Earnings outlook intact
​eg solutions (eg) is a leading provider of software solutions which improve the efficiency of the corporate back office. It has sold over 100,000 licences sold worldwide to leading organisations in financial services, outsourcing, healthcare, government, utilities, telecoms and retail.
Their announcement today put in context the news that one of its resellers, Aspect Software Inc. had submitted a petition for bankruptcy protection in the US. That potentially provides Aspect with time to refinance/restructure existing debt and equity.
It should, however, have no impact on eg's earnings outlook, according to its management's initial assessment. Since February 2013 eg has had a strategic partnership with Aspect and what was initially a 3 year reseller agreement, the latter renewing annually unless terminated by either party.
eg will make comment further as appropriate. Regarding market communication, the next relevant date is 23 March 2016, when it is due to announce full year results for the year to end Jan 2016.
The above developments do not impact our earnings forecast or view of intrinsic value at c 100p/share. That's underpinned by a growing order book, improved delivery vs sales targets and an operationally leveraged financial model which will mean higher revenues result in a step up in profit/EPS.
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