Flow Traders on track for record year
Flow Traders has published its unaudited 2Q18 results revealing that NTI reached EUR53.8 million in 2Q18, against EUR213.2 million in 1Q18 and EUR46.7 million in 2Q17.
Flow Traders writes that 1H18 NTI reached EUR266.9 million and is on track to lead to a record year. Fixed costs grew 0.8 per cent Q-o-Q, leading to fixed cost growth in 1H18 of 4.1 per cent Y-o-Y.
2Q18 EBITDA margin was 36 per cent, leading to a 1H18 EBITDA margin of 57 per cent. Net Profit reached EUR17.2 million in 2Q18, resulting in a 1H18 Net Profit of EUR126.8 million, or a 1H18 EPS of EUR2.73.
Under the CRR (Capital Requirement Regulation), Flow Traders' own funds requirement was EUR179 million as at 30 June 2018, resulting in excess capital of EUR111 million. Interim dividend for 2018 is set at EUR1.35.
Flow Traders reports that it connected to 5 per cent more trading venues, grew its counterparties base by 10 per cent and its official liquidity providership by 8 per cent to over 6,000 ETPs since the end of 2017.
FTEs remained flat Q-o-Q as at the end of 2Q18 at 412, realising an FTE growth of 4.5 per cent since end 2017.
The firm writes that after the strong start to the year in the first quarter, market dynamics slowed down in the second quarter of 2018. Value traded in the market decreased Q-o-Q, but showed a Y-o-Y increase. That slow down resulted in market dynamics we've witnessed before: tightening spreads and change in product mix traded. Nevertheless, market value traded continued to stay on the upward trend observed since 3Q17. Growth in assets under management picked up again in 2Q18, reaching new highs at the end of this quarter. Momentum in the ETP market therefore remains healthy.
On the regulatory front, MiFID II has improved transparency as flows have moved onto lit venues from dark pools in EMEA, increasing the addressable market in ETPs, Flow Traders says.
Flow Traders sees confirmation in the recent results of the strength of its organic growth strategy. The ongoing focus on growth through more venues and with more counterparties in more products, while at the same time diversifying trading into areas like FX, US OTC and Fixed Income have supported the Company's performance in 2018 so far and are expected to remain supportive in the coming period.
Co-CEO Dennis Dijkstra says: "The opportunities we identified in the market in recent years started to contribute to our results in 2018. As Flow Traders' value traded grew ahead of the market in the first six months of 2018, we were able to show the impact of our organic growth strategy. Our 1H18 NTI reached EUR266.9 million, which is unprecedented.
“By growing the number of venues to 109 and our counterparty base to over 775, while simultaneously keeping our fixed cost growth in control, +4.1 per cent YTD Y-o-Y, and diversifying our trading activities, Flow Traders further built on its foundation for the future. As flagged before, regulatory developments like CRR and MiFID II have not limited Flow Traders in its ability to execute on its organic growth strategy. Based on our results, we are confident that we will continue to further leverage our leading position."
Co-CEO Sjoerd Rietberg says: "When taking a closer look, Flow Traders showed an increase of its market presence in all regions in 2018 to date. Our NTI grew at a record pace, helped by favourable market dynamics, in particular in 1Q18. When looking at the different regions, Flow Traders continued to be the dominant liquidity provider in ETPs in EMEA in 2Q18. The impact of MiFID II so far seems beneficial.
“Furthermore, Flow Traders started to provide liquidity in FX in EMEA, which will be rolled out further in the coming period. In APAC, Flow Traders grew its on-screen presence as our organic growth strategy resulted in market share gains. Our OTC engagement in APAC also showed good progress. With the regulated status in Hong Kong and the registration in Tokyo, Flow Traders is all set for further growth in that region in the future.
“In the US, we maintained good momentum as we grew our on- and off-screen trading activity. Our OTC flows in the US now make up 25 per cent of our value traded in the US. We also started to trade more products in the Americas. Given these developments, Flow Traders remains committed to its current organic growth strategy in near the future."
CFO Marcel Jongmans says: "As we stated before, Flow Traders has found the right balance between growing our firm and controlling our cost base. In 2Q18, we continued to execute and control our growth strategy while maintaining a tight grip on our cost growth. This resulted in a record 1H18 performance for Flow Traders. On the regulatory front, Flow Traders continued to comfortably meet the regulatory required capital levels under CRR as at 30 June 2018, resulting in EUR111m in excess capital after payment of the final dividend for 2017 and the interim dividend provision for 2018.
“The IFRS treatment of Flow Traders' employee participation plan continued to have an impact on the reported variable cash component in the income statement. Taking all of this into account, based on our strong balance sheet and our high free cash flow generation, we announce an interim dividend for FY18 of EUR1.35. Looking forward, Flow Traders will continue to focus on optimizing NTI and returns for its shareholders in 2018 and beyond."