Highlights
Flow Traders recorded Normalized Net Trading Income of €72.8m and Normalized Total Income of €72.9m in Q423. For FY23, Normalized Total Income was €299.8m compared to €460.6m in FY22 given the overall decline in market activity over the year.- Flow Traders’ Value Traded declined 5% y/y in Q423 and declined by 16% y/y in 2023 given the subdued market environment.
- Normalized Operating Expenses were €49.4m in Q423, with Normalized Fixed Operating Expenses of €40.4m. For FY23, Normalized Operating Expenses came in at €207.6m, down from €252.4m in FY22. Normalized Fixed Operating Expenses were €174.1m, up from €161.6m in 2022, and compared to the guidance of €175-185m.
- Normalized EBITDA was €23.4m in Q423, generating a Normalized EBITDA margin of 31%. For FY23, Normalized EBITDA totaled €92.2m, with a margin of 31%, down from €208.2m and 45% in FY22.
- Normalized Net Profit was €15.3m in Q423, yielding a Normalized basic EPS of €0.35. For FY23, Normalized Net Profit totaled €59.5m with a Normalized basic EPS of €1.38, compared to €150.2m and €3.45 in FY22.
- Trading capital stood at €584m at the end of Q423, compared to €585m at the end of Q323, and generated a 51% return on trading capital1.
- Shareholders’ equity was €586m at the end of Q423, compared to €590m at the end of Q323.
Flow Traders employed 646 FTEs at the end of Q423, compared to 658 at the end of Q323 and 660 at the end of FY22, which is slightly below the guidance of broadly flat headcount for the year.Flow Traders proposes a final FY23 dividend of €0.15, resulting in total dividends of €0.45 for FY23 and a 54% payout ratio.
Financial Overview
€million | Q423 | Q422 | Change | FY23 | FY22 | Change |
Normalized total income | 72.9 | 113.9 | (36%) | 299.8 | 460.6 | (35%) |
Normalized net trading income2 | 72.8 | 115.6 | (37%) | 300.3 | 459.5 | (35%) |
EMEA | 40.5 | 66.2 | (39%) | 162.2 | 312.5 | (49%) |
18.4 | 37.1 | (50%) | 83.2 | 91.7 | (9%) | |
APAC | 13.9 | 12.3 | 13% | 54.9 | 55.2 | (1%) |
Normalized other income2 | 0.1 | (1.7) | - | (0.5) | 1.1 | - |
Fixed employee expenses | 17.5 | 19.9 | (12%) | 76.0 | 73.2 | 4% |
Technology expenses | 15.3 | 16.4 | (6%) | 64.4 | 61.2 | 5% |
Other expenses | 7.6 | 7.9 | (4%) | 33.7 | 27.3 | 23% |
Normalized fixed operating expenses | 40.4 | 44.2 | (9%) | 174.1 | 161.6 | 8% |
Normalized employee expenses3 | 26.5 | 41.4 | (36%) | 109.5 | 164.0 | (33%) |
Normalized operating expenses | 49.4 | 65.7 | (25%) | 207.6 | 252.4 | (18%) |
Normalized EBITDA | 23.4 | 48.2 | (51%) | 92.2 | 208.2 | (56%) |
Depreciation / amortisation | 4.2 | 4.7 | (11%) | 18.3 | 16.8 | 9% |
Write off of (in) tangible assets | 0.0 | - | - | 0.1 | 0.2 | (53%) |
Normalized profit before tax | 19.2 | 43.5 | (56%) | 73.8 | 191.2 | (61%) |
Normalized tax | 3.9 | 10.0 | (61%) | 14.4 | 41.0 | (65%) |
Normalized net profit | 15.3 | 33.6 | (54%) | 59.5 | 150.2 | (60%) |
Normalized basic EPS4 (€) | 0.35 | 0.78 | (55%) | 1.38 | 3.45 | (60%) |
Normalized EBITDA margin | 32% | 42% | (24%) | 31% | 45% | (32%) |
Value Traded Overview
€billion | Q423 | Q422 | Change | FY23 | FY22 | Change |
Flow Traders ETP Value Traded | 375 | 396 | (5%) | 1,464 | 1,775 | (18%) |
151 | 179 | (16%) | 617 | 787 | (22%) | |
203 | 195 | 4% | 753 | 892 | (16%) | |
22 | 22 | (1%) | 93 | 96 | (3%) | |
1,144 | 1,209 | (5%) | 4,185 | 4,989 | (16%) | |
Flow Traders Value Traded | 1,518 | 1,605 | (5%) | 5,648 | 6,765 | (16%) |
Equity | 762 | 780 | (2%) | 3,009 | 3,349 | (10%) |
Fixed income | 289 | 363 | (20%) | 1,154 | 1,323 | (13%) |
Currency, Crypto, Commodity | 422 | 451 | (6%) | 1,312 | 1,940 | (32%) |
Other | 45 | 11 | 309% | 173 | 152 | (14%) |
Market ETP Value Traded5 | 11,714 | 11,640 | 1% | 43,081 | 51,811 | (17%) |
557 | 506 | 10% | 2,039 | 2,371 | (14%) | |
9,877 | 9,781 | 1% | 35,874 | 44,675 | (20%) | |
1,280 | 1,353 | (5%) | 5,168 | 4,764 | 8% | |
383 | 403 | (5%) | 1,578 | 1,591 | (1%) |
Market Environment
- Equity trading volumes and volatility in
Europe remained muted in Q4. While trading volumes improved compared to Q3, they remained down meaningfully compared to the same period a year ago. Market volatility, on the other hand, was down in the period vs. both the last quarter and the same period last year despite a temporary increase in October and reached the lowest point of the year in December. - The
