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FlexiGroup H1 cash profit climbs 4% to $44.3 mln

FlexiGroup H1 cash profit climbs 4% to $44.3 mln

WELLINGTON: FlexiGroup acting chief executive David Stevens says big revenue falls in its leasing arm are being reversed and expects strong interest in solar batteries to boost the earnings of its biggest business, Certegy.

On Wednesday, the equipment financier and credit card issuer reported a 4 per cent rise in 2016 first-half cash profit to $44.3 million and confirmed full-year cash earnings guidance of $92 million to $94 million.

The company will pay an interim dividend of 7.25¢, down from the year-earlier payout of 8.75¢. However, the company said the drop was temporary, as it was due to around 68 million extra shares on issue after its recent capital raising to buy Fisher & Paykel Finance, which diluted the dividend.

Its interest-free credit card business grew sales volumes by almost 40 per cent and cash profit by 11 per cent. Its New Zealand business recorded a 63 per cent rise in profit to $5.2 million.

FlexiGroup is still suffering from a major decline in its commercial leasing arm, however, following the departure of senior executives and the loss of important relationships. Revenue of its Australian leasing business – its second biggest – fell 18 per cent to $30 million but this is rising now. The stock slumped 17.8 per cent on Wednesday, closing at $2.12.

“SME and enterprise has grown by 3 per cent between the second half of 2015 and the first half of 2016 – we have steadied the ship,” he said. “That’s not good enough, but it does show [it is improving].”

Certegy, which accounts for close to 40 per cent of FlexiGroup’s profit, had a 5 per cent rise in cash earnings to $17.5 million, but sales volumes fell 2 per cent to $280 million. This is partly explained by the company suspending its NZ Certegy operations temporarily as it competes with its new acquisition there, Fisher & Paykel Finance.