Results for the twelve months ended 31 December 2019 · 2020-02-12 · Trading experience: Added analysis package to our WebTrader, iOS and Android platforms, including volume indicators,

Results for the twelve months ended 31 December 2019

London Stock Exchange symbol: PLUS

* Illustrative figures

Financial Performance

2

FY 2019 Highlights

Robust performance across all key metrics in H2 2019 vs. H1 2019, mainly driven by more volatile market conditions:

H2 2019 Revenues up 40% to $206.5 million (H1 2019: $148.0 million)

H2 2019 EBITDA up 93% to $126.7 million (H1 2019: $65.6 million)

H2 2019 Net Profit up 94% to $100.1 million (H1 2019: $51.6 million)

High cash conversion of 88% in 2019

Financial Summary

0

100

200

300

400

500

2015 2016 2017 2018 2019

EBITDA ($m)

H1 H2

0

200

400

600

800

2015 2016 2017 2018 2019

Revenue ($m)

H1 H2

H2 2019 H1 2019 H2 2018 FY 2019 FY 2018

Revenue ($m) 206.5 148.0 254.9 354.5 720.4

Operating Expenses ($m) 80.9 83.5 98.3 164.4 215.1

EBITDA ($m) 126.7 65.6 157.0 192.3 506.0

EBITDA Margin 61% 44% 62% 54% 70%

EPS ($) 0.9 0.45 1.03 1.35 3.33

3

FY 2019 Highlights

0

0.5

1

1.5

2

2.5

2015 2016 2017 2018 2019

Earnings per Share ($)

H1 H2

Shareholder Returns

30.9

40.8

50

30

0

30

60

90

120

150

Share Buybacks

Dividends

FY 2019 Shareholder Returns ($m) – Total of $151.7m

100% ofFY 2019

Net Profit

The Company’s dividend policy is to return at least 60% of net profits to its shareholders through a combination of dividends and share buybacks, with at least 50% by way of dividends

100% of FY 2019 Net Profit ($151.7 million) proposed to be distributed to shareholders

Total shareholder returns of $919 million since IPO in 2013 ($823 million in cash dividends and $96 million in share buyback programmes)

FY 2019 Highlights

4

Average of approximately 3 million customer trades executed per month in FY 2019

Average deposit per Active Customer increased 19% year on year at $5,116 (FY 2018: $4,284)

Continued investment in innovation and technology throughout the entire customer journey

Increased focus on our core markets and continued expansion of global presence:

Successfully retained leading industry positions in core markets

New securities dealer licence received by the Financial Services Authority in the Seychelles

The Group’s mobile and tablet offering continues to be very popular with customers:

Represented over 80% of total revenues in 2019 (FY 2018: 77%)

75% of all customer trades were completed on a mobile device (FY 2018: 73%)

AUAC1 increased 12% year on year at $1,046 (FY 2018: $934), with 6% reduction in H2 2019 vs. H1 2019

ARPU2 for FY 2019 was $1,775 (FY 2018: $2,365), with 39% increase in H2 2019 vs. H1 2019

Operational Highlights

1 AUAC – Average User Acquisition Cost2 ARPU – Average Revenue Per User

Investment Summary

FinancialOverview

RegulatoryFramework

BrandAwareness

5

BusinessPerformance

6

Revenue ($m) ARPU1 ($)

H2 19 H1 19 % Change FY 19 FY 18 % Change H2 19 H1 19 % Change FY 19 FY 18 % Change

UK 22.4 16.2 38% 38.6 100.5 (62%) 1,100 730 51% 1,256 2,199 (43%)

EEA (exc. UK) 89.7 61.2 47% 150.9 384.7 (61%) 1,093 747 46% 1,334 2,154 (38%)

Australia 28.6 22.6 27% 51.2 84.8 (40%) 2,060 1,652 25% 2,506 2,371 6%

ROW2 65.8 48.0 37% 113.8 150.4 (24%) 2,552 2,011 27% 3,207 3,374 (5%)

Total 206.5 148.0 40% 354.5 720.4 (51%) 1,453 1,044 39% 1,775 2,365 (25%)

