CLS Reports Loss in H1 2018 as Amortization of Settlement Product Accelerated

Despite an overall growth in revenues during H1 2018 at CLS, a number of its metrics showed mixed figures.

CLS Group, a provider of risk mitigation and settlement services for FX dealers and institutions, has released its interim financial metrics for the first half of 2018, which showed tepid signs of growth over the previous year, largely clinging to a tight consolidation across key figures.

CLS reported a revenue of £101.5 million ($133 million) for the six-month period ending June 30, good for a rise of 1.6 percent year-over-year from £99.9 million back in H1 2017. The increases in revenue over the past year have come during a recent uptrend in volumes at the venue, having risen substantially in recent months.

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Moving to the bottom line, CLS yielded a net loss of £525,000 ($690,000) in H1 2018, compared to a profit of £5.4 million in H1 2017. Operating income in H1 2018 also failed to orchestrate any significant advance from its 2017 counterpart, revealing a loss of £0.8 million ($1.06 million), relative to a profit of £13.8 million a year ago.

Despite the overall growth in revenues during H1 2018 at CLS, a number of its metrics showed mixed figures. For example, the group’s operational expenses increased by 13 percent which includes the negative impacts of foreign exchange translation and ongoing business investment.

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CLS Updates Its Settlement Product Suite

The most notable spot of CLS’s interim report was its CLSSettlement business, with the asset’s the amortization period being reduced, which will continue to impact on its future profitability for a number of periods. However, the accounting practice reflects CLS’ strategic decision to replace and modernize the underlying technology platform that supports CLSSettlement.

On an adjusted basis, which removes the effect of distorting items, profit for the period was £9.2 million compared to £11.8 million for the same period last year.

“On completion of this multi-year project, CLSSettlement will use a new platform that we believe will enable improved efficiency, multi-session capability, and adhere to the highest level of industry standards to support our future strategic goals,” Trevor Suarez, CLS’ Chief Financial Officer, said.

“Additionally this new platform, which is recorded on the CLS balance sheet, already supports our newly launched CLSClearedFX service, and prior to the migration of CLSSettlement will be the platform for other future settlement related product launches, such as CLSNow,” he added.

The group’s outgoing CEO, David Puth, added: “We saw record traded volumes in CLSSettlement, driven by this increased volatility as well as greater participation by a wider segment of the FX market. June saw particularly strong average daily traded volumes at USD1.95 trillion, culminating in a record half year average traded volume of USD1.84 trillion. Traded volume was up 19 percent compared to the same period last year and 26 percent against the second half of 2017.”

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