X Trade Brokers Dom Maklerski S A : CR no. 11/2020 – Information on the preliminary financial and operating results for the I quarter of 2020

X-TRADE BROKERS DOM MAKLERSKI S.A.

(joint stock company with its registered office in Warsaw and address at Ogrodowa 58, 00-876 Warszawa, entered into the Register of Business Entities of the National Court Register under No. 0000217580)

DISCLAIMER

This document is an unofficial translation of the Polish version of Current Report No. 11 dated 26 April 2020 and does not constitute a current or periodical report as defined under the Regulation of the Minister of Finance on the current and periodical information provided by issuers of securities and the conditions for considering the information required by the provisions of law of the state not being a member state as equivalent thereto that was issued in accordance with the Polish Act on Public Offering, the Conditions Governing the Introduction of Financial Instruments to Organised Trading, and Public Companies dated 29 July 2005 (amended and restated: Journal of Laws of 2018, item 757).

This document is for informational purposes only. Neither the Company, its shareholders, nor any of their advisors are responsible for translation errors, if any, or for any discrepancies between the original report and this translation into English. If there are any discrepancies between the English translation and the Polish version, the latter shall prevail.

CURRENT REPORT NO. 11/2020

Warsaw, 26 April 2020

Information on the preliminary financial and operating results for the I quarter of 2020

The Management Board of the X-Trade Brokers Dom Maklerski S.A (the "Issuer") hereby announces that on 26 April 2020 the aggregation process of financial data for the purpose of the preparation of the condensed consolidated financial statements of the Issuer's Group for the I quarter of 2020 was completed. Therefore the decision was made to publish the preliminary consolidated selected financial and operating data for the above period, which the Issuer submits as an attachment to the foregoing current report.

The Issuer informs also that the final financial and operating results for the I quarter of 2020 will be submitted in the extended consolidated report of the Issuer's Group for the I quarter of 2020, publication of which was planned for 7 May 2020.

Legal basis:

Article 17 paragraph 1 MAR - inside information.

Appendix to the current report

No. 11/2020 dated 26 April 2020

X-TRADE BROKERS DOM MAKLERSKI S.A.

X-Trade Brokers Dom Maklerski S.A.

APPENDIX TO CR NO 11/2020

QI 2020

176,0 MM PLN

+ 22 962,8% r/r

234,1 MM PLN

+ 112 664,9% r/r

306,7 MM PLN

+ 650,0% r/r

21 911

+ 220,2% r/r

45 660

+ 105,3% r/r

784 840

+ 99,0% r/r

391 PLN

+ 276,0% r/r

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X-Trade Brokers Dom Maklerski S.A.

APPENDIX TO CR NO 11/2020

Selected consolidated financial data

	(in PLN'000)						THREE-MONTH PERIOD ENDED
			31.03.2020			31.12.2019			31.03.2019
Total operating income		306 664		89 571	40 890
Total operating expenses		(72 529)		(47 324)	(41 098)
Profit (loss) on operating activities (EBIT)		234 135		42 247		(208)

Finance income

Finance costs, including:

• negative foreign exchange differences relating to a company in Turkey

Profit before tax

Income tax

1 043	261	1 617
(12 904)	(1 425)	(338)
(21 880)	-	-
	41 083	1 071
222 274
(46 305)	(4 045)	(308)

Net profit		175 969		37 038		763
	(in PLN'000)									AS AT
			31.03.2020			31.12.2019			31.03.2019
Own cash		731 175		484 351		457 590
Own cash and treasury bonds		757 387		499 250		457 590
Equity		690 132		490 744		455 500
Standalone capital adequacy ratio (%)		18,0		14,6		15,3
Aggregated capital adequacy ratio (%)		15,1		13,3		14,5
Selected consolidated operating data (KPI)
							THREE-MONTH PERIOD ENDED
							31.12.2019			31.03.2019
				31.03.2020
New clients1		21 911	10 424	6 843
Average number of active clients2		45 660	30 815	22 245
Clients in total		170 290	149 304	122 645
New accounts3		49 338	26 747	16 243
Average number of active accounts4		50 273	33 765	24 386
Accounts in total		372 355	323 315	253 978
Net deposits (in PLN'000)5		454 360	119 278	92 320
Average operating income per active client		6,7		2,9	1,8
(in PLN'000)6

