Payment management group PayPoint (PAY) said it expected to post record FY26 results while revealing a strategic revamp. The firm is reorganising itself into four divisions to create ‘a more transparent business with a simpler investment case’.
New structure
By reorganising itself into four divisions the firm hopes to ‘strengthen execution and its go-to-market strategy’. Having clearly defined areas of co-operation, cost savings, synergy and opportunity between businesses should drive growth.
The largest business is Network Services which accounted for £91 million of FY26 revenue or just under half the group total. The businesses encompasses over 30,000 convenience stores, parcel drop-off, local cash banking and card top-ups.
Love2Shop, accounted for around 28% of group revenue and is the UK’s leading provider of multi-retailer gift cards and vouchers. Acquired in 2023, ‘considerable progress’ has been made upgrading the business’s tech platform and raising margins.
Merchant Services, which accounted for around 17% of group revenue, provides in-store and online card acquiring, terminal rental and business finance solutions to over 30,000 UK smaller businesses.
The final division, which made up the rest of FY26 revenue, will bring Digital Payments and Open Banking together under one roof. This should create a simpler platform for new product development and increase new business wins.
Capital reduction
During the last year, through a combination of ordinary and special dividends and buybacks, PayPoint returned over £90 million to shareholders. That included buying in 15% of the shares and cancelling them.
The firm has a target to reduce the share count by 30% in total by FY28. At the same time it will continue to increase the ordinary dividend payout.
Looking tof FY27, PayPoint said the year would be balanced between growth, cost efficiencies and ‘recent trends in our business units’. It singled out the parcels business, which had a record Q3, and indicated underlying profit would exceed FY26.
PayPoint isn’t a stock we know well but then the shares have gone sideways for the last six years. The fact they are still only just above their pandemic lows of 2020 suggests a revamp was long overdue.
The market reaction to the news was muted, which we get as there wasn’t an upgrade to FY26 or FY27 numbers. Still, with the yield on the stock almost equalling the PE it’s probably time to take a closer look.
Read the press release here: https://www.paypointbusiness.com/corporate/investor-centre
