Fidessa misses forecasts due to tough European conditions

Top line growth at trading systems developer Fidessa was below forecasts in the first half, as falling sales in Europe dampened revenues at the group level.

Revenues rose 3% during the six months to June 30th from £137m to £141.3m, short of Peel Hunt's £144m estimate. At constant currency, growth would have been 2%.

"The rate of consolidation, restructuring and closures across the customer base has continued to be significant and the direct impact of these events on the growth rate for the period was seven percentage points," the firm said.

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Asian revenues jumped by 18% and accounted for 17% of total revenue, whilst the Americas grew by 10% (37% of group revenue) and Europe decreased by 6% (46% of group revenue).

Pre-tax profits increased by 4% from £20.9m to £21.7m. The group raised its interim dividend by 4% from 12p per share to 12.5p per share.

Meanwhile, the cash balance stood at £50.7m by the end of the period, down 7% on the £54.5m recorded the year before. The company had no debt.

Chief Executive Chris Aspinwall said: "Fidessa has maintained its track record of growth in the first half of 2012 despite the persistence of the difficult conditions seen within the markets over the last few years. The on-going issues in the Eurozone, coupled with the wider problems in the global economy, have continued to create adverse conditions for our customers making it more challenging for us to achieve growth."

While the tough market conditions have persisted longer than first though, Aspinwall said that he expects to see "stability and opportunity returning to the markets" and reduced headwinds will enable the group to return to historic growth levels.

Analysts at Jefferies said: "[The results] feature a continuation of the end-market pressures on organic growth that Fidessa has been facing for some time [...] Pressures remain most acute in Europe and at the smaller end."

The broker has reduced its full-year forecasts for Fidessa this morning to reflect the lower-than-expected revenue growth in the first half and cautious outlook statement. For the full year, Jefferies is now looking for 2.3% headline revenue growth.

Shares dropped 6.2% to 1,407p in early trading.

BC