HK Forex broker CLSA Premium issues profit warning
The situation at Hong Kong-focused Forex broker CLSA Premium Ltd (HKG:6877) is far from rosy. Even after the company managed to survive several voting procedures on its proposed winding up, it still appears to be in trouble regarding its financial performance.
Today, the broker issued a profit warning for the full year to December 31, 2020.
CLSA Premium said that, based on the information currently available and the preliminary assessment of the Group’s latest unaudited consolidated management accounts for 2020, the Group is expected to record a consolidated net loss of approximately HK$72 million. This compares with an audited consolidated net loss of approximately HK$180 million reported for the year ended 31 December 2019.
The decrease of consolidated net loss is primarily attributable to the decrease in total expenses of the Group.
Let’s note that the proposals to wind up the business were accompanied by critics regarding CLSA Premium’s performance. The Board, however, has insisted that the company has been actively carrying out a series of action to improve its business. The management of the company expects that the financial performance of the Group would gradually improve following the implementation of a certain business plan, and in turn it will create greater value and return to the Shareholders in the long term.
On September 18, 2020, CLSA Premium New Zealand Limited, a subsidiary of the Hong Kong brokerage, received a notice of decision from the Financial Markets Authority of New Zealand regarding the addition of specific conditions on its derivatives issuer licence. This move reflects CLSAP NZ’s failure to meet some of its audit and assurance obligations under the Act for year 2019.
The additional specific conditions prevent CLSAP NZ from making an offer to, or receiving further funds from, retail investors in relation to derivatives, except in certain limited circumstances. The conditions that the FMA has imposed allow CLSAP NZ to close out open positions with retail investors, or receive funds from retail investors for the purposes of meeting obligations (e.g. margin or collateral requirements) that the investor might have with CLSAP NZ.
These conditions took effect on September 22, 2020.