FLOW TRADERS Q422 RESULTS
09/02/2023 06:30
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FLOW TRADERS Q422 RESULTS
Amsterdam, the Netherlands - Flow Traders Ltd. (Euronext: FLOW) announces its
unaudited Q422 results.
Highlights
* Flow Traders recorded Normalized total income of €113.9m in Q422
comprising Normalized NTI of €115.6m reflecting a continued active trading
environment and Normalized other income of €(1.7)m with revisions to the
valuations of certain investments. FY22 Normalized total income was €460.6m
vs €387.1m in FY21
* Flow Traders Value Traded was broadly flat quarter-on-quarter as was the
overall ETP market. Strong increases in equity and fixed income value traded
further demonstrated the growing resilience and trading diversification of the
business
* Normalized operating expenses of €65.7m incurred in Q422 contributing to
FY22 Normalized operating expenses of €252.4m. 19% year-on-year increase in
fixed operating expenses when adjusted for effect of USD strengthening and
targeted base compensation increases
* 660 FTEs as at 31 December 2022 compared to 639 as at 30 September 2022
* Normalized EBITDA in Q422 reached €48.2m representing a margin of 42%
contributing to FY22 Normalized EBITDA of €208.2m with a margin of 45%
* Q422 Normalized net profit amounted to €33.6m with Normalized basic EPS of
€0.78. FY22 Normalized net profit amounted to €150.2m with Normalized
basic EPS of €3.45
* Regulatory Own Funds Requirement (OFR) as at 31 December 2022 was €274m,
resulting in excess capital of €264m as at 31 December 2022. Following the
completion of the corporate holding structure update on 13 January 2022, group
consolidated regulatory capital is no longer applicable going forward. Trading
capital stood at €651m at the end of the fourth quarter, generating a 71%
return on trading capital
* Flow Traders proposes a final FY22 dividend of €0.80, implying a total
dividend of €1.50 for FY22 and a 51% dividend payout ratio
Financial Overview
€million Q 4 22 Q 3 22 Change FY 22 FY 21 Change
Normalized total income 113.9 112.2 2% 460.6 387.1 19%
Normalized net trading i ncome 115.6 111.7 3% 459.5 384.0 20%
EMEA 66.2 87.4 (24%) 312.5 245.8 27%
Americas 37.1 14.4 157% 91.7 74.4 23%
APAC 12.3 9.9 25% 55.2 63.8 (13%)
Normalized other income (1.7) 0.4 - 1.1 3.1 (63%)
Normalized employee expenses (1) 41.4 40.1 3% 164.0 140.3 17%
Technology expenses 16.4 16.1 2% 61.2 49.7 23%
Other expenses (2) 7.9 7.1 11% 27.3 18.7 46%
Normalized o perating e xpenses 65.7 63.3 4% 252.4 208.6 21%
Normalized EBITDA (1) 48. 2 48.8 (1%) 208.2 178.5 17%
Depreciation / amortisation 4.7 4.4 - 16.8 15.3 -
Write off of (in) tangible assets - - - 0.2 - -
Normalized p rofit b efore t ax 43.5 44.5 (2%) 191.2 163.2 17%
Normalized tax 10.0 9.9 - 41.0 32.3 -
Normalized n et p rofit 3 3.6 34.5 (3 % ) 15 0.2 130.9 1 5 %
Normalized basic EPS (3)(€) 0.78 0.79 3.45 3.00
Normalized EBITDA margin 42% 44% 45% 46%
Value Traded Overview
€billion Q 4 22 Q 3 22 Change FY 22 FY 21 Change
Flow Traders ETP Value Traded 396 409 (3%) 1,775 1,541 15%
Europe 179 178 1% 787 703 12%
Americas 195 212 (8%) 892 741 21%
Asia 22 20 13% 96 97 (1%)
Flow Traders non-ETP Value Traded 1,209 1,182 2% 4,989 4,209 19%
Flow Traders Value Traded (4) 1,605 1,591 1% 6,765 5,750 18%
Equity 780 714 9% 3,349 3,121 7%
Fixed income 363 344 5% 1,323 1,036 28%
Currency, Crypto, Commodity 451 495 (9%) 1,940 1,422 36%
Other 11 37 (71%) 152 171 (11%)
Market ETP Value Traded (5) 11,640 11,410 2% 51,81 1 36,835 41%
Europe 506 532 (5%) 2,371 2,035 17%
Americas 9,871 9,638 1% 44,675 31,056 44%
Asia 1,353 1,240 9% 4,764 3,744 27%
Asia ex China 403 395 2% 1,591 1,377 16%
Regional Highlights
EUROPE:
* Robust trading performance in the region with meaningful contributions from
all asset classes. Flow Traders maintained its position as the leading
liquidity provider in ETPs, both on- and off-exchange
* Flow Traders was again the lead sponsor at the Fixed Income Leadership
Summit which took place in Nice in October as the fixed income and corporate
credit trading business continues to increase its presence across the market.
