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Plus500 Ltd (PLUS)

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Monday 13 August, 2018

Plus500 Ltd

Interim Results

RNS Number : 5386X
Plus500 Limited
13 August 2018
 

 

Plus500 Ltd

("Plus500", "the Company" or "the Group")

 

Interim Results for the six months ended 30 June 2018

 

'Record first half revenues and profits - move up to Main Market completed'

 

Plus500, a leading online service provider for trading Contracts for Differences ("CFDs") internationally, is pleased to announce its interim results for the six months ended 30 June 2018.

 

Financial Highlights:

 

 

H1 2018*

H1 2017*

Change

Revenues

$465.5m

$188.4m

147%

EBITDA1

$349.0m

$118.5m

195%

Net profit

$261.7m

$90.7m

189%

Earnings per share2

$2.30

$0.79

191%

Cash

$511.9m

$220.7m

132%

ARPU3

$1,873

$1,678

12%

AUAC4

$677

$836

(19%)

Operating cash flow

$272.3m

$84.5m

222%

Operating cash conversion5

96%

97%

(1%)

Total returns to shareholders

 

·      Interim dividend - payout

                              - per share

·      Share buy back programmes

·      Total returns to shareholders

 

 

$157.0m

$1.3786

-

$157.0m

 

 

$27.2m

$0.2388

$37.2m

$64.4m  

    

 

*Unaudited

 

·   Plus500 is the No.1 CFD broker in the UK, Germany and Spain by number of clients relationship and Australia by client rating6 reflecting the Group's strong growth in its core markets

·   Record first half results benefitted from:

o Exceptional first quarter combined with a good second quarter performance

o Active Customers7 - significant increase of 121% to a record level of 248,564 (H1 2017: 112,317)

o New Customers8 - growth of 75% to 94,148 (H1 2017: 53,881)

o ARPU - increased 12% to $1,873 (H1 2017: $1,678)

o AUAC - decreased 19% to $677 (H1 2017: $836)

·   Interim dividend - significant increase in shareholders returns reflecting the outstanding first half performance; a total interim payout of $157.0 million (H1 2017: $27.2 million) or $1.3786 per share (H1 2017: $0.2388) declared in relation to the period

 

Operational Highlights:

·   Strong progress and trading activity:

o Plus500's internationally regarded brand strengthened further due to the Group's technology  

             edge and unique omni-channel offering 

o Total number of transactions in H1 2018 increased by 51% in comparison to last year

o Geopolitical events resulted in higher than expected market volatility with new and existing customers trading a diverse range of instruments

·   Continued expansion of global presence and diversification of revenues outside the European Economic Area ("EEA"):

o New Commodity Broker's Licence issued to Plus500SG Pte. Ltd. in Singapore

o Australian revenues seven times last year, driven by a fivefold increase in Active Customers

·   Listing and admission to trading on the premium segment of the London Stock Exchange's Main Market completed on 26 June 2018

 

Regulatory Highlights:

·   The Group's technological edge has enabled it to comply efficiently with recent regulatory changes, including MiFID II, GDPR and ESMA   

·   Update regarding Elective Professional Clients ("EPC") categorisation requests:

o Approximately 5% of the Company's overall EEA customer base has elected to become EPC to date, representing approximately 20% of Q2 revenues within the EEA

o Revenue from non-EEA countries represents approximately 29% of the Group's revenues

o The EPC categorisation process is progressing broadly in line with the Group's expectations

        

Current trading:

·   Q3 2018 trading to date is in line with market expectations 

·   It is unlikely that the exceptional performance of H1 2018 will be repeated and the impact of rule  changes will potentially affect less than half of EEA revenues (30% of Group revenues) in the short term

·   Overall, the Group is on track to meet current market expectations for 2018 

Asaf Elimelech, Chief Executive Officer of Plus500, commented:

"We have had a very successful first half with two major milestones; another record set of first half results including an exceptional first quarter performance and completion of our move up to the Main Market. The strong financial performance has enabled us to declare a very significant increase in shareholders returns by declaring a generous interim dividend.

"We have also made strong progress with our international diversification, within and outside the EEA, driven by our strong brand and new licences - Plus500 is now the biggest CFD Broker in the UK, Germany, Spain and Australia according to Investment Trends,9 we grew our Active Customers in Australia fivefold and started operating in Singapore.

"Plus500 has implemented the recent regulatory changes and we anticipate an increased number of EPCs within European jurisdictions, complementing our growing activity outside the EEA. 

"Overall, our expectations are that Plus500's outstanding momentum will deliver strong year-on-year growth in 2018, in line with the market expectations."

There will be a dial-in facility for the results presentation at 09:30am UK time, please contact [email protected] for dial-in details.

