ePlus Annual Report 2018

FY2018 Annual Report · ePlus

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2018
Plus500 Limited
ANNUAL REPORT
AND ACCOUNTS

World's Trading Machine

www.plus500.com

Plus500 Ltd. 2018 Annual ReportABOUT PLUS500

Plus500 Ltd. (the "Company" and together with its
subsidiaries, the "Group") is a leading online provider
of Contracts for Difference (“CFDs”). Plus500 has
developed and operates a leading online trading
platform for individual customers to trade CFDs
internationally with reference to more than 2,200
different underlying global financial instruments,
comprising equities, indices, commodities, options,
exchange-traded funds (“ETFs”), cryptocurrencies and
foreign exchange. The Company enables customers
to trade CFDs in more than 50 countries and in 32
languages. The trading platform is accessible from
multiple operating systems (Windows, iOS, Android and
Surface) and web browsers.

In June 2018, Plus500 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 (just under five years since its
successful AIM IPO). Plus500 was included within the
FTSE250 index in September 2018.

Plus500 retains operating licences and is regulated in
the United Kingdom, Australia, Cyprus, New Zealand,
Israel, South Africa and Singapore. Customer care is
and has always been integral to Plus500: customers
cannot be subject to negative balances and there are
no commissions on trades. A free demo account is
available on an unlimited basis for platform users and a
variety of risk management tools, including stop losses,
are provided free of charge to help customers manage
leverage, protect profits and limit financial losses.

Plus500 Ltd. 2018 Annual ReportTABLE OF CONTENTS

STRATEGIC REPORT

2018 Highlights

Chairman's Statement

Chief Executive Officer's Statement

Our Strategy

Our Business Model

Key Stakeholder Relationships

Key Performance Indicators

Our Technology

Our Markets

Financial Review

Risk Management Framework

Going Concern and Viability Statement

Corporate Social Responsibility Report

Sponsorships

GOVERNANCE

Chairman's Introduction to Governance

Board of Directors

UK Corporate Governance Code Compliance Statement

Governance Report

Shareholder Engagement

Report of the Nomination Committee

Report of the Audit Committee

Report of the Regulatory & Risk Committee

Report of the Remuneration Committee

Directors' Remuneration Report

Directors' Report

Corporate Law

Directors' Responsibility Statement

FINANCIAL STATEMENTS

Independent Report of the Auditors

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

FURTHER INFORMATION

Advisors

101

102

103

129

Plus500 Limited

STRATEGIC REPORT

Plus500 Ltd. 2018 Annual Report7

Plus500 Ltd. 2018 Annual ReportREVENUE

437.2M

EBITDA

259.2M

ACTIVE
CUSTOMERS4

317,175

NEW
CUSTOMERS5

246,946

8
1
0
2

7
1
0
2

8
1
0
2

7
1
0
2

8
1
0
2

7
1
0
2

8
1
0
2

7
1
0
2

2018 HIGHLIGHTS

FINANCIAL HIGHLIGHTS

• Revenue increased 65% to $720.4 million (2017: $437.2 million)
EBITDA1 increased 95% to $506.0 million (2017: $259.2 million)
•
Exceptional first quarter benefitting in particular from cryptocurrency
•
trading
Total P&L gain in 2018 of $172 million (FY 2017: loss of $103 million)
EEA performance impacted by ESMA measures from 1 August 2018,
offset by $56 million P&L gain in the fourth quarter of 2018
EBITDA margin increased to an exceptional 70.2%, reflecting the record
revenue and operational leverage (2017: 59.3%)

•
•

•

• Net profit increased 90% to $379.0 million (2017: $199.7 million)
•
• Cash generated from operations increased 78% to $495.0 million

Earnings per share increased 90% to $3.33 (2017: $1.75)

(2017: $278.7 million)

• ARPU2 reached a record high of $2,365 in 2018, against $1,379 for 2017
Strong financial position: debt-free balance sheet and high cash
•
conversion ratio3 (98%)

OPERATIONAL HIGHLIGHTS

•

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

Strong progress and trading activity:
•
• More than 3 million transactions per month on average
• More than $1.3 billion deposited by customers, reflecting strong trust
in the Plus500 brand

• Continued expansion of global presence and diversification of revenues

•

outside the EEA:
• Australian domiciled revenues increased approximately four times

year-on-year and represented 12% of Group revenue in 2018
•
Launched operations in Singapore
Leading industry positions improved:
• The largest CFD provider in the UK6, Spain and Germany7
• Australia's best CFD mobile platform8
•

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

Plus500 Ltd. 2018 Annual ReportSHAREHOLDERS' RETURNS

•

Significant returns to shareholders during the period:
•
• A total of $229.7 million (2017: $199.6 million) is returned to shareholders, consisting of dividends of $227.4

Final dividend of $0.6191 per share (final dividend 2017: $0.8129 per share)

million and an initial $2.3 million of a share buyback programme in the period

• The Company maintains its core 60% dividend pay-out ratio, with interim and final dividends split in

accordance with half yearly profits

• 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

1 Earnings before Interest, Taxes, Depreciation and Amortisation

2 Average Revenue per Active User

3 Cash generated from operations / EBITDA

4 Customers who made at least one real money trade during the period

5 Customers depositing for the first time ever during the period

6 By total number of client relationships, Investment Trends 2018 UK Leverage Trading Report

7 By total number of client relationships, Investment Trends 2018 Germany & Spain CFD & FX Reports

8 By own client satisfaction rating, Investment Trends 2018 Australia Leveraged Trading Report

Plus500 Ltd. 2018 Annual ReportCHAIRMAN’S STATEMENT

" Plus500 remains well positioned to
capitalise on the significant global
market opportunity in the financial
trading industry, which we believe
will enable it to generate growing and
sustainable returns over time. "

Penny Judd
Chairman

INTRODUCTION

2018 was a momentous year for Plus500 and I am
pleased with the operational progress made by the
business during the year. Our successes included:
• a record financial performance and maintenance of

a robust financial position

• smart marketing technology to acquire valuable

customers cost effectively

• the rapid introduction of new trading instruments and
quick and efficient updates to our platform to comply
with new regulations

• payment of significant shareholder returns
•

joining the Main Market of the London Stock
Exchange and joined the FTSE250 index
implementing major regulatory changes smoothly
and on time
improving on our market leading industry positions

•
• continuing our expansion into new territories and

•

All of our key technology is delivered in-house by
Plus500 staff and is based on proprietary technology
supported solely by the Company’s internal technical
expertise. This is cost effective, flexible and supports
our goal of being number one in the market.

diversification of our sources of revenues

REGULATION

This success was all made possible by the hard work
of our talented management and employees combined
with our continued investment in the core business –
in our trading platform, our marketing, our innovative
technology edge, our compliance and regulation, and
our risk management.

OUR COMPETITIVE ADVANTAGE

Plus500 challenges itself to be the best in the CFD
industry. In particular, we have made strides in enhancing
our regulatory compliance procedures and embedding
a compliance culture within our global business. We
continued to invest in our regulatory and compliance
operations during the year, with employees dedicated
to regulatory compliance and customer-facing
employees aware of and fully trained to meet regulatory
requirements.

Our strong performance was achieved by the Company’s
superior technology, which is both a significant barrier
to entry and a competitive advantage. It enables:
• a highly rated, user friendly trading platform delivered

seamlessly across the latest devices

Plus500 operates in a highly regulated industry, which
requires a continuing focus on best practice and
continuous and open dialogue with regulators.
During the year, a number of regulatory changes came

Plus500 Ltd. 2018 Annual Reportinto force, as a result of MiFID II, GDPR and the new
measures introduced by the European Securities and
Markets Authority ("ESMA").

Plus500 implemented these required changes assisted
by its strength in technology. With regard to the ESMA
measures in particular, the Company has never offered
binary options and has always provided negative balance
protection as part of its business model, meaning that
the impact on the business was limited largely to the
changes in leverage levels. While client trading behaviour
is adjusting to the reduction in leverage, this is expected
to continue to impact short term revenue and profits,
while supporting value over the longer term.

The Board believes the Company is well prepared for
the various UK Brexit scenarios, given its separate EU
licence in Cyprus, through which it can operate in other
European jurisdictions in line with applicable regulatory
requirements. The Company also continues to build its
business outside of the European Economic Area ("EEA").

SHAREHOLDER RETURNS

The Company's core dividend policy is to pay out 60%
of retained profits in each financial year as dividends to
shareholders.

The Board declared a final dividend for the year ended
31 December 2018 of $0.6191 per share (2017: $0.8129
per share), reflecting an 18% increase in the total
dividend for the year, amounting to $1.9977 per share
(2017: $1.6867).

In addition, during the year the Company also bought
back 130,963 Ordinary Shares, or 0.1% of its capital
for an aggregate purchase price of $2.3 million at an
average share price of £13.58.

STRATEGY

Plus500 aims to maintain its leadership in innovation,
grow its customer base in established markets, extend
its market leadership and strengthen and expand its
geographical reach into new regions, with the aim of
becoming the number one global listed CFD provider.
We believe this will allow us to continue to deliver
significant shareholder returns.

During the year we continued to improve our market
position and either became or maintained our ranking
as the largest CFD provider in the UK, Spain and Germany
according to recent reports published by Investment
Trends (measured by total number of client relationships).

Plus500 Ltd. 2018 Annual Report

Plus500 Ltd. 2018 Annual ReportWe will continue to build the Plus500 business by:
•

investing in marketing initiatives, to enhance our brand
globally and attract new, high value customers with a
good lifetime value

• further developing our technology, thus ensuring we

continue to be first to market and flexible in our approach

• obtaining new operating licences in existing and

new target territories, thereby increasing customer
numbers and geographically diversifying our earnings

• ensuring regulatory compliance and rapid

implementation of all required regulatory changes
• further improving our customer service, to deliver an

excellent trading experience to our customers

OUTLOOK

As we enter 2019, market conditions are very different
to last year. The new regulatory environment in Europe
presents both opportunities and challenges to which we
are adjusting rapidly. I am confident that our team will
successfully navigate this period of transition and that
Plus500 will emerge a stronger and better business as
a result, building on our market leading positions and
identifying exciting opportunities for future growth.

In conclusion, Plus500 remains well positioned to
capitalise on the significant global market opportunity
in the financial trading industry, which we believe will
enable it to generate sustainable returns over time.

Penny Judd
Chairman
12 April 2019

Plus500 Ltd. 2018 Annual Report13

Plus500 Ltd. 2018 Annual ReportCHIEF EXECUTIVE OFFICER’S STATEMENT

" 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. "

Asaf Elimelech
Chief Executive Officer

INTRODUCTION

I am pleased to report a year of record numbers and
performance. These results demonstrate both our
strong operational performance and the ongoing
commitment to delivering an excellent customer
experience. 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,
evidenced by 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. We expect this listing
to increase interest and trust in Plus500, both from
investors and potential new customers.

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 both a strong foundation in this new environment
and the benefit of diversified revenues.

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. We
believe that we can continue to successfully develop
our business and expand into new markets, in order
to enable us to continue to provide strong shareholder
returns.

OPERATIONAL REVIEW

The year was also notable for the introduction of
regulatory measures by ESMA in August 2018. Although
we saw a marked reduction in Group revenue in the
second half of the year attributable to ESMA regulation,
we welcomed the new regulatory framework, as it is
aimed at ensuring a level playing field across industry
providers and increased transparency and fairer

In order to continue to grow, it is essential to recruit
and retain high quality customers in new and existing
territories. Plus500 therefore continues to invest in
broadening and enhancing its brand awareness and
diversifying its customer base internationally, both
inside and outside the EEA. The Company is currently
exploring a number of opportunities to further extend

Plus500 Ltd. 2018 Annual Report
its market reach to new territories, which the Board
believes could be a major driver for future growth and
further diversification of revenues.

77% of the Group's 2018 total revenues (2017: 75%),
with 73% of all customer trades executed on a mobile
device.

The trading platform continues to be diversified across
an increasing range of financial instruments, in line with
our customers' trading interests. During 2018 various
instrument categories were in the headlines and the
Company broadened its offering accordingly with
relative ease thanks to our innovative technology.

During the year, the Company also improved the
scalability of the trading platform infrastructure and
its capacity to deal with sudden surges in demand and
a growing number of customers and simultaneous
transactions.

Our successful partnerships as official main sponsors
of Club Atlético de Madrid and the Plus500 Brumbies
continued to attract interest and raise our brand
awareness worldwide.

During the year, the Company continued to recruit new
staff to maintain its position as an industry leader.
Ari Shotland joined as the Group's Chief Technology
Officer, having 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
Company believes represents a significant competitive
advantage.

The adoption of the Group's mobile offering (including
tablet) continued to grow and mobile represented

The Company invested in improving the level and
quality of customer support, particularly in the live chat
facility, extending native language support to the 16
languages most demanded by our customers. Overall
the trading platform is now available in 32 languages in
50 countries. In addition, Plus500 further improved its
withdrawal and deposit processes including shortening
its processing times, ensuring rapid platform availability
for new customer trading.

RISK MANAGEMENT FRAMEWORK

Plus500’s target audience is exclusively individual
customers and the platform is not available to
institutional or corporate traders. As a result, Plus500
does not have a dependency on a small number of
very large customers – the largest customer in 2018
contributed only 0.36% of total Group revenue.

Plus500 Ltd. 2018 Annual ReportPlus500 offers its customers sophisticated risk
management tools to manage their trading positions
and guarantees all of its customers, including those
who have elected and qualified for Elective Professional
Clients ("EPCs"), cannot lose more than their account
balance at no additional cost – this has been true since
the formation of the Company and has been a key
commercial and cultural advantage over the years.

The Company employs a combination of real-time
monitoring technology, predefined limits and internal
offsetting techniques across its hundreds of thousands
of customers to ensure risk is effectively managed- full
details are set out in the Risk Management Framework
on page 38.

In the Company’s Preliminary Results announcement
issued on 12 February 2019, we provided additional
disclosure on the components of the reported
revenue for the 2017 and 2018 financial years. Due
to unusual market circumstances, particularly in the
cryptocurrency asset type, revenue was negatively
impacted by strong customer trading performance in
2017 and positively impacted by weak customer trading
performance in 2018.

RESEARCH AND DEVELOPMENT

Research and Development remains a priority for the
Company, as it is imperative to maintain its
competitive advantage and to drive new products
and platform enhancements. The fact that the trading
platform has been developed in-house provides Plus500
with a clear competitive advantage. This structure
contributed to the smooth implementation of ESMA’s
new measures, the flow of EPCs, and expedited reactive
product development in line with market trends.

Plus500 remains the industry leader in mobile and
retains the highest rated app in its sector in both Apple’s
AppStore and Google’s Play Store. This will continue to
be an area of concentration, as the Company seeks to
protect this important advantage.

The Company is also constantly working on further
developments, which are expected to reduce churn and
enhance customer value; this is increasingly important
as regulation changes the industry.

OUTLOOK

Plus500 is well positioned to capitalise on the global
market opportunity in the financial trading industry,
building on its success to date. The Company continues
to work on a number of initiatives in order to attract and
retain valuable customers. The Company’s success to
date has been built on its technological leadership and
its unified omni-channel trading platform, along with its
popular and intuitive mobile offering. Ten years on from
its formation, Plus500’s technology edge remains a
significant competitive advantage.

