Against a soft trading background Otc Markets Group (OTC:OTCM) delivered FY16 numbers slightly ahead of our expectation and the prior year. While the number of companies on its premium exchanges fell during the year there has been encouraging pick-up in new joiners in Q4 and early 2017. On a medium-term view the increased number of states, now 20, that grant OTCM markets Blue Sky recognition is important in helping draw in additional, good quality, corporate clients.
Ahead of estimates and dividend payments resumed
Reported FY16 normalised PBT (we exclude pension net finance costs) for the continuing businesses came to c U$5m above our estimate (at U$140.7m with EPS on the same basis of 5.8c). This outcome was attributable broadly equally to higher divisional EBIT (despite small revenue shortfalls) and lower than anticipated pension admin costs. Margins in both divisions were up slightly versus our model; Industrial did ease back compared to the first six months, but H216 was up year-on-year, while Crafts picked up markedly after the flagged H1 issues. The previously flagged resolution of a substantial portion of the UK DB pension scheme is helpful to the investment case, as is a return to the dividend list, a year earlier than we had anticipated.
To read the entire report Please click on the pdf File Below