Average operating income per active account (in PLN'000)7

Transaction volume in CFD instruments in lots8 Profitability per lot (in PLN)9

Transaction volume in CFD instruments in nominal value (in USD'000000)

Profitability per 1 million transaction volume in CFD instruments (in PLN)

6,1	2,7	1,7
784 840	394 146	394 421
391	227	104
248 654,6	132 376,2	130 335,0
297,4	178,2	81,8

Turnover of shares in nominal value (in USD'000000)	157,4	55,2	33,5

1) The number of new Group's clients in the individual periods.

2) The average quarterly number of clients who at least one transaction has been concluded over the last three months.

3) The number of accounts opened by the Group's clients in the individual periods.

4) The average quarterly number of accounts via which at least one transaction has been concluded over the last three months.

5) Net deposits comprise deposits placed by clients less amounts withdrawn by the clients in a given period.

6) The Group's operating income in a given period divided by the average quarterly number of clients who at least one transaction has been concluded over the last three months.

7) The Group's operating income in a given period divided by the average quarterly number of accounts via which at least one transaction has been concluded over the last three months.

8) A lot is a unit of trading in financial instruments; in the case of foreign currency transactions, a lot corresponds to 100,000 units of the underlying currency; in the case of

instruments other than CFDs based on currencies, the amount is specified in the instruments table and varies for various instruments. 9) Total operating income divided by the transaction volume in CFDs in lots.

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X-Trade Brokers Dom Maklerski S.A.

APPENDIX TO CR NO 11/2020

Management Board's commentary on the preliminary results

In the first quarter of 2020 XTB reported a consolidated net profit of PLN 176,0 million compared to PLN 0,8 million a year earlier. It is an increase of PLN 175,2 million. Consolidated revenue amounted to PLN 306,7 million (I quarter 2019: PLN 40,9 million) and operating expenses amounted to PLN 72,5 million (I quarter 2019: PLN 41,1 million). In this period the Group noted a record number of new clients i.e. 21 911, which is an increase of 220,2% y/y.

Revenues

In the first quarter of 2020 XTB noted a record revenue increase by 650,0 % y/y, i.e. by PLN 265,8 million from PLN 40,9 million to PLN 306,7 million. The significant factors determining the level of revenues were above-average volatility on financial and commodity markets caused by among others coronavirus COVID-19 global pandemic and a constantly growing client base combined with their high transaction activity noted in the number of concluded transactions in lots. As a consequence the transaction volume in CFD instruments amounted to 784,8 thousand lots (QI 2019: 394,4 thousand lots) and a profitability per lot increased by 276,9%.

THREE-MONTH PERIOD ENDED

	31.03.2020	31.12.2019	30.09.2019	30.06.2019	31.03.2019	31.12.2018	30.09.2018	30.06.2018
Total operating income
(in PLN'000)	306 664	89 571	60 952	47 891	40 890	42 786	47 578	84 200

Transaction volume in CFD instruments in lots1

Profitability per lot (in PLN)2

784 840	394 146	423 333	385 318	394 421	458 869	345 118	616 082
391	227	144	124	104	93	138	137

1) A lot is a unit of trading in financial instruments; in the case of foreign currency transactions, a lot corresponds to 100,000 units of the underlying currency; in the case of instruments other than CFDs based on currencies, the amount is specified in the instruments table and varies for various instruments.

2) Total operating income divided by the transaction volume in CFDs in lots.

XTB has a solid foundation in the form of constantly growing client base and the number of active clients. In the QI of 2020 the Group reported a new record in the number of new clients amounted to 21 911 compared to 6 843 a year earlier i.e. an increase by 220,2 %. This is the effect of continuing the optimized sales and marketing strategy and the successive introduction of new products to the offer, such as CFD based on sector indices, shares, ETFs and expansion into new geographic markets. The average number of active clients was higher by 23 415 y/y, i.e. 105,3%. The intention of Management Board in 2020 is to further increase the client base.