Americas saw a rebound in trading volumes in the quarter, both compared to last quarter and the same period a year ago. However, volatility was roughly flat quarter-on-quarter and down significantly year-on-year. Asia saw volumes decline in the quarter compared to last quarter, driven in part by declines inHong Kong andChina , and was flat compared to the same period a year ago.- Volumes and volatility from an asset class perspective followed the same pattern, improving on a quarter-on-quarter basis, but saw a meaningful decline vs. the same period a year ago. The exception was cryptocurrencies, which saw a strong improvement compared to last quarter given the resurgence in interest in the quarter.
Share Buyback
- €3.2m worth of shares were repurchased in Q423 as part of the €15m share buyback program announced in
October 2022 . A portion of the shares to be repurchased under this program could be allocated to employee incentive plans as needed.
Outlook
- Normalized Fixed Operating Expenses for FY23 came in at €174m vs. the €175-185m guidance. The firm remains fully focused on operational and cost efficiencies across the business while implementing its growth and diversification strategies. For FY24, Normalized Fixed Operating Expenses are expected to be in the same range as FY23 for the full year as headcount is expected to be flat to down for the year, offset by continued technology investments and inflationary pressures.
CEO statement
“We saw a slightly improved trading environment in the fourth quarter when compared to the third quarter, though volumes and volatility were still down compared to the same period last year. The brief increase in volatility in October was met with the lowest levels of volatility for the year in November and December. For full year 2023, we are pleased to see our diversification strategy yielded solid results despite the slowdown in market activity as we were able to benefit from the recent increase in activity within the CCC segment, which somewhat offset the lower market activity in equity and fixed income when compared to a year ago.
In
In the
Looking at our operations, we continue to focus on cost and operational efficiencies while balancing our key growth initiatives. In 2023, our Fixed Operating Expenses came in slightly below our guidance and we expect a similar projection in 2024 but remain vigilant, given continued investments in technology and inflationary pressures.
In 2024, we will continue to focus on executing our strategy to strengthen and diversify our business and contribute to driving transparency and efficiency across global financial markets in collaboration with our partners. As we come up on the 20th anniversary of
Normalized Performance
Flow Traders makes certain adjustments to various IFRS expense and profit measures in order to derive Alternative Performance Measures (APM). The policy is to exclude or adjust items that are considered to be significant in both nature or size and where the treatment as an adjusted item provides stakeholders with useful information to assess the year-on-year or quarter-on-quarter underlying performance. On this basis, the following items were adjusted or excluded for the Q423 results:- Removal of IFRS 2 treatment of share-based payments which include the deferral of a portion of the current year share plans as well as recognition of prior years’ share plans. This adjustment provides insights into the relationship between the current year variable employee expenses and current year trading performance.
- Other income line includes all the realized and unrealized results on Flow Traders’ long-term equity investments whether accounted for as Fair Value Other Comprehensive Income (FV OCI), Fair Value Profit and Loss (FVPL) or Results of Equity Accounted Investments.
- Exclusion of one-off expenses related to the completed corporate holding structure update and balance sheet review work. These are not considered to be part of the underlying operating expenses of the business.
- Tax expenses are adjusted based upon the pre-tax adjustments and/or excluded items above.
