Ozforex Group Ltd (ASX: OFX) shares have fallen by more than 6% this morning, hitting a low of $2.50, despite a strong full-year report which showed a 52% lift in net profit for the 2014 fiscal year.
Given that the shares had rallied more than 20% since the end of April, it's possible that investors had been expecting an even greater result which could explain today's fall.
The numbers
For the 12-month period ended 31 March 2015, the money transfer provider achieved a net profit after tax of $24.77 million, up a whopping 52% on the $15.97 million achieved in the prior year on the back of a 24% lift in revenue to $97.4 million. It also achieved an 18% lift in earnings per share (EPS), which hit 10.11 cents per share.
During the period, the Sydney-based company helped 142,000 clients transfer $16 billion worth of money (up 22% from $13.6 billion in 2014) from one currency to another, which represented an 18% increase on the 120,500 client transfers recorded in the previous year. The total number of transactions recorded also grew by 21% to more than 702,000 with more and more customers becoming attracted to OzForex's competitive pricing and ease of use.
The strong result enabled OzForex to determine a fully franked dividend of 3.58 cents per share, taking its full-year distribution to 7.08 cents.
The bigger picture
Although the results presented by OzForex today were impressive, they do not provide a full description of the year the company had.
The troubles first began when Westpac Banking Corp (ASX: WBC) announced that it would no longer act as a counterparty to OzForex after it decided to exit the money service industry altogether. Although OzForex still has other banking partners, including National Australia Bank Ltd. (ASX: NAB), there's nothing stopping them from making the same move as Westpac which could prove disastrous to the company's operational ability.
More recently, OzForex named Richard Kimber as its new CEO following the unexpected departure of Neil Helm. Helm announced his departure in February shortly after Westpac had severed ties with the business. You can read more about that, here.
From today's price of $2.53, OzForex could still prove to be a great investment – especially if it continues to accelerate its number of active clients and transactions — but investors need to remain cautious of the key risks facing the business.
