FLOW TRADERS Q420 RESULTS
Highlights
- Market ETP Value Traded increased by 0.4% quarter-on-quarter and increased 48% FY20 vs FY19
- Flow Traders ETP Value Traded increased 14% quarter-on-quarter and increased 50% FY20 vs FY19, outperforming the broader market
Flow Traders recorded NTI of €130.3m in Q420 reflecting higher activity levels and strategic reallocations by investors. This compares to NTI of €78.3m in Q320 and €46.1m in Q419. FY20 NTI was €933.4m vs €216.4m in FY19- In line with previous commitments, a further €2.5m has been donated to the
Flow Traders Foundation with total donations of €10.0m. No further donations are required for the Foundation - Total operating expenses of €39.8m incurred in Q420, which included €0.9m of COVID-19 and business continuity plan-related expenses and reflects the positive impact of the accounting treatment of the new share plan. One-off expenses in FY20 totalled €11.4m out of total operating expenses of €346.8m
- 554 FTEs as at
31 December 2020 compared to 532 FTEs as at30 September 2020 and 513 as at31 December 2019 - Q420 EBITDA reached €90.5m with a margin of 69% contributing to FY20 EBITDA of €586.6m with a margin of 63%
- Q420 Net Profit amounted to €66.2m with EPS of €1.47. FY20 Net Profit amounted to €464.5m with EPS of €10.26
- Regulatory Own Funds Requirement (OFR) as at
31 December 2020 was €218m resulting in excess capital of €221m as at31 December 2020 . Trading capital stood at €772m at the end of the fourth quarter Flow Traders proposes a final FY20 dividend of €2.50, implying a €6.50 total dividend for FY20 and a 63% dividend pay-out ratio- Announces repurchase of shares of up to €25m commencing on
12 February 2021 over a period of 12 months in connection with employee incentive plans
Financial Overview
€million | Q420 | Q320 | FY20 | FY19 |
Net Trading Income | 130.3 | 78.3 | 933.4 | 216.4 |
EMEA ( | 93.9 | 44.4 | 552.5 | 138.1 |
22.0 | 16.1 | 283.8 | 47.6 | |
APAC | 14.3 | 17.9 | 97.2 | 30.7 |
Net Trading Income | 130.3 | 78.3 | 933.4 | 216.4 |
Employee expenses* | 20.4 | 25.4 | 274.4 | 81.3 |
Technology expenses | 12.0 | 11.3 | 46.2 | 39.7 |
Other expenses | 4.0 | 3.2 | 14.7 | 15.0 |
One-off expenses ** | 3.4 | 6.5 | 11.4 | 1.5 |
Total Operating Expenses | 39.8 | 46.5 | 346.8 | 137.5 |
EBITDA | 90.5 | 31.9 | 586.6 | 78.9 |
Depreciation/Amortisation | 3.7 | 3.4 | 14.2 | 14.6 |
Write offs, tangible assets | - | - | - | 0.1 |
Results subsidiaries | 0.4 | - | 0.4 | (1.1) |
Profit Before Tax | 86.3 | 28.4 | 571.9 | 65.3 |
Tax | 20.1 | 5.4 | 107.4 | 12.2 |
Net Profit | 66.2 | 23.0 | 464.5 | 53.1 |
EPS*** (in €) | 1.47 | 0.51 | 10.26 | 1.15 |
EBITDA margin | 69% | 41% | 63% | 36% |
* Of which fixed employee expenses were: Q420 - €11.9m; Q320 - €11.6m; FY20 - €46.4m; FY19 - €43.6m
** One-off expense relate to the
*** Weighted average shares outstanding: Q420 - 45,022,415; FY20 - 45,276,693. 44,701,621 shares outstanding as at
Value Traded Overview
€billion | Q420 | Q320 | Change | FY20 | FY19 | Change |
Flow Traders ETP Value Traded | 370.8 | 324.4 | 14% | 1,515.4 | 1,009.3 | 50% |
EMEA ( | 182.4 | 163.2 | 12% | 767.3 | 514.9 | 49% |
170.5 | 140.7 | 21% | 671.8 | 452.4 | 49% | |
APAC ex | 17.9 | 20.4 | (12%) | 76.2 | 42.0 | 81% |
Flow Traders’ non-ETP Value Traded | 765 | 726 | 5% | 3,695 | 2,995 | 23% |
Market ETP Value Traded1 | 7,403 | 7,374 | 0% | 34,920 | 23,588 | 48% |
EMEA ( | 489 | 391 | 25% | 2,039 | 1,492 | 37% |
6,081 | 6,146 | (1%) | 29,541 | 20,140 | 47% | |
APAC | 833 | 837 | 0% | 3,339 | 1,956 | 71% |
APAC ex | 380 | 337 | 13% | 1,680 | 844 | 99% |
1. Source -
Q420 & FY20 Regional Highlights
EMEA:
- Reinforced position as the leading liquidity provider in ETPs, both on- and off-exchange, by gaining market share in EMEA year-on-year. Taken the #1 position off-exchange in Fixed Income ETFs and now hold top position in Equity, Fixed Income and Commodity ETFs
- Strong trading performance in the core ETP business with a focus on optimising spread capture alongside positive NTI contributions from non-ETP trading as returns from investments in trading diversification become evident. Increased interest from Flow Traders’ counterparty base to trade non-ETP products
- Continued to be a top three market maker on major FX ECNs in spot metals
- #1 market maker in cryptocurrency ETPs, active on 15 exchanges globally, providing 24/7 liquidity, as well as being a leading spot OTC liquidity provider. Continued adoption of this asset class by institutional investors with subsequent inflows in cryptocurrency ETPs and ETNs
- Following the opening of the
London branch office, a new office inMilan was opened in November, providing a physical presence in one of EMEA’s key markets and further increasing proximity to institutional counterparties Flow Traders had prepared for all Brexit scenarios resulting in a smooth transition leaving trading operations unaffected with no impact on performance
- Improved trading performance with continued market share gains with Flow Traders ETP value traded materially outperforming market ETP value traded in Q420
- Further expansion of the counterparty base including successfully onboarding two of the top 20 institutional counterparties in the US in Q4
