Increasing competition in the payments market, along with the heightened uncertainty surrounding the UK’s departure from the EU, have weighed on shares in FairFX (FFX), now well adrift of their high point in October last year. But the latest full-year results have reassured investors, judging by a double-digit rise in the share price on results day.
After moving into statutory profitability in 2017, the group expanded an already sizable gross margin to 78.5 per cent. Adjusted cash profits were up sixfold to £7.5m, which management said reflected operational gearing “with a significant retention of revenue growth flowing down to profits”. FairFX signed up its millionth customer in the year, and more than doubled the gross value of currency transactions and deposits to £2.3bn. And progress appears to be holding up in the current year – revenues were up 43 per cent to £7m in the three months to March 2019, ahead of expectations.
Broker Canaccord Genuity is forecasting adjusted cash profits of £12.9m in 2019, giving EPS of 6.5p, up from £7.5m and 3.9p in 2018.
| FAIRFX (FFX) | ||||
| ORD PRICE: | 103p | MARKET VALUE: | £168m | |
| TOUCH: | 102-104p | 12-MONTH HIGH: | 150p | LOW: 84p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 61 | |
| NET ASSET VALUE: | 23p* | NET CASH: | £7.86m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 5.5 | -2.83 | -4.41 | nil |
| 2015 | 7.4 | -3.40 | -4.76 | nil |
| 2016 | 10.2 | -1.44 | -1.49 | nil |
| 2017 | 15.5 | 0.23 | 0.37 | nil |
| 2018 | 26.1 | 2.08 | 1.68 | nil |
| % change | +69 | +808 | +354 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £27m, or 17p a share | ||||
