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Final Results

Date : 05/28/2012 @ 2:01AM
Source : UK Regulatory (RNS & others)
Stock : First Deriv. (FDP)
Quote : 972.5  0.0 (0.00%) @ 10:05AM
First Derivatives share price Chart

Final Results

TIDMFDP

RNS Number : 1858E

First Derivatives PLC

28 May 2012

First Derivatives plc

("First Derivatives" the "Company" or the "Group")

Final Results

First Derivatives (AIM: FDP.L, ESM:FDP.I), a leading provider of software and consulting services to the capital markets industry, today announces its results for the twelve months ended 29 February 2012.

Financial Highlights:

   -     Total revenue increased 25.4% to GBP46.1 million (2011: GBP36.7 million) 

- Software license revenue increased 7.6% to GBP13.5 million (2011: GBP12.5 million)

   - Transactional and recurring revenue increased 102.2% to 44% of software revenues (2011:    23%) 

- Consultancy revenue increased by 34.7% to GBP32.6 million (2011: GBP24.2million)

   -     EBITDA increased 21.8% to GBP10.9 million (2011: GBP8.9 million) 

- Normalised pre-tax profit increased by 25.0% to GBP7.3 million (2011: GBP5.9 million) after adjusting for associate and currency translation

   -     Pre-tax profit increased by 7.0% to GBP6.9 million (2011: GBP6.5 million) 
   -     Normalised basic earnings per share increased by 31.1% to 37.5p per share (2011: 28.6p) 
   -     Fully diluted earnings per share increased by 13.1% to 32.8p per share (2011: 29.0p) 

- Final dividend of 8.15p per share, which together with interim dividend of 3.0p amounts to 11.15p for the year (2011: 10.15p)

Business Highlights:

- Growing customer base with software and services being provided to over 91 different investment banks, exchanges, brokers and hedge funds

   -     New initiatives to position consulting divisions for global trends 
   -     Launch of Capital Markets Legal services stream 
   -     Launch of Vendor Managed Services 
   -     Launch of Data Management Team 

- New software releases to enhance "Big Data" and FX offerings major wins achieved including Thomson Reuters, SGX, ANZ and Direct FX

   -     Significant investment into staff, headcount at year end 662 (2011 year end: 524) 

- Earnings visibility improving as revenue contribution from transactional / recurring revenue increases

David Anderson, Chairman of First Derivatives commented:

"This year has seen continued strong growth across the Group's activities with total revenues up over 25%. As the economic recovery has been taking a fragile hold we have continued to make a substantial investment in the development of all the group's activities. The goal of this investment has been to ensure that we build a robust organisation with a strong asset base and service offering to ensure future growth. We expect the market in coming years will continue to be challenging as the full effects of budget constraints, regulation and globalisation continue to impinge our customers. With the improvements made to the Delta suite and its revenue stream and the positioning and improvements to our service offerings, we feel that the group is well positioned to continue to grow. We continue to have a strong pipeline of prospects and have made a strong start to the current year and expect to be able to report further progress in the year to 28 February 2013."

Enquiries:

 
 First Derivatives plc               +44(0)28 3025 2242 
 Brian Conlon, Chief Executive       www.firstderivatives.com 
 Graham Ferguson, Chief Financial 
  Officer 
 
 Charles Stanley Securities 
  (Nominated Adviser)                +44 (0)20 7149 6000 
 Russell Cook 
 Carl Holmes 
 
 Goodbody Corporate Finance 
  (EMI Adviser)                      +353 1 667 0420 
 Diane Hodgson 
 Linda Hickey 
 
 Walbrook PR                         +44 (0)20 7933 8780 
 Fiona Henson                        fiona@walbrookpr.com 
 Paul Cornelius                      paul@walbrookpr.com 
 
 Stakeholder Communications          +44 (0) 2890 339949 
 John Hart 
 Jonathan King 
 

About First Derivatives

First Derivatives is a global provider of software and consulting services to the financial services industry. With almost 16 years experience working with leading financial institutions, it continues to deliver technologically advanced products and services that anticipate and respond to the evolving needs of global capital markets.

First Derivatives currently employs around 700 people worldwide and counts many of the world's top investment banks, brokers and hedge funds as its customers. It has operations in London, New York, Stockholm, Shanghai, Singapore, Toronto, Sydney, Dublin, Newry and Hong Kong.

For further information please visit www.firstderivatives.com

Chairman's Statement

I am pleased to report another year of continued growth in profitability for the group, the sixteenth year of continued progression. This achievement is all the more satisfying given the market backdrop where we are seeing market trends that are significantly altering the economics of the financial services industry. In response to these market opportunities and building upon prior years, we have continued to implement the Board's strategy of continued investment into the group's technology, infrastructure and operations in order to create a platform for continued success and future growth. Our ability to generate continued growth in this challenging market, while implementing our investment growth strategy, demonstrates the strength of the organisation.

