Plus500 posts record results as it navigates regulatory changes

Online trading platform provider Plus500 announced record preliminary unaudited results for the year to 31 December on Tuesday, with revenues growing 19% to $327.9m.

The AIM-traded company reported EBITDA up 14% to $151m, though its EBITDA margin reduced five percentage points during the year to 46%.

Net profit stood at $117.2m, up 21%, with earnings per share improving at the same rate to $1.02.

During the year, Plus500 generated $153.3m cash from operations - up 20% year-on-year - with year-end net cash of $136.5m, down 13%.

It confirmed a final dividend of 37.99 cents which, combined with an interim dividend of 23.24 cents and a special dividend of 27.29 cents, made for a total dividend of 88.52 cents - a 5% uptick on 2015.

Total dividend payouts were $101.7m, compared to $96.6m in the prior year.

“We are pleased to announce record annual results,” said chief executive Asaf Elimelech.

“Our continued focus on serving our customers' trading needs through product innovation and technology leadership, combined with our marketing activity, has led to strong new customer sign ups, reducing churn in H2 2016 and increased customer activity.”

Elimelech confirmed Plus500 retained operating licences and was regulated in the United Kingdom, Australia, Cyprus, New Zealand and Israel, which he said provided a strong foundation in an ever evolving regulatory environment.

“Our safe and secure trading account already incorporates a number of the trading controls that regulators are seeking to introduce - we were among the first to offer a trading platform where customers cannot lose more than they invest, and in 2016, as in 2015, there were no net revenues from market P&L.

“The latter reflects the efficiency of our internal risk management systems and meets the expectations of the regulators that aim to prevent industry participants from being dependent on client losses.”

Elimelech confirmed Plus500 wouldl make the necessary adjustments to comply with regulatory changes announced during 2016 and any future requirements, as certain regulators continued to go through a consultation and implementation process.

“Proposals to reduce leverage are expected to have the greatest financial effect.

“In this regard the UK regulatory proposals have the most material impact and we note that approximately 20% of our revenues currently go through the UK regulated subsidiary.”

At the same time, he said the company maintained a highly flexible business model and a lean cost structure to help mitigate the impact of regulatory changes on its financial performance.

“Overall, we anticipate that the industry will consolidate around a smaller number of larger participants, of which we believe Plus500 will be amongst the leaders.

“We were delighted to announce recently the extension of our existing partnership with Atlético Madrid in football and our new sponsorship agreement with the Plus500 Brumbies, the Australian Super Rugby team; together these sponsorships extend our strategy of increasing our brand recognition and expanding our customer base globally.”

Asaf Elimelech said the company was entering 2017 confident it can continue to develop its business and expand into new markets, whilst successfully incorporating regulatory changes with the minimum of disruption.

“Our strong balance sheet, cash generative business model, geographic diversification and competitive market position are expected to enable us to provide good shareholder returns despite continuing short term regulatory uncertainty.”