Playtech has just announced the company’s full year results for 2016. The firm’s financials division has seen substantial growth in the first half of the year. The company’s second half was boosted by the acquisition of CFH for $120 million, which concluded on the 30th of November and added a total of €1.8 million to the company’s revenues.
For the full year 2016, revenues of the financials division increased by over 9 percent to €65.6 million. The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled €15.4 million, which is lower than 2015’s €15.9 million by 3 percent. The company has attributed the underperformance in its bottom line to an overall decline in volatility.
The margins of Playtech’s financial division were significantly better, rising from 40.0 percent in 2015 to 42.7 percent in 2016 and 44.0% on a constant currency basis. When stripped of the effects of acquisitions, the margin increased to 47.1%. The company attributes the increase to better cost controls and improved commercial terms in Asia.
Throughout the year, the company also appointed Ron Hoffman as the CEO of its Financials Division.
B2C Business Highlights
Playtech states in its earnings that the results for 2016 have been driven by a 60 percent spike in First Time Depositors during the first half of the year. Active clients have grown 7 percent throughout last year.
Regulatory changes throughout the year have forced Playtech to take measures to address some concerns. Throughout 2016, the firm ceased its relationships with introducing brokers, shifted away from the binary options controversy and significantly overhauled its on-boarding processes.
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The company also substituted its salesperson approach to client acquisition with automated client acquisition and retention funnels.
Total active CFD customers increased by 10 percent in the second half of 2016 with total total first time CFD depositors growing 37 percent.
The company highlights the regulatory changes by the UK Financial Conduct Authority (FCA) and the Cyprus Securities and Exchange Commission (CySEC) as “an opportunity for differentiation and growth”.
In addition, the acquisition of CFH is to secure better liquidity and complementary risk management for the company and for the clients of Playtech’s financial division.
B2B Post-CFH Acquisition
CFH’s multi-asset offering of Straight Through Processing (STP) broker liquidity has delivered an outstanding asset to the company. The company has over $1.5 billion worth in direct interbank credit lines with tier 1 banks, liquidity providers and prime brokers including Barclays, Goldman Sachs, UBS, Jefferies and BNP Paribas.
CFH’s revenues and adjusted EBITDA for 2015 was $19.2 million (€17.6 million) and $5.7 million (€5.2 million) respectively.
“The acquisition of CFH is a major step forward in the development of our financial division B2B offering given the hundreds of brokers CFH has a relationship with, an advanced sophisticated offering and technology, coverage of an enlarged number of instruments as well as the ability to provide an attractive liquidity pool,” the company elaborated in its annual report.