Financials

Revenues for the year ended 29 February 2012 increased by 25.4% to GBP46.087 million from GBP36.740 million in the previous year. Normalised pre-tax profits (after adjusting for currency translation and associate) increased by 25.0% to GBP7.315 million compared to GBP5.852 million in 2011 reported pre-tax profits increased by 7.0% to GBP6.947 million (2011: GBP6.495 million). Normalised basic earnings fully diluted earnings per share increased by 40.2% to 34.2p per share (2011: 24.4p).

Dividend

The group continues to generate strong operating cash flow and this, along with our retained cash at the year end, allows the Board to recommend a final dividend of 8.15p per share which together with the interim dividend of 3.0p per share paid on 8 December 2011, totals 11.15p and is covered approximately three times by earnings. This will be paid on 6 July 2012 to those shareholders on the register on 8 June 2012. The shares will be marked ex-dividend on 6 June 2012.

Software

Software sales at GBP13.458million (2011: GBP12.511 million) were up 7.6% on the previous year. While this revenue stream increased it does not reflect the progress made in revenue generated from the Delta Suite. Transactional and recurring revenues were up 102.2% on the previous year showing the significant progress achieved. This was partly offset by a reduction of 54.1% in one off license fee income and a reduction of 68.9% in technology income stream (Auto Deal+) obtained as part of the acquisition of "Cognotec" in 2010.

The technical challenges are extensive in the capital markets particularly when dealing with complex instruments on a global scale. This complexity, in combination with continually increasing data volumes and the subsequent IT processing requirements, create many challenges for the industry. Our products are all developed on the common Delta technology platform which is specifically engineered to meet the complex calculations and large volume of data issues that exist in the capital markets sector. We also have made a significant investment in establishing the physical infrastructure necessary to operate the software in the 'cloud' or on a Software as a Service model ("SaaS") to meet the growing trend and desire of our clients to operate this model. This allows clients to seek economies of scale by outsourcing elements of their infrastructure, while removing the need for internal expertise in the support of the software. The investment in expanding this capability enables many of our products to be sold under annual license or transactional revenue based pricing models. Both models allow us to secure a continued and visible stream of software revenue.

Sales success has been achieved across all our key products in the year with contract wins for our complex event processing ("CEP") engine (Delta Stream), algorithmic trading engine (Delta Algo), data management engine (Delta Data Factory) and FX trading platform (Delta Flow). As our customer base has expanded, our opportunity to cross sell to our consulting and software clients has been enhanced. At the year-end we concluded the sale of our CEP, Algorithmic engine and FX platform to one customer and are in further discussions with a number of other existing customers for the provision of other products within our suite.

We have a healthy pipeline of prospects within our specific domain and are actively looking for partners to help bring the products to new markets and new industries. This continuing investment in our platform, increasing the channels to market and the successful deployment of our solutions, allied with our flexible licensing and service model, gives us confidence in our ability to deliver continued growth in software revenues.

Consulting

Consulting revenues increased 34.7% to GBP32.629 million from GBP24.229 million in the previous year. It has been another year of continued growth across the division, both in our client base, expansion of the number of assignments undertaken with new and existing customers and our penetration into the global market place. The key to this continued growth continues to be the quality of our people, our commitment to training and the quality and the flexibility of our service.

Selling services to the market continued to be a challenge this year with ongoing regulatory changes, continued globalisation challenges, increasing complexity, fast moving technology innovation and margin pressures affecting our customer base. To meet the challenges facing our customers, we have continued to invest in our service offerings, launching three major initiatives in the period, in addition to the continual reinvestment and refinement of our existing portfolio. We undertook a new legal services initiative aimed at providing resources to banks in areas such as non-core asset disposal, regulatory compliance and securitisation, where personnel with a combination of IT, finance and legal skills are in short supply. Secondly, we have launched a strategic vendor service practice focused on the delivery of global, large scale implementation and support services for leading third party trading technology platforms. Finally we have formed a dedicated data management team, bringing together a group of highly experienced and respected professionals from the data management industry. Market reaction has proven positive with a number of engagements already underway and we expect that these new initiatives combined with continued development of existing services will have the company well positioned in the changing market.

We undertake complex assignments for our clients and our inherent knowledge of their systems leads to repeat business from upgrades and ongoing development. This repeat recurring business model is a key focus for us. We are able to achieve this by our ability to ensure that our services are integrated into our customers' strategy and operations assisting them to streamline their services and products. We do this while ensuring we provide the relevant market or domain expertise along with a competitive cost operating model to ensure that we maximize the recurring revenue stream.

