OzForex targets a bigger role in global payments

OzForex chief executive Neil Helm believes there is scope for foreign exchange companies, or money service businesses as he prefers to call them, to play a much bigger role in the global payments market.

A report prepared for OzForex by Port Jackson Partners estimates that money service businesses handle about 15 per cent of global payments for Australian consumers and seven per cent for businesses.

Helm said OzForex's strategy was to invest in people, its platform and marketing to grow share. As a result, the company's expenses rose 38 per cent over the six months to March.

OzForex yesterday reported net profit of A$25.6 million for the 12 months to March - an increase of 51.5 per cent over the previous corresponding period. Based on the company's preferred metric, pro form net profit, earnings were up 21 per cent to 24.3 million.

Turnover rose 22 per cent to $16.6 million. Active client numbers rose 18 per cent to 142,500.

Helm said a highlight was the growth in client retention. The percentage of fee and commission income attributable to clients on the books for three years or more rose from 29 per cent in 2013/14 to 31 per cent in the year to March.

Given the company's commitment to investment in the business, it was no surprise to see a big increase in costs. Expenses rose 26 per cent to $55.6 million year-on-year and were up 38 per cent half-on-half.

Earlier this year OzForex announced it had received notice from Westpac that their banking relationship was to be terminated. Westpac's decision was based on its view that it could not manage the risks involved in dealing with remittance companies and foreign exchange providers.

Helm said the company had replaced Westpac's banking services with minimal impact.

"Our banking relationships are strategic assets and we are looking to expand them. We have seen some local banks exit but some global banks are stepping up," he said.

All business segments grew. EBITDA from Australian and New Zealand operations rose 81.9 per cent to $19.1 million. The EBITDA contribution from Europe rose 9.8 per cent to $7.5 million, the US contribution rose sharply to $1.4 million and the Asian contribution was up 12.5 per cent to $684,000.