TechFinancials sees revenues drop 15% in 2H-2015 as it faces a CySEC AML fine


Binary platform provider and operator TechFinancials Inc (LON:TECH) reported its 2015 financials today, indicating a fairly slow second half of the year amid tough conditions for regulated binary options brokers.

For the full year 2015, TechFinancials saw Revenues of $13.6 million, down 12% from 2014. The company’s revenue decline which it saw in the first half of the year continued in the second half, particularly in the company’s ‘B2C’ segment. Revenues at the company’s OptionFair binary brand declined to just $1.7 million in the second half of 2015, about half of what they were in 1H and down fully 64% from 2H-2014’s $4.8 million.

The company’s ‘B2B’ business, providing the TechFinancials binary options platform to other brokers, was a bright spot and continued to steadily increase activity throughout 2015.

TechFinancials revenues by year divided between OptionFair and the platform business…

TechFinancials revenues 2015

…and by semi-annual period:

TechFinancials revenues half year

 

 

TechFinancials also disclosed that on April 27, a subsidiary of the group received a letter of from CySEC indicating that the company may have been in violation of articles of the Cyprus Investment Firm Laws of 2007 and the country’s Anti Money Laundering Law.

Based on discussions between management and CySEC to remedy the violations, it is anticipated that the company will indeed incur a fine from CySEC. The company believes that despite there being a risk of a fine the impact would not be material and no provision has been made in the company’s financials. There is a remote possibility of withdrawal or suspension of TechFinancials’ CIF license, but the directors believe it is more likely the company will receive an administrative fine.

Asaf Lahav, TechFinancials
Asaf Lahav, TechFinancials

According to Asaf Lahav, Group Chief Executive Officer of TechFinancials:

2015 was a transformational year in which we completed our AIM listing. Our B2B software licencing division continued to perform well. However, the Company also had to deal with an increased regulatory environment which impacted our B2C OptionFair business. In response to this, the Group undertook a number of actions to reverse the difficulties it faced due to increased regulatory supervision and we are confident that the Group is now better positioned moving forwards and that we have built strong foundations for renewed growth.

Looking ahead, we will continue to invest heavily in R&D, new markets, ongoing regulatory compliance and marketing activities that will increase our global brand awareness. Our focus in 2016 will be on integrating our new agreements with Optionfortune and IBID, and building on the recent progress made in restoring our B2C offering to profitability. We are pleased to report that the 2016 financial year has started well and Q1 trading was in line with market expectations. We remain committed to creating value for shareholders and we look forward to updating the market on our progress in due course.

Financial highlights for 2015 at TechFinancials:

  • Group revenue decreased by 12% to US$13.6 million (2014: US$15.5 million)
  • Net cash generated from operating activities remains positive
  • Core software licensing revenue increased by 30% to US$8.6 million (2014: US$6.6 million)
  • Trading platform revenues decreased by 44% to US$5.0 million (2014: US$8.9 million)
  • Gross margins increased to 71% (2014: 65%)
  • Operating loss of US$0.1 million (2014: operating profit US$1.0 million)
  • Adjusted EBITDA was US$0.6 million (2014: US$2.3 million)
  • Pre-tax loss of US$0.4 million (2014: pre-tax profit of US$0.8 million)
  • Strong cash position of US$3.4 million as at 31 December 2015
  • Basic earnings per share (‘EPS’) has fallen from a profit of US$0.012 in 2014 to a loss of US$0.0073 in 2015
  • 2016 has started well and Q1 trading was in line with market expectations

TechFinancials 2015 income statement:

TechFinancials 2015 income statement

More details on TechFinancials’ 2015 financials can be seen here.

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TechFinancials sees revenues drop 15% in 2H-2015 as it faces a CySEC AML fine

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