UPDATE 1-Fidessa sees better times ahead for equities brokers

Mon Feb 11, 2013 5:28am EST

* Says upturn in equity markets could help its customers

* Sees 2013 performance broadly flat on 2012

* Shares up 4.1 pct

By Paul Sandle

LONDON, Feb 11 (Reuters) - Software group Fidessa said the strongest sentiment in equity markets in five years could signal a return to more stability among its financial-sector customers, after lower trading volumes in 2012 hurt profit.

Buyers of Fidessa's equity-trading software, particularly small and mid-sized brokerages, have struggled during the financial crisis with a fall in trading volumes forcing some out of business and others to merge.

Fidessa Chief Executive Chris Aspinwall said this year had got off to a good start, after the global value of equity trading fell by around 20 percent in 2012 on top of the already depressed levels of the previous year.

"We've seen some good inflows coming back into the equity markets," he said on Monday.

"We have got a better market sentiment coming into this year than we've had for probably the last five years."

He said that while it was too early to know whether this was a turning point, a floor would eventually be reached in the decline of equity markets which would allow Fidessa's customers to gradually return to a more stable state.

The group said it would continue to invest in new platforms, like derivatives, and in regional expansion. As a result, performance in 2013 would be similar to last year.

The company said it would once again pay a special dividend of 45 pence a share, in line with a payout in 2011, while it increased its annual dividend by 1 percent to 37 pence.

Shares in the group were up 4.1 percent at 1,589 pence by 1023 GMT, the second-largest mid-cap gainer.

Jefferies analyst Milan Radia said growth should return as downward pressure on prices and churn, or customers dropping the service, should reduce in the next two years. Churn was around 7 percent in 2012, he said.

"As equity market conditions improve, we believe pricing pressure will abate, while churn is expected to reduce to nearer 5 percent points in 2013 (assuming no further material bank closures," he said.

Fidessa reported a 1 percent dip in adjusted pretax profit to 42.7 million pounds ($68 million) on broadly flat revenue of 278.6 million pounds for the year to end-December. The results were broadly in line with market expectations.

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