Flow Traders NV: FLOW TRADERS REPORTS THIRD QUARTER 2016 RESULTS

FLOW TRADERS REPORTS THIRD QUARTER 2016 RESULTS

Amsterdam, the Netherlands, 9 November 2016 - Flow Traders N.V. (Euronext: FLOW) today announced its 3Q16 results, delivering a 5% increase quarter-on-quarter in ETP Value Traded and further strengthening its market share globally. The markets in 3Q16 continued to be challenging, following a decline in volatility and trading activity by investors. As a consequence, Market ETP Value Traded globally saw a 7% decline quarter-on-quarter. Momentum in Global ETP Assets under Management however remained positive as it grew to a new high of € 3.0tn at the end of 3Q16.

The 5% quarter-on-quarter increase in Flow Traders' ETP Value Traded was driven by an increased exposure to a broader range of products on the back of technological improvements. With this, we positioned ourselves better for future growth within the fast growing ETP market. Following the challenging markets, Revenue Capture for the period decreased to 3.3 bps as a result of our product mix traded.

Overall Flow Traders is on its way to deliver the second best year since inception.

Flow Traders 3Q16 Key Highlights

• Total Market ETP Value Traded decreased to € 4.71tn (-7% versus 2Q16) while Flow Traders' ETP Value Traded reached € 149bn (+5% versus 2Q16)
• Net Trading Income reached € 48.8m (-28% versus 2Q16), as trading activity overall slowed down further over the summer
• Revenue Capture reached 3.3 bps in 3Q16, reflecting low volatility and a decline in trading activity, especially in Europe
• EBITDA margin remained strong at 42% for 3Q16 as costs developed in line with expectations
• Net Income for 3Q16 reached € 15m, or EPS € 0.32 (-48% versus 2Q16). The 2Q16 results included a one-off tax benefit of € 4.5m or € 0.10 EPS
• Trading Capital remained stable quarter on quarter at € 300m after payment of interim dividend in 3Q and is still very comfortably above all regulatory and prime broker requirements. Focus continues to be on maximizing profitability and returns to shareholders and paying at least 50% of our Net Profit in dividend
• We further strengthened our Business Development, Trading and Technology teams across all regions, but especially in Asia and the US, and expanded our product coverage
• In the Americas we started the Institutional Trading department during 3Q and expanded the number of venues we provide liquidity to, as we have become a member of IEX
• Headcount overall grew by 19 employees to 325 end 3Q16, with an emphasis on the Americas and APAC

Flow Traders YTD September 2016 Key Highlights

• Market ETP Assets under Management grew to € 3.0tn (US$ 3.39tn), again hitting the highest level on record
• Year-to-date Market ETP Value Traded reached € 15.83tn, a 1% decline versus 9M15. First nine months 2015 included 3Q15, which was the most active quarter in history 
• Flow Traders' ETP Value Traded reached € 441bn in 9M16, versus € 462bn in 9M15, reflecting the low volatility and a decline in volumes in the market to date in 2016
• Net Trading Income (NTI) was € 181.3m in 9M16, down 25% versus 9M15 and up 83% versus 9M14
• Revenue Capture was 4.1bps in 9M16 versus 5.2bps in 9M15 and 2.9bps in 9M14
• EBITDA Margin for 9M16 was 47% versus 52% in 9M15 (corrected for IPO costs) and 44% in 9M14
• Net Profit was € 66.9m in 9M16, versus € 98.5m in 9M15 (corrected for IPO costs) and € 34.2m in 9M14
• EPS in 9M16 was € 1.44 versus € 2.12 in 9M15 (corrected for IPO costs) and € 0.74 in 9M14

Consolidated quarterly and 9M results Flow Traders

In 3Q16, Flow Traders continued to grow as our ETP Value Traded outperformed the market quarter-on-quarter, reaching € 149bn, mainly driven by EMEA and the Americas. Operational expenses developed in line with our expectations, resulting in an EBITDA Margin of 42% in 3Q16 versus 48% in 2Q16. Net Profit was €15m in 3Q16 versus € 28.7m in 2Q16 (2Q results contained a € 4.5m one-off tax gain). Overall headcount increased from 306 FTE at the end of 2Q16 to 325 FTE at the end of 3Q16, as we continued to drive our organic growth strategy and improved our position as the leading technology-driven ETP-focused liquidity provider.

