Flow Traders NV: FLOW TRADERS REPORTS FIRST QUARTER 2016 RESULTS

FLOW TRADERS REPORTS FIRST QUARTER 2016 RESULTS

Amsterdam, the Netherlands, 4 May 2016 - Flow Traders N.V. ("Flow Traders") (Euronext: FLOW) today announced its 1Q16 results. The results show a continuation of our structural growth path. For 1Q16, ETP Value Traded for Flow Traders reached €151 billion^[1][2] (+12% quarter-on-quarter) with strong performances in both Europe and the Americas, the biggest and most competitive ETP market in the world. In Asia, the performance was more moderate in 1Q16 on a quarterly basis, although 4Q15 performance was influenced by a one-off benefit. Overall, Net Trading Income came in at €64.6 million, in line with 4Q15. This is also a reflection of a shift in volumes traded towards more liquid, blue chip ETPs, which are usually characterized by relative tight spreads. Going forward, our focus will continue to be on organic growth by increasing the volumes we trade and optimizing our revenue capture, while we aim to grow at a faster pace than the growth of the ETP Assets under Management.
 

Flow Traders 1Q16 Key Highlights

• On-Exchange Market ETP Value Traded grew to €4.3 trillion in 1Q16, a 14% increase quarter-on-quarter, triggered by increased trading activity in EMEA and the Americas, especially in January and February
  
• ETP Value Traded by Flow Traders increased from €135 billion in 4Q15 to €151 billion in 1Q16 (+12%)
• Net Trading Income (NTI) was €64.6 million in 1Q16, stable versus €64.5 million in 4Q15, with strong performances in EMEA (+19% quarter-on-quarter) and the Americas (+27% quarter-on-quarter)
• Revenue Capture was 4.3 bps in 1Q16 versus 4.8 bps in 4Q15
• The EBITDA Margin somewhat improved quarter-on-quarter from 48% to 50% in 1Q16, as a result of our tight cost control. EBITDA 1Q16 was €32.3 million
• Net Profit was €23.2 million in 1Q16, versus €29.8 million in 4Q15. Main driver was the tax benefits recognized during 4Q15, compared to a more normal effective tax rate in 1Q16
• EPS 1Q16 is €0.50, taking into account a one-off write down on a non-core asset part of our infrastructure, impacting our EPS by €0.04 negatively this quarter. This write down will structurally reduce our operating expenses by €1.2 million annually going forward
  

Dennis Dijkstra, Co-CEO of Flow Traders commented: "In the first quarter of 2016, Flow Traders continued to execute on its long term growth strategy, especially in EMEA and the Americas. We reported a quarter-on-quarter stable Net Trading Income of €64.6 million. Operating expenses developed in line with expectations. On the cost side, we decided to write down part of our non-core infrastructure and cancel the sale process, which impacted our EPS by €0.04 in 1Q16, but will result in structural savings of €1.2 million annually going forward. Our goal for 2016 remains to continuously improve our business and increase the ETP Value we trade. We continue to do this by improving our pricing power, our infrastructure and our risk management framework, so we grow organically at a faster pace than the Assets under Management growth in the ETP space. We are also looking forward to the implementation of new regulation, like MiFID2, as it will bring greater transparency and a level playing field. This will help liquidity providers like us to improve our visibility and show our competitive strength."

Sjoerd Rietberg, Co-CEO of Flow Traders commented: "During 1Q16 the market experienced relatively more trading in the more liquid, plain vanilla ETPs with typically tighter spreads. Despite the lower market activity in February and March, our 1Q16 ETP Value Traded developed to our satisfaction in EMEA and the Americas with quarter-on-quarter growth of 19% and 27%, respectively. The performance in APAC lagged, as the shift in ETP Value Traded towards more liquid products was felt particularly in that region. For APAC, this impacted both our Revenue Capture and Net Trading Income, despite the growth in ETP Value Traded. Our overall Revenue Capture came in at 4.3 basis points in 1Q16 versus 4.8 basis points in 4Q15, which is a reflection of the market developments described earlier. Overall, in 1Q16, we generated a stable Net Trading Income, driven by a growth of 12% in our ETP Value Traded quarter-on-quarter. We believe this was a good performance in a somewhat challenging market in 1Q16."

Historical NTI performance Flow Traders per quarter over the last 2 years

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As a result of the long term growth focus, Flow Traders' NTI has grown substantially since 2014.  The table above shows the NTI performance over the last two years. These results underline our long term structural growth with on top of that the increase of our NTI in periods of higher volatility since the beginning of 2014.

Consolidated quarterly results Flow Traders

In 1Q16 our ETP Value Traded rose 12% versus 4Q15 to €151 billion, mainly driven by our trading in EMEA and the Americas. Operational expenses developed in line with our expectations, resulting in an EBITDA Margin of 50% in 1Q16 versus 48% in 4Q15, mainly driven by additional year-end expenses in 4Q15. Net Profit was €23.2 million in 1Q16, or EPS €0.50. Main drivers were the tax benefits recognized during 4Q15, compared to a more normal expected effective tax rate in 1Q16 and the one-off tangible asset write off, impacting EPS negatively by €0.04. Overall headcount increased from 268 FTE at year-end 2015 to 288 FTE end 1Q16, to support our global leading role as an electronic ETP-focused liquidity provider. 