- Championed the global growth of the ETP ecosystem through expanding Flow Traders’ footprint in
Latin America ; acted as market maker to support listings inBrazil Flow Traders approved as Secondary Market Corporate Credit Facility (SMCCF) Eligible Seller by theFederal Reserve Board of New Yok (FRBNY) on23 October 2020
APAC:
- APAC saw the largest regional percentage increase in ETP value traded in 2020 with record volumes across numerous exchanges
- Strong growth in off-exchange both in the terms of number of counterparties and value traded through the trading of global products in the APAC time zone
- Strengthened partnerships in the region with key stakeholders, including partnership with HKEx to be the lead market maker in their MSCI futures and a number of new successful ETF listings across the region
Variable Remuneration Accounting Treatment
Flow Traders has updated its remuneration policy for all staff to further align with current and future regulatory requirements as well as to create additional alignment of employees with other stakeholders- Accordingly, the FCIP (Flow Cash Incentive Plan) where employees purchased shares has been replaced. The new plan provides the award up to 50% of variable remuneration in shares (or share-like instruments). Shares are awarded in equal installments over 4 years on the condition that the employee is employed at
Flow Traders - Given this award schedule, the share plan is treated differently from an accounting perspective. The result is that the variable employee expenses in the income statement are lower than the 35% of operational profit target for the variable remuneration pool. While the total value of the 2020 share awards is funded from the FY20 variable remuneration pool, the total expense is recognised through the income statement over 4 years in accordance with IFRS
Outlook
- In order to accelerate diversification and support the ever-increasing growth in product coverage, asset classes and trading platforms, guidance has been revised to a maximum growth in fixed operating expenses of c. 15% for 2021
- The European Union’s new Investment Firm Regulation and Directive (IFR/IFD) will apply to
Flow Traders fromJune 2021 . In line with the update provided at the time of the Q220 results, the assessment remains thatFlow Traders should receive some capital relief given that the incoming requirements should be more tailored to Flow Traders’ specific risk profile. Accordingly, capital requirements should be markedly lower once IFR/IFD comes into force. It is still envisaged that this capital relief will be partially offset by growth business activities Flow Traders announces that it will repurchase shares for a total aggregate consideration of up to €25m in connection with its employee incentive plans and to minimise shareholder dilution. The share repurchases will commence on12 February 2021 for a period of 12 months. As before, any shares repurchased will be held in treasury until such time as they are distributed. This repurchase of shares supersedes the programme announced on11 November 2020
Management Board Comments
CEO
“With the coronavirus pandemic intensifying during the fourth quarter, our focus naturally remained on the health and wellbeing of our colleagues as well as ensuring the continuous, uninterrupted access to superior liquidity for investors. Our robust business continuity plan has ensured that we have functioned as normal throughout the course of 2020. Despite the disruption caused by the pandemic, we have made substantial progress in terms of delivering our growth strategy. 2020 saw record ETP value traded versus last year, which in itself was a record for our business and we grew our counterparty base as well as the broader ecosystem through supporting listings in
“On behalf of the entire Management Board, I would like to take the opportunity to pay tribute to the professionalism, resilience, and loyalty of all our colleagues globally this past year during exceptional and challenging circumstances. We are immensely grateful to our colleagues for their tremendous hard work which allowed for our considerable operational and strategic achievements and successes over the past year.
“Lastly, while this has been a successful year for
Chief Trading Officer
“This was the strongest fourth quarter in Flow Traders’ history as heightened levels of market activity led to strategic reallocations by investors with corresponding true in- and out-flows. There was strong trading performance across all desks and regions, particularly in
“Looking ahead for this year, there will be greater contributions from our non-ETP market making activities. Globally, we have more than 25% of our colleagues working on new initiatives as we drive forward and further accelerate our growth agenda."
Preliminary Financial Calendar
5 March 2021 Release 2020 Annual Report
23 July 2021 H121 results release (incl. analyst conference call)
Analyst Conference Call and Webcast
The FY20 results analyst conference call will be held at
Contact Details
Phone: +31 20 7996799
Email: investor.relations@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
Flow Traders - Q420 Results
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