OFX replaces CEO Richard Kimber as trading update disappoints

Forex group OFX reveals it launched a confidential search for a new CEO, as it posted a “disappointing” trading update.

Outgoing CEO Richard Kimber. OFX says the delivery of his strategy had not met expectations.

The board of online foreign exchange and payments company OFX Group launched a “confidential” search in late November to replace chief executive Richard Kimber after the company continually failed to meet earnings forecasts.

OFX Group today announced the immediate replacement of Mr Kimber as it revealed another earnings downgrade and detailed how post-Brexit currency caution has damaged its earnings outlook.

The moves hit OFX shares, which at 10.42am (AEDT) were down 18.3 per cent at $1.36.

John Alexander Malcolm will replace Mr Kimber, who spent less than two years in the position, with chairman Steven Sargent saying the delivery of the outgoing CEO’s strategy “has not been to the board’s or shareholders’ expectations”.

“When we were announcing the half yearly result the board had a conversation that if we missed another quarter or half year result we were going to have to take action,” Mr Sargent told an analyst briefing this morning. “We launched a search then, and it was confidential and wide, and we’re delighted we’ve found a candidate like Malcolm,” he said.

Chief financial officer Mark Ledsham said Mr Kimber’s execution of the company’s strategy had been the issue, and that the group’s plans would remain intact.

“If you look a the various marketing strategies that we’ve outlined, we are getting growth but they are not delivering the results that we have planned or the results that we have committed to shareholders or the board,” Mr Ledsham said. “As a result of that we’ve had a number of conversations internally about how to deliver more on what we’ve doing and in the time frame that we said we’d do it by,” he said.

Mr Kimber, a former ANZ executive and serial tech start-up junkie, had outlined plans to grow revenue to $200 million by the 2019 financial year.

Mr Ledsham said this plan was now “an aspirational goal” and would be recalibrated.

“We’re working on the right things, because we are generating growth, but we’re not meeting our plans or commitments to shareholders,” Mr Ledsham said.

Along with the executive changeover, OFX (OFX) — formerly known as OzForex — updated the market on the fallout from the surprise Brexit vote in June last year.

“Post ‘Brexit’ the devaluation of the pound by more than 20 per cent has resulted in fewer large value discretionary transactions and a corresponding 35 per cent decline in revenues per transaction,” the update said. “As a result, total fee and commission income for FY2017 will be $3 million lower than anticipated.”

The group now expects statutory EBITDA for fiscal 2017 to be between $27.5 million and $28.5 million with statutory net profit after tax of at least $19 million.

The caution that followed Brexit came after Mr Kimber boasted of record trading for the foreign exchange and payments group during the wild days surrounding the surprise referendum result.

The group said it would not reduce spending to make up for the drop in revenue, which it says should recover in the medium term.

“OFX has continued to experience positive momentum in key operating metrics, with growth in transaction volumes and client additions, especially in its offshore markets. The lower revenue per transaction, which is expected to recover in the medium term, will therefore not be offset by any reduction in spending.”

“Today’s update on trading is disappointing,” Mr Sargent said.

“While softer market conditions in the UK as a result of Brexit have resulted in lower average transaction values, the revenue uplift from our marketing program in Australia during the third quarter and into January has not been as significant as we had hoped.

“The board firmly believes that the growth opportunities for OFX, both domestically and abroad are substantial and that the long term outlook for the business is very strong. We look forward to keeping shareholders updated on our progress.”