a result of a takeover bid.
Charitable and political donations
The Group made no political donations during the year (2022: nil). Details of the charitable donations
policy can be found within the Responsible Business section of the annual report on page 54.
Related-party transactions
Related-party transactions that took place during the year can be found in note 32.
Dividends
Dividends are typically paid quarterly in July, September, December and March. In 2023 because of
the acquisition of Appreciate Group and some extended audit requirements which have affected the
date of the AGM for 2023 a third interim dividend of 9.3 pence per share is being paid on 1 September
to shareholders on the register on 11 August 2023 followed by a final dividend of 9.3 pence (In total
18.6 pence).
We have declared a final dividend of 9.3 pence per share (2022: 18.0 pence per share) payable on
22 September 2023 to shareholders on the register on 11 August 2023. The final dividend is subject to
the approval of the shareholders at the annual general meeting on 7 September 2023.
The third interim and final dividends will result in £13.5 million (2022: £12.4 million) being paid to
shareholders from the standalone statement of financial position of the Company which, as at
31 March 2023, had approximately £44.2 million (2022: £67.9 million) of distributable reserves.
An earlier interim ordinary dividend of 18.4 pence (2022: 17.0 pence) was paid in equal instalments of
9.2 pence on 30 December 2022 and 6 March 2023.
The dividend policy including all the dividends declared during the year is set out in the Financial Review
on page 78.
Going concern
As at 31 March 2023 the Group had £72.4 million of net debt. As at 31 March 2023, the Group had
corporate cash and cash equivalents of £22 million. In addition, following the Group-wide refinancing
the Group’s borrowing facilities consist of a £10.8 million amortising term loan which is due to be fully
repaid over the next financial year, an unsecured £75.0 million revolving credit facility with a £30.0
million accordion facility (uncommitted) expiring in February 2026 and a £36 million term loan. The
Company’s cash and borrowing capacity is adequate to meet the foreseeable needs of the Group, taking
into account any risks (see pages 63 to 68). The Directors are satisfied that the Group has adequate
resources to continue in operational existence for the foreseeable future, a period of not less than 12
months from the date of this report. Therefore, the financial statements have been prepared on a going
concern basis.
The Group’s liquidity review and commentary on the current economic climate are shown on page 69 and
70 of the Strategic Report and commentary on financial risk management is shown in note 31.
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PayPoint Plc Annual Report 2023
Directors’ Report continued
Independent auditor
KPMG LLP will not be continuing as the Company’s auditor and a resolution for the appointment of
PricewaterhouseCoopers LLP as the Company’s new auditor will be proposed at the forthcoming annual
general meeting. The Notice of Annual General Meeting can be found on pages 185 to 192.
Corporate governance statement
The information that fulfils the requirements of the Corporate Governance Statement for the purposes
of the FCA’s Disclosure Guidance and Transparency Rules can be found in this Directors’ Report and in
the Corporate Governance section on pages 88-92 (which is incorporated into this Directors’ Report
by reference).
Statement as to disclosure of information to auditor
Each of the persons who is a Director at the date of approval of this report confirms that:
1)
So far as the Director is aware, there is no relevant audit information of which the Company’s auditor
is unaware; and
The Director has taken all the steps that he/she ought reasonably to have taken as a Director in order
to make themselves aware of any relevant audit information and to establish that the Company’s
auditor is aware of that information.
2)
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of
the Companies Act 2006.
Annual general meeting
The annual general meeting will be held at PayPoint’s head office, 1 The Boulevard, Shire Park, Welwyn
Garden City AL7 1EL on 7 September 2023 at 12 noon.
The Notice of Annual General Meeting and explanatory information on the resolutions to be passed at
the annual general meeting can be found on pages 185 to 192.
The Directors’ Report was approved by the Board and signed on its behalf by:
Brian McLelland
Company Secretary
27 July 2023
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Statement of Directors’ responsibilities in respect of the annual report and the financial statements
The directors are responsible for preparing the Annual Report and the Group and parent Company
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent Company financial statements for each
financial year. Under that law they are required to prepare the Group financial statements in accordance
with UK-adopted international accounting standards and applicable law and have elected to prepare the
parent Company financial statements on the same basis.
•
Responsibility statement of the Directors in respect of the annual financial report
We confirm that to the best of our knowledge:
•
the 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; and
the Strategic Report includes a fair review of the development and performance of the business
and the position of the issuer and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess the Group’s position and performance,
business model and strategy.
Alan Dale
Finance Director
27 July 2023
Under company law the directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group and parent Company and of the
Group’s profit or loss for that period. In preparing each of the Group and parent Company financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable, relevant and reliable;
• state whether they have been prepared in accordance with UK-adopted international accounting
standards;
• assess the Group and parent Company’s ability to continue as a going concern, disclosing, as
Applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or the
parent Company or to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show
and explain the parent Company’s transactions and disclose with reasonable accuracy at any time
the financial position of the parent Company and enable them to ensure that its financial statements
comply with the Companies Act 2006. They are responsible for such internal control as they determine
is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open
to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report,
Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies
with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance and Transparency Rule 4.1.14R, the financial statements will
form part of the annual financial report prepared using the single electronic reporting format under the
TD ESEF Regulation. The auditor’s report on these financial statements provides no assurance over the
ESEF format.
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PayPoint Plc Annual Report 2023
Independent Auditor’s Report to the Members of PayPoint Plc
1 Our opinion is unmodified
We have audited the financial statements of PayPoint Plc (“the Company”) for the year ended
31 March 2023 which comprise the Consolidated Statement of Profit or Loss, Consolidated Statement
of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of
Changes in Equity, Consolidated Statement of Cash Flows, Company Statement of Financial Position,
Company Statement of Changes in Equity, Company Statement of Cash Flows and the related notes,
including the accounting policies in note 1.
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the parent
Company’s affairs as at 31 March 2023 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
the parent Company financial statements have been properly prepared in accordance with UK-
adopted international accounting standards as applied in accordance with the provisions of the
Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
•
•
•
We were first appointed as auditor by the directors on 15 August 2017. The period of total
uninterrupted engagement is for the six financial years ended 31 March 2023. We have fulfilled our
ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit
services prohibited by that standard were provided.
2 Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance
in the audit of the financial statements and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by us, including those which had the greatest
effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts
of the engagement team. We summarise below the key audit matters, in decreasing order of audit
significance, in arriving at our audit opinion above, together with our key audit procedures to address
those matters and, as required for public interest entities, our results from those procedures. These
matters were addressed, and our results are based on procedures undertaken, in the context of, and
solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion
thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on
these matters.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities are described below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our
report to the audit committee.
Identification and valuation
of Appreciate Group ABS
non-contractual customer
relationship and Park and
Love2Shop brand intangible
assets (New risk)
(ABS non-contractual customer
relationship: £8.8 million;
2022: nil; Park brand: £4.2million;
2022: nil; Love2Shop brand:
£7.6 million; 2022: nil)
Refer to page 99 (Audit
Committee Report), page 150
(accounting policy) and page
165 (financial disclosures).
The risk
Subjective estimate:
PayPoint Plc acquired the entire share capital of the Appreciate Group on
28 February 2023 for consideration of approximately £79.2 million.
There is an inherent complexity in identifying acquired intangibles.
Additionally we considered the valuation of Appreciate Group customer
relationship and brand intangibles as a risk because of the inherent
complexity, estimation uncertainty, and judgements involvement in
determining and applying assumptions to assess their fair value, and
because of the size of the acquisition. Auditor judgement is required
to assess whether the Group’s estimate of the valuation of customer
relationship and brand intangible asset, taking into account key inputs
and assumptions, fall within an acceptable range.
The effect of these matters is that, as part of our risk assessment for
audit planning purposes, we determined that the recorded intangible
assets had a high degree of estimation uncertainty, with a potential
range of reasonable outcomes greater than our materiality for the
financial statements as a whole.
Our response
Our procedures included:
• Our valuation expertise: Engaging our valuation specialists we assessed the appropriateness
of the intangible assets identified, critically assessed the valuation methodology applied and key
assumptions included within (discount rate, attrition rate and pre-tax royalty rate);
• Benchmarking assumptions: Comparing the Group’s assumptions to externally derived data in
relation to key inputs such as discount rate, and pre-tax royalty rate;
• Historical comparison: Assessing the accuracy of previous forecasts by comparing those forecasts
to actual performance of the acquired entities; and
• Assessing transparency: Assessing whether the Group’s disclosures detailing the sensitivity of the
valuation of acquired intangibles to discount rate, pre-tax royalty rate and attrition rate are adequate.
We performed the tests above rather than seeking to rely on any of the Group’s controls because
the nature of the balance is such that we would expect to obtain audit evidence primarily through the
detailed procedures described.
Our results:
We found the identification and valuation of Appreciate Group customer relationship and brand
intangible assets to be acceptable.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
The risk
Our response
Revenue recognition
(Risk vs 2022: unchanged)
(part of the revenue within
a total of £165.2 million;
2022: £145.1 million)
Refer to page 97 (Audit
Committee Report), page 147
(accounting policy) and page
154 (financial disclosures).
Data capture and processing error:
The risk is that revenue transacted through the group’s network of
terminals is misstated due to inherent complexities involved in capturing
and processing the high volume of low value transactions generated
across the Company’s off-site terminal network. IT systems may not be
configured appropriately such that data does not correctly flow through
the IT systems.
Recoverability of group
goodwill in relation to
Handepay and of parent’s
investment in subsidiary
in relation to Handepay
(New risk)
(Group: £45.6 million;
2022: £43.9 million; Parent:
£39.8 million; 2022: £43 million)
Refer to page 100 (Audit
Committee Report), page 144
(accounting policy) and page
161 (financial disclosures).
Forecast-based assessment:
Goodwill in the group and the carrying amount of the parent Company’s
investment in subsidiary are significant and at risk of irrecoverability
due to Handepay’s trading performance when compared to the original
projections produced at a time of the Handepay’s acquisition. The
estimated recoverable amount of these balances is subjective due to the
inherent uncertainty involved in forecasting and discounting future cash
flows, particularly in light of more challenging economic circumstances.
The effect of these matters is that, as part of our risk assessment,
we determined that the value in use of goodwill has a high degree of
estimation uncertainty, with a potential range of reasonable outcomes
greater than our materiality for the financial statements as a whole, and
possibly many times that amount.
For the cost of investment in subsidiary, as part of our risk assessment
for audit planning purposes, we determined that the value in use had
a high degree of estimation uncertainty, with a potential range of
reasonable outcomes greater than our materiality for the financial
statements as a whole. Following completion of our procedures, we
concluded that reasonably possible changes to the value in use of cost
of investment in subsidiary would not be expected to result in a material
impairment.
Our procedures included:
• Control design and operation: Assessing the design and operation of controls over the general
IT environment supporting the transaction recording, billing and general ledger systems. These
procedures included testing access to programs and data, program change and development to
address the risk of unauthorised changes being made to the operation of IT application controls;
• Control design and operation: Testing key automated controls (with the support of our IT
specialists) and manual controls, including controls that are designed to ensure reconciliations
are performed between system reports used to generate invoices and off-site terminal network
systems;
• Tests of details: Using data analytical tools to test that revenue invoiced agrees through to cash
received; and
• Tests of details: On a statistical sample basis, recalculated revenue recorded by inspecting the rate
per transaction in the customer contract, and the number of transactions within the system reports.
Our results:
The results of our procedures were satisfactory, and we considered the amount of revenue recognised
to be acceptable (2022: acceptable).
Our procedures included:
• Our sector experience: We challenged the Group’s assumptions with reference to our knowledge of
the Group, including from our inspection of board approved strategy plans;
• Benchmarking assumptions: Comparing the Group’s assumptions to externally derived data in
relation to revenue growth rates;
• Sensitivity analysis: Performing sensitivity analysis which considered reasonably possible changes
in the key assumptions that had the greatest judgements and their impact on the valuation, including
discount rates and revenue growth rates;
• Independent reperformance: We developed our own estimate of a range of reasonably possible
discount rates for the CGU, based on external market data and our understanding of the business,
and compared this to the discount rate determined by the Group;
• Historical comparisons: Assessing the director’s ability to forecast by comparing previous forecasts
to actual performance; and
• Assessing transparency: Assessing whether the Group’s disclosures about the sensitivity of the
outcome of the impairment assessment to changes in key assumptions reflected the risks inherent in
the recoverable amount of goodwill.
We performed the detailed tests above rather than seeking to rely on any of the Group or parent
Company’s controls because the nature of the balance is such that we would expect to obtain audit
evidence primarily through the detailed procedures described.
Our results:
We found the Group’s conclusion that there is no impairment of goodwill or the parent Company’s
investment in subsidiary to be acceptable.
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PayPoint Plc Annual Report 2023
Independent Auditor’s Report to the Members of PayPoint Plc continued
We continue to perform procedures over the Recoverability of group goodwill in relation to i-movo and
of parent’s investment in subsidiary in relation to i-movo. However, following improved performance of
i-movo business, we have not assessed this as one of the most significant risks in our current year audit
and, therefore, it is not separately identified in our report this year.
3 Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at £2.0m (2022: £2.0m), determined
with reference to a benchmark of Group profit before tax from continuing operations normalised to
exclude this year’s exceptional items relating to acquisitions as disclosed in note 6 (2022: Group profit
before tax from continuing operations normalised to exclude exceptional items relating to acquisitions
as disclosed in note 6) of which it represents 4.3% (2022: 4.4%).
Materiality for the parent company financial statements as a whole was set at £1.0 million
(2022: £1.0 million), determined with reference to a benchmark of Company total assets, of which it
represents 0.41% (2022: 0.58%).
In line with our audit methodology, our procedures on individual account balances and disclosures were
performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk
that individually immaterial misstatements in individual account balances add up to a material amount
across the financial statements as a whole.
Performance materiality was set at 75% (2022: 75%) of materiality for the financial statements
as a whole, which equates to £1.5 million (2022: £1.5 million) for the group and £0.75 million
(2022: £0.75 million) for the parent company. We applied this percentage in our determination of
performance materiality because we did not identify any factors indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements
exceeding £0.1 million (2022: £0.1 million), in addition to other identified misstatements that warranted
reporting on qualitative grounds.
Of the group’s 13 (2022: 12) reporting components, we subjected seven (2022: six) to full scope audits
for group purposes.
The group team performed procedures on the items excluded from normalised group profit before tax.
The components within the scope of our work accounted for the percentages illustrated opposite.
For the residual components, we performed analysis at an aggregated group level to re-examine our
assessment that there were no significant risks of material misstatement within these.
The Group team instructed component auditors as to the significant areas to be covered, including
the relevant risks detailed above and the information to be reported back. The Group team approved
the component materialities, which ranged from £0.35 million to £1.30 million (2022: £0.35 million to
£1.40 million), having regard to the mix of size and risk profile of the Group across the components.
The work on one of the seven components (2022: zero of the six) was performed by component auditors
and the rest, including the audit of the parent Company, was performed by the Group team.
Normalised group profit before tax £46.6m (2022: Normalised group
profit before tax before tax from continuous operations £45.6m)
Group materiality
£2.0m (2022: £2.0m)
4.5
0.0
£2.0m
Whole financial statements materiality (2022: £2.0m)
£1.5m
Whole financial statements performance materiality (2022: £1.5m)
£1.3m
Range of materiality at seven components (£1.3m – £0.35m)
(2022: £1.4m – £0.35m)
£100k
Misstatements reported to the audit committee
(2022: £100k)
Normalised PBT
Group materiality
Group revenue
Group profit before tax
90%
(2022: 94%)
94%
90%
86%
(2022: 95%)
95%
86%
Group total assets
Group normalised profit before tax
95%
(2022: 94%)
94%
95%
87%
(2022: 92%)
92%
87%
Full scope for group audit purposes 2023
Full scope for group audit purposes 2022
Residual components
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Video and telephone conference meetings were held with the component auditor of Appreciate, and
the Group team visited the component team to discuss the audit risk and strategy and to assess the
audit work performed. During these meetings, the findings reported to the Group team were discussed
in more detail, and any further work required by the Group team was then performed by the component
auditor. The Group team also inspected the component team’s key work papers to evaluate the quality
of execution of the audit of the component with a particular focus on payables in respect of cards
and vouchers.
We were able to rely upon the Group’s internal control over financial reporting on Revenue recognition,
where our controls testing supported this approach, which enabled us to reduce the scope of our
substantive audit work; in the other areas the scope of the audit work performed was fully substantive.
4 Impact of climate change on our audit
In planning our audit we have considered the potential impacts of climate change on the Group’s
business and its financial statements. The Group’s main exposure to climate risk is the shifting
expectations from business stakeholders to transition to low-carbon supply chains and greater emphasis
on climate related disclosures in the annual report.
As part of our audit we made enquiries of management to understand the Group’s assessment and
preparedness for climate change. We have performed a risk assessment on how the impact of climate
change may affect the financial statements and our audit and, taking into account the nature of the
business and the limited impact of climate change on the assumptions in impairment testing, we have
not assessed climate related risk to be significant to our audit this year.
We have also read the Group’s and Parent Company’s disclosure of climate related information in the
front half of the annual report as set out on pages 42 to 49 and considered consistency with the financial
statements and our audit knowledge.
5 Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend
to liquidate the Group or the Company or to cease their operations, and as they have concluded that the
Group’s and the Company’s financial position means that this is realistic. They have also concluded that
there are no material uncertainties that could have cast significant doubt over their ability to continue
as a going concern for at least a year from the date of approval of the financial statements (“the going
concern period”).
We used our knowledge of the Group, its industry, and the general economic environment to identify
the inherent risks to its business model and analysed how those risks might affect the Group’s and
Company’s financial resources or ability to continue operations over the going concern period.
The risk that we considered most likely to adversely affect the Group’s and Company’s available
financial resources and metrics relevant to debt covenants over this period was lower than expected
trading volumes.
We also considered less predictable but realistic second order impacts, such as a significant cyber
incidence, or the erosion of customer or supplier confidence, which could result in a rapid reduction of
available financial resources.
We considered whether these risks could plausibly affect the liquidity or covenant compliance in the
going concern period by comparing severe, but plausible downside scenarios that could arise from these
risks individually and collectively against the level of available financial resources and covenants indicated
by the Group and Company’s financial forecasts.
We considered whether the going concern disclosure in note 1 to the financial statements gives a full
and accurate description of the Directors’ assessment of going concern, including the identified risks and
related sensitivities.
Our conclusions based on this work:
• we consider that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate;
• we have not identified, and concur with the directors’ assessment that there is not, a material
uncertainty related to events or conditions that, individually or collectively, may cast significant doubt
on the Group’s or Company’s ability to continue as a going concern for the going concern period;
• we have nothing material to add or draw attention to in relation to the directors’ statement in note
1 to the financial statements on the use of the going concern basis of accounting with no material
uncertainties that may cast significant doubt over the Group and Company’s use of that basis for the
going concern period, and we found the going concern disclosure in note 1 to be acceptable; and
the related statement under the Listing Rules set out on page 125 is materially consistent with the
financial statements and our audit knowledge.
•
However, as we cannot predict all future events or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were reasonable at the time they were made, the
above conclusions are not a guarantee that the Group or the Company will continue in operation.
6 Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions
that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
• Enquiring of directors, the audit committee, internal audit and inspection of policy documentation as
to the Group and Company’s high-level policies and procedures to prevent and detect fraud, including
the internal audit function, and the Group and Company’s channel for “whistleblowing”, as well as
whether they have knowledge of any actual, suspected or alleged fraud.
• Reading Board minutes, and by attending Audit Committee meetings.
• Considering remuneration incentive schemes and performance targets for management, and directors
including the profit before tax and net revenue targets for management and directors remuneration.
• Using analytical procedures to identify any unusual or unexpected relationships.
• Our forensic specialists assisted us in identifying key fraud risks. This included holding a discussion
with the engagement partner, engagement manager and engagement quality control reviewer, and
assisting with designing relevant audit procedures to respond to the identified fraud risks.
We communicated identified fraud risks throughout the audit team and remained alert to any indications
of fraud throughout the audit. This included communication from the Group audit team to full scope
component audit team of relevant fraud risks identified at the Group level and request to full scope
component audit teams to report to the Group audit team any instances of fraud that could give rise to a
material misstatement at the Group level.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 132
PayPoint Plc Annual Report 2023
Independent Auditor’s Report to the Members of PayPoint Plc continued
As required by auditing standards, and taking into account possible pressures to meet profit targets, we
perform procedures to address the risk of management override of controls, in particular the risk that
Group and component management may be in a position to make inappropriate accounting entries. On
this audit we do not believe there is a fraud risk related to revenue recognition because application of the
revenue policy involves a low degree of estimation and judgement.
We did not identify any additional fraud risks.
We performed procedures including:
•
Identifying journal entries to test for all full scope components based on risk criteria and comparing
the identified entries to supporting documentation. These included those posted to unusual or
unrelated revenue and cost accounts, and journal entries with an unexpected double entry to cash,
loans or borrowings.
• Evaluating the business purpose of significant unusual transactions.
• Assessing whether the judgements made in making accounting estimates are indicative of a
potential bias.
enquiry of the directors and other management and inspection of regulatory and legal correspondence,
if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected
some material misstatements in the financial statements, even though we have properly planned and
performed our audit in accordance with auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and transactions reflected in the financial
statements, the less likely the inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit
procedures are designed to detect material misstatement. We are not responsible for preventing non-
compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
Identifying and responding to risks of material misstatement related to compliance with laws
and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect
on the financial statements from our general commercial and sector experience, and through discussion
with the directors and other management (as required by auditing standards) and discussed with the
directors and other management the policies and procedures regarding compliance with laws and
regulations.
As the Group is regulated, our assessment of risks involved gaining an understanding of the control
environment including the entity’s procedures for complying with regulatory requirements.
7 We have nothing to report on the other information in the Annual Report
The directors are responsible for the other information presented in the Annual Report together with
the financial statements. Our opinion on the financial statements does not cover the other information
and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our
financial statements audit work, the information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that work we have not identified material
misstatements in the other information.
We communicated identified laws and regulations throughout our team and remained alert to any
indications of non-compliance throughout the audit. This included communication from the Group audit
team to full scope component audit teams of relevant laws and regulations identified at the Group level
and a request for full scope component auditors to report to the Group audit team any instances of
non-compliance with laws and regulations that could give rise to a material misstatement in the Group
financial statements.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic report and the directors’ report;
in our opinion the information given in those reports for the financial year is consistent with the
•
financial statements; and
in our opinion those reports have been prepared in accordance with the Companies Act 2006.
•
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial statements including
financial reporting legislation (including related companies legislation), distributable profits legislation,
and taxation legislation, and we assessed the extent of compliance with these laws and regulations as
part of our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations where the consequences of non-
compliance could have a material effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation. We identified the following areas as those most
likely to have such an effect: payment services legislation, data protection laws, anti-bribery, regulatory
capital and liquidity, and certain aspects of company legislation recognising the financial and regulated
nature of the Group’s activities to provide payments services and its legal form. Auditing standards
limit the required audit procedures to identify non-compliance with these laws and regulations to
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared
in accordance with the Companies Act 2006.
Disclosures of emerging and principal risks and longer-term viability
We are required to perform procedures to identify whether there is a material inconsistency between
the directors’ disclosures in respect of emerging and principal risks and the viability statement, and the
financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in relation to:
•
the directors’ confirmation within the Corporate Governance Report on page 90 that they have
carried out a robust assessment of the emerging and principal risks facing the Group, including those
that would threaten its business model, future performance, solvency and liquidity;
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 133
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
•
•
the Principal risks and uncertainties disclosures describing these risks and how emerging risks are
identified, and explaining how they are being managed and mitigated; and
the directors’ explanation in the viability statement of how they have assessed the prospects of the
Group, over what period they have done so and why they considered that period to be appropriate,
and their statement as to whether they have a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to review the viability statement, set out on page 69 under the Listing Rules. Based
on the above procedures, we have concluded that the above disclosures are materially consistent with
the financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context of only the knowledge acquired during
our financial statements audit. As we cannot predict all future events or conditions and as subsequent
events may result in outcomes that are inconsistent with judgements that were reasonable at the time
they were made, the absence of anything to report on these statements is not a guarantee as to the
Group’s and Company’s longer-term viability.
9 Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 127, the directors are responsible for: the
preparation of the financial statements including being satisfied that they give a true and fair view; such
internal control as they determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error; assessing the Group and parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern; and using the going concern basis of accounting unless they either intend to liquidate the
Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue our opinion in an
auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
the financial statements.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material inconsistency between the
directors’ corporate governance disclosures and the financial statements and our audit knowledge.
A fuller description of our responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
Based on those procedures, we have concluded that each of the following is materially consistent with
the financial statements and our audit knowledge:
•
the directors’ statement that they consider that the annual report and financial statements taken as
a whole is fair, balanced and understandable, and provides the information necessary for shareholders
to assess the Group’s position and performance, business model and strategy;
the section of the annual report describing the work of the Audit Committee, including the significant
issues that the audit committee considered in relation to the financial statements, and how these
issues were addressed; and
the section of the annual report that describes the review of the effectiveness of the Group’s risk
management and internal control systems.
•
•
The Company is required to include the financial statements in an annual financial report prepared using
the single electronic reporting format specified in the TD ESEF Regulation. This auditor’s report provides
no assurance over whether the annual financial report has been prepared in accordance with that format.
10 The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
We are required to review the part of the Corporate Governance Statement relating to the Group’s
compliance with the provisions of the UK Corporate Governance Code specified by the Listing Rules for
our review. We have nothing to report in this respect.
8 We have nothing to report on the other matters on which we are required to report
by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent Company, or returns adequate for our
•
audit have not been received from branches not visited by us; or
the parent Company financial statements and the part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
James Tracey (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
27 July 2023
We have nothing to report in these respects.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 134
PayPoint Plc Annual Report 2023
Consolidated statement of profit or loss
Continuing operations
Revenue
Other revenue
Total revenue
Cost of revenue
Gross profit
Administrative expenses – excluding adjusting items
Operating profit before adjusting items
Adjusting items:
Exceptional items – administrative expenses
Amortisation of intangible assets arising on acquisition – administrative expenses
Operating profit
Finance income
Finance costs
Exceptional item – finance costs
Profit before tax from continuing operations
Tax on continuing operations
Profit from continuing operations
Discontinued operation
Profit from discontinued operation, net of tax
Exceptional item – gain on disposal of discontinued operation, net of tax
Profit for the year attributable to equity holders of the parent
Note
2,3
2,3
5
6
9
9
6
10
11
11
1 Amortisation of intangible assets arising on acquisition were not identified as adjusting items in the prior year financial statements (see note 1).
