Organisations are hungry to harness information and learn ways to lower costs and boost efficiency. Strong demand for data analytics and consulting drove organic revenues up more than a quarter at First Derivatives (FDP) in the year to 29 February. That, combined with a greater proportion of higher-margin software sales, drove adjusted cash profits up 51 per cent to £23.3m.
Lots of repeat work and several multi-year contracts with large investment banks drove sales up 29 per cent in the consulting business. Similarly, organic revenues soared 27 per cent in the smaller software business. That reflected robust demand from banks and insurers for compliance and regulation solutions, previous sales and marketing investments and new customers such as Thomson Reuters. But higher costs, together with a one-off disposal gain of £9.6m last financial year, meant statutory profits fell sharply (see table).
First made three acquisitions to accelerate its expansion beyond its capital markets heartland. It now counts Cisco among users of its digital marketing platform, which crunches online data to predict buying habits. It also partnered with Utilismart to provide meter and sensor analytics to utilities. And it continues to explore joint ventures and sales opportunities in telecoms, pharmaceuticals and other industries.
Broker N+1 Singer expects 2017 adjusted pre-tax profits of £20.4m, giving EPS of 60p (£16.8m and 51.7p in FY2016).
| FIRST DERIVATIVES (FDP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,800p | MARKET VALUE: | £436m | |
| TOUCH: | 1,771-1,799p | 12-MONTH HIGH: | 1,820p | LOW: 1,174p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 54 | |
| NET ASSET VALUE: | 468p* | NET DEBT: | 13% | |
| Year to 29 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 46 | 7.0 | 36.0 | 11.15 |
| 2013 | 57 | 6.2 | 30.2 | 11.50 |
| 2014 | 70 | 7.9 | 34.4 | 12.20 |
| 2015 | 83 | 17.5 | 77.2 | 13.50 |
| 2016 | 117 | 10.4 | 33.3 | 17.00 |
| % change | +41 | -41 | -57 | +26 |
Ex-div: 16 Jun Payment: 15 Jul *Includes intangible assets of £151m, or 625p a share | ||||