Retained Top 5 Bloomberg dealer rankings for executed tickets and volume in
Flow Traders’ Euro IG universe
* As a regulated and listed firm, Flow Traders is well-positioned in the
digital assets space, utilizing proprietary trading infrastructure and
diversified liquidity provision to continually support partners and the
ecosystem through on- and off-exchange trading, accurate pricing, strategic
investments, and centralized and on-chain market making. Regarding FTX, Flow
Traders has an immaterial exposure and continues to manage risk effectively.
Moreover, Flow Traders is supporting the Binance recovery fund which will
provide liquidity to distressed crypto assets and is a key step ensuring
greater stability in the broader crypto ecosystem
AMERICAS:
* Fixed income trading contributed to a strong trading performance in Q4 in
the Americas effectively leveraging recent investments amidst ongoing interest
rate volatility. Further build-out of the fixed income business with continued
improvement in various RfQ platform rankings in Q4
* Continued focus on international equity pricing capabilities, including ADR
trading. Flow Traders has also opened a new office in Chicago on 1 February
2023 to further benefit from the city’s unique talent pool and academic
diversity
* Creating closer proximity to the many innovative players in the US digital
assets space to ensure Flow Traders remains well positioned to be part of this
defining moment in the future of finance and technology
ASIA:
* Continuing to build out activities in China, following receipt of Flow
Traders' QFII license and the opening of the Shanghai office, with the purpose
of helping to develop the local ETF market in making domestic and
international indices efficiently available to investors
* Flow Traders has started to leverage the US and European fixed income
business with coverage in Asian trading hours for global coverage of both
index products and selected single bonds
* Acted as market maker in the CSOP Bitcoin Futures ETF (3066) which is
HKEX’s first virtual asset ETF and reflects Flow Traders’ ongoing support
for crypto and digital asset ETPs globally
Flow Traders Capital
* Flow Traders Capital team has found that recent developments across the
digital assets market have led to a number of strategic investment
opportunities arising at more attractive entry valuations. Interest in
strategically partnering with Flow Traders remains high and whilst new
investment activity has reduced, focus has intensified on strategic planning
with existing portfolio companies. The pipeline for new investment in both
digital assets and traditional finance ecosystems remains strong
* To date, Flow Traders Capital has made a total of 23 investments to date
representing a total value of €25.3m - this reflects minor adjustments to
the portfolio in Q4 through a robust valuation process
Share Buyback Program
* As of 8 February 2023, the total number of shares purchased under the
ongoing €40m share buyback program is 1,159,791 shares at an average price
of €21.33 for a total consideration of €24.7m. The purpose of the current
buyback program is to return excess capital to shareholders. The intention is
that shares repurchased as part of this program will initially be held in
treasury and may be cancelled going forward
* 3,513,011 shares are held in treasury as at 8 February 2023 with 1,490,365
treasury shares repurchased for the purpose of satisfying the requirements of
various employee incentive plans and 2,022,646 shares repurchased for the
purpose of returning excess capital to shareholders
Corporate Structure and Leadership
* On 13 January 2023, Flow Traders completed the update to its corporate
holding structure. This followed receipt of shareholder approval at an
Extraordinary General Meeting held on 2 December 2022 and fulfilment of all
regulatory and other customary closing conditions. As a result of the update,
the top holding company is now Flow Traders Ltd, an exempted company limited
by shares under the law of Bermuda with the listing on Euronext Amsterdam
retained. The update of the corporate holding structure enables Flow Traders
to become more competitive as a global liquidity provider, particularly in
relation to regulatory capital management. Different capital requirements will
apply following the update of the holding structure which are expected to
expand Flow Traders' strategic growth options. Furthermore, it will create a
more level playing field with global peers with respect to the regulatory
capital framework. Flow Traders' regulated entities will continue to be
subject to supervision by their respective regulators
* Mike Kuehnel assumed the role of Chief Executive Officer of Flow Traders
Ltd. on 1 February 2023. Dennis Dijkstra’s intention not to seek
reappointment and the CEO succession plan was announced on 18 November 2022
Outlook
* While Flow Traders remains committed to bringing onboard additional talent
in growth business areas, FTEs are expected to remain broadly flat during 2023
given expected efficiency gains. There is a strong commitment to maintain the
fixed operating cost base in line with the December 2022 run-rate.
