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Share Name Share Symbol Market Type Share ISIN Share Description
First Derivatives LSE:FDP London Ordinary Share GB0031477770 ORD 0.5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -48.00p -2.30% 2,038.00p 2,017.00p 2,040.00p 2,114.00p 1,975.00p 2,075.00p 23,843 16:35:23
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 117.0 10.4 33.3 61.2 493.92

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Date Time Title Posts
25/5/201621:29First Derivatives - deriving growth and profits4,197
22/8/201021:25FDP - Moorsie Thread1
29/10/200912:16FDP - EXplosive stock8
08/1/200714:25First derivatives charts and news 20052
10/3/200623:29If its good enough for him...............1

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First Derivatives Daily Update: First Derivatives is listed in the Software & Computer Services sector of the London Stock Exchange with ticker FDP. The last closing price for First Derivatives was 2,086p.
First Derivatives has a 4 week average price of 1,860.68p and a 12 week average price of 1,651.13p.
The 1 year high share price is 2,114p while the 1 year low share price is currently 1,227.50p.
There are currently 24,235,639 shares in issue and the average daily traded volume is 46,568 shares. The market capitalisation of First Derivatives is £493,922,322.82.
lovejoy4: Looking at this thread I'm less than impressed with members making bold predictions about the future direction of the share price without the slightest reference to underlying fundamentals, which drives the share price in the long run. Looking through the last annual report uncovers some less than pleasant results: They highlighted that revenue was up 19% but operating income only grew 2%, with administrative expenses up 26%. Operating margins are shrinking year after year and now stand at just 10.1% - only 188k of operating income was added last year. Net income was stated as £15,915m but £9.5m of this was a gain from an asset sale – though looking at footnote 3 this wasn’t even a cash realization, they just decided to revalue their stake in Kx so how this constitutes ‘income’ is baffling, particularly since it appears that most of that value is made up of intangibles. Adjusting the EPS downward for that ‘gain’ and it becomes roughly 30p per share, roughly what it was the previous year on a diluted basis. Shares trade at a multiple approaching 60x earnings which sees incredibly stretched. Company likes to use a non-GAAP measure like adjusted EBITDA but this ignores write-downs in intangibles and share based payments – the former is a legitimate concern since they’re taking on debt and issuing shares to purchase smaller technology companies at vast multiples and booking the assets as ‘goodwill̵7; etc. The economic value of goodwill is questionable particularly in the technology realm where change is rampant and things become obsolete very quickly. Company added nearly £100m in intangible assets last year to the point that net tangible assets are negative £36m. Going back to Kx, in footnote 3 they say that net profit would’ve been £17.1m had it occurred a year earlier, and so would’ve added £1.2m to the bottom line. Valuing a company that adds £1.2m per year at £80.1 seems a bit rich, particularly given that Kx seems to have exhausted its avenues within banking with regard to potential clients within banking and is now seeking clients in other sectors (little to no tangible news / contract win announcements on this topic all year BTW). On page 54 they state that the Prelytix acquisition (which cost roughly £6m) would have resulted in net income of £15,994 had it occurred a year previous – so in effect they paid £6m for a company that would’ve added £79 to the bottom line? Let’s hope the recent acquisitions are more valuable. It seems very strange that as a supposed growth company it pays a dividend year after year, £2.5m per year at this point – wouldn’t this cash be better spent on expansion? It could certainly be used in place of debts and share issuances – more share issuances mean more dividends must be paid – completely counter intuitive. Page 87 provides a potential answer – of the £2.5m total dividend pool the CEO received almost £1m – certainly more tax efficient than taking salary but puts his own interests above the shareholders in this case. On a final note, shareholders buying into the ‘big data’ story need to be realistic – this is essentially an IT consultancy company with a ‘big data’ wing – around 66% of revenue still comes directly from consulting, which tends to be negatively correlated with the financial industry at large, longer term any uptick in the financial sector will see banks hiring full time employees en masse one again, which doesn’t bode well for firms flaunting temporary contactors on expensive daily rates. Disclosure: No position.
moorsie2: To be fair Mach100 at these price levels the dividend does not have a significant material affect on share price action. This is being driven by expectations and the very bullish language of the company in the last few weeks. Stuff like "all the heavy lifting is done" is relation to its transition to a new bigger organisation and integration of acquisitions is very significant. I for one will not be surprised to see a profits upgrade before or at the half year results and the analysts moving on the target to above £20 per share. I will be surprised and disappointed if we are not at circa £17-18 by year end...
moorsie2: Uncrossed trade went through at £13.50 - this augers well for the rest of this week. Last few days of share price at £13 something this week.
