PayPoint announces special dividend as Royal Mail owner IDS takes 49% stake in Collect+

(Sharecast News) - PayPoint rallied on Tuesday as it said that Royal Mail owner International Distribution Services has taken a 49% stake in Collect+ for £43.9m and announced a special dividend as a result of the deal. 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.