Z.com Trade Posts Second Year of Massive Losses

For the second consecutive year the FCA-regulated broker, Z.com Trade, part of Japan-headquartered GMO Click Group, has unveiled a significant loss, this time for the fiscal year ending March 31, 2016.

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In terms of the aggregated financial results by the end of FY 2016, Z.com Trade put together a weak YoY performance relative to 2015 figures.

Z.com Trade has followed up on a 2015 loss of £910,780 ($1,134,869) with a further £2,355,012 ($2,934,442) loss for 2016, having been forced to write down the value of its net assets to £4,872,079 ($6,069,073) compared to £7,227,091 ($9.0 million) in the period a year earlier. GMO Click Holdings Inc (TYO:7177), the parent company of Japanese Online Trading giant GMO Click Securities, has invested $9.0 million in Z.com Trade since its launch three years ago.

The announcement underlines the crisis unfolding in GMO’s UK brokerage arm, and goes to show that more changes will be needed to reflect success in making its services more accessible to the European traders.

Meanwhile, operating revenues at Z.com Trade amounted to £68,712 ($85,615) in 2016, down 8.2 percent from the reading of £74,781 ($93,165) registered in 2015. In terms of administrative expenses, the comparison was not also rosy, as the 2016 figure reflected a substantial increase of 142 percent YoY, coming in at £2,442,692 ($3,043,117) compared with £1,007,289 ($1,254,909) from the same period in 2015. Accordingly, the loss for the year, after taxation, amounted to £2,355,012.

The company attributed the sharp increase into its operating expenses to several measures taken to ensure that sufficient resources were in place to support its services offering in the new year. However, this doesn’t explain why the revenues dropped while it committed to more resources.

In a different vein, Z.com Trade provided an upbeat outlook for FY2017, citing a significant increase in both client bases and trading volumes since the major change in marketing strategy brought in later in FY2016, as well as its current efforts to expand activity to much broader area.

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In terms of the aggregated financial results by the end of FY 2016, Z.com Trade put together a weak YoY performance relative to 2015 figures.