Plus500 Ltd A year of record numbers and performance

Plus500 Ltd (LON:PLUS), a leading online service provider for trading Contracts for Difference  internationally, today announced preliminary unaudited results for the year ended 31 December 2018.

Financial Highlights:

· Record financial performance:

o Exceptional first quarter benefitting in particular from Cryptocurrency trading;

o Total P&L gain in 2018 of $172 million (FY 2017: loss of $103 million);

o EEA performance impacted by ESMA measures from 1 August 2018, offset by $56 million P&L gain in the fourth quarter of 2018;

o EBITDA margin increased to an exceptional 70.2%, reflecting the record revenue and operational leverage (FY 2017: 59.3%);

· Strong financial position:

o Debt-free balance sheet and high cash conversion ratio4 (98%);

· Significant returns to shareholders during the period:

o Recommended final dividend of $0.6191 per share (final dividend 2017: $0.8129 per share);

o Including the final dividend, a total of $229.7 million (2017: $199.6 million) is being returned to shareholders, consisting of dividends of $227.4 million and an initial $2.3 million of a $10 million share buyback programme in the period;

o The Company remains highly cash-generative and maintains its core 60% dividend pay-out ratio, in line with its dividend policy, with interim and final dividends split in accordance with half yearly profits;

o The Board will continue to assess the availability of any excess capital and prioritise its use, as it has always done, between value-adding investment, growth opportunities and additional returns to shareholders.

Operating Highlights:

· Strong progress and trading activity:

o Total number of transactions in 2018 increased by 6% year on year;

o More than 3 million transactions per month on average;

o More than $1.3 billion in customer deposits, reflecting strong trust in the Plus500 brand;

· Continued expansion of global presence and diversification of revenues outside the EEA:

o Australian domiciled revenues increased approximately four times year-on-year and represented 12% of Group revenue in 2018;

o Launched operations in Singapore;

· Leading industry positions improved:

o The largest CFD provider in the UK5, Spain and Germany6;

o Best rated mobile platform among CFD traders in Australia7;

o Leadership in technology and product innovation:

– over 77% of revenues from mobile devices;

– maintained position as the highest rated industry app by customers in both Apple’s AppStore and Google’s Play Store;

· Move up to the Main Market of the London Stock Exchange completed on 26 June 2018; joined the FTSE250 in September 2018.

Regulation:

· The Group’s technology edge enabled it to comply quickly and efficiently with recent regulatory changes, including MiFID II, GDPR and ESMA intervention measures;

· Non-EEA countries represented approximately 33% of the Group’s FY 2018 revenues and 40% of H2 2018 revenues;

· Elective Professional Client (“EPC”) categorisation requests in FY 2018:

o 16,475 customers applied for EPC categorisation;

o 7,229 customers (44% of the customers who applied for EPC), were approved;

o Revenue from EPCs in 2018 represented approximately 29% of the Group’s annual EEA revenues, and 61% in H2 2018;

o The EPC categorisation request, consideration and approval process is progressing broadly in line with the Group’s expectations.

Current Trading:

· 2019 has started with positive operational KPIs. New Customer8 and Active Customer9 numbers and the number of new trades opened are ahead of the end of 2018;

· Following our latest assessment of the impact of the ESMA regulatory measures, FY19 revenue is expected to be lower than current market expectations. This, combined with our intention to maintain our marketing spend, is likely to result in 2019 profit being materially lower than current market expectations;

· Work is ongoing to extend the global footprint and to continue to diversify revenues through growth in current territories and the addition of new operating licences.

Asaf Elimelech, Chief Executive of Plus500, commented:

“We are pleased to report a year of record numbers and performance, well ahead of our original expectations. These results demonstrate both our strong operational performance and differentiation from our industry peers. Our focus on innovation and technology leadership continues to deliver benefits, through the acquisition of New Customers and the continued activity and increasing loyalty of existing ones, evident in the continued downward trend in customer churn.

“It was a momentous year as we successfully completed our move up to the premium listing segment of the Official List and to trading on the London Stock Exchange’s Main Market for Listed Companies, with the subsequent inclusion in the FTSE250 – barely five years since our successful AIM IPO. This listing is already increasing interest in Plus500 and we expect it to further improve the trust and confidence of investors.

“The year was also notable for the introduction of regulatory measures by the European Securities and Markets Authority (“ESMA”) in August 2018. Although we have seen a marked reduction in Group revenue directly attributable to this, we welcomed the new regulatory framework, as it is aimed at ensuring a level playing field across industry providers and increased transparency and fairer outcomes for customers. This creates a backdrop against which we expect Plus500 to excel over the medium to longer term.

“Our operating licences in the United Kingdom, Australia, Cyprus, New Zealand, Israel, South Africa and Singapore, provide a strong foundation in this new environment and the benefits of a diversified revenue stream.

“In summary, our highly flexible business model, industry leading scale and market share, technology edge, lean cost structure and robust financial position will help mitigate the impact of regulatory measures and ensure the delivery of sustained market leading financial performance. We are therefore confident that we can continue to successfully develop our business and expand into new markets, enabling us to continue providing strong shareholder returns.”