The trading platform has evolved over the years, while
retaining the ease of use that has attracted the vast
majority of customers. The proprietary infrastructure
means that enhancements can be designed, tested
and implemented very rapidly. Future upgrades to the
platform are planned and will continue to enhance the
overall customer experience and improve customer
satisfaction and retention.

Over the last few years, the Group has sought to
broaden and de-risk its operations and its geographic
revenues by successfully acquiring licences in
addition to its initial UK licence, including in Australia,
Cyprus, Israel, New Zealand, Singapore and South
Africa. Plus500 is continuing to pursue opportunities
to expand its footprint and is actively working on
gaining additional licences which will further diversify
its revenue and provide significant opportunities for
growth. With the recent regulatory changes designed to
raise standards across the industry, Plus500 believes
these changes create both a barrier to entry and a
disincentive for some current players.

The Group has now adjusted to the new industry
regulations. New customer flow remains at levels well
above all major competitors in the industry; ARPU is
growing as a result of the targeting of valuable
customers; the proportion of EEA region revenue from
EPCs continues to grow; customer retention metrics
are improving and customer tenure is increasing,
supporting lifetime values; the proportion of Group
revenue from outside the EEA region continues to
rise as Plus500 makes good progress in Australia,
Singapore and beyond, and the Company is seeking
to expand its global footprint to further diversify its
revenue base.

Plus500 Ltd. 2018 Annual ReportFollowing our latest assessment of the ESMA
regulatory measures of August 2018, on 12 February
2019 we announced that this year's revenues and
profits were expected to be lower than the existing
market expectations, although the long-term impact
of the ESMA measures is expected to be partially
mitigated by increased deposit levels across this
customer segment and falling churn rates.

Underpinned by technology, and given its scale,
its culture of compliance and its commitment to
outstanding customer service, Plus500 is set to
benefit over the medium to long-term from the stricter
regulatory oversight, and to generate growing and
increasingly sustainable returns over time.

Asaf Elimelech
Chief Executive Officer
12 April 2019

Plus500 Ltd. 2018 Annual ReportOUR STRATEGY

By focusing on our core strategic pillars we seek to achieve our goal of being the leading global listed CFD provider

Strategic Objectives

2018 Performance

Priorities

Maintain leadership
in innovation

•

Introduction of new features and redesigns to the trading platform to
enhance customer experience

• Developed innovative financial instruments
• The Group’s technology edge enabled it to comply quickly and efficiently with
recent regulatory changes, including MiFID II, GDPR and ESMA intervention
measures

Grow our customer base in
established markets and
extend market leadership

Increased its leading position and international brand recognition

•
• Extended and enhanced our 24/7 live chat

KPIs

•

Increase in customer registration rates introduced

• Aim to be among the first to launch attractive new

during the period

instruments, responding rapidly to news flow, such

Immediate release of new instruments in

as high profile, newly listed equities or fluctuating

accordance with market trends

currencies

• Number 1 ranking among CFD providers for mobile

• Further developing the trading platform, launching

app in Apple AppStore and Google Play, and in

various tools to provide more in-depth analysis for

number of downloads

our customers, improving satisfaction levels,

• Over 77% of revenues from mobile devices (2017:

enhancing customers experience and reducing

75%)

churn

•

134,237 New Customers (2017: 246,946)

304,616 Active Customers (2017: 317,175)

• ARPU: $2,365 (2017: $1,379)

• AUAC9: $934 (2017: $474)

• Number 1 CFD provider in the UK, Germany and Spain

(according to Investment Trends reports)

• Reduced response times in customer support

channels

•

Increase in customer satisfaction and retention

• Continue to invest in marketing scale and abilities

to ensure that it remains a key differentiator and

attracts new valuable customers, while increasing

our return on investment and improving retention

rates

• Continue to increase brand awareness in

measurable, innovative, cost-effective ways to

attract new and valuable customers

• Further invest in customer support measures to

increase overall customer satisfaction

Strengthen and expand our
geographical reach into
new regions

• Launched its operation in Singapore, entering a significant market for our
product, increasing revenue diversification and reducing specific location
regulatory risk

•

Increased revenue diversification between the EEA

and non-EEA territories

•

Extend the global footprint and to continue to

diversify revenues through growth in current

territories and the addition of new operating

licences

9 Average User Acquisition Cost

Plus500 Ltd. 2018 Annual ReportStrategic Objectives

2018 Performance

KPIs

Priorities

•

Introduction of new features and redesigns to the trading platform to

enhance customer experience

Maintain leadership

• Developed innovative financial instruments

in innovation

• The Group’s technology edge enabled it to comply quickly and efficiently with

recent regulatory changes, including MiFID II, GDPR and ESMA intervention

measures

Grow our customer base in

established markets and

extend market leadership

•

Increased its leading position and international brand recognition

• Extended and enhanced our 24/7 live chat

•

Increase in customer registration rates introduced
during the period
Immediate release of new instruments in
accordance with market trends

• Number 1 ranking among CFD providers for mobile
app in Apple AppStore and Google Play, and in
number of downloads

• Over 77% of revenues from mobile devices (2017:

75%)

• Aim to be among the first to launch attractive new

instruments, responding rapidly to news flow, such
as high profile, newly listed equities or fluctuating
currencies

• Further developing the trading platform, launching
various tools to provide more in-depth analysis for
our customers, improving satisfaction levels,
enhancing customers experience and reducing
churn

134,237 New Customers (2017: 246,946)
304,616 Active Customers (2017: 317,175)

•
•
• ARPU: $2,365 (2017: $1,379)
• AUAC9: $934 (2017: $474)
• Number 1 CFD provider in the UK, Germany and Spain

(according to Investment Trends reports)

• Reduced response times in customer support

channels
Increase in customer satisfaction and retention

•

• Continue to invest in marketing scale and abilities
to ensure that it remains a key differentiator and
attracts new valuable customers, while increasing
our return on investment and improving retention
rates

• Continue to increase brand awareness in

measurable, innovative, cost-effective ways to
attract new and valuable customers

• Further invest in customer support measures to

increase overall customer satisfaction

Strengthen and expand our

• Launched its operation in Singapore, entering a significant market for our

geographical reach into

product, increasing revenue diversification and reducing specific location

new regions

regulatory risk

•

Increased revenue diversification between the EEA
and non-EEA territories

•

Extend the global footprint and to continue to
diversify revenues through growth in current
territories and the addition of new operating
licences

Plus500 Ltd. 2018 Annual ReportOUR BUSINESS MODEL

Our robust, agile, lean and scalable business
model generates operating leverage to create
value for our stakeholders

HOW WE CREATE VALUE

Financial Capital

Public Sector

Human Capital

The Company maintains a

healthy debt-free balance

sheet and a lean cost

structure business model

Governmental and
regulatory activity affects
the environment within
which Plus500 operates

The success of Plus500 depends
on the people who work for it and
their innate abilities: the human capital
embodied in each of its employees

SHAREHOLDERS
AND INVESTORS

Shareholders own
the Company and the
Company in return is
tasked with delivering
the best return on their
investment

REGULATORS

EMPLOYEES

Regulators play a
central role in shaping
our industry and
building constructive
relationships here is key

Plus500 is built and based on
the values and abilities of its
employees

Recruiting talented people
Experienced management, skilled
employees with deep understanding
of the business.

Read more on page 30

Flexible, scalable business structure
Ability to adjust to the changing
environment as a result of our lean
cost structure and proprietary
technology. The Company does not
pay any royalties to third parties for
the use of the trading platform by its
customers and can therefore maintain
high margins and profitability levels

No.1 CFD provider
in the UK10,
Germany and Spain11

Over 50 Countries

32 Languages

7 locations
worldwide

10 By total number of client relationships, Investment Trends 2018 UK Leverage Trading Report

11 By total number of client relationships, Investment Trends 2018 Germany & Spain CFD & FX Reports

Plus500 Ltd. 2018 Annual ReportWHERE WE OPERATE

Our trading platform is available in more than 50
countries in 32 languages

Operations are conducted from our seven locations
worldwide. Plus500 retains operating licences and is
regulated in the UK, Australia, Cyprus, New Zealand,
Israel, South Africa and Singapore

Plus500 Ltd. 2018 Annual ReportKEY STAKEHOLDER RELATIONSHIPS

Stakeholder

Why it is important to engage

How we engage

Customers

Employees

Regulators

Understanding customers’ needs is an integral part of providing a relevant and
up to date product offering that will attract a growing number of new valuable
customers and will assist in retaining existing customers thereby reducing churn

Automation has been very important in the Group’s success to date and will
continue to be a central theme, as the Company operates a lean and efficient
structure. The Company regards its employees as the key asset which support
and enable such a structure

Regulatory oversight is an integral part of the Group's business, as its
subsidiaries retain operating licences and are supervised by various regulators
across the globe. The Group sees great importance in reviewing and enhancing
its regulatory compliance procedures and embedding a compliance
culture within its global business, including through open and constructive
communications with relevant regulatory bodies

• Online and offline marketing channels

• Omni-channel customer-centric approach

•

24/7 customer support available in multiple

languages

•

Evaluation and feedback processes for employees

and management

• Competitive reward packages

•

Encourage employee training and development

• Non-Executive Director (Steven Baldwin) responsible

for employee engagement

• Ongoing constructive interactions with

various regulators

•

Participation in regulators' coordination groups

Public consultations issued by regulators on

relevant industry matters

Shareholders
and Investors

As a public listed company, Plus500 aims to provide fair, balanced and
understandable information to investors and shareholders. Maintaining a close
connection to its shareholders through transparent dialogue has always been
the Group’s focus. The Company continues to seek ways to strengthen the
relationship with its shareholders and investors

• Annual reports

• Regulatory News Service

• Annual General Meeting

•

Investor presentations

Investor conferences

• One-on-one meetings

Suppliers

Plus500 uses the services of various suppliers in order to provide its customers
with the best user experience. Suppliers assist with the ongoing activities
surrounding the Plus500 trading platform

Sponsorships

Plus500 is the official sponsor of the Spanish football club, Atlético de Madrid FC
and of the Australian professional rugby union team, the Plus500 Brumbies. Both
sponsorships have been highly successful, increasing brand recognition with the
Company’s current and potential global customer base within its target markets

•

engagement with suppliers allow the ongoing

review and monitoring of suppliers' performance

levels

•

Building strong partnerships with suppliers through

open two-way dialogue

• Ongoing relationship, including online and offline

marketing campaigns and the prominent feature of

Company logo on all team jerseys

• Mutually beneficial relationship enhancing

all brands

Plus500 Ltd. 2018 Annual ReportCustomers

up to date product offering that will attract a growing number of new valuable

Understanding customers’ needs is an integral part of providing a relevant and

customers and will assist in retaining existing customers thereby reducing churn

Automation has been very important in the Group’s success to date and will

continue to be a central theme, as the Company operates a lean and efficient

structure. The Company regards its employees as the key asset which support

and enable such a structure

Regulatory oversight is an integral part of the Group's business, as its

subsidiaries retain operating licences and are supervised by various regulators

across the globe. The Group sees great importance in reviewing and enhancing

its regulatory compliance procedures and embedding a compliance

culture within its global business, including through open and constructive

communications with relevant regulatory bodies

Employees

Regulators

Shareholders

and Investors

Stakeholder

Why it is important to engage

How we engage

• Online and offline marketing channels
• Omni-channel customer-centric approach
•

24/7 customer support available in multiple
languages

•

Evaluation and feedback processes for employees
and management

• Competitive reward packages
•
Encourage employee training and development
• Non-Executive Director (Steven Baldwin) responsible

for employee engagement

• Ongoing constructive interactions with

•
•

various regulators
Participation in regulators' coordination groups
Public consultations issued by regulators on
relevant industry matters

As a public listed company, Plus500 aims to provide fair, balanced and

understandable information to investors and shareholders. Maintaining a close

connection to its shareholders through transparent dialogue has always been

the Group’s focus. The Company continues to seek ways to strengthen the

relationship with its shareholders and investors

• Annual reports
• Regulatory News Service
• Annual General Meeting
Investor presentations
•
•
Investor conferences
• One-on-one meetings

Suppliers

with the best user experience. Suppliers assist with the ongoing activities

Plus500 uses the services of various suppliers in order to provide its customers

surrounding the Plus500 trading platform

Sponsorships

Plus500 is the official sponsor of the Spanish football club, Atlético de Madrid FC

and of the Australian professional rugby union team, the Plus500 Brumbies. Both

sponsorships have been highly successful, increasing brand recognition with the

Company’s current and potential global customer base within its target markets

•

engagement with suppliers allow the ongoing
review and monitoring of suppliers' performance
levels
Building strong partnerships with suppliers through
open two-way dialogue

• Ongoing relationship, including online and offline

marketing campaigns and the prominent feature of
Company logo on all team jerseys

• Mutually beneficial relationship enhancing

all brands

Plus500 Ltd. 2018 Annual ReportKEY PERFORMANCE INDICATORS

The Board monitors the Company's performance
against its objectives, and the financial performance of
its operations through a number of key performance
indicators (“KPIs”) regularly. In particular, these KPIs are
used to benchmark revenue generation and operating
costs, and to ensure the ongoing and improving
effectiveness of the Company's marketing budget to
maximise efficiency and returns on investment. The
following charts set out the Group’s KPIs, which are
following the industry's common practice.

NUMBER OF NEW CUSTOMERS

'New Customers’ are customers who deposited real
money into their own trading account for the first time
ever in the relevant financial period. This is used as a
consistent and relevant measure to track the number
of new customers the Group is attracting on a year-
on-year basis. It is important in the overall strategy for
the Group to attract new valuable customers, whilst
engaging and retaining existing customers.

NUMBER OF ACTIVE CUSTOMERS

‘Active Customers' are customers who made at least
one trade using real money on the trading platform in
the relevant period. This measure assists in reflecting
the level of customer activity within the trading platform
and is indicative of the degree of customer satisfaction.
It is important that the Group attracts and retains active
trading customers to continue deliver sustainable
revenue and profits.

350,000

300,000

250,000

200,000

150,000

100,000

50,000

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

2016

2017

2018

2016

2017

2018

Plus500 Ltd. 2018 Annual ReportAVERAGE REVENUE PER USER (ARPU)

Average Revenue per User is calculated by dividing
the total trading revenue by the number of Active
Customers in the relevant financial period. This
measure is only indicative of how the value of the
average customer moves over time, as it is affected
by other factors such as extreme periods of customer
acquisition; periods of low or high volatility in financial
markets; and customer trading performance.

AVERAGE USER ACQUISITION COST (AUAC)

Average User Acquisition Cost is used to show the
costs of attracting a new customer to use the trading
platform. This is calculated by dividing the total
marketing expenses by the number of new customers
in the relevant financial period. Along with ARPU, the
direction of movement here indicates the level of return
on marketing investment. The Company feels it is
important to manage the average user acquisition cost
to ensure a balanced spend on customer retention and
acquisition. The Group overlays this with a series
of retention and customer satisfaction initiatives,
to reduce churn and increase the lifetime value of
customers.

