Plus500 Ltd. · LSE:PLUS
Plus500 — FY2017 Earnings Presentation
31 slides from Plus500's earnings presentation, 2018
Slide 1: Results for the twelve months ended 31 December 2017
Results for the twelve months ended 31 December 2017 London Stock Exchange Symbol: PLUS
Slide 2: Record Full Year Results (FY 2017)
Record Full Year Results (FY 2017) Plus500 in numbers: $437.2m $199.7m $259.2m 246,946 317,175 Revenues Net Profit EBITDA New Customers Active Customers (+33% Growth) (+70% Growth) (+72% Growth) (+136% Growth) (+103% Growth) #1 #1 #1 8 32 >50 Rated App on Revenues from New Customers Unified Platform
Slide 3: Financial Highlights
Financial Highlights Record year of strong revenue growth due to increased New Customers1 and Active Customers2: 76% revenues from Europe Cryptocurrency CFDs trading represented less than 15% of total revenues Over 75% of revenues derived from mobile devices Financial performance ahead of expectatio
Slide 4: Operating Highlights
Operating Highlights Continue to build international presence and diversify market through new licences in South Africa and Singapore adding to existing licences in UK, Australia, Cyprus, New Zealand and Israel Leadership positions1: Second largest CFD provider in the UK (Investment Trends UK Report
Slide 5: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 5
Slide 6: New and Active customer KPIs
New and Active customer KPIs 1-12 2017 1-12 2016 H2 2017 H2 2016 Q4 2017 Q4 2016 Active Customers 317,175 155,956 263,624 102,002 223,864 71,721 % Growth % Growth % Growth 103% 158% 212% 1-12 2017/1-12 2016 H2 2017/H2 2016 Q4 2017/Q4 2016 ARPU ($) 1,379 2,103 944 1,658 591 1,277 % Reduction % Reduct
Slide 7: Key Business Model Strengths
Key Business Model Strengths Self-developed, user friendly and robust trading platform – based on proprietary technology Analytics driven, returns focused customer acquisition model – driven by “Marketing Machine” and affiliate programme Strong international brand awareness – driven by successful ma
Slide 8: Strong Product Platform
Strong Product Platform CFD Financial Instruments Platform and Devices Unified Trading Platform Over 2,200 CFD Financial Instruments Supporting 32 languages in more than 50 countries iPhone / Stocks iPad / Apple Watch App Crypto Indices Android WebTrader App Plus500 Plus500 Product Platform Commodit
Slide 9: Market Leading Technology
Market Leading Technology Proprietary technology, developed in-house: key differentiator and flexible advantage System Architecture rapid product development User Interface consistent experience across all platforms “Marketing Machine” efficient acquisition of new customers Back Office Affiliate Pro
Slide 10: Business Model
Business Model Revenue Split Revenues FY 2017 International Footprint Plus500UK FCA regulated Dealing Spreads 0% Spreads Difference between the buy 11% Plus500CY price and the sell price of a CFD CySEC regulated Overnight Funding Plus500 Ltd. Israel HQ Interest charges on open customer positions hel
Slide 11: Plus500 is an attractive proposition to retail customers
Plus500 is an attractive proposition to retail customers Peer Company A Peer Company B CFDs only Product portfolio CFD, Spread betting, Binary Options CFD, Spread betting, Binary Options (2,200 instruments, 7 asset classes) -Unified simple platform Combination of third-party Multi-layer platform wit
Slide 12: Analysis of customer churn
Analysis of customer churn Churn 2017 Revenue split by client tenure 70% 62% 0-6 Months 2016 12% 60% 55% 7-12 Months 2017 5% 50% 48% 1-3 Years 36% 3-5 Years 40% 37% 30% 5+ Years 30% 23% 32% 20% 15% 10% 0% 53% of Group’s revenues Increased focus on FY H2 Q4 come from customers customer retention who
Slide 13: Efficient and flexible investment in marketing
Efficient and flexible investment in marketing Focus remains online but Plus500 will continue to explore offline opportunities 140 Online 120 13 * Affiliates Advertising Spend ($m) 9 13* Online Offline 100 9* Advertising 6 27 Search engines 80 Referrals 1 60 4 103 1 89 *7 40 77 Offline 3 1 56 Mass M
Slide 14: 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 4Q16 1Q17 2Q17 3
Slide 15: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 15
Slide 16: Regulatory Framework
Regulatory Framework Compliance Approach Negative balance protection for all Ltd customers Headquarters No advice self execution venue Listed on LSE No bonuses for the majority of business Default leverage of 1:50 for the majority of the business UK Ltd AU Pty Ltd CY Ltd IL Ltd SG Pte Ltd SA Pty Ltd
