US tax reform to give First Derivatives financial boost
Newry financial software and consulting firm First Derivatives has said it expects to benefit from tax cuts in the US as it reported strong trading in the second half of the year.
In a trading update, the AIM-listed company, which has now branched out into other uses for its technology beyond financial markets, said revenue would likely be ahead of the forecast £180.2m.
And it said it had analysed the impact of the US Tax Cuts and Jobs Act, which has cut the US Federal corporate income tax rate form 35% to 21%. "The US tax reform is expected to benefit the group through an ongoing reduction in the group's effective tax rate of 4-6%, in a preliminary view."
During the last 12 months, it has also signed up clients in new sectors, including the Formula 1 Red Bull team and Airbus defence and space.
It has signed a deal with a FTSE 100 gaming company for the use of Kx to provide data analytics, as well as acquiring analytics software business Teleconomics.
The company, which is based in Newry but has offices around the world, now employs around 1,700 people. In a note, investment bank Investec said the second half results - which will be announced on May 22 - were expected to be similar to the first half, with revenue growth of over 20%.
And it added that the update suggested there would be acceleration in earnings before interest, taxes, depreciation and amortization (EBITDA). Investec added: "We see this as driven by capital markets strength and an acceleration in marketing technology performance in the second half. "These have been the two key drivers of growth in the last three years, but contribution from other vertical markets should now start to layer on additional growth." And it said revenue from uses of its technology in other vertical markets should start to grow from the £2.7m of the first half - mainly driven by a contract announced last year with a Fortune 500 fault detection solution provider announced in March 2017.