FTSE-250 listed trading software provider Fidessa (LON:FDSA) has hiked its dividend 11% after achieving a jump in full year earnings on foreign exchange tailwinds following the Brexit vote.
In the year to 31 December 2016, revenue rose 12% to £331.9mln with growth across all regions, while pre-tax profit gained 25% to £48.8mln.
The company, which supplies trading and investment technology, raised its final dividend per share by 11% to 28.2p as it closed the period with no debt and a cash balance of £95.2mln, compared to £78.3mln the previous year. Total dividends for the year came to 92.5p, an 11% increase compared to 2015 and ahead of the consensus forecast of 86p.
Fidessa said its results were supported by a weaker pound following the UK’s vote to leave the European Union last June as more than 60% of Total revenue is derived from outside of Europe and more than 70% is in non-sterling currencies.
The group added that it remains “well positioned” to benefit from any continued weakness in sterling, providing support to cash generation and its dividend policy.
“We expect that 2017 constant currency revenue growth will be around the levels that we have seen during 2016, with further headline gains if sterling remains weak,” chief executive Chris Aspinwall said.
During the period, Fidessa saw a slowdown in trading activity in the first half followed by political uncertainty surrounding Brexit and the US presidential election in the second half. The company was also affected by the continued crisis in the Chinese stock market.
However, the business said it was also supported by positive elements in the market, including increasing clarity around regulation, improved sentiment among the Futures Commission Merchants community and the view that new US President Donald Trump will loosen regulations in the country’s financial markets.
Fidessa believes the investments it has made to extend the range of asset classes it supports and expand its coverage globally have positioned it well to help its customers to reduce their costs through a multi-asset, service-based delivery platform.
Looking ahead, the company expects that the Brexit vote and the result of the US election will create some uncertainty but believes that it is “entering a period where opportunity is returning to the market”.
“We expect to continue to make progress with our multi-asset initiative and will continue to investigate the possibility of extending our asset class coverage further,” Aspinwall said.
“We believe that across all asset classes, the market is moving towards the increased use of service-based solutions and that few vendors have both the depth of applications and the scale of infrastructure needed to deliver these solutions.”
Shore Capital said the full year results were "uninspiring" despite currency benefits bolstering profits. While revenue was as expected and the dividend was ahead of the consensus forecast, markets outisde derivatives remain weak, the broker said.
"We still think it is a solid, well-run company - it’s just that its end markets remain weak, activity in multi-asset is good, but overall it has the lack of growth, despite the benefits it has seen with sterling," ShoreCap said.
"It’s decent value at 10.9x consensus fiscal year 2017 enterprise value/EBITDA, which we see as the right measure. It does however look expensive at 26.0x earnings per share for the same period."
Shares reversed earlier gains, falling 0.4% to 2,33p in afternoon trade.