FFastFill (LSE: FFA), the leading provider of Software as a Service (“SaaS”) trading technologies to the derivatives market, is pleased to announce interim results for the six months ended 30 September 2009, showing robust progress despite a difficult market background.

Financial Highlights

• Revenues up 3% to £7.04m (H1 08/09: £6.83m)
  • SaaS revenues up 27% to £5.11m (H1 08/09: £4.02m)
• 12 month SaaS Order Book stands at £10.51m (H1 08/09: £8.95m)
• Gross Profit up 17% to £5.86m (H1 08/09: £5.01m)
• Benefits of cost efficiencies being felt across the business
• Operating profit up to £0.5m (H1 08/09: loss of £0.4m)
• Strong cash position: £3.1m at 30 September 2009 (£2.2m at 31 March 2009)
• Excellent operating cash conversion before investment in core infrastructure and Asia
  
  

Operational Highlights

• Notable new client wins across the front, middle and back offices, including, Prudential Bache, Liquid Capital, Mako, Ignis and SVS
• Continued investment in product development, in particular in our middle office solutions
• Phase One of the Asia expansion completed, linking our London and Chicago data centres to the Far East

Commenting on the results Keith Todd, Executive Chairman of FFastFill said:

“I am pleased to be able to report a robust performance in the half year to 30 September 2009. This performance was delivered in a market recovering from the financial storms of 2008 and resulted from the strength of our SaaS business model and the effect of the cost saving that we delivered. With renewed stability and confidence returning to our markets, we are cautiously optimistic that will be able to continue to grow strongly.”

For further information please contact:

FFastFill plc +44 (0)20 3002 1900
Keith Todd, Executive Chairman
Hamish Purdey, Chief Executive Officer

Canaccord Adams +44 (0)20 7050 6500
Simon Bridges
Andrew Chubb

FinnCap +44 (0)20 7600 1658
Charles Cunningham

Financial Dynamics (Financial PR) +44 (0)20 7831 3113
James Melville-Ross / Matt Dixon / Emma Appleton

Chairman’s Statement

I am pleased to announce a robust performance in the half year to 30 September 2009. Particular highlights were the 27% growth in our core SaaS revenues offsetting declines in other revenue streams, and a significant increase in profitability delivering an operating profit of £0.5m (H1 2008/9: Loss £0.4m). Our closing cash balance was also strong at £3.1m (H1 2008/9: £1.37m).

This performance was delivered in a market recovering from the financial storms of 2008 and resulted from the strength of our SaaS business model and the effect of the cost saving that resulted from the cost efficiencies we delivered.

There have been a number of notable new customers wins in the first half and we have strengthened our already strong position in the LME market despite increased competition. Our Asian Pacific expansion strategy, announced in November 2008, is starting to bear fruit and we have completed the implementation of phase one of our Asian infrastructure rollout, connecting our London and Chicago data centres to Singapore, Hong Kong and Tokyo. It continues to be a focus for us particularly given the fact that the Asian market is expected to grow faster than other regions in the years ahead, especially as it migrates its trading environment to a fully open, electronic world. The list of active local prospects is building and we look forward to a bright future in Asia Pacific, in addition to our prospects in Europe and the US.

The effect of the 2008 crisis will be felt through our current financial year - firms that have merged are still completing their integration programmes and new entrants, established to take advantage of the turmoil, are taking time to get going. We said that 2009 would be the calm after the storm and this has proved correct. However, we are now seeing the emergence of a more normal business environment and budgets for new initiatives which are now being put in place for 2010. This will help underpin our growth through 2010. 

The regulatory pressure on the ‘over the counter’ (OTC) market, led by the US administration, is intense and looks like it will lead to fundamental change in the OTC market. Significant parts of the market will be required to be centrally cleared through one of the International Clearing Houses. As this change process unfolds through 2010 into 2011, we expect FFastFill’s addressable market will grow significantly, for in particular our middle and back office components.