Accordingly, normalized fixed operating expenses in 2023 are expected to
amount to c. €175m - €185m compared to €161.6m in 2022
* Substantial progress has been made in the detailed and thorough review of
Flow Traders' capital structure as announced at the time of the previous
trading update and Flow Traders will remain focused on all arising
opportunities to create shareholder value through systematic capital
management going forward
Management Comments
Mike Kuehnel, CEO, stated:
“In 2022 as a whole, we made considerable progress delivering on our
strategic growth ambitions which has seen an even more resilient and diverse
business emerge. It is encouraging to see a structural return on our recent
investments in the business. Indeed, 2022 saw record value traded versus last
year across our three asset class pillars and we continue to grow our
institutional counterparty base which now stands at more than 2,200. The
successful completion of the update to our corporate holding structure means
that we now have even greater trading flexibility and have laid the groundwork
to undertake any potential inorganic growth activity.
“Operating expense growth moderated in the fourth quarter and 2023 will see
a continued focus on increasing the underlying efficiency of the business as
we seek to further leverage the investments made in prior years. We also
maintained our conservative capital position while implementing this growth
strategy. Remaining cognisant of our trading capital position as well as the
growth opportunities ahead, we have elected to pay a €0.80 per share final
dividend to shareholders.
“Despite increasing competition for talent in the market, we have been
successful in attracting and recruiting the best talent and have welcomed many
new colleagues in the past year. Lastly, on behalf of the entire Board and
ExCo, I would like to take the opportunity to pay tribute to the
professionalism, resilience, and loyalty of all our colleagues globally this
past year. We are immensely grateful to our colleagues for their tremendous
hard work which allowed for our considerable operational and strategic
achievements and successes in 2022.”
Folkert Joling, Chief Trading Officer, added:
“Heightened levels of market activity delivered a strong trading performance
in the fourth quarter with all regions contributing meaningfully. We have
continued to expand and broaden our trading activities even further across
different products and asset classes and this is reflected in the results
achieved throughout 2022. Our robust and prudent approach to risk management
meant that we were immaterially affected by the collapse of FTX in November
and our status as a listed, transparent, seasoned market participant improved
our overall standing with investors and other market participants. As to be
expected, we reduced our overall trading capital exposure to the various
crypto platforms we trade with, fully recognising the increased risks present
in the broader crypto market. This trading capital was naturally deployed to
other areas of the business. We retain our conviction around the long-term
potential of crypto and DeFi from both a trading as well as a technological
and financial markets innovation perspective.
“Looking ahead for 2023, we remain focused on executing our growth plans
with respect to our business lines of Equity, Fixed Income and Crypto,
Currencies and Commodities. Our achievements in 2022 have reinforced our
confidence in our ability to deliver further growth going forward.”
Preliminary Financial Calendar
24 February 2023 Release 2022 Annual Report
31 March 2023 Start Silent Period ahead of
Q123 trading update
21 April 2023 Release Q123 trading update (no
analyst conference call)
26 April 2023 AGM
28 April 2023 FY22 final dividend proposed
ex-dividend date
2 May 2023 FY22 final dividend proposed record
date
4 May 2023 FY22 final dividend proposed payment
date
30 June 2023 Start silent period ahead of H123
results
21 July 2023 Release H123 results (inc. analyst
conference call)
Analyst Conference Call and Webcast
The Q422 results analyst conference call will be held at 10:00 am CET on
Thursday 9 February 2023. The presentation can be downloaded at
www.flowtraders.com/investors/results-centre 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 Ltd.
