FLOW TRADERS 3Q19 TRADING UPDATE
Amsterdam, the Netherlands - Flow Traders N.V. (Euronext: FLOW) releases its unaudited 3Q19 trading update. Highlights are:
- Market ETP Value Traded grew 6% quarter-on-quarter and 7% YTD9m19 vs YTD9m18
- Flow Traders ETP Value Traded grew 12% quarter-on-quarter and 21% YTD9m19 vs YTD9m18, significantly outpacing the overall market growth
- Flow Traders recorded NTI of €53.3m in 3Q19 as robust trading performance in EMEA and APAC offset weaker than expected trading in the US
- Fixed operating expenses increased by 4% quarter-on-quarter and by 9% in YTD 9m19 vs YTD 9m18, which also reflects the impact of IFRS 16
- Net Profit for the quarter was €12.9m with EPS of €0.28
- Regulatory Own Funds Requirement (OFR) as at 30 September 2019 was €158m, resulting in an excess capital of €135m
- Focus remains on improving efficiency, enlarging the ETP footprint and trading diversification into other asset classes
|€million||3Q19||2Q19||Change||YTD 9m19||YTD 9m18||Change|
|Net Trading Income||53.3||53.9||(1%)||170.3||309.4||(45%)|
|Net Trading Income||53.3||53.9||(1%)||170.3||309.4||(45%)|
|Employee expenses (fixed)||11.1||10.6||5%||32.0||26.5||21%|
|Fixed Operating Expenses||25.0||23.9||4%||72.2||66.5||9%|
|Employee expenses (var)||8.8||9.1||(3%)||30.9||76.8||(60%)|
|Total Operating Expenses||33.8||33.0||2%||103.1||143.3||(28%)|
|Write offs, tangible assets||-||-||0.1||0.1|
|Profit Before Tax||15.8||17.3||(8%)||56.3||162.6||(65%)|
|EPS (in €)||0.28||0.30||0.99||2.91|
|EBITDA margin (%)||37%||39%||39%||54%|
* Reflects the impact of IFRS 16
Value Traded Overview
|€billion||3Q19||2Q19||Change||YTD 9m19||YTD 9m18||Change|
|Flow Traders ETP Value Traded||264.1||235.4||12%||758.0||626.6||21%|
|APAC ex China||12.8||9.3||37%||30.8||24.8||24%|
|Flow Traders’ non-ETP Value Traded||817||694||18%||2,249||1,874||20%|
|Market ETP Value Traded 1||6,174||5,842||6%||18,108||16,959||7%|
|APAC ex China||217||209||4%||643||707||(9%)|
3Q19 Regional Highlights:
- Continued to be the leading liquidity provider in ETPs; on-exchange market share reached new highs
- Well prepared for all Brexit scenarios
- Became a remote member of the Tel Aviv Stock Exchange (TASE) to act as liquidity provider in Israel to support BlackRock’s iShares ETP listings
- Overall market trading conditions improved, particularly in domestic US equities in August which has not been a focus of Flow Traders historically
- Continued to grow its position in the region with lower than expected NTI mainly driven by Fixed Income as the business is being repositioned for future growth
- Sustained strong OTC momentum as more ETP flow was traded with additional, newly connected counterparties
- Favourable market conditions and focused trading strategies resulted in a strong quarter
- Completed the consolidation of the dealing rooms in APAC and trading has been optimized by moving all trading desks for on-screen liquidity provision to Hong Kong
- Activated a business continuity plan with respect to the political situation in the region, business operations remain unaffected
Management Board Comments
CEO Dennis Dijkstra stated:
“During the third quarter, Flow Traders continued to grow its leading ETP position globally as, once again, we traded more ETPs with more counterparties. New markets were opened as we sought to broaden the ETP ecosystem; our partnership with iShares was a catalyst for providing liquidity in Israel. Diversification initiatives, including FX, OTC trading and Crypto, performed in line with expectations. We also maintained a strong discipline on costs while implementing our strategy and the increase was well within guidance. It is pleasing that Flow Traders continues to attract the brightest talent as we welcomed a large intake of new colleagues on 1 September, mostly comprised of graduates.“
Chief Trading Officer Folkert Joling added:
“3Q19 was a good quarter from a market trading activity perspective. Flow Traders was able to benefit from this increased pace of activity, particularly in APAC, although the increase in market activity in the US was notably visible in domestic equities. Fixed Income trading performance in the US was not as expected, which resulted in a lower NTI contribution from this region. We anticipate improved performance going forward. On the OTC front, momentum remained strong and we expect this to continue with the growing use of RFQ tools. In EMEA, we consolidated our leading position as liquidity provider in ETPs.”
Preliminary Financial Calendar
10 January 2020 Start Silent Period ahead of FY19 results
07 February 2020 Release FY19 results (incl. analyst conference call)
28 February 2020 Release Annual Report 2019
31 March 2020 Start Silent Period ahead of 1Q20 trading update
21 April 2020 Release 1Q20 trading update (no analyst conference call)
24 April 2020 AGM
Flow Traders N.V.
Jonathan Berger / Investor Relations Officer
Phone: +31 20 7996799
Important legal information
This press release is prepared by Flow Traders N.V. and is for information purposes only. It is not a recommendation to engage in investment activities and you must not rely on the content of this document when making any investment decisions. The information in this document does not constitute legal, tax, or investment advice and is not to be regarded as investor marketing or marketing of any security or financial instrument, or as an offer to buy or sell, or as a solicitation of any offer to buy or sell, securities or financial instruments.
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Financial objectives are internal objectives of Flow Traders to measure its operational performance and should not be read as indicating that Flow Traders is targeting such metrics for any particular fiscal year. Flow Traders’ ability to achieve these financial objectives is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Flow Traders’ control, and upon assumptions with respect to future business decisions that are subject to change. As a result, Flow Traders’ actual results may vary from these financial objectives, and those variations may be material.
Efficiencies are net, before tax and on a run-rate basis, i.e. taking into account the full-year impact of any measure to be undertaken before the end of the period mentioned. The expected operating efficiencies and cost savings were prepared on the basis of a number of assumptions, projections and estimates, many of which depend on factors that are beyond Flow Traders’ control. These assumptions, projections and estimates are inherently subject to significant uncertainties and actual results may differ, perhaps materially, from those projected. Flow Traders cannot provide any assurance that these assumptions are correct and that these projections and estimates will reflect Flow Traders’ actual results of operations.
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1 Source: Flow Traders analysis