I've done some more digging on the H1 results, as follows: - The...

I've done some more digging on the H1 results, as follows:

- The key driver of the reduction is EPS was split roughly 50/50 between:
1. Investment in new finance and IT personnel. Apparently the accounting acquisitions necessitated additional hires in the finance team. I get the sense that there was some overinvestment, however it should mean little cost growth with the next acquisition. I was however disappointed that these costs were not offset by synergies in other areas. The investment in IT should also help to reduce PFG's reliance on financial advisers per dollar of revenue, which should benefit earnings as the group scales up (and we could start to see some earnings benefit from H2);
2. Investment in new products. This is primarily investment in people to sell new products in funds management, primarily in the startup/venture capital space, as well as some limited property FM capability. In my view there is too much new product development (which are all far from proven) at a time when they are integrating new acquisitions. That said, they should be able to reduce the additional cost (mainly headcount) fairly quickly if the products don't sell.

Overall, although the H1 results were disappointing, and I think could have been better managed (by a more gradual investment in the issues above), these issues don't appear to represent any fundamental problems. I think the distraction of the accounting issues meant mgt/Board lost focus on costs, but should improve going forward.
My strong preference is that PFG focuses on acquisitions of small FP and accounting businesses where the synergies are greatest (rather than new untested products). I also believe that with the accounting issues resolved, and a new energised CFO in place (who appears heavily focused on costs), the H1 results should provide a good base to grow from going forward. Nonetheless, I suspect it will be some time before the share price reflects the upside potential.