Accommodation

No further acquisition of employee residential accommodation has been made. Disposal of four individual properties was made in the year with a resulting profit on sale of GBP528k. At year end three properties were listed for sale with selling agents and have been classified as such in the accounts. We will continue to dispose of properties when suitable profitable opportunities arise. The remaining properties held by the group have a carrying value of GBP15.524 million and at the year-end were independently valued by external valuers at GBP18.915 million on an open market basis.

Outlook

This year has seen continued strong growth across the Group's activities with total revenues up over 25%. As the economic recovery has been taking a fragile hold we have continued to make a substantial investment in the development of all the group's activities. The goal of this investment has been to ensure that we build a robust organisation with a strong asset base and service offering to ensure future growth. We expect the market in coming years will continue to be challenging as the full effects of budget constraints, regulation and globalisation continue to impinge our customers. With the improvements made to the Delta suite and its revenue stream and the positioning and improvements to our service offerings, we feel that the group is well positioned to continue to grow. We continue to have a strong pipeline of prospects and have made a strong start to the current year and expect to be able to report further progress in the year to 28 February 2013.

I would like to thank Brian Conlon and his team for making it another successful year for the group.

David Anderson

Chairman

CHIEF EXECUTIVE'S STATEMENT

I am pleased to report that First Derivatives has had another successful year, despite continuing uncertainty in the financial markets resulting largely from the European sovereign debt crisis. We have continued to expand and consider that we are well positioned to continue to grow our operations and customer base.

Review of activities

First Derivatives sells software products to the capital markets and provides a range of associated consulting services. Our customer base continues to grow and this year we provided services to 91different investment banks, brokers, exchanges and hedge funds. We continue to expand our global reach with assignments underway in countries such as Chile, Russia, Hungary, Turkey and South Africa as well as in major financial centres such as New York, London, Toronto, Chicago, Singapore, Hong Kong, Tokyo and Sydney.

The broad but yet focused nature of our product and consulting offerings and our geographical spread is key to our continued organic growth. Our target industry segment is extensive and gives us a vast potential market to penetrate and our success has been built on treating our customers as partners to build strong recurring revenue streams both in consulting and software. In consulting we target assignments that are vital to the customers' infrastructure that will be in existence for years. We sell software on a subscription model or on a Software as a Service basis.

Software

We continue to invest heavily in improving our Delta technology platform and applications. We have made significant scientific progress in areas such as messaging and in-memory capacity. Our Delta technology platform is designed to work with large volumes of data analytics in the cloud on any desktop or handheld device. Allied with our hosting and data centre expertise this means that we are well placed to take advantage of the wider trends in the technology market - Cloud computing, "Big Data" and mobile devices.

We continue to add new features to our existing flagship products and have successful reference implementations. Delta Stream for example is now in use at several large financial institutions including ANZ and Singapore Exchange and Delta Algo is firmly embedded in one of the largest investment banks in the world. We are very excited about the prospects for Delta Data Factory which has been successfully deployed by Thomson Reuters. The sales pipeline is very healthy and we are cautiously optimistic for the year ahead.

We have successfully migrated RealStream - an acquired legacy technology - to our architecture and relaunched this as Delta Flow. We believe that this product has the potential to be a disruptive technology in the FX trading arena. It is a hosted technology and we have mobile (iPhone, iPad and Android) and desktop versions. This view has been further reinforced during recent preliminary demos with a number of leading players in the market and our order book for this product is very encouraging. Indeed we have recently signed up one of the biggest banks in Asia and one of the biggest brokers in Russia.

Although our software revenue has only grown by a small amount in total relative to 2011 the mix has changed considerably. As expected there has been a tapering off of revenue from a legacy technology Auto Deal+, with recurring transactional revenue now accounting for 44% of our software revenue (2011: 23%). We will continue to endeavour to sell our software on an annual recurring or transactional model.

Our common technology platform makes it easier to develop new products and bring them quickly to market. In addition, the problems at which we excel - analysing large volumes of data in millisecond periods of time - are issues which are common to many industry sectors. The success of our technology in the capital markets industry should make it easier to sell in other areas. We have had some success in this respect and I am pleased to report that we have secured our first customers of Delta in the telecoms and utilities markets. We have launched a new prototype of a bandwidth exchange (in partnership with BT and Nokia at the recent TM Forum) and are launching an alpha version of a carbon credits trading platform at the Rio+ Earth Summit in June this year. This follows the success of an initial prototype at the recent Clinton Global Initiative in New York. This gives further validation as to the flexibility of our technology and gives us confidence that the market for our software is extensive.