($)

2,500

2,000

1,500

1,000

500

($)

1,400

1,200

1,000

800

600

400

200

2016

2017

2018

2016

2017

2018

Plus500 Ltd. 2018 Annual ReportOUR TECHNOLOGY

THE TRADING PLATFORM

The trading platform has been designed to be intuitive
and user-friendly, providing customers with a simple
and consistent interface across a wide variety of
devices, including mobile, tablet. web and PC. This
approach ensures that customers are able to enjoy
a multi-channel experience, allowing them full
accessibility to trade the financial instruments which
are of interest to them, across all formats and through
a single customer account; this offers the customer a
familiar interface, greatly reducing the learning curve
when switching between different devices.

DEMO ACCOUNT

The Group offers potential customers the opportunity
to operate a free demo account for an unlimited period
of time. The demo account fully imitates the real
trading experience, providing customers with access
to all financial instruments, trading tools and features
and ensures that customers have an opportunity to
familiarise themselves with the features of the trading
platform and to fully understand the product before
they commence trading using a real money account.
The Group also allows customers to open real money
accounts with relatively small deposits, when compared

to many of its primary competitors, which allows new
customers to only have to commit relatively small
amount at the initial stage.

CUSTOMER INTERFACE AND BACK-END TO
THE TRADING PLATFORM

The trading platform operates a simple and consistent,
but highly localised, user interface across a number of
desktop and mobile devices, available in more than 50
countries and in 32 languages. It has been designed
to be as intuitive and as user-friendly as possible and
provides customers with real-time prices, allowing
users to continuously monitor their open positions
and trading activity, with immediate access to trade
execution across a multitude of order types.

CONTINUED DEVELOPMENT OF THE
TRADING PLATFORM

The trading platform continues to evolve in order to
further improve systems scalability for meeting the
growing demands of the Group’s active customer base
and the increased customer activity, thus creating an
even more robust infrastructure which can support
substantial volumes. For example, the Group rapidly
released new interfaces for users following the

Plus500 Ltd. 2018 Annual Reportlaunches of Apple’s operating systems updates. The
Android version has also been updated and has seen
a step up in its usability. The Group is constantly
updating and introducing new financial instruments
to its supported portfolio to meet customer demand
and asset trends across the geographies in which its
offering is available.

The industry-wide trend for trading CFDs on
smartphones and tablets continues to gather pace.
The Group’s mobile platforms for both smartphones
and tablets now account for more than 77 per cent
of revenues. The Group’s mobile app is ranked the
highest amongst its peers, with an average rating of

between 4.2 and 4.2 respectively, out of 5 on Google’s
Play Store and Apple’s AppStore as of 31 March 2019.
It has also received considerably more reviews than
those provided to the Group’s competitors. The success
of the Group has been supported by maintaining a
tight and flexible cost structure. The high degree of
operating leverage within the business, driven by the
efficiency and automation of the trading platform and
the supporting elements, enables the Group to generate
a relatively high average revenue per employee, whilst
maintaining a relatively low average cost per employee;
these are metrics which the Board believes compare
favourably to some of the Group’s primary competitors.

Plus500 Ltd. 2018 Annual ReportOUR MARKETS

CFDs are highly flexible products, traded internationally,
which can be based on a wide range of underlying
financial instruments. The growth of this industry
over recent years has been aided by a number of
factors: increasing awareness of its existence through
online and social media channels; a growing desire by
individuals to control their finances along with changes
in financial regulation providing greater freedoms;
the ongoing growth in internet usage along with the
explosion in the use of mobile devices; the development
of intuitive yet highly advanced online trading platforms.
Together these have enabled individual customers to
trade in an increasingly wide variety of financial assets
and instruments that were previously inaccessible.
Within the broader industry, the Group is currently
focused solely on the provision of CFDs.

GLOBAL OPERATIONS

Our seven offices are located in Europe, the Middle East,
Australia and Asia and provide services to customers all
around the world. Our worldwide operations enable us
to provide our customers with a best-in-class product
and to expand our offering to potential new customers
within additional territories, while operating within the
local regulatory regimes.

REGULATION

(ASIC), in New Zealand by the Financial Market
Authority (FMA) and in South Africa by the Financial
Sector Conduct Authority (FSCA);
Plus500IL Ltd is authorised in Israel by the Israeli
Securities Authority (ISA); and
Plus500SG Pte Ltd is authorised in Singapore by the
Monetary Authority of Singapore (MAS).

•

The Group believes that regulators around the globe
continue to increase scrutiny and standards in the retail
leveraged trading industry. In particular, the regulatory
environment continues to evolve in many of the Group’s
European markets and in other parts of the globe.

As a result of a tightening global regulatory environment,
the Company believes there will be a greater need for
efficiency and automation within the business models of
industry participants and that the scale of the Group and
its accepted technological leadership positions it well to
benefit from these trends.

BREXIT

The Company believes it is well prepared for the various
UK Brexit scenarios, given its separate EU licence in
Cyprus, through which it can continue to operate in other
European jurisdictions in line with applicable regulatory
requirements.

The Group is regulated in the EEA, Australia, South
Africa, Israel, New Zealand and Singapore and its
services are also available in certain other jurisdictions
across Asia, the Middle East and elsewhere. The Group
operates through five subsidiaries which have been
granted licences by regulators:
•

Plus500UK Ltd is authorised in the United Kingdom
by the Financial Conduct Authority (FCA) and has
obtained “passports” allowing it to offer its services
across the EEA;
Plus500CY Ltd is authorised in Cyprus by the
Cyprus Securities and Exchange Commission
(CySEC) and has similarly obtained “passports”
allowing it to offer its services across the EEA;
Plus500AU Pty Ltd is authorised in Australia by the
Australian Securities and Investments Commission

•

Plus500 Ltd. 2018 Annual Report33

Plus500 Ltd. 2018 Annual ReportFINANCIAL REVIEW

" The combination of the Group’s inherent
operational leverage together with
strong KPIs resulted in a record financial
performance. This has enabled us to
provide significant shareholder returns,
whilst continuing to invest in the future
growth and diversification of the business
through current and new verticals. "
Elad Even-Chen
Chief Financial Officer

INTRODUCTION

Financially, 2018 was a very strong year for Plus500. The
combination of the Group’s inherent operational leverage
together with strong KPIs resulted in a record financial
performance. This has enabled us to provide significant
shareholder returns, whilst continuing to invest in the
future growth and diversification of the business through
current and new verticals - and at the same time remain
debt free with 98% conversion of operating profit to cash
flow (2017: 108%).

Our corporate structure encourages streamlined
systems and efficiency across the Group enabling
us to form a lean and agile operating structure; this,
in turn, enables us to efficiently and quickly adapt to
ongoing changes to our industry and business, thereby
enhancing our overall performance.

REVENUE

The Group delivered record revenue and profitability
in the year. Revenue was up by 65% to $720.4 million
(2017: $437.2 million), with growth across all key
geographies. This step-change in the Company’s
financial performance included an exceptional first quarter
with revenues of $297.3 million (more than triple Q1 2017),
following the record New Customer acquisition at the
end of 2017.

In the first half of 2018, revenue was 147% compared
to the same period in the prior year. The Company
also delivered a solid second half, 2.5% ahead of the
prior year. Although the ESMA measures in August did
impact the Group’s revenue in the EEA region, 33% of
the Group’s FY 2018 revenue was delivered outside the
EEA, up from 28% in 2017, evidence of the Company’s
move to further diversify its revenue base. Within the
EEA, 61% of the second half revenues were generated
from Elective Professional Customers, who made up 5%
of Active Customers in the period.

We had an outstanding growth in Australian domiciled
revenue, as they saw an increase of approximately four
times year on year. UK revenue grew as well by 47% as
a result of increased brand recognition and marketing
success. In the EEA (excluding UK), revenue increased
55% to $384.7 million (2017: $247.8 million).

EBITDA

The Company delivered a significant increase of 95% in
EBITDA to $506.0 million in 2018 (2017: $259.2 million),
with EBITDA margins increasing to an exceptional
70.2% in 2018 (2017: 59.3%). Net profit for 2018
increased 90% to $379.0 million (2017: $199.7 million).
Earnings per share were $3.33 (2017: $1.75).

Plus500 Ltd. 2018 Annual ReportSELLING, GENERAL AND ADMINISTRATIVE
EXPENSES

The Company continued to keep costs under control.
Non-marketing and non-processing costs were up by
55%, relative to Group revenue up by 65% in comparison
to the previous year. Plus500 continued to invest in
disciplined marketing, with spend up by 7% to $125.4
million (2017: $117 million).

Selling, general and administrative expenses increased
by 20% to $215.1 million (2017: $178.7 million), with
the majority (68%) represented by advertising and
marketing costs and processing costs. The remaining
costs (32%) also included payroll and related expenses,
variable bonuses and Share Appreciation Rights and
one-off costs for legal, professional and regulatory fees
relating to the move to the Main Market.

FINANCIAL EXPENSES

In 2018, the Company’s financial expenses amounted
to a net $2.3 million (2017: $5.1 million), the majority
arising from foreign exchange and translation
differences. A significant proportion of the Company’s
cash is held in US dollars in order to provide a natural
hedge to reduce the impact of currency movements on
financial expenses.

REVENUE

720.4M

437.2M

EBITDA

506.0M

259.2M

NET PROFIT

379.0M

199.7M

TOTAL DIVIDEND
PER SHARE

1.9977

1.6867

8
1
0
2

7
1
0
2

8
1
0
2

7
1
0
2

8
1
0
2

7
1
0
2

8
1
0
2

7
1
0
2

Plus500 Ltd. 2018 Annual ReportBALANCE SHEET

Plus500’s total assets in 2018 increased 23% to $332.9
million (2017: $271.6 million); equity was $280.7 million
(2017: $225.9 million), representing approximately 84%
of the total shareholders’ equity and liabilities on the
balance sheet. Plus500’s business model continued to
be highly cash-generative in 2018, with 98% conversion
of operating profit to cash flow (2017: 108%). Earnings
from customer trades are recognised in cash on the
Company’s balance sheet as customers’ trading activity
occurs. In addition, the Company requires relatively low
levels of capital expenditure. The combination of these
features mean that a high proportion of net income is
rapidly converted into cash.

In 2018 the Company generated $495.0 million of cash
from operations (2017: $278.7 million), resulting in cash
and cash equivalent balances of $315.3 million at 31
December 2018 (31 December 2017: $241.9 million).
Cash balances increased despite the Company's
significantly higher dividend distribution, amounting
to the payment of $321.9 million in 2018 compared to
$102.3 million in 2017.

All amounts stated exclude client funds which are held
in segregated accounts and are subject to annual audit
and certification, in line with global best practices. Total
customer deposits in the year were up 29% at over $1.3
billion (2017: $1 billion). The amount of net customer
equity in 2018 was $107.2 million (2017: $162 million).

PRESENTATION OF CURRENCIES

The Consolidated Financial Statements are presented
in US dollars, which is the Company’s functional and
presentation currency. Foreign currency transactions
and balances in currencies different from the US dollar
are translated into the US dollar using the exchange
rates prevailing on the dates of the transactions or at
the statement of financial position dates.

SHAREHOLDERS' RETURN

The Board considers the Group’s dividend policy
annually, including the optimal balance between
allocating surplus funds to the payment of ordinary and
special dividends or share buybacks. The Company's
core policy is to pay out 60% of retained profits in each
financial year as dividends to shareholders. In addition,

the Board has undertaken buybacks in the past and
has the power to implement them at short notice. It will
continue to consider buybacks as a means of returning
capital, taking into account market conditions, share
price, trading volume and other factors.

In October 2018 the Board approved a programme
to buyback an initial amount of $10 million of the
Company’s Ordinary Shares in accordance with the
authority granted at the Company’s AGM. Subsequently,
the Company bought back 130,963 Ordinary Shares,
or 0.1% of its capital, between 5 November and 17
December 2018, for an aggregate purchase price of
$2.3 million at an average share price of £13.58 . The
Company has since purchased a further 410,500
Ordinary Shares in accordance with this programme
during the year 2019 up to the signing date of the
Annual Report, for an aggregate purchase price of $5.5
million, and at an average share price of £11.03.

The Board declared a final dividend for the year ended
31 December 2018 of $0.6191 per share (2017: $0.8129
per share), with an ex-dividend date of 21 February
2019, a record date of 22 February 2019 and a payment
date of 9 July 2019. This makes a total dividend for
the year of $1.9977 per share (total dividend for 2017:
$1.6867 per share) an increase of 18% from previous
year.

The resulting total distribution to shareholders for
the full year amounts to a pay-out of $229.7 million
(2017: $199.6 million) in line with the Company’s stated
dividend policy, with the interim and final dividends split in
accordance with half yearly profits.

The Company maintains its core 60% dividend pay-out
ratio. Beyond this, 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 and growth opportunities and additional
returns to shareholders.

Elad Even-Chen
Chief Financial Officer
12 April 2019

Plus500 Ltd. 2018 Annual Report
The table below shows the consolidated audited results of the two financial years ended 31 December 2018:

Revenue

EBITDA

Profit before Tax

Net Assets

2018

$720.4m

$506.0m

$503.0m

$280.7m

2017

$437.2m

$259.2m

$253.4m

$225.9m

The table below shows the consolidated audited cash flows of the Group for the two financial years ended
31 December 2018:

Net cash provided by operating activities

Net cash used in investing activities

2018

$400.4m

$(0.7)m

2017

$212.0m

$(1.0)m

Net cash used in financing activities

$(324.2)m

$(109.8)m

Plus500 Ltd. 2018 Annual ReportRISK MANAGEMENT FRAMEWORK

The management and control of risks within the Company
is embedded within day-to-day operating procedures.
The Company has developed a comprehensive risk
mitigation plan, to control exposure and provide secure
solutions. These procedures comprise a range of
measures including corporate policies, operating rules,
systematic reporting, external audits, internal audits,
self-assessment and continuous monitoring by the
Regulatory & Risk Committee, the Board and the
executive management team.

RISK GOVERNANCE FRAMEWORK

The financial, market and regulatory environments in
which Plus500 operates inherently expose it to a number
of strategic, financial and operational risks. The Company
recognises the importance of understanding and
managing these risks and has determined levels of risk
that it believes are acceptable. Policies and procedures
have been developed within a robust risk management
framework that attempts to minimise various risks,
including market risk.

Plus500 monitors trading levels and exposure limits
(by customer, instrument and as a total), with the ability
to cap trades or, in extremis, to hedge once pre-agreed
limits are reached. Credit risk is limited by having all
customers pre-fund their account and offering a margin
close-out policy to minimise unfunded customer losses.
In addition, Plus500 does not offer CFDs in less liquid
and less popular instruments, such as small cap stocks.

The lowest and highest daily financial performance in
2018, as to the closed positions, were a loss of $2.0
million and profit of $19.4 million, respectively. In 2018,
92% of the days were profitable. The average daily
revenue in 2018 was just under $2 million.

GOVERNANCE

The role of the Board
The Board is ultimately responsible for the risk strategy
and has developed a Risk Governance Framework.
The Board believes the robust, technology-driven
risk management systems of the Group are a key
competitive strength and an important factor in its
revenue generation. The implementation of the risk

strategy is delegated to management under the more
detailed supervision of the Regulatory & Risk Committee.