moorsie2: From III Big data software supplier First Derivatives (FDP) has been popular in City circles for years. Raising money to fund growth has never been a problem. It's been heavily backed by investors, too, and the share price shot up as much as 6% following better-than-expected full-year results. Management has also told analysts that this year's results will exceed current estimates. Pre-tax profit rocketed 120% to £17.5 million in the year ended 28 February on revenue up nearly a fifth to £83.2 million. Strip out one-off items – largely a £9.58 million gain following the revaluation of FD's original stake in Kx Systems - profit still jumped by 17% to £10.8 million. Work for the world's biggest banks meant FD's consulting business delivered a twelfth consecutive year of double-digit percentage growth - up 15% to £58.3 million. But the smaller software division, which excels at quickly analysing huge datasets for City traders, grew by 29% to £24.9 million. Nine of the top 10 investment banks use FD's flagship kdb+ and Delta products, mainly for market surveillance, trading, regulatory reporting, transaction cost analysis and algorithmic testing. Getting to this point has required some heavy investment. There has been a series of acquisitions, plus a stakebuild at Kx Systems Inc, funded by an oversubscribed placing in February and another in March. But it's been worth it. "We've now achieved our strategic position," finance director Graham Ferguson told Interactive Investor. "We've done the hard yards and are now delivering on investment over past five years." And management now expect current-year numbers to be "moderately ahead of current market forecasts". (click to enlarge) That's why Panmure Gordon rushed to upgrade forecasts. Analyst Adam Lawson now expects adjusted cash profit of £22.3 million in the year to February 2016 - it rose 24% to £15.5 million this time - and £25.5 million the year after. However, a slightly higher adjusted tax rate assumption numbs the impact on earnings slightly to 51.9p and 60.1p, respectively. FD shares currently trade on a lofty 25 times forward earnings, and there's stiff technical resistance at around 1,333p (see chart). However, earnings are growing fast and a bounce off support at the 200-day moving average looks convincing. Half-year results in early November are tipped to impress, too. Lawson still rates the shares a 'buy' with a 1,657p price target.
rivaldo: The Affinity acquisition is costing £7.7m, in return for a mere £2.3m turnover and £0.2m PBT. FDP is obviously on a building-up strategy, but this is the third expensive acquisition in a matter of weeks, Note that nowhere in any of these RNS's is there any mention at all of earnings enhancement for an already very high/expensive share price rating.
rivaldo: Hi Moorsie, cheers. I assume that almost any profit at all will be earnings-enhancing if FDP are paying low interest rates on increased loan drawdowns! Nevertheless, €4.75m has left the business, with potentially more to come, which seems expensive to me. If the share price fell to 850p-900p I'd certainly be interested again.
moorsie2: It actually makes sense now why the share price has been sitting in the £13 range for 3 to 4 months. Results for year to end of Feb will be in line with expectations and hopefully some clarity on future earnings from the investments of this placing and we are looking at a company valued between £16 and £20 by year end
blackbox1: Moorsie Point taken, but there is another way to look at this: I actually think this is a positive development. Ferguson held 350,000 options at various strike prices < £5. He also owned 117k shares outright (according to the last annual report). Anyone exercising options has to weigh up "value" when it comes to exercise time. Typically, you want to take advantage of a depressed price in order to minimise tax and NI payable at the time of exercise (as the paper gain between £10 and the exercise prices is taxed as income @ 45%). No one exercises any option, let alone all of them, if they think there is a material risk of the share price dropping to a lower point in the near future. Ferguson went all in. Why exercise now? Well, I would do it if I thought - on the balance of probability - that the shares were likely to run upwards at some point in the near future. Better to hold straight equity before a run up than an option - the tax on subsequent capital gains on shares is 28% as opposed to income tax @ 45% + NI if the option is exercised at a future higher share price. Call the difference 20% of the future gain. Finally, Ferguson also ponyed up over £1m to complete the option exercise. Feels to me like he was probably forced to sell 200k-odd shares to raise enough money (including payment of capital gains tax on his original holding) to fund the whole exercise. Perhaps he also took a few pounds out to pad the bank a bit, who could blame him? But he still has > 200,000 shares, so serious skin in the game. At the end of this exercise process he has actually doubled his holding in equity. Rather than looking at it as a net disposal by a director, I see a person who needed to find serious money in order to acquire a significant direct equity interest in the company at this point, and perhaps didn't have the funds available. He may have been a forced seller of some of his shares in order to raise funds, if you follow my logic. Not many people have a spare £1m lying around looking for a home. Next thing to chew over: why would a person who - presumably having intimate knowledge of the company's circumstances - move to take this position now? To me there is one simple answer: to position oneself to take advantage of a material uplift in future share price in a tax efficient manner. No CFO of a PLC is stupid. The timing of this exercise is not an accident or about year-end tax planning. I think something is coming up. I also see that Slater has increased his fund holding in FD. That guy isn't stupid, either. I think this whole FD rollercoaster is going to end with a trade sale at some point. It's the only way Conlon is realistically going to get his money out... I think the management team is simply getting their affairs in order. Just my thoughts.
