Brexit effects take toll on OFX Group’s revenues

Maria Nikolova

Total fee and commission income for FY2017 is set to be $3 million below expectations.

Brexit effects are starting to bite income of some businesses, with a piece of proof provided earlier today by international provider of online payment services OFX Group Ltd (ASX:OFX).

Today, the company published a trading update for the quarter to December 31, 2016, with the numbers painting a rather dull picture. During the three-month period, the company saw further drop in average transaction values from transactions originating from individual customers in the UK.

The company explained that the devaluation of the GBP in connection to “Brexit” has led to fewer big value discretionary transactions and a 35% fall in revenues per transaction. This decline, in turn, is set to result in OFX’s total fee and commission income for FY2017 being $3 million lower than initially forecast.

OFX Chairman Steven Sargent also noted the “softer market conditions in the UK as a result of Brexit” and called the trading update “disappointing”.

Adding to the gloom, OFX said that clients additions in Australia in the third quarter failed to meet expectations – that was attributed to the ongoing extension and refinement of company’s performance-based marketing program.

The company now expects statutory EBTDA for FY2017 to be in the range $27.5 million – $28.5 million.

At ASX close today, one share in OFX traded at AUD 1.27, down 23.95%.

Today’s share price dive is worse than the one registered after OFX reported its financial results for the first half of FY2017 but is not so bad as the drop of more than 40% after the company ended acquisition talks with Western Union in February 2016.

In November 2015, Western Union submitted an indicative conditional proposal for all of OFX’s (back then OFX was still widely known as OzForex) issued share capital. Under the proposal, Western Union would have purchased 100% of the shares of OzForex for an all cash consideration of between $3.50 to $3.70 per OzForex share.

In February 2016, OFX said Western Union had not submitted a binding proposal. As a result, the Board of OFX has terminated talks with Western Union.

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