The role of the Regulatory & Risk Committee
The Regulatory & Risk Committee receives updates
from management on risk, compliance and regulatory
issues and reviews the related internal systems. The
Regulatory & Risk Committee has responsibility for
reviewing relationships with the regulatory authorities
and reviewing the adequacy and quality of the Group’s
systems and procedures for compliance with regulatory
requirements where the Group is regulated and in
other jurisdictions where the Group has a significant
market presence. The Regulatory & Risk Committee
also has responsibility for reviewing the Company’s
most significant risks to the achievement of strategic
objectives, reviewing the Company’s risk policy and
ensuring that its ethical standards are being adhered to.

LINES OF DEFENCE

Within the Risk Governance Framework, three lines of
defence are created through:
• Front-line risk management processes
• Regulatory compliance
•

Independent assurance provided by internal audit

First line of defence
The first line of defence consists of front-line risk
management processes operated by management within
the day-to-day trading activities of the Group’s businesses.

There are three elements to the management of day-to-
day trading risk.

a. Financial Risk Limitation Policies

The Group has developed proprietary risk
management systems that incorporate various real-
time financial risk limits.

b. Trading Limits

i. Customer limits

Monetary limits are placed on a customer’s: (a)
exposure to any single instrument; (b) aggregate
open positions as a whole; and (c) aggregate

Plus500 Ltd. 2018 Annual Report

deposit amounts. Customer limits are determined
with reference to, amongst other things, a
customer’s credit score, trading history, location
and other due diligence results.

ii. Group limits

Monetary limits are also placed on the Group’s
exposure to individual instruments. These limits
are set according to, amongst other things, the
asset class, the size, the liquidity and the beta
(volatility) of the underlying instrument. In each
case, when these limits are reached the trading
platform automatically ceases to accept trades
from the relevant individual or on the underlying
instrument until such time as exposure levels fall
below the relevant threshold(s) or such thresholds
are reviewed and amended.

Pursuant to the Companies Law, the internal auditor
may be an employee of the Company but may not
be an interested party or office holder, or a relative of
any interested party or office holder and may not be
a member of the Company’s external auditor or its
representative.

The Company’s internal auditor is Brightman Almagor
Zohar & Co. (Deloitte Israel) a member firm of Deloitte
Touche Tohmatsu Limited.

Compliance with applicable regulations is also provided
by local advisors in the main territories that the Group
operates in, and advice on the regulatory regime is
considered when planning new licence applications.

INTERNAL CONTROLS

c. Hedging

To further manage risk the Group has a hedging
policy in place which would, in extremis, mitigate
exposure of the Group as a whole beyond certain
thresholds.

Second line of defence
A strong Compliance function is in place in all territories
where the Group operates. The Board continues to
develop the Group’s compliance policies in line with
each of the regulatory environments in which the
Group’s offering is available.

Third line of defence
The third line of defence, independent assurance,
is provided by internal audit.

The role of the internal auditor is to examine, among
other things, the Company’s compliance with applicable
law and orderly business procedures. In accordance
with the Israeli Companies Law 5759-1999 (the
"Companies Law") the internal auditor is appointed
by the Board following recommendation by the Audit
Committee, which also oversees the internal auditor’s
work plan, monitors its activities and assesses its
performance.

The Board has overall responsibility for the Company’s
systems of internal control and for monitoring their
effectiveness. Although no system of internal control
can provide absolute assurance against material
misstatement or loss, the Company’s systems are
designed to provide the directors with reasonable
assurance that issues are identified on a timely basis
and dealt with appropriately.

The Company’s key internal financial control procedures
include:
• a review by the Board of actual results compared

with budget and forecasts;

• reviews by the Board of year end forecasts;
• the establishment of procedures for acquisitions,

capital expenditure and expenditure incurred in the
ordinary course of business;

• the appraisal and approval of proposed acquisitions
outside of the ordinary course of business by the
Board;

• the detailed budgeting and monitoring of costs
incurred on the development of new products;

• a review of day to day management controls and test

of operating effectiveness of key controls;

• an annual review of the system of internal controls;
• the reporting to, and review by, the Board of changes
in legislation, regulatory requirements and practices
within the sector, accounting and regulatory and legal
developments pertinent to the Company; and

• the appointment of experienced and suitably qualified
staff to take responsibility for key business functions to
ensure maintenance of high standards of performance.

Plus500 Ltd. 2018 Annual Report

The Board has reviewed the effectiveness of the Group’s
system of internal controls. As a result of this review, the
Board considers that the measures that have been or
are planned to be implemented, complement the Group's
risk management framework and are appropriate to the
Group’s circumstances.

PRINCIPAL RISKS AND UNCERTAINTIES

The Board has undertaken a robust assessment of
the principal risks facing the Group and how these
risks are managed or mitigated in accordance with
provision C.2.1 of the Financial Reporting Council’s UK
Corporate Governance Code (the “Code”). Significant
and emerging risks are considered those that would
threaten its business model, future performance, solvency
or liquidity. These are outlined below and details of
financial risks and their management are set out in note
21 to the Consolidated Financial Statements.

The annual and ongoing elements of the Group’s risk
management process are controlled by an established
risk identification, assessment and monitoring process.

The 2018 risk assessment process identified certain risks
and was narrowed down into major risks monitored by
the executive management and the Regulatory & Risk
Committee, then further consolidated into seven principal
risks closely monitored by the Board.

The Risk Factors section included within the Prospectus is
available at:
https://www.plus500.com/Docs/Plus500UK/Prospectus.pdf.

Business & Strategic Risks

Risk

Description

Management & Mitigation

The risk that changes in the regulatory

frameworks in which the Group currently

operates could adversely affect its

performance

•

Diversification of jurisdictions in which the Group offers

Regulatory changes could result in the

developments and advice from compliance functions

product offering becoming less profitable,

on actual and possible changes and offering remedial

its services

• Monitoring market and regulatory sentiment,

restrictions on the product marketing, or a

actions

ban on the product offering in one or more of

the countries in which the Group

operates

Legal and
Jurisdictional
Risk

Regulatory
Risk

Plus500 Ltd. 2018 Annual ReportFinancial Risks

Risk

Description

Management & Mitigation

The risk of a commercially adverse impact

on the business resulting from:

•

Robust governance, challenge and oversight

•

Group’s strategic decision making

policies and risk appetite and periodic reviews of such

failing to seize business opportunities or

assumptions

• Managing the Group in line with the agreed strategy,

Business
Risk

react to changes in the market. This risk

•

Developing redundancies for services provided by third

may result in damage or loss, financial

parties by having secondary providers and alert systems, as

or otherwise, to the Group as a whole.

well as automated processes to operate redundancies

•

The risk that a third-party organisation

on which the Group relies significantly

will inadequately provide or fail to deliver

•

Due diligence performed on service suppliers ahead of

outsourcing

Service level agreements in place and regular monitoring of

its outsourced activities or contractual

performance

obligations to the standard required

The risk of exposure to the market.

Market Risk

The market risk is mainly comprised of the

following factors:

•

Price movements

Foreign currency exposures

The Group manages market risks by steering/balancing

natural hedge (client positions are offsetting each other)

and the Group risk tolerance (for each financial market in

which the Group's customers trade). Market risk is mitigated

by:

•

The Group’s real time position monitoring and alert

system which allows the Group to constantly manage

•

its market exposure and adjust controls

Defining daily/weekly/monthly Group market risk

limits for each financial market or instrument

If predetermined limits are exceeded, the Group takes

appropriate actions to reduce exposure (e.g. margin

requirement change)

Plus500 Ltd. 2018 Annual ReportFinancial Risks

Risk

Description

Management & Mitigation

Credit Risk

The risk of client or counterparty failing

to fulfil contractual obligations and/or

settlements resulting in financial loss,

specifically:

•

Client credit risk:

Leveraged trading can result in client

trading losses exceeding available

funds on their account (mainly due to

sharp market movements); such losses

are absorbed by the Group (negative

balance protection has always been

offered to the Group’s clients)

•

Institutional credit risk:

The risk that financial counterparties will

not meet their obligations, risking both

client and Group's assets

•

Client Credit Risk:

The Group has a “no-credit” policy in which customers

can only fund their accounts from their own

resources. Customer can set a wide range of loss risk

mitigation tools such as alerts and stops features

•

Institutional Credit Risk:

The Group engages only with prominent, high ranked and

well-established financial institutions for the holding of its

own assets and in order to meet its regulatory obligations

to safeguard client money in segregated accounts. The

Group periodically reviews its engagements with such

financial institutions to make sure they remain within the

standard

Liquidity
Risk

The risk that there is insufficient available

liquidity to meet the financial liabilities of the

Group

The Group utilises liquidity forecasts to identify potential

risks. These forecasts incorporate the impact of all liquidity

regulations in force in each jurisdiction and other hindrances

to the free movement of liquidity around the Group. Key

issues affecting the Group’s liquidity are discussed with the

Board

Plus500 Ltd. 2018 Annual ReportOperational Risks

Risk

Description

Management & Mitigation

•

Business and regulatory sign-off of processes and

procedures to ensure business efficiency and regulatory

compliance

•

Investment in system development to improve process

automatisation

• Monitoring, quality checks and robust analysis of

The risk of enduring losses

performance to identify errors, underlying causes and

resulting from inadequate or failed

mitigation plans

internal processes due to people,

failed technology adoption and

Operational
Risk

innovation, external events (such

as natural disaster, major utilities

or infrastructure failure etc.) or

inability to attract and maintain

competent staff the Group requires

for operational purposes

Information
and Data
Security
Risk

The risk of loss of technology

services caused by network

disruption and loss of systems,

data, and failure to restore services

of a third party in a timely manner

resulting in the Group’s incapability

to offer its services

•

Centralised operations - helps monitoring and maintaining

high standards

Centralised technical operations, to ensure Group-wide

monitoring, issue handling and analysis

Unified IT strategy with focus on performance and growth

Continuous development efforts towards operational risk

framework to ensure risk recognition and timely control

Recruitment of highly competent employees

Enhanced staff training and oversight

The Group has a clear business continuity plan, ensuring

quick recovery and cover for both IT and operational aspects

(connectivity, Distributed Dos Attacks, unresponsiveness of

server etc., as well as external events have an emergency

plan and contacts in place)

Operating a multi-layered delivery, security and mitigation

solution

Continuous investment in increased functionality, scalability,

capacity and responsiveness of systems to monitor, react and

prevent cyber attacks

Continuous real-time monitoring of incoming and outgoing

network activity

Constant monitoring of systems performance and controls

Selective software design methodologies and testing regimes

A robust Group IT policy sets out strategic, stability, security and

performance standard as well as backup processes to enable

service availability in the event of failures

Plus500 Ltd. 2018 Annual ReportGOING CONCERN AND VIABILITY STATEMENT

GOING CONCERN

Having given due consideration to the nature of the
Group’s business, the Group's budget and cash flow
forecasts for the period to December 2021, taking
into account the Company’s anticipated investment
commitments and working capital requirements. The
Board considers that the Company and the Group
are going concerns and the Consolidated Financial
Statements are prepared on that basis. This treatment
reflects the reasonable expectation that the Group has
adequate resources to continue in business for the
foreseeable future and the consideration of the various
risks set out on pages 38 to 43 and the financial risks
described in note 21 to the Consolidated Financial
Statements.

revenue impacts with consideration of key risks. This
is used in conjunction with external assumptions
such as a region-by-region review of the regulatory
environment and incorporation of any anticipated
regulatory changes as outlined in the Strategic Report,
to revenue modelling, market volatility, interest rates
and industry growth which materially impact the
business. The budget is used to set targets across
the Group. The budgeting process also covers
liquidity and capital planning and, in addition to the
granular budget, a three-year outlook is prepared
using assumptions on industry growth, the effects
of regulatory change, revenue growth from strategic
initiatives and cost growth required to support
initiatives. The budget was reviewed by the Board in
December 2018 and was finally approved in February
2019.

VIABILITY STATEMENT

• Ongoing review and monitoring of risks: these have

In accordance with provision C2.2 of the Code, the
Board has considered the Group’s current financial
position and future prospects and has a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the
period of the assessment.

In reaching this conclusion, both the prospects and
viability considerations have been assessed:

Prospects
• The Group’s current financial position is outlined in

the Strategic Report (pages 18 to 19).

• The Group’s business model: despite regulatory

changes in a number of jurisdictions, the core of the
current strategy remains in place and continues to
demonstrate delivery of sufficient cash generation to
support operations.

• Assessment of prospects and assumptions:
conservative expectations of future business
prospects through delivery of the Group strategy
as presented to the Board through the budget
approval process. The annual budget approval
process consists of a detailed bottom-up process
with a 12-month outlook which involves input from
all relevant functional and regional heads. The
process includes a collection of resource assumptions
required to deliver the Group strategy and associated

been identified in the Group’s Risk Appetite
Statement, outlined in the Group’s principal risks and
uncertainties (pages 40 to 43) and monitored monthly
by management, with review and challenge from the
Regulatory & Risk Committee.

Viability
• Scenario stress testing: available liquidity and capital
adequacy are central to understanding the Group’s
viability hence stress scenarios, such as adverse market
conditions and adverse regulatory change are therefore
considered in the Group’s Individual Capital Adequacy
Assessment Process and Individual Liquidity Adequacy
Assessment documents, which are shared with our
regulators on request. The results of the stress testing
showed that, due to the robust nature of the business,
the Group would be able to withstand scenarios,
including combined scenarios, over the financial
planning period by taking management actions that
have been identified within the scenario stress tests.

The Board has considered that three years is an
appropriate period over which to provide a viability
statement as this is the longest period over which the
Board reviews the success of strategic opportunities
and this timeline is also aligned with the period over
which internal stress testing occurs. The Board has no
reason to believe that the Group will not be viable over
a longer period, but given the uncertainty involved, in

Plus500 Ltd. 2018 Annual Reportparticular of regulatory change, the Board believes this
period presents the readers of the Annual Report with a
reasonable degree of confidence.

The Group also monitors performance against pre-
defined budget expectations and risk indicators, along
with strategic progress updates, allowing management
action to be taken where required, including the
assessment of new opportunities.

Plus500 Ltd. 2018 Annual ReportCORPORATE SOCIAL RESPONSIBILITY REPORT

Plus500 is committed to operating responsibly in all aspects
of its business, including enriching the communities
where it operates and creating an inclusive, safe and
healthy workplace. Plus500 believes that Corporate
Social Responsibility (“CSR") is both its duty and an
essential part of good management. As Plus500 grows
its business it remains committed to integrating CSR
initiatives into its business, not only to enrich and
contribute to the lives of the communities in which it
works and lives, but also to create tangible value for its
employees, customers and shareholders.

VALUES

Our core values include:
• putting our customers and stakeholders in the centre
•

leading the industry while standing out and providing
an innovative self-developed high standard product
• providing a dynamic and evolving work environment
for our employees in which they can grow and develop

CULTURE

The Group’s lean cost structure enables it to engage
highly talented and motivated employees who receive
the opportunity to develop and optimise the Group’s
technology, including among others, the ongoing
developments to the trading platform. The Group
encourages and motivates its employees by rewarding
them via the Share Appreciation Rights programme and
by promoting them within the organisation. Plus500
operates in an entrepreneurial cultural environment
where employees are encouraged to develop, innovate
and brainstorm new ideas. It is this culture that creates
continuous improvements in the technology, employee
satisfaction and loyalty.