In EMEA the on-exchange ETP Market Value Traded was €261 billion in 1Q16 versus €220 billion in 4Q15 (+19%). Net Trading Income rose to €39.9 million, an increase of 21%, triggered by higher Revenue Capture and higher ETP Value Traded. Flow Traders' on-exchange market share remained just below 20%.

In the Americas the on-exchange ETP Market Value Traded came in at €3,514 billion in 1Q16, compared to €2,970 billion in 4Q15 (+18%). ETP Value Traded by Flow Traders increased from €41 billion in 4Q15 to €46 billion in 1Q16 (+12%). Revenue Capture rose to 3.5 bps in 1Q16, up from 3.1 bps in 4Q15. This resulted in a Net Trading Income of €16 million, a 27% improvement quarter-on-quarter from €12.6 million. As mentioned in previous presentations, Flow Traders is on track to start trading directly with institutional counterparties in the US market in 2016.
 

In APAC, the on-exchange ETP Market Value Traded reached €522 billion, down 8% quarter-on-quarter versus €565 billion in 4Q15. ETP Value Traded by Flow Traders increased from €8.9 billion in 4Q15 to €9.1 billion in 1Q16 (+2%). Revenue Capture came in at 9.6 bps in 1Q16, a decrease versus 4Q15, which contained a one-off late benefit.

Other

Flow Traders has decided to write down part of its non-core infrastructure and cancel the sale process, which impacted our EPS by €0.04 in 1Q16, but will result in structural savings of €1.2 million annually going forward.
 

Current Trading and Outlook

Going forward, our focus will continue to be on Flow Traders' organic growth by increasing the volumes we trade and optimizing our revenue capture. We aim to do so by improving our pricing power, our infrastructure and our risk management framework, so we grow organically at a faster pace than the Assets under Management growth in the ETP space.

Financial Calendar 2016

19 May                          AGM Flow Traders
23 May                          Ex-dividend date (pending AGM approval)
24 May                          Record date dividend
26 May                          Payment date dividend
15 July                          Start Silent Period
12 August                     2H16 results
19 October                   Start Silent Period
09 November                3Q16 results
 
 
Analyst Conference Call and Webcast

The analyst conference call on the results will be held at 10:00 am CET on Wednesday 4 May 2016. The presentation will also be accessible via www.flowtraders.com, where the presentation can be downloaded and the conference call can be followed via a listen-only audio webcast. A replay of the conference call will be available on the company website for at least 90 days.

Contact Details

Flow Traders N.V.
Serge Enneman / Manager Investor Relations
Phone: +31 20 7996799
Email:   Investor.relations@flowtraders.com
 

Regulatory Disclosures

We have amended and renamed our Personal Transaction Policy. Please revert to our website for the latest version of the policy. (http://www.flowtraders.com/about-us/our-corporate-governance)
 

Important legal information

This press release is prepared by Flow Traders N.V. and is for information purposes only. It is not a recommendation to engage in investment activities and you must not rely on the content of this document when making any investment decisions. The information in this document does not constitute legal, tax, or investment advice and is not to be regarded as investor marketing or marketing of any security or financial instrument, or as an offer to buy or sell, or as a solicitation of any offer to buy or sell, securities or financial instruments.

The information and materials contained in this press release are provided 'as is' and Flow Traders N.V. or any of its affiliates ("Flow Traders") do not warrant the accuracy, adequacy or completeness of the information and materials and expressly disclaim liability for any errors or omissions. This press release is not intended to be, and shall not constitute in any way a binding or legal agreement, or impose any legal obligation on Flow Traders. All intellectual property rights, including trademarks, are those of their respective owners. All rights reserved. All proprietary rights and interest in or connected with this publication shall vest in Flow Traders. No part of it may be redistributed or reproduced without the prior written permission of Flow Traders.

This press release may include forward-looking statements, which are based on Flow Traders' current expectations and projections about future events, and are not guarantees of future performance. Forward looking statements are statements that are not historical facts, including statements about our beliefs and expectations. Words such as "may", "will", "would", "should", "expect", "intend", "estimate", "anticipate", "project", "believe", "could", "hope", "seek", "plan", "foresee", "aim", "objective", "potential", "goal" "strategy", "target", "continue" and similar expressions or their negatives are used to identify these forward-looking statements. By their nature, forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of Flow Traders. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no undue reliance should be placed on any forward-looking statements. Forward-looking statements speak only as at the date at which they are made. Flow Traders expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statements contained in this press release to reflect any change in its expectations or any change in events, conditions or circumstances on which such statements are based unless required to do so by applicable law.

Financial objectives are internal objectives of Flow Traders to measure its operational performance and should not be read as indicating that Flow Traders is targeting such metrics for any particular fiscal year. Flow Traders' ability to achieve these financial objectives is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Flow Traders' control, and upon assumptions with respect to future business decisions that are subject to change. As a result, Flow Traders' actual results may vary from these financial objectives, and those variations may be material.

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. Flow Traders cannot provide any assurance that these assumptions are correct and that these projections and estimates will reflect Flow Traders' actual results of operations.
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