Fintech FlexiGroup just dropped its profit guidance by as much as $24m
Pavel Kolgotin crashes at the Men's Ski Cross Final of the FIS Freestyle Ski World Championships. Pic: Tom Pennington
Diversified fintech FlexiGroup has slashed its 2019 full-year profit guidance by as much as $24 million as it is beset by problems in its commercial leasing business and slow growth.
FlexiGroup (ASX:FXL) provides a range of services including several buy-now-pay-later platforms, credit cards and leasing options.
It was flying high in November, reaffirming an FY19 profit of up to $100 million after it had paid a 4c dividend a couple of months earlier.
But today it had its tail between its legs, telling investors it would now be in the range of $76 million to $80 million thanks to a tax impairment in its commercial leasing business.
The company’s shares fell 23 per cent in response, to 97.5c, an all-time low for the group.
FlexiGroup said an equipment finance vendor program partner had gone into liquidation.
“We believe our contractual arrangements with the underlying small business borrowers are sound and enforceable, and have been endeavouring to identify if there is a course of action which could be taken to assist in meeting the offer made to those customers by the intermediary,” it said.
“This has proven difficult, and we have therefore taken the decision to provision for $12M after tax in relation to our exposure generated through this equipment finance vendor program partner.”
It spoke of growth in other areas of its business, but was slower than expected, further impact profit guidance.
“Following good volume, customer and retailer growth across the business, it is disappointing to announce a significant one off impairment in our commercial leasing business,” Rebecca James, FlexiGroup chief, said.
It will announce its half-year results later this month.