Earnings per share (pence)
Basic
Diluted
Earnings per share – continuing operations (pence)
Basic
Diluted
Underlying earnings per share – continuing operations before adjusting items (pence)
Basic
Diluted
Year ended
31 March 2023
£’000
Re-presented1
Year ended
31 March 2022
£’000
165,220
2,503
167,723
(64,257)
103,466
(50,083)
53,383
(5,317)
(2,574)
45,492
87
(2,718)
(287)
42,574
(7,864)
34,710
–
–
34,710
145,144
-
145,144
(48,725)
96,419
(46,357)
50,062
2,880
(2,394)
50,548
13
(2,046)
–
48,515
(8,986)
39,529
148
29,863
69,540
Year ended
Year ended
31 March 2023
31 March 2022
50.1
49.6
101.3
100.2
Year ended
Year ended
31 March 2023
31 March 2022
50.1
49.6
57.6
57.0
Year ended
Year ended
31 March 2023
31 March 2022
61.0
60.3
56.0
55.4
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 135
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Consolidated statement of comprehensive income
Items that will not be reclassified to the consolidated statement of profit or loss:
Remeasurement of defined benefit pension scheme
Deferred tax on defined benefit pension scheme
Items that may subsequently be reclassified to the consolidated statement of profit or loss:
Exchange differences on disposal of discontinued operation reclassified to profit or loss
Other comprehensive income for the year
Profit for the year
Total comprehensive income for the year attributable to equity holders of the parent
Note
18
10
11
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
353
(86)
–
267
34,710
34,977
–
–
1,645
1,645
69,540
71,185
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 136
PayPoint Plc Annual Report 2023
Consolidated statement of financial position
Non-current assets
Goodwill
Other intangible assets
Investment in associate
Convertible loan notes
Other investment
Property, plant and equipment
Net investment in finance lease receivables
Retirement benefit asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current tax asset
Cash and cash equivalents – clients’ funds, retailer partners’ deposits and card and voucher deposits
Cash and cash equivalents – corporate cash
Monies held in trust
Total current assets
Total assets
Current liabilities
Trade and other payables
Deferred consideration liability
Lease liabilities
Loans and borrowings
Bank overdraft
Total current liabilities
Non-current liabilities
Trade and other payables
Lease liabilities
Loans and borrowings
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Share-based payment reserve
Retained earnings
Total equity attributable to equity holders of the parent
31 March
2023
£’000
31 March
2022
£’000
Note
13
14
15
15
15
17
26
18
19
20
21
21
21
22
24
26
27
21
22
26
27
25
28
28
28
117,427
75,293
–
3,750
251
29,257
1,711
411
228,100
3,152
82,055
6,231
55,905
22,546
82,000
251,889
479,989
255,526
–
862
58,245
525
315,158
115
4,617
36,170
12,215
53,117
57,668
35,990
6,739
750
–
21,782
4,407
–
127,336
332
75,975
4,191
16,646
7,653
–
104,797
232,133
92,375
1,000
200
39,643
–
133,218
–
60
11,891
3,706
15,657
368,275
148,875
111,714
83,258
242
1,000
18,243
2,286
89,943
111,714
230
1,000
999
1,570
79,459
83,258
These financial statements were approved by the Board of Directors and authorised for issue on 27 July 2023 and were signed on behalf of the Board of Directors.
Nick Wiles
Chief Executive
27 July 2023
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 137
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Consolidated statement of changes in equity
Opening equity at 1 April 2021
Profit for the year
Exchange differences on translation of foreign operation
Comprehensive income for the year
Issue of shares
Equity-settled share-based payment expense
Vesting of share scheme
Reclassification of share premium into retained earnings
Dividends
Closing equity at 31 March 2022
Profit for the year
Total other comprehensive income
Comprehensive income for the year
Issue of shares
Equity-settled share-based payment expense
Vesting of share scheme
Dividends
Closing equity at 31 March 2023
Note
Share capital
£’000
Share premium
£’000
Merger reserve
£’000
229
–
–
–
1
–
–
–
–
230
–
–
–
12
–
–
–
242
4,975
–
–
–
1,000
–
–
(4,975)
–
1,000
–
–
–
–
–
–
–
1,000
999
–
–
–
–
–
–
–
–
999
–
–
–
17,244
–
–
–
18,243
28
29
29
30
28
29
29
30
Share-based
payment
reserve
£’000
Translation
reserve
£’000
2,005
(1,645)
–
–
–
–
868
(1,303)
–
–
1,570
–
–
–
–
1,330
(614)
–
2,286
–
1,645
1,645
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Retained
earnings
£’000
26,737
69,540
–
69,540
–
–
1,303
4,975
(23,096)
79,459
34,710
267
34,977
–
–
614
(25,107)
89,943
Total equity
£’000
33,300
69,540
1,645
71,185
1,001
868
–
–
(23,096)
83,258
34,710
267
34,977
17,256
1,330
–
(25,107)
111,714
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 138
PayPoint Plc Annual Report 2023
Consolidated statement of cash flows
Cash flows from operating activities
Net cash generated from operations
Corporation tax paid
Interest received
Interest paid
Net cash inflow from operating activities
Investing activities
Purchases of property, plant and equipment
Purchases of intangible assets
Acquisitions of subsidiaries net of cash acquired
Contingent consideration cash paid
Disposal/(acquisition) of investment in associate
Purchase of convertible loan note
Purchase of other investment
Proceeds from disposal of discontinued operation net of cash disposed
Net cash used in investing activities
Financing activities
Dividends paid
Proceeds from issue of share capital
Payment of lease liabilities
Repayments of loans and borrowings
Proceeds from loans and borrowings
Net cash generated/(used) in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
1
Interest received was presented within “Investing activities” in the prior year financial statements.
Reconciliation of cash and cash equivalents
Continuing operations
Corporate cash
Clients’ funds, retailer partners’ deposits and card and voucher deposits
Bank overdraft
Cash and cash equivalents
Note
33
16
24
15
15
15
11
30
26
27
27
Year ended
31 March
2023
£’000
Re-presented1
Year ended
31 March
2022
£’000
102,182
(6,204)
609
(2,973)
93,614
(7,802)
(4,900)
(45,580)
(1,000)
5,487
(3,000)
(251)
–
(57,046)
(25,107)
1
(261)
(22,074)
64,500
17,059
33,626
(9,161)
13
(1,913)
22,565
(5,185)
(5,627)
(4,543)
(2,000)
(6,739)
(750)
–
20,159
(4,685)
(23,096)
1
(243)
(61,469)
26,420
(58,387)
53,627
(40,507)
24,299
77,926
64,806
24,299
31 March
2023
£’000
31 March
2022
£’000
Note
22,546
55,905
(525)
77,926
7,653
16,646
–
24,299
21
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 139
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Company statement of financial position
Non-current assets
Investments in wholly owned subsidiaries
Investment in associate
Convertible loan notes
Other investment
Trade and other receivables
Total non-current assets
Current assets
Trade and other receivables
Current tax asset
Cash and cash equivalents – corporate cash
Total current assets
Total assets
Current liabilities
Trade and other payables
Deferred consideration liability
Loans and borrowings
Total current liabilities
Non-current liabilities
Loans and borrowings
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Share-based payment reserve
Retained earnings
Total equity attributable to equity holders of the parent
31 March
2023
£’000
31 March
2022
£’000
Note
15
15
15
15
20
20
22
24
27
27
28
28
28
221,837
–
3,750
251
11,477
237,315
2,530
1,984
1,186
5,700
139,105
6,739
750
–
26,155
172,749
3,108
–
301
3,409
243,015
176,158
83,298
–
57,788
141,086
54,765
1,000
37,833
93,598
36,000
177,086
10,833
104,431
65,929
71,727
242
1,000
18,243
2,286
44,158
65,929
230
1,000
999
1,570
67,928
71,727
The Company has taken advantage of the exemption under section 408 of the Companies Act 2006 and consequently the statement of profit or loss of the Company is not
presented as part of these financial statements. The profit of the Company for the financial year was £0.7 million (2022: £25.1 million).
These financial statements were approved by the Board of Directors and authorised for issue on 27 July 2023 and were signed on behalf of the Board of Directors.
Nick Wiles
Chief Executive
27 July 2023
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 140
PayPoint Plc Annual Report 2023
Company statement of changes in equity
Opening equity at 1 April 2021
Profit for the year
Issue of shares
Equity-settled share-based payment expense
Vesting of share scheme
Reclassification of share premium into retained earnings
Dividends
Closing equity at 31 March 2022
Profit for the year
Issue of shares
Equity-settled share-based payment expense
Vesting of share scheme
Dividends
Closing equity at 31 March 2023
Note
Share capital
£’000
Share premium
£’000
Merger reserve
£’000
28
29
29
30
28
29
29
30
229
–
1
–
–
–
–
230
–
12
–
–
–
4,975
–
1,000
–
–
(4,975)
–
1,000
–
–
–
–
–
242
1,000
999
–
–
–
–
–
–
999
–
17,244
–
–
–
18,243
Share-based
payment
reserve
£’000
2,005
–
–
868
(1,303)
–
–
1,570
–
–
1,330
(614)
–
2,286
Retained
earnings
£’000
59,686
25,060
–
–
1,303
4,975
(23,096)
67,928
723
–
–
614
(25,107)
44,158
Total equity
£’000
67,894
25,060
1,001
868
–
–
(23,096)
71,727
723
17,256
1,330
–
(25,107)
65,929
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 141
PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Company statement of cash flows
Cash flows from operating activities
Net cash generated from operations
Interest received
Interest paid
Net cash flow from operating activities
Investing activities
Increased capitalisation of existing investments
Acquisition transaction costs
Acquisitions of subsidiaries
Contingent consideration cash paid
Proceeds from/(Purchase of) investment in associate
Purchase of convertible loan note
Purchase of other investment
Proceeds from disposal of discontinued operation
Net cash (used in)/generated from investing activities
Financing activities
Dividends paid
Proceeds from issue of share capital
Repayments of loans and borrowings
Proceeds from loans and borrowings
Net cash generated from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
33
15
16
24
15
15
15
11
30
27
27
Year ended
31 March
2023
£’000
Re-presented
Year ended
31 March
2022
£’000
46,658
2
(2,810)
43,850
–
(1,837)
(61,925)
(1,000)
5,487
(3,000)
(251)
–
(62,526)
(25,107)
1
(19,833)
64,500
19,561
30,230
–
(1,655)
28,575
(5,000)
–
(5,944)
(2,000)
(6,739)
(750)
–
48,063
27,630
(23,096)
1
(57,833)
24,500
(56,428)
885
(223)
301
1,186
524
301
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 142
PayPoint Plc Annual Report 2023
Notes to the consolidated financial statements
1. Accounting policies
Statement of compliance with IFRS and basis of preparation
PayPoint Plc (‘PayPoint’ or the ‘Company’) is a public limited company and is incorporated and registered
in England in the UK under the Companies Act 2006. The Company’s ordinary shares are traded on
the London Stock Exchange. The Group and Company financial statements have been prepared in
accordance with UK-adopted International Accounting Standards (“UK-adopted IFRS”).
These financial statements are presented in Pounds Sterling rounded to thousands (£’000). The Pound
Sterling is the currency of the primary economic environment in which the Group operates.
Prior year re-presentation of administrative expenses for amortisation arising on acquisition of
intangible assets
For the current year the Group has updated its presentation of the expense for amortisation of
intangible assets arising on acquisition. In order for the user to understand the operational performance
of continuing business, the Group is changing from presenting “Operating Profit before exceptional
items” to “Operating Profit before adjusting items”. Adjusting items represents exceptional items and
amortisation of intangible assets arising on acquisition and so this latter expense is shown separately on
the face of the Consolidated statement of profit or loss as an adjusting item. The prior year results have
been re-presented on this basis.
Adoption of standards and policies
The accounting policies adopted by the Group in the financial statements for the year ended 31 March
2023 have been applied consistently to all periods set out in these group financial statements, with the
exception of the following policies which are set out below and were applicable for the first time in the
year ended 31 March 2023 following the acquisition of Appreciate Group PLC: i) Pension costs – defined
benefit schemes, ii) Revenue recognised by Love2shop in respect of vouchers and cards.
Pension costs – defined benefit schemes
Defined benefit pension schemes create an obligation on the entity to provide agreed benefits to current
and past employees. The Group’s defined benefit pension schemes are accounted for in accordance with
IAS19 Employee Benefits, under the principle that the cost of providing employee benefits should be
recognised in the period in which the benefit is earned.
The present value of the defined benefit obligation is measured by applying an actuarial valuation
method, using a set of actuarial assumptions. The fair value of the scheme assets is deducted from the
present value of the defined benefit obligation to determine the net deficit or surplus to be recognised
on the statement of financial position.
Service cost attributable to current and past periods is recognised in the Statement of profit or loss, as is
net interest on the net defined benefit asset or liability. Actuarial gains and losses, and returns on scheme
assets, are recognised through Other comprehensive income.
Revenue recognised by Love2shop in respect of vouchers and cards
The Group offers single-retailer and multi-retailer redemption products. The Group is a principal for
single-retailer products, on which revenue is recognised on a gross basis. For multi-retailer products,
the Group acts in the capacity of an agent, recording as revenue the net amount that it retains for its
agency services.
Multi-retailer products may be partially or fully redeemed and the unused amount (i.e. the non-refundable
unredeemed or unspent funds on a voucher, card or e-code at expiry) is referred to as ‘non-redemption
income’. Non-redemption income is recognised as other revenue when the card has expired and the right
of refund has lapsed.
Prior year re-presentation of interest received
For the current year the Group has updated its presentation of interest received. In the prior year
Consolidated statement of cash flows it was presented as “Investment income” within “Investing
activities”. In the current year it is presented as “Interest received” within “Net cash inflows from
operating activities”. The impact of the re-presentation is to increase both “Net cash inflows from
operating activities” and “Net cash used in investing activities” by £13,000. Similarly, interest received
relating to interest earned on deposits is included in “other revenue”; the value was £nil in the prior year.
The Group has made this change as this better reflects the operating nature of interest earned on cash
deposits, following the acquisition of Appreciate Group during the year.
New and revised IFRS in issue but not yet effective
No new standards or interpretations have been adopted in the Group’s accounting policies in the year
ended 31 March 2023. At the date of authorisation of these financial statements, new and revised
standards issued but not yet effective are set out below. It is anticipated the adoption of these
standards and interpretations in future periods will have no material impact on the financial statements
of the Group. These have not been adopted in the Group’s accounting policies:
• Amendment to IAS1: Presentation of Financial Statements and IFRS Practice Statement 2: Making
Materiality Judgements – Non-current liabilities with covenants (effective date 1 January 2024).
• Amendments to IFRS16 Leases – Lease liability in a sale and leaseback (effective date 1 January 2024).
•
• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors – definition
IFRS17 Insurance Contracts (effective date 1 January 2023).
of accounting estimates.
• Amendments to IAS 12 Income Taxes – Deferred tax related to assets and liabilities arising from a
single transaction.
• Amendments to IAS 12 Income Taxes – International tax reform, pillar two model rules.
• Amendments to IAS 1 Presentation of Financial Statements – Classification of liabilities as current or
non-current.
• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments – Disclosures:
supplier finance arrangements (issued on 25 May 2023).
Going concern
The financial statements have been prepared on a going concern basis. The Group manages its capital
to ensure that entities in the Group will be able to continue as a going concern while maximising the
return to shareholders through the optimisation of the debt-to-equity balance. The capital structure of
the Group consists of debt and equity attributable to equity holders of the parent company comprising
capital, reserves and retained earnings.
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Shareholder information
The Group’s policy is to borrow centrally to meet anticipated funding requirements. Our cash and
borrowing capacity provides sufficient funds to meet the foreseeable needs of the Group. At 31 March
2023, the Group had cash and cash equivalents of £78.4 million, consisting of £22.5 million corporate
cash and £55.9 million of clients’ funds, retailer partners’ deposits and card and voucher deposits. In
addition, the Group carried out a refinancing in the year to support the acquisition of Appreciate Group
PLC. The Group’s borrowing facilities consist of:
• £10.8 million amortising term loan which is due to be repaid in quarterly instalments over the next
financial year, completing in February 2024.
• £36.0 million amortising term loan repayable from May 2024 to February 2026 in equal, quarterly
instalments until the final, double payment.
• £75.0 million unsecured revolving credit facility with an additional £30.0 million accordion facility
(uncommitted) expiring in February 2026.
• £0.6 million block loan balances. The block loans are to be repaid by September 2024.
At 31 March 2023, £46.5 million (2022: £27.0 million) was drawn down from the revolving credit facility.
The Group has net assets of £111.7 million as at 31 March 2023, having made a profit of £34.7 million
and delivered a net cash inflow from operating activities of £93.6 million for the year then ended. The
Group had net current liabilities of £63.3 million (2022: £28.4 million).
The Directors have prepared cash flow forecast scenarios for a period of at least 12 months from the
date of approval of these financial statements, taking into account the Group’s current financial and
trading position, the impact of current economic conditions, the principal risks and uncertainties and
the strategic plans that are reviewed at least annually by the Board. In this ‘base case’ scenario, the cash
flow forecasts show considerable liquidity headroom and debt covenants will be met throughout the
period. The Directors have also considered the matters described in note 34 and concluded that it is not
appropriate to extend the going concern assessment beyond 12 months on the basis that the timing of
conclusion of the legal proceedings is so uncertain.
As detailed in the Financial Review, the Group has many product lines which deliver a profitable result and
strong cash generation. The ‘base case’ scenario considered the trends identified and explained in the
Review and included improved operating profit and related cash flows.
The key assumptions were:
•
In Shopping, the level of service fee continues to grow through sales and RPI increases, card revenues
continue to grow on increased number of merchants through sales growth and increased retention
and the cash withdrawal proposition continues to decline in line with use of cash.
In e-commerce, transactions and net revenue increase although not by as much as the rate in the
current year.
In Payments and Banking, revenues from digital increase, especially through Open Banking, whilst cash
declines in line with use of cash.
In Love2shop, with a full year contribution, billings to increase with the new initiatives outlined in the
strategic report. As previously announced, Love2shop is expected to be earnings enhancing in the
23/24 financial year.
•
•
•
• Costs increase reflecting the current economic pressures and growth in revenue.
• Finance revenue and finance costs both increase reflecting current rates in the market.
Additionally, the Directors have carried out an assessment of the principal risks and uncertainties and
applied several severe but plausible scenarios to test the Group viability further, as detailed on pages 69 to
70 in the Group’s Viability Statement. These included a reduction in the volume of transactions, loss of key
contracts and under-performance of acquisitions and new products or service lines. As mitigating actions,
we have assumed achievable reductions in expenditure and a reduction in the level of future dividends
following the payment of the final dividend of 18.6 pence per share declared in respect of financial year
ended 31 March 2023. The cash flow forecasts included stress test for the above scenarios to ensure
working capital movements within a reporting period do not trigger a covenant breach.
In both the ‘base case’ and severe but plausible scenarios, the forecasts indicated that there was
sufficient headroom and liquidity for the Group to continue with the existing facilities outlined above.
None of the significant judgements and estimates detailed on pages 143 to 145 made by the Directors
casts any doubt on the assessment to continue as a going concern.
Based on these assessments, the Directors confirm they have a reasonable expectation that the Group
will be able to continue in operation and meet its liabilities as they fall due over the period of not less
than 12 months from the date of approval of these financial statements and therefore have prepared
the financial statements on a going concern basis.
Use of judgements and estimates
In the application of the Group’s accounting policies, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered relevant. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only
that period, or in the period of the revision and future periods if the revision affects both current and
future periods.
Critical judgement: recognition of cash and cash equivalents and monies held in trust
The nature of payments and banking services means that PayPoint collects and holds funds on behalf
of clients as those funds pass through the settlement process and retains retailer partners’ deposits
as security for those collections. Following the Appreciate acquisition, it also holds card and voucher
deposits on behalf of agents, cardholders and redeemers, some of which is held in trust.
A critical judgement in this area is whether clients’ funds, retailer partners’ deposits and monies held in
trust are recognised in the statement of financial position, and whether they are included in cash and
cash equivalents for the purpose of the statement of consolidated cash flows. This includes evaluating:
(a) the existence of a binding agreement, such as a legal trust, clearly identifying the beneficiary of the
funds;
(b) the identification of funds, ability to allocate and separability of funds;
(c) the identification of the holder of those funds at any point in time; and
(d) whether the Group bears the credit risk.
The Group evaluated the April 2022 IFRIC agenda decision on demand deposits with restrictions on use
arising from a contract with a third party and concluded that it did not have any impact on the Group’s
existing accounting policy for cash and cash equivalents.
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PayPoint Plc Annual Report 2023
1. Accounting policies continued
Use of judgements and estimates continued
Where there is a binding agreement specifying that PayPoint holds funds on behalf of the client
(i.e. acting in the capacity of a trustee) and those funds have been separately identified as belonging to
that beneficiary, the cash and the related liability are not included in the statement of financial position.
Where funds are held in trusts set up for the purpose of ring-fencing monies belonging to agents,
cardholders and redeemers, they are recognised as monies held in trust on the statement of financial
position, as the Group has access to the interest on such monies, listed in note 21, and can, having met
certain conditions, withdraw the funds. However, given the restrictions over these monies, listed in note
21, the amounts held in trust and ring-fenced are not included in cash and cash equivalents, except where
they are deposits repayable on demand.
In all other situations the cash and corresponding liability are recognised on the statement of financial
position. Corporate cash and clients’ funds, retailer partners’ deposits and card and voucher deposits are
presented as separate line items within cash and cash equivalents on the statement of financial position.
The amounts recognised on the statement of financial position as at 31 March 2023 are as follows:
• Cash and cash equivalents – clients’ funds £12.0 million (2022: £9.8 million).
• Cash and cash equivalents – card and voucher deposits £37.7 million (2022: £nil).
• Cash and cash equivalents – retailers’ deposits £6.2 million (2022: £6.8 million).
• Cash and cash equivalents – corporate cash £22.5 million (2022: £7.7 million).
• Monies held in trust £82.0 million (2022: £nil).
Clients’ funds and card and voucher deposits held in trust off the Statement of financial position as at
31 March 2023 are £124.3 million (2022: £55.9 million).
Critical estimate: Valuation of the goodwill relating to the Handepay cash generating unit
Handepay’s principal activity is that of an independent sales organisation in the merchant acquiring
industry. It is a growth business that has strong cash generation and limited capital expenditure
requirements. The market in which it operates is highly competitive and facing several regulatory changes.
Handepay has a relatively small market share, however it continues to develop its proposition, sales force
and operations with an ambition to accelerate the growth of its market share. Handepay is a CGU for the
purposes of impairment testing.
The recoverable amount (based on value in use) of the Handepay CGU is £57.6m, which is £12.0m higher
than the carrying value. Therefore, the CGU and its assets continue to be measured at their carrying value.
The assumptions underpinning the recoverable amounts that are most sensitive to a reasonable
change include:
1. The average revenue growth assumption of 14.5% p.a.
2. Pre-tax discount rate of 15.7% p.a.
1.
2.
Revenue growth is primarily determined by the increased salesforce and sales efficiency, ultimately
driving the number of new merchants acquired. Over the five-year forecast period, headcount is
planned to grow by 31% with sales efficiency being based on historic rates. Merchant churn is
forecast to reduce by 14 percentage points from recent historical rates. This is driven by enhancing
the businesses retention teams, utilising algorithms, and the continuous improvement in the product
offering. The forecasts included existing revenue per merchant rates uplifted for approved repricing
activities. The Group prepares five-year cash flow forecasts derived from the most recent three-
year financial budgets approved by the Board which are extrapolated for a further two years and
subsequently extended to perpetuity.
The pre-tax risk-adjusted discount rate of 15.7% has been used to discount the forecast cash
flows calculated by reference to Handepay’s weighted average cost of capital (‘WACC’). The Group
engaged an external advisor to produce a WACC. The cost of equity is based on the risk-free rate
for long-term UK Government bonds adjusted for the beta (reflecting the systemic risk of Handepay
relative to the market as a whole) and the equity market risk premium (reflecting the required return
over and above a risk-free rate by an investor who is investing in the market as a whole). An alpha
factor has also been included in the discount rate to capture the risks in the cash flows not already
captured in the cost of equity and the cash flows. The recoverable amount would equal the carrying
value if the discount rate increased to 18.7%.
Reasonably possible changes in the above key assumptions can affect the recoverable amount (using the
value in use method) as follows:
Change of assumption:
Increase in pre-tax discount rate of 3.0%
Decrease in average revenue growth rate of 2.2% in each of years 1-5
Value of impairment of
Handepay CGU
£0.2m
£5.3m
The 2.2% reduction in average revenue growth rate in each of years 1-5 is a reasonably possible decrease
considering the competitive nature of the merchant acquiring sector, the current market share and the
current proposition.
A 3.0% increase in the pre-tax discount rate is considered to be a reasonably possible outcome
considering the alpha factor which captures the risks in the cash flows not already captured in the cost of
equity and the cash flows.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 145
PayPoint Plc Annual Report 2023
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Governance
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Shareholder information
Critical estimate: Valuation of acquired intangible assets on acquisition of Appreciate Group PLC
The fair value of acquired intangible assets (brands, customer relationships and developed technology)
recognised on the acquisition of Appreciate amounted to £40.4 million, with a related deferred tax liability
of £10.1 million. There is complexity in identifying a complete list of intangible assets. Management
engaged with subject-matter experts to assist with this process. Together with other assets acquired
and liabilities assumed, this resulted in goodwill of £59.8 million. The aggregate of the acquired intangible
assets and the goodwill exceeds the consideration paid due to net other liabilities having been acquired
on acquisition (see note 16). The estimate of fair value measurements of certain acquired intangible
assets is considered by management a critical estimate due to a significant risk of material adjustment in
the measurement period. The fair values are derived from assumptions, changes to which would have a
material impact on the fair values. Management estimate that the following acquired intangible assets fall
into this category:
• Non-contractual customer relationship: Appreciate Business Services (ABS).
• Brand: Park.
• Brand: Love2shop.
