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PayPoint One expanding

The group has set a new roll-out target for its electronic-point-of-sales platform
November 28, 2019

PayPoint’s (PAY) half-year results landed in line with bosses’ expectations. Net revenue – which deducts commission paid to retailers, among other things – edged up by 3 per cent to £57.3m. The underlying improvement was 4 per cent – reflecting good growth in UK service fees (up by nearly a third to £6.3m), operations in Romania (up by 6 per cent) and the group’s UK bill payments and top-up businesses, for which sales were broadly flat.

IC TIP: Buy at 989p

One of PayPoint’s focuses has been to “embed” itself “at the heart of convenience retail”. On this front, its PayPoint One electronic-point-of-sales (EPoS) and bill payment platform had been installed across 15,922 sites as at 25 November, constituting 86 per cent of the group’s independent retailers. It now anticipates exceeding its target of 15,800 sites by next March, and has set a new goal of 16,500.

Pre-tax profits were knocked partly by the fact that the prior year’s first half had seen a £1.7m benefit tied to better VAT recovery. But on an adjusted basis, the group saw a 4 per cent improvement to £0.9m. Management expects “progression” here for the full year, although parcel volumes will depend, to a significant degree, on how the busy Christmas period turns out to be.

Panmure Gordon expects adjusted EPS of 65p for FY2020, up from 63.4p in FY2019.

PAYPOINT (PAY)   
ORD PRICE:989pMARKET VALUE:£ 676m
TOUCH:985-989p12-MONTH HIGH:1,136pLOW: 734p
DIVIDEND YIELD*:5.5%PE RATIO:16
NET ASSET VALUE**:61pNET DEBT†:29.7%
Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2018106.125.330.115.6
2019103.724.028.623.6
% change-2-5-5+51
Ex-div:*   
Payment:*   

*Excludes special dividend of 18.4p. The total dividend of 42p will be paid in equal instalments of 21p on 30 Dec 2019 (ex-dividend date 5 Dec) and 9 Mar 2020 (ex-dividend date 6 Feb)

**Includes intangible assets of £29m, or 41p a share †Does not include IFRS 16 lease liabilities of £1m