Alexander Tsikhilov, the incoming Chief Executive Officer of Admirals Group, has confirmed to Finance Magnates that the broker will undergo “some structural optimization” under his leadership.
“Partly, this will involve changes in the composition of the staff, but they will not be significant,” Tsikhilov said. “We do not plan to undertake any fundamental changes in the infrastructure.”
Headquartered in Estonia, Admirals now employs about 400 staff. Tsikhilov highlighted that the upcoming move will be more “about resource rebalancing, adjusting the strategic focus on geography and products.”
Co-Founder as the New CEO
Tsikhilov is one of the co-founders of the brokerage and had already steered the company as the CEO before. He was appointed Chairman of the Supervisory Board of Admirals Group in 2017.
He will assume the top executive role from 1 March as its sitting CEO, Sergei Bogatenkov, will depart from the role on 29 February after seven years. Bogatenkov joined Admirals in 2014 as the Chief Financial Officer and was promoted to CEO in 2017 when Tsikhilov moved up to Chairman.
Tsikhilov confirmed to Finance Magnates that his recent appointment to the top executive role is “permanent” as the broker is “not anticipating” the appointment of another CEO.
Apart from Bogatenkov, Admirals’ Executive Director in Cyprus, Andreas Ioannou, will also separate from the company next Thursday. Both of them handed in their resignation on 17 January.
“We have come to understand that we and the departing colleagues have different views on the company's future development,” Tsikhilov said.
“In recent years, the company has seen quite significant infrastructure growth, obtained several new licenses, and established new company representations in various regions of the world. At this point, I believe we need to start using the opportunities that have opened up for the company's development more effectively and focus on enhancing the competitiveness of the company's products and services. In other words, make a strategic emphasis on strengthening the company's current position in the markets where it is already present.”
Admirals made further changes to its board, basically reshuffling its positions. Tsikhilov said the changes were made to assist him “in implementing the necessary changes in operational processes.”
“Their positions in the Supervisory Board have been filled by specialists with competencies that were not fully represented there before,” he said.
Benefiting from Estonian Tax Regime
Despite its headquarters in Estonia, Admirals decided to withdraw its local Estonian license last year. According to Tsikhilov, the move was made due to its license duplication: Admirals also has an active Cyprus license.
“We are in the process of structural optimization, as a result of which we have decided to withdraw the license in Estonia,” Tsikhilov added. This decision was made several years ago and is currently in the process of being implemented,” said the incoming CEO.
Tsikhilov pointed out the “very attractive tax system” of Estonia, where corporate profits reinvested in further development are not taxed, and it is a highly developed digital state, well-suited for IT developments.”
However, the group will continue to remain in Estonia.
“Nevertheless, we are not leaving Estonia - our group itself is an Estonian company, and in addition, there are two more Estonian companies in the group, one of which has a local license for peer-to-peer lending services. That is, we had four Estonian companies in the group; now there will be three.”
Challenges and Future Plans
As the incoming CEO, Tsikhilov will have to tackle the weakening financial performance of the company. It turned a net loss of €4.8 million in the first half of 2023 as its revenue declined by 50 percent to €21.1 million. In contrast, the broker generated a net profit of €24 million in H1 2022.
“In our industry, market volatility plays a significant role, affecting the profitability of brokerage firms,” Tsikhilov said. “As is known, in 2023, volatility was close to historical lows. At the same time, the company made significant investments in expanding its global infrastructure, which impacted the overall financial result.”
Pointing at the focus of the business in the near future, Tsikhilov remarked: “We aim to focus on the development of our core products, including in new regions where the company has recently gained the opportunity to operate.”
“Currently, the company holds 11 financial licenses in various countries around the world… Some of these licenses were obtained quite recently (South Africa, Kenya, Canada, UAE), and we will primarily focus on expanding our activities in these countries and regions. Then, we will continue our geographical expansion into other countries that we identify as having the most perspective.”