The table below summarises, for each of the above intangible assets, the fair values recognised, the key
assumptions used in deriving those fair values and the range of fair values obtained by changing one or
more of the assumptions:
Non-contractual
customer
relationship: ABS
Brand:
Park
Brand:
Love2shop
Fair value
Discount rate assumption
Attrition rate
Pre-tax royalty rate
Impact of 2%-point change to discount rate
Impact of 2%-point change to attrition rate
Impact of 0.5%-point change to pre-tax royalty rate
Value with both assumptions at favourable end
of range
Value with both assumptions at adverse end
of range
£8.8m
12.5%
22.6%
–
£4.2m
14.0%
–
4.5%
£7.6m
14.0%
–
4.5%
+/- £0.5m +£0.5m /- £0.4m +£0.8m /- £0.7m
+/- £0.2m
–
+/- £0.6m +£0.9m /- £0.8m
–
–
£9.1m
£8.5m
£5.2m
£3.3m
£9.3m
£6.2m
Given that the acquired intangible assets were not purchased in separate transactions, but rather as
part of the wider Appreciate business combination, the ‘market participant’ perspective is hypothetical.
Therefore, in measuring the acquired intangible assets at fair value, management considered the types
of potential market participants (e.g. competitors and comparable companies) to apply assumptions
that were consistent with the assumptions that market participants would use when pricing the
intangible assets. Given that the acquired intangible assets are not traded on an active market, have
no recent market transactions and are unique to Appreciate, management valued them using the
following approaches:
Brands – using a relief from royalty method. In setting the pre-tax royalty rate, management considered
the perceived strengths of the brands, based on factors including the level of brand awareness, their
longevity and profitability. The pre-tax royalty rate of 4.5% applied reflects market observable royalty
rates for other brands and trademarks in similar sectors.
Non-contractual customer relationships – using a multi-period excess earnings (MEEM) method, which
reflects market participant fair value by including forecast lifetime earnings which were specifically
attributable only to the non-contractual customer relationships existing at the acquisition date. The
discount rate applied to the MEEM incorporates general market rates of return at the acquisition date
as well as industry risks and the risks of the asset to typical market participant, based on an analysis of
comparable companies.
The residual £59.8 million goodwill represents the future economic benefits arising from the acquisition
that were not individually identified and separately recognised at the acquisition date. The buyer-specific
synergies subsumed into goodwill did not exist at the market-participant level at the acquisition date
because i) they result from combining PayPoint and Appreciate, enabling PayPoint to cross-sell to the
Appreciate customer base and ii) the new customer relationships and sectors are anticipated to arise
post-acquisition but were not identifiable at the acquisition date. The workforce and operating expertise
are not separately identifiable intangible assets and are also included in goodwill.
Alternative performance measures
Non-IFRS measures or alternative performance measures are used by the Directors and management for
performance analysis, planning, reporting and incentive-setting purposes. They have remained consistent
with the prior year with the exception of the addition of the Billings measure, following the acquisition of
Appreciate. The Group has also added EBITDA and pulled out amortisation of intangible assets arising
on acquisition as well as exceptional items. These measures are included in these financial statements to
provide additional useful information on performance and trends to shareholders.
These measures are not defined terms under IFRS and therefore they may not be comparable with
similarly titled measures reported by other companies. They are not intended to be a substitute for,
or superior to, IFRS measures.
Underlying performance measures (non-IFRS measures)
Underlying performance measures allow shareholders to understand the operational performance in the
year, to facilitate comparison with prior years and to assess trends in financial performance. They usually
exclude the impact of one-off, non-recurring and exceptional items and the amortisation of intangible
assets arising on acquisition, such as brands and customer relationships.
Love2shop billings (non-IFRS measure relating solely to the Love2shop segment)
Billings represents the value of goods and services shipped and invoiced to customers during the year
and is recorded net of VAT, rebates and discounts. Billings is an alternative performance measure, which
the directors believe provides an additional measure of the level of activity other than total revenue.
This is due to revenue from multi-retailer redemption products being reported on a ‘net’ basis, whilst
revenue from single-retailer redemption products and other goods are reported on a ‘gross’ basis.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 146
PayPoint Plc Annual Report 2023
1. Accounting policies continued
Alternative performance measures continued
Net revenue (non-IFRS measure)
Net revenue is total revenue less commissions paid (to retailer partners and Park Christmas agents)
and the cost of revenue for items where the Group acts in the capacity as principal (including single-
retailer vouchers and SIM cards). This reflects the benefit attributable to the Group’s performance,
eliminating pass-through costs which creates comparability of performance under both the agent and
principal revenue models. It is a key consistent measure of the overall success of the Group’s strategy.
A reconciliation from total revenue to net revenue is included in note 4.
Total costs (non-IFRS measure)
Total costs comprise other costs of revenue (note 4), administrative expenses, finance income and
finance costs. Total costs exclude adjusting items, being exceptional costs and amortisation of intangible
assets arising on acquisition.
Earnings before interest, tax, depreciation and amortisation (EBITDA) (non-IFRS measure)
The Group now presents EBITDA as it is widely used by investors, analysts and other interested parties
to evaluate profitability of companies. This measures earnings from continuing operations before interest,
tax, depreciation and amortisation. See page 73 for a reconciliation from profit before tax to EBITDA.
Adjusting items (non-IFRS measure)
Adjusting items consist of exceptional items and amortisation of intangible assets arising on acquisition.
These items are presented as adjusting items in the consolidated statement of profit or loss, as they do
not reflect the operational performance of the Group.
Underlying earnings before interest, tax, depreciation and amortisation (Underlying EBITDA)
(non-IFRS measure)
The Group also now presents underlying EBITDA, which comprises EBITDA, as defined above, excluding
exceptional items. See page 73 for a reconciliation from profit before tax to underlying EBITDA.
Year ended
31 March
2023 £’000
Re-presented1
Year ended
31 March 2022
£’000
Exceptional items – acquisition costs expensed
Exceptional items – impairment loss on reclassification of investment in
associate to asset held for sale
Exceptional items – finance costs
Exceptional items – revaluation of deferred, contingent consideration
liability
Amortisation of intangible assets arising on acquisition
Total adjusting items
4,065
1,252
287
-
2,574
8,178
-
-
-
(2,880)
2,394
(486)
1
Amortisation of intangible assets arising on acquisition is reported separately on the face of the Consolidated statement of profit
or loss as an adjusting item. The prior year results has been re-presented on this basis. (see note 1).
Effective tax rate (non-IFRS measure)
Effective tax rate (note 10) is the tax cost as a percentage of the net profit before tax.
Reported dividends (non-IFRS measure)
Reported dividends are based on a financial year’s results from which the dividend is declared and consist
of the interim dividend paid and final dividend declared (note 30). This is different to statutory dividends
where the final dividend on ordinary shares is recognised in the following year when it is approved by the
Company’s shareholders.
Cash generation (non-IFRS measure)
Cash generation reflects profit before tax, depreciation, amortisation and non-cash exceptional items
adjusted for working capital (excluding movement in clients’ funds, retailer partners’ deposits and card
and voucher deposits) as detailed in the financial review. This measures the cash generated which can be
used for tax payments, new investments and financing activities.
Underlying earnings per share from continuing operations (non-IFRS measure)
Underlying earnings per share is calculated by dividing the net profit from continuing operations before
exceptional items and amortisation of intangible assets arising on acquisition attributable to equity
holders of the parent by the basic or diluted weighted average number of ordinary shares in issue.
Underlying profit before tax (non-IFRS measure)
The calculation of underlying profit before tax is as follows:
Profit before tax from continuing operations
Total adjusting items
Underlying profit before tax
Underlying profit after tax (non-IFRS measure)
The calculation of underlying profit after tax is as follows:
Profit after tax from continuing operations
Total adjusting items
Tax on adjusting items
Underlying profit after tax
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
42,574
8,178
50,752
48,515
(486)
48,029
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
34,710
8,178
(644)
42,244
39,529
(486)
(599)
38,444
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 147
PayPoint Plc Annual Report 2023
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Shareholder information
Net corporate debt (non-IFRS measure)
Net corporate debt represents cash and cash equivalents excluding cash recognised as clients’ funds and
retailer partners’ deposits, less bank overdraft and amounts borrowed under financing facilities (excluding
IFRS 16 liabilities). The reconciliation of cash and cash equivalents to net corporate debt is as follows:
Principal and Agent
Under IFRS15, the Group is a principal (and records revenue on a gross basis) if it controls the promised
good or service before transferring it to the customer. The Group is an agent (and records as revenue the
net amount that it retains for its agency services) if its role is to arrange for another entity to provide the
good or service.
Cash and cash equivalents – corporate cash from continuing operations
Less:
Bank overdraft
Loans and borrowings (note 27)
Net corporate debt
31 March
2023
£’000
22,546
(525)
(94,415)
(72,394)
31 March
2022
£’000
7,653
–
(51,534)
(43,881)
Significant accounting policies
Basis of consolidation
PayPoint Plc (the ‘Company’) acts as a holding company. The accounts of the Company and its
investments in entities controlled by the Company (its subsidiaries) are consolidated in the Group
accounts. Control is achieved when the Company has power over an entity, exposure to variable returns
and the ability to use that power to affect its returns from the entity. The Company reassesses its control
over an entity if facts and circumstances indicate that there is a change to any of the three elements of
control listed above. The results of subsidiaries acquired or sold are consolidated for the periods from
or to the date on which control exists. All intergroup transactions, balances, income and expenses are
eliminated on consolidation. All the subsidiaries in the Group, a list of which are presented in note 15
of the financial statements, apply accounting policies which are consistent with those of the Group.
In the current year, the Company disposed of its investment in an associate over which it had significant
influence but not control. The results of the associate prior to disposal were not consolidated, but instead
accounted for using the equity method as disclosed in the accounting policy for investments in associates.
Revenue
Revenue, as reported in the Consolidated statement of profit or loss, is derived from contracts with
customers. It represents the value of services and goods delivered or sold to clients, retailer partners and
SME partners. It is measured using the fair value of the consideration received or receivable, net of value-
added tax. Performance obligations are identified at contract inception and the revenue is recognised
once the performance obligations are satisfied. Upfront payments for management fees and set-up and
development fees in respect of contracts with clients, retailer partners and SME partners are deferred
and recognised on a straight-line basis over the contracted period, which appropriately reflects that
the clients, retailer partners and SME partners receive and consume the benefits of those performance
obligations evenly throughout the contract.
The Group acts as principal for the following Love2shop services:
• Single-retailer redemption products.
• Administrative support for multi-retailer cardholders.
and for the sale of SIM cards and some e-money through PayPoint.
The Group acts as agent for all services provided through PayPoint, other than the sale of SIM cards and
some e-money, and for the following multi-retailer Love2shop redemption products:
• Love2shop vouchers.
• Flexecash (c) cards and e-codes.
• Mastercards.
Timing of revenue recognition
1. Shopping and e-commerce
The Group provides shopping and e-commerce services to retailer partners, which form part of
PayPoint’s network, and SME partners.
Shopping (retail services) revenue comprises:
• Service fees from retailers that use PayPoint One, legacy terminals and EPoS, all of which are charged
for on a weekly or monthly basis, and recognised on a straight-line basis over the period of the
contract. Retailers simultaneously receive and consume the benefits related to the services fee;
therefore, a straight-line approach appropriately reflects the transfer of the service.
• ATM and Counter Cash transaction fees which are recognised when each transaction is processed.
• Home delivery revenue from PayPoint’s partnership with Snappy Shopper which enables local store to
door delivery and click and collect for retailer partners. PayPoint earns a commission on the turnover
which is recognised when the corresponding transactions are processed.
• Fees for receipt advertising and FMCG revenue from digital vouchering, digital screen advertising,
sales data, and PayPoint’s retailer engagement channels which are recognised over the period of the
campaign on a straight-line basis.
• Operating lease income from ATMs which is recognised on a straight-line basis over the expected
lease term.
• Other retail services revenue including failed Direct Debits which are recognised at the time the
transaction occurs.
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1. Accounting policies continued
Significant accounting policies continued
Shopping (card payments) revenue comprises:
• Commissions and fees from card payments which are recognised when each transaction is processed.
• Finance lease income from card terminals is recognised over the expected lease term using the sum
of digits method.
• Operating lease income from card terminals which is recognised on a straight-line basis over the
expected lease term.
• Commissions from PayPoint’s Business Finance products in partnership with YouLend which is
earned on the loan amounts outstanding from card payment retailers and recognised when the loan
is granted to the retailer.
e-commerce revenue comprises:
• Fees earned for processing parcels which are recognised when each parcel has been delivered or
returned through the PayPoint network.
• Royalty income from the Collect+ brand which is recognised as the parcels are processed.
• Cash through to digital: PayPoint provides the physical network of retail locations for consumers to
convert cash into electronic funds with online organisations. Consumers pay for a ‘pin on receipt’ code
in any of PayPoint’s retail locations and then can use that value online with their chosen digital brand or
service across a comprehensive portfolio of banking, e-commerce, gaming and loyalty card partners.
3. Love2shop
Love2shop revenue comprises:
• Multi-retailer redemption products (Love2shop vouchers, Flexecash® cards and e-codes, and
Mastercards). Service fees earned from the retailers are recognised when the products are redeemed.
• Single-retailer redemption products (Third party vouchers, cards and e-codes). Revenue is recognised
on despatch.
• Multi-retailer cardholder fees, earned for services provided to cardholders such as issue, dealing with
lost, stolen or damaged cards and post-expiry fees. Revenue is recognised when the fees are levied.
Other revenue
Other revenue, as reported in the Consolidated statement of profit or loss, is IFRS9 revenue. It comprises:
2. Payments and banking
Payments and banking revenue is recognised as performance obligations are satisfied which is usually at
the point in time each transaction is processed. Other than for the sale of SIM cards as principal, PayPoint
is contracted as agent in the supply of payments and banking services and accordingly the commission
earned from clients for processing transactions is recognised as revenue when each transaction
is processed.
Payments and banking revenue comprises:
• Cash bill payments: customers of PayPoint’s clients can pay their bills (due to the client) over-the-
counter at any of PayPoint’s retailer partners. PayPoint provides the technology for recording the
payment of bills and transmission of that payment data to the client. PayPoint then collects bill
payment funds from retailer partners and remits those funds to clients.
• Cash top-ups: customers of PayPoint’s clients can top up their mobiles over-the-counter at any of
PayPoint’s retailer partners. This category also includes revenue from the sale of SIM cards which is
primarily earned from the mobile operators based on the value of top-ups after the initial activation.
This revenue is contingent on the customer actions and is recognised at the point in time when the
consumer tops up the SIM card. PayPoint contracts as principal for SIM card sales as it obtains control
of the SIM cards before transferring control to the customer, therefore revenue is recognised at the
gross sale price and cost of revenue includes the related cost.
• Digital payments: MultiPay is an integrated solution offering a full suite of digital payments. It enables
transactions online and through smartphone apps and text messages, as well as event payments, over
the counter, over the phone and via interactive voice response (IVR) systems. It also supports a full range
of Direct Debit options, including scheduling collections, as well as new product developments such as
PayByLink, recurring payments and Event Streamer. CashOut enables the rapid dispersal of funds through
secure digital channels, including the Payment Exception Service which is run for the Department for
Work and Pensions by i-movo, delivering payments to those without access to a standard bank account.
i-movo also issues digital newspaper vouchers which enable newspaper publishers to digitise consumer
subscription services and home news delivery in local convenience stores.
1. Payments and banking
•
Interest earned on clients‘ funds and retailer partners’ deposits.
2. Love2shop
• Multi-retailer non-redemption revenue (where the end-user has the right of refund), recognised when
the product has expired and the right of refund lapsed.
• Multi-retailer non-redemption revenue (where the end-user has no right of refund), recognised on
•
expiry.
Interest generated by investing cash received from customers. This applies both to cash received for
the Park Christmas Saver business where customers save with the Group throughout the year, and to
all other pre-paid products. Funds associated with customers are included in both monies held in trust
and cash and cash equivalents.
Non-redemption income represents the unused amount (i.e. the non-refundable unredeemed or unspent
funds) on a voucher, card or e-code at expiry, where there is no right of refund, or on expiry and lapse of
the refund period, where there is a right of refund.
Cost of revenue
Cost of revenue primarily consists of expenses related to delivering our services and products.
These include retailer commissions, the cost of single-retailer vouchers, cards and codes, SIM cards and
e-money (where the group is principal), depreciation and amortisation of assets used to deliver services,
field sales costs, transaction costs, terminal and ATM maintenance costs and telecommunications costs.
Retailer partner commission costs
Retailer partner commission costs represent the fees due to PayPoint’s retailer partners for providing
PayPoint’s services in their store. These costs are recognised as an expense within cost of revenue when
the transaction or parcel is processed.
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Strategic report
Governance
Governance
Financial statements
Financial statements
Shareholder information
Foreign currency
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transaction. At each reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates prevailing on the statement of financial
position date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign
currency are translated at the rates prevailing at the date when fair value was determined. Gains and
losses arising on translation are included in net profit or loss for the year.
Pension costs
Defined benefit plan
The fair value of the plan assets less the present value of the defined benefit obligation is recognised in
the statement of financial position as the retirement benefit asset, after applying the asset ceiling test.
The limit on the recognition of a defined benefit pension asset is measured as the value of economic
benefit available to the Group in the form of refunds or reductions in future contributions, in accordance
with the rules of the pension schemes.
Regular valuations are prepared by independent professionally qualified actuaries on the projected
unit credit method. The valuations are carried out every three years and updated on a yearly basis for
accounting purposes. These determine the level of contribution required to fund the benefits set out
in the rules of the plans and allow for the periodic increase of pensions in payment.
Finance income
Finance income comprises IFRS9 income reported as “Other revenue” in the income statement (namely
bank deposit interest received on monies held at financial institutions and non-redemption income) and
interest income on defined benefit pension scheme assets, reported as “Finance income” in the income
statement. Interest is recognised as earned, which reflects the effective interest rate method.
Finance costs
Finance costs comprises interest costs on loans and borrowings and bank overdrafts and interest
expense on the defined benefit pension scheme obligations and leases. Finance costs are recognised as
an expense in the period in which they are incurred.
Exceptional items
Exceptional items are those which are considered significant by virtue of their nature, size or incidence.
These items are presented as exceptional within their relevant income statement categories to assist in
the understanding of the performance and financial results of the Group, as they do not form part of the
underlying business. The current year exceptional items are:
• £4.07 million one-off costs related to the acquisition of Appreciate Group PLC on 28 February 2023.
• £1.25 million one-off impairment loss on the reclassification of the Group’s interest in Snappy
Shopper Ltd from an investment in associate to an asset held for sale. The Group subsequently
disposed of its interest in the current year.
• £0.29 million one-off refinancing costs related to the acquisition of Appreciate Group PLC.
The scheme is closed to future accrual for years’ service but pensions are still dependent on actual final
salaries. Consequently, the Group may have an amendment in future where salary rises differ from those
projected. For any related plan amendment, these are recognised immediately in the statement of profit
or loss.
Taxation
The Group’s policy is to pay tax when due but to minimise tax payments where practically possible,
without engaging in aggressive tax schemes.
Remeasurements comprise actuarial gains and losses on the obligations and the return on scheme assets
(excluding interest). They are recognised immediately in other comprehensive income in the Consolidated
statement of comprehensive income. Net interest cost is calculated by applying the discount rate on
liabilities to the net pension liability or asset (adjusted for cash flows over the accounting period) and
is recognised within administrative expenses.
The tax expense represents the amount payable in respect of the year under review based on the taxable
profit for the year and the provision for deferred tax. Taxable profit differs from net profit as reported in
the income statement because it excludes items of income or expense that are taxable or deductible in
other years and items that are not taxable or deductible.
Defined contribution plans
The Group makes payments to a number of defined contribution pension schemes. Pension costs are
recognised as an expense when employees have rendered services entitling them to the contributions.
Differences between contributions payable in the year and contributions actually paid are shown as
either accruals or prepayments in the statement of financial position.
Share-based payments
Share-based payment arrangements are equity settled. Equity-settled share-based payments are
measured at fair value at the date of grant. The fair value at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting period and adjusted for
non-market-based conditions where they will not vest (i.e. leavers). For equity-settled share-based
payment arrangements with market-based vesting conditions, fair value is measured by use of a Monte
Carlo simulation. The fair value of other equity-settled share-based payment arrangements where no
market-based vesting conditions exist is based on the share price at the date of the grant.
The Group’s liability for current tax is calculated using tax rates that are applicable to the current year.
Deferred tax is provided in full on taxable temporary differences between the tax bases of assets
and liabilities and their carrying amounts. Deferred tax is calculated using tax rates that have been
substantively enacted by the balance sheet date. Deferred tax assets are recognised on deductible
temporary differences to the extent that it is probable that future taxable profit will be available
against which the tax asset will be realised. Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where the Group is able to control the reversal
of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
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1. Accounting policies continued
Significant accounting policies continued
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of
the asset to be recovered. Deferred tax is charged or credited in the statement of profit or loss, except
when it relates to items charged or credited to other comprehensive income or equity, in which case the
deferred tax is recorded in other comprehensive income or equity.
Financial instruments
The financial asset or liability is initially recognised when the Group becomes party to the contractual
instrument. The Group classifies derivative financial instruments, which consist of foreign exchange
contracts, as held for trading and measures the financial instruments at fair value through profit or loss.
The Group’s derivative financial instruments are valued using forward exchange rates at the balance
sheet date.
The Group discloses the fair value measurements of financial assets and liabilities using three levels
as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
Financial liabilities
Multi-retailer products can be exchanged for goods or services with redemption partners at any
point until they are fully utilised or they expire. Redemption partners are paid the value of the product
redeemed, less the commission earned by the company. Multi-retailer products are accounted for as
a financial liability under IFRS 9 as there is a contractual obligation to deliver cash to the redemption
partners on behalf of the cardholder and there is no unconditional right to avoid delivering cash to settle
this contractual obligation.
A financial liability equivalent to the value of the card, less any discount, is recognised at the point of
sale. The financial liability is reduced as funds are settled to the redemption partner after the value,
part or whole, is spent with the relevant redemption partner. Discount costs are released to the income
statement in line with the reduction in underlying liability. Profits on products that expire without being
redeemed are recognised in income after the expiry date of the redemption rights, at which point the
financial liability and associated discount are also derecognised.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method. Acquisition-related costs
are recognised in profit or loss as incurred. The cost of the acquisition is measured at the aggregate
of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree. The acquired identifiable
assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business
Combinations are recognised at their fair value at the acquisition date.
When the initial accounting for a business combination is determined, it is done so on a provisional
basis. Measurement period adjustments to these provisional values may be made within 12 months
of the acquisition date and are effective as at the acquisition date, if new information about facts and
circumstances that existed at the acquisition date is obtained and, if known, would have resulted in the
recognition of those assets and liabilities at that date.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s
interest in the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition.
Goodwill is not amortised and is measured at the amount initially recognised less any accumulated
impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units
or groups of cash-generating units. The cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication of impairment. This is done by
determining the recoverable amount. If the recoverable amount of the cash-generating unit is less than the
carrying amount, an impairment loss is recognised by first allocating the impairment to goodwill and then to
the other assets on a pro-rata basis of the carrying amount of each asset in the unit. Any impairment loss
for goodwill is recognised immediately in profit or loss and is not reversed in subsequent years.
On disposal of a cash-generating unit, the related goodwill is included in the determination of the profit
or loss on disposal.
Intangible assets
Recognition on acquisition
The Group has recognised acquired brands, customer relationships and developed technology intangible
assets at fair value in accordance with IAS 38 Intangible Assets, which are amortised over their estimated
useful economic lives as follows:
• Brands – eleven to fifteen years
• Customer relationships – two to thirteen years
• Developed technology – one to seven years
Acquired brands are valued using the relief-from-royalty method using an estimation of future revenues
and a market-based royalty rate that an acquirer would pay in an arm’s length licensing arrangement to
secure access to the same rights. The theoretical royalty payments are discounted to obtain the cash
flows to determine the present asset value. A tax amortisation benefit is applied to reflect the present
value of the expected benefits of amortising the value of the intangible asset over its useful tax life.
Acquired customer relationships are valued using the multi-period excess earnings method (‘MEEM
approach’) by estimating the total expected income streams from customer relationships and deducting
portions of the cash flow that can be attributed to supporting or contributory assets (including
workforce). The residual income streams are discounted. No tax amortisation benefit is applied.
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Acquired developed technology is valued using a depreciated replacement cost method, which requires
an estimate of all the costs a typical market participant would incur to generate an exact replica of the
intangible asset in the context of the acquired business. The depreciated replacement cost method takes
into account factors including economic and technological obsolescence.
The useful life of acquired intangible assets is based on factors including the expected usage of
the asset, typical product lifecycles for the asset (reflecting the ability to generate the expected
future economic benefits with reasonably low levels of required maintenance expenditure), technical,
technological, commercial or other types of obsolescence, expected actions by competitors and the
period of the contractual or other legal rights over which the entity expects to use the asset including
renewal, which determines future amortisation charges.
Development expenditure
The Group develops software and other intangible assets including EPoS services and the digital
payments platform which generate future economic benefits through cost savings or revenue from
clients, retailer partners and SME partners. Development expenditure on large projects is recognised
as an intangible asset if the product or process is technically and commercially feasible and the Group
intends to and has the technical ability and sufficient resources to complete development, future
economic benefits are probable and if the Group can measure reliably the expenditure attributable to the
intangible asset during its development. The costs that are capitalised are the directly attributable costs
necessary to create and prepare the asset for operations. Development costs recognised as an intangible
asset are amortised on a straight-line basis over its useful life, which is between three and ten years.
Other software costs are recognised in administrative expenses when incurred.
Costs incurred in the configuration and customisation of cloud-hosted SaaS arrangements are expensed
where they do not give rise to an identifiable intangible asset which the Group controls. Amounts
paid to the cloud vendor for configuration and customisation that are not distinct from access to the
cloud software are expensed over the SaaS contract term. In limited circumstances, configuration and
customisation costs may give rise to an identifiable intangible asset, for example, where code is created
that is controlled by the Group.
Investments
Investments in subsidiaries and associates in the Company accounts are stated at cost less
accumulated impairments.
Investments in associates in the Group accounts are initially recognised at cost and subsequently
adjusted, where material, for the Group’s share of the profit or loss after tax, distributions received
and accumulated impairments using the equity method. See note 15.
Investments in convertible debt instruments (embedded derivatives) in the Group and Company
accounts are stated at fair value.
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated depreciation and impairment.
Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each
asset on a straight-line basis over its expected useful life. The estimated useful lives are as follows and
are reviewed on an annual basis:
• Freehold land – not depreciated
• Freehold building – forty to fifty years
• Leasehold improvements – over the lease term or the useful economic life of three to fifteen years,
whichever is lower
• PayPoint One terminals – seven years
• Card terminals – three to seven years
• Other terminals – five years
• ATMs – five years
• Other classes of assets – three to five years
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between
the sale proceeds and the carrying amount of the asset and is recognised in profit or loss.