PERIOD ENDED

31.03.2020 31.12.2019 30.09.2019 30.06.2019 31.03.2019 31.12.2018 30.09.2018 30.06.2018

New clients1

Average number of active clients2

New accounts3

Average number of active accounts4

21 911	10 424
45 660	26 582
49 338	26 747

50 273

29 099

10 042	9 246	6 843	5 742	4 884	4 734
25 171	23 688	22 245	21 279	21 515	22 135
24 424	22 215	16 243	13 930	11 758	11 321
27 544	25 932	24 386	23 656	24 032	24 918

1) The number of new Group's clients in the individual periods.

2) The average quarterly number of clients respectively for 3 months of 2020 and 12, 9, 6 and 3 months of 2019 and 12, 9 and 6 months of 2018.

3) The number of accounts opened by the Group's clients in the individual periods.

4) The average quarterly number of accounts respectively for 3 months of 2020 and 12, 9, 6 and 3 months of 2019 and 12, 9 and 6 months of 2018.

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X-Trade Brokers Dom Maklerski S.A.

APPENDIX TO CR NO 11/2020

XTB's aim is to provide a diversified investment offer simultaneously with comfort of managing the differentiated portfolio on one trading platform. The company analyses other possibilities of expanding the product offer, which could cause the introduction of new products in 2020 and subsequent years.

Looking at revenues in terms of the classes of instruments responsible for their creation, it can be seen that CFDs based on commodities. Their share in the structure of revenues on financial instruments in QI 2020 reached 51,2% against 6,8% a year earlier. This is a consequence of the high interest of XTB clients in CFD instruments based on oil prices and natural gas contracts. The second most profitable class were CFD instruments based on indices. Their share in the structure of revenues in QI 2020 reached 36,2% (QI 2019: 89,3%). The most popular instruments among this asset class were instruments based on the German DAX stock index (DE30) and contract based on volatility index listed on the U.S. organized market. Revenues of CFD based on currency reached 11,1% of all revenues, compared to 1,1% a year earlier.

XTB clients, looking for investment opportunities to earn money, generally trade in financial instruments that are characterized by high market volatility in a given period. This may lead to fluctuations in the revenue structure by the asset class, which should be treated as a natural element of the business model. From the point of view of XTB, it is important that the range of financial instruments in the Group's offer is as broad as possible and allows clients to use every upcoming market opportunity to earn money.

The structure of revenue by asset class (in %)

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X-Trade Brokers Dom Maklerski S.A.

APPENDIX TO CR NO 11/2020

	(in PLN'000)						THREE-MONTH PERIOD ENDED
			31.03.2020			31.12.2019			31.03.2019
Commodity CFDs		156 545		815	2 680
Index CFDs		110 682		80 584	35 363
Currency CFDs		34 048		6 163	433
Stock CFDs		2 500		(56)	627
Bond CFDs		163		(296)	329
Total CFDs		303 938		87 210	39 432
Shares and listed derivative instruments		1 839		531	178
Gross gain on transactions in financial instruments				87 741	39 610
	305 777
Bonuses and discounts paid to costumers		(119)		(150)	(71)
Commission paid to cooperating brokers		(649)		286	(286)
Net gain on transaction in financial instruments		305 009		87 877	39 253

XTB places great importance on the geographical diversification of revenues. The countries from which the Group derives more than 15% of revenues are Poland and Spain with the share of 27,9% (QI 2019: 54,6%) and 19,0% (QI 2019: 17,0%). The share of other countries in the geographical structure of revenues does not exceed in any case 15%.

							THREE-MONTH PERIOD ENDED
	(in PLN'000)			31.03.2020			31.12.2019			31.03.2019
Central and Eastern Europe		151 062		42 379	24 997
	- including Poland		85 432		33 967	22 319
Western Europe		132 390		31 064	12 926
	- including Spain		58 136		15 208	6 964
Latin America		23 212		16 128	2 967
Total operating income		306 664		89 571	40 890

XTB puts also strong emphasis on diversification of segment revenues. Therefore the Group develops institutional activities (X Open Hub), under which it provides liquidity and technology to other financial institutions, including brokerage houses. Revenues from this segment are subject to significant fluctuations from quarter to quarter, analogically to the retail segment, which is typical for the business model adopted by the Group.

