FFastFill has made further progress within the Front Office
securing a number of significant mandates across its global network
in the half. We announced and deployed BGC Partners as a customer
during the period. This was a key win for the front end platform
and was the result of an extensive global RFP. To further enhance
connectivity, we have also expanded the range of markets which
connects FFastFill to real trade orders and trade feeds during the
period. This additional flexibility enables our customers to
connect to real time data feeds which they can process using our
system.
We have also continued to expand our connectivity adding
Japanese exchanges and other Asian exchange connectivity during the
period. In particular, we have significantly expanded our offering
into Japan with the addition of TFX (Tokyo Financial Exchange), TSE
(Tokyo Stock Exchange), TOCOM (Tokyo Commodity Exchange) and OSE
(Osaka Securities Exchange) to the global network. We have also
worked with customers to expand the range of non-exchange liquidity
pools available on the platform and have integrated to internal
market connectivity in a number of our customers. The ability to
quickly connect to these markets demonstrates the flexibility of
our platform.
Our multi broker solution has also been very successful during
the period with an increase in the number of "Horizon" brokers on
our system. The Horizon offering reduces the technical complexity
for customers to connect to markets via other customers on our
network and has been a key driver for growth during the period.
In addition, Spread Intelligence, a provider of highly
sophisticated spread trading tools, which we acquired last year, is
now fully integrated into the business bolstering our reach and
capabilities particularly in the US. Spread Intelligence has
already been responsible for key customer wins and additions to the
sales pipeline.
The London Metal Exchange (LME) continues to be a strong market
for FFastFill and its acquisition by Hong Kong Exchanges and
Clearing Limited (HKEx) is a growth opportunity for us especially
in the Chinese market.
o Middle Office
In the Middle Office, we have expanded our geographical coverage
by increasing the range of connectivity to clearing houses, as well
as complying with exchange initiatives such as LCH Clearnet
Universal Clearing Platform, Intercontinental Exchange (ICE 6.0),
Chicago Mercantile Exchange (CME), Front End Clearing (FEC+) and
the Trident API. We have also expanded functionality for CME based
over-the-counter (OTC) products, trade entry in the metals space
and increased automation for average price trades.
The changing regulatory landscape has resulted in additional
risk management requirements in the Middle Office during the
period. As a result, we have added functionality to enable our
customers to enforce risk limits as part of the "give-in"
acceptance process.
The Prysm Middle Office product, acquired through the purchase
of WTD, has further enhanced our capabilities. We continue to
integrate the SEALS and Prysm products which will take the best
elements of each platform and provide additional functionality for
all of our customers. This addition has continued to strengthen our
offering particularly in the US market and expand customer reach
globally.
o Back Office (Post Trade Processing)
Encouragingly, FFastFill has made strong headway in the Back
Office. We have added new mandates to our Back Office customer list
in addition to renewals and extensions of existing mandates during
the period.
At the time of its Preliminary Results in May 2012, the Group
updated the market on two Back Office implementations which had
previously been delayed. These implementations are now fully live
and are both delivering service to customers. These were major
milestones for us and both broke new ground in terms of geography
and functionality of the system.
The technology and expertise acquired through the purchase of
WTD, are fully integrated into FFastFill's Back Office suite. The
addition of WTD's capabilities has also enabled us to complete the
customisation required to advance the position of our Back Office
platform, "Eclipse" including iDash, in the important US market.
Specifically, this has provided customers with advanced reporting
technology on our platform.
We have also commenced a performance improvement project using
the latest database and hardware technologies which has already
significantly increased the scalability of our system. Work on this
project is well-advanced and will continue through FY13.
In the half, we also deployed projects for NYSE eFills which are
upgrades to existing technology provided to the customer but also
includes real time FIX Drop Copy for exchange members. This has
added further benefit for customers of the FFastFill suite.
o Risk Management
In the risk management arena, our products continue to leverage
our front to back capability as well as complying with the changing
regulatory landscape. The integration of real time market data with
real time margin calculation provides significant value to our
customers. Wins during the period included G H Financials Limited
among others.