Impairment of property, plant and equipment and amortising intangible assets
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment
and intangible assets to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that
are independent from other assets, the Group estimates the recoverable amount of the cash-generating
unit to which the asset belongs. An intangible asset with an indefinite useful life and intangible assets not
yet available for use are tested for impairment annually and whenever there is an indication that the asset
may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised as an expense immediately.
The reversal of any impairment loss is limited by the net book value to which the relevant asset would have
been reduced, had no impairment occurred. A reversal of an impairment loss is recognised as income.
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1. Accounting policies continued
Significant accounting policies continued
Inventories
Inventories comprises Love2shop cards, stocks of SIM cards and card terminals. These are stated at
the lower of cost or net realisable value. Net realisable value is based on estimated selling price in the
ordinary course of business less cost of disposal having regard to the age, saleability and condition
of the inventory.
Where the Group trades as principal for the sale of Love2shop cards and SIM cards, the cost of these is
included in inventories. Where the Group acts as an agent, the cost of these is not included in inventories.
Trade and other receivables
Trade receivables are initially recorded at fair value and represent the amount of commission and fees
due from clients, fees from retailers and monies due from entities for card and voucher purchases, for
which payment has not been received, less an allowance for doubtful accounts that is estimated based
on factors such as the credit rating of the customer, historical trends, the current economic environment
and other information.
The Group has used the expected credit loss (‘ECL’) model and has adopted an allowance matrix for
trade receivables, whereby these are segmented according to number of days outstanding and an
appropriate probability of impairment is applied to each category based on historical loss experience
and adjusted for information about current and reasonable supportable future conditions.
Items in the course of collection represent gross transaction values received by retailer partners for
clients which have not yet been collected by the Group, which bears the credit risk for these amounts.
Accrued income
Unbilled revenue is a receivable and is presented as accrued income on the balance sheet.
Cash and cash equivalents
For the purpose of the statement of cash flows and statement of financial position, cash and cash
equivalents comprise cash at bank and in hand, short-term deposits with original maturity of less than
three months and bank overdrafts. Cash and cash equivalents are subject to insignificant risk of changes
in value. Cash comprises corporate cash, clients’ funds and retailer partners’ deposits.
Corporate cash consists of cash available to the Group for its daily operations. Clients’ funds consist
of cash collected on behalf of clients from retailer partners, but not yet transferred to clients, and are
held in PayPoint’s bank accounts. Retailer partners’ deposits consist of retailer partners’ funds held as
security against default, except if held in trust (in which case they are not recorded in the statement
of financial position). Card and voucher deposits represent funds collected on behalf of clients of the
Love2shop business where the Group has title to the funds.
Monies held in trust
Monies held in trust are largely in fixed-term bank deposit accounts and consist of customer
prepayments and an e-money float. The customer prepayments represent cash held on behalf of the
Group’s agents. The e-money float represents the value of the obligations of the Group to cardholders
and redeemers.
Monies held in trust are recognised on the statement of financial position as the Group has access to the
interest on these monies and can, having met certain conditions, withdraw the funds. However, given the
restrictions over these monies, they are not included in cash and cash equivalents for the purposes of the
statement of cash flows.
Trade and other payables
Trade payables are initially recorded at fair value and represent the value of invoices received from
suppliers for purchases of goods and services for which payment has not been made.
Settlement payables represent gross transaction values received by retail agents that have not yet been
settled to clients. An equivalent balance “Items in the course of collection” is held within Trade and other
receivables (note 20).
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of
a past event, it is probable that an outflow of resources will be required to settle the obligation and the
amount can be reliably estimated.
Deferred consideration
Where a business combination agreement provides for an adjustment to the consideration, the Group
accrues the fair value, based on the estimated additional consideration payable as a liability at the
acquisition date. To the extent that the consideration is payable after more than one year from the
acquisition date, the consideration is discounted at an appropriate interest rate and carried at net present
value in the consolidated statement of financial position. The discount component is then unwound as a
finance cost in the consolidated statement of profit or loss over the life of the earnout. Where the deferred
consideration is contingent on future performance over the contractual earnout period, the liability is
measured against the contractually agreed performance targets at each subsequent reporting date
with any adjustments recognised in the consolidated statement of profit or loss. Where the contingent
consideration is contractually linked to ongoing employment of the founders over the contractual period
it is treated as an expense and recognised in the consolidated statement of profit or loss.
Loans and borrowings
Loans and borrowings are initially measured at fair value, net of any attributable transaction costs, and are
subsequently measured at amortised cost using the effective interest rate method.
Leases
The Group assesses whether a contract is, or contains, a lease at inception of the contract. A contract is,
or contains, a lease if the contract conveys the right to control the use of an identified asset for a period
of time in exchange for consideration.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component based on their relative standalone price. However,
for leases of land and buildings in which it is a lessee, the Group has elected not to segregate non-lease
components and account for the lease and non-lease components as a single lease component.
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As a lessee
Where the Group is lessee, it recognises a right-of-use asset and a corresponding lease liability, except
for short-term leases and leases of low value assets. For these leases, the Group recognises the lease
payment as an operating expense on a straight-line basis over the term of the lease.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the group’s incremental borrowing rate. The lease liability is subsequently increased
by the interest cost on the lease and decreased by payments made. The lease liability is presented as a
separate line in the consolidated statement of financial position. The Group remeasures the lease liability
and makes a corresponding adjustment to the right-of-use asset whenever there has been a lease
payment change, the lease contract is modified or any other significant event.
The right-of-use asset is initially measured at cost and subsequently recognised at cost less accumulated
depreciation and impairment losses. The right-of-use asset is depreciated using the straight-line method
over the shorter of the period of the expected lease term and useful life of the underlying asset. The
depreciation starts at the commencement date of the lease. The right-of-use asset is presented within
property, plant and equipment. The Group applies IAS 36 to determine whether a right-of-use asset is
impaired and accounts for any identified loss as described in the ‘Property, plant and equipment’ policy.
As a lessor
Where the Group leases assets to a third party as a lessor, the Group assesses whether the contract is a
finance lease or operating lease, depending on whether the lease transfers substantially all the risks and
rewards incidental to ownership of the underlying asset.
2. Segmental reporting
Segmental information
The Group provides a number of different services and products. However, prior to the acquisition of
Appreciate Group PLC on 28 February 2023, the different services and products provided by the Group
did not meet the definition of different operating segments under IFRS 8, as the chief operating decision
maker (CODM), the Executive Board, did not review them separately to make decisions about resource
allocation and performance. Therefore, the Group had only one operating segment.
The Group considers the Appreciate business, now known as Love2shop, to be a separate segment
from its pre-acquisition PayPoint business, since discrete financial information is prepared and it offers
different products and services. Furthermore, the CODM reviews separate monthly internal management
reports (including financial information) for both PayPoint and Love2shop to allocate resources and
assess performance.
The material products and services offered by each segment are as follows:
PayPoint
• Card payment services to retailers, including leased payment devices.
• ATM cash machines.
• Bill payment services and cash top-ups to individual consumers, through a network of retailers.
• Parcel delivery and collection.
• Retailer service fees.
• Digital payments.
Where the lease is a finance lease, the Group recognises as a receivable an amount equal to the net
investment in the finance lease i.e. the minimum lease payments receivable under the lease discounted at
the interest rate implicit in the lease. Incremental initial direct costs of obtaining the lease are included in the
initial measurement of the net investment in the lease. This receivable is reduced as the lessee makes capital
payments over the term of the lease. The terminal lease income is recognised over the expected lease term.
Love2shop
• Shopping vouchers, cards and e-codes which customers may redeem with participating retailers.
These are either ‘single-retailer’ or ‘multi-retailer’. The former may only be used at the specified
retailer, whilst the latter may be redeemed at one or more of over 200 retailers.
• Christmas savings club, to which customers make regular payments throughout the year to help
spread the cost of Christmas, before converting to a voucher.
Where the lease is an operating lease, lease payments are recognised as income on a straight-line basis
which reflects the pattern in which economic benefits from leasing the underlying asset are derived.
The underlying asset is capitalised as property, plant and equipment and costs, including depreciation,
incurred in earning the lease income are recognised as an expense. Initial direct costs incurred in obtaining
the operating lease are added to the carrying amount of the underlying asset and recognised as an
expense over the expected lease term on the same basis as the lease income.
Dividends
Final dividends on ordinary shares are recognised in equity in the year in which they are approved by the
Company’s shareholders. Interim ordinary dividends are recognised when paid.
In the Company accounts, dividend income from investments is recognised when the shareholders’ rights
to receive payment have been established.
Merger reserve
Merger reserve represents amounts in excess of the nominal value of shares issued, where shares are
issued in part or full consideration of an acquisition.
Information related to each reportable segment is set out below. Segment profit/(loss) before tax and
exceptional items is used to measure performance because management believes that this information
is the most relevant in evaluating the results of the respective segments relative to other entities that
operate in the same industries.
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PayPoint Plc Annual Report 2023
2. Segmental reporting continued
Year-ended 31 March 2023
Revenue
Other revenue
Segment revenue
Segment profit before tax and adjusting items
Exceptional items
Amortisation of intangible assets arising on acquisition
Segment profit before tax
Interest income
Interest expense
Depreciation and amortisation
Capital expenditure
Segment assets
Segment liabilities
Segment equity
PayPoint
£’000
159,531
575
160,106
50,296
(5,604)
(2,139)
42,553
29
2,303
9,819
12,349
219,649
125,113
94,536
L2S
£’000
5,689
1,928
7,617
456
–
(435)
21
58
415
658
354
260,340
243,162
17,178
Total
£’000
165,220
2,503
167,723
50,752
(5,604)
(2,574)
42,574
87
2,718
10,477
12,703
479,989
368,275
111,714
The L2S result is only one month, as the acquisition completed on 28 February 2023.
A business division analysis of revenue has been provided in note 3.
Geographic information
Total Revenue
Continuing operations – UK
Discontinued operation1 – Romania (note 11)
Total
Year ended
31 March
2023
£’000
167,723
–
167,723
Year ended
31 March
2022
£’000
145,144
1,258
146,402
1
The prior year revenue from the discontinued operation represents the revenue from Romania between 1 and 8 April 2021 prior
to disposal.
The total £227.9 million (2022: £127.3 million) non-current assets at 31 March 2023 are geographically
located within the UK.
3. Revenue
Disaggregation of revenue
Revenue
Continuing operations
Shopping
Service fees
Card payments
Card terminal leases
ATMs
Other shopping
Shopping total
e-commerce total
Payments and banking
Cash – bill payments
Cash – top-ups
Digital
Cash through to digital
Other payments and banking
Payments and banking total
Love2shop total – voucher and card service fee
Total continuing operations
Discontinued operation – Romania1
Revenue
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
17,947
24,293
7,542
12,920
3,355
66,057
16,575
24,951
5,566
13,858
1,936
62,886
20,183
13,600
34,135
11,959
18,081
7,769
1,347
73,291
5,689
36,660
12,898
8,224
9,411
1,465
68,658
–
165,220
145,144
–
165,220
1,258
146,402
1
The prior year revenue from the discontinued operation represents the revenue from Romania between 1 and 8 April 2021 prior
to disposal.
Service fee revenue of £17.9 million (2022: £16.6 million) and management fees, set-up fees and upfront
lump sum payments of £0.7 million (2022: £1.2 million) are recognised on a straight-line basis over the
period of the contract. Card terminal leasing revenue of £7.5 million (2022: £5.6 million) is recognised
over the expected lease term using the sum of digits method for finance leases and on a straight-line
basis for operating leases. Multi-retailer voucher, card and e-code service fee revenue is recognised on
redemption by the customer. The remainder of revenue is recognised at the point in time when each
transaction is processed. The usual timing of payment by PayPoint customers is on fourteen-day terms.
The usual timing of Love2shop’s corporate customers is fifteen-day terms; its consumer customers pay
on ordering.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 155
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Strategic report
Governance
Governance
Financial statements
Financial statements
Shareholder information
Revenue subject to variable consideration of £13.5 million (2022: £10.7 million) exists where the
consideration to which the Group is entitled varies according to transaction volumes processed and rate per
transaction. Management estimates the total transaction price using the expected value method at contract
inception, which is reassessed at the end of each reporting period, by applying a blended rate per transaction
to estimated transaction volumes. Any required adjustment is made against the transaction price in the
period to which it relates. The revenue is recognised at the constrained amount to the extent that it is highly
probable that the inclusion will not result in a significant revenue reversal in the future, with the estimates
based on projected transaction volumes and historical experience. The potential range in outcomes for
revenue subject to variable consideration resulting from changes in these estimates is not material.
Other Revenue
Payments and banking
Interest revenue
Love2shop
Interest revenue
Non-redemption revenue
Love2shop total
Total other revenue
Year ended 31
March 2023
£’000
Year ended 31
March 2022
£’000
575
325
1,603
1,928
2,503
–
–
–
–
–
Other revenue comprises:
• Multi-retailer voucher and card non-redemption revenue is recognised on expiry (where the customer
has no right of refund) or on expiry and lapse of the refund period (where the customer has a right of
refund).
Interest revenue generated by investing clients’ funds, retailer partners’ deposits and card and
voucher deposits recognised over the period invested.
•
Contract balances
Trade receivables
Net investment in finance lease receivables
Accrued income
Contract assets – capitalisation of fulfilment costs
Contract liabilities – deferral of set-up and development fees
Deferred income
31 March
2023
£’000
17,703
3,855
5,241
2,910
(710)
(214)
31 March
2022
£’000
10,316
6,221
4,315
2,057
(788)
(401)
Notes
20
26
20
20
22
22
The Group’s contract balances arise from differences between timing of cash flow and revenue
recognition, which is usually at the point in time each transaction is processed or on a straight-line basis
over the contracted period for management fees, set-up fees or upfront lump sum payments.
• The trade receivables represent the Group’s entitlement to consideration from clients and SME and
retailer partners for services and goods delivered and invoiced at the reporting date, where the right
to payment is unconditional except for the passage of time. The significant increase in the balance
compared with prior year is principally due to the acquisition of Appreciate Group PLC.
• The net investment in finance lease receivables balance represents the total minimum lease payments
receivable by PayPoint as lessor under finance leases, adjusted for the incremental initial direct costs
of obtaining that lease, discounted at the interest rate implicit in those leases, with corresponding
card terminal finance leasing revenue recognised over the expected lease term using the sum of digits
method. The significant decrease in the balance compared with prior year is due to the fact that most
new sales are now operating leases.
• The accrued income is a receivable which represents the Group’s entitlement to consideration from
clients and SME and retailer partners for services and goods delivered but not yet invoiced at the
reporting date, as well as accrued interest on monies held in trust.
• The contract assets are mainly capitalised employee costs directly relating to the implementation
services which are expected to be recovered from the customer and are amortised on a straight-line
basis over the period of the contract.
• The contract liabilities represent set-up and development fees which are released on a straight-line
basis over the period of the contract.
• The deferred income is a contract liability which represents advance consideration received at
the reporting date, which is released with revenue recognised upon delivery of the performance
obligations. The consideration is received from clients, SME and retailer partners.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 156
PayPoint Plc Annual Report 2023
4. Alternative performance measures
Net Revenue
The reconciliation between total revenue and net revenue is as follows:
Continuing operations
Service revenue – Shopping
Service revenue – e-commerce
Service revenue – Payments and banking
Service revenue – multi-retailer redemption products
Service revenue – other
Sale of goods – single-retailer redemption products
Sale of goods – other
Royalties – e-commerce
Other revenue – multi-retailer non-redemption income
Other revenue – interest on clients’ funds, retailer partners’ deposits and
card and voucher deposits
Total revenue from continuing operations
Less:
Retailer partners’ commissions
Cost of single-retailer cards and vouchers
Cost of SIM card and e-money sales as principal
Net revenue from continuing operations
Discontinued operation1
Service revenue
Sale of goods
Total revenue from discontinued operation
Less:
Retailer partners’ commissions
Cost of mobile top-ups and SIM card sales as principal
Net revenue from discontinued operation
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
66,057
16,085
71,994
1,217
128
4,325
1,316
4,098
1,603
62,886
10,949
67,475
–
–
–
1,183
2,651
–
900
167,723
–
145,144
(34,369)
(4,208)
(199)
128,947
(29,827)
–
(205)
115,112
–
–
–
–
–
–
366
892
1,258
(101)
(897)
260
Total net revenue
128,947
115,372
1
The prior year revenue and net revenue from the discontinued operation represents the revenue and net revenue from Romania
between 1 and 8 April 2021 prior to disposal.
Total Costs
Total costs from continuing operations, excluding adjusting items, comprises:
Other costs of revenue (note 5)
Administrative expenses – excluding adjusting items
Finance income (note 9)
Finance costs (note 9)
Total costs
Year ended
31 March 2023
Re-presented1
Year ended
31 March 2022
£’000
25,481
50,083
(87)
2,718
78,195
£’000
18,693
46,357
(13)
2,046
67,083
1
Amortisation of intangible assets arising on acquisition was reported separately on the face of the Consolidated statement of
profit or loss as an adjusting item. The prior year results have been re-presented on this basis (see note 1).
Love2shop billings
Billings relates solely to Love2shop and represents the value of goods and services dispatched and
invoiced to customers during the year. The reconciliation between Love2shop’s billings and total revenue
is as follows:
Love2shop billings
Multi-retailer redemption products – gross to net revenue recognition
Other revenue – interest on card and voucher deposits
Love2shop total revenue from continuing operations
Year ended
31 March
2023
£’000
14,807
(7,515)
325
7,617
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 157
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Financial statements
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Shareholder information
5. Cost of revenue
6. Exceptional items
Acquisition costs expensed – administrative expenses
Impairment loss on reclassification of investment in associate
to asset held for sale
Revaluation of deferred, contingent consideration liability
Total exceptional items included in operating profit
Gain on disposal of discontinued operation, net of tax
Refinancing costs expensed – finance costs
Total exceptional items included in profit or loss
The tax impact of the exceptional items is £nil (2022: £nil).
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
4,065
1,252
–
5,317
–
287
5,604
–
–
(2,880)
(2,880)
(29,863)
–
(32,743)
Exceptional items are those which are considered significant by virtue of their nature, size or incidence.
These items are presented as exceptional within their relevant income statement categories to assist in
the understanding of the performance and financial results of the Group, as they do not form part of the
underlying business.
Continuing operations
Retailer partners’ commissions
Cost of single-retailer cards and vouchers
Cost of SIM card and e-money sales as principal
Total cost of revenue deducted from net revenue
Depreciation and amortisation
Field sales costs
Transaction costs
ATM costs
Card fees
Other
Total other costs of revenue
Total cost of revenue from continuing operations
Discontinued operation1
Retailer partners’ commissions
Cost of mobile top-ups and SIM cards as principal
Total cost of revenue deducted for net revenue
Depreciation and amortisation
Other
Total other costs of revenue
Total cost of revenue from discontinued operation
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
34,369
4,208
199
38,776
7,186
8,876
3,477
1,148
1,096
3,698
25,481
64,257
–
–
–
–
–
–
–
29,827
–
205
30,032
7,626
7,548
1,140
1,293
856
230
18,693
48,725
101
897
998
10
(10)
–
998
Total cost of revenue
64,257
49,723
1
The prior year cost of revenue from the discontinued operation represents the cost of revenue from Romania between
1 and 8 April 2021 prior to disposal.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
158
PayPoint Plc Annual Report 2023
7. Employee information
8. Profit for the year
Average number of employees
Sales, distribution and marketing
Operations and administration
Total
Employee costs during the year (including Directors)
Wages and salaries
Social security costs
Pension costs
Redundancy and termination costs
Total
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
199
506
705
32,257
3,303
2,588
86
38,234
201
469
670
28,682
2,902
2,365
127
34,076
Directors’ emoluments, pension contributions and share options are disclosed in the Remuneration
Committee Report on pages 104 to 123.
Average number of employees reflects the annual average for Love2shop, taking into account they were
acquired on 28 February 2023.
Included within wages and salaries is a share-based payment charge of £1.3 million (2022: £0.9 million.)
Refer to note 29 for disclosure of share awards made in the year.
Pension arrangements
The Group administers a number of defined contribution schemes for employees, including those taken
on following the acquisition of Appreciate Group PLC. The pension charge for the year for the defined
contribution schemes was £2.5 million (2022: £2.4 million).
The accrual for defined contribution pension contributions at the statement of financial position date
was £0.1 million (2022: £nil).
Following the acquisition of Appreciate Group PLC, the Group also operates two defined benefit pension
schemes at 31 March 2023, one of which had no members as at that date. (see note 18). The pension
charge for the year for the defined benefit schemes was £0.1 million (2022: £nil).
Profit from continuing operations is after charging:
Depreciation on property, plant and equipment – cost of revenue
Amortisation of intangible assets – cost of revenue
Depreciation of property, plant and equipment – administrative expenses
Amortisation of intangible assets – administrative expenses
Loss on disposal of property, plant and equipment – administrative expenses
Research and development costs – administrative expenses
Auditor’s remuneration:
Fees payable to the Company’s auditor for the audit of the Company’s
annual accounts
Fees payable to the Company’s auditor for the audit of the
Company’s subsidiaries
Additional fees payable to the Company’s auditor in respect of prior
years’ audits
Total audit fees
Fees payable to the Group’s auditor for the review of the interim results
Audit-related assurance services
Total auditor’s remuneration
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
(4,336)
(2,850)
(586)
(2,705)
(1,090)
(350)
(4,221)
(3,405)
(547)
(2,396)
(59)
(808)
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
250
1,300
167
1,717
50
50
1,767
100
347
–
447
38
38
485
In addition to the above, BDO LLP was paid £578,000 in respect of their work on the Appreciate
component audit.
A description of the work of the Audit Committee is set out on pages 96 to 103 and includes an
explanation of how auditor independence is safeguarded by limitation of non-audit services.
Group profit before tax from continuing and discontinued operations
Profit before tax from continuing operations
Gain on disposal after tax from discontinued operation (note 11)
Profit up to date of disposal from discontinued operation (note 11)
Group profit before tax from continuing and discontinued operations
42,574
–
–
42,574
48,515
148
29,863
78,526
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 159
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Financial statements
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Shareholder information
9. Finance income and costs
Finance income
Interest income on defined benefit pension scheme assets
Other interest
Total interest income reported as Finance income
Interest income on clients’ funds, retailer partners’ deposits
and card and voucher deposits – reported as Other revenue
Finance costs
Bank interest payable
Interest expense on defined benefit pension scheme obligations
Lease and other interest
Total finance costs
10. Tax
Continuing operations
Current tax
Charge for current year
Adjustment in respect of prior years
Current tax charge
Deferred tax
Charge for current year
Adjustment in respect of prior years
Deferred tax charge
Tax charged directly to other comprehensive income
Deferred tax on actuarial gains on defined benefit pension plans
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
86
–
The income tax charge is based on the UK statutory rate of corporation tax for the year of 19%
(2022: 19%). Deferred tax has been calculated using the enacted tax rates that are expected to apply
when the liability is settled, or the asset realised. During the prior financial year, an increase in the main
rate of UK corporation tax from 19% to 25% with effect from 1 April 2023 was enacted. Deferred tax
has been calculated based on the rate applicable at the date timing differences are expected to reverse.
The income tax charge of £7.9 million (2022: £9.0 million) on profit before tax of £42.6 million
(2022: £48.5 million from continuing operations) represents an effective tax rate1 of 18.5% (2022: 18.5%
for continuing operations). This is lower than the UK statutory rate of 19% due to adjustments in respect
of prior year and capital allowances super deduction, partially offset by disallowable expenses.
The tax charge on continuing operations for the year is reconciled to profit before tax from continuing
operations, as set out in the consolidated statement of profit or loss, as follows:
Profit before tax
Tax at the UK corporation tax rate of 19% (2022: 19%)
Tax effects of:
Disallowable expense/(non-taxable income) – exceptional items
Disallowable expense/(non-taxable income) – other
Adjustments in respect of prior years
Capital allowance super deduction
Tax impact of share-based payments
Revaluation of deferred tax liability
Actual amount of tax charge on continuing operations
1 Effective tax rate is the tax cost as a percentage of profit before tax on continuing operations.
Year ended
31 March
2023
£’000
42,574
8,089
Year ended
31 March
2022
£’000
48,515
9,218
1,119
1
(1,109)
(390)
(121)
275
7,864
(547)
(726)
155
–
(3)
889
8,986
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
58
29
87
900
2,631
55
32
2,718
–
13
13
–
2,024
–
22
2,046
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
7,829
(806)
7,023
1,144
(303)
841
8,254
86
8,340
577
69
646
Total income tax charge on continuing operations
7,864
8,986
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 160
PayPoint Plc Annual Report 2023
11. Discontinued operation
In the prior year, the group disposed of its Romanian business, PayPoint Services SRL, to Innova Capital.
The sale was consistent with PayPoint’s focus on its key strategic priorities and the delivery of enhanced
growth and value in its core UK markets.
Cash proceeds of £48.3 million were received in April 2021 and were used partly to repay the revolving
credit facility and reduce net corporate debt. A further £0.3m working capital adjustment was received
on 2 November 2021.
The Group profit from the discontinued operation was £30.0 million:
Group
Total disposal proceeds received
Costs of disposal
Carrying amount of net assets sold
Gain on sale before income tax and reclassification of foreign currency translation reserve
Reclassification of foreign currency translation reserve to profit or loss
Tax charge on discontinued operation
Gain on disposal after tax
Profit up to date of disposal
Profit from discontinued operation (attributable to owners of the Company)
Company
Total disposal proceeds received
Costs of disposal
Carrying value of investment in discontinued operation in Company statement of
financial position (note 15)
Profit from discontinued operation (attributable to owners of the Company)
Year ended
31 March
2022
£000
48,585
(1,010)
(16,067)
31,508
(1,645)
–
29,863
148
30,011
Year ended
31 March
2022
£000
48,585
(522)
(17,420)
30,643
The gain on disposal of the discontinued operation was exempt from UK corporation tax under the
substantial shareholding exemption.
The prior period results of the discontinued operation up to the date of disposal and the gain on disposal
after tax have been included in the total Group profit for the year as follows:
Revenue
Cost of revenue
Gross profit
Expenses
Operating profit
Finance income
Finance costs
Profit before tax
Tax
Gain on disposal
Post-tax profit from discontinued operation attributable to equity holders of
the parent
Period from
1 to 8 April
2021
£000
1,258
(998)
260
(112)
148
–
–
148
–
29,863
30,011
12. Earnings per share
Basic and diluted earnings per share are calculated on the following profit and number of shares.
