PayPoint pleased with underlying growth in first half
PayPoint
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Payment network provider PayPoint reported a 1.6% fall in net revenue in the six months ended 30 September on Thursday, to £55.6m on a reported basis.
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The London-listed firm did note underlying growth of £1.8m, or a 3.2% increase, when excluding the £2.2m impact of the closure of the Department of Work and Pensions' ‘Simple Payment Service’, and the revised Yodel commercial terms.
Underlying net revenue growth was said to have been driven by “strong performance” in UK service fee revenue, up 39.8%, and in Romania, up 33.2% to £6.8m, which was partially offset by the marginal decline of £0.3m in UK bill payment and top-up net revenue.
Network costs of £30.2m were £1.9m lower than at the same time last year, and included a £1.7m benefit from improved VAT recovery.
Excluding that, costs were slightly lower than the £32.1m for the same period last year, which Paypoint said reflected the ongoing improvement in operational efficiencies, partially offset by a £1.1m increase in Romania driven by including Payzone overheads for six months.
Profit before tax stood at £25.3m for the period, up 4.0%, including a £1.7m benefit from improved VAT recovery related to prior years.
Net corporate cash was £0.6m, which was based on cash balances of £6.6m, less £6.0m financing facility usage.
Client funds and retailer deposits at period-end increased to £32.7m, which was primarily due to the firm recognising retailer deposits on its statement of financial position.
It said it saw continued strong cash conversion, with £27.6m in cash generated from profit before tax of £25.3m.
The board declared an ordinary interim dividend of 15.6p per share, which was an increase of 2%, with an additional interim dividend of 12.2p per share making for a total dividend of 27.8p per share.
“I'm pleased with the progress PayPoint has made over the past six months,” said chief executive officer Dominic Taylor.
“We are executing against the roadmap and our strategic priorities outlined in May, delivering underlying net revenue growth of 3.2% and reported profit before tax growth of 4.0%.
“The business also continues to innovate in an evolving retail and payments environment, developing new technologies and propositions that are transforming the way our customers operate and run their businesses.”
Taylor said the roll-out of its ‘PayPoint One’ product was continuing at pace, expanding to 11,246, sites and with ‘EPoS Pro’ now live in 4,783 sites.
“We remain on target to achieve 12,400 PayPoint One sites by 31 March 2019.
“Service fee revenue from PayPoint One also grew by 39.8% in the period, contributing to the increase in underlying net revenue, with the new terminal providing tangible benefits for our retailers, enabling retailers to drive increased profitability and efficiency in their stores.”
In parcels, PayPoint’s new carrier partnership with eBay was now live in 2,500 sites ahead of the holiday season, with Taylor saying the company remained focussed on delivering at least two additional carriers in 2019.
“E-money and MultiPay volumes grew strongly and a further six clients were secured including one of the UK's fastest growing digital bank challengers, Monzo.
“In Romania, we continue to see good growth as we integrate Payzone.
“The good performance of the first half underpins the board's confidence that as PayPoint's growth drivers continue to develop there will be progression in profit before tax for the full financial year to 31 March.”