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First Derivatives banks growth

RESULTS: First Derivatives - a global software and consulting specialist for the financial services sector - is banking strong growth
November 6, 2012

Financial software and consulting specialist First Derivatives (FDP) has racked up more strong revenue growth at its two business units. Software sales may have risen by a modest 7.2 per cent overall, to £7.5m, but the more important metric to look at - recurring sales for its cloud-based Delta platform - jumped 40.8 per cent.

IC TIP: Buy at 545p

In its consultancy division, revenue climbed 30.7 per cent to £20m. Expanding the client base has helped, but so too has a tighter regulatory squeeze on the financial services sector - meaning more business for First Derivatives. The group has also established a legal services consulting unit, which provides banks with guidance on non-core asset disposal, regulatory compliance and securitisation.

Chief executive Brian Conlon now reckons that First Derivatives is ready to step up a gear. "We're now pitching for larger contracts at larger firms," he says. The acquisition of Cowrie Financial in September has also beefed up the group's presence in Murex technology - a third-party platform to support trading and risk management - which Mr Conlon believes will help win bigger contracts.

Broker Charles Stanley expects full-year adjusted pre-tax profits of £8.5m, giving EPS of 34.69p (from £7.4m and 32.99p in 2012).

FIRST DERIVATIVES (FDP)
ORD PRICE:545pMARKET VALUE:£93.7m
TOUCH:530-560p12-MONTH HIGH:555pLOW: 471p
DIVIDEND YIELD:2.1%PE RATIO:15
NET ASSET VALUE:195p*NET DEBT:59%

Half-year to 31 AugTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201122.43.4016.33.00
201227.63.4716.73.10
% change+23+2+2+3

Ex-div: 14 Nov

Payment: 6 Dec

Includes intangible assets of £30.6m, or 178p a share