Sweet £11.6m profit for Canadian owner of loyalty card leader Nectar as savvy shoppers look to cash in on points

Nectar, the country’s biggest loyalty card scheme, has seen profits and turnover soar as savvy shoppers look to get as much value as possible.

One pound in every seven spent in the UK now earns some form of reward, compared with one in a hundred 20 years ago. And Nectar’s parent firm, Canadian-owned Aimia Coalition Loyalty UK, is reaping the benefit.
Launched 11 years ago, Nectar receives payment when a retailer issues a Nectar point to a shopper. Nectar then compensates retailers when the points are redeemed.
Its turnover rose almost 40 per cent to £267million in the year to December 31, 2012.
It made a pre-tax profit of £11.6million, after a loss of £47.9million the year before, though that figure included a one-off charge of £52.3million to account for the increase in the proportion of points being redeemed by its 19million customers.
Nectar’s chief financial officer Mark Grafton said: ‘We invested a lot of time and money encouraging more people to redeem points and everything that we hoped would happen in that regard has happened.

‘We are managing to get more points into people’s pockets and have been doing this by signing up more retailers and partners, and doing events such as this summer’s Megapoints promotion.’
Every £1 spent at Sainsbury’s, Homebase, Hertz and DHL, usually earns two points, with a point typically worth ½p when it is redeemed at the same group of retailers, which also includes eBay, BP and British Gas. ‘We are signing up more customers all the time,’ said Grafton.
‘We are finding that people are increasingly preferring to have one card that can be used at many different retailers, so you can build up points more quickly, rather than having to carry a lot of different cards around with a small amount of points on each.’
Earlier this year Nectar won a ten-year court battle with Revenue & Customs over whether it should pay VAT on compensating retailers for redeemed Nectar points.
The Supreme Court verdict means Nectar will see a one-off £27million boost to its revenues this year and benefit by £2million to £4million annually in future years.