PayPoint (PAY) is delivering solid top-line growth, with net revenues - which strip out commissions and customer funds - up 7 per cent year-on-year in the first half. But the payment solutions group is also having to spend heavily to keep its technology up to date in a very fast moving market, so operating profits rose by a more modest 6 per cent.
In March, the group merged its internet-payment and mobile-phone payment businesses to meet demand from its merchant customers for multi-channel payment services. But net revenues were still flat in the combined division, with growth in its parking payment unit - a strategic focus for PayPoint - offset by pricing pressures from larger merchants. The mobile top-up business also continues to decline, with transactions down 8 per cent to 45.8m.
Yet these problems were offset by strong growth in its retail division, where net revenues rose 17 per cent to £13m. That was driven in particular by money transfer and parcel transactions, which increased by more than half during the period. And the group’s bill and transactions business continued to benefit from its expansion into Romania. Transactions in the country grew by more than a half thanks to market-share gains and the launch of new services, such as road-tax payment at PayPoint sites.
Broker Canaccord Genuity expects adjusted EPS of 55.4p, up from 51.8p in 2013-14.
PAYPOINT (PAY) | ||||
---|---|---|---|---|
ORD PRICE: | 948p | MARKET VALUE: | £645m | |
TOUCH: | 948-956p | 12-MONTH HIGH: | 1,212p | LOW: 857p |
DIVIDEND YIELD: | 3.8% | PE RATIO: | 17 | |
NET ASSET VALUE: | 152p* | NET CASH: | £28.7m |
Half-year to 30 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2013 | 102 | 21.3 | 24.1 | 11.4 |
2014 | 104 | 22.5 | 26.1 | 12.4 |
% change | +2 | +6 | +8 | +9 |
Ex-div: 4 Dec Payment: 18 Dec *Includes intangible assets of £65.7m, or 97p per share |