PayPoint profits hit by rising costs

Payment services company PayPoint posted a decline in first-half profit on Thursday on the back of increased costs, but revenue rose.

In the six months to the end of September, net revenue ticked up 3% to £57.3m, but pre-tax profit was down 5.2% at £24m as costs increased £3m to £33.2m. Excluding the one-off VAT recovery benefit of £1.7m and £0.5m Yodel impact in the previous year, underlying pre-tax profit was up 4%, it said.

Service fee revenue pushed up 31.8% during the half to £6.3m and is now the biggest net revenue contributor in its UK retail services business.

The company said PayPoint One installed in 15,088 sites as at 30 September, up 2,207 from the end of March and representing 86% of PayPoint’s independent retailer estate.

The group said it will "significantly exceed" its original target of 15,800 PayPoint One sites by the end of March next year, with the legacy terminal largely retired from the independent retailer estate by that date. Its new target is 16,500 by 31 March 2020.

Executive chairman Nick Wiles said: "Whilst the financial performance of the business will be influenced by parcel volumes and continued resilience in UK bill payments over the second half, the progress of the business during the first half, reported today, underpins the board’s confidence that as PayPoint’s growth drivers continue to develop, there will be progression in profit before exceptional items and tax for the full financial year to 31 March 2020."

At 0845 GMT, the shares were down 0.1% at 982.02p.