- 01Equals fails to reconfirm $1 bid; talks now non-exclusive.
- 02Q2 income rose 3.1% QoQ, but fell 9.6% YoY.
- 03Corporate revenue rose 6.9%; active clients fell 5%.
OFX Group (ASX: OFX) has ended its exclusive transaction process with UK payments business Equals Group after the prospective buyer failed to reconfirm its indicative $1.00-per-share takeover proposal by the required 23 October deadline.
The terminated process concerned a proposed all-cash acquisition of OFX by Alakazam Holdings Bidco, the direct owner of Equals, through a scheme of arrangement.
Although the transaction process deed has terminated, OFX and Equals remain in discussions on a non-exclusive basis, with no certainty that a deal will proceed.
The development coincided with a second-quarter trading update showing sequential improvement in operating income but continuing weakness against the corresponding period last year.
Corporate Trading Momentum
Net operating income reached $45.3 million for the second quarter of the financial year ending March 2027, rising 3.1% from the first quarter but declining 9.6% year on year amid subdued business confidence.
Corporate revenue increased 6.9% quarter on quarter to $28.4m as cross-currency margins improved by three basis points to 0.6%, supported by pricing changes and a greater contribution from forward transactions.
Cross-currency transaction volumes grew 1.4% while average transaction values remained steady, and revenue from high-value consumers rose 2.8% to $13.3m on larger average transactions.
Enterprise revenue fell 31.3% to $2.8m against a strong preceding quarter, reflecting an uneven performance across the group despite the improvement in its principal corporate business.
Lower Client Activity
Corporate active clients declined 5% during the quarter, principally because of continued runoff among lower-value customers in the Firma and OLS portfolios, while the decrease excluding those portfolios was 0.9%.
Transactions per active corporate client grew 2%, and average corporate revenue per client increased 2.7% to $4,000 as OFX generated more activity from its remaining customer base.
Revenue from products outside foreign exchange increased 31% quarter on quarter to $1.0m, 178.9% higher than a year earlier, with cards, pay-by-card, and subscriptions all contributing.
Approximately 11.7% of active clients on the company’s new client platform were using multiple products, while client wallet balances increased from $203.3m to $294.6m by the end of September.
Rising Interest Income
Interest income earned on group cash and client wallet balances rose 27.2% quarter on quarter to $3.1m, providing another source of income alongside payments activity.
OFX had implemented approximately $15m in annualised cost reductions by quarter end and continues to target positive operating leverage for the financial year, although first-half underlying operating expenses are expected to reach $85m to $87m.
That expense outlook includes $3.8m in bad debts, incorporating approximately $1.6m in adjustments expected not to recur and $1.1m in consumer losses, for which additional controls were introduced during the quarter.
Net cash held was $63.3m and net available cash after collateral and bank guarantees was $36.6m, down 25.7% from the preceding quarter as lower revenue and continued investment in the new client platform weighed on cash generation.
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