FfastFill H1 revenue jumps
19 November 2012 | 1657 views | 0
The Board of FFastFill plc (LSE: FFA), the leading provider of Software as a Service ("SaaS") to the global derivatives community, announces Interim Results for the six months ended 30 September 2012.
· Group revenue at £10.9m (H1 11/12: £7.3m)
o Organic revenue growth of 14%
o SaaS revenue increased by 21% at £7.4m (H1 11/12: £6.1m)
o SaaS represents 67% of Group revenue (H1 11/12: 84%)
· Adjusted EBITDA* of £2.5m (H1 11/12: £1.0m)
· Adjusted Operating Profit* of £1.4m (H1 11/12: £0.1m)
· Group 12 month order book stands at £22.1m (H1 11/12: £13.6m)
o 12 month SaaS order book stands at £15.5m (H1 11/12: £11.4m)
· The Group has net cash of £2.0m (H1 11/12: £1.1m)
* Before share based payment charges of £0.5m (H1 11/12: £0.1m), acquisition costs of £nil (H1 11/12 £0.1m), exceptional items of £0.2m (H1 11/12: £nil) and amortisation of acquired intangibles of £0.4m (H1 11/12: £nil)
· Secured 9 new mandates across all product lines including 3 new customers
· Extension of functionality across Front, Middle and Back Office as well as Risk Management which is a key regulatory driver for growth
· Extension of geographical coverage across the product suite particularly in Asia
· Expanded offer and connectivity by adding Asian exchanges including Japan
· Delayed Back Office implementations now fully live and delivering service to customers
Commenting on the results FFastFill Executive Chairman, Keith Todd CBE said:
"FFastFill continues to make good progress despite the challenging market environment in which we operate. Thanks to the breadth of our global SaaS offering and our strengthened platform we continue to win new mandates and believe we now have a better, more balanced business. This, coupled with the strength of our pipeline, underpins our current expectations for a successful outturn to the financial year as a whole. We enter the second half in a strong position and we remain focused on delivering value to our shareholders."
For further information please contact:
+44 (0)20 3002 1contact:
+44 (0)20 3002 1900
Keith Todd CBE, Executive Chairman
Hamish Purdey, Chief Executive Officer
Mark Carlisle, Chief Financial Officer
+44 (0)20 7831 3113
James Melville-Ross / Matt Dixon / Emma Appleton / Jessica Liebmann
Canaccord Genuity Limited
+44 (0)20 7523 8000
Simon Bridges / Cameron Duncan
+44 (0)20 7600 1658
Tom Jenkins / Marc Young
The first half of this financial year has seen FFastFill make further, encouraging progress. Our financial performance in the first six months has been strong, with robust growth achieved in both revenue and profitability. This growth is thanks largely to a continuation of the good customer mandate win momentum seen in the prior financial year, across each of our product lines and in all of our markets. As a result, our Software-as-a-Service ("SaaS") revenue stream in particular continues to grow in size and quality, increasing 21 per cent year on year. We exit this first half with a strong total order book of £22.1m and a SaaS order book of £15.5m.
This progress is particularly encouraging given that the market environment in which we operate remains challenging and continues to change shape. Some of the more traditional operators have reduced or reshaped their strategic focus, creating pockets of uncertainty. At the same time however, new entrants to the market and regulatory change have, created new and exciting opportunities for growth. This dynamic has been a characteristic of our markets for some time now and FFastFill continues to navigate it well, supported by the breadth of our customer relationships and by the defined and approved budgets our customers have for IT investment. As a consequence, and in spite of what often appear to be contradictory market signals, FFastFill continues to win new business and make further advances with our technical architecture and deployment model.
Our customer success in this half owes much to the strength of our offering. The SaaS platform that sits at the heart of our product suite remains an attractive proposition in the market. It enables customers to access sophisticated technology and dedicated services quickly and cost effectively. Our position has been strengthened in this half, as a result of the benefits we continue to see from our increased geographic reach and scale as a firm.