We have further cemented our relationship with Kx Systems by recently signing an OEM and hosting agreement which gives us increased access to the kdb+ database for all products in a hosted or installed basis. We have been working with Kx Systems for 14 years and they had another profitable year last year. As a 20% shareholder we will continue to benefit from their success and continued investment in making their technology the world's leading time series database. Their products are used by some of the world's largest financial institutions and Kx Systems lists organisations such as JP Morgan, Goldman Sachs, Zurich Financial Group, Morgan Stanley, Fidelity Investments and Total Gas & Power.

Consulting

First Derivatives provides highly skilled resources to the capital markets in the areas of consulting, support and development services. We have ongoing contracts with many of the leading global banks, supporting their activities across a range of asset classes including credit, interest rate, foreign exchange, equity cash and derivatives markets. The Company has been working in this area for sixteen years and we have seen a trend in the last year for us to work on increasingly large projects. The major trends in the industry at the moment are around outsourcing and trying to implement various regulatory initiatives introduced throughout the world as a response to the global crisis in 2008. We have launched three major initiatives to respond to these trends:-

                 --     A legal stream offering services around the disposal of non-core assets by banks and the impact of 

regulations and compliance

                 --     A managed services for outsourced third party product support and 
                 --     The creation of a dedicated data management team. 

The market has responded positively to these initiatives and we have been able to draw upon the strength of our brand to win new customers in these areas. We continue to derive significant recurring revenue in this division from the long-term nature of the projects we undertake and these three new initiatives will also generate long-term work.

Our consultants continue to work closely with our development team by providing market intelligence and competitor analysis. They can also assist the product team with business analyst work and testing. The fungible nature of our resource pool gives us significant operational efficiencies.

Management and Personnel

The Company now employs almost 700 people and our success in retaining staff and senior management means that the experience profile of our consultants continues to improve. We continue to enhance our Capital Markets Training Programme and have now included legal stream modules which gives employees the opportunity to qualify for the New York Bar. Once again I would like to pay tribute to all First Derivatives employees who are hard working, talented, flexible and dedicated. Our customer retention rates are evidence of this.

Financial Review

The group has reported revenues and profits significantly higher than last year. Post-tax profit for the year was GBP5.946 million (2011: GBP5.112 million) on turnover of GBP46.087 million (2010: GBP36.740 million). Our balance sheet is strong with equity attributable to shareholders up to GBP32.236 million (2011: GBP24.888 million), an increase of 29.5%. This, and our confidence in the Group's ability to generate cash, enables the Board to recommend a final dividend of 8.15p per share (2011: 7.25p) which means that we will have paid a total dividend of 11.15p (2011: 10.15p) per share for the full year.

Outlook

Based on the health of our current sales pipeline we anticipate reporting further growth in the year to 28 February 2013. As well as organic growth the Board will continue to pursue acquisition opportunities where we see a strategic fit and have access to the necessary sources of finance. On a macro level we are confident that we have positioned ourselves to benefit from global trends in technology and consulting and that with our recurring revenue model and continued reinvestment in the business we will deliver further significant benefits in the years ahead.

Brian Conlon

Chief Executive Officer

Consolidated statement of comprehensive income

Year ended 29 February 2012

 
                                                             2012       2011 
                                                  Note    GBP'000    GBP'000 
 Continuing operations 
 Revenue                                           2       46,087     36,740 
 Cost of sales                                           (30,172)   (23,423) 
 Gross profit                                              15,915     13,317 
 
 Other operating income                                     1,414      1,974 
 Administrative expenses                                  (9,368)    (8,723) 
 Results from operating activities                          7,961      6,568 
 
 Finance income                                                 2          7 
 Finance expense                                            (648)      (723) 
 Loss on foreign currency translation                       (455)      (198) 
                                                        ---------  --------- 
 Net financing expense                                    (1,101)      (914) 
 
 Share of profit of associate using the 
  equity method, net of tax                                   458        841 
 Share of loss on dilution in associate 
  using the equity method                                   (371)          - 
 Profit before income tax                                   6,947      6,495 
 
 Tax expense                                              (1,001)    (1,383) 
                                                        ---------  --------- 
 
 Profit for the year                                        5,946      5,112 
                                                        =========  ========= 
 
 Other comprehensive income 
 Deferred tax on share options outstanding                  (309)      1,030 
 Net exchange gains/(losses) on net investment 
  in foreign subsidiaries and associate                       214    (1,091) 
 Net (loss)/gain on hedge of net investment 
  in foreign subsidiaries and associate                     (121)        594 
                                                        ---------  --------- 
 Other comprehensive income for the period, 
  net of tax                                                (216)        533 
                                                        ---------  --------- 
 
 Total comprehensive income for the period 
  attributable to equity holders' of the 
  company                                                   5,730      5,645 
                                                        =========  ========= 
 
 Earnings per share                                         Pence      Pence 
 Basic                                             4         36.0       33.2 
 Diluted                                           4         32.8       29.0 
                                                        =========  ========= 
 

