First-half results illustrated what an uphill struggle life has become for former tech darling Fidessa, which once boasted a 10-year compound annual sales growth rate of 30 per cent-plus. The financial trading software specialist estimates that the impact of closures and consolidation in its struggling customer base shaved 7 per cent off revenue growth and there are few signs of improvement.
Given the tough backdrop, the company did well to produce a modest revenue increase by focusing on larger clients and developing its derivatives software business. But increased investment in derivatives is expected to slightly reduce margins this year and slower payments by struggling clients weighed on cash generation.
There were some encouraging signs in the first half. Growth in the Americas and Asia was strong and 54 per cent of revenue is now generated outside hard-hit Europe. And while it is difficult to separate out derivative-related revenues, clearly attributable sales have doubled, albeit to a meagre 2 per cent of the total.
Prior to these results, Peel Hunt, which is likely to make modest downgrades, expected full-year pre-tax profits of £43.1m and EPS of 82.9p (from £43.2m and 81.8p in 2011).
| Fidessa (FDSA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,409p | MARKET VALUE: | £521m | |
| TOUCH: | 1,405-1,408 | 12-MONTH HIGH: | 1,823p | LOW: 1,353p |
| DIVIDEND YIELD: | 2.6%* | PE RATIO: | 17 | |
| NET ASSET VALUE: | 350p | NET CASH: | £51m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 137 | 20.9 | 40.5 | 12.0 |
| 2011 | 141 | 21.7 | 42.2 | 12.5 |
| % change | +3 | +4 | +4 | +4 |
Ex-div: 22 Aug Payment: 24 Sep *Excludes 45p special dividend **Includes intangible assets of £84m, or 228p a share | ||||
