Flow Traders Investor Presentation 3Q 2016 results
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Flow Traders
Investor Presentation 3Q 2016 results
Flow Traders |Disclaimer
This presentation is prepared by Flow Traders N.V. and is for information purposes only and the Forward-looking statements speak only as at the date at which they are made. Flow Traders
material contained in this document is provided ‘as is’. It is not a recommendation to engage in expressly disclaims any obligation or undertaking to update, review or revise any forward-
investment activities and you must not rely on the looking statements contained in this presentation to reflect any change in its expectations or
any change in events, conditions or circumstances on which such statements are based unless
content of this document when making any investment decisions. The information in this required to do so by applicable law.
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 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
offer to buy or sell, or as a solicitation of any offer to buy or sell, securities or financial for any particular fiscal year.
instruments.
Flow Traders’ ability to achieve these financial objectives is inherently subject to significant
The information and materials contained in this presentation are provided ‘as is’ and Flow business, economic and competitive uncertainties and contingencies, many of which are
Traders N.V. or any of its affiliates (“Flow Traders”) do not warrant the accuracy, adequacy or beyond Flow Traders’ control, and upon assumptions with respect to future business decisions
completeness of the information and materials and expressly disclaim liability for any errors or that are subject to change. As a result, Flow Traders’ actual results may vary from these
omissions. This presentation is not intended to be, and shall not constitute in any way a binding financial objectives, and those variations may be material.
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 Efficiencies are net, before tax and on a run-rate basis, i.e. taking into account the full- year
proprietary rights and interest in or connected with this publication shall vest in Flow Traders. impact of any measure to be undertaken before the end of the period mentioned. The
No part of it may be redistributed or reproduced without the prior written permission of Flow expected operating efficiencies and cost savings were prepared on the basis of a number of
Traders. 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
This presentation may include forward-looking statements, which are based on Flow Traders’ significant uncertainties and actual results may differ, perhaps materially, from those
current expectations and projections about future events, and are not 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.
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”, By accepting this document you agree to the terms set out above.
“will”, “would”, “should”, “expect”, “intend”, “estimate”, “anticipate”, “project”,
If you do not agree with the terms set out above please notify
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“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.
Flow Traders | Investor Presentation 2An introduction
Founded in January 2004 with offices in Amsterdam, New York and Singapore
Flow Traders trades in all time zones
Our core business is providing liquidity for ETPs1
Around 100 traders providing continuous ETP liquidity on 97 trading venues worldwide
We are listed on Euronext in Amsterdam since 10th of July 2015 (Ticker FLOW NA)
Flow Traders is independent and not linked to any issuer or bank
A leading global
technology-
enabled liquidity
provider specialized
in ETPs
1 ETPs (Exchange Traded Products) include ETFs (Exchange Traded Funds), ETCs (Exchange Traded Commodities) and ETNs (Exchange Traded Notes)
Flow Traders | Investor Presentation 3Flow Traders at a glance
AMERICAS EUROPE ASIA
(since 2009) (since 2004) (since 2007)
ETP AuM(€bn) ETP AuM(€bn) ETP AuM(€bn)
2,228 511 278
FLOW ETP
FLOW ETP Value Value Traded FLOW ETP Value
Traded (€bn)* FTE FTE Traded (€bn) * FTE
(€bn) *
129 49 289 226 23 50
ETP AUM as at 30 September 2016, ETP Value Traded for the nine months period ended 30 September 2016 and FTE for the quarter ended 30 September 2016
Flow Traders | Investor Presentation 4Our corporate culture supports our leading market position
High-growth underlying market driven
by secular shifts in the asset management
industry
ETP
Critical component of the ETP Ecosystem Pricing
Excellence
Leading global technology-enabled
ETP-focused liquidity provider
Strong
Team-Driven
Culture
Highly collaborative, integrated and resilient Cutting-Edge
business model with strong barriers to entry Proprietary Risk management
Technology Focus
Platform
Strong growth, high margins and
attractive dividend pay-out ratio
Flow Traders | Investor Presentation 5Critical component of the ETP Ecosystem
ETP creation / redemption
>25 ETP issuers Providing liquidity to
the global ETP market,
Primary Market
fostering primary
issuance and
secondary trading
ETPs vs basket of assets / cash
Facilitating primary
Ability to create and redeem daily
issuance through
Authorized Participant
(AP) agreements
Global risk transfer between market participants
Aggregating flow from
all market participants
Secondary Market
ETPs vs cash ETPs vs cash
On-exchange Institutional / off-exchange liquidity Increasing secondary
liquidity provision provision
market efficiency
through global
97 Exchanges and other >475 Institutional Counterparties
interconnectivity and
Trading Venues
Asset managers, private banks,
efficient pricing
insurance companies etc.
