TechFinancials Posts Loss in H1 2017, Faces Challenging Times

The company faces difficult challenges ahead, looking to restructure to cut costs and improve margins.

TechFinancials (LON:TECH), UK-listed trading technology provider for the financial industry, has announced its unaudited interim report for the six months ending 30 June 2017. The group’s revenue was reported at $6.97 million, 29 percent lower than the company’s revenues in the first half of 2016.

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Pre-tax losses attributable to shareholders were reported at $0.8 million, with the company foreseeing a continuation of the challenging trend in the industry in which it operates. The strong area of business for the company is DragonFinancials, its joint venture in Asia, where profits increased 63 percent to $2.06 million.

“We anticipate the remainder of this financial year continuing to be challenging until there is clarity surrounding the on-going regulatory consultations. As a result, this tougher and uncertain regulatory environment will continue to impact our B2B business,” said Christopher Bell, the chairman of its board of directors.

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Software licensing revenues came in at $3.58 million which is 38% lower than a year ago. Revenues from the company’s trading platform revenues came in at $3.77 million. The figure is 14 percent lower than revenues in the first half of 2016.

TechFinancials holds a majority stake in a joint venture controlling the Asia-focused brand DragonFinancials. This represents the main B2C business of the company and was a major addition to the company’s bottom line in 2016.

Revenue from DragonFinancials was $3.57 million, which was an increase of 9.8% over the same period in 2016. The net profit from DragonFinancials increased by 30% to $2.06 million in 2017, while in H1 2016 it had been $1.58 million.

Challenging Times Ahead

Commenting on the results, Asaf Lahav, Group CEO of TechFinancials, said: “The Group performed well in 2016 achieving record revenues and profitability, but as we anticipated, the first half of 2017 has been challenging as a result of the loss of our largest customer and the uncertain and tightening regulatory environment particularly in Europe, which impacted revenues in our core B2B software licensing business.”

The company’s operating margin totaled 69.86 percent, which is lower by about 7 percent when compared to last year’s figures.

“We anticipate the remainder of this financial year continuing to be challenging within the binary options market until there is clarity surrounding the on-going regulatory consultations. Nonetheless, we remain focused on diversifying our business in order to withstand these pressures and we have plans to introduce further products in the coming years. We are actively looking at potential projects that will leverage the Company’s technology and its expertise in online financial trading solutions and we will provide an update to our shareholders on our progress in due course.”

Due to challenging times in the binary options market, the company has been shifting towards the forex and CFDs space with a new add-on to its trading platform. The market in Asia remains the firm’s best hope for growth, with the joint venture continuing to perform well.

In July Finance Magnates reported on the firm downsizing in Asia and Israel as part of a restructuring process.

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