British spread betting, CFD and FX trading company ETX Capital, the trading name of Monecor (London) Limited, has today issued its financial statements for the year ended December 31, 2013.
Dr. John Wilson, the company’s Chairman made a statement with regard to the results, affirming that ETX Capital is a strong, dynamic financial services company authorised and regulated by the Financial Conduct Authority (FCA) in the UK and a member of the London Stock Exchange. The Company’s clients can trade with the Company knowing that their deposits are protected by the Financial Services Compensation Scheme, the UK’s deposit protection scheme. At the end of 2013, the Company had client deposits totalling in excess of £69.6 million and cash at bank of £43.2 million.
“The Company provides trading platforms to active retail, high net worth (HNW) and institutional clients and makes markets in thousands of underlying assets. It is one of only a small number of companies offering multiple trading platforms catering for both inexperienced and experienced traders. The financial products offered are derivatives (in the form of CFDs, Spreads Bets or Margined FX) and cover all asset classes; equities, indices, FX, fixed income, hard and soft commodities, futures and options.”
As far as commercial progress since acquisition is concerned, in late 2009 the Company’s ownership changed to the Principals of JRJ Group and BXR Group. Since the acquisition, the Company has undergone a significant change process and embarked on an ambitious growth strategy.
The change process has seen the Company reconstruct its board and board committees to ensure proper governance and controls; significantly improve systems, processes and controls, including transaction reporting, credit control and market risk management; strengthen legal and compliance; reduce concentration risk in its client portfolio; put in place cost controls and drive a cost conscious focus throughout the Company; and a number of other important changes.
The results which the company achieved during 2013 serve as testimony to Dr. Wilson’s positive outlook, with an increase in overall revenue by 3% to £25.2 million.
The Company’s growth strategy has focussed on expanding the number of retail clients, client deposits and client activity. This strategy has been executed through geographic and product expansion; proprietary client acquisition and retention processes; and proprietary data analysis. The geographic expansion has seen new active clients from outside the UK increase from virtually nil prior to the acquisition to more than 67% at the end of 2013. The number of countries making a material contribution to revenue now includes Germany, France, Spain, Portugal, Greece, Denmark and South Africa, moreover, there are now over 350,000 unique visits to the Company’s main web sites each month.
Indeed, in August 2013, the firm added the MetaTrader 4 platform to its armory, in order to satisfy the needs of clients outside Britain who trade spot FX rather than engaging in spread betting or the trading of CFDs.
The investments that have been made to change the Company, control costs and to grow the retail client base, retail deposits and retail activity have successfully delivered a well-run reliable business with significant growth in retail revenues (over 19% growth in 2013 on 2012) and very good long term growth in profitability (EBITDA has grown at a compound rate of 164% per annum following the change of ownership).
As far as expansion of presence and corporate growth is concerned, the majority of ETX Capital’s growth was outside the UK, as international revenues climbed to about half, from just 38% in 2012.
Whilst revenues climbed, profit was flat, however the firm made strategic investment by purchasing its main platform provider Ariel Communications subsequent to the end of the 2013 financial year. Additionally, despite revenues being higher than last year, client deposits were down slightly to £69.6 million from £72.7 million in 2012, a matter which has plagued a number of retail FX firms since last Autumn, when the period of low activity began to set in.
The Chairman’s statement enthused that this is particularly impressive given the backdrop of poor market conditions and the effect this had on a number of our competitors, some of whom have declared reducing profitability, losses or even bankruptcy.
The Company is well positioned to continue its growth both in the European markets and beyond, and to take advantage of other profitable opportunities that may arise within the sector.
Progress in 2013
In the financial year ended 31 December 2013, the Company employed over 70 people, achieved revenues of £25 million and an EBITDA of £3 million and maintained both its clients’ funds and cash at bank at broadly similar levels to 2012. This was a good performance against a backdrop of significantly declining HNW and institutional revenues million) and reflects continuing significant growth in the Company’s retail business million). This growth came mainly from clients located outside the UK; at the end of 2013 new active clients from outside the UK were 191% of those from
within the UK.
During the year the Company launched businesses in Asia and Eastern Europe to complement the its established businesses in Europe and South Africa. In addition, the Company redesigned its client on-boarding, sales and retention processes. This involved recruiting a significant number of new employees, introducing new telephony systems and upgrading the CRM system. Together, ETX Capital consdiers these changes place the Company at the leading edge of client on-boarding and service techniques in the industry. This provides the Company with the infrastructure and processes to acquire significantly more clients and to more easily benefit from scale economies in future years.
2013 was also a year in which the company also relocated its offices from the periphery of the City of London to the heart of the financial district: One Broadgate. This location better reflects the strong financial brand and prestigious nature of our Company.
“We are indebted to our staff who have worked tirelessly in 2013 to introduce significant changes to our Company.While we have much to be proud of, there is still significantly more for the Company to undertake to achieve our ambition of a truly global trading service whilst maintaining our existing high regulatory standards and pre-eminent client service” stated the firm’s Chairman.
Outlook
Over the last several years the Company has put in place the governance, systems, processes and controls that set the foundations of a strong and î‘resilient business. In 2013 the Company accelerated its international expansion and product expansion. Much of the work begun in 2013, the company hopes will bear fruit this year, with the Company entering Eastern European markets, Asian markets and Middle Eastern markets. In addition, the Company is launching two new trading platforms this year and may add further platforms to meet client demand.
The firm’s executive directors are optimistic that the growth in revenue and profits since 2009 will not only continue in 2014 but accelerate.