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014

 

1 EBITDA - Earnings before interest, taxes, depreciation and amortisation

2 Earnings per share - Calculated based on weighted average number of ordinary shares in issue as of 30 June 2018 - 113,908,231

3 ARPU -   Average revenue per user

4 AUAC -   Average user acquisition cost

5 Operating cash conversion - Cash generated from operations / EBITDA

6 By total number of client relationships. Investment Trends 2018 Germany & Spain CFD & FX Reports. By total number of relationships with UK CFD traders. Investment Trends 2018 UK Leverage Trading Report. By own client rating. Investment Trends 2017 Australia CFD Report

7 Active Customers - Customers who made at least one real money trade during the period

8 New Customers - Customers depositing for the first time during the period

9 By total number of client relationships. Investment Trends 2018 Germany & Spain CFD & FX Reports. By total number of relationships with UK CFD traders. Investment Trends 2018 UK Leverage Trading Report. By own client rating. Investment Trends 2017 Australia CFD Report

 

 

For further details:

Elad Even-Chen, Chief Financial Officer

[email protected]

 

Tel: +972-4-8189503

 

Clayton Bush, Neil Elliot, Josh Hughes, William Hall

www.liberum.com

Tel: 020 3100 2222

 

Chris Bowman, Mark Whitmore

www.berenberg.de/en  

 

Tel: 020 3207 7800

Reg Hoare, Tim Rowntree, Kelsey Traynor, Pete Lambie

[email protected]

 

Tel: 020 3128 8100

 

Forward looking statements

 

This announcement contains statements that are or may be forward-looking statements.  All statements other than statements of historical facts included in this announcement 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 this announcement are based on current 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 this announcement.  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.

 

About Plus500

Company website: www.plus500.com

Plus500 operates an online trading platform for individual customers to trade CFDs internationally over more than 2,200 different underlying global financial instruments comprising equities, indices, commodities, options, ETFs, cryptocurrencies and foreign exchange. Individual customers of Plus500 can trade CFDs in more than 50 countries and in 32 languages. The trading platform is also accessible from multiple operating systems (Windows, smartphones (iOS, Android and Windows Phone), tablets (iOS, Android and Surface) and web browsers). Plus500 retains operating licences and is regulated in the United Kingdom, Australia, Cyprus, Israel, New Zealand, South Africa and Singapore.  Customer care is integral to Plus500: customers cannot be subject to negative balances and there are no commissions on trades. Plus500 does not utilise cold calling techniques and does not offer binary options.  A free demo account is available on an unlimited basis for platform users and sophisticated risk management tools are provided free of charge to manage your leveraged exposure and stop losses to help customers protect profits and limit capital losses.

 

Business Update

 

Introduction

 

The Group has delivered record first half revenues and profits and a record number of Active Customers in the period. The strong performance was mainly due to an exceptional first quarter combined with a good second quarter performance. This reflected very active trading activity in Q1 due to high levels of trading of cryptocurrency CFDs, and throughout the half year, relative volatility due to geopolitical events which led to active trading in a wide variety of the Company's CFD instruments.

 

Ten years on from our foundation, our technology edge remains a significant competitive advantage and our customer-centric strategy has meant that we have offered the best protection combined with the best trading platform. These strengths have ensured we have reaped the benefits of our marketing activity in the period.

 

First half revenues were up 147% to $465.5 million (H1 2017: $188.4 million) and profit before tax was up 198% to $346.4 million (H1 2017: $116.3 million) as we benefitted from operational gearing and low fixed costs. The high revenues also reflected a significant increase in the level of deposits which increased by 130% from H1 2017 to H1 2018.

 

The Board believes Plus500 will continue to provide its shareholders and stakeholders with strong operational performance under the new regulatory regime thanks to the Group's lean cost structure together with its flexible business model and its technology platform.

 

Dividends and share buy backs

 

The Board remains committed to its dividend policy of a total 60% pay-out ratio, to include payment of special dividends at the end of the year, if appropriate, whilst retaining the flexibility to buy back shares.  
 

The strong half year performance has enabled the Board to again meet this commitment in the period, and it is therefore pleased to declare an interim dividend representing a total payout of $157.0 million compared to $64.4 million last year, which was comprised of a cash payout of $27.2 million and a share buy back programme of $37.2 million. This year's interim payout comprises a dividend of $1.3786 per share (H1 2017: $0.2388), a very significant increase of 477% in comparison to the dividend paid in the same period last year.

 

Overall, the amount being returned to shareholders has increased by 144% when the entire 37.2 million share buyback programme announced in 2017 is taken into account.

                                            
The ex-dividend date is 23 August 2018, the record date 24 August 2018 and payment date 22 November 2018.
The Board remains committed to its dividend policy of a 60% pay-out ratio with payment of special dividends at the end of the year if appropriate and retain the flexibility to buy back shares.

