![Chief executive Richard Kimber said Brexit has had an enduring effect on OFX Group.](/content/dam/images/g/k/u/t/x/m/image.related.afrArticleLead.620x350.gspegl.png/1479187182496.jpg)
Foreign exchange provider OFX Group crowed about record transactions volumes after the shock vote by Britain to leave the European Union, but the enduring effect of Brexit has been depressed transaction values, which has hammered its half-year profit.
At first OFX, formerly known as OzForex, benefited from keen currency traders and savvy savers trying to capitalise on the plunging pound, but chief executive Richard Kimber said the devaluation of the currency to multi-decade lows has sapped activity in key consumer segments, such Britons buying houses in France or Spain.
"Property investment into Europe is one of the key use cases that people use OFX for," he told The Australian Financial Review. "Those larger transactions were put on hold as people's confidence was put back a bit."
Statutory net profit for the six months ended September 30 fell 13.3 per cent to $9.7 million, while the underlying result was worse, a fall of 21 per cent, because of one-off items in the prior year, OFX said on Tuesday.
It forecast its fiscal 2017 underlying net profit after tax would be "slightly up" on the prior year, which was a great disappointment to shareholders, who dumped the stock.
OFX shares were the worst performer in the S&P;/ASX200 Index, losing 17 per cent to hit $1.345. The stock is well down on a 12-month high of $3.55 hit last November, after global rival Western Union said it was considering paying up to $3.70 a share to take over the company. Those talks were abandoned in February and the OFX share price has struggled to recover.
Turnover in the half, which is a measure of total transaction value, fell 4 per cent to $9.6 billion, but was in line with the final half of 2015-16.
The result was hit by a fall in average transaction values of 11 per cent to $22,800, which Mr Kimber put down predominantly to the fall in the value of the pound and stronger Australian dollar.
Muted outlook
Net operating income of $53.6 million was flat against the same half last year, which suggests a woeful second quarter given the measure soared 11.4 per cent in the first quarter. "The second quarter was definitely tougher than the first and it was largely driven by this lower transaction value," Mr Kimber said.
Beyond the muted outlook for the rest of the year, Mr Kimber said OFX was well-positioned for "medium-term growth".
The company has completed a migration of all of its technology operations to the cloud, using Amazon Web Services. The effect of opting for the cloud, instead of physical data centres, is greater flexibility and a reduction in overhead costs. Under a cloud model during peak periods – such as Brexit – OFX can simply ramp up its use of hosting and then scale it back down for quiet periods. "It will save us millions in terms of hardware [annually]," Mr Kimber said.
OFX will also focus on more targeted advertising via search engine marketing, social media and online display advertising during the second half. "The growth will come it's just a matter of making sure we have the right platform in place," he said.
The number of active OFX clients, those who have transacted in the past 12 months, rose less than 1 per cent to 151,700 and transaction volumes were up 7 per cent to 419,300.
The board declared an interim dividend of 2.8¢ a share, fully franked.