I am also pleased to confirm that the process to convert our share premium account to distributable reserves was successful and we are now in a position to consider dividend and share buyback programmes at the appropriate time. 

Following our robust performance in H1, our SaaS business model has proved to be highly effective through these challenging times. With stability and confidence returning to our markets, we are cautiously optimistic that we will continue to grow strongly.

Keith Todd CBE
Executive Chairman

Chief Executive Officer’s Review

Introduction
The Company has continued to make good progress during the first half of 2009/10, as indicated by the increase in operating profit, despite the troubled economic conditions. We are confident in the future and believe that FFastFill is well positioned to take advantage of an improving economic environment.

Contract Wins during the Year
In terms of new business, FFastFill continues to win SaaS mandates from major financial institutions. Wins during the half included, among others, Prudential Bache, Liquid Capital, Mako, Ignis and SVS. These solutions ranged from front office, through middle office and into the back office. Our new customers have been particularly impressed by our offering’s flexibility, underlining the strategic rationale behind our focus on SaaS. The buy side continues to be a target for our technology solutions driving greater efficiencies into the trade cycle.

Throughout the half, we have also continued to phase out legacy software with conversions from Viewpoint to SEALS for many of our middle office customers. SEALS is providing an industry leading middle office solution and has beaten the incumbent provider in a number of competitive tenders.

Developing our End-to-End offer
We continue to improve our product offerings - from front through middle and back - in terms of functionality and scalability. The combination of the NG platform and the Eclipse back office platform lays a solid framework for future growth, using best of breed technology in both areas to deliver customer requirements.

Front Office
During the period, the front office platform has continued to grow in terms of functionality and capability. The NG platform is monitored and supported 24 hours a day with one service methodology and one service management platform. It provides functional benefits over competitive offerings and is significantly easier for brokers to deploy to their customers. LME continues to be a strong market place for us and FFastFill has benefited from LME’s move towards electronic trading. However, there remains a significant number of firms who are yet to move towards electronic trading, and this provides us with great opportunity to further leverage our leading position within the LME market.

Middle Office
The SEALS product integration continues and European and US customers are now benefiting from the SEALS workflow interface approach to their middle office requirements. The increased scalability that has arisen sets the product in good stead for increased ETD volumes as and when they occur. Conversions from Viewpoint continue to go live and the shift to the new technology base is a key focus in the second half of the year. We have also continued to invest in new markets and new connectivity to Eurex 12, EDX/OMX, Tokyo (TSE), Osaka (OSE) and the migration at Singapore (SGX) to SGXClear. Tokyo Futures Exchange (TFX) is in development with its release a key deliverable in the second half.

Back Office
The Eclipse platform continues to expand and win new customers on both the buy and sell side. The increased focus on regulatory change especially in the USA will be most keenly felt for us in the back office arena and we are currently investing in developments for these OTC centrally cleared process changes. The conversion to one code base as well as the migration to a HP Intel Linux platform has provided significantly increased scalability and optionality in terms of deployment.

Risk
RiskPro has continued to grow during the period and integration to the different trade flows has improved. Real time P&L and intra day margin calculations are essential to all futures businesses and we have demonstrated to a number of customers the benefits of these metrics and our ability to deliver timely and accurate data.

Asian Expansion
During the half, Phase One of the Asian infrastructure roll out has been successfully delivered. This has connected Hong Kong, Singapore and Tokyo to our global network and built the foundation on which we can build the ability for local participants to access global markets through a local connection. The technology employed makes very efficient use of bandwidth for wide area networks.

Service and Quality
We have continued to innovate in our service management methodologies and technologies. We have been able to leverage our hardware platform and network infrastructure to continue to provide more functionality and capability within the existing data centre footprint. Thus not needing to extend the number of data centres we use. Advances in technology and the migration to the HP Intel platform in the back office have been significant factors in these advances.