 

Move up to Main Market

 

On 26 June 2018, the Group completed its admission to the premium listing segment of the Official List and to trading on the London Stock Exchange's Main Market for Listed Companies.  The Board believes that the Main Market will:

·   provide a more appropriate platform for continued growth and further raise the Company's profile and status, thereby helping to attract new customers;

·   benefit shareholders due to the further development of the Group's corporate governance,  regulatory and reporting disciplines;

·   provide improved liquidity and valuation due to potential inclusion in the FTSE indices and the higher number of institutional investors that regularly trade Main Market company shares; and

·   provide diversification of funding sources and improved currency for any acquisitions to support the Group's long-term growth.

 

Operational review

 

The Group continues to invest in broadening and enhancing its brand awareness and diversifying its customer base internationally, both inside and outside the EEA. Plus500 already operates a strong footprint, principally across Europe, Australia and Asia, with seven regulatory licences.  Following the award of a new licence in Singapore early in 2018, the Group is currently exploring a number of opportunities to further extend its market reach to new territories, which the Board expects to be a major driver of the Group's future growth.

For the half year, Active Customers increased by 121% to a record level of 248,564 (H1 2017: 112,317), benefiting from returning customers attracted by trading opportunities and the overall increase in customer numbers. New Customers increased to 94,148 (H1 2017: 53,881) due to marketing activity and interest being heightened by financial news. Marketing spend for new customers, which is the principal expense of the Group, has increased in H1 2018 by 41% in comparison to H1 2017. However, the acquisition cost per new customer (AUAC) in H1 2018 fell significantly and reflects the success of the Group's optimisation initiatives. During Q2 2018 marketing spend increased as the Group focused on investing to recruit new customers in well-established jurisdictions.

Plus500's business model continues to be extremely cash generative with 96% conversion of operating profit to cash flow (H1 2017: 97%). Cash stood at $511.9 million as at 30 June 2018 (30 June 2017: $220.7 million) (which included a total of $164.9 million which was subsequently paid out in dividends (final and special) on 23 July 2018).  All amounts stated exclude client funds which are held in segregated bank accounts.

The model continues to be diversified across many products depending on customer appetite. As previously stated, cryptocurrency has been a significant offering which led to such an exceptional Q4 2017 and Q1 2018 for Plus500. While the cryptocurrency hype has diminished, it still remains a popular product on our platform and is a key element of trading due to the volatility of the underlying instruments, low dealing costs and spreads compared to owning the asset directly, with no attendant risk of safe storage.

 

Continuous development

 

The Company is the No. 1 CFD provider in the UK, Germany, Spain and Australia.10 

During H1 2018, the adoption of the Group's mobile and tablet offering continued to grow and now represents 76% of the Group's total revenues (H1 2017: 74%), with over 70% of the Group's total trades executed on its trading platform being completed on a mobile device.

We have also enhanced the scalability of the trading platform and its capacity to deal with a rapidly growing amount of customers and simultaneous transactions.

 

During H1 the Company invested in improving its customer support by extending its chat facility's native language support in several additional languages, including enabling 24/7 chat support for these languages. In addition, Plus500 optimised its withdrawal and deposit processes including shortening its processing times. 

The number of transactions in H1 2018 increased by 51% in comparison to the same period in the previous year, whilst churn decreased in H1 2018, reflecting the strength of the Group and its attractiveness to its customers.

 

10 By total number of client relationships. Investment Trends 2018 Germany & Spain CFD & FX Reports. By total number of relationships with UK CFD traders. Investment Trends 2018 UK Leverage Trading Report. By own client rating. Investment Trends 2017 Australia CFD Report

 

Regulatory update

 

The Group has continued to invest in its regulatory and compliance operations with a strong focus on best practice and maintaining an open dialogue with each of its regulators, in what is a highly regulated industry. During the year to date, a number of regulatory changes have entered into force, as a result of MIFID II, GDPR and ESMA requirements and Plus500 has accordingly implemented these required changes. Plus500's technological edge has enabled it to comply with regulatory changes following an efficient and rapid adjustment process.

 

ESMA

 

During the period, the European Securities and Markets Authority (ESMA) announced its regulatory changes to be implemented by 1 August 2018; the restrictions that now apply are:

·     Leverage limits on opening of a position by a retail customer - Leverage of retail customers was adjusted in accordance with the new ESMA restrictions, such as 1:2 on cryptocurrencies, 1:5 for individual equities and other reference values, 1:10 for commodities other than gold and non-major equity indices, 1:20 for non-major currency pairs, gold and major equity indices and 1:30 for major currency pairs

·      Negative balance protection on a per account basis - No change was required as this has been Plus500's policy since its foundation

·      A margin close-out rule on a per account basis - No change was required as this has been Plus500's policy since its foundation

·      A restriction on the incentives offered to trade CFDs - Plus500 had already implemented this restriction for its retail customers

·      A standardised risk warning - Plus500 had already adopted a standardised risk warning

 

Plus500 was therefore already aligned with many of the proposed regulatory changes, prior to publication. The Board believes these changes will enhance the CFD trading landscape and create a more level competitive playing field. 

