Overview
First Derivatives Plc (FDP) is a Software & Computer Services company providing consulting services to the world’s leading companies from the energy, technology and finance domain. The company has developed kdb+ one of the worlds most used database technology.The company is having an employee base of more than 2,400 employees globally. The company’s research and development centre are located in Newry in Northern Ireland and have operational bases in Australia, Asia, North America and Europe.


Recent News

On 3^rd September 2019, First Derivatives announced the allotment of 15,500 ordinary shares at 0.5 pence per share. The new allotment was for certain employees who want to exercise share options. The application for the same had been made on Euronext Growth and AIM.

Financial Highlights – Financial Year 2019 (ending 28^th February 2019 £, million)


(Source: Annual Report, Company Website)
 
For the financial year ending February 28^th, 2019, the company’s revenue surged by 17 per cent to £217.4 million as against £186 million in FY2018. The increase in the revenue was driven by an increase in revenue from all reportable segments and all geographic locations in which the company operates. In FY2019, the company’s gross profit increased by 16 per cent to £91.3 million as against £78.5 million in FY2018. The company’s adjusted EBITDA surged by 14 per cent from £34.1 million in FY2018 to £38.9 million in FY2019. The company’s PBT (Profit before tax) was up by 38 per cent to £16.7 million in FY2019 as against a PBT (Profit before tax) of £12.1 million in FY2018. The company’s PAT (Profit after tax) stood at £13,175 thousand in FY2019 as against a PAT (Profit after tax) of £10,208 thousand in FY2018. The company’s reported basic earnings per share stood at 50.9 pence in FY2019 versus basic earnings per share of 40.4 pence in FY2018. The company’s reported diluted earnings per share stood at 47.9 pence in FY2019 versus diluted earnings per share of 37.8 pence in FY2018, reflecting an upside of 17 per cent for the period. The company’s dividend per share for the full year surged by 13 per cent to 27 pence in FY2019 from 24 pence in the financial year 2018.

Share Price Performance


Daily Chart as at September-24-19, before the market close (Source: Thomson Reuters)

On September 24, 2019, at the time of writing (before the market close, at 11:38 AM GMT), First DerivativesPlc shares were trading at GBX 2,302.00, up by 0.31 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 4,200.00/GBX 2,010.00.

Valuation Methodology


*Peers: StatPro Group Plc, RM Plc, Learning Technologies Group Plc, Innofactor Plc and GK Software SE.

Conclusion

Although the company’s operating expenses have surged for the period.The company had shown good financial performance for the financial year 2019. Driven by good growth from all the businesses in which company operates, the company’s revenue and the profitability have improved for the current period.

The company’s Consulting activities and Software activitieshad been performing well with high growth acquisitions and new product developments. The company’s investment programme had resulted in new contract wins and partnership agreements. It will also provide a growth platform for the coming years.

The company also have manyprojects under pipeline, which will help the company to achieve strong organic growth. The company is actively looking forward to acquisition opportunities with good funding capacity.

Over the course of 5 years (FY14 - FY19), the company’s operating income surged from £69.9 million in FY14 to £217.4 million in FY19. Compound annual growth rate (CAGR) stood at 25.47 per cent.
Based on the decent prospects and supported by valuation done using the above method, we have given a "Speculative BUY" recommendation at the closing price of GBX 2,295 (as on 23rd September 2019) based on 18.50x NTM Price/Cash flow (approx.) on FY20E cash flow per share (approx.).

*All forecasted figures and peers have been taken from Thomson Reuters.
*The “Speculative Buy” recommendation is also valid for the current price as covered in the report (as on 24^th September 2019).

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.
References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.
This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.
The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.
Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.