ActivTrades PLC, an online broker offering contracts-for-differences (CFDs) and Forex trading services, has published its annual financial report ending on December 31, 2019, showing a net loss of £7.1 million, compared to an £11 million profit the previous year.
In the financial accounts filed with the UK’s Companies House, the broker detailed that before taxes, it recorded a loss of £8.3 million and its shareholders’ funds for the year also went down by 12.4 percent to £50 million.
The negative numbers were the result of a 46.7 percent drop in annual turnover - for 2019, the broker recorded £20.6 million in its total revenue, compared to £38.7 million in 2018. This massive drop was mainly due to the 42 percent fall in average trading volume on the platform.
ESMA's restrictions turned out to be a major setback for brokers
“Trading volumes have been heavily impacted by leverage restrictions introduced by the European Securities and Markets Authorities (ESMA) in August 2018 and lower market volatility,” the filing noted.
Notably, the broker cited the implications of these ESMA restrictions in 2018 following a 42 percent drop in its trading volume that year, Finance Magnates reported.
The recent financials also showed that the Group’s direct cost of sales fell by 10 percent in 2019 to £1.8 million, compared to £2 million in 2018, while its administrative expense (excluding FX revelations) increased 8 percent £27.9 million.
Along with the negative numbers, the Group’s interest income increased significantly to £2.3 million from £0.8 million in 2018, primarily by the £1.8 million generated from its real estate lending.
Booming business in 2020
While the company reported a poor 2019, its business rebounded for the first half of 2020, mainly because of the increased market demand for COVID-19 induced volatility.
ActivTrades told Finance Magnates that it recorded £30.9 million in revenue for the first half of 2020, making it the first half-yearly result for the broker. With this jump, it is expecting to record a profit of £19 million.
"We are very pleased with this performance. We were expecting a strong year but this goes beyond our estimates and bodes well for future growth," ActivTrades CEO Alex Pusco told Finance Magnates. "The return of volatility globally has helped and we have also seen a strong increase in clients in various regions. At this turbulent time for markets, ActivTrades has benefitted from its reputation as one of the most efficient and trusted online brokerages."
Apart from the annual financials, the broker also revealed that it added 6,681 new customers in 2019 – a 7 percent fall from 2018. With this, the total number of clients at the end of the year stood at 15,972 clients. This fiigure jumped by 73 percent in the first half of this year.
"These impressive numbers also highlight the success of our new platform ActivTrader, which is easy to use, very innovative and offers fast order execution. Clients are certainly rewarding us for this upgrade," Pusco added.
