UK's Plus500 sees FY results 'significantly ahead' of market expectations

© Reuters. UK's Plus500 sees FY results 'significantly ahead' of market expectations

(Reuters) - UK Spreadbetting group Plus500 Ltd (L:PLUSP) said on Monday it expects full-year revenue and profit to be "significantly ahead" of current market estimates, driven by strong trading in its first half.

Shares in Plus500 rose as much as 9.72 percent to its highest since November last year, before trading up about 9 percent at 595.6 pence on Monday on the London Stock Exchange.

The company said trading exceeded its expectations with new customer sign-ups and reduced average user acquisition cost (AUAC), leading to a higher earnings before interest, tax, depreciation and amortization margin compared to last year.

"The outcome of the year will be subject to the balance between the benefit of the positive trading conditions... set against the possible negative impact of the expected regulatory changes in a number of our countries of operation," Plus500 said in a statement.

Regulators have been moving to tighten controls on the fast-growing 3.5 billion pound spreadbetting industry.

Britain's Financial Conduct Authority (FCA) said in December it had found evidence of poor conduct across the market over the past six years and that people using the most popular product - known as a contract for difference (CFD) - lost 2,200 pounds a year on average.

CFDs allow people to bet on moves in share prices without having to buy the underlying stock. Binary options are a bet on whether a stock or other instrument will trade above or below a set level in future.

Shares in Plus500 and rivals CMC Markets (L:CMCX) and IG Group (L:IGG) fell heavily after the FCA intervention.

The British watchdog last week said it would delay the publication of its final rules as its proposals were broadly similar to what the European Securities and Markets Authority was discussing.

The European Union's markets watchdog said on Thursday it was discussing a bloc-wide crackdown on "speculative products" bought online by retail customers to bet on market moves.

"With new EU regulation unlikely to be enacted until H1'18, there is clearly considerable upside risk to CY17 forecasts and probably CY18 forecasts," Liberum analysts wrote in a note.