Full year results from software and services company First Derivatives surpassed analyst expectations. Pre-tax profits raced up 42% to £577,000 on sales ahead by more than £1m at £2.7m. The company, which operates two financial markets focused divisions and a fledgling e-business arm, was buoyed by an upturn in second-half trading. Encouragingly, managing director Brian Conlon asserts that this improvement has continued into the current year. To Conlon First Derivatives' recurring revenue streams are integral to its success. 'Last year 53 per cent of our turnover came from repeat business [principally through support contracts],' he explains, 'and anything we make on top of that we can use to invest in new products.' Conlon's comments represent a clear change in the company's approach; he even admits that 'we are now turning ourselves into more of a product company than a pure software company'. This decision reflects the believed potential of the company's Kx division. Kx is a California-based database software producer and, to date, Conlon and his team - who continue to develop applications to augment the basic technology - have managed to sell its offerings into eight of the ten largest investment banks in the US. With the company expected to generate a £1.1m profit for the year to February 2005, First Derivatives' shares trade off a prospective p/e of 11.7 and are forecast to yield a 2% dividend. They look worth picking up at present levels.