Royalblue spotlights acquisitions and new products as foundation for growth

Royalblue spotlights acquisitions and new products as foundation for growth

Royalblue, a supplier of trading systems to financial institutions, is forecasting modest growth through 2003 after keeping revenues and profits in line for the year ended 31 December.

Ropyalblue shares are up 11% on the day, trading at 237.5 pence by mid-day from an overnight close of 212.5 pence. The City generally liked the figures, with revenues and profits from continuing operations showing a marginal one per cent increase at £57 million and £8.2 million respectively. While total revenue fell 14%, profit before tax more than trebled to £13.1 million, boosted by an exceptional gain of £3.7 million from the sale of a minority holding in ICIS Technology and a £0.5 million loan repayment from Touchpaper Ltd.

Cash balances nearly doubled to £22.7m, and the group remains debt free, providing a stable platform for growth and/or acquisitions. Chief executive Chris Aspinall, comments: "The financial strength of the group gives us a strong position to benefit from investment opportunities that arise because of the sustained downturn whether these take the form of development of new products or acquisition activity".

Aspinwall points to the continued shift in the profile of royalblue's business with a reduction in consultancy revenue of just under seven per cent more than compensated for an 85% increase in combined fidessa rental fees and fidessaNet service fees. As a result, recurring revenues continue to represent an increasing proportion of business at 39%, up from 26% last year.

Geographically, revenues in the UK dropped by 11% to £26.5 million while Asia saw a two per cent fall to £8.3 million. Business in Europe was up 72% to £3.8 million and North America rose 17% to £18.5m.

The US market, which now accounts for 32% of all revenues, is seen as a strong source of potential growth. In 2002, royalblue signed agreements worth a combined total of nearly $20 million over five years with Bear Stearns and Royal Bank of Canada for US domestic trading systems. Of eight new fidessaNet deals signed last year, five came from the US.

Aspinwall says the company continues to invest in R&D, with a number of new products slated for launch later this year. These include the fidessa workstation, a major new development which will aim to provide users with a cost-effective service for real-time prices, historic prices, VWAP, news, company fundamentals, FTSE and world indices as well as trading functionality, access to RSPs (Retail Service Providers) and connectivity to order flow.

Royalblue says the fidessa workstation will address an important segment of the market where the principal requirement is for market data and occasional transactional capability. Potential customers will be additional users within existing fidessa and fidessaNet sites who do not require access to the full fidessa system, users within the retail broking community and also customers on the buy-side. The workstation will include support for sending and receiving FIX based order flow via the fidessaNet order routing network.

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