12/04/2006
DataCash, the payments service provider chaired by former stockbroker David Bailey, marginally beat forecasts with its calendar 2005 figures. Revenues spiked 32% higher to more than £6.1m on growth in the group’s core ‘cardholder not present’ transaction processing business, helping to send adjusted pre-tax profit 66% higher to £2.53m.
Cardholder-not-present transactions (payments where the cardholder is not present at the point of sale, such as those over the internet) drove the strong financial performance, with transactions rising more than 50% to 63m. Bailey flagged up particularly good progress among retail customers, with the UK public continuing to warm to online shopping and increased usage of broadband coming into play, as well as in the gaming market, which makes up more than half of all transactions. Datacash is also making moves in the cardholder-present (chip & pin) market, but disappointingly, has yet to sign any deals of significance to date.
Major investment pluses include burgeoning year-end cash balances of £4.9m (£3.2m), equating to 11p a share, a rise in the dividend to 0.75p (0.5p) and the fairly recent addition of experienced payment systems man Andrew Dark as chief executive.
This year, Numis’ Paul Jones suggests pre-tax profits of £3.6m, giving earnings of 6.2p, ahead of profits of £4.8m the following year. Those numbers mean the shares trade on a forward multiple of 23, falling to 19.2 for 2007. Growth Company Investor was an early backer of DataCash (at 71p), and we believe the shares are worth holding.
| Market cap: | £65.2m |
| PE Forecast: | 23 |
| Share price: | 142.5p |
| AIM | £195.68m |
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