Shares in FairFX (FFX) edged higher after the online banking and payments company reported significant revenue growth and its first maiden half-year post-tax profit (£0.2m, up from a net loss of £0.9m). The gross margin strengthened slightly from 1.03 per cent to 1.12 per cent, helped by a more profitable product mix and a more efficient supply chain. And the group’s international payments division achieved turnover growth – measured by the gross value of currencies sold – of 33 per cent, while its corporate platform stood out with 95 per cent growth.
In January, FairFX acquired digital financial services provider Q Money and its e-money licence, allowing it to hold money on customers' behalf and cut out third-parties in payments. This has lighter reporting and compliance demands than a banking licence, says chief executive Ian Strafford-Taylor. A key difference is that licence holders cannot re-lend that money.
This licence helped FairFX to purchase CardOne, an e-banking business, for £15m in August. This acquisition bolsters FairFX’s move into the small- and medium-sized (SME) business sector, and was paid for with the proceeds of a £26m capital-raising. The leftover cash from this placing gives the company more working capital flexibility going forward, says chief executive Ian Strafford-Taylor.
Analysts at Cenkos forecast post-CardOne acquisition net profits of £0.27m for the year to December 2017. They also expect EPS to reach 5.4p in 2018 and 8.3p in 2019.
| FAIRFX (FFX) | ||||
| ORD PRICE: | 71p | MARKET VALUE: | £110m | |
| TOUCH: | 70-72p | 12-MONTH HIGH: | 78p | LOW:25p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 4.3p | NET CASH: | £3.6m* | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 4.59 | -0.89 | -0.99 | nil |
| 2017 | 6.10 | 0.15 | 0.14 | nil |
| % change | +33 | - | - | nil |
| Ex-div: | na | |||
| Payment: | na | |||
| *Excludes client money | ||||
