UPDATE 2-Fidessa beats FY forecasts, sees 2009 growth

Mon Feb 16, 2009 5:55am EST

* Year sales up 40 pct, pretax up 111 pct

* Targets continued growth in 2009

* Says market conditions cloud short-term view

* Shares rise as much as 14 percent

(Adds company comment, analyst reaction, share price)

By Paul Sandle

LONDON, Feb 16 (Reuters) - British software company Fidessa reported a better-than-expected rise in full-year revenue and profit, and said it expects growth in 2009 despite uncertain market conditions, boosting its shares by as much as 14 percent.

Fidessa (FDSA.L), which supplies trading platforms to banks and financial institutions, on Monday posted a 40 percent rise in revenue of 189.1 million pounds ($273.2 million) and a 111 percent rise in pretax profit of 36.0 million pounds for the year to the end of December.

Analysts were expecting revenue of 176.0 million pounds and pretax profit of 21.8 million pounds, according to a company-supplied consensus.

Chief Executive Chris Aspinwall said Fidessa's sell-side and buy-side products were finding favour with banks looking to cut costs by standardising operations, and it was also benefiting from the rise of alternative markets and asset classes.

"We are providing the technology to enable people to trade more efficiently," Aspinwall told Reuters in an interview.

Shares in the group rose as much as 14 percent to a four-month high on Monday, and was up 8.6 percent at 651.5 at 1049 GMT, as analysts upgraded forecasts for 2009.

"These strong results reflect a combination of buoyant markets, market share gains and limited revenue loss from recent turmoil in the investment banking industry," said RBS analysts, who upgraded their 2009 pretax profit forecast by 14 percent.

Jefferies analyst Milan Radia said revenue in 2009 should rise by about 20 percent.

"As exchanges themselves implement major technology upgrades, participants have an impetus to keep up, benefiting third-party vendors such as Fidessa," Radia said.

Aspinwall said Fidessa had been affected by the banking turmoil in the autumn -- Lehman Brothers was a top 10 customer -- but equities trading activities had been reasonably resilient.

"In 2008 a number of banks ran into difficulties but the equities business was very sound," the CEO said, adding that the group resumed activities with Nomura Securities (8604.T) after it took over Lehman's operations.

DARK POOLS

Fidessa has also been boosted by the emergence of complex trading products, such as those that are used to access dark pools -- private, anonymous trading venues that compete with exchanges for contracts.

Fidessa monitors the fragmentation of liquidity, which helps customers decide when to trade on a single venue or use an advanced service to access other trading products, Aspinwall said.

"There is a trend (towards fragmentation), although on the days when there was considerable panic, liquidity went back to the main market," he said.

Aspinwall also said the company also was expanding its coverage of other asset classes, including derivatives on the sell-side and fixed income on the buy-side, which was helping to offset some pricing pressure.

Fidessa, whose systems handle about 70 percent of transaction volumes in London, said it believed it could continue to grow in 2009, but uncertain market conditions made it difficult to forecast the level.

"We still expect some (underlying revenue) growth in the next year," Aspinwall said.

Fidessa increased it total dividend in line with earnings per share, resulting in a 36 percent increase to 24.5 pence a share. ($1=.6920 Pound) (Editing by Rupert Winchester and Karen Foster)

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