Spread better shrugs off crackdown to hit a high
The City toasted Plus500 yesterday as the spread betting firm shrugged off a potentially brutal regulatory crackdown to post a stellar set of first-half figures.
Shares in Plus500, which allows customers to trade online, hit an all-time high after it reported a 104pc jump in year-on-year profit to £69.7m over the six months to June 30.
Likewise, the firm saw year-onyear six-month earnings rise 100pc to £91m, while revenues rose 19pc to £144.7m.
This was primarily driven by an 8pc jump in the firm’s active customers to 112,317 over the period and a 40pc drop in marketing spend to £34.6m, although this remains its largest expenditure.
Plus500, which is the UK’s second-largest contracts for difference products provider, lost nearly half its market value in December after the Financial Conduct Authority (FCA) announced a crackdown on the spread betting sector. The watchdog is worried investors are losing huge sums of money due to poor market conduct on complicated products designed for experienced traders.
With the probe still hanging over Plus500’s head, traders were left impressed by the firm’s claim that, although uncertainties remain, its business model has not been ‘meaningfully affected’ by the regulatory changes.
The firm is so confident in its future prospects that it has even committed to an additional £20.9m share buyback programme on top of the £7.7m one it is already completing.
Analysts at Liberum increased their target price for Plus500 from 628p to 992p and reiterated their
‘ buy’ rating for the stock. The broker said that even though the potential for aggressive regulatory action from the FCA puts its upgrades at risk, Plus500 has proved ‘very capable’ at adapting to changes so far.
Shares rose 19.4pc, or 127.5p, to 784p.
Oxford Biomedica’s longawaited licence to manufacture a material which will be used in an upcoming ‘blockbuster’ treatment for leukaemia was met with a fizzle rather than a bang yesterday.
The Oxford University cell therapy spin-off won a licence to make the so- called lentiviral vector materials that it agreed last month to supply to drug giant Novartis. The multi-million-pound deal will help create a new leukaemia treatment.
But with shares already rising by 128.1pc this year after brokers identified the potential for the deal to generate a strong income several months ago, shares rose just 0.9pc, or 0.1p, to 9.4p.
After a slow morning, the strong performance of mining and oil firms led the FTSE 100 to close at a seven-week high yesterday. It rose 0.3pc, or 20.2, to 7531.9p.
British Gas owner Centrica languished after RBC analysts said that the firm’s efforts to improve customer service and cut costs are not yet cutting the mustard in the face of potential UK price caps.
‘We see Centrica as broadly fairly valued, and there are better options elsewhere in UK utilities,’ the broker said, sending Centrica down 1.6pc, or 3.1p, to 196.1p.
A 2.8pc dividend increase to 14.6p per share failed to lure investors towards aerospace and defence firm Ultra Electronics yesterday as sluggish progress on several contracts led revenues to come in flat.
Revenues for the six months ending June 30 fell 0.1pc year-onyear to £366.4m while profits fell 0.2pc to £52.3m after several contracts were delayed by the late US federal budget and unexpected UK election result. Shares fell 3.7pc, or 77p, to 1987.5p.