Impairment charge hits PayPoint FY results as refocus continues

Full year pre-tax profits at PayPoint fell dramatically due to an impairment charge, although underlying results showed a small rise in adjusted operating profits.

Revenues fell 2.7% to £212.6m, while pre-tax profits slumped to £8.2m from £49.6m. Adjusted operating profit rose 1.2% to £50.1m.

The payment services company said negotiations for sale of the mobile payments business continue but it had to book a £30.8m impairment charge in the absence of a sale.

Adjusted diluted earnings per share increased by 1.9% to 58.4p. The final dividend was 28.2p makin a total for the year of 42.4p, an increase of 10.1%. There will also be a 21p a share payout from the sale of its online payments unit.

PayPoint said following its decision to sell its mobile and online payments businesses, it had reviewed its capital requirements and allocation.

“Focusing on multi-channel payments where we have retail networks, simplifies our business and reduces the capital headroom we require,” PayPoint said.

“Given the high level of current changes in the business, we are adopting a cautious approach to the return of capital and plan to release the surplus over a period of five years at £25 million per annum.”

“We will continue with a progressive dividend policy. It is our current intention not to borrow more than one times our earnings before interest, taxes, depreciation and amortisation. The first special dividend is planned for December this year. If there is a potential acquisition which offers better returns, we may defer the special dividend as appropriate.”

It added that it would distribute the sale proceeds from the sale of online payments business, together with the final dividend from the year under review.

“We also intend to distribute sale proceeds from the mobile payments business once the sale is completed,” PayPoint said.