Consolidation in FY17, acceleration in FY18

While GFT reported FY16 revenues and EBITDA slightly ahead of our forecasts, the shares fell in response to unexpectedly weak FY17 guidance and higher than expected debt. The guidance reflected the challenging investment banking backdrop, which has been holding back profits in the UK and North America. Nevertheless, GFT’s retail banking activities remain buoyant, benefiting from digital banking projects in continental Europe, and management expects group growth to return to trend levels from FY18 on digitisation strength and recovering investment banking markets. Hence, we believe the shares look attractive on c 14x our FY18 earnings.