Plus500 Ltd. · LSE:PLUS
Plus500 — FY2016 Earnings Presentation
30 slides from Plus500's earnings presentation, 2017
Slide 1: Annual results for the twelve months ended 31 December 2016
Annual results for the twelve months ended 31 December 2016 London Stock Exchange Symbol: PLUS
Slide 2: Strong KPIs FY 2016 – record FY results
Strong KPIs FY 2016 – record FY results Plus500 in numbers: $327.9m +19% $151m 104,432 155,956 Revenues Growth in EBITDA FY16 New customers FY 16 Active customers FY 16 FY 16 Revenues +14% +23% +14% FY 16/FY 15 Growth FY 16/FY 15 Growth FY 16/FY 15 Growth FY 16/FY 15 #1 #1 #1 8 31 >50 Rated on Reven
Slide 3: FY 2016 Operating Highlights
FY 2016 Operating Highlights Another year of significant dividend payments: Total dividend of $101.7 million, consists of interim dividend of $26.7 million, final dividend of $43.6 million and a special dividend of $31.4 million, representing a total pay-out of 87% of net profit for the year Another
Slide 4: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 4
Slide 5: New and active customer KPIs
New and active customer KPIs 2016 Total 2015 Total H2 2016 H2 2015 New Customers 104,432 84,858 47,503 32,641 % Growth % Growth 23% 46% FY 2016/FY 2015 H2 2016/H2 2015 AUAC 1,195 1,227 1,036 1,526 % Growth % Growth -3% -32% FY 2016/FY 2015 H2 2016/H2 2015 Active Customers 155,956 136,540 102,002 73,
Slide 6: Key Business Model Strengths
Key Business Model Strengths Self-developed, user friendly and robust trading platform Proprietary in-house developed technology Analytics driven, returns focused customer acquisition model Proprietary “Marketing Machine” and affiliate programme Strong international brand thanks to successful market
Slide 7: Strong Product Platform
Strong Product Platform CFD Financial Instruments Platform and Devices Trading Platform 2,100 CFD financial instruments Supporting 31 languages in Retail customers only more than 50 countries iPhone / Stocks iPad / Apple Watch App Android Commodities Indices WebTrader App Plus500 Plus500 Product Pla
Slide 8: Market Leading Technology
Market Leading Technology Proprietary technology, developed in-house: key differentiator and flexible advantage System Architecture rapid product development User Interface “Marketing Machine” consistent experience efficient acquisition of new customers across all platforms Back Office Affiliate Pro
Slide 9: Flexible Business Model
Flexible Business Model Revenue Split Revenues FY 2016 International Footprint Plus500UK Dealing Spreads 5% 0% Spreads FCA UK-regulated subsidiary Difference between the buy price and the sell price of a CFD Premium Plus500CY CySEC regulated subsidiary Overnight Premiums Charges on open customer pos
Slide 10: Analysis of customer churn
Analysis of customer churn Churn Revenue split by client tenure 70% 62% 0-6 Months 2015 60% 7-12 Months 54% 13% 51% 2016 2% 1-3 Years 50% 48% 3-5 Years 40% 37% 37% 5+ Years 25% 30% 30% 20% 23% 10% 0% 52% of Group’s Increased focus on FY H2 Q4 revenues come from customer retention customers who trade
Slide 11: Significant Investment in Marketing
Significant Investment in Marketing Focus remains online but Plus500 will continue to explore offline opportunities Advertising Spend ($m) 140 Online 120 *13 Affiliates Online 9 100 *9 Advertising Offline 6 Search engines 80 Referrals 1 60 4 103 1 89 40 Offline 3 1 56 Mass Media 20 2 (TV, print, rad
Slide 12: Mobile – a key growth driver
Mobile – a key growth driver Key driver of market growth - and key acquisition channel for Plus500 Mobile is a key access point for retail customers GUI developed for mobile, consistent with other platforms Features and portfolio of instruments on par with PC version Successfully launched a dedicate
Slide 13: Mobile revenues and sign ups by device
Mobile revenues and sign ups by device Number of Signups by Device Revenues by Device 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q11 2
Slide 14: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 14
Slide 15: Regulatory framework
Regulatory framework Client Take-On FCA / CySEC / ASIC / FMA / ISA rules Ltd set out client take-on requirements Israeli Headquarters Client money treated the same across jurisdictions and kept in segregated accounts. Customers must self-certify their UK Ltd AU Pty Ltd CY Ltd IL Ltd understanding of
Slide 16: Commitment to regulatory, compliance and risk best practice
