First Derivatives (FDP) believes its stellar track record in developing analytics software for banks can be replicated in the telecoms, pharmaceutical and automotive sectors. For shareholders, that strategy is a step into the unknown. What is clear, however, is that the traditional capital markets business continues to motor, even if chief financial officer Graham Ferguson believes there is "so much more" his consultants could do for existing clients.
Financial results for the six months to August were impressive, and sent shares up strongly. Software revenue from financial services clients shot up 87 per cent to £18.3m, supported by a 153 per cent increase in recurring revenues. This, together with a 28 per cent jump in consulting revenues to £35.5m, ballooned adjusted pre-tax profit by 69 per cent to £7.6m, although amortisations and a higher tax rate took the shine off the final profit available to shareholders.
The company has also laid the ground for future heady growth, with new acquisitions and hires boosting its staff count by 50 per cent in a year. Mr Ferguson is pleased with the progress made in new markets such as pharma, although data analytics solutions for non-financial services clients remain embryonic.
Broker Investec expects full-year normalised pre-tax profits of £16m and EPS of 49.5p, against £10.8m and 38.8p in the year to February 2015.
FIRST DERIVATIVES (FDP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,500p | MARKET VALUE: | £352.5m | |
| TOUCH: | 1,475-1,509p | 12-MONTH HIGH: | 1,525p | LOW: 1,094p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 453p* | NET DEBT: | 10% | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 37.5 | 3.7 | 14.6 | 3.3 |
| 2015 | 53.8 | 4.6 | 15.0 | 5.0 |
| % change | +44 | +27 | +3 | +52 |
Ex-div: 19 Nov Payment: 11 Dec *Including intangible assets of £136m, or 580p a share. | ||||