Business Performance

H2 2019 strong performance across all regions

Significant increase in ARPU levels in H2 2019

Plus500 continues to focus on recruitment of high value customers

1 ARPU – Average Revenue per User2 ROW – Rest of World

Revenues Breakdown

7

Active Customers1 New Customers2

H2 19 H1 19 % Change FY 19 FY 18 % Change H2 19 H1 19 % Change FY 19 FY 18 % Change

UK 20,366 22,141 (8%) 30,716 45,694 (33%) 6,309 8,623 (27%) 14,932 21,349 (30%)

EEA (exc. UK) 82,039 82,025 0.02% 113,096 178,576 (37%) 22,722 24,330 (7%) 47,052 78,400 (40%)

Australia 13,872 13,673 1% 20,418 35,769 (43%) 5,545 5,939 (7%) 11,484 15,476 (26%)

ROW 25,797 23,853 8% 35,490 44,577 (20%) 9,272 8,648 7% 17,920 19,012 (6%)

Total 142,074 141,692 0.3% 199,720 304,616 (34%) 43,848 47,540 (8%) 91,388 134,237 (32%)


1 Active Customers - Customers who made at least one real money trade during the period2 New Customers - Customers depositing for the first time during the period

Strong set of KPIs in FY 2019 following exceptional market conditions observed in FY 2018

Slight improvement in Active Customers in H2 2019 compared to H1 2019, reflecting successful measures to improve churn rateAs profile of customers shifts to higher value customers, average lifetime value of New Customers is expected to remain at anattractive level and AUAC is expected to rise steadily

Active Customers and New Customers KPIs


8

FY 2019 FY 2018 % Change

Advertising and marketing costs 95.6 125.4 (24%)

Processing costs 15.8 20.1 (21%)

Payroll and related expenses 22.6 22.1 2%

Variable bonuses 5.2 13.0 (60%)

Share-based compensation 3.7 8.9 (58%)

IT & data feeds costs 7.2 6.9 4%

Legal, professional and regulatory fees 5.8 8.2 (29%)

Office expenses 2.8 5.0 (44%)

Other costs 5.7 5.5 4%

Total costs 164.4 215.1 (24%)

Key Financial Indicators ($m)

116.6 158.5

47.8 56.6

0%10%20%30%40%50%60%70%80%90%

100%

FY 2019 FY 2018

Variable Fixed

Large proportion of variable costs provides flexibility to deliver enhanced EBITDA margins Highly-targeted and effective marketing investment

1 Variable – advertising and marketing costs, processing costs and variable bonuses

Lean Cost Structure ($m)

9


53% 73% 73%

More than 1 Year

FY 2016

52%

4%

23%

53%

12%

8%

FY 2017 FY 2018 FY 2019

25%

23%37%

13%2%

Revenue Split by Customer Tenure

The Group continued to invest in technological retention initiatives to enhance the overall customer experience

73% of FY 2019 revenue derived from customers who have traded for more than one year (FY 2018: 73%)

27% of FY 2019 revenue derived from customers who have traded for more than three years (FY 2018: 20%)

11% of customers in FY 2019 have traded with the Group for more than five years, a significant increase from 2% in 2016

11%

16%

46%

16%

11%

32%

15%36%

12%

5%

21 3256

89103

7794

73

23

4

69

2715

8

11

1

9*

13*13*

16*

15*

0

20

40

60

80

100

120

140Online

Affiliates

Offline

*

**

* *

*

* Majority is Atletico Madrid sponsorship deal


*

2012 2013 2014 2015 2016 2017 2018 2019

Marketing Spend per Year and by Channel ($m)

125

104

High Return on Marketing Investment

Total marketing spend of $104 million in 2015, $125 million in 2016 and $117 million in 2017

2019 continued focus on online, with the vast majority of spend allocated to online channels, where the Group’s targeted efficient marketing algorithms can produce high levels of return

10

117

Cumulative Return - 2015 Registrations ($m)