IFRS Financial Overview
€million | Q423 | Q422 | Change | FY23 | FY22 | Change |
Total income | 74.3 | 115.5 | (36%) | 303.9 | 458.7 | (34%) |
Net trading income | 72.7 | 115.7 | (37%) | 300.3 | 460.2 | (35%) |
Other income | 1.6 | (0.2) | - | 3.6 | (1.5) | - |
Employee expenses3 | 39.6 | 46.6 | (15%) | 134.0 | 176.8 | (24%) |
Technology expenses | 15.3 | 16.4 | (6%) | 64.4 | 61.2 | 5% |
Other expenses | 7.6 | 7.9 | (4%) | 33.7 | 27.3 | 23% |
One-off expenses6 | - | 1.5 | - | 4.3 | 14.1 | - |
Adjusted total operating expenses8 | 62.5 | 72.4 | (14%) | 236.3 | 279.3 | (15%) |
EBITDA | 11.8 | 43.2 | (73%) | 67.5 | 179.3 | (62%) |
Profit before tax | 7.4 | 38.0 | (80%) | 44.7 | 161.7 | (72%) |
Net profit | 6.4 | 29.5 | (78%) | 36.2 | 126.8 | (72%) |
Basic EPS4 (€) | 0.15 | 0.68 | (78%) | 0.84 | 2.92 | (71%) |
Fully diluted EPS7 (€) | 0.14 | 0.65 | (78%) | 0.81 | 2.76 | (71%) |
EBITDA margin | 16% | 37% | (58%) | 22% | 39% | (43%) |
- Normalized EBITDA and margin are based on the relevant profit share percentage of operating result for the relevant financial period without any IFRS 2 adjustments for share-based payments. The profit share percentage was adjusted to a maximum of 32.5% in Q222 from 35%.
- A summary reconciliation of Normalized to IFRS is presented below:
Normalized to IFRS Reconciliation
€million | Q423 | Q422 | FY23 | FY22 |
Normalized EBITDA | 23.4 | 48.2 | 92.2 | 208.2 |
FV OCI adjustment | 1.3 | 1.2 | (0.4) | (2.6) |
Results of equity-accounted investments | 0.1 | 0.4 | 4.5 | 0.6 |
One-off expenses6 | - | (1.5) | (4.3) | (14.1) |
Prior year share plans | (3.6) | (7.0) | (17.3) | (25.4) |
Current year share plan deferral | (9.5) | 1.9 | (7.1) | 12.5 |
Other variable remuneration adjustment | - | - | - | - |
IFRS EBITDA | 11.8 | 43.2 | 67.5 | 179.3 |
Normalized net profit | 15.3 | 33.6 | 59.5 | 150.2 |
Profit before tax IFRS adjustments | (11.8) | (5.5) | (29.2) | (29.5) |
Tax difference | 2.9 | 1.4 | 5.9 | 6.1 |
IFRS net profit | 6.4 | 29.5 | 36.2 | 126.8 |
Notes
- Return on trading capital defined as LTM NTI divided by end of period trading capital.
- Normalized NTI is adjusted for the fair value change of economic offsetting positions presented in the NTI line instead of Other income. Normalized Other income is adjusted for Fair value through other comprehensive income and Results of equity-accounted investments.
- Normalized employee expenses is adjusted for the impact of share-based variable remuneration payments from prior years. Fixed employee expenses for the quarter were: Q423 - €17.5m; Q323 - €19.3m; Q422 - €19.9m; FY23 - €76.0m; FY22 - €73.2m.
- Weighted average shares outstanding: Q423 - 43,166,257; Q323 - 43,293,467; Q422 - 43,050,125; FY23 - 43,223,129; FY22 - 43,476,991.
- Source -
Flow Traders analysis. - One-off expenses related to the completed corporate holding structure update and balance sheet review work.
- Determined by adjusting the basic EPS for the effects of all dilutive share-based payments to employees.
- Adjusted total operating expenses excludes depreciation of €17.7m (FY22-€16.3m), amortization of €0.6m (FY22-€0.5m) and asset write-offs of €0.1m (FY22-€0.2m)
Preliminary Financial Calendar
1 March 2024 Release 2023 Annual Report
31 March 2024 Start silent period ahead of Q124 trading update
25 April 2024 Release Q124 trading update (no analyst conference call)
13 June 2024 AGM
17 June 2024 FY23 final dividend proposed ex-dividend date
19 June 2024 FY23 final dividend proposed record date
21 June 2024 FY23 final dividend proposed payment date
30 June 2024 Start of silent period ahead of H124 results
25 July 2024 Release of H123 results (inc. analyst conference call)
Contact Details
Investors
Phone: +31 20 7996180
Email: investor.relations@flowtraders.com
Media
Phone: +31 20 7996125
Email: press@flowtraders.com
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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.
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Attachment
- Q423 Trading Results vF
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