Plus500 Portends One-Month Lag in Client Backlog

Plus500 issued a trading update that helped clarify its fiscal situation and fallout surrounding its recent trading suspension.

Israel-based FX broker, Plus500 (LON:PLUS), has insisted it maintains a ‘sustainable business model’ following its recent suspension of trading on the London stock exchange and money laundering review.

Despite wild oscillations in the Plus500’s share price recently, Odey Asset Management continued fortifying its share holdings of the beleaguered company, bringing its overall stake to nearly 19%.

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Earlier today, Plus500 admitted that revenues at its UK operations have indeed been ‘significantly impacted by recent events,’ following a large pool of clients who were left unable to trade. In particular, Plus500 issued a trading update for its business.

Year to date revenues at Plus500 are $107.9 million in excess of those achieved in the whole of the first half of 2014. Moreover, the trading and financial performance at Plus500 has been impacted by recent events, in a typically more tranquil Q2

As a result, remediation actions at Plus500 are now up to full speed to re-approve customer accounts and new customers have been recruited for Plus500 in Q2 to date at higher rates than last year. Finally, the group cash position has yielded $92.2 million as of May 26, 2015, excluding customer cash retained separately in segregated accounts.

Trading Update

In terms of trading and conjunction with a previous report issued on April 16, 2015, Plus500 achieved revenue of $82.1 million in Q1 2015, a 35% increase YoY from $60.7 million seen in the Q1 2014.

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In addition, Q2 is typically a more subdued trading quarter for Plus500 (Q2 2014 revenue was just $45.5 million compared to Q1 2014 revenue of $60.7 million). Up until May 25, 2015, Plus500 had garnered revenues of $25.8 million Q2, 2015.

Despite revenues generated by customers, Plus500’s UK subsidiary, Plus500UK Limited, has been staunchly affected as of late, trading in its other regulated subsidiaries has continued as expected without any hiccups. According to the recently released statement, Plus500 estimates that in the past two weeks group revenue has been reduced by approximately $4 million.

Remediation Plan in Progress

Plus500UK has been working to make progress re-approving existing customers’ documentation, now reserving nearly 40 staff members on the project. Unfortunately, Plus500 estimates that it will take approximately another month to work through the backlog.

Regarding new Plus500UK customers, modifications to its onboarding processes are continuing to be developed, which also is pegged at a one-month lag for the implementation of new processes.

Plus500’s net cash position as of May 26, 2015 stood at $92.2 million, excluding customer cash retained separately in segregated accounts.

According to Plus500 Chairman, Alastair Gordon, in a recent statement on the vitality of the company, “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,” he added.

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