 

During H1 2018, the Company began providing a process to allow its customers, upon their request, to change their regulatory status to a new categorisation as an EPC in line with MIFID rules. Subsequently, approximately 5% of the Company's overall EEA customer base has elected to become EPC to date, representing approximately 20% of Q2 revenues within the EEA. The categorisation process is progressing broadly in line with the Group's expectations.

       

New Chief Technology Officer

 

The Company is pleased to announce the appointment of Mr. Ari Shotland as the Group's Chief Technology Officer. Mr. Shotland has an extensive technological background and most recently held the position of Senior Staff Software Engineer and Tech Lead Manager at Google Israel. This appointment reflects the importance that the Group places on its in-house proprietary technology and internal technical expertise, which the Board believes represents a significant competitive advantage and barrier to entry. The Group will continue to invest heavily in this capability to maintain this advantage. 

 

Financial review

 

Revenues in the first half of 2018 totalled $465.5 million (H1 2017: $188.4 million), representing significant growth of 147% compared to H1 2017. The strong growth achieved is attributed to the growing number of Active Customers, up 121% to 248,564 (H1 2017: 112,317) and the high value customers that started and continued to use Plus500's trading platform. 

 

 

 

Qtr 30/6/18

Qtr 30/6/17

Change

H1 2018

H1 2017

Change

Revenues ($'000)*

 

$168,226

$110,876

52%

$465,550

$188,417

147%

Number of New Customers

 

21,188

31,671

(33%)

94,148

53,881

75%

Number of Active Customers

 

103,086

80,526

28%

248,564

112,317

121%

ARPU

 

$1,632

$1,377

19%

$1,873

$1,678

12%

AUAC

 

$1,281

$787

63%

$677

$836

(19%)

*Unaudited

 

Revenue in Q1 2018 particularly benefitted from high levels of volatility and interest in a wide range of instruments. Our platform is designed to accommodate such an increase in trading and as previously stated in recent trading updates, there was a return to a more normal level of trading in Q2 2018. Due to the operational gearing of the business, and the optimisation of customer acquisition (as reflected in the significantly lower AUAC in Q1 2018), and optimisation of operating costs, substantially all of this additional revenue was converted to EBITDA at a higher margin.

 

EBITDA in the first half of 2018 was $349.0 million (H1 2017: $118.5 million), an increase of 195%, with EBITDA margins increasing from 63% in H1 2017 to 75% in H1 2018. Net profit for the period was $261.7 million (H1 2017: $90.7 million), up 189%.

 

Plus500's total assets increased from $250.3 million in H1 2017 to $529.1 million in H1 2018, an increase of 111%, with cash balances increasing to $511.9 million (H1 2017: $220.7 million), and equity of $322.7 million representing approximately 61% of the balance sheet (H1 2017: $148.5 million). Cash balances are stated including a total of $164.9 million which was paid out in dividends (final and special) on 23 July 2018.

 

Principal risks and uncertainties

 

During the six months to 30 June 2018 and up to the date of approval of the interim financial statements there have been no significant changes in the Group's risk management framework. Details of the Group's approach to risk management and its principal risks and uncertainties for the remainder of the current financial year remain consistent with those detailed in the Group's Prospectus (set out on pages 15 to 44 and on page 80 of the Group's Prospectus which is available on the Company's website www.plus500.com). 

 

Current trading and outlook

 

Following an excellent start to the year, the Board has confidence in Plus500's ability to continue to outperform its peers in what is expected to be a smaller overall market. It is unlikely that the exceptional performance of H1 2018 will be repeated and the impact of rule changes will potentially affect less than half of EEA revenues (30% of Group revenues) in the short term.

 

Plus500 has performed strongly in the first half of 2018 and current trading in the third quarter to date has been in line with market expectations. As a result, the Board looks ahead with continued confidence given the Group's combination of industry leadership, strong brand awareness and geographical diversification

 

Statement of Directors' Responsibilities

 

The Directors confirm to the best of their knowledge that the consolidated condensed interim financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" ("IAS 34"), as issued by the International Accounting Standards Board, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the undertakings included in the consolidation as a whole for the period ended 30 June 2018 as required by the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority:

 

·   an indication of important events that have occurred during the six months ended 30 June 2018 and their impact on the consolidated condensed interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and 

·   material related party transactions in the six months ended 30 June 2018 and any material changes in the related party transactions described in the last Annual Report.

