Tight cost management and a modest increase in revenue have restored BPay to profitability for the first time in four years.
Financial accounts lodged with ASIC show that BPay Group Holding Limited recorded a net profit of A$1.25 million for the 12 months to the end of June.
The result marks a turnaround in the financial performance of the business after it posted net losses of $2.6 million in 2020 and $3.9 million in 2019.
BPay’s board attributed the bottom line to strong growth in the Osko real time transfer service, but the financial statements indicate that the result was also attributable to sharp cost management.
The improvement in group revenue was modest, rising $900,000 to $58.3 million, but costs were slashed by almost 10 per cent to $54.58 million during the year.
BPay harvested most of its cost savings by halving expenditure on external consultants.
The company’s directors indicated that the Sypht document intelligence subsidiary was a big drag on earnings.
“The group generated a strong profit, however Sypht Pty Ltd operated at a loss partially offsetting BPay’s operating surplus at a consolidated level,” the board stated in the accounts.
“Business activities in the period have been focused on developing and sustaining existing products and operations and investing in the development of new products and services.”
BPay sold its majority interest in Sypht to NCI at the end of September.
ASIC records show the business is now owned by a US-based development company controlled by the Boston Consulting Group.
BPay’s net profit was also undermined by an unusually high level of tax paid by the group in 2021.
BPay posted a gross profit of $3.3 million but incurred $2.1 million in aggregate tax expenses.
That equates to an effective tax rate of 63 per cent.
Note 10 of the accounts show that BPay paid $1 million of income taxes at the statutory rate of 30 per cent and an additional $1.2 million for “R&D tax offsets for which no deferred asset was recognised”.
The bill payments company is scheduled to consolidate its operations with Australia’s two other domestic payments schemes – Eftpos and NPP Australia – in the coming months, but BPay’s board noted in their accounts a legal move by Sydney fintech Controlabill against the ACCC’s decision in September to approve the merger.
The Australian Competition Tribunal is scheduled to conduct a hearing of Controlabill’s application on 6 December.