Regulatory change to drive Focus Solutions

9th Jun 2010 14:12

Focus Solutions, whose software allows firms to provide financial services, has keyed in a 15% increase in full-year profit and anticipates regulatory changes driving further demand.A 3% increase in revenue to £9.6m during the year to 31 March was driven by higher licence sales of focus:360° software, supported by professional service revenues provided to HSBC and other established clients. That gave pre-tax profits a leg up to £2.04m from £1.78m in 2009."The new financial year has started well and trading remains in line with management expectations," said chairman Alastair Taylor. "We are continuing to build a solid pipeline across all our propositions and we continue to see demand being driven by regulation, particularly the RDR (Retail Distribution Review)."RDR will make companies within the retail financial service sector to address the way they sell financial products and services to consumers, although it won't come into force until the end of 2012.But contracts are already being won as a result of the need to transform in time for the new regulations. AWD Chase de Vere and Tenet have employed the services of Focus over the past year.Analysts at FinnCap like the prospects. "The pending RDR is already beginning to deliver substantial disruptive change to the financial services industry and wealth management and retail banking in particular," it said in a note to clients today."We expect significant drivers such as the RDR and growth in demand for financial planning in emerging markets to propel market activity higher over the next 12 months."Adjusted profit before tax is forecast to rise from £2.3m this time to £3m in 2011 and £5.3m the year after on sales of £16.8m. FinnCap's fair value estimate of 70p represents 70% upside to the current share price.Although the cancellation of its share premium account will allow the company to pay a dividend, it is still wary about the fragility of the economic recovery, so is keeping the situation under review.