This fine set of reported numbers suggests a fast-growing software start-up, or a company focused on growth through acquisitions. But First Derivatives (FDP) is neither of these. The Aim-listed financial software company now boasts a market capitalisation of over £600m, thanks to a fourfold share price increase since 2012. Plus, the 30 per cent revenue increase in the year to February 2017 was nearly all organic.
The group's Kx software for fast data analytics is used by financial regulators and 19 of the top 20 global investment banks. Revenue from the financial services sector rose 55 per cent to £54m thanks to the addition of both new products and customers. The online marketing world is also coming around to the benefits of Kx and revenue grew 39 per cent to £30.7m in the newly separated 'Martech' division.
And First Derivatives is not stopping at marketing. Management has invested heavily in brand awareness in the pharmaceuticals, transport and 'internet of things' markets, which has helped the group sign new contracts with Purdue, Airbus and Wireless Republic.
Profits were considerably ahead of broker expectations. Investec has therefore upgraded pre-tax profit and EPS forecasts for the year to February 2018 to £22.6m and 65.1p, respectively (up from £20.8m and 61.2p in FY2016). Meanwhile, cash generation was stronger at 105 per cent of adjusted cash profits, from 73 per cent in the previous year.
FIRST DERIVATIVES (FDP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,560p | MARKET VALUE: | £637m | |
| TOUCH: | 2500-2600p | 12-MONTH HIGH / LOW: | 2,765p | 1,450p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 70 | |
| NET ASSET VALUE: | 529p* | NET DEBT | 10% | |
| Year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 57 | 6.2 | 30.2 | 11.5 |
| 2014 | 70 | 7.9 | 34.4 | 12.2 |
| 2015 | 83 | 17.5 | 77.2 | 13.5 |
| 2016 | 117 | 10.4 | 33.3 | 17.0 |
| 2017 | 152 | 12.5 | 36.7 | 20.0 |
| % change | +30 | +20 | +10 | +18 |
Ex-div: 15 Jun Payment: 15 Jul *Includes intangible assets of £163m, or 656p a share | ||||
