"Actually, it nay not be that bad. Revenues are up very strongly. So that's very positive."
@MarsC,
@craft
Not really all that positive, I don't find.
Trouble is, full-year comparatives mask some important half-on-half trends, so let's break Revenues down in a bit more detail:
DH14 = $29.3m
JH15 = $31.0m
DH15 = $33.9m
JH16 = $33.7m (implied by 12% growth guidance for FY2016 on FY2015)
In % change terms, this is:
a) on
Previous Corresponding Period (PCP):
DH14 on DH13 = 5%
JH15 on JH14 = 7%
DH15 on DH14 = 16%
JH15 on JH15 = 9%
and
b)
Sequentially:
DH14 on JH23 = 1%
JH15 on DH14 = 6%
DH15 on JH 15 = 9%
JH16 on DH15 = -1%
Now, looking at the underlying Revenue growth in the current half:
Given that almost 80% of IFM's Revenues are non-A$ denominated (EMEA = 46%, North America = 29% and Latin & South America = 4%), the 5%-odd weakening of A$ in the past 12 months will have contributed, maybe 3% or 4% to the 9% growth number on a PCP basis.
So the constant currency growth in the current half on pcp is probably closer to 5% or 6%, which is so-so, but not as flattering as first appears. (And recall that the the current half is not exactly cycling a very strong corresponding comparative period, since JH15 constant growth on its PCP was negligible (7% reported in A$ terms, but the A$ averaged close to 8% lower in JH15 compared to JH14).
And on a sequential basis, the -1% figure reported is probably a fair reflection of the rate of growth in constant currency terms, given the A$ is relatively unchanged in the current half, on average, compared to DH15.
So, putting all that together:
Sure, while one might give the benefit of the doubt to management in respect of their pointing to a significant cost investment being the overarching cause for the downgrade, on the other hand the Revenue performance I don't thing can be described as a redeeming aspect of today's announcement.
I don't think it is anything to write home about at all.
The market, I suspect, won't like it one bit when the stock resumes trading.
* Of course, one should be vigilant to the new CEO trick of hollow-logging-and-under-promising-and-then-over-delivering, of which I think there is probably some on the go here. But one will need to delve into the entrails of the next financial result to confirm whether or not this is the case.
(20min delay)