Internal Process
We have continued to invest in the integration of internal staff systems in order to increase productivity and efficiency. Our graduate recruitment program as well as some targeted staff relocation has enabled us to continue to recruit and train the right balance of staff in the right locations. We have added a new senior recruit to the North American business, who brings significant industry experience to the team.

Operational Priorities
Our priorities for the second half of 2009/10 are fourfold. First, we will continue to work to integrate of the SEALS middle office functionality within the NG architecture, in order to allow greater functionality for our customers. Secondly, we will continue to build and deploy our Asian infrastructure to regional customers. Thirdly, our ongoing efficiency drive continues and finally, we will continue to invest in optimising our service delivery platform to ensure we provide the best possible service to our customers. 

With the renewed level of stability in the market, we believe the business is well placed to benefit from the steps we have taken to reduce cost as well as increase efficiency and output from our service platform. This combined with the Company’s market position, progress in winning new business, extensive product suite and, the broadening of our sales pipeline together with our strong recurring model leaves the Company well placed for the future. 

Hamish Purdey
Chief Executive Officer

Financial Review

Total revenue during the period grew 3.1% to £7.04m (H1 2008/09: £6.83m) within which core SaaS revenue grew by 27.12% to £5.11m. Third party cost revenue fell by £0.48m, which led to a better margin achieved on revenue. Revenue from SaaS related work accounts for 73% of total revenue (H1 2008/09 59%), thus underpinning the already high quality of our recurring revenue base (this excludes third party licence fees passing through our revenue). Our ‘12 month Order Book’ now stands at £13.64m (H1 2008/09: £12.33m), with our SaaS Order Book increasing 17% to £10.51m (H1 2008/09: £8.95m).

Our top 20 customers account for 76% of total revenue (H1 2008/09: 81%), with the revenue of these top 20 now standing at £5.31m (H1 2008/09: £5.52m) at the close of the six month period and representing an annualised average of £0.53m per customer (H1 2008/09: £0.55m).

EBITDA for the period was £1.47m (H1 2008/09: £0.24m). The Company recorded an operating profit in the first half of £0.50m (H1 2008/09: Loss of £0.42m). This increase in profitability was achieved through growth in revenues, greater margin achieved on revenue and the benefits from the cost reduction programme, which was announced in March 2009.

The total operating expenses at £6.54m (H1 2008/09: £7.24m) include three elements; Cost of Sales, covering third party licences sold directly to a customer and cost of development of specific customer funded work; Amortisation and Depreciation; and Company overheads (Opex).

Amortisation and Depreciation increased during the period by £0.31m to £0.97m (H1 2008/09: £0.66m).

The Company’s overheads decreased by £0.38m from £4.77m in H1 2008/09 to £4.39m in the period, following the implementation of the cost reduction programme announced in March 2009.

Cash at the half year was £3.08m (H1 2008/09: £1.37m). During the half year, £0.25m was repaid in borrowings and £0.15m was paid in relation to the acquisition of Exchange Technology Pty Limited.

                                              
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period ended 30 SEPTEMBER 2009

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 SEPTEMBER 2009

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDING
30 SEPTEMBER 2009

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDING
30 SEPTEMBER 2009

CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the period ended 30 SEPTEMBER 2009

NOTES TO THE CASH FLOW STATEMENT

A.  Reconciliation of net loss to net cash flow from operating activities

NOTES TO THE HALF YEARLY REPORT

1   Basis of Preparation

The consolidated half yearly financial information has been prepared on a consistent basis with the accounting policies that are expected to apply in the full year financial statements for the year ending 31 March 2010, which will be prepared in accordance with International Financial Reporting Standards as adopted by the EU. 

The current and comparative periods have been prepared using the accounting policies and practices consistent with those adopted in the annual financial statements for the year ended 31 March 2009 except the adoption of IAS 1 Revised.

The Group’s segment information has already been based on the management reporting structure and therefore the operating segments are the same as previously reported. 

They were approved by the board and authorised for issue on 19 November 2009.