Year ended
31 March 2023
£’000
Re-presented1
Year ended
31 March 2022
£’000
Total profit for basic and diluted earnings per share is the net profit
attributable to equity holders of the parent
34,710
69,540
Continuing operations
Profit for basic and diluted earnings per share is the net profit from
continuing operations attributable to equity holders of the parent
34,710
39,529
Continuing operations – underlying
Profit for basic and diluted earnings per share is the net profit from
continuing operations before exceptional items attributable to equity
holders of the parent
Discontinued operation
Profit for basic and diluted earnings per share is the net profit from
discontinued operation attributable to equity holders of the parent
42,244
38,444
–
30,011
1
The prior year profit after tax for “Continuing operations – underlying” has been re-presented to exclude amortisation on acquired
intangible assets.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 161
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Shareholder information
Weighted average number of ordinary shares in issue
(for basic earnings per share)
Potential dilutive ordinary shares:
Long-term incentive plan
Restricted share awards
Deferred annual bonus scheme
SIP and other
Weighted average number of ordinary shares in issue
(for diluted earnings per share)
31 March
2023
Number
of shares
Thousands
31 March
2022
Number
of shares
Thousands
69,281
68,631
–
588
104
60
164
408
108
58
70,033
69,369
The SIP and other dilutive shares only have a passage of time restriction on them, hence are included
above but not in the total number of outstanding share awards at the end of the year.
All CGUs assessed generate value-in-use in excess of their carrying values. Sensitivity analysis applied
to discount rate and short-term growth rate demonstrated that a combination of adverse changes in
assumptions for the Handepay CGU could cause its carrying value to exceed its recoverable amount,
as explained below. The headroom between the Handepay CGU valuation and its recoverable amount
is £12.0 million, calculated using the assumptions below. For the other CGUs, no reasonably possible
change in any of the assumptions would cause their carrying values to exceed their recoverable amounts.
Management does not consider that climate change factors would adversely impact its goodwill
impairment assessments.
Group – goodwill values
At 31 March 2021
Acquisition of business
At 31 March 2022
Acquisition of business
At 31 March 2023
Love2shop
CGU
£’000
–
–
–
59,759
59,759
i-movo
CGU
£’000
6,867
–
6,867
–
6,867
Handepay
CGU
£’000
Merchant
Rentals CGU
£’000
35,632
–
35,632
–
35,632
9,586
–
9,586
–
9,586
Digital
payments CGU
£’000
–
5,583
5,583
–
5,583
Total CGUs
£’000
52,085
5,583
57,668
59,759
117,427
Earnings per share – discontinued operation (pence)
Basic
Diluted
Year ended
31 March 2023
Year ended
31 March 2022
–
–
43.7
43.2
The key assumptions used in the estimation of the recoverable amount are set out below. The values
assigned to the key assumptions represent management’s assessment of future trends in the relevant
industries and have been based on historical data from both external and internal sources.
Assumptions used for annual impairment tests
13. Goodwill
The Group tests goodwill for impairment annually and more frequently if there are indicators of
impairment as set out in note 1. The Group’s cash-generating units (‘CGUs’) have been assessed based
on independently managed cash flows. When testing for impairment, recoverable amounts for the
Group’s CGUs are measured at their value-in-use by discounting the future expected cash flows from
the assets in the CGUs. The Group prepares five-year cash flow forecasts derived from the most recent
three-year financial budgets approved by the Board which are extrapolated for a further two years and
subsequently extended to perpetuity. A key source of estimation in the impairment tests is the short-
term growth rates applied within the cash flow forecasts, which are determined using an estimate of
future results based on the latest business forecasts and appropriately reflect expected performance
of the CGU. The estimates of future cash flows are based on past experience, adjusted for estimates of
future performance, including the continued shift from cash to digital payments.
Terminal values are based on long-term growth rates that do not exceed 2%, which appropriately reflects
the expected long-term rate of GDP growth in the UK. The pre-tax risk-adjusted discount rates have
been used to discount the forecast cash flows calculated by reference to the weighted average cost
of capital (‘WACC’) of each CGU. The cost of equity is based on the risk-free rate for long-term UK
government bonds, which is adjusted for the beta (reflecting the systemic risk of PayPoint relative to the
market as a whole) and the equity market risk premium (reflecting the required return over and above a
risk-free rate by an investor who is investing in the market as a whole).
At 31 March 2023
Carrying value of
cash generating unit
Pre-tax risk adjusted discount rate
Terminal growth rate
At 31 March 2022
Carrying value of
cash generating unit
Pre-tax risk adjusted discount rate
Terminal growth rate
Love2shop
CGU
i-movo
CGU
Handepay
CGU
Merchant
Rentals CGU
Digital
payments
CGU
£68.0m
16.0%
£8.6m £45.6m
15.7%
16.6%
2.0%
2.0% (8.0)%–2.0%
£23.7m £11.7m
14.6% 15.1%
2.0%
2.0%
–
–
–
£8.8m £46.8m
15.0%
11.8%
0.0%
£22.6m £10.5m
11.8% 15.6%
2.0%
2.0% (5.0)%–2.0%
Given the proximity of the timing of the Appreciate acquisition to the year end, fair value less costs of
disposal was also considered as an alternative measure of recoverable amount and indicated that no
impairment was required at the year end.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 162
PayPoint Plc Annual Report 2023
14. Other intangible assets
Group
Cost
At 31 March 2022
Acquisition of business
Additions
Disposals
At 31 March 2023
Accumulated amortisation
At 31 March 2022
Charge for the year
Disposals
At 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
Development
costs
£’000
Customer
relationships
Brands and
trademarks
£’000
£’000
Regulatory
licences
£’000
Developed
technology
£’000
Total
£’000
32,146
–
4,079
(1,443)
34,782
20,477
2,344
(1,443)
21,378
18,608
21,648
–
–
40,256
2,198
2,147
–
4,345
8,951
11,790
–
–
20,741
1,252
790
–
2,042
236
–
–
–
236
24
24
–
48
306
7,006
335
–
60,247
40,444
4,414
(1,443)
7,647 103,662
306
250
–
556
24,257
5,555
(1,443)
28,369
13,404
11,669
35,911
16,410
18,699
7,699
188
212
7,091
–
75,293
35,990
Acquisition of business in the current year relates to Appreciate Group PLC.
Included within development costs at 31 March 2023 are £3.3 million (2022: £3.6 million) of assets under
construction which were not being amortised at 31 March 2023.
At 31 March 2023, the Group had entered into contractual commitments for development cost additions
amounting to £0.2 million (2022: £1.0 million).
Group
Cost
At 31 March 2021
Acquisitions of businesses
Additions
At 31 March 2022
Accumulated amortisation
At 31 March 2022
Charge for the year
At 31 March 2023
Carrying amount
At 31 March 2022
At 31 March 2021
Development
costs
£’000
Customer
relationships
£’000
Brands and
trademarks
£’000
Regulatory
licences
£’000
Developed
technology
£’000
Total
£’000
26,512
7
5,627
32,146
17,574
2,903
20,477
18,404
204
–
18,608
293
1,905
2,198
8,951
–
–
8,951
538
714
1,252
11,669
8,938
16,410
18,111
7,699
8,413
–
236
–
236
–
24
24
212
–
306
–
–
306
51
255
306
54,173
447
5,627
60,247
18,456
5,801
24,257
–
255
35,990
35,717
15. Investments
The Company, a holding company, has investments (directly or indirectly) in wholly owned subsidiaries
and associates, and convertible loan notes, as follows:
A) Investments in wholly owned subsidiaries
Active companies
Company name
Appreciate Ltd
Direct or indirect
investment
Direct
Collect+ Brand Limited
Indirect
Collect+ Holdings Limited
Direct
Event Payment Services
Limited
Indirect
Handepay Limited
Direct
i-movo Holdings Limited
Direct
i-movo Limited
Indirect
MBL Holdco Limited
Indirect
MBL Solutions Limited
Indirect
Merchant Rentals Limited
Direct
Park Card Marketing
Services Limited
Indirect
Park Card Services Limited
Indirect
Park Direct Credit Limited
Indirect
Park Financial Services Limited Indirect
Principal activity (registered address)
Holding company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Holder of Collect+ brand (1 The Boulevard,
Shire Park, Welwyn Garden City, Hertfordshire
AL7 1EL)
Country of
registration
England
and Wales
England
and Wales
Holding company (1 The Boulevard,
Shire Park, Welwyn Garden City, Hertfordshire
AL7 1EL)
England
and Wales
Provision of business support services
(1 The Boulevard, Shire Park, Welwyn Garden
City, Hertfordshire AL7 1EL)
Sales business in merchant acquiring industry
(1 The Boulevard, Shire Park, Welwyn Garden
City, Hertfordshire AL7 1EL)
England
and Wales
England
and Wales
Holding company (1 The Boulevard, Shire Park,
Welwyn Garden City, Hertfordshire
AL7 1EL)
England
and Wales
Provision of digital voucher service
(1 The Boulevard, Shire Park, Welwyn
Garden City, Hertfordshire AL7 1EL)
England
and Wales
Holding company (Valley Road, Birkenhead,
Merseyside, CH41 7ED)
England
and Wales
Gift card processing (Valley Road, Birkenhead,
Merseyside, CH41 7ED)
England
and Wales
Provision of asset finance and leasing
solutions to merchant acquiring industry
(1 The Boulevard, Shire Park, Welwyn Garden
City, Hertfordshire AL7 1EL)
Card administration support services (Valley
Rd., Birkenhead, Merseyside, CH41 7ED)
Electronic money issuer (Valley Rd.,
Birkenhead, Merseyside, CH41 7ED)
Debt collection services (Valley Rd.,
Birkenhead, Merseyside, CH41 7ED)
Insurance broking services (Valley Rd.,
Birkenhead, Merseyside, CH41 7ED)
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 163
PayPoint Plc Annual Report 2023
Strategic report
Governance
Governance
Financial statements
Financial statements
Shareholder information
Company name
Direct or indirect
investment
Park Retail Limited
Indirect
PayPoint Collections Limited Direct
PayPoint Network Limited
Direct
PayPoint Payment Services
Limited
Direct
PayPoint Retail Solutions
Limited
Direct
RSM 2000 Limited
Direct
Dormant companies
Agency Administration
Limited
Indirect
Brightdot Limited
Indirect
Cheshire Bank Limited
Indirect
Cheshire Securities Limited
Indirect
Principal activity (registered address)
Gifting and prepayment (Valley Rd.,
Birkenhead, Merseyside, CH41 7ED)
Provision of a payment collection service
(1 The Boulevard, Shire Park, Welwyn Garden
City, Hertfordshire AL7 1EL)
Country of
registration
England
and Wales
England
and Wales
Management of an electronic payment service
(1 The Boulevard, Shire Park, Welwyn Garden
City, Hertfordshire AL7 1EL)
England
and Wales
Provision of regulated payments services (1
The Boulevard, Shire Park, Welwyn Garden
City, Hertfordshire AL7 1EL)
England
and Wales
Provision of retail services (1 The Boulevard,
Shire Park, Welwyn Garden City, Hertfordshire
AL7 1EL)
England
and Wales
Provision of regulated payments services
(1 The Boulevard, Shire Park, Welwyn Garden
City, Hertfordshire AL7 1EL)
England
and Wales
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Country Christmas Savings
Club Limited
Indirect
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Family Hampers Limited
Indirect
Handling Solutions Limited
Indirect
Heritage Hampers Limited
Indirect
High Street Vouchers Limited Indirect
Maxim B2B Limited
Indirect
Opal Loans Limited
Indirect
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
Company name
Park Christmas Savings
Club Limited
Direct or indirect
investment
Indirect
Park.com Limited
Indirect
Park Connect Limited
Indirect
Park Food (Warrington)
Limited
Park Group Secretaries
Limited
Park Hamper Company
Limited
Indirect
Indirect
Indirect
Park Travel Services Limited Indirect
PayPoint Trust Managers
Limited
Indirect
The Perfect Hamper Co.
Limited
Indirect
Wirral Cold Store Limited
Indirect
Principal activity (registered address)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Services company (1 The Boulevard, Shire
Park, Welwyn Garden City, Hertfordshire AL7
1EL)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Dormant company (Valley Rd., Birkenhead,
Merseyside, CH41 7ED)
Country of
registration
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
England
and Wales
The Group acquired 100% interest in Appreciate Group PLC and its subsidiaries on 28 February 2023, on
which date Appreciate Group PLC was delisted from the London Stock Exchange’s AIM market. Its name
was changed to Appreciate Ltd on 16 March 2023.
Movement in investments in wholly owned subsidiaries
Company
Balance at the beginning of the year
Reclassification of initial Collect+ arrangement from brand intangible
asset to investment
Acquisitions of wholly owned subsidiaries (note 16)
Increased capitalisation of existing investments in wholly owned subsidiaries
Disposal of investments in wholly owned subsidiaries (note 11)
Balance at the end of the year
31 March
2023
£’000
31 March
2022
£’000
139,105
138,539
–
82,732
–
–
221,837
6,042
6,944
5,000
(17,420)
139,105
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 164
PayPoint Plc Annual Report 2023
15. Investments continued
In the prior year the Company increased its investment in RSM 2000 Ltd by £5.0 million. RSM 2000 Ltd
allotted and issued £5.0 million of additional shares (5.0 million additional shares at nominal value of
£1 each) in satisfaction of the increased investment.
An impairment test was performed on the Company’s investments in subsidiaries which indicated that
no impairment was required. Recoverable amounts for the Company’s investments are measured at
their value-in-use by discounting the future expected cash flows, derived from the most recent financial
budgets approved by the Board which are extended to perpetuity. The estimates of future cash flows are
based on past experience adjusted for management’s expectations of future performance.
Based on the key terms of the convertible loan note and investment agreement, the convertible loan
note has been classified in both the prior and current years as a Level 3 embedded derivative convertible
debt instrument. At each reporting period prior to conversion, the investment is recognised at fair value,
with any gains or losses recognised through the statement of profit and loss. The fair value is determined
by applying a probability-weighted aver-age best estimate of the Company’s potential equity holding
% outcomes, to a discounted cash flow valuation. At both 31 March 2022 and 31 March 2023, the fair
values so determined were materially unchanged compared with the £750k purchase price.
The prior and current year discounted cash flow valuations are based on 5-year forecasts extrapolated
to perpetuity, using the following financial assumptions. The discount rate reflects management’s view of
the level of risk associated with a relatively new business:
B) Investment in associate
PayPoint Plc subscribed to 9.35% of the ordinary share capital (conferring 13.04% of voting rights)
in Snappy Shopper Ltd on 7 July 2021 for £6,739,000. The Group incurred an exceptional loss of
£1,252,000 on reclassifying its investment in associate to asset held for sale, prior to disposing of
Snappy Shopper Ltd on 14 October 2022 for £5,487,000 (net of disposal costs of £15,000).
C) Convertible loan notes
The movements in the fair values of the convertible loan note investments in the prior and current years
are as follows:
Group and Company
At 31 March 2021
Addition in the year
At 31 March 2022
Addition in the year
At 31 March 2023
Optus Homes
Ltd £’000
OBConnect
Ltd £’000
–
750
750
–
750
–
–
–
3,000
3,000
Total
£’000
–
750
750
3,000
3,750
No unrealised gains or losses arose in the current or prior year.
Optus Homes Ltd
The Company purchased a convertible loan note of nominal amount £750,000 from Optus Homes Ltd
on 25 March 2022. Optus has developed in-house software which facilitates property maintenance for
the benefit of landlords and tenants. Landlords using the ‘App’ are charged a monthly fee per tenant,
on a sliding scale.
The investment is structured as a two-year, zero-coupon convertible loan note of £750k (with a potential
extension of an additional £500k funding subject to the Company’s approval) which will be settled into a
variable number of Optus’s equity shares on 1 April 2024. Upon maturity, the Company’s equity holding
will be determined by the value of the loan as a proportion of the Optus valuation post-conversion, based
on a ‘cap and floor’ method, falling between 20%–37% (based on an investment of £750k) or 29%–40%
(based on an investment of £1,250k). In turn, the proportional share depends on the number of landlords
at the conversion date.
Discount rate
Corporation tax rate
Terminal growth rate
31 March
2023
31 March
2022
25.0%
25.0%
2.0%
25.0%
19.0%
2.0%
In addition to the above assumptions, the valuation model has additional ‘unobservable’ inputs.
The following table shows the valuation technique used in measuring the fair value of the investment,
as well as the significant unobservable inputs used:
Valuation technique
Significant unobservable inputs
Inter-relationship between key
unobservable inputs and fair
value measurement
Discounted cash flows: The valuation
model considers the present value
of cash flows to be generated from
the business, taking into accounted
the expected increase in the number
of landlords, the average tenants per
landlord and the monthly fee charged
to landlords. The expected net cash
flows are discounted using risk-
adjusted discount rates. Among other
factors, the discount rate estimation
considers the probability of take-up
of the App by landlords.
• Landlord numbers at
conversion date to reach
7 (‘floor’ scenario) to
11 (‘cap’ scenario).
The estimated fair value would
increase/(decrease) if:
• Landlord numbers at conversion
date were higher/(lower).
• Average number of tenants
per new landlord c. 5,000.
• The average number of tenants
were higher/(lower).
• Average monthly fee per
tenant for new landlords.
• The average monthly fee
charged were higher/(lower).
• Payroll and other costs
increase at an average
rate of 30% p.a. over
the forecast period.
• Payroll costs were lower/
(higher).
OBConnect Ltd
The Company purchased a convertible loan note of nominal amount £3.0 million on 5 July 2022 from
OBConnect Ltd., which provides open banking services to banks and other financial institutions.
The loan converts into a 22.5% equity stake in OBConnect Ltd’s ordinary shares on 24 May 2025.
Based on the key terms of the convertible loan note and investment agreement, the convertible loan
note is classified as a Level 3 embedded derivative convertible debt instrument. At each reporting
period prior to conversion, the investment is recognised at fair value, with any gains or losses recognised
through the statement of profit or loss. The fair value so determined at 31 March 2023 was materially
unchanged compared with the total £3.0 million purchase price.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 165
PayPoint Plc Annual Report 2023
Strategic report
Governance
Governance
Financial statements
Financial statements
Shareholder information
The current year discounted cash flow valuation is based on a 5-year forecast extrapolated to perpetuity,
using the following financial assumptions. The discount rate reflects management’s view of the level of
risk associated with the business:
Discount rate
Corporation tax rate
Terminal growth rate
31 March
2023
20.0%
25.0%
2.0%
In addition to the above assumptions, the valuation model has additional ‘unobservable’ inputs.
The following table shows the valuation technique used in measuring the fair value of the investment,
as well as the significant unobservable inputs used:
Valuation technique
Significant unobservable inputs
Inter-relationship between key
unobservable inputs and fair
value measurement
Discounted cash flows: The valuation
model considers the present value of
cash flows to be generated from the
business, taking into accounted the
level of retention of existing clients,
the value of new business won and
the increase to the cost base.
The expected net cash flows are
discounted using risk-adjusted
discount rates. Among other factors,
the discount rate estimation considers
the newness of the business and
the sector in which it operates.
• Existing clients are
retained throughout
the forecast periods,
with no attrition assumed.
The estimated fair value would
increase/(decrease) if:
• The retention rate of existing
clients were (lower).
• Revenue from new clients
• The rate of revenue growth
increases at a rate of
50% p.a.
• Payroll and other costs
increase at a rate of
20% p.a. over the
forecast period.
were higher/(lower) than 50%.
• The annual payroll and other
costs increase were lower/
(higher).
D) Other investment
On 13 January 2023 the Company acquired 2.5% of the ordinary share capital of OBConnect Ltd for
consideration of £251,000. This is in addition to the convertible loan note in OBConnect Ltd referred
to above.
16. Acquisition of subsidiaries
A) Appreciate Group PLC
On 28 February 2023, PayPoint acquired 100% of the share capital of Appreciate Group PLC for
consideration of £79.2 million, comprising cash of £61.9 million plus equity of £17.3 million in the form of
3.6 million issued shares, and based on the closing share price of £4.84 per share at 28 February 2023.
The acquisition resulted in a net £45.6 million cash outflow (net of cash and borrowings acquired) in the
current year.
The primary reasons for the acquisition were to open up a range of growth opportunities, leveraging
Appreciate’s well-established and well-regarded offerings in the gift card, voucher and prepay
savings markets.
The following intangible assets have been recognised and are being amortised over useful lives as shown:
Brands
Customer relationships
Developed technology
Fair value
£ million
11.8
21.6
7.0
Useful life
12–15 years
2–13 years
5 years
In the period since acquisition, Appreciate contributed total revenue of £7.6 million and nil profit
before tax to the Group’s results. Had the acquisition taken place on the first day of the financial year,
Appreciate would have contributed revenue of £135.3 million and profit before tax of £0.7 million
(on an unconsolidated basis).
Acquisition costs incurred in the year in relation to Appreciate totalled £3.6 million, which are reported
within exceptional items in profit or loss.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 166
PayPoint Plc Annual Report 2023
16. Acquisition of subsidiaries continued
The following table summarises the provisional fair values of the identifiable assets purchased and
liabilities assumed at the acquisition date:
Acquired brands
Acquired customer relationships
Acquired developed technology
Retirement benefit asset
Property, plant and equipment
Trade and other receivables
Inventories
Current tax asset
Monies held in trust
Cash and cash equivalents – corporate cash
Cash and cash equivalents – card and voucher deposits
Payables in respect of cards and vouchers
Other trade and other payables
Lease liabilities
Retirement benefit liability
Borrowings
Deferred tax liabilities
Total identifiable net assets acquired at fair value
Cash consideration
Equity consideration
Total consideration
Goodwill recognised on acquisition
Cash outflows in respect of acquisition
Cash consideration
Cash acquired
Bank overdraft acquired
Acquisition of subsidiary net of cash acquired (Group)
Acquisition of subsidiary (Company)1
28 February
2023
£’000
11,790
21,648
7,006
1,573
5,631
10,650
3,557
2,099
47,000
17,469
64,960
(108,489)
(49,923)
(5,448)
(1,395)
(1,124)
(7,582)
19,422
61,925
17,256
79,181
59,759
(61,925)
17,469
(1,124)
(45,580)
(61,925)
1
Excludes £3.6 million acquisition costs, capitalised in investments in the Company statement of financial position but expensed in
the Group statement of profit and loss.
The acquired identifiable assets and liabilities have been recognised at their fair values at acquisition date
and in accordance with the Group’s accounting policies (note 1):
• The acquired customer relationships, including contractual customer relationships, have been valued
using the multi-period excess earnings method (“MEEM approach”) by estimating the total expected
income streams from the customer relationship and deducting portions of the cash flow that can
be attributed to supporting, or contributory, assets (including workforce). The contractual customer
relationships asset relates to cards existing at the acquisition date, some of which will be redeemed
post acquisition and on which a service fee will be earned and some of which (including those only
partially redeemed) will expire with unredeemed balances on which unredeemed income will be
earned. It is estimated based on the expected revenue to be received, less the costs to deliver the
service. The residual income streams are discounted. No tax amortisation benefit is applied. The key
inputs to this method are the customer churn rate and discount rate applied to future forecasts of the
businesses. Contractual customer relationships have a fair value of £7.7 million and a useful economic
life (UEL) of two years. Non-contractual customer relationships have a fair value of £14.0 million
(£8.8 million relating to Appreciate Business Services and £5.2 million relating to Park) and a UEL of
eleven to thirteen years.
• Acquired brands have been valued using the relief-from-royalty method.
• Acquired software intangible assets and property, plant and equipment have been valued using the
depreciated replacement cost method, considering factors including economic and technological
obsolescence.
Inventories, trade receivables and trade payables have been assessed at fair value on the basis of
the contractual terms and economic conditions existing at the acquisition date, reflecting the best
estimate at the acquisition date of contractual cash flows not expected to be collected. The fair value
assessment of trade receivables reflects estimated uncollectable amounts of £251,000.
•
• The retirement benefit asset has been measured in accordance with IAS19 at the date of acquisition.
• The deferred tax liability comprises £10.1 million liability recognised on the £40.4 million of acquired
intangible assets, less £2.5 million of deferred tax asset relating principally to acquired losses,
measured in accordance with IAS12.
• Lease liabilities are valued at the present value of the remaining lease payments as if the acquired
leases were new leases at the acquisition date. The related right of use assets are measured at the
same amount, adjusted to reflect terms which are either favourable or unfavourable compared to
market terms. The fair value of the right of use asset relating to the Chapel St. premises differs from
that of the associated lease liability due to favourable terms for rent-free and discounted periods.
The following acquired assets and liabilities were valued using management’s best estimates based
on information available at the acquisition date, which are therefore subject to adjustment within the
measurement period if new information about facts and circumstances that existed at the acquisition
date is obtained and, if known, would have resulted in the recognition of those assets and liabilities at
that date:
• Trade and other receivable.
• Trade and other payables.
•
Intangible assets (and the deferred tax liability thereon).
Of the £59.8 million of goodwill acquired during the period, no goodwill is expected to be deductible for
tax purposes. The goodwill arising on acquisitions is attributable to workforce, synergies, growth from
new customers and other assets not separately recognised.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 167
PayPoint Plc Annual Report 2023
Strategic report
Governance
Governance
Financial statements
Financial statements
Shareholder information
B) RSM2000 Ltd
In the prior year, the Company acquired 100% of the share capital of RSM2000 Ltd. The acquisition
resulted in a net £4.5 million cash outflow (net of cash acquired) in the prior year and £1.0 million outflow
in the current year.
17. Property, plant and equipment
Terminals and
ATMs
£’000
Fixtures,
fittings and
equipment
£’000
Leasehold
improvements
£’000
Land and
buildings
£’000
Right-of-use
assets
£’000
Cost
At 31 March 2022
Acquisition of business
Additions
Disposals
At 31 March 2023
41,338
–
7,736
(3,107)
45,967
Accumulated depreciation
At 31 March 2022
Charge for the year
Disposals
At 31 March 2023
30,535
4,239
(2,017)
32,757
3,673
328
111
–
4,112
1,922
180
–
2,102
–
1,169
–
–
1,169
11,081
16
–
–
11,097
–
9
–
9
2,101
261
–
2,362
462
4,118
9
–
4,589
214
233
–
447
Total
£’000
56,554
5,631
7,856
(3,107)
66,934
34,772
4,922
(2,017)
37,677
Carrying amount
At 31 March 2023
At 31 March 2022
13,210
10,803
2,010
1,751
1,160
–
8,735
8,980
4,142
248
29,257
21,782
Acquisition of business in the current year relates to Appreciate Group PLC.
