As expected, difficult trading conditions impacted significantly on the group
in the first half and although gross profits were modestly ahead of last year – with all regions showing some growth – operating profits more than halved. We are not changing our forecasts or target price on the back of today’s results.
Due to the fact the first quarter is seasonally the weakest, we continue to expect a modest pick-up in net fee income. Headcount is likely to remain broadly flat in the second half, reflective of weak end market conditions, meaning a reasonably high proportion of increment net fee income should drop-through to the bottom-line.
Adjusted profit before tax was £3.4m on net fees of £92.4m, but trading is tough and the outlook has not improved since the pre-close update. We leave our numbers unchanged, but we suspect consensus will drift. We maintain our cautious stance. ‘Sell’.