Fidessa confident despite Brexit uncertainty

Fidessa posted its interim results for the six months to 30 June on Monday, with its board describing solid revenue growth, and growth across all business lines and regions.

Revenue grew 9% to £158.3m during the period, or 4% at constant currencies, while operating profit rose 15% to £22m, or also 4% at constant currencies.

Pre-tax profit was up 14% to £22.2m, with diluted earnings per share rising 9% to 40.9p.

The FTSE 250 firm claimed to have a good international spread, with 63% of total revenue accounted for outside of Europe.

That international spread was also providing stability against uncertainty as a result of Brexit vote, the board claimed.

Fidessa said it was seeing an increasing opportunity for new services as markets enter a new phase, as well as reporting strong growth in multi-asset revenue as its derivatives programme continues.

Recurring revenue represented 86% of total revenue during the period.

The company also posted strong cash generation, with £66.9m cash balance after dividend payments of £27.0m - an increase of 9% on the same period last year.

Fidessa’s board declared an interim dividend increase of 9% to 14.3p.

“During the first half of 2016, despite the challenges our customers have faced, the new phase of recovery within our end markets has continued with structural and regulatory changes starting to have an impact,” said chief executive Chris Aspinwall/

“This has resulted in new opportunities and high levels of new business activity which, when combined with the weakness of sterling, have enabled us to deliver strong growth during the first half.”

Aspinwall said that as anticipated in the 2015 preliminary results announcement, Fidessa expects to see an increased headwind in 2016 as a result of consolidations and closures within its customer base.

“However, whilst we expect there will be further consolidations and closures in 2016, on the basis of what we can currently see, we believe that this headwind will start to reduce next year.”

Moving into the second half, Fidessa’s board was continuing to see structural and regulatory drivers within the market, but warned that there is clearly a degree of uncertainty as a result of the Brexit vote.

“Although it is too early to say what the wider implications of Brexit will be and how this might affect customer activity, we are not currently expecting that there will be any impact on the changing regulatory environment,” Aspinwall explained.

“In particular, we expect that MiFID II will be introduced as planned across Europe and that, regardless of any Brexit negotiations, it will also be implemented in the UK.

“We continue to believe that we are well positioned to benefit from opportunities that will arise as a result of these changes in regulation.”

Fidessa added that with over 60% of our revenue derived from outside of Europe, it remained well positioned to benefit from any weakness in sterling, providing further support for strong cash generation and its dividend policy.

“Overall, we expect that 2016 constant currency growth will be around the levels that we have seen in the first half, with the possibility of further headline gains if sterling remains at its current level,” Aspinwall explained.

Looking further ahead, Fidessa’s board said it is clear the Brexit vote will create some uncertainty for a period, although it also believes it are entering a period where opportunity is returning to the market.

“We expect to continue to make progress with our multi-asset initiative and will investigate the possibility of extending our asset class coverage further,” Aspinwall commented.

“We believe that across all asset classes, the market is moving towards the increased use of service-based solutions and that few vendors have both the depth of applications and the scale of infrastructure needed to deliver these solutions.

“We are committed to playing an increasingly important role in the markets as customers focus on efficiency, transparency, compliance and performance, and expect that this will provide us with significant opportunities for further growth,” Aspinwall said.