Business Irish

Saturday 18 November 2017

First Derivatives shrugs off Brexit as sales soar

First Derivatives – headquartered in Co Down – was founded by current ceo Brian Conlon
First Derivatives – headquartered in Co Down – was founded by current ceo Brian Conlon
Michael Cogley

Michael Cogley

First Derivatives is "well geographically diversified" to withstand the effects of Brexit, its chief financial officer Graham Ferguson said yesterday. However, he did not rule out moving its head office from Newry if the situation demanded it.

The financial technology services firm generates over 60pc of its revenue outside of the UK and Mr Ferguson doesn't expect Brexit to have a major effect on the business.

"Brexit is an unknown quantity and what will happen is an unknown quantity. There's talk in Ireland that there is going to be a soft Border - nobody knows what that will mean.

"From a passport control point of view, yes our head office is in Newry but we have operations, businesses and companies on a global basis. In all the major areas that we operate, we recruit in each of those areas so I really don't see it making a major difference to us no matter what the outcome is," Mr Ferguson said.

The First Derivatives (FD) chief said the company's growth factors will remain the same after the UK leaves the EU as the company looks to further growth in its software division.

Group revenue for the six months ending August 31 increased by 34pc to £72.4m (€80.3m), with software revenue rocketing by 60pc to £29.2m (€32.3).

There was a 45pc surge in recurring licence sales after the firm secured a number of major deals, including one with financial news giant Thomson Reuters. Recurring fees work off an annual contract basis and are a high profitability stream for the firm.

"When you set up a software division you have to make all of the investments up front, you've got to build your development team, you've got to build your data centres, your infrastructure teams, your support teams.

"For us now it's about building that software revenue and getting those gross margins down," Mr Ferguson said.

The company is expanding the applications of its software, which analyses large swathes of data in real time.

First Derivatives, which was founded by capital markets veteran and current ceo Brian Conlon in 1996, is a major graduate employer in Ireland and says it will continue to invest here. Mr Ferguson also didn't rule out further acquisitions.

"The key thing for me is if we do look to make acquisitions that they fit within the mantra of FD, and we can integrate them into our culture, which we believe is very strong," he said.

The company's net debt was negatively affected by the weak sterling after the dollar-denominated balance increased when transferred into sterling. Mr Ferguson referred to the £1.2m increase as "theoretical".

Elsewhere, the company's profit before tax increased by 52pc to £7m with earnings per share rising to 19.4p.

Earnings before interest tax depreciation and amortisation (EBITDA) increased to £13.6m (€15m), up 26pc.

Irish Independent

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