Cinnober plans cost reductions as diversification saps profits

Cinnober plans cost reductions as diversification saps profits

Swedish capital markets software house Cinnober is planning costs reductions and a stake sale of one of its operating subsidiaries after reporting a slow start to the year and full-year 2017 losses of Skr97.6 million.

The company has been looking to diversify its business away from its core legacy trading and exchange technology franchise, establishing new divisions to cater for trade reporting, surveillance and risk and client clearing.

Between them, the new subsidiary businesses - Simplitium, Minium, and Irisium - contributed SKr106 in Ebidta losses, with the mature trading and clearing business posting profits of Skr25 million.

In an AGM presentation posted on its Website, the company says it has initiated a cost reduction programme in both its Simplitium and core Cinnober divisions. A planned stake sale in the Irisium trade surveillance business is also on the cards as the company bids to slash its core base in anticipation of a return to profitability in 2019 as the diverification policy gains traction.

The first casualty of the overhaul appears to be Jamie Khurshid, the chief executive of Mifid II trade reporting business Simplitium, who has left his post at the company which Cinnober acquired under the Boat brand name from Markit in 2014. The unit reported Skr31 million in losses in 2017.

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