 

The Directors of Plus500 Ltd. are as listed in the Plus500 Ltd. 2017 Annual Report. A list of current directors is maintained on the Company's website: www.plus500.com 

 

On behalf of the Board

Elad Even-Chen

Chief Financial Officer

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (UNAUDITED)

 

 

 

Six months

ended 30 June

Year ended

31 December

 

 

2018

2017

2017

 

 

(Unaudited)

(Audited)

 

Note

U.S. dollars in millions

TRADING INCOME

 

465.5

 188.4

437.2

Selling and marketing expenses

5

92.8

61.2

156.0

Administrative and general expenses

6

24.0

9.0

22.7

OPERATING PROFIT

 

348.7

118.2

258.5

     Financial income

 

1.7

3.2

3.2

     Financial expenses

 

4.0

5.1

8.3

FINANCIAL EXPENSE - NET

 

(2.3)

(1.9)

(5.1)

PROFIT BEFORE INCOME TAX

 

346.4

116.3

253.4

INCOME TAX EXPENSE

 

84.7

25.6

53.7

PROFIT AND COMPREHENSIVE INCOME FOR

 

 

 

 

      THE PERIOD

 

261.7

90.7

199.7

 

 

 

 

 

In U.S. dollars

 

 

 

 

 

EARNINGS PER SHARE (basic and diluted)

7

2.30

0.79

1.75

 

 

CONDENSED CONSOLIDATED FINANCIAL POSITION

30 JUNE 2018 (UNAUDITED)

 

 

As of 30 June

As of 31 December

 

 

2018

2017

2017

 

 

(Unaudited)

(Audited)

 

Note

U.S. dollars in millions

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

      Property, plant and equipment

 

3.3

3.4

3.3

      Intangible assets

 

0.1

0.1

0.1

      Deferred income taxes

 

1.9

0.7

0.5

Long term restricted deposit

 

0.3

0.2

0.3

Total non-current assets

 

5.6

4.4

4.2

 

 

 

 

 

Current assets

 

 

 

 

Income tax receivable

 

-

10

17.2

      Other receivables

 

11.2

14.8

7.7

      Restricted deposit

 

0.4

0.4

0.4

      Short-term bank deposit

 

0.2

0.1

0.2

      Cash and cash equivalents

 

511.7

220.6

241.9

Total current assets

 

523.5

245.9

267.4

TOTAL ASSETS

 

529.1

250.3

271.6

 

 

 

 

 

LIABILITIES

 

 

 

 

Non-current liabilities

 

 

 

 

Share-based compensation

 

1.9

0.6

-

Total non-current liabilities

 

1.9

0.6

-

 

 

 

 

 

Current liabilities

 

 

 

 

Dividend

8

164.9

75.0

-

Share-based compensation

 

6.1

2.1

4.2

      Income tax payable

 

5.7

3.1

2.3

      Other payables

 

12.1

5.3

12.1

      Service suppliers

 

15.7

14.5

22.6

      Trade payables - due to clients

10

-

1.2

4.5

Total current liabilities

 

204.5

101.2

45.7

TOTAL LIABILITIES

 

206.4

101.8

45.7

 

 

 

 

 

EQUITY:

 

 

 

 

      Ordinary shares

 

0.3

0.3

0.3

      Share premium

 

22.2

22.2

22.2

      Cost of Company's shares held by the Company

9

(7.5)

(3.2)

(7.5)

      Retained earnings

 

307.7

129.2

210.9

Total equity

 

322.7

148.5

225.9

TOTAL LIABILITIES AND EQUITY

 

529.1

250.3

271.6

 

 

 

 

Asaf Elimelech

Elad Even-Chen

Penelope Judd

Chief Executive Officer

Group Chief Financial Officer

Non-Executive Director and Chairman

 

Date of approval of the condensed consolidated interim financial statements by the Company's Board of Directors: 10 August, 2018

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (UNAUDITED)

 

 

Ordinary

Share

Cost of Company's shares held by

Retained

 

 

shares

premium

the Company

Earnings

Total

 

 

U.S. dollars in millions

BALANCE AT 1 JANUARY 2018 (audited)

0.3

22.2

(7.5)

210.9

225.9

CHANGES DURING THE SIX MONTHS ENDED 30 JUNE 2018 (unaudited):

 

 

 

 

 

Profit and comprehensive income for the period

 

 

 

261.7

261.7

TRANSACTION WITH SHAREHOLDERS:

 

 

 

 

 

   Dividend

 

 

 

(164.9)

(164.9)

BALANCE AT 30 JUNE 2018 (unaudited)

0.3

22.2

(7.5)

307.7

322.7

 

 

 

 

 

 

BALANCE AT 1 JANUARY 2017 (audited)

0.3

22.2

-

113.5

136.0

CHANGES DURING THE SIX MONTHS ENDED 30 JUNE 2017 (unaudited):

 

 

 

 

 

Profit and comprehensive income for the period

 

 

 

90.7

90.7

TRANSACTION WITH SHAREHOLDERS:

 

 

 

 

 

   Dividend

 

 

 

(75.0)

(75.0)

Acquisition of treasury shares

 