11



High Return on Marketing Investment

2015 marketing spend of $104 million generated returns of $332 million




95 M 104 M

85 M

62 M63 M27 M

M

100 M

200 M

300 M

400 M

500 M

600 M

Return 2015 Investment

2015 2016 2017 2018 2019

5 years

332

102 M 125 M

119 M

99 M40 M

M

100 M

200 M

300 M

400 M

500 M

600 M


2016 2017 2018 2019

4 years

360

129 M 117 M

278 M

89 M

M

100 M

200 M

300 M

400 M

500 M

600 M


2017 2018 2019

3 years

496

Plus500 has no 'opinion' on direction of market movements

The Group’s market exposure is dictated by customers’ views of market trading opportunities

Company’s risk management framework ensures risk exposures are limited

Risk is effectively managed by a combination of real-time monitoring technology, predefined limits (e.g. by customer, instrument and asset class) and internal offsetting techniques

All customers are treated equally

Plus500 has a symmetrical risk approach around customers’ trading performance:

While it may fluctuate over the short term, performance is considered over a longer timeframe which tends to be broadly neutral over timeCustomer Income1 accounted for approximately 99% of revenues over the past six years

12


Approach to Customer Execution

Plus500 acts as principal to the customer trade (like its peers)

1 Customer Income - Revenue from customer spreads and overnight charges

Churn Rates 2017-2019

Churn = [(Active Customers (T) + New Customers (T+1)) - Active Customers (T+1)]/ Active Customers (T)


13

Retention efforts to enable increased customers’ lifetime

31% churn in H2 2019, aided by continued focus on technological retention initiatives

Broadened product offering, accompanied with rapid response to market events and focused campaigns

Enhanced platform capabilities (charts, indicators, drawing tools) appeal to more sophisticated traders and reduce churn

Best-in-class customer service and improved communication with customers

Analysis of Customer Churn

43%

37%41%

59%

34%31%

0%

10%

20%

30%

40%

50%

60%

H1 H2

201720182019

14

Continuous focus on innovation and technology throughout the entire customer journey:

Trading experience:

Added analysis package to our WebTrader, iOS and Android platforms, including volume indicators, drawingtools and an extensive range of technical indicators

More than 100 new financial instruments, including some which were unique to Plus500’s trading platform

Upgraded WebApp platform interfaces

Support channels and back office systems:

The first major CFD provider to successfully incorporate WhatsApp into its customer service offering

Proprietary technology provides smart routing optimisation between local payment processing companies

Introduction of additional alternative payment methods to increase variety and streamline the deposit process

Marketing and customer acquisition process – proven marketing optimisation technology


Operational Progress

Investment Summary

FinancialOverview

RegulatoryFramework

BrandAwareness

15

BusinessPerformance

Brand Awareness

16

Plus500 retained leading industry positions in core markets:

No.1 CFD provider in the UK1

No.1 CFD provider in Spain2

No.1 CFD provider in Germany3

Australia’s best CFD mobile platform4

Recent achievements also include:

UK No. 1 for satisfaction for Online Chat Customer Service1

1 2 3

1 By total number of relationships with UK CFD traders. Investment Trends 2019 UK Leverage Trading Report2 By total number of client relationships. Investment Trends 2019 Spain Leveraged Trading Report3 By total number of client relationships. Investment Trends 2019 Germany Leveraged Trading Report4 By own client satisfaction rating. Investment Trends 2018 Australia Leveraged Trading Report

Market Share in CFD Market

23%

14% 13%

17%

11%13%

UK Spain Germany

Mar

ket S

hare

(%)

Plus500 Next largest provider

Global Growth Opportunities

17

Expansion into new geographic regions leveraging the strong Plus500 international brand and capabilities

Product extension enabled by further development of the current technology platform

Retaining robust financial position while delivering attractive returns to shareholders

Enhancing customer acquisition rates and improving retention levels

Increase growth rates by improving brand awareness globally through marketing activity

Value-adding targeted acquisitions

Strategic

*

Investment Summary

FinancialOverview

RegulatoryFramework

BrandAwareness

18

BusinessPerformance

19

Regulatory Framework

HQ

Monetary Authorityof Singapore

ISRAEL SECURITIESAUTHORITY

FINANCIAL SERVICES AUTHORITY

Global Strong and Robust Regulatory Framework

During the year, and as anticipated, the majority of EU-member states adopted national product intervention measures

relating to CFDs reflecting the ESMA product intervention measures which came into force in August 2018