	(in PLN'000)						THREE-MONTH PERIOD ENDED
			31.03.2020			31.12.2019			31.03.2019
Retail segment		253 014		80 145	37 605
Institutional segment (X Open Hub)		53 650		9 426	3 285
Total operating income		306 664		89 571	40 890

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X-Trade Brokers Dom Maklerski S.A.

APPENDIX TO CR NO 11/2020

Expenses

In the QI of 2020 operating expenses amounted to PLN 72,5 million and were higher by PLN 31,4 million in relation to the same period a year earlier (QI 2019: PLN 41,1 million). The most significant changes occurred in:

• costs of salaries and employee benefits, an increase of PLN 19,0 million mainly due to provisions established for variable components of remuneration (bonuses) and unused holidays and an increase in employment;
• marketing costs, an increase of PLN 7,6 million mainly due to higher expenditures on marketing online campaigns;
• commission expenses, an increase of PLN 2,5 million as a result of larger amounts paid to payment service providers through which clients deposit their funds on transaction accounts;
• other external costs, an increase of PLN 2,0 million as a result of higher expenditures on: (i) IT support service (an increase of PLN 1,6 million y/y); (ii) IT systems and licenses (an increase of PLN 0,4 million y/y).

							THREE-MONTH PERIOD ENDED
	(in PLN'000)			31.03.2020			31.12.2019			31.03.2019
Salaries and employee benefits		38 782		24 126	19 737
Marketing		16 740		10 222	9 178
Other external services		7 767		7 540	5 815
Costs of maintenance and lease of buildings		968		742	742
Amortization and depreciation		1 861		1 720	1 788
Taxes and fees		669		869	708
Commission expenses		4 540		2 282	2 032
Other expenses		1 202		(177)	1 098
Total operating expenses		72 529		47 324		41 098

In q/q terms, operating costs increased of PLN 25,2 million mainly due to higher by PLN 14,7 million costs of salaries and employee benefits and higher by PLN 6,5 million marketing expenditures.

THREE-MONTH PERIOD ENDED

31.03.2020 31.12.2019 30.09.2019 30.06.2019 31.03.2019 31.12.2018 30.09.2018 30.06.2018

Total operating income including: (in PLN'000)

- Marketing New clients

Average number of active clients

72 529

16 740

21 911

45 660

47 324	42 980	42 490	41 098	40 862	48 837	41 750
10 222	8 735	9 581	9 178	7 878	8 669	8 976
10 424	10 042	9 246	6 843	5 742	4 884	4 734
30 815	28 136	25 131	22 245	20 568	20 277	21 952

The Management Board expects that during the whole 2020 operating costs will be higher than in 2019. In the coming quarters the costs of salaries and employee benefits are expected to decline to similar levels to those we observed quarterly in 2019. In the second quarter of 2020 marketing costs are also expected to decline - similarly to the costs of salaries and employee benefits.

The final level of operating costs will depend on the level of variable remuneration components paid to employees, the level of marketing expenditures, the dynamics of geographical expansion into new markets and the impact of potential product interventions and other external factors on the level of revenues generated by the Group.

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X-Trade Brokers Dom Maklerski S.A.

APPENDIX TO CR NO 11/2020

The value of variable remuneration components will be influenced by the results of the Group. The level of marketing expenditures depends on their impact on the Group's results and profitability, the rate of foreign expansion and on clients responsiveness to the actions taken. The impact of ESMA's product intervention on the Group's revenues will determine, if necessary, a revision of the cost assumptions.

Development perspectives

XTB with its strong market position and dynamically growing client base enters the non-European markets. XTB is consequently implementing a strategy on building a global brand. In 2020 the Group aims to increase its European market penetration and continue with building its position in Latin America, Asia and Africa.

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