Financial-sector focused software and IT solutions provider First Derivatives continues to grow and has banked encouraging interim results to August, sending the shares soaring.

First Derivatives, which boasts a number of blue-chip investment banks amongst its portfolio, reported profit before tax of £1.17 million, an 80% rise, on turnover increased 52% to £4.18 million. Earnings per share were improved 68% to 6.2p, and a maiden interim dividend has been proposed at 1.4p per share.

According to managing director Brian Conlon, the company continues to benefit from the current trends towards outsourcing. Many large firms are shifting IT operation out of house, often to Asia, and Conlon sees First Derivatives as a near-shore alternative. ‘Although we can’t beat them on price, we do have a better understanding of the market, are able to have personnel on site and consider ourselves at the higher end of the consultancy market.’

The group, says Conlon, remain highly cash generative with a continuing pipeline of products in research and development. In addition, the company is now moving into a position where it can benefit from the sale of software from American strategic partner Kx Systems. The board expects improved performance to continue into the second half.

Analysts at house broker Corporate Synergy reiterate this sentiment, forecasting turnover of £8m for the year, and profit before tax of £2.2m. Earnings are estimated at 11.9p and 13p for this year and next respectively, equating to a prospective p/e and sector discount of 13.3 and 12.2 times at the current 153.5p share price, up 23p today. Growth Company Investor originally recommended the shares at 75p. Add.