We continue to see good demand for implementations of our technology; whereas we may once have sold one product or service to a customer in one geography, we are today seeing an increasing requirement for multi-product implementations, in multiple geographies. Our ability to offer a credible 'front to back' global service, including risk management, is one key driver of this trend. It is also a development that our recent acquisitions have helped us to exploit. Following their successful integrations, WTD Consulting and Spread Intelligence now work within the FFastFill team thereby bolstering our reach and capabilities as well as opening up increased opportunities for cross-selling.
We enter the second half of the year in a strong position, but with clear tasks ahead of us. Some uncertainty still remains, driven by the changes that continue to characterise our market place. It will also be important for us to remain focused on our strategic goals and to maintain the good customer win momentum we have seen this half. However, we retain a firm belief in the strength of our competitive position, supported by the quality of our product offering and the global nature of our reach. These factors, coupled with the strength of our order book and of our pipeline, underpin our current expectations for a successful outturn to the financial year as a whole.
Keith Todd CBE
Chief Executive's Review
I am pleased to report on the good progress FFastFill has accomplished during the first six months of this year. This progress reflects the fact that we are a better, more balanced business owing to the continued investment in our platform and product innovations made over the last few years.
Our industry is undergoing regulatory change and we are well placed to take advantage of those changes due to our architectural and product reach. We continue to successfully navigate these contradictory market dynamics and our SaaS-led offering and competitive product range means we continue to win new mandates, which are increasingly international in scope.
The acquisitions of WTD Consulting ("WTD") and Spread Intelligence made in 2011 are now integrated and, one year on, we are pleased to report both are contributing to the overall performance of the Group and are, in different ways, leading cross selling and new customer business.
FFastFill continues to win
We have continued to grow organically during the period across front, middle and back office and we are seeing a particularly encouraging impetus from the Group's risk management solutions. Our Consulting business also remains strong. The integrated nature of our offering has enabled cross selling as well as new front to back wins and implementations which have included G H Financials Limited amongst others.
During the half, we signed 9 new mandates across all product lines including 3 new customers and we have a solid pipeline as we enter the second half. Additionally, we are seeing an increasing percentage of new customer mandates which involve FFastFill delivering one or more services to a client across two or more geographies.
FFastFill continues to expand on a global level, with particular advances made in Asia, supported by the establishment of a local presence in Hong Kong. Alongside our operations in Singapore and Sydney, this is the third FFastFill location to be opened in the Asia Pacific region enabling us to better leverage growth opportunities in our client base throughout the region. We have also invested in Japanese exchange connectivity as a further driver for growth in the region.
The SaaS model continues to provide key benefits in the deployment of the FFastFill services. The single instance, multi-tenant deployment of our front and middle office and risk management services deliver significant leverage to our deployment capabilities globally. We continue to focus on service quality, which remains of paramount importance, and have invested in further system monitoring tools during the period. Our SSAE16 certification has been achieved as a follow on to the SAS70 in previous years.
We have continued to bolster the geographical reach of our operational deployment during the period. We have expanded into the Chicago Mercantile Exchange colocation facility at Aurora as well as expanding into Italy with a data centre co-located with the Borsa Italiana exchange in Milan. Each of these developments is driven by increasing customer requirements.
o Front Office (Trade Execution Services or TES)
FFastFill has made further progress within the Front Office securing a number of significant mandates across its global network in the half. We announced and deployed BGC Partners as a customer during the period. This was a key win for the front end platform and was the result of an extensive global RFP. To further enhance connectivity, we have also expanded the range of markets which connects FFastFill to real trade orders and trade feeds during the period. This additional flexibility enables our customers to connect to real time data feeds which they can process using our system.
We have also continued to expand our connectivity adding Japanese exchanges and other Asian exchange connectivity during the period. In particular, we have significantly expanded our offering into Japan with the addition of TFX (Tokyo Financial Exchange), TSE (Tokyo Stock Exchange), TOCOM (Tokyo Commodity Exchange) and OSE (Osaka Securities Exchange) to the global network. We have also worked with customers to expand the range of non-exchange liquidity pools available on the platform and have integrated to internal market connectivity in a number of our customers. The ability to quickly connect to these markets demonstrates the flexibility of our platform.