Slide 17: Commitment to regulatory, compliance and risk best practice
Commitment to regulatory, compliance and risk best practice Continuing focus on and investment in best practice Robust Compliance organisation built to ensure Plus500 is meeting its regulatory obligations: Global compliance and support employees c.240 permanent staff Local Compliance teams with sign
Slide 18: Plus500 and compliance landscape
Plus500 and compliance landscape Plus500 continued to make necessary changes to comply with regulatory updates We welcomed and are aligned with many of the changes proposed by regulators: always offered a trading platform where customers cannot lose more than their account balance already offer a ma
Slide 19: ESMA's Call for Evidence
ESMA’s Call for Evidence Measures to restrict the marketing, distribution and sale of CFDs to retail clients, including the introduction of: leverage limits on the opening of a position, ranging from 30:1 to 5:1 according to the volatility of the underlying assets; a margin-close out rule on a posit
Slide 20: Regulation – current situation and potential impact
Regulation – current situation and potential impact Regulator focus Plus500 compliance Potential impact Negative balance protection ✓ None Maintenance margin Account-level margin close out None Appropriateness ✓ Limited Client losses ✓ None Risk Warning Disclosure ✓ None Leverage limits on Crypto Cu
Slide 21: Minimising downside risk: 86% profitable trading days in 2017
Minimising downside risk: 86% profitable trading days in 2017 Strong track record in managing market risk demonstrated by looking at number of profitable trading days. In 2017 the Group made a profit on over 86% of the trading days with remaining 14% of trading days showing mostly relatively immater
Slide 22: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 22
Slide 23: Income Statement
Income Statement Key Financial Indicators – Income Statement ($’000): A record revenue for the twelve H2 17/H2 16 months ended 31 December 2017 is FY2017 FY2016 FY 17/FY 16 H2 17 H2 16 driven by an increased number of Growth Growth both active and new high value customers who are using Plus500’s Tra
Slide 24: Lean cost structure
Lean cost structure Key Financial Indicators: ($‘000): Healthy and efficient cost H2 17/H2 16 FY 2017 FY 2016 FY 17/FY16 H2 2017 H2 2016 base – “Advertising and Growth Growth marketing costs” and “Processing costs” represent Advertising and 75% of total FY 2017 117,126 124,848 (6%) 72,060 49,232 46%
Slide 25: Balance sheet remains strong
Balance sheet remains strong Key Financial Indicators – Balance Sheet: ($’000): FY 17/FY 16 Record level of cash balance FY2017 FY2016 Growth Cash balances held on deposit at Barclays Plc, Credit Suisse and Cash and cash equivalents 242,082 136,518 77% Bank Leumi Other Current Assets 25,308 14,193 7
Slide 26: Strong cash generation funds attractive dividend
Strong cash generation funds attractive dividend Key Financial Indicators – Cash Flow: ($’000): Limited capex needs FY 17/FY 16 FY2017 FY2016 Growth Low capital requirements Operating activities: High cash conversion 278,492 153,455 81% available to pay dividend Cash generated from operations and to
Slide 27: Dividend and share buy back payouts (2018 proposed to date)
Dividend and share buy back payouts (2018 proposed to date) 180,000,000 $165m 160,000,000 140,000,000 $123m 120,000,000 $110m 100,000,000 80,000,000 $65m $60m 60,000,000 40,000,000 $17m 20,000,000 0 2013 2014 2015 2016 2017 2018 Total of $199.6 million returned to shareholders, consisting of an inte
Slide 28: Business Regulatory & Financial Outlook
Business Regulatory & Financial Outlook Overview Risk Management Overview Page 28
Slide 29: Outlook – confident of another successful year
Outlook – confident of another successful year Record financial KPIs in the early weeks of Q1 2018. Accordingly, the Board expects revenues for the year ended 31 December 2018 to be significantly ahead of current market expectations New Customer acquisition continues to be strong compared to 2017 av
Slide 30: Investment Summary
Investment Summary Business model significantly differentiated from major peers Market leading in use of innovative technology, use of mobile, and marketing techniques Low cost, low risk and low capital intensive financial model Highly cash generative – robust balance sheet and cash conversion Focus
Slide 31: 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