Plus500 upbeat after second half recovery
By Josh White
Date: Wednesday 12 Feb 2020
(Sharecast News) - Contracts for differences (CFD) trading services provider reported on a year of "two distinct halves" on Wednesday, with a "strong" improvement in the second half, after a first half impacted by extremely low volatility in the first quarter.
The FTSE 250 company said the strong second half was primarily driven by increased trading opportunities identified by customers, reflecting more volatile market conditions during the rest of the year.
Second half revenues were up 40% over the first half to $206.5m (?159.33m), while full-year revenue for the 12 months ended 13 December fell to $354.5m from $720.4m.
The firm said second half EBITDA was 93% higher than the first half at $126.7m, while full-year EBITDA slipped to $192.3m from $506.0m.
Net Profit in the second half improved 94% over the first to $100.1m, with net profit for the full year sliding to $151.7m from $379m in 2018.
Plus500 noted that 2019 marked the first full year of trading under the new regulatory regime introduced by European regulators, with customer trading patterns adjusting through the year.
The board said it maintained a "robust" financial position during the year, with operating cash conversion standing at 88%, compared to 98% in 2018, supported by a "highly efficient, lean and cash generative" business model.
That resulted in year end cash and cash equivalents of $292.9 million, following the distribution of $148.3 million in shareholder returns during the year.
It also said it had continued to deliver "significant" shareholder returns, with 100% of 2019 net profit proposed to be distributed to shareholders, equivalent to a total of $151.7m, consisting of interim and final dividends totalling $71.7m and $80m in share buyback programmes.
An interim dividend of $30.9m was distributed in November, and a $50m share buyback programme - announced in August - had been executed in full.
The board declared a final dividend of $40.8m, or 37.67 cents per share, down from $70.2m and 61.91 cents a year earlier.
It said it was intending to conduct a further share buyback programme in 2020 to purchase up to $30m of the company's shares.
On the operational front, Plus500 said it saw an average of around three million customer trades per month in 2019, with the average deposit per active customer increasing 19% year-on-year at $5,116, which it said reflected "continued and strong" trust in the trading platform.
It made continued investment in technology and innovation in a bid to further enhance its customer proposition, through the introduction of new features, trading instruments and trading tools, support channels and an improved customer interface.
Plus500 also said it increased its focus on its core markets, and continued the expansion of its global presence.
It successfully retained leading industry positions in its core markets as the largest CFD provider in the UK, Germany and Spain, and as the top rated mobile platform among CFD traders in Australia.
Following the year-end, a new securities dealer licence was issued by the Financial Services Authority in the Seychelles, which the board said further complemented its seven existing regulatory licences internationally, and reflected its "robust" regulatory regime.
Looking at current trading, the firm said positive momentum had continued into 2020, reflecting heightened levels of volatility in the financial markets due to global events.
The board maintained its confidence in the group's prospects for the year ahead.
"We finished 2019 in good financial and operational shape following a period of changes for the industry, which has provided a more certain regulatory outlook for Plus500 and the industry as a whole," said chief executive officer Asaf Elimelech.
"We were particularly pleased with the strong improvement in financial performance in the second half of 2019 and believe that customer trading patterns have now adjusted following the regulatory changes introduced in Europe last year.
"We continue to monitor and prepare for any potential product intervention measures that are expected to take place in Australia during 2020."
Elimelech said he was also "encouraged" by the trading momentum shown through the year-end, which he said reflected the continued optimisation of the company's marketing spend, enhancements to its customer service, improvements in its proprietary technology platform and additional cost optimisation.
"We are further pleased in our ability to provide significant value to our shareholders with the delivery of strong returns representing 100% of our 2019 net profit.
"Looking forward to 2020 we are confident of the prospects for the group as we focus on further strengthening our customer offering and market positions, thereby delivering growth and further strong shareholder returns."
At 0859 GMT, shares in Plus500 were up 4.37% at 950.6p.
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