Sales have plunged 24% at coupon company Valassis after Tesco decided to destroy paper coupons after scanning them.

Valassis had counted and verified the coupons before sending the information to Tesco's suppliers. But in June last year Tesco switched to only using EPoS data when making deductions from suppliers' trading accounts for ­redeemed coupons.

Valassis' sales for 2010 dropped to £6.6m and pre-tax profits slumped from £1.44m to £50,000. "The loss was incurred largely due to the reduction in core service to one major client and the one-time costs incurred in the resultant business restructure," said MD Charles D'Oyly. "In this restructure, both headcount and overhead were significantly reduced. The restructure meets the current and future capacity required."

D'Oyly hinted at plans to bounce back with investment in the digital market. "The shift to electronic or digital distribution and redemption presents an opportunity for the company to provide a more integrated approach to sales promotion activity," he said.

Tesco still gives weekly redemption data to Valassis, which passes the information onto the ­relevant brands.