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#1 02-06-2017 23:19:12

johnedward
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Plus500 announces a share buyback and revenue growth

Plus500 announces a share buyback and revenue growth


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Article by the Telegraph:

Online financial trading business Plus500 has said it will bump up payouts to shareholders after announcing a $10m (£7.7m) scheme to buy back some of its shares.

The Israel-based firm already pays out 60pc of its profits in the form of dividends but is now using its discretionary power to crank up what it pays to investors via the purchase of up to 11.5m shares.

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The plan means investors will be able to sell some of their shares back to the company until the end of August with trades handled by broker Liberum.

Purchases will be made from the company’s net cash balance of $191m, a figure that includes $75m already earmarked for a dividend for its most recent financial year as well as a special dividend. Both will be paid on July 3.

The announcement, which came alongside a trading update, cheered investors and pushed the shares up 11pc in early trading to 576p.

Plus500 enables retail investors to trade derivatives known as contracts for difference (CFDs). These allow people to speculate on whether prices of investments such as equities or commodities will rise or fall without actually owning the underlying product.

The CFD industry has come under scrutiny because it is possible for investors to lose more than their account balance; German regulator BaFin has banned this practice from August. Plus500 says it already provides balance protection for its customers in all of the 50 markets in which it operates, including Germany.

The online trading business had a record 2016 but the company’s share price suffered a near-28pc fall to 369p in December after it told investors a paper by the Financial Conduct Authority covering the derivatives trading sector would have a “material operational and financial impact” on its UK subsidiary.

Plus500 said it continued to monitor the situation with the UK regulator closely and was “awaiting the outcome of the FCA consultation (regarding new rules governing leveraged trading) which could affect the second half of 2017”.

As the UK represents a fifth of sales, investors may be keen to hear about growth in other regions or measures to support the profitability of its UK operations.

Plus500 added that trading revenue had been stronger in recent weeks than in the first three months of the year in spite of what it called low levels of volatility in stock markets, which have remained relatively calm in the run-up to the UK General Election.

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