Headline declines at Fidessa (FDSA) suggest a troubling first half for the financial software group. But they're largely the result of currency movements, as Fidessa earns over half its revenues outside of Europe. Strip those out and the group recorded top-line growth and a 5 per cent rise in operating profit to about £20m.
Those gains reflect a gradual return of confidence to financial markets, where software budgets have been depressed since the recession. Fidessa estimates that consolidation, restructuring and closures among its customers eroded its sales by 3 per cent - an improvement from last year's 5 per cent fall and a trough of 8 per cent.
Softness in Europe was largely offset by strong trading in Asia and the Americas, where underlying sales rose 11 and 6 per cent, respectively. Fidessa also made progress towards becoming a multi-asset class software provider, with sales of its new derivatives software doubling to make up 6 per cent of total recurring revenue. And its consultancy business, which is often viewed as a weather vane for client spending, grew sales by 6 per cent.
Deferred revenues slumped 10 per cent to £45m, but management tells us that isn't unusual in the first half. And the total number of users remained flat at around 24,000, as its smaller customers continued to restructure.
Analysts at Credit Suisse expect pre-tax profit of £42.4m, giving EPS of 82p, up from £41.8m and 81.8p.
| FIDESSA (FDSA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,044p | MARKET VALUE: | £777m | |
| TOUCH: | 2,020-2,054p | 12-MONTH HIGH: | 2,672p | LOW: 1,808p |
| DIVIDEND YIELD: | 1.8%† | PE RATIO: | 24 | |
| NET ASSET VALUE: | 364p* | NET CASH: | £57.8m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 139 | 20.5 | 40.6 | 12.5 |
| 2014 | 137 | 19.7 | 38.6 | 13.1 |
| % change | -2 | -4 | -5 | +5 |
Ex-div: 20 Aug Payment: 15 Sep *Includes intangible assets of £89.9m, or 237p a share †Excludes special dividend of 45p in 2013 | ||||
