Cash machine operator Cardpoint issued a profits warning yesterday because of delays in converting free machines to fee-charging ones.

While Cardpoint did not quantify the scale of the profit shortfall, City analysts were cutting their forecasts for full-year profits in half. Evo Securities, the firm's broker on the stock market, cut its full year pre-tax profit expectation from £7.9m to £4m.

The profit shortfall has arisen because it is taking Cardpoint longer than expected to introduce fees for cash withdrawals from machines it bought from banking group HBOS last year. HBOS had not charged for withdrawals from the 816 machines it sold to Cardpoint.

Cardpoint's shares fell 8.5p to 117.5p after it revealed details of the delay in its interim results which showed a loss of £5m, largely because of goodwill amortisation of £5.5m. Before goodwill amortisation and tax, the profits in the six months to the end of March were £0.4m, compared with £0.3m previously.

Mark Mills, the chief executive of Cardpoint, said the delay would have only a "short-term" impact on profits for the year.

The delays are being caused because Cardpoint has to put formal legal documentation in place with the individuals who own the sites at which the machines are located. Even so, by the year-end, the firm is forecasting that "not fewer than 275" of the former HBOS machines will be charging compared with its target of 250.

The issue of charging for cash withdrawals has become politically charged since the Treasury select committee of MPs investigated the matter earlier this year. At one hearing, Mr Mills was accused of placing warning signs about an impending charge for cash withdrawals at knee level, rather than in a more noticeable position.

In his statement accompanying yesterday's results, Mr Mills said: "The Treasury select committee has recommended that additional signage be installed in and around cash machines forewarning of charges. This is in line with the acceptance question which has been posed to each and every customer withdrawing cash since the company's inception and in the directors' opinion will not have a material adverse effect."

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