Modest growth equals good result
Underlying H114 constant currency revenue growth of 3% is a respectable performance in challenging markets. H2 trading to date is in line with management expectations, although we have adjusted forecasts to take further account of currency headwinds. The technology investments and the transition to digital to date have better equipped the group to leverage both its overhead and, potentially more importantly, the value of its accumulated content and data. With the sector having underperformed over the last quarter, the shares now look more attractively priced.
Modest adjustments for currency
Euromoney Institutional Investor's (LONDON:ERM) interim results contain no surprises and show some encouraging developments such as the progress on implementing the new technology platform (Project Delphi), improving conditions in emerging markets and a 10% increase in event sponsorship revenues, offset by trading headwinds in the fixed interest, currency and commodities (FICC) operations of investment banks and the translation effect of the £:$ movement. We have reflected this in our forecasts, assuming a more pronounced effect in H214. Current year forecast reported revenues reduce from £423m to £415m and from £440m to £428m in FY15, with£2.0m and £3.8m reductions in forecast adjusted pre-tax profits respectively.
Delphic benefits
The investment in Project Delphi is affecting margins (built into forecasts), but the benefits in terms of reduced costs should emerge in H2, with further positive implications for FY15 as the spend slows. With those products already migrated, there is early indication of some pricing benefit, but the greater flexibility to customise output to meet client requirements and the options to slice and dice content across formats should increase the group’s ability to optimise charging. The time to market and costs of launching new products will also be greatly reduced.
To Read the Entire Report Please Click on the pdf File Below