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First Derivatives seeks Brexit boost as firm's revenues soar

By Margaret Canning

The chief executive of Newry financial software company First Derivatives has said it hopes to benefit from the "down draft" of cost-cutting actions by banking clients following Brexit.

Brian Conlon spoke as the AIM-listed firm beat its own predictions with a 30% leap in sales in the last year to £151.7m.

He said the company had already benefited from a decision by a major Japanese bank to move a function from London and outsource it to First Derivatives staff in Newry.

This week banking giant JP Morgan announced it had bought an office in Dublin as part of its Brexit planning.

Mr Conlon said: "What we are seeing is that banking clients in the wake of Brexit are looking at new locations, as JP Morgan has done with the purchase of new offices in Dublin.

"But they are also looking at cost-cutting where possible, and one Japanese bank has already moved a function from London to us in Newry to save costs."

He said 30 First Derivatives staff were now working on the function and that the company was bidding to increase the size of the team working on the function to 90.

Mr Conlon said he expected more banking clients to make similar moves in future. He said First Derivatives was continuing work on seeking out new vertical markets for its Kx technology, which allows for the analysis of fast-flowing data.

Teams have been hired to analyse Kx's uses in retail and utilities. But Mr Conlon would not reveal how far First Derivatives was from making an announcement of a deal for Kx use in the sectors. "I'll have to plead the fifth on that," he said.

Revenue at the listed company in the year to the end of February was up from £117m over the same period a year earlier - and surpassed the company's own expectation of a rise of 23%.

Pre-tax profits were also up 20% to £12.5m.

The company, founded by Newry-born Mr Conlon, employs around 1,700 people around the world. It provides consulting services as well as software.

So far it has adapted its Kx technology into new markets, including precision engineering and the defence sector.

It has signed a contract with a Fortune 500 precision engineering manufacturer for the use of Kx to analyse sensor data.

And it is collaborating with Airbus Defence and Space to use Kx as a platform to analyse Earth observation data.

First Derivatives has offices in London, New York, Stockholm, Philadelphia and other global locations, while maintaining headquarters in Newry.

Chairman Seamus Keating said: "During the year we made strong progress on our strategic objectives, while delivering a solid financial performance.

"Our increasing scale is leading to larger, longer-term managed services and consulting engagements, and we are confident this trend will continue as we develop our service capabilities.

"Demand for the ultra-high analytics processing Kx delivers continues to grow, and this is reflected in a strong pipeline of opportunities across the business."

The company said it had also had a strong start to the present financial year.

Gerry Hennigan, analyst at Goodbody Stockbrokers, said: "We see little in the outcome to dissuade us from the growth potential to be derived from the apparent opportunities both within its traditional financial services franchise and via extension into 'new verticals'."

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