Flow Traders | Investor Presentation 63Q results overview
Flow Traders | Investor Presentation 7Executive summary 3Q performance
We have increased our market share in the third quarter as we grew in ETP Value Traded,
confirming our position as leading global ETP liquidity provider
Slow market trading activity, with VIX close to all time lows, impacted our Net Trading Income
(NTI) and Revenue Capture
We still see a lot of growth opportunities in the US and Asia
We continue to invest in our people and technology to benefit from future growth and facilitate
our growing presence
We are on track to deliver the second best year since inception
Flow Traders | Investor Presentation 8ETP market continued to grow in 3Q16
ETP Assets under Management grew by 5.8% Net inflows trend remains skewed towards Quarterly increase in ETP listings driven by
quarter-on-quarter Fixed Income & Equity products the Americas and APAC regions
€ bn € bn number
3,500 130
3,016 109 111 12,000
107
2,851
3,000 2,642 2,667 110 9,644
10,000 9,542
85 83 9,117
8,556 8,891
2,500 76 8,262
2,079 90 8,024
1,918
66 8,000
1,744
2,000
70 50
46 6,000
1,500
50 23
1,000 24 4,000
30
500 2,000
10
-
31 Dec 30 Jun 31 Dec 30 Jun 31 Dec 30 Jun 30-Sep-16 -
2013 2014 2014 2015 2015 2016 (10) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Equity Fixed Income Commodities Other (30) EMEA Americas APAC
Equity Fixed Income Commodities Other
Second consecutive quarter of decreasing Drop in Market Velocity demonstrates the Combined with lower VIX this impacts
on-exchange ETP Value Traded continuing slowdown through 2016 margins, despite short term Brexit event
€ bn %
3.1
60
7,000
5,974 6,065 2.9
6,000 5,317 50
5,109 4,901 5,053 2.7
4,708
5,000 2.5 40
4,000 2.3
30
3,000 2.1
20
2,000 1.9
1,000 1.7 10
- 1.5
0
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Quarterly Intraday High Quarterly Intraday Low
Quarterly Average close level
* Source: Blackrock, Flow Traders, Bloomberg Flow Traders | Investor Presentation 9
Market Velocity is the Market ETP Value Traded divided by the Market ETP Assets under ManagementResilient performance in a challenging environment
KPIs Flow Traders Flow Traders NTI (in €m)
YTD YTD
In €bn unless otherwise stated 3Q16 2Q16 ∆ Sept16 Sept15 ∆ 350.0
Market ETP Value Traded 4,708 5,053 (7%) 15,826 15,984 (1%) 304.7
Europe 216 241 (10%) 723 735 (2%) 300.0
Americas 4,103 4,333 (5%) 13,693 13,280 3% 64.5
APAC 390 479 (19%) 1,410 1,969 (28%) 250.0
Flow Traders ETP Value Traded 149 141 5% 441 462 (5%) 200.0 92.8 181.3
Europe 98 94 4% 289 292 (1%) 172.7
Americas 45 39 13% 129 125 3% 150.0 48.8
APAC 6 8 (19%) 23 45 (50%) 73.2
70.5
Flow Traders NTI (€m) 48.8 67.9 (28%) 181.3 240.2 (25%) 100.0 67.9
38.1
Europe 29.6 43.6 (32%) 113.1 149.1 (24%)
50.0 24.9
Americas 14.6 19.9 (26%) 50.5 38.4 32% 76.9 64.6
APAC 4.6 4.4 3% 17.7 52.7 (66%) 36.5
-
2014 2015 2016 YTD
Flow Traders RevCap (bps) 3.3 4.8 (1.5) 4.1 5.2 (1.1)
Europe 3.0 4.6 (1.6) 3.9 5.1 (1.2)
1Q 2Q 3Q 4Q
Americas 3.3 5.0 (1.8) 3.9 3.1 0.9
APAC 7.5 5.9 1.6 7.8 11.7 (3.9)
External Developments Flow Traders’ Performance
3Q16 was dominated by the Brexit aftermath, Central Bank decisions across the ETP Value Traded improved 5% compared to the previous quarter whilst the market ETP
globe and the upcoming US elections and Italian referendum Value Traded declined 7% over the same comparative period
Market circumstances kept investors side-lined as volatility declined further to NTI declined 28% q-o-q due to tightening market spreads, following lower market
levels last seen in summer 2014 volumes as investors were assessing impact Brexit and the upcoming US elections and
Italian referendum
Product mix traded in the market remains skewed towards highly liquid products, as Revenue Capture reached 3.3 bps as lower volatility affected market spreads and product
flagged in previous quarters mix, especially in Europe
Note 1: Market Value Traded is restated based on Flow Traders Market reference data.
Note 2: Flow Traders Value Traded is restated to correct for creations and redemptions, NTI is not impacted. Refer to appendix for more details.