DEVELOPMENT OF EMPLOYEES AND
EMPLOYEE ENGAGEMENT

Plus500 is committed to the creation of a work
environment in which fairness, trust and individual
responsibility are valued. The Group believes that
talented and dedicated employees are our most
valuable asset and that everyone should be given an
equal opportunity to succeed. The Group’s employees
are offered rewarding careers with opportunities for

training, development and progression. The Group
is committed to equal opportunity in employment
and to creating, managing and valuing diversity in its
workforce. The Group has an Equality and Diversity
Policy with respect to hiring, promotion, compensation,
training and assignment of responsibilities, termination,
or any other aspect of the employment relationship
on age, gender orientation, marital status, physical or
mental disability.

DIVERSITY

Plus500 encourages a supportive, diverse and inclusive
culture amongst its workforce. The Group’s aim is to
ensure that all employees and job applicants are given an
equal opportunity no matter their age, disability, gender
reassignment, marriage and civil partnership, pregnancy
and maternity, race, ethnic origin, colour, nationality,
national origin, religion or belief, or sex and sexual
orientation. All employees, whether they are part-time, full-
time, or temporary, will be treated fairly and with respect.

Plus500 commits to:
•

create an environment in which individual
differences and the contributions of all team
members are recognised and valued
create a working environment that promotes dignity
and respect for every employee
not tolerate any form of intimidation, bullying, or
harassment, and to discipline those that breach the
policy

•

• make training, development, and progression

•
•

•

opportunities available to all staff
promote equality in the workplace
encourage anyone who feels they have been
subject to discrimination to raise their concerns so
corrective measures can be applied
encourage employees to treat everyone with dignity
and respect
regularly review all employment practices and
procedures so that fairness is maintained at all
times

The Equality and Diversity Policy is monitored and
reviewed annually to ensure that equality and diversity
is continually promoted in the workplace.

Plus500 Ltd. 2018 Annual ReportGender diversity

Male (%)

Female (%)

Board members

6 (86%)

Senior managers

15 (68%)

1 (14%)

7 (32%)

All employees

184 (50%)

185 (50%)

HUMAN RIGHTS & EQUAL OPPORTUNITIES

Plus500 conducts business in an ethical manner and
adheres to policies which support recognised human
rights principles.

Plus500 is committed to the creation of a work
environment in which fairness, trust and individual
responsibility are valued. The Company believes
that talented and dedicated employees are our most
valuable asset and that everyone should be given an
equal opportunity to succeed. The Group is committed
to equal opportunity in employment and to creating,
managing and valuing diversity in its workforce. The
Group has an equal opportunities policy with respect
to hiring, promotion, compensation, training and
assignment of responsibilities, termination, or any other
aspect of the employment relationship on age, gender
orientation, marital status, physical or mental disability.

According to the Israeli Extension Order for Encouragement
and Enhancement of Employment of People with
Disabilities, a company that employs more than
100 employees should have representation of 3% or
more people with disabilities within its workforce.
The Company complies with the requirements of the
Extension Order and by this creates more diversification
and equal opportunities to its different employees.

temporary), consultants, contractors, trainees, seconded
staff, homeworkers, casual workers and agency staff,
volunteers, interns, agents, sponsors, or any other
person associated with us, or any subsidiaries or their
employees, wherever located.

The policy covers:
•
•
•
•
•
•
•

bribes;
gifts, hospitality and expenses;
facilitation payments;
third party suppliers or agents;
client entertainment and benefits;
political contributions;
charitable contributions.

The prevention, detection and reporting of bribery and
other forms of corruption are the responsibility of the
Company and its individuals. All individuals are required
to avoid any activity that might lead to, or suggest,
a breach of the policy. Internal control systems and
procedures are subject to regular audits to provide
assurance that they are effective in countering bribery
and corruption.

Training on the anti-bribery and corruption policy forms
part of the introduction process for all new individuals.
All existing individuals receive regular, relevant training
on how to implement and adhere to the policy. In
addition in 2019 and beyond, all individuals will be
asked to formally confirm compliance with the policy on
an annual basis.

The Regulatory & Risk Committee reviews the
implementation of the Anti-bribery and Corruption
Policy. The Committee annually considers the policy’s
suitability, adequacy and effectiveness.

ANTI-BRIBERY AND ANTI-CORRUPTION

ENVIRONMENTAL MATTERS

Plus500 operates a zero tolerance approach to bribery
and corruption. The Company’s Anti-bribery and
Corruption Policy ensures it conducts all business in
an honest, ethical manner whilst acting professionally
and fairly with integrity in business dealings and
relationships in all jurisdictions.

The Anti-bribery and Corruption Policy apply to all
individuals working for the Company at all levels
and grades, including senior managers, officers,
directors, employees (whether permanent, fixed‐term or

The Group conducts its business using an online
platform and therefore it is an environmentally low
impact business. However, Plus500 is committed to
managing its environmental impact and is fully aware
that by considering the environment in its decision
making, particularly around technology adoption and
office selection, it can have a beneficial impact on its
performance.

Plus500 Ltd. 2018 Annual ReportSPONSORSHIPS

In January 2015 Plus500 announced a business
partnership via a sponsorship agreement with the
Spanish football club, Atlético de Madrid FC.
In June 2015 the Company announced that
it had become the main sponsor for the 2015/16
and 2016/17 seasons and in January 2017 the
partnership was renewed for 2017/18 season. In
November 2017 Plus500 extended the sponsorship
agreement entitling it to advertise and promote itself
as the main sponsor of the club for the 2018/2019,
2019/2020 and 2020/2021 seasons.

Plus500 Ltd. 2018 Annual ReportAtlético de Madrid FC is one of the most successful
clubs in Europe and is currently ranked fourth in the
UEFA rankings for club competitions.

Atlético de Madrid FC plays in La Liga, one of the
most popular leagues in the world, which is the top
professional association football division of the Spanish
football league system and the club also regularly
participates in European tournaments such as the
UEFA Champions League, the most prestigious club
competition in Europe.

Atlético de Madrid FC has won ten La Liga titles. The
club has also won the Copa del Rey on ten occasions
along with other Spanish cup competitions. It is also
one of the most successful clubs in Europe having
won the UEFA Super Cup in 2010, 2012 and 2018, and
won the UEFA Europa League in 2010, 2012 and 2018.

This partnership with Atlético de Madrid FC, one of the
most successful clubs in Europe that plays in one of the
most popular leagues in the world, is helping Plus500 to
further its strategy of increasing brand recognition and
expanding its customer base globally.

Plus500 Ltd. 2018 Annual ReportSPONSORSHIPS

In December 2016 Plus500 announced a business
partnership via a sponsorship agreement with the
Australian professional rugby union team, the Brumbies.
In November 2017, Plus500 announced it will continue
to be the Official Sponsor of the Brumbies for the 2018-
2020 seasons.

The Brumbies is an Australian professional rugby union
team based in Canberra that competes in the Super
Rugby competition and is a member of the Australian
Rugby Union.

This sponsorship complements the Group’s existing
licences in Australia New Zealand and South Africa,
all of these countries are participating in the Super
Rugby competition.

Plus500 Ltd. 2018 Annual ReportSuper Rugby is the pre-eminent professional men’s
rugby union competition in the Southern Hemisphere
and Japan featuring teams from Australia, South Africa,
New Zealand, Argentina and Japan. The Brumbies are
one of the most successful of the Australian teams,
having been the Super Rugby champions in 2001 and
2004 and won the Australian Conference Champions
in 2013, 2016 and 2017.

Together both sponsorships have been highly
successful, increasing brand recognition with the
Company’s global customer base and target markets.

Plus500 Ltd. 2018 Annual ReportPlus500 Limited

GOVERNANCE

Plus500 Ltd. 2018 Annual Report53

Plus500 Ltd. 2018 Annual ReportCHAIRMAN'S INTRODUCTION TO GOVERNANCE

Penny Judd
Chairman

Dear Shareholder,

I would like to take this opportunity to give you an
overview of the work of the Board during 2018. A key
focus was the preparation for Plus500's admission to the
premium listing on the Main Market of the London Stock
Exchange, which took place in June, and its inclusion
in the FTSE250 index in September. The preparatory
work for this included a comprehensive review and update
of the Group’s policies and procedures and provided
a chance to consider and enhance the Governance
framework. As we stated at the time, an objective of
the move to the Main Market was to give us a platform
for continued growth and an opportunity to further raise
the Group’s profile and status. However, we recognise
that with this opportunity comes a responsibility to
ensure that we develop our corporate governance
standards as we seek to apply the standards of the UK
Corporate Governance Code across all of our Board and
committee activities. This has been one of the Board’s
key priorities during the year; both before and since our
admission to the Main Market. I am pleased to report
that we have made good progress in this task.

Having made changes to the composition of the Board
during 2016 and 2017, we were able to embark on the
move to the Main Market with a settled Board. The
focus, therefore, has been on the readiness of our
policies and procedures to meet the requirements of
the UK Corporate Governance Code. With the Code

being updated during 2018, we have begun to turn
our attention to its new requirements and we will
be particularly focussing on our relationships with
Plus500’s key stakeholders during 2019.

Corporate governance has been just one of several key
themes for the Board during the year. With information
technology being critical to Plus500’s business model,
the Board has spent a lot of time on this topic. Cyber
security, and the General Data Protection Regulation
(GDPR) in particular, were areas of focus and the
Board has made key appointments in this area with
the appointment of a new Chief Technology Officer
and Data Protection Officer during the year. The Group’s
relationships with regulators in the jurisdictions in which
it operates are equally important to our ongoing success
and therefore has been a regular subject for review and
discussion during the year.

During 2018, the Board has considered the channels of
communication with its independent shareholders. The
three significant votes against resolutions presented at
our AGM in June, while relating to issues of a technical
nature, are clearly indicative of a need to ensure we
focus on the detailed guidance issued by the various
shareholder bodies and that we continue to enhance
our understanding of shareholder expectations and the
quality of our engagement with our shareholders. In

Plus500 Ltd. 2018 Annual Reportrelation to the 2018 votes we can confirm that we will
increase the transparency on audit and non-audit fee
split paid to the Company's external auditor.

I look forward to reporting on the Board’s further
progress in next year’s annual report.

Penny Judd
Chairman

There was also a significant vote against the 2019
executive remuneration at the January 2019 EGM and
this matter is covered more fully in the Remuneration
Committee report; however the Board is committed
to moving towards compliance with the Code and
considers that the 2019 remuneration arrangements
are a significant move towards compliance.

We have taken steps to increase our investor relations
presence in the UK with the addition of a senior
hire and we will continue to seek opportunities for
further engagement. On a personal note, I recognise
the importance of this and I will always welcome
opportunities for dialogue with shareholders and have
engaged with many of our significant shareholders over
the past year.

We continue to be mindful of the need to monitor our
own effectiveness as a Board and we have undertaken
an internal Board evaluation exercise during 2018,
facilitated by our Company Secretary. In 2019, we have
already initiated an externally facilitated Board review.
The following report describes the activities of the
Board and its committees during 2018 in more detail.

Plus500 Ltd. 2018 Annual Report
BOARD OF DIRECTORS

THE ROLE OF THE BOARD

The Board is responsible to shareholders for effective
direction and control of the Company which is aimed
at providing a long-term success for the Company. In
order to lead the development of the strategy of the
Company and the progress of financial performance,
the Board is provided with timely and comprehensive
information that enables it to review and monitor the
performance of the Company and to ensure it is in line
with its objectives for achieving its strategic goals.

Committee membership Key:

Nomination

Audit

Regulatory & Risk

Disclosure

Remuneration

Chairman

PENNY JUDD
CHAIRMAN

Date of appointment: June 2016
Committee membership:

Penny Judd is a Non-Executive Director, Chairman of
the Board and chairman of the Risk and Regulatory
Committee. Penny Judd is a chartered accountant with
over 30 years of experience in compliance, regulation,
corporate finance and audit.

Penny Judd was Managing Director and EMEA Head
of Compliance at Nomura International plc until June
2016. Penny Judd was also the Managing Director and
EMEA Head of Compliance at UBS investment bank
for nine years. She was a consultant to the London
Investment Banking Association (now AFME) and a
corporate finance executive in Cazenove & Co.

Penny Judd was previously the UKLA Head of Equity
Markets for six years and also worked for ten years in
KPMG as a Corporate Finance Manager and Auditor.

Penny Judd sits on the Boards of Trufin Plc, Alpha
Financial Management Consulting Plc and Team 17 Plc,
in each case as a Non-Executive Director and Chair of
Audit Committee.

Plus500 Ltd. 2018 Annual Report
ASAF ELIMELECH
CHIEF EXECUTIVE OFFICER

Date of appointment: February 2016
Committee membership:

CHARLES FAIRBAIRN
SENIOR INDEPENDENT NON-EXECUTIVE
DIRECTOR & EXTERNAL DIRECTOR
Date of appointment: July 2013
Committee membership:

Asaf Elimelech is Chief Executive Officer of the
Company. He previously served as the CEO of
Plus500AU Pty Ltd. and has worked for the Group
for the last four years. In his previous role as the
Company’s Chief Subsidiaries Officer, he was
responsible for managing the Company’s subsidiaries,
working with the senior management to ensure that the
Group, through its subsidiaries, is meeting its strategic
goals.

Prior to joining Plus500, Asaf Elimelech was a
Supervisor at PwC Israel from 2008 to 2012,
specialising in biotech and commercial audit as well
as providing tax services to clients. As part of his role
he managed several audit teams and was responsible
for the preparation of financial reports for private and
international public companies. Asaf Elimelech holds a
B.A. in Accounting and Economics from Haifa University
and is a certified accountant in Israel.

Charles Fairbairn is a Non-Executive Director, the
Senior Independent Director and Chairman of the
Audit Committee. Charles Fairbairn has held similar
positions for a number of publicly traded companies
over the past 18 years including Research Now Ltd, the
online research company of which he was a founder
investor, Statpro Group plc, providing analytics for
asset managers, and Brightview plc, an internet service
provider. Charles Fairbairn graduated from Durham
University with a BA (Hons) in Economics and then
qualified as a Chartered Accountant with Deloitte
Haskins & Sells in London. Having spent seven years
at Deloitte Haskins & Sells, he joined Pearson Plc as
Group Accountant, Group Chief Accountant and latterly
Finance Director of Pearson New Entertainment, a start-
up division. Over the following 20 years, he has held
a number of positions as finance director, executive
and non-executive director of a portfolio of companies,
helping to develop and scale growth companies from
start-ups into global companies. Charles Fairbairn is an
active investor in growth companies and reviews new
business and turnaround opportunities, exposing him
to a multitude of sectors and business models. He also
holds an Investment Management Certificate.

