TEP Exchange needs to be endowed with new customers

TEP Exchange, the Chester-based company which has a software platform for trading endowment policies, has said it is “exploring additional opportunities to generate income” after losing its main source of revenue.

The AIM-listed company has just published accounts for 2011 which show that it declared a pre-tax profit of £666,082 on revenues of £1m, compared with a loss of £86,458 on sales of £164,776 in the prior year.

The increase in revenues had been achieved after it agreed a deal with SL Investment Management (which owns a 48.26% stake in TEP Exchange) in September 2010 to exploit its software.

SL Investment Management basically agreed licensing fees worth £250,000 per quarter to license, develop and modify its core electronic platform used to trade endowment policies.

However, in April this year SL Investment Management told TEP Exchange that it had not been able to achieve the revenues to cover the licence fees and was terminating its agreement. A temporary extension was agreed, but by August 30 either side can walk away from the deal within 30 days.

The firm’s non-executive chairman, George Kynoch, said that directors were “continuing to maintain strong controls over the company’s cost base” as well as looking for new sources of revenues.

“The market demand for traded endowment policies still remains extremely depressed but the company continues to work closely with market makers in anticipation of increasing demand for policies.”

TEP Exchange finished the year with cash of £73,593 in the bank and
net assets of £22,866, compared with liabilities of £728,446 at the end of 2010.