ASIC in Australia released a consultation paper which sets out ASIC’s proposals to impose certain restrictions on the sale and

marketing of CFDs to retail customers. It is anticipated that final product intervention orders will come into force during 2020

The UK left the EU on 31 January 2020 and is now in a transition period until 31 December 2020 in which EU law will continue

to apply. Plus500 remains well prepared for various scenarios, supported by the Group’s separate EU licence in Cyprus

Plus500 will continue to offer CFDs in accordance with applicable laws, regulations and industry best practice

20

Regulatory Framework

Regulatory Developments

Investment Summary

FinancialOverview

RegulatoryFramework

BrandAwareness

21

BusinessPerformance

H2 2019 H1 2019 FY 2019 FY 2018 FY 19/FY 18

Trading Income 206.5 148.0 354.5 720.4 (51%)

Selling and Marketing Expenses 67.7 71.2 138.9 175.9 (21%)

Administrative and General Expenses 13.2 12.3 25.5 39.2 (35%)

EBITDA 126.7 65.6 192.3 506.0 (62%)

EBITDA Margin 61% 44% 54% 70% (23%)

Financing Expenses, Net 0.2 0.6 0.8 2.3 (65%)

Tax Expenses 25.3 12.3 37.6 124.0 (70%)

Net Profit 100.1 51.6 151.7 379.0 (60%)

Key Financial Indicators – Income Statement ($m)

Financial Overview

22

Efficient cost structure reflecting a controlled cost base at all times

Optimised effective tax rate

Reduced FX impact on financial expenses due to continuous treasury optimisation

Income Statement

FY 2019 FY 2018 FY 19/FY 18

Cash and Cash Equivalents 292.9 315.3 (7%)

Other Current Assets 14.7 12.8 15%

Total Current Assets 307.6 328.1 (6%)

Non Current Assets 9.3 4.8 94%

Total Assets 316.9 332.9 (5%)

Current Liabilities 28.7 51.9 (45%)

Non Current Liabilities 4.1 0.3 1,267%

Total Liabilities 32.8 52.2 (37%)

Equity 284.1 280.7 1%

Total Liabilities and Equity 316.9 332.9 (5%)

No debt and loans

Client money held with reputable financial institutions

Strong balance sheet with positive working capital has enabled Plus500 to withstand the period of recent change, continue to invest in the business for future growth, and to continue to make attractive shareholder returns

Financial Overview

Key Financial Indicators – Balance Sheet ($m)

23

Balance Sheet

Strong cash generation

Limited capex needs

Low capital intensity

High cash conversion, available for shareholder returns and market opportunities

Significant shareholder return reflected within financing activities

Financial Overview

Key Financial Indicators – Cash Flow ($m)

24

Cash Flow

FY 2019 FY 2018 FY 19 / FY 18

Operating Activities:Cash generated from operations 170.1 495.0 (66%)

Interest received, net 4.8 3.8 26%

Income tax paid, net (47.6) (98.4) (52%)

Net cash provided by operating activities 127.3 400.4 (68%)

Net cash used in investing activities (0.1) (0.7) (86%)

Financing Activities:

Dividend Paid (*/**)Payment of principal in respect of leases liabilityAcquisition of the Company's shares by the Company ***

(101.1)(1.8)

(47.2)

(321.9)-

(2.3)

(69%)NA

1952%

Net cash used in financing activities (150.1) (324.2) (54%)

Gains (Losses) from exchange differences on cash and cash equivalents 0.5 (2.1) (124%)

Balance of cash and cash equivalents at end of the year 292.9 315.3 (7%)

* On August 2019 the Company declared an interim dividend in an amount of $30.9 million ($0.2734 per share), which was paid on 28 November 2019** On February 2019 the Company declared a final dividend for the year ended 31 December 2018 in an amount of $70.2 million ($0.6191 per share), which was paid on 9 July 2019*** During 2019 the Company purchased its own shares through two share buyback programmes ($6 million and $41.2 million)