At 31 March 2023, the Group had entered into contractual commitments for the acquisition of property,
plant and equipment amounting to £1.0 million (2022: £2.1 million).
Included within Terminals and ATMs at 31 March 2023 are £1.4 million (2022: 3.6 million) of assets under
construction which were not being depreciated at 31 March 2023.
Cost
At 31 March 2021
Acquisition of business
Additions
Disposals
At 31 March 2022
Accumulated depreciation
At 31 March 2021
Charge for the year
Disposals
At 31 March 2022
Carrying amount
At 31 March 2022
At 31 March 2021
Terminals and
ATMs
£’000
Fixtures,
fittings and
equipment
£’000
Land and
buildings
£’000
Right-of-use
assets
£’000
37,473
12
4,982
(1,129)
41,338
27,495
4,118
(1,078)
30,535
3,479
–
202
(8)
3,673
11,081
–
–
–
11,081
1,737
185
–
1,922
1,827
274
–
2,101
10,803
9,978
1,751
1,742
8,980
9,254
428
34
–
–
462
23
191
–
214
248
405
Total
£’000
52,461
46
5,184
(1,137)
56,554
31,082
4,768
(1,078)
34,772
21,782
21,379
18. Pensions
Defined benefit plans
Following the acquisition of Appreciate Group PLC, the Group took on the operation of two defined
benefit pension schemes, Park Food Group plc Pension Scheme (PF) and Park Group Pension Scheme
(PG). The schemes provide benefits based on final pensionable pay and are both closed to future accrual
of benefit based on service. The assets of the schemes are held separately from those of Appreciate
Group Ltd in trustee-administered funds. Contributions to the schemes are determined by a qualified
actuary on the basis of triennial valuations.
With the exception of £543,000 of assets and £284,000 of liabilities, the PG scheme assets and
liabilities were transferred into the PF scheme on 30 March 2023. The assets left behind in the PG
scheme are to be used to pay benefits owed, winding up costs and winding up lump sums, with any
remaining cash balance to be transferred to the PF scheme on winding up the PG scheme later this year.
The PG scheme agreed to pay winding up lump sum payments to 27 members totaling £284,000 which
were fully known and committed to by 29 March 2023. This has been treated as a settlement cost of
£16,000 in the Consolidated statement of profit or loss (within past service cost of £123,000 disclosed
below), being the difference between the winding up lump sum amounts of £284,000 and the accounting
liability of £268,000 calculated at the year-end.
Both schemes are subject to the funding legislation which came into force on 30 December 2005,
outlined in the Pensions Act 2004. This, together with documents issued by the Pensions Regulator
and the Guidance Notes adopted by the Financial Reporting Council, set out the framework for funding
defined benefit occupational pension plans in the UK. The trustees of the schemes are required to
act in the best interests of the schemes’ beneficiaries and are responsible for setting the investment,
funding and governance policies of the funds. The schemes are administered by an independent
trustee appointed by the Group. Appointment of the trustees is determined by the schemes’
trust documentation.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 168
PayPoint Plc Annual Report 2023
18. Pensions continued
Defined benefit plans continued
The Group have applied IAS19 Employee Benefits (revised 2011) and the following disclosures relate
to this standard. The present value of scheme liabilities is measured by discounting the best estimate
of future cash flows to be paid out of the schemes using the projected unit credit method. All actuarial
gains and losses have been recognised in the period in which they occur in other comprehensive income.
For the purposes of IAS19, the results of the PG actuarial valuation as at 31 March 2019 and the PF
actuarial valuation as at 31 March 2022, which were carried out by a qualified independent actuary, have
been updated on an approximate basis to 31 March 2023. No actuarial valuation of the PG scheme was
carried out as at 31 March 2022, as by then it had been decided to wind up the scheme. There have
been no changes in the valuation methodology adopted for this year’s disclosures compared to the
previous year.
Analysis of amounts recognised in other comprehensive income:
Gain on scheme assets
Experience gains arising on the defined benefit obligation
Gains arising from changes in the demographic assumptions underlying the present value
of the defined benefit obligation
Losses arising from changes in the financial assumptions underlying the present value of
the defined benefit obligation
Total
1 month to
31 March
2023
£’000
675
1
141
(464)
353
The schemes typically expose the Group to actuarial risks such as investment risk, interest rate risk, salary
growth risk, mortality risk and longevity risk.
The amounts recognised in the Statement of financial position are as follows (comparative figures are for
28 February 2023, to show movements since the Appreciate acquisition date):
Scheme assets
It is the policy of the scheme trustees to review the investment strategy at the time of each funding
valuation. The trustees’ investment objectives and the processes undertaken to measure and manage
the risks inherent in the scheme’s investment strategy are documented in the scheme’s Statement of
Investment Principles.
Present value of pension obligation
Fair value of scheme assets
Net pension surplus
Comprising:
Schemes in asset surplus
31 March
2023
£’000
(17,341)
17,752
411
28 February
2023
£’000
(16,880)
17,058
178
411
178
The amounts recognised in the Consolidated statement of profit or loss are as follows:
Past service cost
Net interest credit
Total
1 month to
31 March
2023
£’000
123
(3)
120
The costs are all recognised within administration expenses in the Consolidated statement of profit
or loss.
Fair value of scheme assets:
Group
Fixed Interest Gilt Fund
Diversified Growth Assets (DGA)
Gilts
LDI
Loan Fund
Multi Asset Credit
Index Linked Gilts
Cash and other
Total assets
31 March
2023
£’000
28 February
2023
£’000
1,305
781
2,430
2,042
1,805
2,155
3,683
3,551
17,752
1,241
778
2,270
1,768
1,811
2,710
3,379
3,101
17,058
None of the fair values of the assets shown above includes any of the Group’s own financial instruments
or any property occupied by, or other assets used by the Group. All the scheme assets have a quoted
market price in an active market, with the exception of the trustee’s bank account balance.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 169
PayPoint Plc Annual Report 2023
Strategic report
Governance
Governance
Financial statements
Financial statements
Shareholder information
The movement in the fair value of scheme assets is as follows:
Group
Fair value of the scheme assets at the acquisition date
Interest income
Return on scheme assets
Benefits paid
1 month to
31 March
2023
£’000
17,058
58
675
(39)
17,752
For the PG scheme, actual return on scheme assets, including interest income, for the month to
31 March 2023 was £578,000 (11 months to 28 February 2023: £(6,406,000)). For the PF scheme,
actual return on scheme assets, including interest income, for the month to 31 March 2023 was
£97,000 (11 months to 28 February 2023: £1,259,000).
Present value of obligations
The movement in the present value of the defined benefit obligation is as follows:
Group
Opening defined benefit obligation
Interest cost
Actuarial gains due to scheme experience
Actuarial gains due to changes in demographic assumptions
Actuarial losses due to changes in financial assumptions
Benefits paid
Past service costs
1 month to
31 March
2023
£’000
16,880
55
(1)
(141)
464
(39)
123
17,341
The average duration of the PF scheme defined benefit obligation at 31 March 2023 is 7 years.
Significant actuarial assumptions
The following are the principal actuarial assumptions for the PF scheme at the reporting date
(expressed as weighted averages):
Financial and related actuarial assumptions:
Discount rate
Inflation (RPI)
Allowance for revaluation of deferred pensions of CPI or 8.5% p.a. if less
31 March
2023
28 February
2023
% per annum
% per annum
4.90
3.20
3.20
5.10
3.20
3.20
The mortality assumptions adopted for the PF scheme are 89% of the standard tables S2PxA, year
of birth, no age rating for males and females, projected using Continuous Mortality Investigation
(CMI)_ 2021 converging to 1.25% pa. These imply the following life expectancies:
Life expectancy at age 65 for:
Male – retiring in 2023
Female – retiring in 2023
Male – retiring in 2042
Female – retiring in 2042
31 March
2023
Years
28 February
2023
Years
23.9
26.1
25.2
27.5
24.2
26.5
25.5
27.8
Sensitivity analysis on significant actuarial assumptions:
The following table summarises the impact on the PF scheme defined benefit obligation at the end of
the reporting period, if each of the significant actuarial assumptions above were changed, in isolation.
The inflation sensitivity includes the impact of changes to the assumptions for revaluation, pension
increases and salary growth. The sensitivities shown below are approximate. Note that as the only
remaining liability in respect of the PG scheme is fixed and not dependent on any assumptions, no
sensitivity analysis has been performed for that scheme as at 31 March 2023.
Discount rate
Discount rate
Rate of inflation
Rate of inflation
Rate of mortality
Rate of mortality
Change in assumption
decrease of 0.50% p.a.
increase of 0.50% p.a.
decrease by 0.25% p.a.
Increase by 0.25% p.a.
decrease in life expectancy of 1 year
increase in life expectancy of 1 year
Change in liabilities
increase by 6.9%
decrease by 6.2%
decrease by 2.1%
Increase by 2.1%
decrease by 2.4%
Increase by 2.4%
The sensitivity assumption used in the year was 0.25% for the price inflation rate and 0.5% for the
discount rate This is in line with the standard sensitivity analysis used by pension advice providers in
their disclosures to clients.
The scheme typically exposes the Group to actuarial risks such as investment risk, interest rate risk, salary
growth risk, mortality risk and longevity risk. A decrease in corporate bond yields, a rise in inflation or an
increase in life expectancy would result in an increase to the schemes liabilities. This would detrimentally
impact on the Statement of financial position and may give rise to increased charges in future income
statements. This effect would be partially offset by an increase in the value of the schemes’ bond holdings.
Additionally, caps on inflationary increases are in place to protect the scheme against extreme inflation.
Funding
The Group expects to contribute £150,000 to the PF scheme for the accounting period commencing
1 April 2023. This is based upon the current schedule of contributions following the pension merger
and the actuarial valuation carried out as at 31 March 2022.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 170
PayPoint Plc Annual Report 2023
19. Inventories
Finished goods – cards and vouchers
Finished goods – terminals
Total
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
2,854
298
3,152
–
332
332
The cost of inventories recognised as an expense in the year is £4.1 million (2022: £0.8 million, of which
£0.1 million credit from continuing operations).
20. Trade and other receivables
Group
Trade receivables
Items in the course of collection1
Revenue allowance for expected credit losses
Other receivables
Net investment in finance lease receivables (note 26)
Contract assets – capitalisation of fulfilment costs
Accrued income
Prepayments
Total
31 March
2023
£’000
17,703
47,771
(1,058)
64,416
1,822
2,144
2,910
5,241
5,522
82,055
31 March
2022
£’000
10,316
55,449
(1,058)
64,707
134
1,814
2,057
4,315
2,948
75,975
1
Items in the course of collection represent amounts collected for clients by retailer partners. An equivalent balance is included
within trade and other payables (settlement payables). Refer to note 22.
The Group’s exposure to the credit risk inherent in its trade and other receivables is discussed in note 31.
The Group reviews trade receivables past due but not impaired on a regular basis and in determining the
recoverability of the trade receivables the Group considers any change in the credit quality of the trade
receivables from the date credit was initially granted up to the reporting date.
Included in trade receivables are past due debtors with a carrying amount of £2.9 million (2022: £1.7 million).
There has been an increase compared to prior year due to the Appreciate acquisition. The ageing of the
trade receivables past due is as follows:
Carrying value at 31 March 2023
Carrying value at 31 March 2022
Less than
1 month
£’000
1,258
907
1–2 months
2–3 months
£’000
551
455
£’000
232
44
More than
3 months
£’000
894
290
Total
£’000
2,935
1,696
The expected credit losses associated with accrued income balances are immaterial based on historical
loss experience for those customers, adjusted for information about current and reasonable supportable
future conditions.
Movement in the revenue allowance
Balance at the beginning of the year
Acquisition of business
Amounts utilised in the year
Increase in allowance
Balance at the end of the year
Age of revenue allowance
31 March
2023
£’000
31 March
2022
£’000
1,058
251
(878)
627
1,058
949
–
(654)
763
1,058
Carrying value at 31 March 2023
Carrying value at 31 March 2022
Less than
1 month
£’000
230
195
1–2 months
£’000
2–3 months
£’000
110
84
116
79
More than
3 months
£’000
602
700
Total
£’000
1,058
1,058
The expected credit losses associated with items in the course of collection are immaterial.
Company
Amounts owed by Group companies (non-current)
Trade and other receivables (non-current)
Amounts owed by Group companies (current)
Other receivables
Accrued income
Prepayments
Trade and other receivables (current)
Total
31 March
2023
£’000
11,477
11,477
1,548
–
12
970
2,530
14,007
31 March
2022
£’000
26,155
26,155
2,353
11
12
732
3,108
29,263
Amounts owed by subsidiaries are unsecured, have no fixed date of repayment and are repayable on
demand. Expected credit losses are immaterial.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section
171
PayPoint Plc Annual Report 2023
Strategic report
Governance
Governance
Financial statements
Financial statements
Shareholder information
21. Cash and cash equivalents and monies held in trust
Group cash and cash equivalents of £78.5 million (2022: £24.3 million) comprise the following:
On 13 August 2007 a declaration of trust constituted the Park Prepayment Protection Trust (PPPT) to
hold customer prepayments. Park Prepayments Trustee Company Limited, as trustee of the trust, holds
this money on behalf of the agents.
The conditions of the trust that allow the release of money to the Group are summarised below:
1. Purchase of products to be supplied to customers.
2. Supply of products to customers less any amounts already received under condition 1 (above).
3. Amounts required as a security deposit to any credit card company or other surety.
4. Amounts payable for VAT.
5. Amount equal to any bond required by the Christmas Prepayments Association (CPA).
6. Residual amounts upon completion of despatch of all orders in full.
Products for this purpose means goods, vouchers, prepaid cards or other products ordered by customers.
Prior to any such release of monies under condition 6 above, the trustees of PPPT require a statement of
adequacy of working capital from the directors of Park Retail Limited, stating that it will have sufficient
working capital for the year. A summary of the main provision of the deeds and a copy of the trust deed
is available at www.getpark.co.uk.
On 16 February 2010 a declaration of trust constituted the Park Card Services E-money Trust (PCSET)
to hold the e-money float in accordance with regulatory requirements. The e-money float represents the
value of the obligations of Love2shop to cardholders and redeemers.
Clients’ funds
Retailer partners’ deposits
Card and voucher deposits
Corporate cash
Cash and cash equivalents
Bank overdraft
Total
31 March
2023
£’000
12,041
6,156
37,708
22,546
78,451
(525)
77,926
31 March
2022
£’000
9,833
6,813
–
7,653
24,299
–
24,299
Client’s funds represent funds collected on behalf of clients of the PayPoint business where the Group
has title to the funds. Retailer partners’ deposits represent security deposits made by PayPoint’s agents.
A balance equivalent to clients’ funds and retailer partners’ deposits is included within trade payables.
Card and voucher deposits represent funds collected on behalf of clients of the Love2shop business
where the Group has title to the funds.
Clients’ funds held in trust off the Consolidated statement of financial position amounted to £124.3 million
(2022: £58.9 million) and relate to Payments and Banking revenue streams, other than Digital (see note 3).
During the year the Group operated cash pooling amongst most of the bank accounts within its PayPoint
businesses, whereby individual accounts could be overdrawn without penalties being incurred so long as
the overall position was in credit.
Monies held in trust of £82.0 million (2022: £nil), which relate solely to the L2S business, comprise
the following:
Park Prepayments Protection Trust
E-money Trust
Total
31 March
2023
£’000
42,000
40,000
82,000
31 March
2022
£’000
–
–
–
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 172
PayPoint Plc Annual Report 2023
21. Cash and cash equivalents and monies held in trust continued
Monies held in trust are largely invested in deposit accounts with maturity dates of up to one year.
The timing of the release of the monies to the Group from PPPT is as detailed above and is expected
to be within 12 months of the year end. The release of monies from the e-money Trust occurs as the
obligations fall due.
In addition to the £82.0 million monies held in trust, £37.7 million of balances held in trust under the
arrangements described above are recognised as card and voucher deposits within cash and cash
equivalents, since in practice the Group can access the funds on demand.
22. Trade and other payables
Group
Amounts owed in respect of clients’ funds and retailer partners’ deposits1
Settlement payables2
Client payables
Payables in respect of cards and vouchers3
Trade payables4
Other taxes and social security
Other payables
Accruals
Deferred income
Contract liabilities – deferral of set-up and development fees
Total
Disclosed as:
Current
Non-current
Total
31 March
2023
£’000
31 March
2022
£’000
18,197
47,771
65,968
101,454
63,133
4,874
4,117
15,171
214
710
255,641
255,526
115
255,641
16,646
55,449
72,095
–
4,789
3,314
901
10,087
401
788
92,375
92,375
–
92,375
1
2
3
4
Relates to monies collected on behalf of clients where the Group has title to the funds (clients’ funds and retailer partners’
deposits). An equivalent balance is included within cash and cash equivalents (note 21).
Payable in respect of amounts collected for clients by retailer partners. An equivalent balance is included within trade and other
receivables (items in the course of collection). Refer to note 20.
Payables in respect of cards and vouchers include balances due to both customers (£19.7 million (2022: £18.7 million)) and retailers
in respect of flexecash © cards and amounts due to retailers for Love2shop vouchers and cards.
Trade payables includes L2S savers’ prepayment balances for products that will be supplied prior to Christmas 2023, upon
confirmation of order. Until orders are confirmed, savers’ prepayments are repayable on demand.
Revenue is deferred for service fees, net of discount.
The movement in deferred income is as follows:
Balance at the beginning of the year
Revenue deferred in the year
Revenue recognised in the year
Balance at the end of the year
Company (Current)
Amounts owed by Group companies
Other payables
Accruals
Total
23. Provisions
Group and Company
At 31 March 2021
Utilised in period
At 31 March 2022 and 2023
31 March
2023
£’000
401
157
(344)
214
31 March
2023
£’000
77,909
1,439
3,950
83,298
31 March
2022
£’000
565
1,914
(2,078)
401
31 March
2022
£’000
52,160
240
2,365
54,765
Other
provision
£’000
12,500
(12,500)
–
Provision utilisation in the prior year relates to a donation to the Energy Industry Voluntary
Redress Scheme as part of the commitments in resolution of the concerns raised in Ofgem’s Statement
of Objections received on 29 September 2020. A £12.5m provision had previously been recognised in
the year ended 31 March 2021.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 173
PayPoint Plc Annual Report 2023
Strategic report
Governance
Governance
Financial statements
Financial statements
Shareholder information
24. Deferred consideration liability
25. Deferred tax liability
At 31 March 2021
Recognition of deferred consideration liability on acquisition of RSM 2000
Revaluation of i-movo deferred, contingent consideration liability
Discount unwind on i-movo deferred, contingent consideration
Settlement of i-movo deferred, contingent consideration liability – cash consideration
paid in the year
Settlement of i-movo deferred, contingent consideration liability – shares consideration
paid in the year
At 31 March 2022
Settlement of RSM 2000 deferred consideration liability – cash consideration paid in
the year
At 31 March 2023
£’000
5,747
1,000
(2,880)
133
(2,000)
(1,000)
1,000
(1,000)
–
Property, plant and equipment
Intangible assets
Defined benefit pension scheme
Share-based payments
Short-term temporary differences
Total
31 March
2022
£’000
Acquisition
of business
£’000
1,222
(5,306)
–
190
188
(3,706)
194
(10,736)
(29)
–
2,989
(7,582)
(Charge)/credit
to consolidated
statement of
profit or loss
£’000
(1,193)
366
26
219
(259)
(841)
Charge
to OCI
£’000
31 March
2023
£’000
–
–
(86)
–
–
(86)
223
(15,676)
(89)
409
2,918
(12,215)
31 March
2021
£’000
Acquisitions/
disposals of
businesses
£’000
Credit/(debit)
to consolidated
statement of
profit or loss
£’000
31 March
2023
£’000
31 March
2022
£’000
–
–
–
1,000
–
1,000
Property, plant and equipment
Intangible assets
Share-based payments
Short-term temporary differences
Balance reclassified as held for sale
Total
1,634
(4,790)
142
39
(2,975)
4
(2,971)
(2)
(83)
–
–
(85)
(4)
(89)
(410)
(433)
48
149
(646)
–
(646)
Charge
to OCI
£’000
31 March
2022
£’000
–
–
–
–
–
–
–
1,222
(5,306)
190
188
(3,706)
–
(3,706)
Disclosed as:
Current
Non-current
Total
i-movo
The prior year deferred, contingent consideration liability in relation to the i-movo acquisition represented
the discounted fair value of the estimated additional consideration payable at the reporting date. It was
contingent on future performance over the earnout period and was linked to four monthly revenue growth
targets on two potential key revenue streams.
The last remaining earnout period expired on 30 May 2023 with the earnout target not having been met.
RSM 2000
The £1.0 million prior year RSM 2000 deferred consideration liability was paid out on the first anniversary
of completion in the current year. The deferred consideration was not contingent on any factors. It was
measured at amortised cost.
At the statement of financial position date, the Group had recognised unused trading losses of
£11.4 million (2022: £0.3 million) from Love2shop. The Group believes that they will be able to be
utilised against future taxable income, as Love2shop is forecast to generate future profits.
Deferred tax assets have not been provided on brought forward trading losses of £20.7 million
(2022: £nil) arising from the Love2shop acquisition as, at the year end, the Group does not believe
it is probable that the entities in which these losses reside will be able to utilise them against future
taxable income.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 174
PayPoint Plc Annual Report 2023
26. Leases
A) Finance lease liabilities
At 31 March 2023
Current balance
Non-current balance
Total lease liabilities
Interest charge for the year
At 31 March 2022
Current balance
Non-current balance
Total lease liabilities
Interest charge for the year
Balance at beginning of year
Acquisition in the year
Payment of lease liabilities (financing cash flows)
Interest on unwind of lease liabilities
Balance at end of year
Disclosed as:
Current
Non-current
Total lease liabilities
B) Right-of-use assets
Property
£’000
Plant and
Equipment
£’000
Vehicles
£’000
Total
£’000
479
4,049
4,528
28
164
57
221
25
371
568
939
3
–
–
–
–
12
–
12
1
27
12
39
(3)
31March
2023
£’000
260
5,448
(261)
32
5,479
862
4,617
5,479
862
4,617
5,479
32
191
69
260
22
31 March
2022
£’000
447
34
(243)
22
260
200
60
260
C) Net investment in finance lease receivables
Current balance
Non-current balance
Total net investment in finance lease receivables
31 March
2023
£’000
2,144
1,711
3,855
31 March
2022
£’000
1,814
4,407
6,221
Interest income (revenue) on net investment in finance lease receivables
1,140
1,701
The decrease in the net investment in finance lease receivable and interest income on net investment
in finance lease receivables in the current year is due to the fact that most new sales are now
operating leases.
Age of allowance for net investment in finance lease receivables
Carrying value at 31 March 2023
Carrying value at 31 March 2022
Less than
1 month
£’000
42
7
1–3 months
£’000
3–6 months
£’000
72
19
22
16
More than
6 months
£’000
818
1,006
Total
£’000
954
1,048
Contractual undiscounted cash flows for net investment in finance lease receivables
Undiscounted lease receivables
Unearned
finance
income
£’000
Less
than 1
month
£’000
1–3
months
£’000
3–6
months
£’000
6 months–
1 year
£’000
1 years–
3 years
£’000
3 years–
5 years
£’000
More
than 5
years
£’000
Total
£’000
31 March 2023
31 March 2022
(898)
(1,669)
106
428
181
790
530
1,063
702
1,703
1,124
3,528
1,978 132 3,885
– 6,221
378
At 31 March 2023
Depreciation charge for the year ended
31 March 2023
At 31 March 2022
Depreciation charge for the year ended
31 March 2022
Property
£’000
3,178
(159)
184
(151)
Plant and
equipment
£’000
946
(33)
–
–
Vehicles
£’000
Total
£’000
18
4,142
(41)
64
(40)
(233)
248
(191)
The right of use assets are shown within Property and Plant and equipment in Note 17. The increase in
the current year is due to the acquisition of Appreciate.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section
175
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Financial statements
Financial statements
Shareholder information
27. Loans and borrowings and lease liabilities
Group
At 31 March 2022
Repayments of revolving credit facility
Drawdowns on revolving credit facility
Repayment of amortising term loan
Drawdown of new amortising term loan
Interest charge
Interest paid
Repayment of block loans
Lease liability acquired in the year
Payment of lease liabilities
Interest on unwind of lease liabilities
At 31 March 2023
Disclosed as:
Current
Revolving credit facility
Amortising term loan
Accrued interest
Block loans
Lease liabilities
Total – current
Non-current
Amortising term loan
Block loan
Lease liabilities
Total – non-current
Balance at end of year
Other liability-related changes
Interest paid
Loans and
borrowings
£’000
Lease
liabilities
£’000
51,534
(9,000)
28,500
(10,833)
36,000
2,612
(2,157)
(2,241)
–
–
–
94,415
46,500
10,833
455
457
–
58,245
36,000
170
–
36,170
260
–
–
–
–
–
–
–
5,448
(261)
32
5,479
–
–
–
–
862
862
–
–
4,617
4,617
Group
At 31 March 2021
Repayments of revolving credit facility
Drawdowns on revolving credit facility
Repayment of amortising term loan
Interest charge
Interest paid
Repayment of block loans
Funding from block loans
Lease liability acquired in the year
Payment of lease liabilities
Interest on unwind of lease liabilities
At 31 March 2022
Disclosed as:
Current
Revolving credit facility
Amortising term loan
Block loans
Lease liabilities
Total – current
Non-current
Amortising term loan
Block loans
Lease liabilities
Total – non-current
Balance at end of year
94,415
5,479
Other liability-related changes
Interest paid
(2,157)
–
Loans and
borrowings
£’000
Lease
liabilities
£’000
86,583
(47,000)
24,500
(10,833)
1,913
(1,913)
(3,636)
1,920
–
–
–
51,534
27,000
10,833
1,810
–
39,643
10,833
1,058
–
11,891
447
–
–
–
–
–
–
–
34
(243)
22
260
–
–
–
200
200
–
–
60
60
51,534
260
(1,913)
–
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PayPoint Plc Annual Report 2023
27. Loans and borrowings and lease liabilities continued
Company loans and borrowings
Balance at the beginning of the year
Repayments of revolving credit facility
Drawdowns on revolving credit facility
Repayment of amortising term loan
Drawdown of new amortising term loan
Interest charge
Interest paid
Balance at the end of the year
Disclosed as:
Current
Revolving credit facility
Amortising term loan
Accrued interest
Total – current
Non-current
Amortising term loan
Balance at end of year
Other liability-related changes
Interest paid
28. Share capital, share premium and merger reserve
Called up, allotted and fully paid share capital
72,563,234 (2022: 68,915,949) ordinary shares of 1/3p each
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
48,666
(9,000)
28,500
(10,833)
36,000
2,498
(2,043)
93,788
82,000
(47,000)
24,500
(10,833)
–
1,654
(1,655)
48,666
46,500
10,833
455
57,788
27,000
10,833
–
37,833
36,000
10,833
93,788
48,666
(2,043)
(1,655)
31 March
2023
£’000
31 March
2022
£’000
242
230
The increase in share capital in the current year resulted from 3,565,382 shares issued (of 1/3p each)
as part of the consideration for Appreciate Group PLC, 47,899 shares issued (of 1/3p each) for share
awards which vested in the year and 34,004 matching shares issued (of 1/3p each) under the Employee
Share Incentive Plan.
