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Alapri UK Reports $10 Million Loss in 2013

Apr 29 2014
By
Forexbrokerz.com

Yesterday Alpari UK has filed its financial statement for 2013 with Company House in the United Kingdom. According to it the company has lost about $10 million due to the low market volatility. A few things that caught my attention:

 
 
1. Alpari has more accounts than all forex brokers' subsidiaries operating on US market combined. 
 
2. Accounts number grows (138 831 in 2013 vs. 116 320 in 2012), but client funds stand unchanged at 100 000 000 GBP. The average account size has dropped to 720 GBP. 
 
3. Trading volumes are 68% up YoY, however Alpari's revenues stand unchanged. The broker makes less than 1 pip ($10) per standard lot traded. It seems that Alpari's hybrid dealing model needs significant improvement.
 
Below is Alpari's official strategic report. The complete statement is available on companieshouse.gov.uk
 
The year 2013 matched the previous year as an extremely challenging one for the whole industry with consistently low levels of volatility. Continuing uncertainty in the global economic recovery and the lack of significant news to drive markets impacted the trading behaviour of existing and new clients. Against this backdrop, Alpari (UK) compared favourably achieving trading volumes of $1,161 billion in 2013, a year on year increase of 68% (2012: $692 billion).

The loss before taxation was GBP 6,029,773 (2012: loss GBP 10,611,573). Before exceptional items the loss is GBP 4,044,527. In comparison to 2012, there was a decrease in income of 1% and a decrease in income of 12%. The main reductions were seen in broker rebates and marketing. The exceptional cost was in relation to the write down of the investment in Alpari Financial Services (India) Pvt. Limited. It was decided to lose the operations in India due to a downward trend in the income generated from this region.


2013 saw continued efforts in implementing the strategy developed in Q3 of 2012.

(i) Growing revenue through the implementation of a new trading model;
(ii) Improving profitability;
(iii) Improvements to product offer and client experienced

(i) Growing Revenue

During the year, the company continued operating a hybrid model, Whilst the business saw a substantial increase in trading volumes, this did not translate into an improvement in income as a large proportion of the volumes being derived were from low margin clients. 

The company optimised its acquisition model during the year via the introduction of a global distribution web portal model with multi language variants and enhancements to the application form procedure so enabling greater client recruitment capability. 

The company also announced a three year deal to become the main shirt sponsor of English Premier League (EPL) side, West Ham United FC. Through TV rights, the global audience reach of the EPL is 710 million households which provides a very cost efficient platform to generate awareness on the global stage, adds stature to the brand and facilitates greater levels of client recruitment. 

(ii) Improving profitability

In comparison to 2012, there was been a reduction in loss of 61% before the write down of the investment in India and tax. This is a significant change driven mainly by the reduction in costs in marketing (21% reduction), rebates (11% reduction). 

The strategy to in-house and centralise marketing operations has proven successful in reducing the operational costs of marketing whilst still ensuring good levels of investment could be deployed across the key media channels to attract future clients. 

(iii) Improvements in product offer and client experience

Our focus remains on offering a diverse range of products and bringing new initiatives to enhance our client trading experience. 

Our client management tool which was rolled out at the end of November 2012 was continually improved during 2013. One of the main enhancements enabled clients to fund in real time. The client management tool was rolled out in additional languages to allow a wider reach. It was fully translated into German, Chinese and Spanish. 

The business also launched an Expert Advisor (EA) builder, which enabled all clients to design, create and use their own EAs through user-friendly, graphical software. 

Throughout 2013 we continued to modify our Electronic Communication Network (ECN) which we launched in June 2012. This provides improved execution and available liquidity to clients of our MT4 platform. 

Future Developments

2013 has been another challenging year for the business. Management changes seen at the end of 2013 and beginning of 2014 has seen a new strategy being developed for 2014 which is now being executed by the management team.

Key performance indicators (KPIs)

Management use the following KPIs to monitor the performance of the Company:
 
 
TAGS: alpari uk  financial statement  loss 

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