Plus500 Ltd. 2018 Annual ReportDANIEL KING
INDEPENDENT NON-EXECUTIVE DIRECTOR
AND EXTERNAL DIRECTOR
Date of appointment: June 2013
Committee membership:

STEVEN BALDWIN
INDEPENDENT NON-EXECUTIVE DIRECTOR

Date of appointment: June 2017
Committee membership:

Steven Baldwin is a non-executive director and
chairman of the Nomination Committee. He has an
extensive corporate finance background and held the
position of Head of European Equity Capital Markets
and Corporate Broking at Macquarie Capital until 2015
when he decided to pursue a non-executive career.

He is currently the Senior Independent Non-Executive
Director of Elegant Hotels Group plc and TruFin plc
and is also a Non-Executive Director of The Edinburgh
Investment Trust plc. Prior to joining Macquarie Capital,
Steven Baldwin was a Director at JP Morgan Cazenove
for ten years and was a Vice President of Corporate
Finance at UBS. He qualified as a Chartered Accountant
at Coopers & Lybrand.

Daniel King has over 20 years’ experience in
e-commerce technologies, data and analytics, digital
and online media and has extensive knowledge in
developing and scaling high-growth companies.

Daniel King is currently the President & COO for Profitero,
a SaaS provider of online insights and e-commerce
intelligence for retailers and brands. Previously, Daniel
King worked for UK Trade & Investment as Head of High
Growth & Emerging Markets, working with companies
and individual investors looking to set up their business
or investment in the UK. Daniel King was previously
Managing Partner of Blue Leaf Capital, a private
boutique venture capital and advisory services company
based in London. Prior to this Daniel King held managing
director roles with Compete Inc; MySupermarket.co.uk;
and Experian Hitwise, overseeing the company’s EMEA
operations and was a key member of staff that led to the
eventual acquisition of Hitwise by Experian in June 2007.

Daniel King is also a non-executive director of several
private companies and advises companies on their business
model, growth strategies, and international expansion plans.

Plus500 Ltd. 2018 Annual ReportGAL HABER
MANAGING DIRECTOR

ELAD EVEN-CHEN
GROUP CHIEF FINANCIAL OFFICER

Date of appointment: June 2013
Committee membership:

Date of appointment: July 2016
Committee membership:

Gal Haber is Managing Director of the Company.
Gal Haber has over 20 years’ experience in software
programming and business development. One of the
Company's founders, he currently holds the position of
Managing Director, having previously held the position
of Chief Executive Officer. Gal Haber led the design of
the user-friendly trading platform, which represents one
of the key competitive advantages for the business.

Elad Even-Chen is the Chief Financial Officer of the
Group, Vice President of Business Development
and Head of Investor Relations. Elad Even-Chen’s
responsibilities cover a broad range of finance,
business, corporate and strategic functions, including
managing the Group finance departments, and
is responsible for Plus500’s strategic business
development projects and their financial angles.

Before founding Plus500, Gal Haber served as Chief
Operating Officer of InterLogic Ltd, a ‘skilled games’
programme provider for the internet, digital television
and mobile devices, which he co-founded in 2004.
Previously, Gal Haber worked for Top Image Systems
Ltd, the enterprise content management specialist.
Gal Haber holds a B.Sc. in Computer Science from the
Technion, Israel.

Elad Even-Chen joined the Group in 2011.

Elad Even-Chen is a certified accountant in Israel and,
prior to joining the Group, he was a senior associate
at KPMG, specialising in commerce and real estate
audit. Elad Even-Chen holds a B.A. in Accounting and
Economics from Tel-Aviv University, a LL.B Degree from
the College of Management and an MBA (specialising
in Financial Management) from Tel-Aviv University.

Plus500 Ltd. 2018 Annual ReportUK CORPORATE GOVERNANCE CODE
COMPLIANCE STATEMENT

With effect from admission to the Main Market of
the London Stock Exchange, and with respect to 2018,
Plus500 is required to comply with corporate governance
policies and practices consistent with the Code (a copy
of which can be found on the website of the Financial
Reporting Council: www.frc.org.uk), or otherwise explain
its reasons for non-compliance.

The following statement is therefore made in respect of
the year ended 31 December 2018 in compliance with
this requirement. The following sections of this report
explain how the principles of the Code were applied and
provide cross-references to other sections of the report
and/ or the Company’s website (www.plus500.com)
where more detailed descriptions are available.

For the financial year ended 31 December 2018,
the Company has complied with the provisions of
the Code, other than in respect of the directors' re-
election mechanism. While the Code recommends
the submission of all directors for re-election annually,
as a company registered in Israel, it is subject to
mandatory corporate governance requirements under
the Companies Law, which require that the Company
must always have at least two External Directors (as
described below). The Company’s External Directors
are currently Charles Fairbairn and Daniel King.
These External Directors must meet certain statutory
requirements of independence and, as prescribed by
the mandatory requirements of the Companies Law,
must be elected for three-year terms and not annually
as the Code recommends.

Plus500 Ltd. 2018 Annual ReportUK CORPORATE GOVERNANCE CODE

COMPLIANCE STATEMENT

GOVERNANCE REPORT

THE BOARD

BOARD ACTIVITIES DURING THE YEAR

The Board maintains full control and direction over
appropriate strategic, financial, organisational and
compliance issues. The Company’s organisation structure
has clearly defined lines of authority, responsibility and
accountability, which are reviewed regularly. The annual
budget and forecasts are reviewed by the Board prior to
approval being given. This includes the identification and
assessment of the business risks inherent in the Company
and the online financial trading industry as a whole, along
with associated financial and regulatory risks.

Board Activity in 2018

The Board agrees an annual calendar and forward
meeting agendas during the prior year. The matters
recognised by the Board for consideration at Board
meetings are business strategy, operational highlights
and current trading, quarterly forecast, budget and
financial performance and governance, risk and
regulation.

Strategy

As in every year, a strategy discussion was held in December 2018,
at which the Board discussed, together with management, strategic
matters and actions to deliver on the strategy for the coming years.

Business, operational highlights
and current trading

The Board receives monthly updates including CEO reviews, financial,
risk and regulatory compliance reports on an ongoing basis.

Quarterly forecast and budget

Updates were provided and discussed on a monthly basis. Discussion
on the 2019 budget was held in December 2018 and finally approved in
February 2019.

Financial performance

The Board reviewed and approved the ongoing trading updates and
results announcements.
The Board considered and approved dividend distribution and share
buybacks, Consolidated Financial Statements and annual report.

Governance, risk and regulation

The Board received updates and conducted discussions about
regulatory developments.
It also received training and briefings on regulatory changes and updates, in
addition to ongoing updates on compliance matters.

Other

An annual internal effectiveness evaluation of the Board, committees,
chairman and each director has been conducted and a discussion was
held to address follow up and action items.

Plus500 Ltd. 2018 Annual ReportBOARD COMMITTEES

of the announcements proposed to be released to the
Stock Exchange and approve their content where relevant.

The Board has appointed five principal committees to
whom certain aspects of the Board’s work are delegated:

OPERATION OF THE BOARD

Nomination Committee
The Nomination Committee has been delegated
responsibility for the oversight of appointments to the
Board and the senior management team. The Committee’s
responsibilities, main activities and priorities for the next
reporting cycle are set out on pages 66 to 67.

Audit Committee
The Audit Committee has been delegated responsibility
for ensuring the financial performance of the Group is
properly reported on and reviewed and the monitoring of
the external auditor, the internal auditor and oversight of
internal controls. The Committee’s responsibilities, main
activities and priorities for the next reporting cycle are set
out on pages 68 to 70.

Regulatory & Risk Committee
The Regulatory & Risk Committee has been delegated
responsibility for the monitoring and oversight of risk
management and mitigation and the approval of risk
appetite. The Committee’s responsibilities, main activities
and priorities for the next reporting cycle are set out on
pages 71 to 72.

Remuneration Committee
The Remuneration Committee has been delegated
responsibility for determining, within the agreed terms
of reference, the Group’s policy on the remuneration
packages of the Company’s Chief Executive Officer, Chief
Financial Officer and Managing Director, the Chairman
and the other Non-Executive Directors, the Company
Secretary and other senior executives. The Committee’s
responsibilities, main activities and priorities for the next
reporting cycle are set out on pages 73 to 75.

Disclosure Committee
The Disclosure Committee assists the Board in fulfilling
its obligation to make timely and accurate disclosure of
all information that is required to be disclosed to meet
legal and regulatory requirements and obligations under
MAR and the Disclosure Guidance and Transparency
Rules of the FCA and the requirement for the Company
to establish and maintain adequate procedures,
systems and controls to enable it to comply with these
obligations. The Committee met to discuss the content

The Board is responsible to shareholders for the
effective direction and control of the Group.
The Board is also responsible for the overall strategy
and financial performance of the Group and has a
formal schedule of matters reserved for its approval.
The schedule of matters covers key strategic, financial
and operational matters including:
•

approval of the Group’s strategic aims and
objectives;
approval of the annual operating and capital
expenditure budgets of the Group, and any material
changes to them;
changes to the Group’s capital structure,
management and control structure;
contracts which are material strategically or by
reason of size, entered into by the Company or any
subsidiary in the ordinary course of business; and
recommendation to appointments to the Board.

•

The Company Secretary, Dana Comber, is responsible
for ensuring that the Company complies with the
statutory and regulatory requirements and maintains
high standards of corporate governance. She supports
and works closely with the Chairman of the Board,
the Chief Executive Officer and the Board committee
chairs in setting agendas for meetings of the Board
and its committees and supports the transfer of timely
and accurate information flow from and to the Board
and the management of the Company. Dana Comber
is a certified lawyer in Israel. All directors have access
to the advice and services of the Company Secretary,
who is responsible to the Board for ensuring that Board
procedures are complied with. Both the appointment
and removal of the Company Secretary is a matter for
the Board as a whole.

BOARD EFFECTIVENESS

The Board holds its meetings in accordance with its
scheduled calendar. Each Board meeting is preceded by
a clear agenda and any relevant information is provided
to the directors in advance of the meeting. The Board
met on twelve occasions in 2018 to review, formulate
and approve the Group’s strategy, budgets and corporate
actions and to oversee the Group’s progress towards its

Plus500 Ltd. 2018 Annual Report
goals. The Board also holds regular telephone calls to
update the members on operational and other business
matters. A summary of the key activities of the Board in
2018 is set out on pages 61 to 75.
Where directors have concerns which cannot be
resolved about the running of the Company or a
proposed action, they may request that their concerns
are recorded in the Board minutes. An agreed procedure
exists for directors in the furtherance of their duties to
take independent professional advice.

Newly appointed directors are made aware of their
responsibilities through the Company Secretary.
The Company provides to the directors training
sessions via internal meetings, presentations and
conversations which are conducted by Company
advisors, management and other relevant persons
during the year in order to enable greater awareness
and understanding of the Company’s business and the
environment in which it operates.

The Chairman is responsible for leading the Board
and ensuring its effectiveness by setting relevant

Board Composition

Board

Chairman

Penny Judd

Executive Directors

Gal Haber

Asaf Elimelech

Elad Even-Chen

Senior Independent Non-Executive, External Director

Charles Fairbairn

Independent Non-Executive, External Director

Daniel King

Independent Non-Executive Director

Steven Baldwin

agenda and providing sufficient time for constructive
discussions in which the Board has the ability to
challenge the discussed items. The Chairman is
responsible for creating the open and engaging
atmosphere that enables the healthy and constructive
discussions of the Board. The Chairman is also
responsible for ensuring effective communication
between Executive, Non-Executive Directors,
shareholders and between other major stakeholders
and the Board, in line with the Company's Written
Statements of Responsibilities. The Chief Executive
Officer acts as the main point of communication
between the Board and the management and is
responsible for the day-to-day running of the business
and implementation of strategy.

Collectively, the Non-Executive Directors bring a
valuable range of expertise in assisting the Company
to achieve its strategic aims. The effectiveness of the
Board benefits from the following skills and experience
offered by current members of the Board: financial
services, finance and accounting, governance and
regulatory, research and development, technology and
CFD trading and financial instrument expertise.

Scheduled meetings
eligible to attend

Scheduled meetings
attended

The Board is comprised of three Executive Directors:
Gal Haber, Asaf Elimelech and Elad Even-Chen, and
four Non-Executive Directors: Penny Judd (Chairman
of the Board), Charles Fairbairn (Senior Non-Executive
Director), Daniel King and Steven Baldwin. Penny Judd
was independent on appointment. As Senior

Independent Director, Charles Fairbairn is available to
meet with shareholders if they have concerns which are
not being addressed through the usual channels of the
Chief Financial Officer, the Chief Financial Officer or the
Chairman.

Plus500 Ltd. 2018 Annual ReportIn accordance with the Companies Law, the Board must
always have at least two external directors who meet
certain statutory requirements of independence (the
“External Directors”). The Company’s External Directors
are currently Charles Fairbairn and Daniel King. The
term of office of an External Director is three years,
which can be extended for two additional three-year
terms. Under the Companies Law, External Directors are
elected by shareholders by a special majority and may be
removed from office only in limited cases. In addition to
the above, any committee of the Board must include at
least one External Director and the Audit Committee and
Remuneration Committee must each include all of the
External Directors (including one External Director serving
as the chair of the Audit Committee and Remuneration
Committee), and a majority of the members of each of
the Audit and Remuneration Committees must comply
with the director independence requirements.

ELECTION OF DIRECTORS

Following recommendations from the Nomination
Committee and review by the Chairman, the Board considers
that all directors continue to be effective, remain committed
to their roles and have sufficient time available to perform
their duties. Information with respect to directors re-election
will be set out in the Notice of AGM.

INDEPENDENCE OF NON-EXECUTIVE
DIRECTORS AND TIME COMMITMENT

Each of the Non-Executive Directors is considered to be
independent of management and is considered by the
Board to be free from any business or other relationships
that could compromise their independence. Their role
is to effectively advise and challenge management, and
to monitor management’s success in delivering the
strategy agreed by the Board. Non-Executive Directors
held discussions and met during the year, without the
Executive Directors present, in order to review and
monitor management performance.

Each director is aware of the need to allocate
sufficient time to the Company in order to fulfil their
responsibilities and is notified of all scheduled Board and
Board Committee meetings. None of the Non-Executive
Directors hold any directorships in any FTSE100
companies.

CONFLICTS OF INTEREST

The Company has procedures for the disclosure and review
of any conflicts of interest, or potential conflicts, which
the directors may have. The Board members are asked to
disclose any conflicts of interest at each scheduled Board
meeting. Each Director is aware of their responsibility to
avoid conflicts of interest and to disclose any conflict or
potential conflict of interest to the Board. A director who
has a personal interest in a matter that is considered
at a meeting of the Board, the Audit Committee or the
Remuneration Committee may not attend that meeting
or vote on that matter, unless a majority of the respective
forum has a personal interest in the matter as well. If
a majority of the Board, the Audit Committee or the
Remuneration Committee, as applicable, has a personal
interest in the transaction, the shareholders’ approval, by
way of ordinary resolution, is also required.
The authorisation of a conflict matter, and the terms
of authorisation, may be reviewed at any time by the
Board. The Board considers that these procedures are
operating effectively. There have been no matters arising
requiring assessment by the Board as a potential conflict
during the year.