blackbox1: Great write up today from CS. See below. Note the bit about a pending opportunity with the SEC in the US. My two cents on the results: Another year of very solid progress across all business lines. Consultancy will always move in lockstep with the companys' ability to attract and train consultancy resources so I expect another year of growth in line with historical averages unless they do an acquisition. Improving market sentiment may also provide for a firming of daily rates with luck. On the software side, never forget that the hardest part of the revenue growth cycle are the first deals. It's critical this year that further quality reference customers are added. I personally place quality of client over quantity at this stage. In fact, a mature client demanding certain functionality may result in short term pain but its to the longer term benefit of the company: s/w gets matured more rapidly and staff get the experience. The company has also spend a truck load of money building an internal sales and delivery channel in its key markets. This is expensive and it takes time to get the right people on-board. Once the platform exists (as it appears to) then focus turns to execution. Conlon has never failed yet on this score. The only area where I think they need to do better is on the business partner front. This is a way to scale s/w sales and delivery capability. The company has a poor track record on nuturing partners so far as I can tell, so to me its an obvious area for improvment. Certain people need to get a grip: These good results come on the back of several others excellent years(delivered in the teeth of a horrible market over the last 5 years) and many of the companys' peers would kill for a similar track record. Here is the CS research: Another year of solid progress and an increasingly healthy pipeline underpins our conviction in First Derivatives shares. Results for the year are broadly in line with expectations and headline revenue growth of 24% with pre-tax profits increasing 29% underpins our conviction. The company is witnessing a strong pipeline of potential software deals and larger consulting projects that should allow the company to grow further. We believe it has become globally recognised in the past year and has the scale to bid for bigger projects by itself and in partnership with the largest competitors globally. We see further revenue growth in the year ahead and potential upside beyond if the company is able to secure some of the larger deals we believe it is working on. We reiterate our Buy rating and 1750p price target. Results broadly in-line with consensus – First Derivatives revenue growth rate slightly accelerated to 24% versus 22.5% last year to reach £69.9m and was broadly in line (-1.3%) with our slightly above consensus estimate. The acceleration was driven by the Software division which grew 28.8% versus 11.4% last year. The Consulting division continued to perform with revenue +22.0%. Normalised EBITDA (excluding the sale of portfolio properties and share-based payments) rose to £12.5m ahead of the 12.3m consensus. New initiatives can drive upside – The company strengthened its sales capacity this year with a regional hub in Singapore, new partnerships with Pivotal, NYSE Technologies and an increase in front line sales. Additionally, it has been able to attract industry leaders and is crafting a new product development path that could extend broaden its reach beyond financial services (please refer our March note, "Building the Onramp to Hadoop," for more detail). We believe it is working on many new initiatives internally that can help drive estimates beyond our current expectations and expects to gain further market share in surveillance this year. We have seen that the company is also listed as a qualified bidder for a large US surveillance data repository deal encompassing ten US exchanges, led by the SEC.  Current share price offers an opportunity – First Derivatives shares are down over 33% from its all-time highs reached earlier this year. Since then the share price has suffered from the sell-off of the Technology sector, driven most aggressively in the US. The company trades on 15.0x EV/EBITDA which we believe is reasonable given the 16.2% growth we expect for EBITDA, and is subject to upgrades.
moorsie2: Heres one for you to consider - FastFill are in the Derivatives SaaS market. I appreciate that virtually all its revenue is derived from SaaS and not consulting but look at how it is valued! Valuation: SaaS business model is highly scalable Having risen strongly this year, the shares trade on c 20x consensus FY13 earnings, falling to c 17x in FY14. We note the SaaS business model offers a significant competitive advantage in this space and the shares are tightly held. We continue to believe FFastFill has a customer proposition – a truly global SaaS trading platform – and business model that can deliver significant cash flows going forward. 20 times PBT! This shows you how much value exists in the FDP share price..

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Trade Type Trade Size Trade Price Trade Date Trade Time Currency
O 21 2,020.00 27 May 2016 17:00:00 GBX
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