By Bernd Debusmann Jr
Finablr has also taken a hit as a result of its connection to NMC Health
London-listed payments company Finablr has been demoted from London’s FTSE 250 index, after the company warned that the ongoing coronavirus epidemic and cyber attacks on its Travelex foreign exchange business have diminished profits.
Additionally, the company’s share price and bond price have taken a hit as a result of its ties with embattled NMC Health.
NMC founder and former CEO BR Shetty owns 66 percent of shares in Finablr.
On New Year’s Eve, Travelex announced that its systems were targeted by cyberattacks that blocked its operations and demanded ransom in exchange for decryption tools.
While the company initially said that the attacks were unlikely to have a “material impact” on its results, a statement on the London Stock Exchange noted that the disruptions are expected to knock £25m from its Q1 earnings.
“Travelex has a cyber-insurance policy in place which we currently expect to off-set a material proportion of this EBITDA reduction in addition to covering the direct costs of recovery,” the statement said. “However, the timing of EBITDA recognition and receipt of the insurance policy is yet to be determined.”
The statement added that Travelex does not expect the malware attack to have any impact on the firm’s peak periods in Q2 and Q3, which contribute a large proportion of Travelex’s annual earnings.
“Travelex’s current expectation is that the results for the FY20 would reflect the benefit of the cyber-insurance policy and cost actions taken by the business,” the statement added.
Additionally, the statement said that that ongoing coronavirus epidemic “is an incremental negative for Travelex’s business given broad exposure to airports and travel flows.”
VAT and related services are also expected to be negatively impacted.
“While China and other Asian in-country revenue account for approximately 10 percent of Travelex revenues, other markets closely linked to Asian outbound travel are also experiencing headwinds,” the statement said.
“Whilst there are current indications of sharp declines in air passenger numbers, the impact on global travel during the remainder of 2020 and on Travelex full year performance is uncertain,’ it added.
Finablr also said that the company’s cross-border payments segment may be impacted as a significant portion of the business happens at physical locations.
“We will continue to monitor the situation closely and provide updates to the market as appropriate,” the statement said.
Shares in Finablr have fallen over 60 percent since it was listed in May 2019. The company has also been effected by its ties to NMC Health, which is now subject to a UK investigation following allegations that it conducted unauthorised off-balance sheet financing.
Finablr shares more than a quarter in January after it was revealed that BR Shetty used more than 50 percent of its stock as security against a debt linked to the purchase of Finablr.
Two of NMC’s largest shareholders were also forced to sell Finablr stock to cover debts linked to their stakes in the firm.