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FairFX: sales and profits soar, despite challenges

The e-banking and payments company enjoyed significant first-half growth, despite Brexit and a hot UK summer
September 28, 2018

FairFX (FFX) faced a tough macro-climate over the first half, in the most literal of senses. Indeed, the hot UK summer was one of three factors – alongside the weak pound, and Brexit – that posed potential challenges to travel money platforms.

IC TIP: Buy at 148p

But despite this difficult backdrop, FairFX continued to fire on all cylinders. The gross value of currency transactions it sold, combined with the gross value of deposits into bank accounts, came in at £1.1bn – a 146 per cent annual increase, or 23 per cent on a like-for-like basis.

Key to this performance were the company’s corporate and international payments platforms, for which revenues rose by 28 per cent and 131 per cent respectively. The latter segment was bolstered by the February acquisition of City Forex – a travel money and international payments provider. In fact, on a like-for-like basis, sales here were up by 39 per cent; still impressive by most standards. Encouragingly, this momentum was sustained further down the P&L – reflecting the relatively small increase in costs required for FairFX to keep growing.

House broker Cenkos forecasts adjusted pre-tax profits of £7.7m and EPS of 4.9p for 2018 (2017: £0.9m and 0.8p).

FAIRFX (FFX)    
ORD PRICE:148pMARKET VALUE:£ 230m
TOUCH:147-149p12-MONTH HIGH:148pLOW: 69p
DIVIDEND YIELD:nilPE RATIO:90
NET ASSET VALUE:24p*NET CASH:£10.7m**
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20176.10.150.14nil
201812.02.021.41nil
% change+97+1246+907-
Ex-div:na   
Payment:na   
*Includes intangible assets of £24.6m, or 16p a share **Excludes client funds of £47.1m