 

(3.2)

 

(3.2)

BALANCE AT 30 JUNE 2017 (unaudited)

0.3

22.2

(3.2)

129.2

148.5

 

 

 

 

 

 

BALANCE AT 1 JANUARY 2017 (audited)

0.3

22.2

-

113.5

136.0

CHANGES DURING THE YEAR ENDED 31 DECEMBER 2017 (audited):

 

 

 

 

 

Profit and comprehensive income for the year

 

 

 

199.7

199.7

TRANSACTION WITH SHAREHOLDERS:

 

 

 

 

 

   Dividend

 

 

 

(102.3)

(102.3)

Acquisition of treasury shares

 

 

(7.5)

 

(7.5)

BALANCE AT 31 DECEMBER 2017 (audited)

0.3

22.2

(7.5)

210.9

225.9

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (UNAUDITED)

 

 

Six months ended

Year ended

 

30 June

31 December

 

2018

2017

2017

 

(Unaudited)

(Audited)

 

U.S. dollars in millions

OPERATING ACTIVITIES:

 

 

 

Cash generated from operations (see Note 11)

334.0

115.5

278.7

Income tax paid, net

(63.2)

(30.5)

(66.5)

Interest received (paid), net

1.5

(0.5)

(0.2)

Net cash flows provided by operating activities

272.3

84.5

212.0

INVESTING ACTIVITIES:

 

 

 

Purchase of deposits

-

(0.1)

(0.2)

Purchase of restricted deposits

-

-

(0.2)

Purchase of property, plant and equipment

(0.3)

(0.4)

(0.6)

Net cash flows used in investing activities

(0.3)

(0.5)

(1.0)

CASH FLOWS USED IN FINANCING ACTIVITIES:

 

 

 

Dividend paid to equity holders of the Company (see note 8)

-

-

(102.3)

-

(3.2)

(7.5)

Net cash flows used in financing activities

-

(3.2)

(109.8)

 

 

 

 

INCREASE IN CASH AND CASH EQUIVALENTS

272.0

80.8

101.2

 

 

 

 

Balance of cash and cash equivalents at beginning of period

241.9

136.5

136.5

Gains (Losses) from exchange differences on cash and cash equivalents

(2.2)

3.3

4.2

BALANCE OF CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 

 

511.7

 

220.6

 

241.9

 

 

 

 

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

 

NOTE 1 - GENERAL INFORMATION

 

Information on activities of Plus500 Ltd and its subsidiaries (hereafter- the Group)

Plus500 Ltd. (hereafter - the Company) and its subsidiaries (hereafter - the Group) has developed and operates an online and mobile trading platform within the CFD sector enabling its international customer base of individual customers to trade CFDs on over 2,200 underlying financial instruments internationally. The Group currently offers CFDs referenced to equities, indices, commodities, options, ETFs, cryptocurrencies and foreign exchange.

 

The Group's offering is available internationally with a significant market presence in the UK, Australia, the EEA and the Middle East and has retail customers located in more than 50 countries. The Group operates through operating subsidiaries regulated by the FCA in the UK, ASIC in Australia, the CySEC in Cyprus, the ISA in Israel, the FMA in New Zealand, the FSCA in South Africa and the MAS and Enterprise Singapore (formerly known as International Enterprise Singapore) in Singapore.

 

On 24 July 2013, the Company's shares were admitted to trading on AIM market of the London Stock Exchange in the Company's initial public offering ("IPO"). On 26 June 2018, the Company's shares were admitted to the premium listing segment of the official list of the UK Listing Authorities (the "official list") and to trading on the London Stock Exchange plc's main market for listed securities and trading of the Company's shares on the AIM market of London Stock Exchange plc were cancelled.

 

The Group is engaged in one operating segment - CFD trading.

 

The address of the Company's principal offices is Building 25, Matam, Haifa 31905, Israel.

 

NOTE 2 - BASIS OF PREPARATION

 

Basis of accounting and accounting policies

 

These condensed consolidated interim financial statements for the six months period ended 30 June 2018 have been prepared in accordance with IAS 34 - 'Interim financial reporting' as issued by the International Accounting Standards Board. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2017, which have been prepared in accordance with IFRS.

This condensed consolidated interim financial information is reviewed and not audited.

 

Going concern

The Group has considerable financial resources, a broad range of products and a geographically diversified business. As a consequence, the Directors believe that the Group is well placed to manage its business risks in the context of the current economic outlook. Accordingly, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. They therefore continue to adopt the going concern basis in preparing these condensed consolidated interim financial statements.

 

NOTE 3 - ACCOUNTING POLICIES

 

Significant accounting policies and computation methods used in preparing the interim financial information are consistent with those used in preparing the 2017 annual financial statements, except for the following:

 

Income tax in interim periods is recognised based on management's best estimate of the annual income tax rate expected.