Investment Summary

FinancialOverview

RegulatoryFramework

BrandAwareness

25

BusinessPerformance

Proprietary technology, developed in-house -key differentiator and flexible advantage

Business Model

26

Back Office

Risk Management

Affiliate Programme

Fraud Managementlow chargeback ratio

System Architecturerapid product developmentUser Interface

consistent experience across all platforms

“Marketing Machine”efficient acquisition of new customers

Payment Interface

“Retention Machine”efficient retention algorithms

Market Leading Technology

27

Cutting-Edge Proprietary Technology

Leadership in innovation and R&D is a key driver for growth:

Proprietary technology suite enables rapid response

Technology solutions replace manual interventions

Upgrading functionality and appearance to aid retention of, and appeal to, more sophisticated traders

Fully self developed cashier and processing mechanism with smart transaction route to reduce costs

Plus500 is, at its core, a technology company

Plus500 excels at understanding customer requirements:

Upgraded WebApp platform interfaces for further user customisation, including introduction of the dark mode which gained popularity quickly

Enhanced customer onboarding experience

Monitoring and implementation of trending topics and customer requests

Introduction of new features, trading instruments and trading tools and support channels

28

29

* Illustrative figures

Encouraged by the momentum built through the year end – heightened levels of volatility in the financial markets due

to global events

Customer trading patterns have now adjusted following the regulatory changes introduced in Europe last year

Customer retention metrics are improving and customer tenure is increasing, supporting lifetime values

Our flexible business model, optimised cost base and technological advantage will enable Plus500 to adjust rapidly to

any future regulation, including the impact of any changes expected to be introduced in Australia during 2020

Plus500's financial performance in 2020 will be dependent, among other things, on financial market conditions

providing sufficient trading opportunities for customers

Looking forward we are confident of the prospects for the Group as we focus on further strengthening our customer

offering and market positions, thereby delivering growth and further strong shareholder returns

Outlook

30

Outlook

Appendices

31

Revenue Split Rolling 6 Year Performance

Customer Income

Revenue from customer spreads and

overnight charges

Customer Trading Performance

Gains/losses on customers’ trading

positions

Effective, comprehensive risk

management capabilities – based on

significant investment in personnel and

processes

32

FY 19 Performance

Risk Management

Amount($m)

# of negative revenue days

0-0.25 28

0.25-0.5 14

0.5-1.0 7

>1.0 6

89%

10%1%

$-10,000,000

$-5,000,000

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

Jan

16

Feb

16

Mar

16

Apr

16

May

16

Jun

16

Jul 1

6

Aug

16

Sep

16

Oct

16

Nov

16

Dec

16

Jan

17

Feb

17

Mar

17

Apr

17

May

17

Jun

17

Jul 1

7

Aug

17

Sep

17

Oct

17

Nov

17

Dec

17

Jan

18

Feb

18

Mar

18

Apr

18

May

18

Jun

18

Jul 1

8

Aug

18

Sep

18

Oct

18

Nov

18

Dec

18

Jan

19

Feb

19

Mar

19

Apr

19

May

19

Jun

19

Jul 1

9

Aug

19

Sep

19

Oct

19

Nov

19

Dec

19

Brexit Referendum

In 2019 the Group made a positive revenue on approximately 85% of the trading days with remaining 15% of trading days showing mostly relatively immaterial negative revenue. The average daily loss in 2019 was less than $411K

US Elections

Crypto Volatility

33

Risk Management

Oil Surge

Minimising Downside Risk: 85% Positive Trading Days in 2019

Disclaimer

The Presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer topurchase or subscribe for, any shares or other securities of the Company, nor shall it (or any part of it), or the fact of itsdistribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contractwhatsoever relating to any securities.

The Presentation is being made, supplied and directed only at persons in member states of the European Economic Area whoare qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC, as amended) and,additionally in the United Kingdom, to those qualified investors who (a) are persons who have professional experience inmatters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion)Order 2005 (investment professionals) or (b) fall within Article 49(2)(a) to (d) of that Order (high net worth companies,unincorporated associations etc.) (all such persons being "Relevant Persons"). Any person who is not a Relevant Person may notreview the Presentation and should not act or rely on this document or any of its contents. Any investment or investmentactivity to which the Presentation relates is available only to Relevant Persons and will be engaged in only with RelevantPersons.

