Interim Financial Report 2018

30 June 2018

CLS Group Holdings AG

24 September 2018

Message from Ken Harvey, David Puth and Trevor Suarez.

Today we have released our Interim Financial Report, outlining the progress we are making on the implementation of our strategy. The full report can be found via the following downloadable PDF.  Click here >>.

We saw continued momentum in the delivery of our business strategy and focused on meeting our growth agenda, while investing in and enhancing the settlement product suite to ensure we meet the needs of our clients now and in the future.

Market volatility continued to be the predominant theme in currency markets throughout the first half of the year. 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, culminating in a record half year average traded volume of USD1.84 trillion. Traded volume was up 19% compared to the same period last year and 26% against the second half of 2017. We launched new products in both our settlement and data business lines and CLSNet in our processing business line will go live later this year.

From a financial perspective, CLS reported a loss for the six months to 30 June 2018. However, this includes a number of distorting items, notably charges as a direct result of reducing the amortization period of our current CLSSettlement asset. On an adjusted (underlying) basis, which removes the effect of distorting items, profit for the period was GBP9.2 million compared to GBP11.8 million for the same period last year. Full details can be found in the report.

The financial strength of CLS continues to be strong. This is best demonstrated by the level of our cash balances, which remain well above the minimum regulatory requirements and, after allowing for an additional level of capital in the form of a buffer, provides a further level of prudence.

The amortization charge will continue to have an impact on our future reported profitability for a number of accounting periods as we replace and modernize the underlying technology platform that supports CLSSettlement. By the end of the period, 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. The new platform 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.

Other operating expenses reflect our ongoing investment in the settlement service and areas such as IT Security. More recently we have also increased our investment in a number of control and governance related activities, where the bar is rightly set at a very high level.

However, our balance sheet remains strong as we continue to deploy capital to develop new products and services, and to protect and strengthen CLSSettlement. We will see a further reduction in the level of cash and deposits, but these will continue to be well in excess of regulatory requirements. 

In summary, headline reported results for the period show a year-on-year decrease, though on an underlying basis results remain robust. Our investment decisions continue to enable our strategy which, in the short term, has an impact on our reported results. However, these decisions are, at all times, underpinned by the continued strength of our balance sheet.

       

2018 Interim Financial Report

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