Plus500 profit slumps amid low volatility; share buyback launched
By Michele Maatouk
Date: Tuesday 13 Aug 2019
(Sharecast News) - Online trading platform Plus500 reported a slump in interim profit on Tuesday, dented by regulatory changes and a lack of volatility, as the company announced a share buyback of up to $50m.
In the six months to 30 June, pre-tax profit slid 59% to $63.9m on revenue of $148m, down 42% on the first half of last year. The company said this reflected low volatility in the first quarter followed by "more normal" trading conditions in the second.
Plus500 noted that financial markets were "very stable" from February to April, which meant there was a limited number of trading opportunities for customers. In addition, a regulatory clampdown in the EU and UK also took its tool.
Chief executive officer Asaf Elimelech said: "The group performed well during what was a difficult period for the entire industry.
"Given the market backdrop, we continued to concentrate on delivering significant enhancements to the trading platform, with the addition of functionality which appeals to more sophisticated traders, and to the level of customer service, with Plus500 becoming the first major CFD trading provider to integrate WhatsApp as an additional customer communication channel."
Plus500 said it remains on track to meet current full-year expectations.
As far as regulatory changes are concerned, the group said the watchdog in Australia has received product intervention powers similar to those possessed by European regulators, which will enable regulators to more directly address any abuses in the sales and marketing of a broad range of complex financial products.
"The company continues to assume that the Australian Securities and Investments Commission will seek to consult on the future rules around the industry, with potential for the introduction of certain restrictions," it said.
Also on Tuesday, Plus500 said its board has approved a programme to buy back up to $50m of the company's shares. The programme is effective immediately and will run until 31 March 2020, or, if earlier, the group's preliminary results for the year to the end of December 2019.
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