Commitment to regulatory, compliance and risk best practice Continuing focus on and investment in best practice Global compliance team consists of c.150 permanent staff Local Compliance teams with significant experience and relationship skills Close relationship and dialog with the different regulat
Slide 17: Recent industry developments
Recent industry developments ESMA Q&A document (EU) – to promote common supervisory approaches and practices in the application of MiFID FSMA (Belgium) CySEC (Cyprus) FCA (UK) BaFiN (Germany) AMF (France) • New • Enhancing the • Enhancing the • New regulation • New marketing regulation for conduct o
Slide 18: Regulation – current situation and potential impact
Regulation – current situation and potential impact Regulator focus Plus500 compliance Potential impact Negative balance √ Limited protection Market P&L √ Limited Reduced leverage ratios Industry standard Material* No high pressure sales √ None No binary options √ None No bonuses Industry standard L
Slide 19: Minimising downside risk: 85% profitable trading days in 2016
Minimising downside risk: 85% profitable trading days in 2016 Strong track record in managing market risk demonstrated by looking at number of profitable trading days. In 2016 the Group made a profit on over 85% of the trading days with remaining 15% of trading days showing relatively immaterial los
Slide 20: Trading platform integrated with risk management
Trading platform integrated with risk management Market Risk Risk Management Advisory Spread of customers acts as a natural risk-mitigation: No dominant customers Real-time monitoring of exposure limits by: Individual clients Individual instruments Total Company exposure Segregated Customer Accounts
Slide 21: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 21
Slide 22: Income Statement
Income Statement Key Financial Indicators – Income Statement ($’000): FY 16/FY 15 H2 16/H2 15 FY 2016 FY 2015 H2 2016 H2 2015 Growth Growth Trading income (net) 327,927 275,651 19% 169,155 148,625 14% Record FY revenues driven by active customers Selling and marketing 157,277 125,413 25% 65,789 61,7
Slide 23: Lean cost structure
Lean cost structure Key Financial Indicators: ($‘000): H2 16/H2 15 FY 2016 FY 2015 FY 16/FY15 H2 2016 H2 2015 Growth Growth Healthy and efficient cost Advertising and base – “Advertising and 124,848 103,760 20% 49,232 49,826 -1% marketing costs marketing costs” and “Processing costs” represent Proce
Slide 24: Balance sheet remains strong
Balance sheet remains strong Key Financial Indicators – Balance Sheet: ($’000): FY 16/FY 15 FY 2016 FY 2015 Growth Cash and cash equivalents 136,518 156,535 -13% Decrease in cash balance due to dividend payment of $123.3m in 2016 (2015: $65m) Other Current Assets 14,193 10,169 40% Cash balances held
Slide 25: Strong cash generation funds attractive dividend
Strong cash generation funds attractive dividend Key Financial Indicators – Cash Flow: ($’000): FY 16/FY 15 FY 2016 FY 2015 Growth Limited capex needs Operating activities: 153,455 128,133 20% Cash generated from operations Low capital requirements Income tax paid - net (44,548) (42,658) 4% High cas
Slide 26: Dividend payments in year (2017 proposed to date)
Dividend payments in year (2017 proposed to date) 140,000,000 $123m $26.7m 120,000,000 100,000,000 80,000,000 $75m* $65m 60,000,000 $60m 40,000,000 20,000,000 $15m $17m $10m 0 2011 2012 2013 2014 2015 2016 2017 Dividend policy – 60% of net profit & a special dividend at the end of the year * Ex divi
Slide 27: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 27
Slide 28: Outlook – confident of another successful year
Outlook – confident of another successful year Entering 2017, there has been a continued strong increase in New Customers Continue to achieve good results from online marketing initiatives and sponsorships Expect to broaden footprint and continue to diversify revenues including adding further new li
Slide 29: Investment Summary
Investment Summary Business model significantly differentiated from major peers Market leading in use of innovative technology and marketing techniques Low cost, low risk and low capital intensive financial model Highly cash generative – robust balance sheet Focus on regulatory framework and holding
Slide 30: Disclaimer
Disclaimer The Presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities of the Company, nor shall it (or any part of it), or the fact of its distribution, form the basis of