The share premium of £1.0 million (2022: £1.0 million) represents the payment of deferred, contingent
share consideration in excess of the nominal value of shares issued in relation to the i-movo acquisition.
The merger reserve of £18.2 million (2022: £1.0 million) comprises £1.0 million initial share consideration
in excess of the nominal value of shares issued on the initial acquisition of i-movo and £17.2 million share
consideration in excess of the nominal value of shares issued in relation to the Appreciate acquisition.
29. Share-based payments
The Group’s share schemes are described in the Directors’ Remuneration Report on pages 104 to 123
and consist of the LTIP, DABS and RSA equity-settled share schemes.
No share awards were issued under the LTIP scheme in the current year (2022: nil). The LTIP scheme was
closed and replaced with the RSA scheme in the year ended 31 March 2021 and no LTIP shares existed
at 31 March 2023.
237,476 share awards were issued under the RSA scheme in the year (2022: 209,293), vesting over two
to five years, between 23 September 2024 and 9 June 2027 subject to continued employment. The RSAs
do not contain any performance conditions other than to complete the required period of service.
55,374 share awards were issued under the DABS scheme in the year (2022: 45,594), vesting over two
years to 10 June 2024 subject to continued employment. The DABS do not contain any performance
conditions other than to complete the required period of service.
The share-based payments charge in the statement of profit or loss in the year was £1.3 million
(2022: £0.9 million). Of this, £0.1 million (2022: £0.2 million) related to the Employee Share Incentive
Plan. For each share purchased by the employee under the Employee Share Incentive Plan, the Company
issues a free matching share which will vest subject to the employee remaining employed with the Group
for three years from the date each share was purchased by the employee.
A total charge of £0.6 million (2022: £1.3 million), which was previously recognised directly in equity, for
schemes which have now lapsed or vested, was transferred from the share-based payments reserve to
retained earnings during the year. Of this, £0.1 million (2022: £0.2 million) related to shares which vested
under the Employee Share Incentive Plan.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section
177
PayPoint Plc Annual Report 2023
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Governance
Financial statements
Financial statements
Shareholder information
Share awards movement during the year
30. Dividends
Outstanding at the beginning of the year
Granted
Lapsed
Exercised
Forfeited
Outstanding at end of the year
Remaining vesting period of outstanding share awards
Within one year
One to two years
Two to three years
Three years or more
Outstanding at end of the year
Number
of shares
31 March
2023
502,167
292,850
(59,350)
(35,589)
(8,752)
691,326
Number
of shares
31 March
2023
139,563
269,094
213,907
68,762
691,326
Number
of shares
31 March
2022
432,725
254,887
–
(112,556)
(72,889)
502,167
Number
of shares
31 March
2022
141,344
121,808
181,365
57,650
502,167
The fair value of the equity instruments granted during the year was determined based on the share price
on the date of the grant. All awards granted and in issue are for free shares and therefore the weighted
average exercise price for all outstanding schemes is £nil.
Awards
RSA – 2 years
RSA – 3 years
RSA – 4 years
RSA – 5 years
DABS
Grant date
24 September 2022
10 June 2022
10 June 2022
10 June 2022
10 June 2022
Number of
shares
11,579
178,529
23,683
23,685
55,374
Fair value (£)
Vesting date
6.05
5.70
5.70
5.70
5.70
23 September 2024
9 June 2025
9 June 2026
9 June 2027
9 June 2024
Reported dividends on ordinary shares:
Interim ordinary dividend
Proposed final ordinary dividend
Total ordinary reported dividends
(non-IFRS measure)
Dividends paid on ordinary shares:
Final ordinary dividend for the prior year
Interim dividend for the current year
Total ordinary dividends paid
(financing cash flows)
Year ended 31 March 2023
Year ended 31 March 2022
£’000
pence
per share
£’000
pence
per share
12,693
13,497
18.4
18.6
11,687
12,405
26,190
37.0
24,092
12,414
12,693
18.0
18.4
11,409
11,687
25,107
36.4
23,096
17.0
18.0
35.0
16.6
17.0
33.6
Number of shares in issue used for proposed
final ordinary dividend per share calculation
72,563,234
68,915,949
The proposed final ordinary dividend is subject to approval by shareholders at the Annual General
Meeting and has not been included as a liability in these financial statements.
31. Financial instruments and risk
The Group’s financial instruments comprise cash and cash equivalents, monies held in trust, trade and
other receivables, net investment in finance lease receivables, trade and other payables, payables in
respect of cards and vouchers, loans and borrowings, lease liabilities, provisions and accruals, which
arise directly from the Group’s operations. The Group’s policy is not to undertake speculative trading
in financial instruments.
The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and foreign
exchange. The Directors review and agree policies for managing each of these risks which are summarised
below. These policies have remained unchanged during the year. The Group uses hedges to manage the
foreign exchange risk of purchasing PayPoint One terminals and card terminals.
The financial assets and liabilities of the Group and Company are detailed below:
Group
Financial assets
Monies held in trust
Cash and cash equivalents
Net investment in finance lease
Trade receivables
Other receivables
Note
21
21
26
20
20
31 March
2023
£’000
31 March
2022
£’000
82,000
78,451
3,855
64,416
1,822
230,544
–
24,299
6,221
64,707
134
95,361
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
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PayPoint Plc Annual Report 2023
31. Financial instruments and risk continued
Group
Financial liabilities
Revolving credit facility
Amortising term loans
Block loans
Loans and borrowings
Payables in respect of cards and vouchers
Other trade and other payables
Trade and other payables
Lease liabilities
Bank overdraft
Deferred, contingent consideration liability
Company
Financial assets
Amounts owed by group companies (non-current)
Financial assets (non-current)
Cash and cash equivalents
Other receivables
Amounts owed by group companies (current)
Financial assets (current)
Total
31 March
2023
£’000
31 March
2022
£’000
Note
22
26
21
24
46,701
47,087
627
94,415
101,454
154,007
255,641
5,479
525
–
356,060
27,000
21,667
2,867
51,534
–
92,375
92,375
260
–
1,000
145,169
31 March
2023
£’000
31 March
2022
£’000
11,477
11,477
1,186
982
1,548
3,716
15,193
26,155
26,155
301
755
2,353
3,409
29,564
Company
Financial liabilities
Amortising term loan – non-current
Financial liabilities (non-current)
Revolving credit facility – current
Amortising term loans – current
Trade and other payables
Deferred, contingent consideration liability
Amounts owed to group companies
Financial liabilities (current)
Total
27
24
31 March
2023
£’000
31 March
2022
£’000
36,000
36,000
10,833
10,833
46,701
11,087
4,889
–
77,909
140,586
176,586
27,000
10,833
2,605
1,000
52,160
93,598
104,431
A) Credit risk
The Group’s financial assets are cash and cash equivalents, monies held in trust, trade and other
receivables and net investment in finance lease receivables. The Group’s credit risk is primarily
attributable to its trade and other receivables and net investment in finance lease receivables.
The Group has treasury policies in place which manage the concentration of risk with individual bank
counterparties. Each counterparty has an individual limit determined by their credit ratings. In accordance
with the Group’s treasury policies and exposure management practices, counterparty credit exposure
limits are monitored and no individual exposure is considered significant in the ordinary course of treasury
management activity. The Company does not expect any significant losses from non-performance by
these counterparties.
To mitigate against credit risk, PayPoint credit checks clients, SME and retailer partners, holds retailer
security deposits, operates terminal limits, monitors clients and retailer partners for changes in payment
profiles and in certain circumstances, has the right to set-off monies due against funds collected.
Additionally, the majority of Love2shop’s trade receivables are subject to credit insurance, further
reducing the Group’s risk. The Group’s maximum exposure, at 31 March 2023, was £51.5 million
(2022: £34.7 million).
The Company, PayPoint Plc, has issued parental guarantees in favour of clients of its subsidiaries under
which it has guaranteed amounts due to clients, by the subsidiaries, for settlement of funds collected
by retailer partners.
B) Liquidity risk
The Group’s policy throughout the year ended 31 March 2023 regarding liquidity has been to maximise
the return on funds placed on deposit whilst minimising the associated risk.
Refer to part (e) of this note for details of the Group’s borrowing facilities. The following shows the
exposure to liquidity risk for continuing operations. The amounts are gross and undiscounted, and include
contractual interest payments.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 179
PayPoint Plc Annual Report 2023
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Financial statements
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Shareholder information
31 March 2023
£’000
Carrying
amount
Total
2 months
or less
2–12
months
1–2
years
2–5
years
5 years
or more
Contractual cash flows
Non-derivative
financial liabilities
Revolving credit facility
Amortising term loans
Block loans
Lease liabilities
Payables in respect of cards
and vouchers
Other trade and other
payables
46,701
47,087
627
5,479
46,701
47,087
654
6,954
46,701
2,962
81
248
–
–
8,125 36,000
170
982
403
887
–
–
–
1,893
–
–
–
2,944
101,454 101,454 101,358
154,187
154,187 154,149
19
–
–
–
34
–
81
–
The Group also minimises interest cost by effective central management of cash resources to minimise
the need for utilisation of the financing facility.
E) Borrowing facilities
Following the group-wide refinancing in respect of the Appreciate acquisition, the Group’s borrowing
facilities consist of a £10.8 million amortising term loan which is due to be fully repaid by February 2024,
a further £36 million amortising term loan repayable from May 2024 to February 2026 in equal, quarterly
instalments until the final, double payment, and an unsecured £75.0 million revolving credit facility with a
£30.0 million accordion facility (uncommitted) expiring in February 2026.
At 31 March 2023, £46.7 million (2022: £27.0 million) was drawn down from the £75.0m revolving credit
facility, including accrued interest of £0.2m. The outstanding balance of the original amortising term loan
was £10.8 million (2022: £21.7 million), the outstanding balance of the new amortising term loan was
£36.0 million and total accrued interest on amortising loans at the year-end was £0.3m. The Group also
had £0.6 million (2022: £2.9 million) of outstanding block loan balances.
31 March 2022
£’000
Carrying
amount
Total
2 months
or less
2–12
months
1–2
years
2–5
years
5 years
or more
Contractual cash flows
Interest is payable at SONIA plus 1.75% (2022: SONIA plus 1.75%). The Group has the ability to roll
over the revolving credit facility drawdown for an additional period between one and six months.
Non-derivative
financial liabilities
Revolving credit facility
Amortising term loan
Block loans
Lease liabilities
Trade and other payables
Deferred consideration liability
27,000
21,667
2,867
260
94,147
1,000
27,054
21,797
2,867
271
94,147
1,000
27,054
2,839
395
41
94,147
1,000
–
–
8,125 10,833
924
1,299
70
160
–
–
–
–
–
–
249
–
–
–
–
–
–
–
–
–
C) Foreign exchange risk
The Group’s currency exposures comprise those transactional exposures that give rise to the net currency
gains and losses recognised in the statement of profit or loss. Such exposures comprise the monetary
assets and monetary liabilities of the Group that are not denominated in the operating (or functional)
currency of the operating unit involved. At 31 March 2023, these exposures were £nil (2022: £nil).
The Group uses hedges to manage the foreign exchange risk related to PayPoint One terminal and card
terminal purchases.
D) Interest rate risk
The Group’s interest-bearing financial assets at 31 March 2023 comprised cash and cash equivalents
which totalled £77.9 million (2022: £24.3 million from continuing operations) and monies held in trust
£82.0 million (2022: £nil). The Group is also exposed to interest rate risk through use of its financing
facility which incurs interest charges based on SONIA plus 1.75% (2022: SONIA plus 1.75%).
All funds earn interest at the prevailing rate. Cash and cash equivalents are deposited on short-term
deposits (normally weekly or monthly) or held in current accounts. The majority of monies held in trust
are held in deposit accounts. The Group seeks to maximise interest receipts within these parameters.
The Group is required to adhere to a net debt leverage of no more than three times EBITDA and an
interest cover of no less than four times. The Group operated within these limits during the financial
year ended 31 March 2023.
F) Fair value of financial assets and liabilities
All derivatives are held with an A rated bank and mature within one year. All financial assets/liabilities are
measured at fair value through the profit or loss, comprising derivative financial instruments in the form
of foreign exchange contracts (classified as Level 2), the deferred consideration liability recognised in
the prior year relating to the RSM 2000 acquisition (classified as Level 1) and the convertible loan note
instruments purchased from Optus Homes and OBConnect (classified as Level 3). The fair value of the
convertible loan note instruments were measured using the income approach (discounted cash flow) –
see note 15. There have been no transfers between Level 1, 2 or 3 in the current year or prior year.
The aggregate amount of the Group’s day one discounts yet to be recognised in the Statement of
consolidated profit or loss is £2.8 million, comprising £2.8 million acquired on the Love2shop acquisition,
£0.6m generated post-acquisition, less £0.6 million released post-acquisition. The corresponding prior
year amounts were all £nil. The fair value of this financial liability differs from the transaction price due to
the discounts offered to corporate customers.
The Directors consider there to be no material difference between the book value and the fair value of
the Group’s financial instruments at 31 March 2023, or 31 March 2022.
G) Market price risk
The Group’s exposure to market price risk comprises interest rate and currency market exposure.
Excess group funds are invested in money market cash deposits with the objective of maintaining
a balance between accessibility of funds and competitive rates of return.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 180
PayPoint Plc Annual Report 2023
31. Financial instruments and risk continued
H) Capital risk management
The Group’s objectives when managing capital (the definition of which is consistent with prior year
and is the Group’s assets and liabilities including cash) are to safeguard the Group’s ability to continue
as a going concern to provide returns for shareholders and benefits for other stakeholders. The Group
manages its capital by continued focus on free cash flow generation and managing the level of capital
investment in the business. The final dividend for the year ensures a prudent level of earnings coverage
for the dividend and that leverage is not substantially increased.
I) Financial instrument sensitivities
Financial instruments affected by market risk include deposits, hedges, trade receivables and trade
payables. Any changes in market variables (exchange rates and interest rates) will have an immaterial
effect on these instruments.
32. Related party transactions
Remuneration of the Executive Directors, who are the key management of the Group, was as follows
during the year:
Short-term benefits and bonus1
Pension costs2
Long-term incentives3
Other
Total
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
1,615
39
503
4
2,161
1,443
38
–
4
1,485
1
2
3
Includes salary, taxable benefits and annual bonus award.
Pension contributions.
Long-term incentives represents the current year charge to the Statement of profit or loss..
Directors’ remuneration, including non-executive directors who are also key management personnel, is
disclosed on pages 113-114 of the Directors’ Remuneration Report.
Company-related party transactions
The following balances existed between the Company and its wholly owned subsidiaries:
Amounts owed by subsidiaries
Amounts owed to subsidiaries
Interest paid to subsidiaries
Interest received from subsidiaries
Year ended
31 March
2023
£’000
13,025
(77,909)
(2,052)
702
Year ended
31 March
2022
£’000
28,508
(52,160)
(885)
826
As an associate of PayPoint PLC, Snappy Shopper was a related party prior to its disposal in the current
year. In the period up to the disposal date, related party transactions consisted of £155,204 revenue,
with £38,850 of accrued revenue at 31 March 2023.
33. Notes to the cash flow statement
Group
Profit before tax from continuing operations
Profit before tax from discontinued operation
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Profit from discontinued operation
R&D and VAT credits
Exceptional item – revaluation of deferred, contingent
consideration liability
Exceptional item – non-cash impairment loss on reclassification
of investment in associate to asset held for sale
Loss on disposal of fixed assets
Finance income
Finance costs
Share-based payment charge
Operating cash flows before movements in working capital
Movement in inventories
Movement in trade and other receivables
Movement in finance lease receivables
Movement in contract assets
Movement in contract liabilities
Movement in provisions
Movement in payables
Movement in lease liabilities
Cash generated from operations
Note
17
14
11
24
15
9
9
29
Year ended
31 March
2023
£’000
42,574
–
Year ended
31 March
2022
£’000
48,515
30,011
4,922
5,555
–
–
4,768
5,801
(30,011)
(15)
–
(2,880)
1,252
1,090
(987)
2,718
1,330
58,454
737
(1,301)
2,366
(853)
(78)
-
3,688
(90)
62,923
–
59
(13)
2,046
868
59,149
70
(526)
4,354
(24)
(684)
(12,500)
(6,488)
(7)
43,344
Movement in clients’ funds, retailer partners’ deposits and card and
voucher deposits
Net cash generated from operations1
21
39,259
102,182
(9,718)
33,626
1
Items in the course of collection and settlement payables and card and voucher balances are included in this reconciliation on a net
basis through the client cash line. The Directors have included these items on a net basis to best reflect the operating cash flows of
the business.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section 181
PayPoint Plc Annual Report 2023
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Governance
Governance
Financial statements
Financial statements
Shareholder information
Company
(Loss)/profit before tax
Adjustments for:
Amortisation of intangible assets
Exceptional item – revaluation of deferred, contingent
consideration liability
Exceptional item – non-cash impairment loss on reclassification of
investment in associate to asset held for sale
Profit from discontinued operation
Finance income
Finance costs
Share-based payment charge
Operating cash movement before movements in working capital
Note
14
24
15
11
Movement in receivables
Movement in payables
Net cash generated from operations
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
(1,261)
27,439
–
–
1,252
–
(703)
4,549
923
4,760
16,610
25,288
46,658
(503)
(2,880)
–
(30,643)
(826)
2,669
392
(4,352)
8,827
25,755
30,230
34. Contingent liability
As announced in our RNS on 29 March 2023, the Group received ‘letter before action’ correspondence
in March 2023 from a small number of market participants relating to issues addressed by commitments
accepted by Ofgem as a resolution of its concerns raised in Ofgem’s Statement of Objections
received by the Group in September 2020. The Ofgem resolution to the case did not include any
infringement findings.
The Group responded robustly to both sets of allegations. A claim has now been served on a number
of companies in the Group in relation to each matter: Utilita Energy Limited and Utilita Services Limited
(“Utilita”) served a formal claim on 16 June 2023 and Global-365 plc and Global Prepaid Solutions
Limited (“Global-365”) served a formal claim on 18 July 2023. Consideration has been given, in these
financial statements, to the possibility of any liabilities arising from each claim. The Group is continuing
to take legal advice with regard to these two claims. It is confident that it will successfully defend
the claim by Utilita, which does not provide any clear evidence to support the cause of action or the
amount claimed, and also that it will successfully defend the claim by Global-365, which fundamentally
misunderstands the energy market and the relationships between the relevant Group companies and the
major energy providers and also over-estimates the opportunity, if any, available for the products offered
by Global-365. As a result, no provision has been recognised in respect of either claim.
The Group intends to continue to robustly defend its position in both claims. However, if the Group
was unable to successfully defend either claim, any liabilities could have a material adverse impact on
the Group.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section
182
PayPoint Plc Annual Report 2023
Notice of Annual General Meeting
This notice of meeting is important and requires your
immediate attention.
If you are in any doubt as to any aspect of the proposals referred to in this notice of meeting or as to the
action you should take, you should seek your own advice from a stockbroker, bank manager, solicitor, tax
adviser, accountant or other independent professional adviser.
Routine business
1. Directors’ Report and Accounts
To receive the accounts for the financial year ended 31 March 2023 together with the Directors’
report and the auditors’ report on those accounts.
2. Directors’ Remuneration Policy
To approve the Directors’ Remuneration Policy, set out on pages 104 to 123 of the annual report
2023, to take effect from 7 September 2023.
If you have recently sold or otherwise transferred all of your ordinary shares in PayPoint Plc, please pass
this notice of meeting, together with the accompanying documents, to the purchaser or transferee, or to
the person who arranged the sale or transfer, so that they can pass these documents to the person who
now holds the shares as soon as possible.
3. Directors’ Remuneration Report
To approve the Directors’ Remuneration Report (excluding the Directors’ Remuneration Policy) for
the financial year ended 31 March 2023 as set out on pages 104 to 123 of the annual report 2023.
PayPoint Plc’s annual general meeting (‘AGM’) is set to be held at PayPoint’s registered office address.
We remain committed to engaging with our shareholders so please do send any questions you may have
for the Board, relating to the business of the meeting, to our Company Secretary at CompanySecretary@
paypoint.com by Tuesday 5 September 2023 at 12.00 noon.
Meantime, we encourage you to submit your proxy votes to the Company’s registrars, Equiniti, as early
as possible. Further information on how you can submit your proxy votes can be found on page 188.
The deadline for submitting proxy votes is 12.00 noon on Tuesday 5 September 2023.
Notice is hereby given that the 2023 Annual General Meeting of PayPoint Plc (the ‘Company’) will be
held at the Company’s head office, 1 The Boulevard, Shire Park, Welwyn Garden City, Hertfordshire AL7
1EL on Thursday 7 September 2023 at 12.00 noon. You will be asked to consider and pass the following
resolutions. Resolutions 1 to 14 (inclusive) will be proposed as ordinary resolutions, and Resolutions
15 to 18 (inclusive) will be proposed as special resolutions.
4. Declaration of final dividend
To declare a final dividend of 9.3 pence per ordinary share of the Company for the year ended
31 March 2023.
5. Re-election of Director – Rosie Shapland
To re-elect Rosie Shapland as a Director.
6. Re-election of Director – Gill Barr
To re-elect Gill Barr as a Director.
7. Re-election of Director – Giles Kerr
To re-elect Giles Kerr as a Director.
8. Re-election of Director – Rakesh Sharma
To re-elect Rakesh Sharma as a Director.
9. Re-election of Director – Nick Wiles
To re-elect Nick Wiles as a Director.
10. Re-election of Director – Ben Wishart
To re-elect Ben Wishart as a Director.
11. Election of Director- Guy Parsons
To elect Guy Parsons as a Director who, having been appointed since the last AGM of the Company,
offers himself for election in accordance with the Company’s Articles of Association.
12. Appointment of Auditor
To confirm the appointment of Pricewaterhouse Coopers LLP as auditor of the Company until the
conclusion of the next AGM of the Company at which the accounts are laid.
13. Auditor’s remuneration
To authorise the Directors to determine the auditor’s remuneration.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Special business
14. Directors’ authority to allot shares
That the Board be generally and unconditionally authorised under section 551 of the Companies Act
2006 to allot shares in the Company and to grant rights to subscribe for or convert any security into
shares in the Company:
(A) up to a nominal amount of £72,576.09 (such amount to be reduced by any allotments or grants
made under paragraph (B) below in excess of such sum); and
(B) comprising equity securities (as defined in section 560(1) of the Companies Act 2006) up to a
nominal amount of £145,152.19 (such amount to be reduced by any allotments or grants made
under paragraph (A) above) in connection with an offer by way of a rights issue:
(i) to ordinary shareholders in proportion (as nearly as may be practicable) to their existing
holdings; and
(ii) to holders of other equity securities as required by the rights of those securities or as the
Board otherwise considers necessary,
and so that the Board may impose any limits or restrictions and make any arrangements which it
considers necessary or appropriate to deal with treasury shares, fractional entitlements, record
dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter,
such authorities to apply until the close of business on 7 December 2024 or, if earlier, the AGM in
2024 but, in each case, during this period the Company may make offers and enter into agreements
which would, or might, require shares to be allotted or rights to subscribe for or convert securities
into shares to be granted after the authority ends and the Board may allot shares or grant rights to
subscribe for or convert securities into shares under any such offer or agreement as if the authority
had not ended.
15. Disapplication of pre-emption rights
That if Resolution 14 is passed, the Board be authorised to allot equity securities (as defined in the
Companies Act 2006) for cash under the authority given by that resolution and/or to sell ordinary
shares held by the Company as treasury shares for cash as if section 561 of the Companies Act 2006
did not apply to any such allotment or sale, such authority to be limited:
(A) the allotment of equity securities and sale of treasury shares for cash in connection with an offer
of, or invitation to apply for, equity securities (but in the case of the authority granted under
paragraph (B) of Resolution 14, by way of a rights issue only):
(i) to ordinary shareholders in proportion (as nearly as may be practicable) to their existing
holdings; and
(ii) to holders of other equity securities, as required by the rights of those securities or, as the
Board otherwise considers necessary;
(B) to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph
(A) above) up to a nominal amount of £21,772.83 representing approximately 10 per cent of the
aggregate nominal amount of the share capital of the Company (excluding treasury shares) as at
10 July 2023; and
(C) to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph
(A) or paragraph (B) above) up to a nominal amount equal to 20% of any allotment of equity
securities or sale of treasury shares from time to time under paragraph (B) above, such authority
to be used only for the purposes of making a follow-on offer which the Board of the Company
determines to be of a kind contemplated by paragraph 3 of Section 2B of the Statement of
Principles on Disapplying Pre-emption Rights most recently published by the Pre-emption Group
prior to the date of this notice,
such authority to expire at the end of the next AGM of the Company (or, if earlier, at the close of
business on 7 December 2024 but, in each case, prior to its expiry the Company may make offers,
and enter into agreements, which would, or might, require equity securities to be allotted (and
treasury shares to be sold) after the authority expires and the Board may allot equity securities
(and sell treasury shares) under any such offer or agreement as if the authority had not expired.