Our multi broker solution has also been very successful during the period with an increase in the number of "Horizon" brokers on our system. The Horizon offering reduces the technical complexity for customers to connect to markets via other customers on our network and has been a key driver for growth during the period.
In addition, Spread Intelligence, a provider of highly sophisticated spread trading tools, which we acquired last year, is now fully integrated into the business bolstering our reach and capabilities particularly in the US. Spread Intelligence has already been responsible for key customer wins and additions to the sales pipeline.
The London Metal Exchange (LME) continues to be a strong market for FFastFill and its acquisition by Hong Kong Exchanges and Clearing Limited (HKEx) is a growth opportunity for us especially in the Chinese market.
o Middle Office
In the Middle Office, we have expanded our geographical coverage by increasing the range of connectivity to clearing houses, as well as complying with exchange initiatives such as LCH Clearnet Universal Clearing Platform, Intercontinental Exchange (ICE 6.0), Chicago Mercantile Exchange (CME), Front End Clearing (FEC+) and the Trident API. We have also expanded functionality for CME based over-the-counter (OTC) products, trade entry in the metals space and increased automation for average price trades.
The changing regulatory landscape has resulted in additional risk management requirements in the Middle Office during the period. As a result, we have added functionality to enable our customers to enforce risk limits as part of the "give-in" acceptance process.
The Prysm Middle Office product, acquired through the purchase of WTD, has further enhanced our capabilities. We continue to integrate the SEALS and Prysm products which will take the best elements of each platform and provide additional functionality for all of our customers. This addition has continued to strengthen our offering particularly in the US market and expand customer reach globally.
o Back Office (Post Trade Processing)
Encouragingly, FFastFill has made strong headway in the Back Office. We have added new mandates to our Back Office customer list in addition to renewals and extensions of existing mandates during the period.
At the time of its Preliminary Results in May 2012, the Group updated the market on two Back Office implementations which had previously been delayed. These implementations are now fully live and are both delivering service to customers. These were major milestones for us and both broke new ground in terms of geography and functionality of the system.
The technology and expertise acquired through the purchase of WTD, are fully integrated into FFastFill's Back Office suite. The addition of WTD's capabilities has also enabled us to complete the customisation required to advance the position of our Back Office platform, "Eclipse" including iDash, in the important US market. Specifically, this has provided customers with advanced reporting technology on our platform.
We have also commenced a performance improvement project using the latest database and hardware technologies which has already significantly increased the scalability of our system. Work on this project is well-advanced and will continue through FY13.
In the half, we also deployed projects for NYSE eFills which are upgrades to existing technology provided to the customer but also includes real time FIX Drop Copy for exchange members. This has added further benefit for customers of the FFastFill suite.
o Risk Management
In the risk management arena, our products continue to leverage our front to back capability as well as complying with the changing regulatory landscape. The integration of real time market data with real time margin calculation provides significant value to our customers. Wins during the period included G H Financials Limited among others.
We have continued to see traction with our risk management product, Orbit Risk Pro. In the period, two customers have contracted for Orbit Risk Pro services. One of these is a new customer win and one is an existing customer which is further evidence of the Group's cross-selling success. These new customer wins demonstrate that the reputation of our Risk Management offering is growing internationally.
We continue to invest in product innovation and believe Orbit Risk Pro is well advanced in terms of responding to regulatory change and protecting our customer firms from unnecessary risk. This is further endorsed by Orbit Risk Pro being awarded "Best New Product From A Technology Firm Award" at The Futures & Options World Awards for Asia 2012 held in Singapore in September 2012.
The ability to risk check customer positions pre-trade has been a key part of our platform for many years. We are pleased to report that FFastFill's fully integrated Straight Through Processing ("STP") already in place is compliant with the Commodities Futures Trading Commission Rule 1.73, which came into effect on 1 October 2012. This new regulatory requirement has provided an opportunity for us to showcase our capabilities.
During the period we integrated a team of experts in the provision of Microsoft Dynamics GP & CRM tools. It is our intention for this team to provide our existing customer base with greater Management Information Systems and analysis capabilities. We are currently delivering this capability to our first customer and the pipeline of additional opportunities is strong.
