FFastFill has the solution

FFastFill, a provider of software to the derivatives sector, is looking forward to the opportunities presented to it by a growing Asian market, with the company also keeping an eye on Germany. An AIM veteran, having joined the junior market in 2000, FFastFill develops a range of back, middle and front office solutions. Its back office offerings include Eclipse – post-trade software that enables exchanges to process orders on products including CFDs, bonds and equities. It is used by a number of exchanges, including the Chicago Board of Trade and the Bombay Stock Exchange. Its other back office technology is SAM – a settlements programme for processing the transaction of securities and used by a number of market makers, stockbrokers and banks.

Meanwhile, its front office software includes spread-trading solution Spread Trader, trade execution technology Tracking Pro and its trading software Trading Pro. It has recently added to its front office technology with the launch of its Horizon service, launched in March of this year. Horizon allows trading companies and brokers access to more than sixty trading venues without having to pay for access to direct membership of those trading venues.

The London-headquartered concern recently unveiled a strong set of full-year results for the year to March, in which it reported pre-tax profits of £1.83 million (2010: £1.2 million) on turnover up 8.7 per cent to £15.5 million. Chairman Keith Todd enthused that the company had made ‘steady progress despite the turbulence’, noting that its back office business ‘has demonstrated its robustness’.

There were a total of 13 contract wins over the period, with deals with customers for its front office services including the Bank of Nova Scotia, Société Générale, stockbroker Bell Potter and Japanese trading group Mitsui Bussan. With a total of five contract wins in Asia, Todd noted that this was facilitated through the business previously known as Exchange Technology, the Australian company it bought three years ago for £4.8 million and which had significant customers across Asia.

Looking forward, Todd noted that there is a trend away from OTC (over the counter) trading and towards the use of central counterparty clearing, adding that ‘volatility is good for us’ and that any possible changes in interest rates could ‘spark an increase in the volume of derivatives traded.’ He notes that opportunities exist to grow further in China and to develop its back office division in North America, which he adds FFastFill will be considering in the next year or so.

Analysts at I S Research are forecasting pre-tax profits of £2.8 million on sales of £16.6 million for the year to March 2012, with profits forecast to grow £400,000 the following year on sales of £18.2 million. EPS of 0.5p and 0.6p are forecast for 2012 and 2013, respectively.

Shares in FFastFill have more than tripled since a 2006 price of 3p and have increased rapidly of late, currently trading at a five-year high. With plans to grow its specialist technology further in Asia and with development of new technology currently underfoot, we think it could well be the right time to invest. With some strong growth prospects in line and plans to benefit from the increasing desire for regulation in the sector, we think the shares are worth buying.