FLOW TRADERS Flow Traders releases 1Q19 trading update

Transparency directive : regulatory news

16/04/2019 07:30

FLOW TRADERS 1Q19 TRADING UPDATE

Amsterdam, the Netherlands - Flow Traders N.V. (Euronext: FLOW) releases its unaudited 1Q19 trading update. The highlights for the period are: 

  • Market ETP Value Traded slowed down 28% quarter-on-quarter and slowed down 7% year-on-year
  • Flow Traders ETP Value Traded slowed down 5% quarter-on-quarter, but grew 8% year-on-year
  • Flow Traders 1Q19 NTI reached EUR63.1m, reflecting the quarter-on-quarter slow down in market conditions
  • Flow Traders` market presence improved in all regions in 1Q19, especially in EMEA and US
  • 1Q19 Fixed operating expenses decreased 3% quarter-on-quarter and grew 8% year-on-year, impacted by IFRS 16
  • FTEs grew to 447 at the end of 1Q19, realizing an FTE growth of 2.5% year-to-date
  • Own Funds Requirement (OFR) 31 March 2019 was EUR185m, resulting in an excess capital of EUR111m
  • Flow Traders will optimize trading capacities in APAC region through a centralization of dealing rooms in Hong Kong. Our Singapore office will remain operational to facilitate the growth of OTC trading to support trading in the region
  • Coverage of our FX liquidity provider has continued to grow with the onboarding of an additional FX Prime Broker and with further focus on scaling of trading and increase of number of connected counterparties

       
Financial Overview Flow Traders 1Q19

EURmillion 1Q19 4Q18 Change YTD 19 YTD 18 Change
Net Trading Income 63.1 74.1 (15%) 63.1 213.2 (70%)
EMEA (Europe) 37.5 44.4 (16%) 37.5 49.5 (24%)
Americas 17.3 13.8 25% 17.3 152.7 (89%)
APAC 8.3 15.8 (47%) 8.3 11.0 (24%)
             
Net Trading Income 63.1 74.1 (15%) 63.1 213.2 (70%)
Employee expenses (fixed) 10.3 9.6 8% 10.3 8.8 18%
Technology expenses 9.5 8.8 8% 9.5 8.9 7%
Other expenses* 3.5 5.8 (39%) 3.5 4.1 (13%)
Fixed Operating Expenses 23.4 24.2 (3%) 23.4 21.7 8%
Employee expenses (var)   13.0** 16.0 (19%) 13.0 57.5 (77%)
Total operational expenses 36.3 40.3 (10%) 36.3 79.2 (54%)
EBITDA 26.8 33.8 (21%) 26.8 133.9 (80%)
Depreciation/Amortisation* 3.6 2.6   3.6 2.0  
Write offs, tangible assets - 0.2   - -  
Results subsidiaries - (0.3)   - -  
Profit Before Tax 23.2 31.4 (26%) 23.2 131.9 (82%)
Tax 4.0 5.5   4.0 22.2  
Net Profit 19.2 25.9 (26%) 19.2 109.7 (83%)
EPS (in EUR) 0.41 0.56   0.41 2.36  
EBITDA margins (%) 42% 46%   42% 63%  

*: Note: 2019 results reflect IFRS 16 impact of EUR984k in a shift from "Other expenses" to "Depreciation"
**: Employee expenses (var) comprise the cash variable compensation over 1Q19 of EUR11.5m and vesting of FCIP payments of previous years of EUR1.5m


Overview 1Q19 Value Traded

EURbillion 1Q19 4Q18 Change YTD 19 YTD 18 Change
Flow Traders ETP Value Traded 258.6 272.8 (5%) 287.4 239.1 8%
EMEA (Europe) 128.7 123.6 4% 128.7 140.4 (8%)
Americas 121.2 139.5 (13%) 121.2 90.1 34%
APAC ex China 8.7 9.7 (10%) 8.7 8.5 2%
             
Flow Traders` non-ETP Value Traded 738.1 807.0 (9%) 738.1 672.6 10%
             
Market ETP Value Traded 6,081 8,454 (28%) 6,081 6,540 (7%)
EMEA (Europe) 355 347 2% 355 382 (7%)
Americas 5,277 7,472 (29%) 5,277 5,616 (6%)
APAC ex China 209 291 (28%) 209 303 (31%)

1Q19 regional highlights:

EMEA:

  • Flow Traders ETP market share continued to grow, consolidating our number 1 position on-screen as well as OTC in the EMEA market
  • Flow Traders ETP Value Traded reached EUR129bn, 4% higher versus 4Q18, comparing to a 2% increase in market ETP Value Traded versus 4Q18
  • Number of counterparties continued to grow, supported by the impact of MiFID 2
  • A second FX Prime Broker has now been onboarded, allowing for further growth of value traded in FX as more counterparties got connected and flows grew further through scaling
  • Flow Traders is prepared for all Brexit scenarios

AMERICAS:

  • Flow Traders ETP market share in 1Q19 was consistently above 2% as trading circumstances improved versus 4Q18
  • Flow Traders ETP Value Traded reached EUR121bn, which is a 13% decline versus 4Q18, comparing to a 29% decline in market ETP Value Traded versus 4Q18
  • Number of counterparties continued to grow to above 110, OTC Value Traded in ETPs continued to grow quarter-on-quarter, confirming ongoing momentum in OTC trading in US