Flow Traders | Investor Presentation 10Maintaining cost discipline to preserve operating margins
Impact of decline in Net Trading Income compensated by reduction in variable component of operating
expenses
3Q 2Q 3Q16 vs YTD YTD Adj. YTD YTD16 vs
Consolidated (in €m) 2016 2016 2Q16 Sep 16 Sep 15 Sep 15 adj. YTD-15
Net Trading Income 48.8 67.9 (28%) 181.3 240.2 240.2 (25%)
Employee expenses (fixed) (6.8) (6.6) (19.4) (15.1) (15.1) 29%
Employee expenses (variable) (9.8) (17.3) (42.4) (72.2) (105.4) (41%)
Technology expenses (8.3) (8.6) (25.4) (19.5) (19.5) 30%
Other expenses (3.5) (2.4) (8.5) (7.9) (9.8) 7%
Operational Expenses (28.4) (35.0) (19%) (95.7) (114.8) (149.8) (17%)
EBITDA 20.5 32.9 (38%) 85.6 125.4 90.4 (32%)
Depreciation / Amortisation (1.5) (1.5) (4.7) (5.0) (5.0)
Write offs tangible assets (0.1) (0.5) (2.7) (0.0) (0.0)
Result subsidiaries (0.0) 0.0 0.0 - -
Profit Before Tax 18.9 30.9 (39%) 78.2 120.5 85.4 (35%)
Tax (3.8) (2.2) (11.3) (21.9) (17.9)
Net Profit 15.0 28.7 (48%) 66.9 98.5 67.5 (32%)
EPS (in €) 0.32 0.62 1.44 2.12 1.45
EBITDA margin (in %) 42% 48% 47% 52% 38%
Flow Traders EBITDA
Increase in fixed employee expenses in line with expectation and driven by recruitment in September, increase in headcount
Technological developments continued to improve performance, with a special focus on the US and Asian offices
Technology expenses declined marginally versus 2Q due to mainly lower connectivity costs
Variable employee expenses reduced on the back of profit for the quarter
Other expenses grew, containing cost items like housing, fixed exchange costs. Housing showed a peak following increase in headcount in September
Flow Traders is on track to realize second best year to date
Flow Traders | Investor Presentation 11Preserved balance sheet strength
Capital management resulted in stable trading capital, despite payment of interim dividend
Condensed consolidated Financial Position Development of regulatory capital
Condensed Balance Sheet (In €m) ∆ 30 Sept 16 400
Assets 30 Sep 16 31 Dec 15 vs. 31 Dec 15 340.0
350
Trading Capital 300 340 (40) 298.9 300.0
280.3
300
Property, Equipment and IntangibleAssets 22 24 (2)
Other Assets 24 19 5 250 268.0
204.3
252.2
Total Assets 346 383 (37) 240.2
200 217.1
150 180.5
Equity &Liabilities
100 136.7 132.7
123.5
Other Liabilities 98 122 (23)
84.3 94.0
Tax Liabilities 7 14 (7) 50
Total Liabilities 105 136 (31) 0
31 Dec 2014 30 Jun 2015 31 Dec 2015 30 Jun 2016 30-Sep-16
Total Equity 240 247 (6) Regulatory Capital Regulatory Capital Required Total Trading Capital
Trading Capital & Dividend
Trading capital at the end of 3Q was €300m, reflecting a stable position versus the previous quarter
Interim dividend payment of € 0.55 per share in September 2016
Regulatory Required Capital remained stable at € 132.7m from € 136.7m end 2Q16
Our list of Prime Brokers continued to grow in 3Q
Focus continues to be on maximizing profitability and returns to shareholders and remaining committed to paying at least 50% of our Net Profit in dividends
Flow Traders | Investor Presentation 12Long term historic growth trend continuous
Despite varying levels of volatility through the years, Flow Traders NTI growth trend has consistently outperformed
the market AuM growth trend
Flow Traders’ NTI (in €m), Market’s AUM ($Bn) and VIX annual average (%) since 2010
NTI (€m) AUM ($bn)
NTI
350
AUM 3,262 350.0
3,500
305
300 2,904 3,000
300.0
2,640
250 250.0
2,500
2,262
173
200 1,838 181 200.0
2,000
1,435 143
150 1,390 150.0
1,500
105
100 91 100.0
1,000
48
50 50.0
500
0 0.00
2010 2011 2012 2013 2014 2015 9M 2016
VIX (%)
Stable growth with upside potential
35 in periods of higher volatility
25
15
5
2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 20169M 2016
Flow Traders | Investor Presentation 13Recognition of our expertise and market leading position
Nine consecutive Four times winner
years running ETF MARKET
ETF MARKET MAKER
MAKER Europe Asia-Pacific
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2015
2011 | 2012 | 2013 | 2014 |
2015
Four consecutive Three times winner
years running ETF RISK
ETF EXPRESS Best Trading
Award Winner House
2013 | 2014 | 2015 | 2016 2013 | 2014 | 2015
Flow Traders | Investor Presentation 14You can also read
