The share price of financial trading software group Fidessa (FDSA) has soared 45 per cent during the latest market rally but these mediocre half-year results should bring lofty expectations of a sustained improvement in sales back to earth. Revenues and profits slipped marginally year-on-year - even compared with the weak first half in 2012 - while chief executive Chris Aspinwall admitted that "…we have seen some continuation of the attrition and price pressure we saw last year".
Granted, the decline appears to be levelling out somewhat. Revenues from traditional trading platforms fell 5 per cent year-on-year due to further consolidation, closures and pricing pressure across Fidessa's customer base. This was a touch better than the 7 per cent fall experienced in 2012. Cash generation also remained strong with recurring revenue still accounting for 85 per cent of total revenue. Meanwhile, revenues from Fidessa's new derivatives platform increased sharply during the period and currently represent 4 per cent of the total revenue, up from 2 per cent a year ago.
Analysts at broker Jefferies expect Fidessa to make further material derivatives contract wins during the next 12 to 18 months, building on the recent landmark wins at Citi, NewEdge and Nomura. They forecast adjusted EPS of 83.6p in 2013 and 88.9p in 2014 (from 82p in 2012).
FIDESSA (FDSA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,031p | MARKET VALUE: | £758m | |
| TOUCH: | 2,021-2,038p | 12-MONTH HIGH: | 2,145p | LOW: 1,224p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 359p* | NET CASH: | £50.3m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 141 | 21.7 | 42.2 | 12.5 |
| 2013 | 139 | 20.5 | 40.6 | 12.5 |
| % change | -1 | -6 | -4 | |
Ex-div: 14 Aug Payment: 16 Sep *Includes intangible assets of £87.6m, or 235p a share | ||||
