- Interim sales and profits down
- Customer numbers and spend down
- $120 million dividend and buyback please
Shares in trading platform Plus500 (PLUS) jumped 6% to £15.19 shortly after the market opened, topping the FTSE 250 leader board, even though sales and earnings were down in the first half of the year.
Investors were cheering a significant increase in shareholder returns instead, after the firm announced a special dividend and a surprise extension of its share buyback programme, although the gain in the share price had moderated by late morning.
RESULTS NOTHING TO CELEBRATE
Total revenue for the six months to June was $368 million, down from $511 million in the same period last year, with trading income down 32% to $346 million as the number of active customers fell 19% and average revenue per customer was down 11% on 2022.
Selling and marketing expenses were 13% lower at $148 million but general and administrative costs were 25% higher at $47.9 million, meaning operating profits were down over 40% to $172 million.
Thanks to a much-reduced tax rate of 16% against close to 22% last year, the tax charge was $28.4 million instead of $68.5 million so basic EPS (earnings per share) were down around 35% to $1.61 against $2.46.
Even so, the firm maintained its guidance for 2023 of $614 million of revenue and $2.59 of EPS, based on the latest analyst consensus, due to its diversified revenue streams and the strength of its customer relationships which allow the group ‘to continue scaling while creating sustainable growth and value for all stakeholders’.
INCREASED SHAREHOLDER RETURNS
Chief executive David Zruia claimed Plus500’s record of shareholder returns ‘puts us amongst the top cohort of companies on a total returns basis within the FTSE All-Share Index over the past ten years’.
To underline the claim, he announced $60 million of dividend payments – comprising an interim dividend of $33.7 million or $0.4125 per share and a special dividend of $26.3 million or $0.3219 per share – to be distributed in November and a new $60 million share buyback, taking total shareholder returns announced this year to almost $350 million.
While noting that consensus earnings forecasts were unlikely to increase after today’s results, Julian Roberts at Jefferies remained positive on Plus500’s potential to grow in the US, adding ‘we are buyers of high returns to equity’.
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