Regionally, we strengthened the different teams and grew the number of products traded in all regions, but especially in APAC and US. We further optimised the infrastructure, along with the start of Institutional Trading in the US during the quarter. In Asia we expanded our Institutional Trading team and our Business Development team. In Europe, the growth in counterparties and the technological improvements had a clear impact on the Volumes Traded. We improved our market share in Europe and the US, whilst maintaining our ground in Asia.

In EMEA, the Market ETP Value Traded came in at € 216bn in 3Q16 versus € 241bn in 2Q16 (-10%), as investors remained on the side-lines over the summer after the Brexit referendum at the end of 2Q16. ETP Value Traded by Flow Traders reached € 98bn in 3Q16 versus € 94bn (+4%) in 2Q16, following technological improvements, improving our performance in highly liquid products. Net Trading Income declined to € 29.6m from € 43.6m in 2Q16, on the back of low liquidity and tightening spreads, and a subsequent decline in Revenue Capture from 4.6 bps in 2Q16 to 3.0 bps in 3Q16.  Our on-screen market share improved to 20%.

In the Americas, the Market ETP Market Value Traded came in at € 4,103bn in 3Q16, versus  € 4,333bn in 2Q16 (-5%). ETP Value Traded by Flow Traders reached € 45bn in 3Q16, from € 39bn in 2Q16  (+13%), with Revenue Capture reaching 3.3 bps in 3Q16 from 5.0 bps in 2Q16, again on the back of declining volatility and changes in the product mix traded. This resulted in a Net Trading Income of € 14.6m, a 26% decline quarter-on-quarter, but a 32% improvement YTD year-over-year. Our market share grew to just above 1.5% on-screen. Going forward, we expect to see a positive impact from the Institutional Trading department in the US, which has become operational at the end of 3Q and regulatory changes like the Fiduciary Ruling, becoming effective in the US on 1 April 2017. 

In APAC, the Market ETP Value Traded reached € 390bn versus € 479bn in 2Q16 (-19%). ETP Value Traded by Flow Traders came in at € 6bn in 3Q16, from € 8bn in 2Q16 (-19%), in line with the market. Our on-screen market share remained stable at 1.5%. Revenue Capture came in at 7.5 bps in 3Q16, an improvement versus 2Q16, reflecting the expansion of product coverage and strengthening of the different teams in a market where volumes continued to decline and flows remained concentrated around highly liquid products. These organizational changes and the ongoing technological improvements are expected to improve our performance in the region further going forward.

Current Trading and Outlook

Since our listing, the ETP market has grown globally in terms of Assets under Management and in the number of ETPs listed. The announced introduction of the Fiduciary Ruling per 1 April 2017 in the US and the SEC ruling on required fund liquidity is expected to further increase the focus on the ETF market in the coming years. With all the initiatives in place, Flow Traders will continue to focus on organic growth by increasing our coverage of the ETP space and by optimizing our Net Trading Income, whilst continuing to aim to grow in the medium- to long term faster than the ETP Assets under Management.

Financial Calendar 2017

The Financial Calendar for Flow Traders until the AGM in 2017 is as follows:

18 January                            Start Silent Period ahead of FY16 results
15 February                         Reporting Full Year 2016 results
26 April                                 Start Silent Period ahead of 1Q 2017 results
17 May                                  Reporting 1Q 2017 results
24 May                                  AGM
26 May                                  Ex-dividend final dividend 2016
29 May                                  Record date final dividend 2016
31 May                                  Payment date final dividend 2016

Analyst Conference Call and Webcast

The analyst conference call on the results will be held at 10:00 am CET on Wednesday 9 November 2016. The presentation will also be accessible via www.flowtraders.com, where the link to 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
Please visit www.flowtraders.com for more information and for the full version of the press release.

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.

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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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