APAC:

  • Flow Traders ETP market share improved from 4Q18 as our decline in ETP Value Traded was less than market trends showed
  • Flow Traders ETP Value Traded, ex China, reached EUR8.7bn, which is a 10% decline versus 4Q18, comparing to a 28% decline in market ETP Value Traded versus 4Q18
  • Flow Traders decided to merge the dealing rooms in APAC and move all trading desks for on-screen liquidity providing to Hong Kong in 2019 to optimize trading in APAC region
  • Singapore office remains open in the appropriate setup to facilitate OTC trading in the APAC market and provide other supporting services in the region

Management Board comments

Co-CEO Dennis Dijkstra stated:
"2019 started relatively strong, as Flow Traders was able to outperform the slowdown of the market as a result of diversification of trading and growth in number of counterparties and venues. Fixed cost growth remained well within limits as Flow Traders continued to execute on its long term growth strategy in a disciplined way. Our fixed technology expenses continued to grow as planned, our fixed employee expenses reflected the increase in FTEs and some annual salary adjustments. Other expenses included the impact of IFRS 16 and an administrative fine of EUR100k imposed by the AFM, the Dutch regulator, related to late-reporting of certain trades in 2017. The cause was identified and reported by us to the AFM proactively and mitigating measures have been taken. In respect of other regulatory matters we understand that the negotiations about the implementation of IFR/IFD are close to finalisation. We are confident that the outcome will lead to a better reflection of the risk of our business model. Flow Traders is furthermore proud to announce the appointment of a Global Head of Risk, Maarten van den Muijsenberg. He has an extensive background in trading as former Head of Trading, having led the dealingroom of our New York office. Maarten will take up the function per 1 May 2019. The responsibilities for finance remain with the CEO until the Management Board and Supervisory Board decide otherwise."

Chief Trading Officer Folkert Joling added:
"Flow Traders had a relative stronger trading quarter in 1Q19 than in 4Q18, despite the slower volumes overall. NTI showed a stronger performance versus 4Q18 in the Americas, in Europe our NTI was driven by more trading in liquid products. Flow Traders` trading platform showed an increased relative performance on-screen in all regions, which, together with ongoing good momentum in OTC trading, resulted in a global market share in ETP trading of over 4%. Growth initiatives are developing well; Hong Kong trading presence continued to grow in 1Q19 and Flow Traders decided to optimize its trading capacities in APAC through merging our Asian dealing rooms in Hong Kong. The Singapore office will remain operational to grow OTC trading and for support services, but the on-screen trading in APAC will be done from Hong Kong. Transition will be completed in 2019. FX liquidity providing is now ready for the next step as the underlying infrastructure is maturing in terms of connectivity, pricing and tooling. Now the focus is on controlled growth of counterparties set up and scaling. In the course of 2019 we will start to cover Asian trading hours. In line with our mission to provide liquidity to our institutional counterparties in all financial instruments, we have now added OTC trading in certain crypto asset classes to our offering. Diversification will allow for further optimization of our NTI growth and increase trading income stability. We will further highlight this strategic ambition in the Capital Markets Day which will be held on 18 April 2019 in Amsterdam."

Preliminary Financial Calendar

18 April 2019                      Flow Traders Capital Markets Day
08 May 2019                       AGM
10 May 2019                       FY18 final dividend ex-dividend date
13 May 2019                       FY18 final dividend record date
15 May 2019                       FY18 final dividend payment date
28 June 2019                       Silent period start ahead of 1H19 results
24 July 2019                        1H19 results release

Contact Details

Flow Traders N.V.
Serge Enneman / Investor Relations Officer
Phone:   +31 20 7996799
Email:     investor.relations@flowtraders.com

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.

The information and materials contained in this press release are provided `as is` and Flow Traders N.V. or any of its affiliates ("Flow Traders") do not warrant the accuracy, adequacy or completeness of the information and materials and expressly disclaim liability for any errors or omissions. This press release is not intended to be, and shall not constitute in any way a binding or legal agreement, or impose any legal obligation on Flow Traders. All intellectual property rights, including trademarks, are those of their respective owners. All rights reserved. All proprietary rights and interest in or connected with this publication shall vest in Flow Traders. No part of it may be redistributed or reproduced without the prior written permission of Flow Traders.

This press release may include forward-looking statements, which are based on Flow Traders` current expectations and projections about future events, and are not guarantees of future performance. Forward looking statements are statements that are not historical facts, including statements about our beliefs and expectations. Words such as "may", "will", "would", "should", "expect", "intend", "estimate", "anticipate", "project", "believe", "could", "hope", "seek", "plan", "foresee", "aim", "objective", "potential", "goal" "strategy", "target", "continue" and similar expressions or their negatives are used to identify these forward-looking statements. By their nature, forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of Flow Traders. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no undue reliance should be placed on any forward-looking statements. Forward-looking statements speak only as at the date at which they are made. Flow Traders expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statements contained in this press release to reflect any change in its expectations or any change in events, conditions or circumstances on which such statements are based unless required to do so by applicable law.

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.

By accepting this document you agree to the terms set out above. If you do not agree with the terms set out above please notify legal.amsterdam@nl.flowtraders.com immediately and delete or destroy this document.

Market Abuse Regulation

This press release contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.



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