Eqs Group's (DE:EQSn) first half results show good revenue growth in its domestic market, boosted by the consolidation of ARIVA (67.5% owned). The build-up of business in new markets is starting to register, with Asia now breaking even. The costs of this expansion and investment in a number of new products and services is constraining operating profits, which were marginally (3%) below the comparative period. The group remains well positioned to benefit from trends in digitisation and globalisation and the growing complexity of corporate compliance requirements.
Strong sales momentum
Good top-line progress, particularly in Germany, was both at an organic level (revenues up 11%) and from the consolidation of ARIVA. The upcoming PRIIP regulation implementation is stimulating demand for workflow solutions, while the Market Abuse Regulations are increasing the volume of corporate announcements. Good increases across all the Products & Services were achieved, including a recovery in Media revenues after a weak Q1. The regulatory requirements on companies both within the EU and in other markets constantly increase in number and complexity, giving a strong trading backdrop for EQS’s offering.
Investment in growth
With a substantial step up in employee numbers from ARIVA and continuing high levels of product development (including investment in COCKPIT capabilities), as well as the expansion into new markets, costs have continued to run at high levels. The reported adjusted EBIT number for H117 was 3% down on H116. Full year guidance is unchanged: revenues to be ahead by 20-25% and non-IFRS EBIT to grow by 10-20%. The medium-term outlook is for non-IFRS EBIT to grow by 20-25% over 2017-21, on a top line increasing by 10-15%, implying a good pick-up in margins as the group moves from an investment to a growth phase.
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