Payzone announces loss of €206m for 12 months

 

DUBLIN-BASED electronic payments group Payzone yesterday announced total losses of €206 million for the 12 months to the end of September 2008 on revenues of just under €1.1 billion.

This was the troubled company’s first year of trading following the merger of Irish payments top-up company Alphyra and British ATM operator Cardpoint.

Payzone, which is listed on the Aim stock market in London and has operations in continental Europe, said it made a loss before tax for the year of €28.4 million.

It incurred goodwill impairment charges of €149.2 million and €30.5 million in restructuring costs.

Payzone’s accumulated losses at the year-end stood at €307.9 million. Its total borrowings are €293.4 million, dwarfing the company’s £6.6 million market capitalisation. Payzone raised €48.3 million from three share placements last year and also drew down €290 million from a new banking facility agreed with Royal Bank of Scotland.

Shares in Payzone closed yesterday unchanged at just 1.5 pence. They debuted at 76 pence in December 2007.

In his outlook statement, Payzone’s chairman Peter Smyth said the new management team, led by chief executive Mike Maloney, had stabilised the business but that the trading outlook remained uncertain.

“As yet we have limited visibility as to how the economic environment will affect our business in the coming year, although some early indications show reductions in mobile phone top-up transaction volumes in Ireland and the UK.”

Mr Smyth said the company had “initiated” various cost-cutting measures to reduce its overheads.

Mr Maloney told The Irish Times that Payzone would reduce its 760-strong workforce this year. “Over the next six to 12 months we will be looking at taking 10 per cent off all of our cost lines.”

Mr Maloney said 15 workers were let go in the UK in recent months and that the company would seek jobs cuts at its Dublin office.

Payzone, whose largest shareholder is venture capital group Balderton Capital, had a turbulent 2008. It dismissed its chief executive John Nagle and finance head John Williamson. Both men successfully challenged their original dismissals in January before being voted out by shareholders at an egm in March.

Payzone said yesterday that the two executives received €1.625 million between them in compensation for loss of office. The company spent €4.1 million in total in relation to the legal actions with Mr Nagle and Mr Williamson, which were settled last October.

Chairman Bob Thian also left Payzone following the egm. No compensation was paid to Mr Thian on his departure, according to Mr Maloney.

Both of Payzone’s businesses have experienced difficult trading conditions, particularly its ATM operation in Britain.

Last October Payzone announced the disposal of its businesses in France, Italy and Spain for €20 million. Payzone wrote off €4.2 million that these businesses owed it as part of the deal.

Payzone yesterday said its chief operating officer, Tim Murphy, has agreed to buy its Open Loop gift business and would leave the company by January 31st.