Sterling top-line benefits

The AGM trading update shows Q117 revenues up 6%. On an underlying basis, though, the top line dipped 5%. The difference stems from the gain from sterling moves, along with portfolio changes. The statement includes a cautionary note over activities targeted at asset management, with geopolitical factors continuing to play out. The main forecast changes relate to the share buyback earlier this month, boosting EPS and, by implication, dividend. The group has moved to pro forma net debt of £92m, which our model shows reducing to £53m by the year end, thanks to the inherently strong cash flow. Restructuring benefits should be stronger in FY18e, when the rating differential to peers looks more anomalous.