16. Additional disapplication of pre-emption rights
That if Resolution 14 granting the authority to allot shares is passed, the Board be authorised
in addition to any authority granted under Resolution 15 (first disapplication resolution) to allot
equity securities (as defined in the Companies Act 2006) for cash under the authority given by that
resolution and/or to sell ordinary shares held by the Company as treasury shares for cash as if section
561 of the Companies Act 2006 did not apply to any such allotment or sale, such authority to be:
(A) limited to the allotment of equity securities or sale of treasury shares up to a nominal amount
of £21,772.83 representing approximately 10 per cent of the aggregate nominal amount of
the share capital of the Company (excluding treasury shares) as at 10 July 2023 such authority
to be used only for the purposes of financing (or refinancing, if the authority is to be used
within 12 months after the original transaction) a transaction which the Board of the Company
determines to be either an acquisition or a specified capital investment of a kind contemplated
by the Statement of Principles on Disapplying Pre-emption Rights most recently published by
the Pre-Emption Group prior to the date of this notice; and
(B) limited to the allotment of equity securities or sale of treasury shares (otherwise than under
paragraph (A) above) up to a nominal amount equal to 20% of any allotment of equity securities or
sale of treasury shares from time to time under paragraph (A) above, such authority to be used only
for the purposes of making a follow-on offer which the Board of the Company determines to be of
a kind contemplated by paragraph 3 of Section 2B of the Statement of Principles on Disapplying
Pre-emption Rights most recently published by the Pre-emption Group prior to the date of
this notice,
such authority to expire at the end of the next AGM of the Company (or, if earlier, at the close
of business on 7 December 2024 but, in each case, prior to its expiry the Company may make
offers, and enter into agreements, which would, or might, require equity securities to be allotted
(and treasury shares to be sold) after the authority expires and the Board may allot equity securities
(and sell treasury shares) under any such offer or agreement as if the authority had not expired.
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PayPoint Plc Annual Report 2023
Notice of Annual General Meeting continued
17. Company’s authority to purchase its own shares
That the Company be authorised for the purposes of section 701 of the Companies Act 2006 to
make one or more market purchases (as defined in section 693(4) of the Companies Act 2006)
of its ordinary shares of 1/3 pence each, provided that:
(A) the maximum number of ordinary shares hereby authorised to be purchased is 7,257,609;
(B) the minimum price which may be paid for an ordinary share is 5 pence and the maximum price
which may be paid for an ordinary share is the highest of:
(i) an amount equal to 5% above the average market value of an ordinary share for the five
business days immediately preceding the day on which that ordinary share is contracted
to be purchased; and
Recommendation
With respect to Resolutions 5 to 11(inclusive), the Chairman confirms that, based on the performance
evaluation undertaken during the period, each of the retiring Directors’ performance continues to be
effective and to demonstrate commitment to the role. The Board has considered this and recommends
that each Director who wishes to serve again be proposed for election/re-election. This opinion is based
on an assessment of each Director’s relevant knowledge and experience and the conclusion that, in
each case, their informed opinions are of significant value and contribute greatly to Board discussions.
Biographies of the Directors including their areas of expertise relevant to their role as a Director are given
on pages 82 to 83 of the 2023 annual report.
(ii) the higher of the price of the last independent trade of an ordinary share and the highest
current independent bid for an ordinary share on the trading venues where the purchase is
carried out at the relevant time, in each case, exclusive of expenses;
The Directors believe that the proposals described in this Notice of Meeting are in the best interests of
the Company and its shareholders as a whole and recommend shareholders to support them by voting
in favour of all the resolutions, as they intend to in respect of their own beneficial shareholders.
such authority to apply to apply until the close of business on 7 December 2024 or, if earlier, the
AGM in 2024 but in each case so that during this period the Company may enter into a contract to
purchase ordinary shares which would, or might be, completed or executed wholly or partly after the
authority ends and the Company may purchase ordinary shares pursuant to any such contract as if
the authority had not ended.
18. Calling of general meetings on 14 days’ notice.
That any general meeting of the Company that is not an AGM may be called on not less than 14 clear
days’ notice.
By order of the Board
Brian McLelland
Company Secretary
27 July 2023
Registered office:
1 The Boulevard
Shire Park
Welwyn Garden City
Hertfordshire AL7 1EL
United Kingdom
Registered in England and Wales
Company No. 03581541
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Notes to the Notice of Annual General Meeting
1.
2.
3.
4.
Shareholders should submit their proxy vote not less than 48 hours before the time of the AGM.
A shareholder may appoint more than one proxy in relation to the AGM provided that each proxy
is appointed to exercise the rights attached to a different share or shares held by that shareholder.
A proxy need not be a shareholder of the Company. To appoint a proxy or proxies shareholders
must: (a) submit a proxy appointment electronically at www.sharevote.co.uk; or (b) complete a
Form of Proxy, sign it and return it, together with the power of attorney or other authority (if any)
under which it is signed, or a notarially certified copy of such authority, to the Company’s registrars,
Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA; or (c) complete a
CREST Proxy Instruction (as set out in paragraph 5 below), in each case so that it is received no later
than 12.00 noon on 5 September 2023. To appoint more than one proxy, you will need to complete
a separate Form of Proxy in relation to each appointment. A Form of Proxy for use in connection
with the AGM is enclosed with this document. Full details of the procedure to submit a proxy
electronically are given on the website www.sharevote.co.uk. To use this service, you will need your
Voting ID, Task ID and Shareholder Reference Number printed on the Form of Proxy. If you do not
have a Form of Proxy and believe that you should, please contact the Company’s registrars, Equiniti
Limited, on +44 (0)371 384 2030 (please use the country code when calling from outside the UK) or
at Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA. Lines are open
from 8.30am to 5.30pm, Monday to Friday (except public holidays in England and Wales).
A member entitled to attend, speak and vote at the AGM may appoint a proxy (who need not be a
member of the Company) to exercise all or any of his or her rights to attend and to speak and vote
on his or her behalf. A member may appoint more than one proxy in relation to a meeting provided
that each proxy is appointed to exercise the rights attached to a different share or shares held by
him or her. To appoint more than one proxy please contact the Company’s registrar using the details
provided above. CREST members should utilise the CREST electronic proxy appointment service in
accordance with the procedures set out below, and in each case must be received by the Company
not less than 48 hours before the time of the meeting. You must inform the Company’s registrar in
writing of any termination of the authorities of a proxy.
Any person to whom this notice is sent who is a person nominated under section 146 of the
Companies Act 2006 to enjoy information rights (a ‘Nominated Person’) may, under an agreement
between him/her and the shareholder by whom he/she was nominated, have a right to be appointed
(or to have someone else appointed) as a proxy for the AGM. If a Nominated Person has no such
proxy appointment right or does not wish to exercise it, he/she may, under any such agreement,
have a right to give instructions to the shareholder as to the exercise of voting rights.
The statement of the rights of shareholders to appoint a proxy in paragraphs one and two above
does not apply to Nominated Persons. The rights described in these paragraphs can only be
exercised by shareholders of the Company. Nominated Persons are reminded that they should
contact the registered holder of their shares (and not the Company) on matters relating to their
investments in the Company.
5.
6.
7.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy
appointment service may do so for the AGM and any adjournment thereof by using the procedures
described in the CREST manual. CREST personal members or other CREST sponsored members, and
those CREST members who have appointed a voting service provider(s) should refer to their CREST
sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment, or instruction, made by means of CREST to be valid, the appropriate
CREST message (a CREST proxy instruction) must be properly authenticated in accordance with
Euroclear UK & Ireland Limited’s (‘EUI’) specifications and must contain the information required for
such instructions, as described in the CREST manual. The message, regardless of whether it relates
to the appointment of a proxy or to an amendment to the instruction given to a previously appointed
proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID RA19)
by the latest time(s) for receipt of proxy appointments specified in the notice of AGM. For this
purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to
the message by the CREST applications host) from which the issuer’s agent is able to retrieve the
message by enquiry to CREST in the manner prescribed by CREST. The Company may treat as invalid
a CREST proxy instruction in the circumstances set out in Regulation 35(5) of the Uncertificated
Securities Regulations 2001. CREST members and, where applicable, their CREST sponsors or voting
service providers should note that EUI does not make available special procedures in CREST for any
particular messages. Normal system timings and limitations will therefore apply in relation to the input
of CREST proxy instructions. It is therefore the responsibility of the CREST member concerned to
take (or, if the CREST member is a CREST personal member or sponsored member or has appointed
a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s))
such action as shall be necessary to ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST members and, where applicable, their CREST
sponsors or voting service providers are referred, in particular, to those sections of the CREST
manual concerning practical limitations of the CREST system and timings.
If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company and approved by the Registrar.
For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be
lodged by 12.00 noon on 5 September 2023 in order to be considered valid. Before you can appoint
a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions.
It is important that you read these carefully as you will be bound by them and they will govern the
electronic appointment of your proxy.
Any corporation which is a member can appoint one or more corporate representatives who may
exercise on its behalf all of its powers as a member provided that they do not do so in relation to the
same shares. If you hold your shares through a Nominee and wish to attend the meeting please bring
the relevant entitlement to attend documentation.
To be entitled to attend and vote at the AGM or any adjournment thereof (and also for the purpose
of calculating how many votes a person may cast), a person must have his/her name entered on the
register of members of the Company by 6:30pm on 5 September 2023 (or by close of business
on the date being two days before any adjourned meeting). Changes to entries on the register of
members after this time shall be disregarded in determining the rights of any person to attend or
vote at the meeting.
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PayPoint Plc Annual Report 2023
Notes to the Notice of Annual General Meeting continued
8.
9.
Biographical details of the Directors of the Company are shown on pages 82-83 of the 2023
annual report.
Each member attending the meeting has the right to ask questions relating to the business being
dealt with at the meeting which, in accordance with section 319A of the Companies Act 2006 and
subject to some exceptions, the Company must cause such questions to be answered. However, no
such answer need be given if:
(a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure
of confidential information;
(b) the answer has already been given on a website in the form of an answer to a question; or
(c) it is undesirable in the interests of the Company or the good order of the meeting that the
question be answered.
10. Information relating to the meeting which the Company is required by section 311A of the
Companies Act 2006 to publish on a website in advance of the meeting may be viewed at
www.paypoint.com. A member may not use any electronic address provided by the Company in
this document or with any proxy appointment form or in any website for communicating with the
Company for any purpose in relation to the meeting other than as expressly stated in it.
11. It is possible that, pursuant to members’ requests made in accordance with section 527 of
the Companies Act 2006, the Company will be required to publish on a website a statement in
accordance with section 528 of that Act setting out any matter that the members concerned
propose to raise at the meeting relating to: (i) the audit of the Company’s accounts (including
the auditor’s report and the conduct of the audit) that are to be laid before the AGM; or (ii) any
circumstances connected with an auditor of the Company ceasing to hold office since the previous
meeting at which annual accounts and reports were laid. The Company cannot require the members
concerned to pay its expenses in complying with those sections. The Company must forward any
such statement to its auditor by the time it makes the statement available on the website. The
business which may be dealt with at the meeting includes any such statement.
12. The issued share capital of the Company as at 10 July 2023, the latest practicable date before
publication of this notice, was 72,576,094 ordinary shares of 0.03 pence each, carrying one vote
each. The Company holds no treasury shares. The total number of voting rights in the Company
on 10 July 2023 is 72,576,094.
13. The Directors’ service agreements, Directors’ letters of appointment and Directors’ deeds
of indemnity are available for inspection at the registered office of the Company. Email:
CompanySecretary@paypoint.com during normal business hours on any weekday (excluding public
holidays). Copies of these documents will also be available at the place of the AGM from 15 minutes
before the meeting until it ends.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Explanatory notes to certain of the resolutions to be proposed at the Annual General Meeting
Resolution 1: To receive the Directors’ report and accounts
The Board asks that shareholders receive the Strategic Report, Directors’ Report and the financial
statements for the year ended 31 March 2023, together with the report of the auditor.
Resolution 2: Directors’ Remuneration Policy
There are two remuneration resolutions this year. The first is to seek approval for our future Directors
Remuneration Policy, which is intended to take effect from 7 September 2023. Our existing policy was
approved at the 2020 AGM and a new policy must be put forward for approval by shareholders at least
every three years. This resolution will be a binding vote and the Directors can only receive remuneration
if it is within the approved Remuneration Policy. If Resolution 2 is not passed, our existing Directors’
Remuneration Policy, approved at the 2020 AGM will continue in effect until a new policy is approved
by shareholders.
Shareholders are asked to approve the Directors’ Remuneration Policy that appears on pages
106-109 of the 2023 annual report. A summary of the changes made in the proposed 2023 policy
is set out below:
3) Annual Bonus
Annual bonus potential for Executive Directors will continue to be capped at 106% of salary (noting that
this is below the 150% of salary permitted under the Policy). Reflecting the below market annual bonus
maximum for Executive Directors, and as per past practice and as aligned to practice below Board,
on-target bonus potential will continue to operate at 80% of the maximum.
However, noting that the on-target bonus is higher than typical, and maximum potential is lower than
market, the new Policy states that should bonus potential be increased from 106% of salary to a more
market-aligned 150% of salary in the future (and as permitted under the current Policy), the on-target
bonus potential will be reduced to 50% of maximum in line with market norms. Appropriate shareholder
consultation would be carried out should Executive Director bonus potential be increased up to the
Policy maximum going forward.
4) Introduction of ESG Performance Metrics
A widening of potential performance metrics in respect of both the annual bonus and the RSA underpin
to explicitly permit the operation of ESG-based targets going forward to the extent that this is
considered appropriate.
1) Restricted Share Awards (‘RSAs’)
Under the current RSA Policy, RSAs granted to Executive Directors vest over three years (50% of
awards), four years (25% of awards) and five years (25% of awards) subject to an assessment of the
discretionary underpin. Once RSAs have vested, a holding period applies such that any resulting shares,
other than those sold to pay employee taxes, may not be sold until at least five years from the grant date.
Resolution 3: Directors’ Remuneration Report
Shareholders are asked to approve the Directors’ Remuneration Report that appears on pages 104-123
of the 2023 annual report. This vote is advisory, and the Directors’ entitlement to remuneration is not
conditional on it.
However, in future the Committee wishes to simplify the vesting such that RSAs granted to Executive
Directors after the 2023 AGM will vest after three years from grant (subject to satisfaction of the
underpin) with a two-year post vesting holding period. No changes will be made to existing awards.
Such a change simplifies the approach going forward, significantly reducing the administration
surrounding multiple vesting dates across multiple awards and will align with the approach to granting
RSAs below Board level. In addition, as evidenced during the recent search for our incoming Finance
Director, a three-year vesting with a two-year holding period will more closely align PayPoint’s approach
to evolving RSA market practice.
2) Pension Policy
The maximum value of pension provision in the current Policy for current Executive Directors is 15% of
salary. However, noting that the Chief Executive has received, and any new Finance Director will receive,
a workforce-aligned pension provision from appointment, the 15% of salary Policy maximum will be
replaced by a requirement to offer workforce aligned pension provision (which is currently 5% of salary)
to Executive Directors.
Resolution 4: Declaration of final dividend
Shareholders are being asked to approve a final dividend of 9.3 pence per ordinary share for the year
ended 31 March 2023. Subject to approval, the dividend will be paid on 22 September 2023 to the
holders of ordinary shares whose names are recorded on the register of members at the close of
business on 11 August 2023.
Resolutions 5–11: Directors
The Directors believe that the Board continues to maintain an appropriate balance of knowledge and
skills and that all the Non-Executive Directors are independent in character and judgment. This follows
a process of formal evaluation, which confirms that each Director makes an effective and valuable
contribution to the Board and demonstrates commitment to the role (including making sufficient time
available for Board and Committee meetings and other duties as required). In accordance with the UK
Corporate Governance Code and in line with previous years, all Directors will again stand for election or
re-election, as relevant, at the AGM this year. Biographies are available on pages 82-83 of the annual
report. It is the Board’s view that the Directors’ biographies illustrate why each Director’s contribution
is, and continues to be, important to the Company’s long-term sustainable success.
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PayPoint Plc Annual Report 2023
Explanatory notes to certain of the resolutions to be proposed at the Annual General Meeting continued
Resolutions 12 and 13: Appointment and remuneration of auditor
The Company is required to appoint or reappoint an auditor at each general meeting at which
accounts are presented to shareholders. Following the resignation of KPMG LLP as auditor, the
Directors recommend Pricewaterhouse Coopers LLP be appointed as auditor for the financial year ending
31 March 2024. Resolution 13 grants authority to the Company to determine the auditor’s remuneration.
Resolution 14: Directors’ authority to allot shares
Paragraph (A) of this resolution would give the Directors the authority to allot ordinary shares or grant
rights to subscribe for or convert any securities into ordinary shares up to an aggregate nominal amount
equal to £72, 576.09 (representing 24,192,031 ordinary shares of 0.03 pence each). This amount
represents approximately one-third of the issued ordinary share capital of the Company as at 10 July 2023,
the latest practicable date prior to publication of this notice. In line with guidance issued by the Investment
Association, paragraph (B) of this resolution would give the Directors authority to allot ordinary shares or
grant rights to subscribe for or convert any securities into ordinary shares in connection with a rights issue
in favour of ordinary shareholders up to an aggregate nominal amount equal to £145,152.19 (representing
48,384,062 ordinary shares of 0.03 pence each), as reduced by the nominal amount of any shares issued
under paragraph (A) of this resolution. This amount (before any reduction) represents approximately
two-thirds of the issued ordinary share capital of the Company as at 10 July 2023, being the latest
practicable date prior to publication of this notice. The authorities sought under paragraphs (A) and (B) of
this resolution will expire at the close of business on 7 December 2024 or, if earlier, the AGM in 2024. The
Directors have no present intention to exercise either of the authorities sought under this resolution, other
than to allot ordinary shares as following the exercise of options and awards under the Company’s share
schemes. However, if they do exercise the authorities, the Directors intend to follow Investment Association
recommendations concerning their use. As at the date of this Notice, the Company does not hold any
shares in treasury.
Resolutions 15 and 16: Authority to disapply pre-emption rights
Resolutions 15 and 16 are proposed as special resolutions. If the Directors wish to allot new shares and
other equity securities, or sell treasury shares, for cash (other than in connection with an employee share
scheme), company law requires that these shares are first offered to shareholders in proportion to their
existing holdings.
In accordance with the Pre-emption Group’s Statement of Principles 2022 on Disapplying Pre-emption
Rights (Statement of Principles 2022), the Directors are seeking authority to disapply pre-emption rights
in two separate resolutions:
•
the first, Resolution 15, seeks authority for the Directors to disapply pre-emption rights and issue
shares in connection with rights issues, or otherwise to issue shares for cash, including the sale on
a non-pre-emptive basis of any shares the Company holds in treasury for cash, up to an aggregate
nominal amount representing 10% of the Company’s issued share capital, together with authority for
a further disapplication of pre-emption rights up to an aggregate nominal amount representing 2% of
issued share capital, to be used only for the purposes of a follow-on offer (see further below); and
the second, Resolution 16 seeks authority seeks for the Directors to disapply pre-emption rights
and allot new shares and other equity securities up pursuant to the allotment authority given by
Resolution 14 or sell treasury shares for cash up to an aggregate nominal amount representing an
additional 10% of the Company’ issued share capital but only in connection with transactions which
the Directors determine to be either an acquisition or special capital investment as defined by the
Statement of Principles 2022, with authority for a further disapplication of pre-emption rights up
to an agreed nominal amount representing 2% of the issued share capital to be used only for the
purposes of a follow-on offer.
•
If the Directors wish to allot new shares or other equity securities, or sell treasury shares, for cash
(other than in connection with an employee share scheme), company law requires that these shares
are first offered to shareholders in the proportion to their existing holdings. However as at previous
annual general meetings, and in line with the Statement of Principles 2022, Resolution 15 authorises
the Directors to allot equity securities for cash without first offering them to existing shareholders in
proportion to their existing holdings. In certain circumstances it may be in the best interests of the
Company to allot shares (or to grant rights over shares) for cash or to sell treasury shares for cash
without first offering them to existing shareholders in proportion to their holdings. However, the authority
granted by Resolution 15 would be limited to allotments of shares for cash or sales of treasury shares
for cash:
(i)
by way of a rights issue (subject to certain exclusions); or by way of an open offer or other offer
of securities (not being a rights issue) in favour of existing shareholders in proportion to their
shareholdings (subject to certain exclusions):
(ii) up to an aggregate nominal amount of £21,772.83 (representing 7,257,609 shares); or
(iii) otherwise up to an aggregate nominal amount of £4,354.57 (representing 1,451,522 shares for the
purposes only of a follow-on offer as described in the Statement of Principles 2022).
The aggregate nominal amounts above represent approximately 10% and 2% respectively of the issued
ordinary share capital in the Company as at 10 July 2023, being the latest practicable date prior to the
publication of this Notice.
Resolution 16 gives the Directors authority to allot shares (or to sell any shares which the Company
may purchase and elect to hold as treasury shares) for cash without first offering them to existing
shareholders in proportion to their existing shareholdings up to:
(i)
an additional 10% of issued share capital in connection with an acquisition or specified capital
investment; or
(ii) up to an additional 2% of issued share capital for the purposes only of a follow-on offer as described
in the Statement of Principles 2022. This is also in line with the Statement of Principles 2022.
The Directors confirm that they will only allot shares representing an additional 10% of the issued
share capital of the Company for cash pursuant to the authority referred to in Resolution 16, where
the allotment is in connection with an acquisition or specified capital investment (as defined in the
Statement of Principles 2022) which is announced contemporaneously with the allotment, or which has
taken place in the preceding 12-month period and is disclosed in the announcement of the allotment.
The authority sought by the Directors in both Resolution 15 and Resolution 16 extends the authority
to allot shares representing up to a further 2% of issued share capital in each case for the purposes of
a follow-on offer. The Statement of Principles 2022 provides for this as a possible means of enabling
smaller and retail shareholders in the Company to participate in a non-pre-emptive equity issue when
it may not be possible (for timing or other reasons) for them to participate in a particular placing being
undertaken. The Statement of Principles 2022 sets out he expected features of any such follow-on offer,
including in relation to qualifying shareholders, monetary caps on the amount qualifying shareholders can
subscribe and the issue price of the shares.
The aggregate nominal amount to be allotted under Resolutions 15 and 16 combined represents 24% of
the issued share capital of the Company as at 10 July 2023, being the latest practicable date prior to the
publication of this Notice.
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PayPoint Plc Annual Report 2023
Strategic report
Governance
Financial statements
Shareholder information
Resolution 18: Authority to allow any general meeting of the Company that is not an annual
general meeting to be called on not less than 14 clear days’ notice
The minimum notice period for general meetings of listed companies is 21 days, but companies may
reduce this period to 14 days (other than for annual general meetings) provided that:
(a) the Company offers a facility for shareholders to vote by electronic means. This condition is met if
the Company has a facility enabling all shareholders to appoint a proxy by means of a website; and
(b) on an annual basis, a shareholders’ resolution approving the reduction of the minimum notice period
from 21 days to 14 days is passed.
The Board is therefore proposing this resolution as a special resolution to approve 14 days as the
minimum period of notice for all general meetings of the Company other than an annual general meeting.
The approval of this resolution will be effective until the end of the 2024 annual general meeting of the
Company, when it is intended that the approval will be renewed. The Board intends that the shorter
notice period will only be used in limited exceptional circumstances which are time-sensitive, rather than
as a matter of routine, and only where the flexibility is merited by the business of the meeting and is
thought to be in the interests of shareholders as a whole. The Directors do not have any current intention
to exercise this authority but consider it appropriate to ensure that the Company has the necessary
flexibility to respond to all eventualities.
In respect of Resolutions 15 and 16, the Directors confirm their intention to follow the provisions of
the Statement of Principles 2022, wherever practicable, and to consult with major shareholders (to the
extent reasonably practicable and permitted by law) in advance of the Directors exercising their authority
under either Resolution 15 or 16 to issue shares, except in connection with routine allotments under
employee share schemes.
The Directors have no present intention of exercising either of the authorities granted by Resolution
15 or 16 but they consider their grants to be appropriate in order to preserve maximum flexibility in
the future.
Both authorities will expire on the earlier of either the conclusion of the next annual general meeting
of the Company or the close of business on 7 December 2024.
Resolution 17: Authority to make market purchases of ordinary shares
Resolution 17 is another special resolution and renews the Directors’ authority granted by the
shareholders at previous AGMs to make market purchases of up to 10% of the Company’s issued
ordinary shares (excluding any treasury shares). The Company may make purchases of its own shares if,
having taken account of all major factors such as the effect on earnings and net asset value per share,
gearing levels and alternative investment opportunities, such purchases are considered to be in the
Company’s and shareholders’ best interests while maintaining an efficient capital structure.
If the Company purchases any of its ordinary shares pursuant to Resolution 17, the Company may cancel
these shares or hold them in treasury. Such decision will be made by the Directors at the time of purchase.
The minimum price, exclusive of expenses, which may be paid for an ordinary share is 5 pence. The maximum
price, exclusive of expenses, which may be paid for an ordinary share is the highest of: (i) an amount equal to
5% above the average market value for an ordinary share for the five business days immediately preceding
the date of the purchase; and (ii) the higher of the price of the last independent trade and the highest
current independent bid on the trading venues where the purchase is carried out at the relevant time.
At last year’s annual general meeting, the Company was given authority to make market purchases of
up to 6,895,790 shares. No shares have been purchased by the Company in the market since then.
Options to subscribe for a total of 699,433 shares, being 0.96% of the issued ordinary share capital, were
outstanding at 10 July 2023 (being the latest practicable date prior to the publication of this notice). If
the existing authority given at the 2022 AGM and the authority being sought under Resolution 17 were
to be fully used, these would represent 10.96% of the Company’s issued ordinary share capital at that
date. The Directors do not have any current plans to exercise the authority to be granted pursuant to
Resolution 17. The Directors will exercise this authority only when to do so would be in the best interests
of the Company, and of its shareholders generally. The authority will expire at the earlier of 7 December
2024 and the conclusion of the AGM of the Company held in 2024.
Contents Generation – PageContents Generation – Sub PageContents Generation – Section 190
PayPoint Plc Annual Report 2023
Officers and professional advisers
Directors
G Barr1
A Dale
G Kerr1 (Chairman)
G Parsons1
R Shapland1
R Sharma1
N Wiles
B Wishart1
Company Secretary
B McLelland
Registered office
1 The Boulevard
Shire Park
Welwyn Garden City
Hertfordshire AL7 1EL
United Kingdom
Registered in England and Wales
Company number 03581541
Independent auditor
KPMG LLP
15 Canada Square
London E14 5GL
United Kingdom
Registrar
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
United Kingdom
1 Non-Executive Directors.
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1 The Boulevard
Shire Park
Welwyn Garden City
Hertfordshire AL7 1EL
United Kingdom
Tel +44 (0)1707 600 300
Fax +44 (0)1707 600 333
www.paypoint.com