Consolidated balance sheet

Year ended 29 February 2012

 
                                                  2012      2011 
                                        Note   GBP'000   GBP'000 
 Assets 
 Property, plant and equipment           5      14,738    18,292 
 Intangible assets and goodwill          6      30,053    26,732 
 Investment in associate                         7,059     7,447 
 Trade and other receivables                       437         - 
 Deferred tax asset                              1,750     1,860 
                                              --------  -------- 
 Non current assets                             54,037    54,331 
                                              --------  -------- 
 
 
 Trade and other receivables                    13,767    12,563 
 Cash and cash equivalents                       1,318     3,501 
 Assets held for sale                            1,598         - 
                                              --------  -------- 
 Current assets                                 16,683    16,064 
 
 Total assets                                   70,720    70,395 
                                              ========  ======== 
 
 Equity 
 Share capital                                      83        80 
 Share premium                                  10,502     7,846 
 Share option reserve                            2,673     2,384 
 Revaluation reserve                               167       174 
 Currency translation adjustment 
  reserve                                          290       197 
 Retained earnings                              18,521    14,207 
                                              --------  -------- 
 Equity attributable to shareholders            32,236    24,888 
                                              ========  ======== 
 
 Liabilities 
 Loans and borrowings                           18,598    21,544 
 Deferred tax liabilities                        2,224     1,319 
 Contingent deferred consideration                   -     1,993 
 Provisions                                          -       344 
 Trade and other payables                        2,901     2,034 
 Non-current liabilities                        23,723    27,234 
 
 Loans and borrowings                            3,603     1,124 
 Trade and other payables                        7,456     7,955 
 Current tax payable                               702     1,176 
 Employee benefits                               2,110     2,401 
 Contingent deferred consideration                 890     5,617 
                                              --------  -------- 
 Current liabilities                            14,761    18,273 
 
 Total liabilities                              38,484    45,507 
                                              --------  -------- 
 
 Total equity and liabilities                   70,720    70,395 
                                              ========  ======== 
 

Consolidated statement of changes in equity

Year ended 29 February 2012

 
                                Share  Share premium  Share option  Revaluation      Currency   Retained  Total equity 
                              capital                      reserve      reserve   translation   earnings 
                                              GBP000                               adjustment 
                               GBP000                                    GBP000        GBP000     GBP000        GBP000 
                                                            GBP000 
 
Balance at 1 March 2011            80          7,846         2,384          174           197     14,207        24,888 
                             --------  -------------  ------------  -----------  ------------  ---------  ------------ 
Total comprehensive income 
 for the year 
Profit for the year                 -              -             -            -             -      5,946         5,946 
Other comprehensive income 
Deferred tax on share 
 options 
 outstanding                        -              -         (309)            -             -          -         (309) 
Change in effective rate 
 of deferred tax                    -              -             -            5             -        (5) 
Net exchange gains on net 
 investment in foreign 
 subsidiaries 
 and associate                      -              -             -            -           214          -           214 
Net exchange loss on hedge 
 of net investment in 
 foreign 
 subsidiaries and associate         -              -             -            -         (121)          -         (121) 
Transfer on dilution of 
 investment 
 in associate                       -              -             -         (12)             -         12             - 
                             --------  -------------  ------------  -----------  ------------  ---------  ------------ 
Total other comprehensive 
 income                             -              -         (309)          (7)            93          7         (216) 
                             --------  -------------  ------------  -----------  ------------  ---------  ------------ 
Total comprehensive income 
 for the year                       -              -         (309)          (7)            93      5,953         5,730 
Transactions with owners, 
recorded directly in equity 
Exercise of share options           1            442          (83)            -             -          -           360 
Issue of shares as purchase 
 consideration                      2          2,214             -            -             -          -         2,216 
Share based payment charge          -              -           725            -             -          -           725 
Transfer on forfeit of 
 share 
 options                            -              -          (44)            -             -         44             - 
Dividends to equity holders         -              -             -            -             -    (1,683)       (1,683) 
                             --------  -------------  ------------  -----------  ------------  ---------  ------------ 
Total contributions by and 
 distributions to owners            3          2,656           598            -             -    (1,639)         1,618 
                             --------  -------------  ------------  -----------  ------------  ---------  ------------ 
Balance at 29 February 2012        83         10,502         2,673          167           290     18,521        32,236 
                             ========  =============  ============  ===========  ============  =========  ============ 
 

