Paypoint plans to sell its payments division

Paypoint performed negatively on stock in the FTSE 250 on 26 November, 2015, after the company wrote GBP 18 million off the value of its online payments business because it is seeking for a buyer who will meet its price expectations, news.markets reports.

Transaction volumes in the businesses were up 22.2% from 30 March to 30 September, 2015, the first half of Paypoint’s financial year, but stiff competition in online payment processing pushed down prices and meant net revenue for the units declined 5.7%.

It has informed that it has made “substantial progress” with the sale of the mobile payments business, and expects to complete a deal by the end of the financial year on 31 March 2016. However, the sales process for the online payments business isn’t going as well, partly because the potential buyer isn’t sure how successful the new products that Paypoint has developed will be. It still expects to do a deal for this business by the end of March, 2016.

That news meant Paypoint shares were down 9.2% at 901.00 pence on 26 November, 2015, a six-month low for the stock. Pretax profit dropped to GBP 3.2 million, from GBP 22.5 million in 2014. Excluding the writedown, its operating profit fell to GBP 21.7 million, from GBP 22.2 million as revenue decreased to GBP 102.8 million, from GBP 104.3 million, partly due to a decline in mobile top-ups.

Still, the company’s retail services business, which handles things like ATM, SIM card and parcels payments transactions is growing significantly, as is the Collect+ joint venture it has with delivery company Yodel that handles click-and-collect and parcels returns transactions.

Transaction volume rose 1.1% and net revenue by 1.2% in Paypoint’s largest business, the bill and general business that provides transaction handling for companies like energy providers. Retail services is currently the fastest growing part of Paypoint’s business. However, Paypoint is now locked in talks with Yodel about the future of Collect+, after the delivery company proposed to raise charges.