During H1FY17, FlexiGroup Limited’s Building for growth while focusing on cost control

Building for growth while focusing on cost control: During H1FY17, FlexiGroup Limited’s (ASX: FXL) revenue grew by 33% year on year (yoy) to $235.5m with 15% yoy increase in net income to a $47.7m, led by NZ Cards segment and Australia cards segment. However, net income was partially offset by increase in employment expenses of 35% to $43.7m. The group has lowered its guidance for FY17 cash net profit to $90-93m (down 2%) from $90-97m earlier forecast, largely due to the underperformance of Certegy and impacted by ~$3m investment in Flight Centre partnership. However, Australian cards, which constitute 52% of group receivables and 39% of group cash net profit, continued to deliver robust growth while Certegy (No Interest Ever business), is behind expectations. Going forward, company expects interest free / interest bearing mix to normalize towards historical average driving revenue growth from significantly increased receivables. The company expects underlying trading in Q4FY17 to be robust and key initiatives include the launch of Oxipay and the project in Ireland going live. Moreover, the dividend policy has been rebased to provide additional capital to support organic growth opportunities within Cards and Commercial leasing. On the other hand, Renaissance Smaller Companies Pty Ltd became a substantial holder of FXL with 5.27% interest.  

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