Headwinds put dent in PayPoint's preliminary reported figures

Payment technology and network provider PayPoint reported 1.6% growth in underlying revenue in its preliminary results on Thursday, including the share of commission paid to retailers.

The London-listed company said reported revenue was down 0.9%, however, to £211.6m, which reportedly reflected the £5.2m headwinds from the ‘Simple Payments Service’ (SPS) closure and the renegotiation of its deal with courier provider Yodel.

Underlying net revenue grew was ahead 2.0%, driven by the roll out of the ‘PayPoint One’ product and growth in ‘MultiPay’, ‘eMoney’ and Romania transactions.

Reported net revenue was down 2.5% to £116.6m, which the board put down to the same £5.2m headwinds.

Underlying costs fell £2.9m, driven by cost efficiencies and savings, with total costs £3.8m lower year-on-year at £62.8m, which included a one-off VAT recovery of £2.4m related to prior years.

Profit before tax excluding exceptional items grew 1.6% to £53.8m, and profit before tax including exceptional items was ahead 3.3%, with diluted earnings per share also up 3.3%.

At year-end, net corporate cash stood at £3.5m, and PayPoint’s £75m financing facility stood unutilised.

The company said it remained committed to the additional dividend programme of £25m per annum until December 2021, alongside the ordinary dividend.

It declared a final ordinary dividend of 23.6p per share to be paid to shareholders in equal payments on 29 July and 30 September.

“I am delighted to have joined PayPoint as CEO at an exciting time in its development,” said chief executive officer Patrick Headon in his first set of results.

“Key foundations have been set for future growth.

“PayPoint One was rolled out to almost 13,000 sites and, in the future, we will continue to enhance product features adding even more value to retailers.”

Headon said that, together with the firm’s four new parcel partners, it could improve online shoppers’ experience by delivering their purchases to a PayPoint store convenient to them.

“MultiPay enhancements allow our clients to offer a full suite of payment options to their end consumers.

“At the same time, our bill payments business has proved resilient in a rapidly evolving market.”

Delivery of the financial result for the year ending 31 March 2020 would require revenue growth across PayPoint One, MultiPay, Romania and parcels, Headon explained, as the company scaled up with its new partnerships, as well as continued resilience in bill payments and vigilance on costs.

“Despite the final year impact of the Yodel renegotiation of £0.7m, investment in customer service and improved business efficiency of £2m, and the uncertain broader economic environment, the board is confident that there will be a progression in profit before tax for the year ending 31 March 2020.”