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Software licensing success boosts TechFinancials

Published: 13:00 26 May 2016 BST

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The B2B business increased customer numbers to 56 from 48 a year ago

A regulatory shake-up hit TechFinancials Inc (LON:TECH) but the financial trading group's software licensing arm is blossoming, boosting its shares.

TechFinancials blamed new rules affecting its business-to-consumer (B2C) trading business in Europe for a 12% fall in group revenue to US$13.6mln.

The overhaul linked to Europe's new Markets in Financial Instruments Directive sparked disruption that reduced trading platform revenues by 44% to US$5mln versus a year ago.

It caused the group’s adjusted underlying earnings to drop to US$600,000 from US$2.3mln last time.

TechFinancials - which listed on AIM in March last year - made a US$400,000 pre-tax loss against a profit of US$800,000 previously.

But its shares rose almost 10% to 13.19p on Thursday as its business-to-business (B2B) software licensing arm lifted revenue 30% year-on-year.

The B2B business, which supplies trading technology to brokers in return for regular performance-based fees, increased customer numbers to 56 from 48 a year ago.

It is launching new products and plans to expand its B2B services in Asia-Pacific by opening a Hong Kong office and developing a regulated product for Japan.

Chief executive Asaf Lahav said regulatory changes were still affecting its consumer business.

But the company has signed up two partner companies to help it, which Lahav said had left it better-placed.

TechFinancials is hoping they will assume responsibility for activities such as marketing, freeing it up to focus on providing technological expertise.

Lahav said: “We’re already seeing positive results.”

He said the new financial year had begun well and first quarter trading was in line with hopes.

“Going forward, the B2C business will be bigger in revenue than B2B, but B2B will be bigger in margins and its contribution to the bottom line,” he said.

“We’re more focused on B2B now but the two deals we’ve done for the consumer business will allow us to grow it quite significantly in the coming years.”

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