Investors
Jonathan Berger
Phone: +31 20 7996149
Email: investor.relations@flowtraders.com
Media
Laura Peijs
Phone: +31 20 7996125
Email: press@flowtraders.com
About Flow Traders
Flow Traders is a leading global financial technology-enabled liquidity
provider in financial products, historically specialized in Exchange Traded
Products (ETPs), now expanding into other asset classes. Flow Traders ensures
the provision of liquidity to support the uninterrupted functioning of
financial markets. This allows investors to continue to buy or sell ETPs or
other financial instruments under all market circumstances. We continuously
grow our organization, ensuring that our trading desks in Europe, the Americas
and Asia can provide liquidity across all major exchanges, globally, 24 hours
a day. Founded in 2004, we continue to cultivate the entrepreneurial,
innovative and team-oriented culture that has been with us since the
beginning. Please visit www.flowtraders.com for more information.
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 Q422 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 which relate specifically to the completed
corporate holding structure update. 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
Normalized to IFRS Reconciliation
€million Q 4 22 Q 3 22 Change FY22 FY21 Change
Total income 115.5 111.7 3 % 458.7 384.0 19%
Net trading i ncome 115.7 111.8 4 % 460.2 384. 0 20%
Other income (0.2) (0.1) - (1.5) - -
Employee expenses (1) 46.6 39.9 17% 176.8 156.2 13%
Technology expenses 16.4 16.1 2% 61.2 49.7 23%
Other expenses 7.9 7.1 11% 27.3 18.7 46%
One off expenses 1.5 0.8 94% 14.1 - -
Total o perating e xpenses 7 2 . 4 63.9 1 3 % 27 9 . 3 224. 6 24%
EBITDA 4 3. 2 47.8 ( 10 % ) 1 79. 3 159. 4 1 2 %
Profit b efore t ax 3 8 . 0 43.4 (1 2 %) 16 1 . 7 144.7 12%
Net p rofit 29. 5 33.8 (1 3 % ) 12 6 . 8 114.9 1 0 %
Basic EPS (3)(€) 0.68 0.78 2.92 2.63
Fully diluted EPS (6)(€) 0.65 0.75 2.76 2.52
EBITDA margin 37% 43% 39% 42%
* 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 32.5% in Q222 from 35%. €1.5m of one-off expenses is also
excluded
* Tax based on estimated expected effective tax rate for the relevant
financial period: Q422 - 22.9%; Q322 - 22.3%; FY22 - 21.4%; FY21 - 19.8%
* A summary reconciliation of Normalized to IFRS is presented below:
€million Q 4 22 Q 3 22 FY 22 FY21
Normalized EBITDA 48.2 48.8 208.2 178.5
FV OCI adjustment 1.2 (0.5) (2.6) (2.5)
Results of equity-accounted investments 0.4 - 0.6 (0.6)
One off expenses (1.5) (0.8) (14.1) -
Prior year share plans (7.0) (4.2) (25.4) (27.3)
Current year share plan deferral 1.9 4.4 12.5 11.3
Other variable remuneration adjustment - - - -
IFRS EBITDA 4 3 . 2 47.8 179. 3 159.4
Normalized net profit 33.6 34.5 150.2 130.9
Profit before tax IFRS adjustments (5.5) (1.1) (29.5) (18.4)
Tax difference 1.4 0.4 6.1 2.5
IFRS net profit 29. 5 33.8 12 6 . 8 114.9
Notes
1. Fixed employee expenses: Q422 - €19.9m; Q322 - €19.0m; FY22 - €73.2m;
FY21 - €53.7m
2. FY21 other expenses includes €2.4m of business continuity plan-related
expenses previously classified as one-off expenses
3. Weighted average shares outstanding: Q422 - 43,050,126; Q322 - 43,615,044;
FY22 - 43,476,990; FY21 - 43,699,300. 42,834,628 shares outstanding as at 31
December 2022
4. Value traded comprises ETPs, Futures and Cash
5. Source - Flow Traders analysis
6. Determined by adjusting the basic EPS for the effects of all dilutive
share-based payments to employees
Important Legal Information
This press release is prepared by Flow Traders Ltd. 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 Ltd. 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.
By accepting this document you agree to the terms set out above. If you do not
agree with the terms set out above please notify
legal.amsterdam@nl.flowtraders.com immediately and delete or destroy this
document.
Market Abuse Regulation
This press release contains information within the meaning of Article 7(1) of
the EU Market Abuse Regulation.
Attachment
* Flow Traders - Q422 Results vF
(https://ml-eu.globenewswire.com/Resource/Download/4a05ef47-6b22-4981-912b-c37bc762e705)
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