BOARD EVALUATION

The performance of the Board, the Board committees
and the individual Board members is self-assessed by an
evaluation of Board performance survey conducted on
an annual basis via questionnaire and Board discussion.
Following a Board review of the results arising from the
questionnaire, appropriate actions are taken in order
to address the areas which could be improved upon to
increase Board effectiveness.
During the year, all the Non-Executive Directors, led by the
Senior Independent Director, met without the presence
of the Chairman, in order to evaluate the Chairman’s
performance.

ENSURING THAT THE ANNUAL REPORT IS
FAIR, BALANCED AND UNDERSTANDABLE

In relation to the Annual Report and the Consolidated
Financial Statements for the year ended 31 December
2018, the Board, in conjunction with the Audit Committee
have sought to ensure that the Annual Report is fair,
balanced and understandable. The Board considers that,
taken as a whole, the Annual Report is fair, balanced and
understandable.

Plus500 Ltd. 2018 Annual ReportSHAREHOLDER ENGAGEMENT

The Company encourages the participation of both
institutional and private investors. In 2018 a new UK-
based investor relations representative, Kieran McKinney
joined the Company’s Investors Relations team. The Chief
Executive Officer, Asaf Elimelech, and Chief Financial
Officer, Elad Even-Chen, together with Kieran McKinney,
meet regularly with institutional investors, usually with
regard to the issuance of half and full year results. The
Chairman of the Board meets regularly with key investors
as well.

Communication with private individuals is maintained
through the Annual General Meeting, the Company’s
annual and interim reports and the scheduled, or otherwise
required, trading updates. The Chairmen of the Company’s
Audit, Remuneration, Nomination and Regulatory & Risk
Committees are made available to answer questions at the
Company’s Annual General Meetings. In addition, further
details on the strategy and performance of the Company
can be found at its website (www.plus500.com), which
includes copies of the Company’s press releases and
financial presentations and reports.

Regular updates are provided to the Board on meetings
with shareholders and analysts and brokers' opinions.
Non-Executive Directors are available to meet major
shareholders, if required. Investors are encouraged to
contact the Company’s Investor Relations at:
ir@Plus500.com.

MAJOR INTERESTS IN SHARES

As at 29 March 2019, being the latest practicable date
before the approval of this report, the Company is aware
of the following persons who, directly or indirectly, were
interested in three per cent. or more of the Company’s
capital or voting rights:

Notifying party

No. of shares held
or controlled

Odey Asset Management

11,242,557

Invesco

BlackRock Inc

10,643,342

6,881,671

9.92

9.39

6.07

Standard Life Aberdeen

5,595,510

4.94

BrightSphere Investment
Group

Morgan Stanley

The Vanguard Group, Inc

4,567,881

4.03

4,239,834

4,044,450

3.74

3.57

3.38

Investec Asset Management

3,837,411

2018 ANNUAL GENERAL MEETING

The 2018 Annual General Meeting was held on 10 July
2018 at the offices of Liberum Capital.

All resolutions were duly passed by shareholders by
means of a poll vote. The Board of Plus500 noted
that there were more than 20% of votes cast against
Resolution 6, the re-appointment of auditors, due to
the lack of disclosure of the split between audit and
non-audit fees paid to the auditors, and Resolution 8,
purchase of own shares due to the lack of disclosure
of the proposed maximum purchase price. The Board
takes shareholder voting seriously, and the analysis
of external auditors’ fees for 2018 are available for
review as part of this report. The price range used for
the purchase of shares by the Company is included in
announcements to the market whenever any shares are
bought back.

2019 ANNUAL GENERAL MEETING

The Annual General Meeting is scheduled to be held on
18 June 2019 at Liberum Capital, Level 12, Ropemaker
Place, 25 Ropemaker Street, London EC2Y 9LY UK.
Details of all resolutions to be proposed at the Annual
General Meeting will be included in the Notice of Annual
General Meeting to be circulated by the Company to all
shareholders.

Plus500 Ltd. 2018 Annual ReportREPORT OF THE NOMINATION COMMITTEE

Steven Baldwin
Chairman of Nomination Committee

Dear Shareholder,

As the new Chairman of the Nomination Committee,
I am pleased to take this opportunity to give you an
overview of the work of the Nomination Committee
during 2018 chaired by Daniel King.

Throughout 2018, the membership of the Board has
remained unchanged, following the changes that took
effect during the previous two years. Consequently,
our focus has turned to the executive team and, in
particular, two critical appointments – the succession
of the Chief Technology Officer, Chief Marketing Officer
and the appointment of the Data Protection Officer.
These three appointments were successfully completed
in the first half of the year.

The Nomination Committee has reviewed and discussed
Board composition and succession planning to ensure
that the necessary set of skills and expertise will continue
to the next generation of directors and management.

The Nomination Committee evaluated the nomination
of Board members for re-election at the 2018 AGM in
June and was pleased to note that the directors that
were standing for re-election were all re-elected with
strong levels of shareholder support.

Following Plus500’s move to the Main Market and the
enhanced expectations placed on the Nomination
Committee by the UK Corporate Governance Code, we
are developing our programme of activity accordingly.
We have already begun to consider our approach to
diversity at Board and senior management levels within
the context of a broader Board-led approach to diversity.

Steven Baldwin
Chairman of the Nomination Committee

COMMITTEE COMPOSITION

The Nomination Committee comprises Steven Baldwin,
Daniel King, Charles Fairbairn and Gal Haber, and is
chaired by Steven Baldwin. The Code recommends that
a majority of the members of a nomination committee
should be independent non-executive directors. The Board
considers Steven Baldwin, Charles Fairbairn and Daniel
King to be independent for the purposes of the Code.

Plus500 Ltd. 2018 Annual ReportCommittee Attendance

Nomination
Committee

Gal Haber

Charles Fairbairn

Daniel King

Scheduled
meetings
eligible to attend

Scheduled
meetings
attended

* Steven Baldwin was appointed to the Nomination

Committee in February 2019

organisational structure and senior leadership and for
review of Board composition.

SUCCESSION PLANNING & DIVERSITY

Directors succession plans were reviewed during the
year by the Committee, which takes an active role
in succession planning. As part of the review, the
Committee considered the benefits and importance of
diversity to the management of the Company and the Board.
Diversity in skills, experience and knowledge are key
elements and contribute to the successful management
of the Company.

PRIORITIES FOR 2019 FINANCIAL YEAR

COMMITTEE RESPONSIBILITIES

In the coming year the Committee will continue to focus
on key themes such as diversity and succession planning.

The Nomination Committee has responsibility for reviewing
the structure, size and composition (including the skills,
knowledge and experience) of the Board, and giving full
consideration to succession planning. The other key
governance mandates pursuant to the written terms
of reference of the Nomination Committee (which are
available on the Company's website) are as follows:
to oversee succession planning for directors and
•
other senior executives, taking into account the
challenges and opportunities facing the Company;
to identify, and nominate for the approval of the Board,
candidates to fill Board vacancies (including external
directors vacancies);
to make recommendations concerning the continuation
in office of any director at any time, including the
suspension or termination of service; and
to prepare a description of the role and capabilities
required for a particular appointment.

•

The Nomination Committee meets not less than twice
a year and at such other times as required. The Nomination
Committee takes into account the challenges and
opportunities facing the Group and what skills and expertise
will therefore be needed on the Board and Committees in
the future.

2018 COMMITTEE ACTIVITIES

The Nomination Committee met on four occasions
since the beginning of 2018 in relation to the
appointment of senior executives, re-election of
directors, review of the Company’s succession plan,

DIVERSITY

The Board confirms a strong commitment to diversity
(including, but not limited to, gender diversity) at all
levels of the Group. The Board’s policy on diversity
commits to:
•

ensuring the selection and appointment process for
employees and directors includes a diverse range
of candidates;
disclosing statistics on gender diversity in every
Annual Report (on pages 46 to 47); and
reviewing this policy from time to time and
continuing to disclose this policy in the Annual
Report.

•

At the Board level, based on the current size and
composition and taking into account current
succession plans, the Board to date includes one
female director. The Board remains committed to
ensuring that the directors bring a wide range of skills,
knowledge, experience, backgrounds and perspectives.

The Committee notes the updated requirement under
the Disclosure Guidance and Transparency Rules (DTR)
for our 2018 Annual Report to disclose diversity policies
with regard to aspects such as age, gender, educational
and professional backgrounds. Our diversity data is
disclosed in our Corporate Responsibility report on
pages 46 to 47.

Plus500 Ltd. 2018 Annual ReportREPORT OF THE AUDIT COMMITTEE

Charles Fairbairn
Chairman of the Audit Committee

Dear Shareholder,

I am pleased to take this opportunity to give you an
overview of the work of the Audit Committee during 2018.

COMMITTEE COMPOSITION

Financial reporting and the associated assurance
that the Audit Committee needs to review has been
an important priority during the year. In addition to its
usual activities, a significant financial reporting exercise
was also required in preparing the prospectus for the
move to the Main Market. Following the successful
completion of that move, we are aware that we
will need to focus on the quality of our reporting to
shareholders and other stakeholders and we asked
PwC to provide a gap analysis review to present the
steps for compliance with Main Listing requirements.

With the assistance of Deloitte, our internal auditor, we
reviewed and approved a multi-year internal audit plan
and associated risk survey which we will continue to
monitor and update over time.

The Committee also reviewed a list of non-audit
services provided this year by the Company’s external
auditor and approved its plan for 2019.

The UK Corporate Governance Code recommends that
an audit committee should comprise of at least three
members who are independent non-executive directors,
and that at least one member should have recent and
relevant financial experience. The Audit Committee is
chaired by Charles Fairbairn, and its other members are
Daniel King and Steven Baldwin. All of the members are
therefore independent Non-Executive Directors.
The directors consider that Charles Fairbairn has recent
and relevant financial experience in accordance with the
requirements of the Code.

Committee Attendance

Audit
Committee

Charles Fairbairn

Daniel King

Steven Baldwin

Scheduled
meetings eligible
to attend

Scheduled
meetings
attended

Charles Fairbairn
Chairman of the Audit Committee

Plus500 Ltd. 2018 Annual ReportCOMMITTEE RESPONSIBILITIES

EXTERNAL AUDITOR

The Audit Committee has responsibility for ensuring
that the financial performance of the Group is properly
reported on and reviewed. The other key governance
mandates pursuant to the written terms of reference
of the Audit Committee (which are available on the
Company's website) are as follows:
• to monitor the integrity of the Consolidated Financial

Statements of the Group (including annual and
interim accounts and results announcements);
• to monitor the adequacy and effectiveness of the
Company’s internal financial controls and internal
control and risk management systems;

• to advise on the appointment of the Company’s
external auditor and on their remuneration; and
• to monitor the effectiveness of the Company’s

internal audit function.

In addition, under the Companies Law, the Audit
Committee is required to monitor deficiencies in
the administration of the Company, including by
consulting with the internal auditor and independent
accountants, to review, classify and approve related
party transactions and extraordinary transactions, to
review the internal auditor’s audit plan and to establish
and monitor whistleblower procedures.

The Audit Committee is expected to meet formally at
least four times a year and otherwise as required.
Further meetings may be called as required. The
internal and external auditors have the right to
attend meetings. The relevant Executive Directors, the
Company’s legal advisors and other persons may, by
invitation from the Audit Committee, attend meetings.
At least once per year, the Audit Committee may, if it so
requires, meet privately with the external auditor.

2018 COMMITTEE ACTIVITIES

The Audit Committee met on seven occasions since the
beginning of 2018. Amongst other items the committee
reviewed the financial performance and Consolidated
Financial Statements of the Company, reviewed an
assessment of the control environment via internal
audit reports, and progress on implementing both
internal and external audit recommendations,
monitored and reviewed the internal audit function’s
effectiveness in the overall context of the Group’s
internal controls and risk management systems.

A responsibility of the Audit Committee is to keep under
review the scope and cost effectiveness of the external
audit. This includes recommending to the Board the
appointment of the external auditor and for reviewing
the scope of the audit, approving the audit fee and,
on an annual basis, satisfying itself that the auditor is
independent. The external auditor is engaged to express
an opinion on the Consolidated Financial Statements.
The external auditor discusses with management
the reporting of operational results and the financial
condition of the Company, to the extent necessary to
express their audit opinion.

Kesselman & Kesselman, a member firm of
PricewaterhouseCoopers International Limited, is
retained to perform audit and audit-related work on
the Company and some of its subsidiaries. The Audit
Committee monitors the nature and extent of non- audit
work undertaken by the auditors. It is satisfied that
there are adequate controls in place to ensure auditor
independence and objectivity. The matter is kept under
review and is a standing item on the agenda for the
Audit Committee. Periodically, the Audit Committee
monitors the cost of non-audit work undertaken by the
auditors. The Audit Committee considers that it is in a
position to take action if at any time it believes there is
a risk of the auditors’ independence being undermined
through the award of this work. A further responsibility
of the Audit Committee is to assess the performance
of the external auditor and review their effectiveness.
The Audit Committee concludes that the Audit process
as a whole had been conducted robustly and that the
team selected to undertake the audit had done so
thoroughly and professionally. The Audit Committee
reviewed the re-appointment of the external auditor and
recommended to the Board that the external auditor be
proposed for re-election at the Annual General Meeting.

INTERNAL AUDITOR

Pursuant to the Companies Law, the Board must
appoint an internal auditor recommended by the Audit
Committee. An internal auditor may not be:
•

a person who holds more than five per cent. of the
Company’s outstanding shares or voting rights;
a person who has the power to appoint a director or
the Chief Executive Officer of the Company;
an officer or Director of the Company; or

•

Plus500 Ltd. 2018 Annual Report•

a member of the Company’s independent
accounting firm, or anyone on its behalf.

WHISTLEBLOWING POLICY

The role of the internal auditor is to examine, among
other things, the Company’s compliance with applicable
law and orderly business procedures. The Audit
Committee is required to oversee the activities and to
assess the performance of the internal auditor as well
as to review the internal auditor’s work plan. Deloitte
Touche Tohmatsu Limited serves as the Company’s
internal auditor.

The Company operates a Whistleblowing Policy which
allows anonymous reporting to assist individuals
who believe that they have discovered malpractice or
impropriety within the Group. It provides a method of
properly addressing bona fide concerns that individuals
within the Group might have, while also offering
whistleblowers protection from victimisation, harassment
or disciplinary proceedings. The current Whistleblowing
Policy supervisor is Daniel King.

NON-AUDIT SERVICES

FAIR, BALANCED AND UNDERSTANDABLE

The Audit Committee undertakes a duty to consider
whether the 2018 Annual Report and Consolidated
Financial Statements are fair, balanced and
understandable, while final determination lies within
the responsibilities of the Board. The Committee,
on behalf of the whole Board, assesses from a
shareholder perspective whether there is enough
information necessary to evaluate the financial position,
governance, business model and strategy of the Group.

The process
During the drafting process of the 2018 Annual Report
and Consolidated Financial Statements, the Committee
is given the outline and structure for feedback. The
Committee also considers whether the content
provided in the report has illustrated the whole picture
for the year. The Committee then evaluates whether
the report is consistent throughout, with a clear layout
and linkage to the different front and back sections,
and whether it is presented in a logical manner to the
shareholders.

Conclusion
Following the review, it was the Committee’s opinion
that the 2018 Annual Report and Consolidated Financial
Statements are representative of the year and present
a fair, balanced and understandable overview for
the shareholders to assess the financial position,
governance, business model and strategy of the Group.

