Fidessa sees 'solid growth' as firms look towards new tech

Trading and investment management software and services provider Fidessa reported solid growth it its transforming markets in its final results on Monday, with revenue rising 7% to £353.9m.

The FTSE 250 company’s profit before tax was ahead 2% at £50m, while its adjusted profit before tax surged 10% to £54.3m in the 12 months to 31 December.

Profit after tax was precisely in line with 2016 at £35.7m, although adjusted profit after tax was ahead 11% at £40.4m.

The company’s diluted earnings per share slipped 1% to 91.7p, while adjusted diluted earnings per share were up 11% at 103.9p.

Fidessa confirmed a final dividend per share of 29.7p - up 5% on the prior year - while special dividends per share totalled 50p, the same as in 2016.

At year end, cash stood at £92.4m, a 3% decline in the prior comparative period.

On the operational front, Fidessa’s board said the solid revenue growth was seen across all regions, with a “good international spread” as 66% of total revenue was accounted for outside of Europe.

It said it continued its strong growth in multi-asset revenue with 10 new derivatives deals signed, adding that recurring revenue now represented 88% of total revenue.

“2017 has been an important year for the financial markets as they prepared for the new MiFID II regulations which are finally coming into force after many years of discussion and debate,” commented Fidessa chief executive Chris Aspinwall.

“This change is likely to result in a significant transformation to the way in which financial markets operate, with requirements for increased transparency and efficiency creating greater need for automation of global workflow and much tighter integration across a range of technologies.

“Fidessa has worked hard during 2017 to position itself to benefit from these changes.”

Aspinwall said that was reflected in a solid financial performance for 2017 as a whole, with a strong and developing pipeline, combined with increasing capacity as the company moved into the 2019 financial year.

That increased capacity resulted from a gradual reduction in the amount of work required to support regulatory changes, he said, and also the improved contribution of Fidessa's derivatives business.

“We will adopt the new IFRS15 accounting standard in 2018 and expect it will have less than a 1% impact on reported revenue for 2018.

“Overall, we expect to see similar levels of constant currency growth in 2018 to those seen during 2017.

“For 2019, the increased capacity is expected to result in a greater ability to invest in further opportunities as the markets develop, or if the right opportunities are not clear, deliver an increase in margin.”

Looking further ahead, Aspinwall said it was clear that technology would play a greater role in financial markets as the impact of new regulation took effect.

He added that it was also clear that increasing numbers of firms were going to need assistance in building out platforms for the future, with Fidessa already seeing evidence of that within its pipeline.

“We believe that there are few vendors who have the expertise and scale of infrastructure, coupled with the technology focus required to support this activity.

“As a result, we believe Fidessa is well positioned for this new environment and able to benefit by replacing in-house platforms, other weaker vendors and also through specific small consolidation opportunities.”