OFX confirms receiving unsolicited approach, talks discontinued

Provider of online payment services OFX Group Ltd (ASX:OFX) today published a trading update ahead of the release of its FY20 financial results due in May 2020. The announcement includes a brief comment regarding recent developments on the M&A front.

OFX confirms that having recently received an unsolicited approach, the company entered into discussions about potential M&A activity, the details of which remain confidential. However, in light of uncertain equity markets, these discussions have been discontinued.

The company explains that its FY20 results will include some corporate action costs resulting from these discussions.

Regarding its performance, OFX says that volatility related to market uncertainty from COVID-19 has stimulated trading activity across both the Consumer and Corporate segments. This has led to strong turnover and transaction volumes in February and March to date. As a result, the company anticipates underlying EBITDA for FY20 to be between $36.8 million and $38.3 million.

OFX reconfirms its FY20 financial commitments of delivering annual positive operating leverage on an underlying EBITDA basis, related to revenue growth, with stable NOI margins excluding IPS. Capital expenditure for FY20 will be below the $11m anticipated at the half year. The investment in infrastructure to support the Link Enterprise deal remains on track with the registration process now live.

The company continues to generate good levels of cash and is well placed to provide additional collateral to its banking counterparties to support heightened trading levels. It expects to end the year with more than $56 million of net cash held.

In response to the COVID-19 pandemic, OFX has implemented business continuity procedures across its global operations. The services are operating well, the company says, and the situation is being monitored daily.