Consumers might be hard up, but bills still have to be paid and
The bills and general payments operation saw transactions grow by 15.7 per cent to 191m, boosted by a 19 per cent jump in energy bill prepayments. The retail services business, which includes cash machine transactions and SIM card sales, saw transactions grow 24.4 per cent to 36.2m. Furthermore, the group's parcels service became profitable in the first half - ahead of market expectations.
Operating costs rose 19.4 per cent to £23.1m, although this included expenses associated with the rollout of the group's simple payment service (SPS). This is essentially a replacement for Giro payments and will allow benefit claimants to receive cash in ordinary shops instead of having to queue at post offices. Outside the UK, the Romanian operation continued to grow strongly, with bill payment transactions rising 38 per cent in the period to over 11.6m.
Broker Numis Securities expects pre-tax profit of £41.7m for 2013, giving EPS of 44.8p (from £37.2m and 39.8p in 2012).
|ORD PRICE:||848p||MARKET VALUE:||£576m|
|TOUCH:||845-849p||12-MONTH HIGH:||899p||LOW: 487p|
|DIVIDEND YIELD:||3.3%||PE RATIO:||20|
|NET ASSET VALUE:||137p*||NET CASH:||£31m**|
PayPoint is a solid performer with a growing and diverse revenue stream - the dividend yield isn't bad, either. But the shares have risen over 50 per cent this year alone and, trading on 19 times forecast earnings, look well up with events. Hold.
Last IC view: Hold, 633p, 24 May 2012