28th Nov 2019 10:31
(Alliance News) - PayPoint PLC on Thursday reported a drop in interim profit but saw its underlying revenue grow on the increased rate of installations of its upgraded payment system.
In the six months to September 30, the retail, mobile and online payment service saw pretax profit slip 5.1% to GBP24.0 million from GBP25.3 million the year before. Profit was hurt by renegotiations of the commercial terms of its agreement with parcel delivery firm Yodel.
As a result of those same negotiations, costs were up 9.9% to GBP33.2 million from GBP30.2 million.
The comparative period also benefited from a one-off value-added-tax benefit of GBP1.7 million. Underlying pretax profit was up 4.0% on a year before.
Revenue declined 2.3% to GBP103.7 million from GBP106.1 million. PayPoint's net revenue, which excludes the commission the company pays to retailers and the cost of mobile top-ups, increased 3.1% to GBP57.3 million from GBP55.6 million.
Net revenue was driven by a growth in UK service fee revenue, rising 32%, and fees from its Romanian operations, up 6.2%. PayPoint also noted the "resilient" performance of its UK Bill Payments and Mobil Top-Up businesses, with net revenue flat.
At the end of the period, PayPoint had a terminal in 28,366 UK sites, down slightly from March 31. The roll out of its upgraded platform PayPoint One "continued at pace", the company said, which increased 17% to 15,088 over the six month period.
The company expects to remove all of its legacy terminals by the end of financial 2020. Due to the increased pace of PayPoint One installations, the company now expects the upgraded terminal to exceed its original target of 15,800 sites and is now targeting 16,500 sites.
PayPoint One average weekly service fee per site rose 3.3% to GBP15.50 from GBP15.00, with total service fee revenue from the new terminals up 32% to GBP6.3 million.
PayPoint also noted its 15% growth in parcel volume in the first half.
Executive Chair Nick Wiles said: "I'm pleased with the progress PayPoint has made over the past six months as continued execution against our stated strategic priorities has seen the business deliver net revenue growth and underlying profit before tax growth.
PayPoint declared an ordinary dividend of 23.6 pence with an additional dividend of 18.4p. giving a total interim dividend of 42.0p - up 51% on the year before. This compares to a 15.6p ordinary dividend and a 12.2p additional dividend last year, giving a total interim dividend of 27.8p.
"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," Wiles added.
Shares in PayPoint were 1.2% higher in London on Thursday at 995.00 pence each.
By Paul McGowan; [email protected]
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