Royalblue raises first half revenues; predicts moderate growth for 2004

Royalblue raises first half revenues; predicts moderate growth for 2004

UK trading technology vendor royalblue is predicting modest growth for 2004 after it posted a two per cent increase in turnover and three per cent rise in operating profit for the six months ending 30th June 2004.

Revenue has increased to £28.5m, from £27.9m for the same period last year. The group reported operating profit of £3.6m, up from £3.5m in 2003, representing a slightly improved operating margin of 12.7% (2003: 12.6%).

Cash balances stand at £22.2m after the company returned £8.0m to shareholders through the special dividend declared at the end of 2003.

Royalblue says it has signed nine new customers to its hosted Fidessa offerings in Europe and the US, including French banking group Societe Generale which has signed a deal which is expected to be worth £5.0m over three years.

For H1 2004, royalblue says recurring revenue, which was up 28% to £17.4m, now represents 61% of total revenue. In particular, revenue growth within its hosted Fidessa services was a strong 75% - now up to 21% of the total. However, this increase was largely offset by a continued downturn in consultancy revenue which dropped 30% to £9.4m and now represents just 33% of total revenue.

Royalblue says there are signs that consultancy revenue has reached a turning point with a marked improvement in June and signs that it will stabilise in the second half of the year.

In a trading statement, Chris Aspinwall, chief executive, royalblue, says: "We expect that trading conditions for us will continue to be challenging for the remainder of 2004. However, the improving position in consultancy coupled with continued growth in recurring revenue means that we still expect to see modest growth in both revenue and profit for the year as a whole."

In the long term, Aspinwall says the company remains committed to its investment programme and developing opportunities in trading, market data and global connectivity services. But he adds: "The nature of revenue from these new initiatives, which are recurring monthly rental and only recognised after software has been implemented and is in operational use, means we would only expect to see a modest contribution to revenue from these streams during 2005."

By mid-day, royalblue shares were down 10 pence (2.10%) to 465 pence.

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