 

IFRS 9 - "Financial Instruments" (hereafter - IFRS 9)

 

IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through other comprehensive income and fair value through P&L. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial assets. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the 'hedged ratio' to be the same as the one management actually uses for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39.

 

The Company implements IFRS9 retrospectively as from January 1, 2018. The initial implementation of IFRS9 had no material effect on the financial statements of the Company.

 

IFRS 15- "Revenue from Contracts with Customers" (hereafter- IFRS 15)

 

Upon first-time adoption, IFRS 15 will replace existing IFRS guidance on revenue recognition.

The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

IFRS 15 introduces a single model for revenue recognition, in which an entity recognizes revenue in accordance with that core principle by applying the following five steps:

1. Identify the contract(s) with a customer.

2. Identify the performance obligations in the contract.

3. Determine the transaction price.

4. Allocate the transaction price to the separate performance obligations in the contract.

5. Recognize revenue as each performance obligation is satisfied.

 

IFRS 15 provides guidance about various issues related to the application of that model, including: recognition of revenue from variable consideration set in the contract, adjustment of transaction for the effects of the time value of money and costs to obtain or fulfill a contract. The standard extends the disclosure requirements regarding revenue.

 

The Company implements IFRS15 retrospectively as from January 1, 2018. The initial implementation of IFRS15 had no material effect on the financial statements of the Company.

  

IFRS 16 - "Leases" (hereafter - IFRS 16)

 

In January 2016, the IASB issued IFRS 16 - Leases which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract and replaces the previous leases standard, IAS 17 - Leases. IFRS 16 eliminates the classification of leases for the lessee as either operating leases or finance leases as required by IAS 17 and instead introduces a single lessee accounting model whereby a lessee is required to recognize assets and liabilities for all leases with a term that is greater than 12 months, unless the underlying asset is of low value, and to recognize depreciation of leases assets separately from interest on lease liabilities in the income statement. IFRS 16 is effective from January 1, 2019 with early adoption allowed only if IFRS 15 - Revenue from Contracts with Customers is also applied.

The Group estimates that there will be no material impact in the application of IFRS 16 on its financial statements.

 

NOTE 4- ENTERPRISE WIDE DISCLOSURES

 

The Company is domiciled in Israel. Trading income and non-current assets from Israeli customers are not material. The Trading income attributed to geographical areas according to the location of the customer is as follows:

 

 

Six months

ended 30 June

Year ended 31 December

 

2018

2017

2017

 

                     (Unaudited)

(Audited)

 

U.S. dollars in millions

 

 

 

 

     United Kingdom

69.6

30.5

68.6

     Australia

47.6

6.9

23.7

     European Economic Area (EEA)*

262.9

107.0

247.8

     Rest of the World

85.4

44.0

97.1

 

465.5

188.4

437.2

 

  *Excluding United Kingdom

 

NOTE 5- SELLING AND MARKETING EXPENSES

 

 

Six months

ended 30 June

Year ended 31 December

 

2018

2017

2017

 

(Unaudited)

(Audited)

 

U.S. dollars in millions

     Payroll and related expenses

7.2

5.2

10.9

     Variable Bonuses

2.6

1.0

2.0

     Share-based compensation

2.8

0.6

2.8

     Commission to agents

11.7

4.8

27.0

     Advertising

52.1

40.3

90.0

     Commissions to processing companies

12.2

6.3

16.9

     Server and data feeds commissions

3.5

2.8

5.8

     Third party customer support

0.3

-

0.1

     Sundry

0.4

0.2

0.5

 

92.8

61.2

156.0

 

NOTE 6- ADMINISTRATIVE AND GENERAL EXPENSES

 

 

Six months

ended 30 June

Year ended 31 December

 

2018

2017

2017

 

(Unaudited)

(Audited)

 

U.S. dollars in millions

Payroll and related expenses

4.1

3.4

7.1

     Variable Bonuses

6.0

0.6

2.9

Share-based compensation

3.1

0.6

2.7

Professional fees and regulatory fees

*3.4

1.5

3.0

Office expenses 

2.8

1.7

4.1

Travelling expenses

0.5

0.3

0.7

Public company expenses

*2.6

0.3

0.8

Nonrefundable VAT

1.1

0.3

0.7

Sundry

0.4

0.3

0.7

 

24.0

9.0

22.7

 

*These amounts include an aggregate amount of $ 4.0 million which is related to the admission to the premium listing segment of the official list of the UK Listing Authorities (see note 1).

