Financial software specialist First Derivatives says profits for the year ending this month should be ‘materially ahead of market expectations’.

Headed by managing director and majority shareholder Brian Conlon, First Derivatives has become a star AIM performer, benefiting from a trend among its blue-chip clients to outsource the services it provides. The company, which made £1.5 million pre-tax profit on £6.3 million turnover in the year to last February, almost doubled profits to £1.2 million in the first half of 2006-07 on £4.2 million turnover and is now clearly set to turn in full-year pre-tax profits well ahead of previous market estimates of £2.2 million on £8 million turnover.

First Derivatives, based in Newry, County Down, Northern Ireland, said ‘the strong trading momentum that has characterised the beginning of the year has continued into the second half’. The company argues new customer wins and increased take-up of its Kx Systems technology have been the causes of its ‘enhanced profitability’.

Floated at 50p in 2002 and recommended by Growth Company Investor at 75p two years later, First Derivatives shares were 35p up this morning at £3, valuing the company at £38.6 million. Partial profit-taking could be prudent, though there could well be more to go for.