British capital markets software company First Derivatives completed its financial year on February 28 2013, and has now released full results for the twelve month period, which has proven a good year for the AIM listed company.
Flagship Software – Delta Suite
A 22.5% rise in revenue to £56.5 million compared to the year ended February 2012’s £46.1 million depicts an upward trend in output for the company following its concentration on selling the Delta Suite of products into large banking institutions as well as national regulators such as ASIC’s implementation of the Delta Stream surveillance system, which resulted in two firms being brought to book this year by the Australian regulator.
Acquisition of Niche Business
Acquisitions were on the agenda last year, the firm having purchased three companies in London in order to expand its managed services offering and real time trading infrastructure, requiring an outlay of £3.15 million, and the company is looking forward this year to working with 15 new Consultancy customers with increasing scale enabling bidding on larger projects.
David Anderson, Chairman of First Derivatives, stated publicly: “This year has seen positive growth across the Group’s activities with total revenues up over 22.5%. The investment we have made in all the Group’s activities has been to ensure that we build a robust organisation with a strong asset base and service offering to ensure future growth.”
“With the improvements to the Delta Suite, its increasingly visible revenue stream along with the positioning of our service offerings, we feel that the Group is well positioned to continue to grow” explained Mr. Anderson.
Big Plans, Big Data
Mr. Anderson concluded by speaking about the company’s intention to focus on Big Data, an interesting move which has been on the radar of several financial technology companies within the last seven days alone: “In addition to our traditional pipeline we have a strong pipeline of larger prospects arising from our push into the Big Data arena though given our revenue model these if successful are unlikely to have a material impact in our year to 2014. We remain excited by the potential of our software and consulting offerings and expect to be able to report further progress in the year to 28 February 2014” he said.
Corporate Performance Feb 2012 to Feb 2013 (x1000 GBP)
Total revenue for 2013: £56,469, an increase of 22.5% over 2012’s £46,087
Normalised EBITDA for 2013: £11,553, an increase of 11.8% over 2012’s £10,332
Normalised pre tax profit for 2013: £7,808, an increase of 6.7% over 2012’s £7,315
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Adjusted earnings per share (pence) for 2013: 38.0p, an increase of 1.3% over 2012’s 37.5p
Total dividend for year 2013 (pence per share): 11.50p, an increase of 3.1% over 2102’s 11.15p
– Revenue increased 22.5% to £56.5 million (2012: £46.1 million)
– Software revenues increased 11.4% to £15.0million (2012: £13.5million)
– Transactional and recurring revenue increased 36.2%
– Consultancy revenue increased by 27.1% to £41.5 million (2012: £32.6million)
– Normalised EBITDA(1) increased 11.8% to £11.6 million (2012: £10.3 million)
– Normalised pre-tax profit(1) increased by 6.7% to £7.8 million (2012: £7.3 million)
– Reported pre-tax profit of £6.2 million (2012: £6.9 million)
– Normalised basic earnings per share1 increased by 1.3% to 38.0p per share (2012: 37.5p)
– Final dividend of 8.40p per share, which together with interim dividend of 3.10p amounts to 11.50p for the year (2012: 11.15p)
First Derivatives advised in its pre-close trading statement on April 2, 2013 that the company had made a provision for a potential bad debt relating to a legacy contract from the acquisition of Cognotec which was acquired in February 2010. As this is a non-recurring item the increase in provision has been removed from normalized profit. In addition normalized profit does not include currency translation loss, acquisition costs and effects of associate’s income.
The year ahead is an interesting one for First Derivatives, as the company considers itself well placed to capitalize on big data opportunities, and is also continuing down the path of providing compliance-related solutions. The company recruited James Sanders as Chief Compliance Officer in March this year, and developed an enterprise-level swap execution facility (SEF) in order to comply with the rulings surrounding the trading and clearing of swaps as part of the Dodd-Frank Wall Street Reform Act, demonstrating the importance placed on the US market by First Derivatives.
The SEF registration will be filed with the US Commodity Futures Trading Commission later this year.