Provides clients with specialist consumer payment transaction processing and settlement across a wide variety of markets: (energy pre and post-payment, telecoms, housing, water, transport, e-commerce, parking and gaming) through its retail networks, internet and mobile phone channels. I have a holding in my income portfolio (epic code: PAY).
Paypoint released their interim results on 27 November declaring net revenue had increased by 7.0% over last year to £57.9m, with transaction volume up 6.1% to 373.4m.
Operating profit was up 6% to £22.2m and EPS was increased by 8.3% to 26.0p. As they mentioned in their first quarter IMS (discussed here), operating profit growth is less than revenue growth due to increased development, sales, marketing and IT investments, that management say will produce benefits in the future.
An interim dividend was declared of 12.4p up 8.8%.
Free cash flow (FCF) was again strong with £6.9m generated, compared to £6.6m last year. After payment of £16.3m for the interim & final dividends and £2.8m purchasing shares for share based remuneration, net cash declined by £12.9m to £28.7m.
With respect to the outlook, management state that "...Looking ahead, we expect our retail networks in the UK and Romania to continue to deliver profitable growth from our breadth of services and extensive client base. Trading since 30 September 2014 is in line with our expectations..."
Paypoint at 959p produce a 4% yield and almost a 20% margin of safety to their estimated intrinsic value (calculated by assuming 8% growth in FCF over the next 10 years and 3% in perpetuity, discounted by their cost of equity of 9.4%).