Consolidated cash flow statement

Year ended 29 February 2012

 
                                                 2012       2011 
                                              GBP'000    GBP'000 
 Cashflows from operating activities 
 Profit for the year                            5,946      5,112 
 Adjustments for: 
 Net finance costs                              1,101        914 
 Share of profit of associate                   (458)      (841) 
 Share of loss on dilution in associate           371          - 
 Provision release                              (266)          - 
 Depreciation                                     592        475 
 Amortisation of intangible assets              1,821      1,532 
 Gain on sale of property, plant &              (528)          - 
  equipment 
 Equity settled share-based payment 
  transactions                                    486        340 
 Tax expense                                    1,001      1,383 
                                               10,066      8,915 
 Changes in: 
 Trade and other receivables                  (1,331)    (2,711) 
 Trade and other payables                         196        880 
 Onerous provisions                              (78)      (301) 
 Taxes paid                                     (699)    (1,422) 
                                             --------  --------- 
 Net cash from operating activities             8,154      5,361 
 
 Cash flows from investing activities 
 Interest received                                  2          7 
 Acquisition of subsidiaries, net 
  of cash acquired                                  -      (585) 
 Acquisition of property, plant and 
  equipment                                     (866)      (842) 
 Disposal of property, plant and equipment      2,705          - 
 Acquisition of intangible assets             (4,636)    (3,477) 
 Dividend received from associate                 570        654 
 Payment of deferred consideration            (3,316)    (1,795) 
                                             --------  --------- 
 Net cash used in investing activities        (5,541)    (6,038) 
 
 Cash flows from financing activities 
 Proceeds from issue of share capital             360      3,579 
 Receipt of new long term loan                  1,553     19,878 
 Repayment of borrowings                      (3,602)   (19,426) 
 Payment of finance lease liabilities            (26)       (66) 
 Interest paid                                  (767)      (537) 
 Dividends paid                               (1,683)    (1,435) 
                                             --------  --------- 
 Net cash from financing activities           (4,165)      1,993 
 
 Net (decrease) / increase in cash 
  and cash equivalents                        (1,552)      1,316 
 Cash and cash equivalents at 1 March 
  2011                                          3,501      1,711 
 Effects of exchange rate changes 
  on cash held                                  (631)        474 
                                             --------  --------- 
 Cash and cash equivalents at 29 February 
  2012                                          1,318      3,501 
                                             ========  ========= 
 
 

Notes

   1       Basis of preparation 

The consolidated financial statements consolidate those of the Company and its subsidiaries (together referred to as the "Group").

Both the consolidated financial statements and the Company financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("IFRSs").

   2      Operating segments 

Business segments

The group has disclosed below certain information on its revenue by geographical location. Details regarding total can be found in the statement of comprehensive income.

The group's two revenue streams are separated as follows:

   --    Consulting activities which includes services to capital markets; and 
   --    Software activities which includes the sale of intellectual property and related services. 

Revenue by division

 
                      Consulting                Software                Total 
 
                    2012       2011       2012       2011        2012         2011 
                   GBP'000    GBP'000    GBP'000    GBP'000     GBP'000      GBP'000 
 Total Segment 
  Revenue          32,629     24,229     13,458     12,511      46,087       36,740 
                 ---------  ---------  ---------  ---------  -----------  ----------- 
 
 

Geographical location analysis

 
                       UK                Rest of             America           Australasia            Total 
                                          Europe 
                2012      2011      2012      2011      2012      2011      2012      2011      2012      2011 
                GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
 Revenue 
  from 
  external 
  customers      18,387    15,811    3,795     2,627     18,969    14,812    4,936     3,490     46,087    36,740 
 
 Non Current 
  Assets         20,873    22,376    8,655     5,930     22,727    24,333    1,782     1,692     54,037    54,331 
               --------  --------  --------  --------  --------  --------  --------  --------  --------  -------- 
 
 
   3       Dividends 
 
                                               2012     2011 
                                            GBP'000  GBP'000 
 
Final dividend relating to the prior year     1,187      976 
Interim dividend paid                           496      459 
                                            -------  ------- 
                                              1,683    1,435 
                                            =======  ======= 
 

The dividends recorded in each financial year represent the final dividend of the preceding financial year and the interim dividend of the current financial year.

The final dividend relating to the prior year amounted to 7.25 (previous year: 6.75) pence per share and the interim dividend paid during the year amounted to 3.00 (previous year: 2.90) pence per share. The cumulative dividend paid during the year amounted to 10.25 (previous year: 9.65) pence per share.

After the respective reporting dates, the following dividends were proposed by the directors. The dividends have not been provided for and there are no income tax consequences.

 
                                               2012     2011 
                                            GBP'000  GBP'000 
 
8.15 pence per ordinary share (2011: 7.25 
 pence)                                       1,370    1,185 
                                            =======  ======= 
 
   4       (a)     Earnings per ordinary share 

Basic

The calculation of basic earnings per share at 29 February 2012 was based on the profit attributable to ordinary shareholders of GBP5,946k (2011: GBP5,112k), and a weighted average number of ordinary shares ranking for dividend of 16,510k (2011: 15,415k).

