Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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I fully expected Q2 to be off the charts as well and 2020 to be close to 2018
Thanks very much for posting; makes for interesting reading as it highlights 'some' downsides too, which I prefer to only the 'sugar coated' commentary these boatdscare often prone too!! ATB
FT -Financials
Plus500 revenue up 500% on boom in bets
ANTONIA CUNDY
Revenue at online trading platform Plus500 jumped nearly 500 per cent in the first quarter after market volatility caused by the coronavirus pandemic spurred a boom in bets.
The London-listed broker reported revenue of $316.6m in the three months to March, far exceeding analysts’ expectations of about $185m and up from $53.9m in the same period a year earlier. The amount was equivalent to about 90 per cent of Plus500’s total revenue in 2019.
Profits for the full year are likely to be “substantially ahead” of expectations, although it is impossible to predict whether future quarters will be as dramatic as the first, Asaf Elimelech, chief executive, said yesterday.
“As we remain at an early stage in the financial year, and there are global markets uncertainties as well as ongoing regulatory changes, it remains difficult to predict the outcome for the full year,” he said.
The group reported earnings before interest, tax and depreciation of $231.6m, which it said was a 1,863 per cent year-on-year increase.
Plus500’s performance follows that of rival online trading platform IG Group, whose revenue jumped nearly a third in the first quarter after global markets began whipsawing in late February.
Israel-based Plus500 offers contracts for difference (CFDs) that allow individual traders to make bets on moves in currencies, stocks and cryptocurrencies.
The six-fold increase in revenue was driven by almost 83,000 new customers signing up in the quarter, almost four times as many as did so in the first quarter of 2019. Altogether the platform ended the period with 194,000 active users, whose average revenue rose to $1,632 — up from $550 a year earlier.
However, Stuart Duncan, analyst at Peel Hunt, warned that although volatility was likely to continue for “weeks if not months”, it was not guaranteed that customers would continue trading. “At some point customers will realise they’ve actually lost most of what they were willing to stake,” he said.
Although many companies have halted payouts to shareholders during the pandemic, Plus500 reiterated its intention to return at least 60 per cent of net profits to shareholders through dividends and share buybacks.
It ended the quarter with cash of about $515.6m, up from $292.9m three months earlier.
Rough markets are big plus for financial betting group
The wild swings in markets caused by the Covid-19 crisis may have wrongfooted traders, but they have helped to propel quarterly revenues at Plus500 to record levels.
Asaf Elimelech, chief executive of the financial betting business, said that it was on course to generate full-year profits “substantially ahead” of City expectations after the group enjoyed what he called an “exceptional” first quarter.
Revenues during the three months to the end of March leapt to $316.6 million from $53.9 million a year earlier, boosted by the trading losses suffered by Plus500 customers during the extreme volatility in recent weeks, which contributed about $82.3 million to the company’s top line.
Plus500 provides contracts for difference, a type of derivative that allows punters to make leveraged bets on the direction of financial markets ranging from equities and bonds to commodities and currencies. Traders betting in the derivatives market typically range from smaller, amateur retail customers to professionals from the financial services industry who trade regularly.
The company, which is based in Israel, was set up in 2008 and was listed in London seven years ago. Plus500 and its rivals, including CMC Markets and IG Group, thrive when markets are volatile because such conditions encourage customers to trade. Punters hope to make quick profits as asset prices experience dramatic swings.
Plus500 said that it had attracted 82,951 new customers during the quarter, up from 21,306 from the same period a year ago. Its active customers — those who executed at least one real money trade during the quarter — doubled to 194,024 from 97,921 a year earlier.
The company gains when its customers make the wrong bets. About 76.4 per cent of Plus500’s amateur customers lose money on derivatives, losses that can be magnified by the leverage used to increase the size of their wagers. When markets fall sharply, as they have during the pandemic, traders seeking to profit from an expected rebound typically are tempted to call the bottom. If they are caught out and markets continue to slide, their trading losses feed into Plus500’s revenues.
Such losses accounted for 26 per cent of the company’s revenues during the three-month period. However, Plus500 said: “The revenues derived from customer trading performance in the first quarter are expected to revert to their medium-term historic level of near zero over time.”
Concerns about the widespread losses suffered by inexperienced retail clients prompted European regulators to crack down on the financial betting industry in August 2018 and to impose stricter rules on derivatives providers, which hit Plus500 and its peers. The company’s pre-tax profits fell to $189.3 million last year from $503 million in 2018, which cut the earnings of Mr Elimelech, 39.
Telegraph one is too big to copy and paste... summary its about spread betting. Its a bit of free marketing for Plus and CMC but highlighting the risks. That was my one free article I can look at today on it. don't have the times.
Seem to be write-ups in The Daily Telegraph and The Times today, but as I don't subscribe to either newspaper, I cannot read them. If anyone does subscribe, then can they cut & paste them here (not a link as we will still not be able to open it)? Thanks...
I don't see why they'd rather retain the cash. Other companies are retaining the cash because of the covid-19 adverse impact. Plus is benefiting from Covid-19. No need to retain cash with such low fixed costs. Plus counties all over the world are giving out cash to people. The UK is paying 80% of wages for people if their company has no work for them. many people are still on full pay. From the ONS a house hold spends 70% on their normal income on essential items. The other 30% isn't available to be spent in the current climate (e.g hotels, restaurants, holidays, transport). basically people will slowly have more cash and not much to do, other than play with things online such as spread betting, online casinos, online games etc.
I appreciate lots of people have also lost their jobs too, but others will have an excess of cash and lots of time on their hands... all bodes well for Plus500 to continue making great money until the market volatility gets back to normal.
And they’d rather retain the cash; especially in this market. . . .
Id rather they just give shareholders back the cash in divis rather than this buy back. I don't really see the point in buy backs unless there is hardly any liquidity I the share.
It was in yesterdays RNS albeit in $. convert at 1.23 for an estimation
The final dividend for the year ended 31 December 2019 of $40.8m, representing $0.3767 per share, which went ex-dividend on 27 February 2020, is payable on 13 July 2020.
In GB sterling?? I can’t remember what it is, but I do remember it being in US cents. So, if anyone can inform us all what it is going to be (give or take a few pence), that would be very helpful! ATB