Source: Sharecast
Collect+ currently has a network of more than 14,000 Out of Home locations in the UK, of which almost 8,000 offer Royal Mail collect, send and return parcel services today.
PayPoint said that as part of the next stage in its partnership with IDS, an initial 500 of these sites have been upgraded to deliver Royal Mail over the counter services, enabling customers to buy postage in store with effect from Tuesday, as part of almost 8,000 sites which will have Royal Mail Shop branding rolled out from October.
Over the next 12 months, the company plans to expand the rollout of Royal Mail over the counter services through the network, including the launch of self-service kiosks in the first quarter of next year.
As a result of the deal, PayPoint announced a special dividend of 50p per share combined with a share consolidation of 12 for 13 to be proposed for shareholder approval at a special general meeting on 17 October.
PayPoint expects the deal to be earnings per share enhancing in the first full year to March 2027, through a combination of the special dividend, share consolidation and expected growth in volumes from the Royal Mail services through the Collect + network.
It also gave a brief update on current trading, saying it remains in line with expectations ahead of the important peak trading period.
Chief executive Nick Wiles said: "We are delighted that Royal Mail has invested into the Collect+ business, which has seen strong growth over the past 5 years as we have established it as the leading open OOH store network in the UK. The addition of Royal Mail over the counter services and Royal Mail Shop branding is an exciting development for our retailer network and is another example of how we deliver vital community services across the UK, including local banking, parcels and broader access to cash services.
"We are also pleased today to be announcing a proposed special dividend and share consolidation, which combined with our ordinary dividend and continuing in year share buyback, will result in over £90 million of returns to shareholders in the current financial year."
At 0920 BST, PayPoint shares were up 8.2% at 729p.
Russ Mould, investment director at AJ Bell, noted this is the first strategic investment from IDS since being acquired by Czech billionaire Daniel Kretinsky in April.
He said: "People used to rely on the Post Office to send goods, but they were constrained by standard business opening hours. A surge in demand to send and receive parcels led to a boom in alternative services, including the ability to pick up or send items early in the morning or late at night via newsagents. This convenience factor forced Royal Mail to adapt to a new world and stop solely relying on the Post Office to support its services.
"Collect+ has proved to be an important part of Royal Mail’s distribution network and it now spies an opportunity to do even more. That includes self-service kiosks in shops that use Collect+ and for over-the-counter services via the network.
"PayPoint launched Collect+ as a 50/50 joint venture with Yodel in 2009 and bought out the partner in 2020 for £6 million. It has now effectively resold that stake, minus 1%, for more than seven times higher. That’s quite a return on investment, and the price is an indication of how Royal Mail is serious about wanting to have the right foundation to survive and thrive in a highly competitive and evolving market."