 
                                2012       2011 
                           Pence per  Pence per 
                               share      share 
 
Basic earnings per share        36.0       33.2 
                           =========  ========= 
 

Weighted average number of ordinary shares

 
                                                           2012         2011 
                                                    Number '000  Number '000 
 
Issued ordinary shares at beginning of period            15,924       14,421 
Effect of share options exercised                           170          132 
Effect of shares issued as purchase consideration           416           46 
Effect of shares issued for cash                              -          816 
Weighted average number of ordinary shares 
 at end of period                                        16,510       15,415 
                                                    ===========  =========== 
 

Diluted

The calculation of diluted earnings per share at 29 February 2012 was based on the profit attributable to ordinary shareholders of GBP5,946k (2011: GBP5,112k) and a weighted average number of ordinary shares after adjustment for the effects of all dilutive potential ordinary shares of 18,128k (2011: 17,606k).

 
                                   2012        2011 
                                  Pence       Pence 
                              per share   per share 
 
Diluted earnings per share         32.8        29.0 
                             ==========  ========== 
 

Weighted average number of ordinary shares (diluted)

 
                                                2012     2011 
                                              Number   Number 
                                                '000     '000 
 
Weighted average number of ordinary shares 
 (basic)                                      16,510   15,415 
Effect of dilutive share options in issue      1,618    2,191 
Weighted average number of ordinary shares 
 (diluted) at end of period                   18,128   17,606 
                                             =======  ======= 
 

The average market value of the group's shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period the options were outstanding.

At 29 February 2012, 600k options (2011: 315k) were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive.

b) Earnings before tax per ordinary share

Earnings before tax per share are based on profit before taxation of GBP6,947k (2011: GBP6,495k). The number of shares used in this calculation is consistent with note 4(a) above.

 
                                                    2012       2011 
                                               Pence per  Pence per 
                                                   share      share 
 
Basic earnings before tax per ordinary share        42.1       42.1 
Diluted earnings before tax per ordinary 
 share                                              38.3       36.9 
                                               =========  ========= 
 

Reconciliation from earnings per ordinary share to earnings before tax per ordinary share.

 
                                                    2012       2011 
                                               Pence per  Pence per 
                                                   share      share 
 
Basic earnings per share                            36.0       33.2 
Impact of taxation charge                            6.1        8.9 
                                               ---------  --------- 
Adjusted basic earnings before tax per share        42.1       42.1 
                                               =========  ========= 
 
Diluted earnings per share                          32.8       29.0 
Impact of taxation charge                            5.5        7.9 
                                               ---------  --------- 
Adjusted diluted earnings before tax per 
 share                                              38.3       36.9 
                                               =========  ========= 
 

Earnings before tax per share has been presented to facilitate pre-tax comparison returns on comparable investments.

          (c)    Normalised earnings after tax per ordinary share 

Normalised earnings after tax per share are based on profit after taxation of GBP6,195k (2011: GBP4,415k). The adjusted profit after tax has been calculated by adjusting for the Group's share of loss on dilution of investment in associate GBP371k (2011: nil), share of profit of associate GBP458k (2011: GBP841k) and loss on foreign currency translation after tax effect GBP336k (2011: GBP143k). The number of shares used in this calculation is consistent with note 4 (a) above.

 
                                                   2012       2011 
                                              Pence per  Pence per 
                                                  share      share 
 
Basic earnings after tax per ordinary share        37.5       28.6 
Diluted earnings after tax per ordinary 
 share                                             34.2       24.4 
                                              =========  ========= 
 
   5        Property, plant and equipment 
 
                           Land and    Plant and       Office      Total 
                          buildings    equipment    furniture 
                            GBP'000      GBP'000      GBP'000    GBP'000 
 Cost 
 At 1 March 2011             18,592        1,143          127     19,862 
 Additions                      320          545            1        866 
 Disposals                  (2,352)            -            -    (2,352) 
 Reclassification 
  to assets held 
  for sale                  (1,734)            -            -    (1,734) 
 Exchange adjustments            29            -            -         29 
                        -----------  -----------  -----------  --------- 
 At 29 February 
  2012                       14,855        1,688          128     16,671 
                        -----------  -----------  -----------  --------- 
 
  Depreciation 
 At 1 March 2011                922          587           61      1,570 
 Charge for the 
  year                          242          326           24        592 
 Disposals                     (99)            -            -       (99) 
 Reclassification 
  to assets held 
  for sale                    (136)            -            -      (136) 
 Exchange adjustments             -            6            -          6 
                        -----------  -----------  -----------  --------- 
 At 29 February 
  2012                          929          919           85      1,933 
                        -----------  -----------  -----------  --------- 
 Net book value 
  At 29 February 
  2012                       13,926          769           43     14,738 
                        ===========  ===========  ===========  ========= 
 
