OFX Group (OFX) – formerly known as Ozforex – shares plunged yesterday after it joined the growing list of companies issuing surprise profit warnings. In its case the lower results are for the year to March 31.
The shares slumped after the foreign exchange trader told the ASX yesterday that its FY17 fee and commission income would be $3 million lower than expected.
That saw the shares slump almost 25% to $1.265 at one stage. They ended down 24% at $1.27.
The foreign exchange group said in the three months ended December 31, it saw a "further decline in average transaction values", largely stemming from the UK after the June Brexit vote resulted in "fewer large value discretionary transactions and a corresponding 35 per cent decline in revenues per transaction".
EBTDA for the year ending June 30 is “now expected to be between $27.5 million and $28.5 million with statutory net profit of at least $19 million”, the company told the ASX.
It also announced it has appointed John Malcolm as the company’s new CEO. Malcolm succeeds Richard Kimber, who has stepped down from leading the foreign exchange company.
OFX chairman Steven Sargent said yesterday the trading update was disappointing.
“The board firmly believes that the growth opportunities for OFX, both domestically and abroad, are substantial and that the long-term outlook for the business is very strong."
In November, the company released its first-half results for the first six months to September 30 which revealed it had banked $53.6 million in net operating income, flat when compared with the previous corresponding period. This resulted in a net profit after tax of $9.7 million, down 21%.
Mr Sargent told an investor call yesterday the board realised last November that it needed to start looking for a new chief executive, in case the company kept failing to deliver.
"Delivery against the strategy has not consistently met the board or shareholders’ expectations," he said.
"Having conducted a search process in the background, we believe that Skander [Mr Malcolm’s nickname] has the global experience … to execute on our growth ambitions and take advantage of the tremendous opportunities for OFX domestically and abroad."
Mr Sargent also said during the call that the company, while still hoping to crack $200 million in revenue, would not do so in the original three-year timeline that had been set by Mr Kimber.