We have continued to see traction with our risk management
product, Orbit Risk Pro. In the period, two customers have
contracted for Orbit Risk Pro services. One of these is a new
customer win and one is an existing customer which is further
evidence of the Group's cross-selling success. These new customer
wins demonstrate that the reputation of our Risk Management
offering is growing internationally.
We continue to invest in product innovation and believe Orbit
Risk Pro is well advanced in terms of responding to regulatory
change and protecting our customer firms from unnecessary risk.
This is further endorsed by Orbit Risk Pro being awarded "Best New
Product From A Technology Firm Award" at The Futures & Options
World Awards for Asia 2012 held in Singapore in September 2012.
The ability to risk check customer positions pre-trade has been
a key part of our platform for many years. We are pleased to report
that FFastFill's fully integrated Straight Through Processing
("STP") already in place is compliant with the Commodities Futures
Trading Commission Rule 1.73, which came into effect on 1 October
2012. This new regulatory requirement has provided an opportunity
for us to showcase our capabilities.
Our Staff
During the period we integrated a team of experts in the
provision of Microsoft Dynamics GP & CRM tools. It is our
intention for this team to provide our existing customer base with
greater Management Information Systems and analysis capabilities.
We are currently delivering this capability to our first customer
and the pipeline of additional opportunities is strong.
On behalf of the Board, I would like to take this opportunity to
thank all of our staff who have contributed significantly to the
success we have enjoyed during this period.
Summary
Our strategic priorities remain unchanged. Regulatory change is
helping to drive additional customer requirements and we are well
positioned with geographic and architectural reach in order to
generate greater returns in the years ahead.
We are focused on our strategic goals and the investments we
have made in both the platform and acquisitions over recent years
means FFastFill is a better, more balanced business. We will
continue to work hard to increase the scope and scale of the firm.
We enter the next six months with a solid pipeline of opportunities
and expect to maintain the good customer win momentum we have seen
this half.
Whilst some uncertainty still remains, we retain a firm belief
in the strength of our competitive position, supported by the
quality of our product offering and the global nature of our reach.
These factors, coupled with the strength of our order book and of
our pipeline, underpin our current expectations for a successful
outturn to the financial year as a whole.
Hamish Purdey
Chief Executive Officer
Financial Review
Revenue and Gross Profit
Revenue for the six months ended 30 September 2012 increased by
51% to GBP10.9m (H1 11/12: GBP7.3m). Excluding revenue from the WTD
Consulting, Inc business ("WTD") acquired in November 2011, organic
revenue growth was 14%. SaaS revenue grew organically by 21% to
GBP7.4m (H1 11/12 GBP6.1m). SaaS revenue now represents 67% of
total Group revenue (H1 11/12 84%) which now includes Consulting
and additional Software income generated by WTD.
Customer wins during the period have further strengthened the
twelve month order book which now stands at GBP22.1m (H1 11/12:
GBP13.6m, FY 11/12: GBP20.7m) of which GBP15.5m (H1 11/12:
GBP11.4m, FY 11/12 GBP13.9m) is derived from SaaS.
The Group's gross margin has decreased to 80% (FY 11/12: 88%) as
a result of the lower margin WTD Consulting business.
EBITDA and Operating Profit
Adjusted EBITDA* for the period was GBP2.5m (H1 11/12: GBP1.0m).
Adjusted operating profit* was GBP1.4m (H1 11/12: GBP0.1m).
Total operating expenses in the period before acquisition costs,
exceptional items and share based payments were GBP6.2m (H1 11/12:
GBP5.4m). This increase is due entirely to WTD operating costs.
Cost optimisation actions taken in H2 11/12 enabled us to continue
to invest in additional infrastructure without increasing our cost
base organically.
Operating profit was GBP0.2m (H1 11/12: Loss of GBP0.1m) and is
stated after charging share-based payment charges, exceptional
items, acquisition costs and amortisation of acquired
intangibles.
Share based payment charges in the period were GBP0.5m (H1
11/12: GBP0.1m). The year on year increase of GBP0.4m arose as a
result of share award schemes implemented during H2 11/12 and the
inclusion of the cost of share-based contingent consideration for
WTD that is being accounted for as remuneration over the five year
earn-out.
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