As AGM approaches, Plus500 says it needs one month to clear backlog


Plus500 Ltd (LON:PLUS) has announced the following trading update in advance of its AGM which is scheduled to be held later today.

Group Summary

·     Year to date revenues of $107.9m are in excess of those achieved in the whole of the first half of 2014

·     Trading and financial performance has been impacted by recent events, in the typically quieter second quarter

·     Remediation actions now up to full speed to re-approve customer accounts

·     New customers have been recruited for the Group in the second quarter to date at higher rates than last year

·     Group cash position of $92.2m as at 26 May 2015; this excludes customer cash retained separately in segregated accounts

 Trading

Year to date revenues of $107.9m are in excess of those achieved in the whole of the first half of 2014. As previously reported on 16 April 2015 the Group achieved revenue of $82.1m in the first quarter of the year, a 35% increase on the $60.7m achieved in the same quarter of 2014. 

The second quarter is typically a quieter trading quarter for the Group (second quarter 2014 revenue was $45.5m compared to first quarter 2014 revenue of $60.7m).  As at close of business on 25 May 2015, the last practicable date, the Group had achieved revenues of $25.8m for the second quarter. Given that periods of less than a quarter can be volatile we recommend caution in extrapolating from these figures. 

The revenues generated by customers of the firm’s UK subsidiary, Plus500UK Limited (“Plus500UK”) have been significantly impacted by recent events. However, trading in our other regulated subsidiaries has continued as expected. The company estimates that in the past two weeks Group revenue has been reduced by c. $4m. However, at this point it is not possible to accurately estimate the possible effect on the Group’s annual revenues. 

The firm stated that it has spent appreciably more on marketing in the year to date. The number of new customers is running at higher levels in April and May 2015 than in the same months in 2014. The Board anticipates that there will be certain short term cost implications relating to the remediation actions, which Plus500 currently conservatively estimates at $2m. 

Remediation plan

Plus500UK continues to make progress re-approving existing customers’ documentation and now has 40 staff working on the project.  It is currently expected that it will take approximately another month to work through the backlog.

Regarding new Plus500UK customers, the modifications to the onboarding processes continue to be developed and it may take about a month for the new processes to be implemented. 

The Company will continue to update the market with progress on remediation when appropriate and trading when quantifiable. 

Cash

The Company’s net cash position as at 26 May 2015 stood at $92.2m. This excludes customer cash retained separately in segregated accounts.

 Directors’ remuneration

Although the Remuneration Committee was satisfied with its recommendations for increases in Directors’ remuneration when those recommendations were made, each of the Directors has taken the view that, in light of recent events, if each remuneration resolution is passed, they will not accept any increases until Plus500UK is capable of trading normally again. 

Statement on accounting policies and business model

The Board is aware of recent press and blog commentary regarding Plus500’s accounting policies and business model and rejects the assertions made as misrepresentative and baseless.

The Board reiterates that the Company’s accounts, along with those of its subsidiary, Plus500UK Limited, have received unqualified audit opinions from PwC and the directors are comfortable with the disclosures made therein.  

In response to the specific issue raised in respect of the restatement of Plus500UK’s subsidiary accounts and the implication that Group revenue is substantially over-stated or a substantial amount is generated in unlicensed jurisdictions, we clarify that both assertions are incorrect. 

The application of the new Financial Reporting Standard 102 resulted in the reallocation of gross revenues attributable to Plus500UK’s customers to Plus500 in the Company’s 2014 results. This also required the 2013 results to be restated.  The reallocation has no impact on Group consolidated revenue.

Alastair Gordon, Chairman, commented: “The Board has taken a number of lessons away from this current situation and is determined to restore Plus500’s business to full health.”

“We are committed to ensuring that all of the Group’s regulated subsidiaries are enabled to operate in a fully compliant manner which is consistent with fair treatment of customers and market integrity. “ 

“We assure customers and shareholders that Plus500 has a sustainable business model and is managed and governed by a Board which is committed to transparency and robust compliance.”

To read the official announcement, click here.

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As AGM approaches, Plus500 says it needs one month to clear backlog

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