 

NOTE 7- EARNINGS PER SHARE

 

Earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. (See note 9)

 

 

Six months ended 30 June

31 December

 

2018

2017

2017

 

(Unaudited)

(Audited)

 

U.S. dollars

 

 

 

 

Profit attributable to equity holders of the Company  

261,725,411

90,709,000

199,675,000

 

 

 

 

Weighted average number of ordinary shares in issue

113,908,231

114,850,572

114,420,058

 

NOTE 8 - DIVIDEND

 

The amounts of dividends and the amounts of dividends per share for the years 2017 and 2018 declared and distribute by the Company's Board of Directors are as follows:

 


Date of declaration

Amount of dividend in millions of $

5 February 2017

75.0

4 August 2017

27.2

14 February 2018

92.6

14 February 2018

72.3

 

On 14 February 2018 the Company declared a final dividend in an amount of $92.6 million ($0.8129 per share). The dividend was paid to shareholders on 23 July 2018.

 

On 14 February 2018 the Company declared a special dividend in an amount of $72.3 million ($0.6350 per share). The dividend was paid the shareholders on 23 July 2018.

 

On 4 August 2017 the Company declared a dividend in amount of $ 27.2 million ($0.2388 per share). The dividend was paid to shareholders on 23 November 2017.

 

On 5 February 2017 the Company declared a dividend in amount of $ 75.0 million ($0.6528 per share). The dividend was paid to shareholders on 3 July 2017.

 

NOTE 9 - ACQUISITION OF THE COMPANY'S SHARES BY THE COMPANY

 

In June 2017, the Board approved a programme to buy back up to US$10 million of the Company's Ordinary Shares. The buyback programme ran from 2 June 2017 to 31 August 2017 and was funded from the Company's net cash balances. In August 2017, the Board approved a second programme to buy back up to US$27.21 million of Ordinary Shares. The second buyback programme expired on 1 February 2018 and was also funded from the Company's net cash balances. The Company bought back 980,146 Ordinary Shares (or 0.9%) in the capital of the Company for an aggregate purchase price of $7.5 million pursuant to these buyback programmes. Shares were bought back at an average price of £5.98.                                                                                            

 

NOTE 10- TRADE PAYABLES- DUE TO CLIENTS

 

 

30 June

31 December

 

2018

2017

2017

 

(Unaudited)

(Audited)

 

U.S. dollars in millions

Customers deposits, net* 

107.6

72.3

162.0

Segregated client funds

(107.6)

(71.1)

(157.5)

 

-

1.2

4.5

 

As of 30 June 2018, 2017 and 31 December 2017 the total amount of trade payables due to clients includes bonuses to the clients from all of the subsidiaries.

 

* Customers deposits, net are comprised of the following:

 

 

30 June

31 December

 

2018

2017

2017

 

(Unaudited)

(Audited)

 

U.S. dollars in millions

 

 

 

 

Customers deposits 

146.9

99.7

188.4

Less- financial derivative open positions:

 

 

 

   Gross amount of assets

(48.6)

(34.8)

(45.7)

   Gross amount of liabilities

9.3

7.4

19.3

   Customers deposits, net

107.6

72.3

162.0

 

 

NOTE 11- CASH GENERATED FROM OPERATIONS

 

 

Six months

ended 30 June

Year ended 31 December

 

2018

2017

2017

 

(Unaudited)

(Audited)

 

U.S. dollars in millions

Cash generated from operations activities

 

 

 

Net income for the period

261.7

90.7

199.7

Adjustments required to reflect the cash flows from

 

 

 

    operating activities:

 

 

 

Depreciation and amortization

0.3

0.3

0.7

Liability for share-based compensation

5.9

1.3

5.5

Settlement of share-based compensation

(2.1)

(0.9)

(0.9)

Taxes on income

84.7

25.6

53.7

Interest expenses (income)

(1.5)

0.4

0.2

Foreign exchange losses (gains) on operating activities

(0.1)

(3.3)

(4.1)

 

87.2

23.4

55.1

Operating changes in working capital:

 

 

 

Decrease (increase) in other receivables

(3.5)

(5.1)

2.0

Increase (decrease) in trade payables due to clients

(4.5)

(0.4)

2.8

Increase (decrease) in other payables

-

8.7

16.8

Increase (decrease) in Service suppliers

(6.9)

(1.8)

2.3

 

(14.9)

1.4

23.9

Cash flows from operating activities

334.0

115.5

278.7

 

Non-cash transactions  

On 14 February 2018, the Company declared a dividend in an amount of $164.9 million ($1.4479 per share). The dividend was paid to shareholders on 23 July 2018.

 

NOTE 12- FINANCIAL RISK MANAGEMENT

 

Financial risks arising from financial instruments are analysed into market, credit, concentration and liquidity risks. These condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements. Details of how these risks are managed are discussed in the financial risk management note of the 2017 Plus500 Ltd Annual Report.

 

There has not been a significant change in the Group's financial risk management processes or policies since the year end.

 

NOTE 13- SUBSEQUENT EVENTS

 

On 10 August 2018 the Company declared a dividend in an amount of $157.0 million ($1.3786 per share). The dividend is due to be paid to the shareholders on 22 November 2018.

 

 


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