Despite catering to the troubled banking sector, and facing contracting IT budgets, trading software specialist First Derivatives managed to record 26 per cent revenue growth in the first half of its financial year, thanks to increasing demand for the company's specialised consultancy offering.
Managing director Brian Conlon says that consultants are deeply integrated into complex financial systems. There are multiple systems – 10 to 20 – within each asset class within a banking institution and as such these are less likely to be cut in times of tightened banking budgets. So, consultancy revenues have continued to rise, growing 39 per cent to £15.4m and now account for more than two-thirds of total sales.
Software revenues have also grown, rising 5 per cent to £7m. Mr Conlon points out that numbers are skewed by a legacy contract and, excluding this, software sales would have increased 42 per cent. Moreover, investments into cloud computing and software-as-a-service offerings have been paying off, with recurring revenues from the business rising 52 per cent. Mr Conlon adds that he is reasonably confident on prospects for the rest of the year, with the company not being "held hostage" to when contracts are being signed.
Analysts at Charles Stanley Securities are expecting full-year pre-tax profits of £7.6m and EPS of 33p (£6.5m and 29p for 2011).
FIRST DERIVATIVES (FDP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 464p | MARKET VALUE: | £76.6m | |
| TOUCH: | 452-475p | 12-MONTH HIGH: | 560p | LOW: 204.75p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 175p* | NET DEBT: | 70% | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 17.7 | 3.24 | 15.6 | 2.90 |
| 2011 | 22.4 | 3.40 | 16.3 | 3.00 |
| % change | +26 | +5 | +4 | +3 |
Ex-div: 9 Nov Payment: 8 Dec *Includes intangible assets of £27.7m, or 168p a share | ||||
