FlexiGroup shares fell more than 6% yesterday after the finance company produced a surprising profit downgrade.
The shares closed at $2.07 after the company said it will take over $36 million in write-offs for the current financial year, despite a rise in trading profits.
And it also warned of slower profit growth in 2016-17.
The company revealed in a presentation released to the ASX yesterday the impact of systems and goodwill impairments of $18.4 million tied to the discontinuance of the enterprise, paymate and telco business units.
This will see the company’s brands Blink, Think Office Technology and Flexi Enterprise hived off.
FlexiGroup will take an additional $15.7 million provision for the lifetime loss in recovering the enterprise portfolio value.
The developments will see FlexiGroup see statutory net profit after tax down fall by around 35% for the year to June 30 to $54.2million.
But the company said final dividend would be unaffected by the move.
FlexiGroup said it now expected its 2015-16 cash profit — before impairments — to rise 8% to around $97 million.
The brand divestment plans may hurt earnings in the 2016-17 financial year, with the group now tipping a rise in cash profit to $100 million, short of analyst projections for $117.9 million.
“We are discontinuing non-material and non-core business units, which distract from our core,” the group said yesterday.
“Our ambition is to return to double-digit growth in FY18 and beyond.”