The Presentation is provided for general information only and does not purport to contain all the information that may berequired to evaluate the Company or its securities. The information in the Presentation is provided as at the date of thePresentation (unless stated otherwise) and is subject to updating, completion, revision and is not independently verified. Noreliance may be placed for any purpose whatever on the information or opinions contained or expressed in the Presentation oron the accuracy, completeness or fairness of such information and opinions.

To the extent permitted by law or regulation, no undertaking, representation or warranty or other assurance, express or implied,is made or given by or on behalf of the Company or any respective parent or subsidiary undertakings or the subsidiaryundertakings of any such parent undertakings or any of their respective directors, officers, partners, employees, agents, affiliates,representatives or advisors, or any other person, as to the accuracy, completeness or fairness of the information or opinionscontained in the Presentation. Save in the case of fraud, no responsibility or liability is accepted by any person for any errors,omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred, however arising,directly or indirectly, from any use of, as a result of the reliance on, or otherwise in connection with, the Presentation. Inaddition, no duty of care or otherwise is owed by any such person to recipients of the Presentation or any other person inrelation to the Presentation.

Nothing in the Presentation is, or should be relied on as, a promise or representation as to the future. The Presentation includescertain statements, estimates and projections provided by the Company in relation to strategies, plans, intentions, expectations,objectives and anticipated future performance of the Company and its subsidiaries. In particular, unless otherwise specificallystated, the financial information in the Presentation has not been audited.

The Presentation contains statements that are or may be forward-looking statements. All statements other than statements of historical facts included in the Presentation may be forward-looking statements, including statements that relate to the Company's future prospects, developments and strategies.

The Company does not accept any responsibility for the accuracy or completeness of any information reported by the press or other media, nor the fairness or appropriateness of any forecasts, views or opinions express by the press or other media regarding the Group. The Company makes no representation as to the appropriateness, accuracy, completeness or reliability of any such information or publication.

Forward-looking statements are identified by their use of terms and phrases such as “believe”, “targets”, “expects”, “aim”, “anticipate”, “projects”, “would”, “could”, “envisage”, “estimate”, “intend”, “may”, “plan”, “will” or the negative of those, variations or comparable expressions, including references to assumptions. The forward looking statements in the are based on current Presentation expectations and are subject to known and unknown risks and uncertainties that could cause actual results, performance and achievements to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements. Factors that may cause actual results to differ materially from those expressed or implied by such forward looking statements include, but are not limited to, those described in the risk factors. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such entity and the environment in which each will operate in the future. All subsequent oral or written forward-looking statements attributed to the Company or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above.

Each forward-looking statement speaks only as at the date of the Presentation, Except as required by law, regulatory requirement, the Listing Rules and the Disclosure Guidance and Transparency Rules, neither the Company nor any other party intends to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

By their nature, such statements, estimates and projections involve risk and uncertainty since they are based on variousassumptions made by the Company concerning anticipated results which may or may not prove to be correct and because theymay relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company’sability to control or predict. No representations or warranties of any kind are made by any person as to the accuracy of suchstatements, estimates or projections, or that any of the events expressed or implied in any such statements, estimates orprojections will actually occur. The Company is not under any obligation, and expressly disclaims any intention, to update orrevise any such statements, estimates or projections. No statement in the Presentation is intended as a profit forecast or a profitestimate.

All charts and graphs contained in this Presentation are graphical representations of the underlying data to which each chart orgraph relates and have been included to aid interpretation of such data and are therefore included for illustrative purposes only.

The Presentation does not constitute or form part of an offer or invitation to issue or sell, or the solicitation of an offer tosubscribe or purchase, any securities to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful,and, in particular, is not for distribution in or into Australia, Canada, Israel, Japan, the Republic of South Africa or the UnitedStates of America.

34

Documents

Results for the twelve months ended 31 December 2019 · 2020-02-12 · Trading experience: Added analysis package to our WebTrader, iOS and Android platforms, including volume indicators,