2   Significant Accounting Policies
 
Revenue
Revenue, which excludes value added tax, represents the value of goods and services supplied. Where income relates to future services or there are associated ongoing costs the income is spread over the life of the provision of the service. All other income is recognised on delivery.

Share-based payments
The Group operates two share options schemes; the Enterprise Management Incentive Scheme and the 2003 Share Option Scheme (HM Revenue & Customs unapproved). The fair value of options is recognised as an employee benefit expense with a corresponding increase in reserves over the vesting period. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

Share option and warrants granted prior to 7 November 2002, have been excluded from the share-based payment calculation, as permitted by IFRS 2 Share-based payment.

Internally generated intangible assets – software development expenditure
The Group considers that the regulatory, technical and market uncertainties inherent in the development of new products and technologies means that the internal software development costs should not be capitalised as intangible assets until the commercial viability of a project is demonstrable and appropriate resources are in place to launch the product. Research and development expenditure prior to this point in time is expensed as incurred.

An intangible asset arising from development is only recognised if all of the following conditions are met:

1. The intangible asset is considered to be technically feasible and the project to create it is sufficiently resourced to be capable of completion.
2. There is an intention to complete the asset and both the intention and ability to sell it.

NOTES TO THE HALF YEARLY REPORT

1. It is reasonably expected that the asset is likely to generate net future economic benefits.
2. Development costs in relation to the asset can be reliably measured. Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses. The expenditure capitalised includes the cost of materials and direct labour. Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of the products concerned. The amortisation period for development costs incurred on the Group’s development is five years.

3   Segmental Information

Geographical segment
The Group operates in one business; that of the provision of application services for use in the global financial markets. The segmental analysis by region is presented below.

During the period to 30 September 2009, the group generated 11.45% of revenue from one customer.

NOTES TO THE HALF YEARLY REPORT

3   Segmental Information (continued)

During the period to 30 September 2008, the group generated 17.35% of revenue from one customer.

NOTES TO THE HALF YEARLY REPORT

3  Segmental Information (continued)

During the year to 31 March 2009, the group generated 11.82% of revenue from one customer.

NOTES TO THE HALF YEARLY REPORT

4  Finance income

5  Finance costs

1. Exceptional Items

The exceptional item included in the half yearly accounts for period ending 30 September 2009, relates to costs of integrating the two London offices.

As FFastFill reaches the end of this development phase, the advances that have been made in software and operational processes over the past few years are resulting in new productivity gains which have facilitated several cost reduction opportunities. As a result of this FFastFill has been able to effect various cost saving measures through some staff reductions and building and data centre consolidation. Included in the annual accounts year ended 31 March 2009 accounts, is an exceptional item of £0.6m to facilitate these reductions.

The exceptional item included the half yearly accounts for period ending 30 September 2008, relates to the reorganisation costs of integrating Exchange Systems Technology Limited (now known as FFastFill Post-trade Processing Limited) into FFastFill plc and its subsidiary companies.

NOTES TO THE HALF YEARLY REPORT

7  Taxation

Any profits made by thee group during the period, where offset against losses made in previous periods.

8  Basic earnings per share and fully diluted earnings per share

Profit/(loss) per share is calculated by dividing the loss attributable to ordinary shareholders for each period by the weighted average number of ordinary shares in issue during each period, as follows:

Share options were non-dilutive for the period ended 30 September 2008 and for the year ended 31 March 2009, as the group incurred a loss.

NOTES TO THE HALF YEARLY REPORT

9  Called up share capital

1. Financial information

The financial information set out in this half yearly report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  The financial information for the six month periods ended 30 September 2009 and 2008 is neither audited nor reviewed. Information relating to the year ended 31 March 2009 is derived from the statutory accounts for that period, which have been reported on by the company’s auditors and delivered to the Registrar of Companies. The auditors’ report on those accounts was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

11   Half yearly dividend

The directors do not intend to declare a half yearly dividend.

12  Share premium account

Accordingly the cancellation of the share premium account is now effective. This now enables the Company to consider the payment of dividends in the future.