At the Flexigroup (ASX:FXL) annual general meeting, the Chairman Margaret Jackson indicated, "as investors you would be aware of a general reduction in market valuations of companies, and that FlexiGroup has seen its share price fall over the last 12 months despite delivering on its stated financial goals. We see that there are four contributing factors that have directly impacted the performance of the FlexiGroup stock."
- "First. with global turmoil stemming from the financial services industry, there have been some spectacular failures with bad news seemingly reported daily, therefore it is not unreasonable for investors and analysts to shy away or abandon finance industry related stocks.
- Second. FlexiGroup’s volumes rely on the performance of our retail partners; an industry also out of favour, as the slowing economy affects overall retail sales.
- Third. the general world-wide liquidity shortage causes doubt around companies who rely on access to funding.
- Fourth. As the economy continues to slow there is an expectation of increasing unemployment and reducing disposable income all of which may flow through to bad debts."
The company believes "with the continued delivery of favourable profits results and with the additional profit contribution from Certegy in financial year 2010, the market in the medium term will ultimately recognise the inherent value of the business and the stock price will adjust accordingly."
For the year ended 30th June, Flexigroup earned net income growth of 20% and a record Net Profit After Tax of $32.3 million (growth of 10.2% as per our guidance).
Flexigroup believes the Certegy acquisition, which completed at a favourable price, will add value to FlexiGroup, providing scale, diversification and a significant customer base. Annually, FlexiGroup customer originations will increase from around 100,000 to in excess of 250,000. On completion of the acquisition, 500,000 customer profiles were added to their database and are available for cross-selling initiatives. Retail partners expand with 5,500 new outlets added and importantly FlexiGroup’s previous 90% concentration in the computer / electrical channel dilutes to approximately 45%.
From a guidance stand point Flexigroup "anticipate meeting analysts’ expectations of $28-$30 million net profit after tax for 2009 financial year."
"The Certegy acquisition is forecast to be NPAT dilutive by $2.2 million, and is expected to deliver $8 million NPAT in its second full year. While personal loan and leasing volumes will reduce below last year, due to the retail environment and FlexiGroup’s defensive credit posture, the volume shortfall will be offset by an improvement in leasing write offs and higher income from fees and end of term income."
The board announced a special dividend payment of 3 cents per fully paid ordinary share will be made on December 9th.