 
                           Land and    Plant and       Office      Total 
                          buildings    equipment    furniture 
                            GBP'000      GBP'000      GBP'000    GBP'000 
 Cost 
 At 1 March 2010             18,296          696           72     19,064 
 Additions                      297          489           56        842 
 Exchange adjustments           (1)         (42)          (1)       (44) 
                        -----------  -----------  -----------  --------- 
 At 28 February 
  2011                       18,592        1,143          127     19,862 
                        -----------  -----------  -----------  --------- 
 
  Depreciation 
 At 1 March 2010                696          385           45      1,126 
 Charge for the 
  year                          227          232           16        475 
 Exchange adjustments           (1)         (30)            -       (31) 
 At 28 February 
  2011                          922          587           61      1,570 
                        -----------  -----------  -----------  --------- 
 Net book value 
  At 1 March 2010            17,600          311           27     17,938 
                        ===========  ===========  ===========  ========= 
 At 28 February 
  2011                       17,670          556           66     18,292 
                        ===========  ===========  ===========  ========= 
 
   6        Intangible assets 
 
                            Goodwill   Customer    Acquired   Brand name   Internally      Total 
                                          lists    Software                 developed 
                                                                             software 
                             GBP'000    GBP'000     GBP'000      GBP'000      GBP'000    GBP'000 
 Cost 
 Balance at 1 
  March 2011                  13,941      2,327       7,252          302        6,168     29,990 
 Development costs                 -          -           -            -        4,819      4,819 
 Additions                         -          -       1,340            -            -      1,340 
 Adjustment to 
  deferred consideration     (1,354)          -           -            -            -    (1,354) 
 Exchange adjustments            303         35          53            2         (36)        357 
                           ---------  ---------  ----------  -----------  -----------  --------- 
 Balance at 29 
  February 2012               12,890      2,362       8,645          304       10,951     35,152 
                           ---------  ---------  ----------  -----------  -----------  --------- 
 Amortisation 
  and impairment 
  losses 
 Balance at 1 
  March 2011                       -        617       1,424           65        1,152      3,258 
 Exchange adjustment               -         14           6            4          (4)         20 
 Amortisation 
  for the year                     -        293       1,003           38          487      1,821 
                           ---------  ---------  ----------  -----------  -----------  --------- 
 Balance at 29 
  February 2012                    -        924       2,433          107        1,635      5,099 
                           ---------  ---------  ----------  -----------  -----------  --------- 
 Carrying amounts 
  At 29 February 
  2012                        12,890      1,438       6,212          197        9,316     30,053 
                           =========  =========  ==========  ===========  ===========  ========= 
 
 
 
                          Goodwill  Customer   Acquired    Brand  Internally    Total 
                                       lists   Software     name   developed 
                                                                    software 
                           GBP'000   GBP'000    GBP'000  GBP'000     GBP'000  GBP'000 
 Cost 
Balance at 1 March 
 2010                       11,427     2,039      7,590      300       2,701   24,057 
Development costs                -         -          -        -       3,475    3,475 
Additions                        -         -          2        -           -        2 
Adjustment to 
 deferred consideration      2,302         -          -        -           -    2,302 
Acquisition through 
 business combinations         690       401          -       18           -    1,109 
Exchange adjustments         (478)     (113)      (340)     (16)         (8)    (955) 
                          --------  --------  ---------  -------  ----------  ------- 
Balance at 28 
 February 2011              13,941     2,327      7,252      302       6,168   29,990 
                          --------  --------  ---------  -------  ----------  ------- 
Amortisation and 
 impairment losses 
Balance at 1 March 
 2010                            -       372        447       30         930    1,779 
Exchange adjustment              -      (30)       (21)      (2)           -     (53) 
Amortisation for 
 the year                        -       275        998       37         222    1,532 
                          --------  --------  ---------  -------  ----------  ------- 
Balance at 28 
 February 2011                   -       617      1,424       65       1,152    3,258 
                          --------  --------  ---------  -------  ----------  ------- 
Carrying amounts 
At 1 March 2010             11,427     1,667      7,143      270       1,771   22,278 
                          ========  ========  =========  =======  ==========  ======= 
At 28 February 
 2011                       13,941     1,710      5,828      237       5,016   26,732 
                          ========  ========  =========  =======  ==========  ======= 
 
   7        Report and accounts 

Copies of the Annual Report will be available as of 7 June 2012 on the Group's website, www.firstderivatives.com and from the Group's headquarters at 3 Canal Quay, Newry, BT35 2BP.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR ARMPTMBITMIT

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