A solid full-year performance by PayPoint (PAY) fed through into a 9 per cent rise in operating profits to £48.2m, while gross margins increased by 2.4 percentage points. The rise was underpinned by strong growth in the online payment specialist's retail networks business, and was achieved despite a significant rise in IT, development and marketing expenses.
Midway through 2014, PayPoint merged its online and mobile channels to take advantage of the substantial opportunities management saw in the market. However, fast forward a year and the group is proposing to sell the unified businesses to sharpen its focus on multichannel payments and services. Performance certainly wasn't helped by the loss of an online parking payment contract for Westminster council. Management said it expects the business to remain lossmaking during the current financial year, as continued expenditure in product development, sales and marketing are needed.
Within the bill and general segment, a 37 per cent increase in Romanian bill payment transactions - where the group has a fifth of the market share - offset lower UK and Ireland payments. And shareholders can take heart from the performance of parcel delivery service Collect +, in which PayPoint holds a 50 per cent stake. Despite increased logistics costs and lower consumer send transactions, profit there grew by 47.6 per cent - one to watch.
Broker Canaccord Genuity expects adjusted EPS of 59.7p for the March 2016 year-end, up from 57.4p.
PAYPOINT (PAY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 918p | MARKET VALUE: | £624m | |
| TOUCH: | 918-920p | 12-MONTH HIGH: | 1,192p | LOW: 780p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 170p | NET CASH: | £43.9m | |
| Year to 31 March | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 193 | 34.5 | 35.2 | 23.4 |
| 2012 | 200 | 37.2 | 39.8 | 26.5 |
| 2013 | 209 | 41.3 | 45.7 | 30.4 * |
| 2014 | 212 | 46.0 | 52.9 | 35.3 |
| 2015 | 219 | 49.6 | 57.6 | 38.5 |
| % change | +3 | +8 | +9 | +9 |
Ex-div: 25 Jun Payment: 23 Jul *Excludes special dividend of 15p | ||||
