FlexiGroup Limited (ASX: FXL) share price has fallen 14% in early trade, having partially recovered after initially falling 22% to a 52-week low. This comes after FlexiGroup announced this morning that a $12m after-tax impairment in its Commercial Leasing business will be recorded, putting a hole in its FY2019 results.
Management has revised down its cash net profit after tax (NPAT) guidance for the 2019 financial year to be in the range of $76 – $80 million, down from previous guidance of $95 – 100 million.
The cause of the impairment is FlexiGroup's exposure to the voluntary liquidation of one of its equipment finance vendor program partners.
The financial services group meets a similar fate as Thorn Group Ltd (ASX: TGA) last Friday, with both companies evidently exposed to the same issue. The Thorn Group share price fell 21% after announcing that it had a $10.5m exposure to defaults on lease payments for an equipment finance product. The writing had been on the wall for FlexiGroup shareholders, with Thorn Group having warned that it was a "widespread exposure in the equipment finance industry".
FlexiGroup Chief Executive Officer, Rebecca James, said: "Following good volume, customer and retailer growth across the business, it is disappointing to announce a significant one-off impairment in our commercial leasing business."
Excluding the impact of the impairment, underlying 1H19 NPAT is expected to be 3% higher than the previous corresponding period.
FlexiGroup will announce its interim result on February 26.
