Delays in conversion hits Cardpoint’s profits |
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Wed, 18 May 2005 08:40
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Leading ATM provider, Cardpoint sent out a profit alarm anticipating its annual profits to be lower than expected this year, following the undue delay on its part in transforming the free cash machines bought from HBOS into fee-charging ones.
Cardpoint confessed that it was taking too much time in converting the free HBOS machines into charging ones because of some delay in completing retailing agreements and problems with a supplier.
However, Mark Mills, the chief executive of Cardpoint, said that the delay would only have a “short term” affect on the profits of the group in the year. He added further that HBOS had sold the 800 cash machines to Cardpoint at relatively low rates, less than £76.6 million, which was the expected cost of acquiring these machines. This, according to Mills, would ease the pressure of the low profits this year on the group.
| He was quoted as saying, “Additional time has been required to complete the complex transition from free machines to highly profitable charging machines owing to the nature of some retailer agreements and due to a specific supplier issue.”
Cardpoint stated that it expected to go beyond its target of the conversion of 250 machines, by converting 275 machines into fee-charging ones by the end of the year. Mills said, “We will start the next financial year from a stronger base as more machines will have been converted to charging than previously anticipated.”
Cardpoint recorded half-year profits ending March 31, before goodwill amortisation and tax at £400,000, which was 43% greater than last year. Meanwhile, the news of reduced profits for the year sent Cardpoint’s shares slip 8½p to 117p.
Customers using ATM machines are now charged fees for withdrawing money and Cardpoint charges about £1.66 on an average to its customers per transaction. Mills said that the second half of the year would promise better results and profits since that was a ‘stronger’ period.
The issue of ATMs charging money to its customers for withdrawals was undertaken by the Treasury select committee for an investigation in the early part of the year. The investigation brought to notice that Mills had not been warning his customers adequately about the ATM charges since he placed warning signs at low knee levels, where customers generally did not care to read.
The Treasury select committee has suggested ATM providers to arrange for extra signages around the machines to forewarn customers regarding the charging nature of the machine. Mills dismissed the committee’s view that such signs would adversely affect its business and said that Cardpoint was “suitably positioned to build on its strong base and to expand organically and by acquisition.”
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