New business lines encourage positive outlook at royalblue

New business lines encourage positive outlook at royalblue

UK dealing systems vendor royalblue is forecasting a positive outlook for the year ahead after posting solid gains in 2006.

The vendor reported a 15% rise in pre-tax profit to £11.3m for the year to December compared with £9.8m a year ago, on revenue of £74.2m up 24% from £59.8m. Recurring revenue from annual license and service fees for the year was up 33% - representing 67% of total turnover - with consultancy revenue up 22%.

Chris Aspinwall, chief executive comments: "Overall, we expect that the strong trading conditions combined with the sales resulting from our investment programmes will result in growth levels for 2006 broadly similar to those we have seen this year."

He says the strong progress in the core business has been reflected in sales of seven enterprise Fidessa systems and 19 new hosted Fidessa deals. The total Fidessa user base now exceeds 8000 screens, he adds, with further opportunities for growth arising from regulatory changes coming into the markets such as Regulation National Market System (RegNMS) in the US and the Markets in Financial Instruments Directive (MiFid) in Europe.

Royalblue is also beginning to make progress in new market areas, says Aspinwall. The group's market data services are being used at 2500 dealing positions, and the move into the buy-side has been rewarded with 21 new clients signed since May.

The vendor's efforts to develop integrated derivatives trading alongside cash markets connectivity is also on schedule for delivery in the first half of 2006, with one client prospect signed up for initial testing.

While the outlook is positive, Aspinwall cautions against unrealistic expectations: "The amount of work to be completed under our investment programmes remains substantial and therefore we do not anticipate any significant change in the operating margin."

By mid-morning, shares in the vendor had slipped slightly after an early spike to stand five pence down from the overnight close at 837.5 pence, still well ahead of a year low of 446 pence.

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