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Fidessa posts strong first half results

03 August 2009  |  792 views  |  0 Source: Fidessa

Fidessa reports strong growth despite unpredictable markets.

 

2009

2008

Change

At constant currency

Revenue

£116.0m

£85.0m

+36%

+19%

Adjusted operating profit*

£15.7m

£11.2m

+40%

+22%

Operating profit

£12.6m

£8.9m

+42%

 

Adjusted diluted earnings per share*

29.7p

22.5p

+32%

 

Diluted earnings per share

23.2p

53.1p

-56%

 

Dividend per share

10.0p

7.5p

+33%

 

*Adjusted where relevant to remove the effect of Touchpaper gains, acquisition intangibles amortisation, patent dispute settlement, Lehman receivable write off and notional interest charge

Highlights for the period ended 30th June 2009:

  • Revenue up 19% and adjusted operating profit up 22%, both at constant currency.
  • Recurring revenue now accounting for 81% of total revenue.
  • Cash of £25m and no debt.
  • User numbers growing and transaction volumes increasing over network.
  • New contract wins across buy-side, sell-side and central markets.

Strong growth in consultancy revenue.

Commenting on these results and current trading, Chris Aspinwall, Chief Executive, said: 'Fidessa has delivered high growth during the first half of 2009. This growth has benefited from the weakness of sterling during the first half compared to the prior year but even at constant currency the underlying growth rate is still strong.

Generally, stability has started to return to the market during the first half of 2009 although cost pressure on some of our customers, combined with volatile exchange rates, are still making conditions difficult to predict. Overall, we have been able to make good progress across both existing accounts and new business lines, particularly where some of our customers are now gearing up to take advantage of the opportunities that are arising as a result of the improving markets. However, where customers are experiencing challenging conditions we are seeing some impact as these customers look to reduce their costs or explore strategic options.

In the short-term, the impact of structural changes within the industry, coupled with movements in exchange rates, makes the future difficult to predict. However, based on what we are currently seeing, we believe that we can deliver strong growth for 2009 as a whole, although we do not believe that the overall rate of growth for 2009 will be as high as that seen during the first half particularly when the impact of recent currency movements is taken into account.

Overall, we continue to view the changes that are occurring in the markets positively and believe that they will generate further opportunities for us over the longer term. We believe that in the current market conditions, it is vital that we maintain our strategy of investment in the business as we look to assist our customers in developing their businesses in new ways throughout all the regions in which we operate.'

Financial Summary

For the six months to 30th June 2009 strong growth in revenue has been achieved, up 36% to £116.0 million, from £85.0 million for the same period last year. The growth has been assisted by sterling being weak in the early months of the period although this benefit has diminished towards the end of the period. At constant currencies the revenue growth was 19%. The strong growth continued to be driven by the momentum in recurring revenue which increased to £93.9 million (2008: £65.5 million), now representing 81% of total revenue. Growth continued to be strong across all regions and consultancy revenue continues to be robust with an increase of 14% over the same period last year. The deferred revenue in the balance sheet at the period end was £38.1 million, representing 16% of annualised revenue that can be recognised in future months.

Looking at the breakdown of recurring revenue across our areas of focus, indicative values for the first six months are that £59 million (2008: £40 million) arose from sell-side trading, £7 million (2008: £6 million) from buy-side trading, £18 million (2008: £12 million) from connectivity and £10 million (2008: £8 million) from market data.

Strong growth in operating profit was also achieved, up 40% to £15.7 million (2008: £11.2 million), being an operating margin of 13.5% (2008: 13.1%). This has been measured before the amortisation of acquired intangibles and with the settlement of the patent dispute removed from the comparable period. The unadjusted operating profit was up 42% to £12.6 million (2008: £8.9 million). In order to be more prudent and consistent, the estimated lives of the complete technology and marketing related intangible assets arising from the LatentZero acquisition have been reduced and as a result the amortisation of acquisition intangibles has increased to £3.0 million (2008: £1.3 million).

In 2008 the disposal of the investment in Touchpaper provided a material one-off gain and this, combined with the reduction in interest rates on bank and other deposits, accounts for the decrease in finance income to £0.1m (2008: £12.9 million).

The effective tax rate was 35.2%, being a small improvement on the underlying rate of 35.5% for 2008. The cash tax rate continues to be materially lower than the charge in the income statement and was 31.3% in the period.

Diluted earnings per share, adjusted to exclude the amortisation of acquisition intangibles, Touchpaper gains, patent dispute settlement and notional interest charge, which the directors believe provides a better indication of the underlying performance of the business, was 29.7 pence for the period, an increase of 32% from 22.5 pence for the first half of 2008.

The business continues to generate cash from operations and the operating cash conversion rate was 170%. The cash balance decreased to £25.0 million from £33.1 million at the year end as the final part of the contingent consideration from the LatentZero acquisition was paid and the final dividend for 2008 was paid. Capital expenditure in the period was 7% of revenue.

The interim dividend has been increased by 33% to 10.0 pence and will be paid on 28th September 2009 to shareholders on the register at the close of business on 28th August 2009, with an ex-dividend date of 26th August 2009.

Read the full statement here:

» Download the document now 84.6 kb (PDF File)

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