OFX Group Released FY2019 Results; Underlying EBITDA Increased By 8.1%

Online international payment services provider OFX Group Limited (ASX: OFX) on 21 May 2019, announced its full-year results for the period ended 31 March 2019. The result reflects the strong operating performance in soft markets along with the continued revenue diversification across its regions and corporate segments.

There was an increase in the net operating income by 8% to $118.7 million. The underlying EBITDA increased by 8.1% to $32.2 million. The Underlying EBITDA was ahead of range as a result of strong March, with better than expected margins and benefits of cost actions. The transactions increased by 8.8% and transaction per active client went up by 12.6%. The statutory Net Profit After Tax dropped by 5.8% to $17.6 million as a result of previously disclosed corporate action costs of $4.3 million. The R&D benefits and lower offshore taxes reduced the effective tax rate to 20%. The company declared a fully franked final dividend of 3.28 cents per share.

The revenue growth during the period was driven by strong momentum witnessed in North America and Asia, with a growth of 19.8% and 19.3% respectively. The revenue growth from Australia and New Zealand was at 5%, and Europe at 12%. Continued revenue growth was also due to the corporate growth of over 10% in all regions. The period also witnessed an enhanced client experience.

 

During the period, the company was able to manage the cost well. It was able to deliver annual positive operating leverage for the year. The company made an investment decision with an eye on revenue generation, including investing more in the sales team. It also made investments in developing reliable, scalable systems across its internal technology capabilities such as transaction monitoring, pricing, treasury, payments engine and security.

The company reported an increase in the net asset base during the period as a result of an increase in the total asset followed by a decrease in the total liabilities. The total shareholders’ equity for the period was $71.364 million.

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During the period, there was a net cash inflow of $18.904 million.

The company made payment for property, plant and equipment, intangible assets and also deposited cash with the financial institutions. Thus, the net cash outflow through the investing activities was $31.231 million.

There was a net cash outflow $8.880 million from the financing activities of the company. By the end of the period, the total cash and cash equivalent with the company was $181.263 million.

Outlook:

In FY2020, the company would be looking towards diversification of its revenue by accelerating growth in its Corporate business by making an investment in the client experience, introducing its CRM program as well as shifting its marketing mix. Further to this, the company will make further investment to be in line with its financial commitments to deliver annual positive operating leverage and stable NOI margins.

The shares of OFX are trading at A$1.605 on ASX (as at AEST: 1:45 PM, 22 May 2019), down by 3.021% as compared to its previous closing price. OFX holds a market capitalization of A$411.41 million with approximately 248.59 million outstanding shares and a PE ratio of 22.730x.


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