On behalf of the Board, I would like to take this opportunity to thank all of our staff who have contributed significantly to the success we have enjoyed during this period.
Our strategic priorities remain unchanged. Regulatory change is helping to drive additional customer requirements and we are well positioned with geographic and architectural reach in order to generate greater returns in the years ahead.
We are focused on our strategic goals and the investments we have made in both the platform and acquisitions over recent years means FFastFill is a better, more balanced business. We will continue to work hard to increase the scope and scale of the firm. We enter the next six months with a solid pipeline of opportunities and expect to maintain the good customer win momentum we have seen this half.
Whilst some uncertainty still remains, we retain a firm belief in the strength of our competitive position, supported by the quality of our product offering and the global nature of our reach. These factors, coupled with the strength of our order book and of our pipeline, underpin our current expectations for a successful outturn to the financial year as a whole.
Chief Executive Officer
Revenue and Gross Profit
Revenue for the six months ended 30 September 2012 increased by 51% to £10.9m (H1 11/12: £7.3m). Excluding revenue from the WTD Consulting, Inc business ("WTD") acquired in November 2011, organic revenue growth was 14%. SaaS revenue grew organically by 21% to £7.4m (H1 11/12 £6.1m). SaaS revenue now represents 67% of total Group revenue (H1 11/12 84%) which now includes Consulting and additional Software income generated by WTD.
Customer wins during the period have further strengthened the twelve month order book which now stands at £22.1m (H1 11/12: £13.6m, FY 11/12: £20.7m) of which £15.5m (H1 11/12: £11.4m, FY 11/12 £13.9m) is derived from SaaS.
The Group's gross margin has decreased to 80% (FY 11/12: 88%) as a result of the lower margin WTD Consulting business.
EBITDA and Operating Profit
Adjusted EBITDA* for the period was £2.5m (H1 11/12: £1.0m). Adjusted operating profit* was £1.4m (H1 11/12: £0.1m).
Total operating expenses in the period before acquisition costs, exceptional items and share based payments were £6.2m (H1 11/12: £5.4m). This increase is due entirely to WTD operating costs. Cost optimisation actions taken in H2 11/12 enabled us to continue to invest in additional infrastructure without increasing our cost base organically.
Operating profit was £0.2m (H1 11/12: Loss of £0.1m) and is stated after charging share-based payment charges, exceptional items, acquisition costs and amortisation of acquired intangibles.
Share based payment charges in the period were £0.5m (H1 11/12: £0.1m). The year on year increase of £0.4m arose as a result of share award schemes implemented during H2 11/12 and the inclusion of the cost of share-based contingent consideration for WTD that is being accounted for as remuneration over the five year earn-out.
Exceptional items of £0.2m (H1 11/12: £nil) comprise onerous lease costs incurred in respect of the integration of the WTD business in Chicago. Amortisation of acquired intangibles of £0.4m (H1 11/12: £nil) arose as a result of the Spread Intelligence and WTD acquisitions in FY 11/12.
Profit Before Tax
Profit before tax was £0.2m (H1 11/12: Loss of £0.1m).
Profit After Tax
Profit after tax was £0.1m (H1 11/12: Loss £0.1m). The Group continues to recognise a deferred tax asset of £1.5m (H1 11/12: £1.6m) in respect of tax losses accumulated in previous years.
As at 30 September 2012 the Group was debt free and had net cash of £2.0m (30 September 2011: £1.1m, 31 March 2012: £2.2m). The net cash outflow for the period was £0.2m (H1 11/12: outflow £2.2m).
Cash in-flow from operating activities was £0.7m (H1 11/12: outflow of £1.6m). This included a reduced working capital outflow compared to the prior year of £1.3m (H1 11/12: outflow of £2.6m).
During the half, the Group has continued to invest in its infrastructure and product set to support revenue growth and, consequently, incurred £0.3m of capital expenditure (H1 11/12: £0.3m) and £1.1m (H1 11/12: £1.1m) of capitalised investment in product development.
Chief Financial Officer
* Before share based payment charges, exceptional items, acquisition costs and (in the case of adjusted operating profit) amortisation of acquired intangibles as set out in the condensed consolidated statement of comprehensive income