For all the hype about its float last year and subsequent strong market performance, market confidence in OzForex (OFX) looks pretty fragile.
After reporting what was a reasonable first profit as a listed company, OzForex shares copped a real pasting yesterday.
That was even though it had bettered prospectus forecasts with the headline profit. However, earnings were lower than expected by another measure.
The company shares were sold down heavily – increasing as the day went on. At the close the shares were down nearly 19% at $2.65.
That compares to the all time high in March of $3.50.
The shares were among the worst performers on the ASX yesterday.
OFX 1Y – OzForex shares pummelled after investors question solid result
Taking the one off items into account, the company reported a 6.8% fall in profit – but excluding those charges, profit was higher than forecast.
It wasn’t hard to work out that the company emphasised the 25% rise (which topped the forecast in the prospectus), while investors focused in part on the weaker figure.
In its first full year results since listing on October 11, the company reported a statutory profit of $15.9 million for the year ended March 31, down from $17.1 million a year earlier.
The company said its performance was ahead of its prospectus forecast of $14 million for the full year by 8.1%.
Excluding the one off costs, pro forma profit was $20.1 million, up 33.3% on the previous financial year and 8.1% ahead of its prospectus forecast.
OzForex was priced at $2 a share when it floated in 2013. The shares jumped 28% on the listing day.
At yesterday’s close investors who held on from the float are still ahead, but there’s a degree of concern among investors.
The sharp fall was a bit mystifying – the one off costs included the costs of the float, plus an abortive takeover.
It spent money on a private bid for UK forex group, HiFX which would have doubled the size of the company.
But OzForex pulled out of the deal in February.
Analysts digging into the results singled out weak growth in new dealing clients and new client numbers.
New clients numbers were nearly 11% lower than expected and active client growth was 2% less than expected.
New client numbers were still up 38% to 55,000 and active clients grew 31% to 120,500.
The company will pay a fully franked dividend of 2.37c a share, or 70% of after tax profit.