The Company maintains a Non-Audit Services
Policy in order to ensure that the provision of non-
audit services do not impair the external auditor’s
independence or objectivity. During 2018, Kesselman &
Kesselman, a member firm of PricewaterhouseCoopers
International Limited, provided non-audit services, such
as tax assessments and advice, regulatory reporting
requirements and remuneration benchmarking, which
totalled $0.6 million (including assurance related
services of $0.4 million).

OVERVIEW OF THE NON-AUDIT
SERVICES POLICY

Under the policy, all services provided by the external
auditor (other than the audit itself) are regarded as non-
audit services. The policy draws a distinction between
permitted services (which could be provided subject to
conditions set by the Committee) and prohibited services
(which may not be provided by the external auditor except
in exceptional circumstances when the auditor has been
provided approval by the FCA). The type of non-audit
services deemed to be permitted include assurance
work on non-financial data, tax services including tax
advisory, and reporting best practice.

The Committee has provided pre-approval which allows
management to appoint the external auditor to conduct
permitted non-audit services if they fall below a set fee
level. The Committee reviews the pre-approval limit
on an annual basis and it is currently set at $50,000.
Any non-audit service provided by the external Auditor
is reported to the Board. In the unlikely event that the
provision of non-audit services would exceed $50,000,
the Committee would request Board approval.

Plus500 Ltd. 2018 Annual ReportREPORT OF THE REGULATORY & RISK COMMITTEE

Penny Judd
Chairman

Our priorities for the coming year will be to continue to
monitor regulatory change and to seek to continue to
enhance the risk assessment and monitoring within the
business in the face of changing regulatory and market
conditions.

Penny Judd
Chair of the Regulatory & Risk Committee

Dear Shareholder,

Regulatory compliance and risk management underpin
the integrity of our business model and continued
delivery of our strategy. The Regulatory & Risk
Committee receives regular reports on both compliance
and risk and challenges the performance in these areas.
It also receives reports on specific areas where more
detailed testing or investigation is felt appropriate. These
are described more fully in the following report.

In addition, the Board, as it is required to do, undertook
a thorough review of the risks to the business as a key
element of the work of preparing the prospectus for the
Company’s admission to the Main Market and updated its
internal risk matrix accordingly. We have also monitored
new areas of regulatory compliance such as GDPR and
developments in securities markets regulation.

The Committee and the Board have received reports on
the implementation of the new ESMA restrictions and
received comfort that the applicable restrictions have been
effectively implemented and monitored.

Plus500 Ltd. 2018 Annual ReportCOMMITTEE COMPOSITION

2018 COMMITTEE ACTIVITIES

The Committee met on four occasions since the
beginning of 2018 to review periodic risk, regulatory and
compliance reports and oversee the implementation
of new regulatory requirements (such as GDPR and
the ESMA measures), to monitor and asses the
Group’s relationships with regulatory authorities
throughout the various jurisdictions, to review licence
applications submitted during the period and to
review risk assessment programmes and internal risk
management controls.

The Company has established a Regulatory & Risk
Committee chaired by Penny Judd. The other members
are Charles Fairbairn, Asaf Elimelech and Elad Even-
Chen. The Regulatory & Risk Committee receives
updates from management on risk, compliance and
regulatory issues and reviews the related internal
systems.

Committee Attendance

Regulatory & Risk
Committee

Scheduled
meetings
eligible to attend

Scheduled
meetings
attended

Penny Judd

Charels Fairbairn

Asaf Elimelech

Elad Even-Chen

COMMITTEE RESPONSIBILITIES

The Regulatory & Risk Committee has responsibility
for providing oversight with respect to current and
potential future risk exposures of the Company and for
overseeing and monitoring the Company’s compliance
with applicable laws, regulations and orders as
required. Its activity includes reviewing relationships
with regulatory authorities such as the FCA, ASIC,
CySEC, FSCA, FMA, ISA, MAS and other regulatory
authorities, as appropriate, in jurisdictions where
the Group has a significant presence; reviewing risk
assessment programmes and internal controls and risk
management.

The Regulatory & Risk Committee has responsibility
for reviewing the Company’s most significant risks to
the achievement of strategic objectives, reviewing the
Company’s Risk Policy, ensuring that the Company’s
Board ethics are being adhered to and that the
Company continues its commitment to issues
concerning social responsibility. The Regulatory & Risk
Committee meets not less than three times a year and
otherwise as required.

Plus500 Ltd. 2018 Annual ReportREPORT OF THE REMUNERATION COMMITTEE

Daniel King
Chairman of the Remuneration Committee

Dear Shareholder,

I am pleased to present an overview of the work of the
Remuneration Committee during 2018.

to the business needs in retaining and motivating the
management team who are currently resident in Israel.

The Board recognises that directors’ remuneration is
a key consideration for shareholders of the Company.
Plus500 operates within an extremely competitive
environment, where performance depends to a great
degree on the individual contributions of the directors
and employees, and the Company believes in rewarding
vision and innovation.

With the Company’s move to the Main Market, the
Remuneration Committee recognises the importance
of adopting a remuneration structure that is more in
line with developments in UK best practice (while as
an Israeli company Plus500 is not strictly required to
comply with the requirements of the UK Companies
Act).

In order to meet the different challenges facing
the Company, the Committee has created a set of
remuneration principles to provide a framework from
which to develop a robust remuneration structure.
Under this framework, the Committee has strived
to develop a structure that will transition executive
remuneration to be increasingly compliant with
moving UK corporate governance standards and meet
investors expectations, but which remains sensitive

•

In developing the new structure for 2019, the
Committee has focussed on the following factors:
•

the changes to the current structure are not
intended to increase the overall remuneration
opportunity for the Executive Directors in 2019 but
to keep it within a comparable range to current
2018 levels in order to retain and motivate the
management team;
a need to re-balance the current remuneration
structure by increasing base salaries to a more
competitive level and adopting a more UK market
conventional approach to the annual bonus
through the introduction of a cap, set by reference
to a multiple of salary, compared to the previous
uncapped arrangement;
the introduction of a deferral period in the bonus
scheme, with an element of the bonus deferred
into shares, to ensure long term alignment of the
executives with shareholders and the ability for
the management team to build up an appropriate
shareholding;
a strong desire to retain the medium term cash
incentive through Share Appreciation Rights which
is a significant contributor to current and future
corporate success; and

Plus500 Ltd. 2018 Annual Report•

the introduction of a new longer term equity based
component to the remuneration structure to further
align the interests of management and that of
shareholders and allow the management team to
build up an appropriate level of shareholding (a
minimum of two times base salary) in line with UK
corporate governance best practice.

The above factors are reflected in the changes to the
directors' remuneration which were approved by the
Company’s shareholders in the Extraordinary General
Meeting ("EGM"), held in January 2019 in accordance
with Israeli law, and which introduced a number of
measures to transition executive remuneration towards
the expectations of UK institutional investors and UK
corporate governance standards.

In accordance with Israeli law, all changes to directors’
remuneration require prior approval of the Company’s
shareholders. Accordingly, the remuneration packages
for the Executive Directors for 2018, which are described
below, were approved by the shareholders in the
EGM held in January 2018 and therefore, there will
be no advisory vote on the 2018 remuneration in the
Company’s AGM later this year. The remuneration
packages for the Executive Directors for 2019 were
approved by the shareholders in the EGM held in January
2019. The Committee and the Board noted that there
have been a number of votes (48%) cast against the
2019 remuneration terms of the Executive Directors
proposed at the January 2019 EGM. The Board and the
Remuneration Committee take these votes seriously and
will consider shareholder feedback before deciding which
steps to take to ensure the Remuneration Policy is better
understood and implemented as appropriate. The Board
and the Remuneration Committee also reiterates the
commitment to achieving and maintaining the highest
governance standards.

The Remuneration Committee firmly believes
that this is a significant step forward. I do hope
that shareholders can remain confident that the
Committee will continue to evaluate the success
of the remuneration arrangements to ensure they
appropriately reward strong performance and enable
recruitment and retention of key individuals to drive
further success at Plus500.

Daniel King
Chairman of the Remuneration Committee

COMMITTEE COMPOSITION

The UK Corporate Governance Code recommends
that all members of the Remuneration Committee be
Non-Executive Directors, independent in character
and judgment and free from any relationship or
circumstance which may, could or would be likely to, or
appear to, affect their judgment. No director or manager
may be involved in any discussions as to their own
remuneration. The Remuneration Committee comprises
of three independent Non-Executive Directors: Daniel
King, Charles Fairbairn and Steven Baldwin, and is
chaired by Daniel King.

Committee Attendance

Remuneration
Committee

Daniel King

Charles Fairbairn

Steven Baldwin

Scheduled
meetings eligible
to attend

Scheduled
meetings
attended

COMMITTEE RESPONSIBILITIES

The Remuneration Committee meets not less than
twice a year and at such other times as required.
The Remuneration Committee has responsibility for
determining, within the agreed terms of reference, the
Group’s policy on the remuneration packages of the
Company’s Chief Executive Officer, Chief Financial
Officer, Managing Director, the Chairman and the other
Non-Executive Directors, the Company Secretary and
other senior executives.

The other key activities of the Committee pursuant to
the written terms of reference of the Remuneration
Committee (which are available on the Company's
website) are as follows:
•

to review the on-going appropriateness and
relevance of the Company’s Remuneration Policy;
approving and recommending to the Board and
the shareholders, the total individual remuneration
package of the Chairman, each Executive and Non-
Executive Director, the Chief Executive Officer and
Managing Director (including bonuses, incentive
payments and share options or other share
awards);

•

Plus500 Ltd. 2018 Annual Report•

•

in determining remuneration policies for the
Company’s senior management and/or individual
remuneration packages of each executive director,
the Chairman and other designated senior
executives, to give regard to the relevant legal
and regulatory requirements, the provisions of the
Companies Law, the provisions and recommendations
of the Code and associated guidance, and institutional
investors expectations;
to approve and determine the targets for any
performance-related pay schemes; and
to review the design of all share incentive plans for
approval by the Board and (if required or deemed
appropriate) the shareholders.

REMUNERATION POLICY

In accordance with the Companies Law, the Remuneration
Committee is required to review and approve
compensation guidelines for directors and executives
("Compensation Guidelines"), and recommend that the
Board and shareholders adopt such guidelines. The
Compensation Guidelines must be approved or ratified
at least once every three years. The Company last
amended its Compensation Guidelines for directors
and executives in January 2018. The Company's
Compensation Guidelines include, inter alia, claw back
provisions with respect to executive remuneration.

In 2018 the Remuneration Committee, together with an
external dedicated consultant, reviewed the Company’s
remuneration practices in relation to its move to the
Main Market. It was deemed necessary to change the
current Remuneration Policy and adopt a structure more
in line with developments in best practice and regulatory
and investor remuneration guidelines, to develop a
robust remuneration structure whilst taking into account
the Company’s values and the long-term interests of
shareholders, investors and other stakeholders.

2018 COMMITTEE ACTIVITIES

The Committee met on three occasions since
the beginning of 2018. During these meetings the
Committee determined and agreed with the Board the
Company’s remuneration philosophy and the principles
of its remuneration policy, ensuring that these are in
line with the business strategy, objectives, values and
long-term interests of the Company and comply with all
regulatory requirements. This included:

• A review of the Non-Executive Directors’ fees.
• A review of the performance of the Chief Executive
Officer and the Executive Directors compared to the
KPIs set and approval of annual bonus awards for
2018 based on achievement of KPI targets.

• Review of senior management fees.
• Other activities, e.g. Committee evaluation, as

required by the Committee’s terms of reference and
review of the terms of reference of the Committee.

ADVISORS TO THE REMUNERATION
COMMITTEE

PricewaterhouseCoopers LLP (PwC) were engaged
by the Remuneration Committee as remuneration
consultants (non-audit services). PwC provided
remuneration assistance with the transition to a more
UK corporate governance compliant structure after the
move to the Main Market. Their advice linked Executive
remuneration, Non-Executive remuneration and
recent shareholder guidance, with similar companies
and market developments. PwC LLP is a member of
the Remuneration Consultants’ Group, and as such
chooses to operate pursuant to a code of conduct that
requires remuneration advice to be given objectively
and independently. The Committee is satisfied that the
advice provided by PwC LLP in relation to remuneration
matters is objective and independent.

The Company Secretary ensures that the Remuneration
Committee fulfils its duties under its terms of reference
and provides regular updates to the Remuneration
Committee on relevant regulatory developments in the UK,
information on Israeli market trends and compensation
structures for the broader employees in the Group.

SHAREHOLDERS VOTING ON THE
REMUNERATION

The Company’s Remuneration Policy for Directors and
Executives was reviewed and approved at the 2018
EGM held January 2018:

Total numbers
of votes

% Votes cast

For

Against

Total

60,245,551

17,282,314

77,527,865

Withheld

400,351

78%

22%

100%

Plus500 Ltd. 2018 Annual ReportDIRECTORS’ REMUNERATION REPORT

ANNUAL REPORT ON REMUNERATION 2018

INTRODUCTION

AUDITED INFORMATION –
DIRECTORS’ REMUNERATION –
1 January 2018 to 31 December 2018

This report sets out information about the remuneration
of the directors, including the Chief Executive Officer
and the Chief Financial Officer of the Company, for the
year ended 31 December 2018.

Single total figure of remuneration
The detailed emoluments received by the Executive
and Non-executive Directors during the year ended 31
December 2018 are detailed below.

The information provided in the section and
accompanying notes has been audited by
Kesselman & Kesselman, a member firm
of PricewaterhouseCoopers International Limited.

US$000

Chairman

Penny Judd12

Executive Directors

Gal Haber

Asaf Elimelech

Elad Even-Chen

Non-executive Directors

Charles Fairbairn

Daniel King

Steven Baldwin13

2018

2017

Salary/ Fees

Benefits

Annual Bonus

Share Appreciation
Rights

Total

Salary/ Fees

Benefits

Annual Bonus

Share Appreciation

Rights

120

347

327

121

4,740

963

120

347

6,030

121

Total

1,388

9,480

1,926

12,794

1,318

3,316

1,282

5,916

347

337

341

1,658

777

505

Total

347

2,772

2,504

12 Penny Judd was appointed Chairman in June 2017
13 Steven Baldwin was appointed to the Board in June 2017

Plus500 Ltd. 2018 Annual Report2018

2017

Salary/ Fees

Benefits

Annual Bonus

Salary/ Fees

Benefits

Annual Bonus

Share Appreciation

Rights

Total

Share Appreciation
Rights

US$000

Chairman

Penny Judd12

Executive Directors

Gal Haber

Asaf Elimelech

Elad Even-Chen

Non-executive Directors

Charles Fairbairn

Daniel King

Steven Baldwin13

120

347

327

121

4,740

963

120

347

6,030

121

347

337

341

Total

1,388

9,480

1,926

12,794

1,318

1,658

777

505

Total

347

2,772

2,504

3,316

1,282

5,916

Plus500 Ltd. 2018 Annual ReportUNAUDITED INFORMATION

3. the discretion of the Remuneration Committee.

Elad Even-Chen – Chief Financial Officer
The services of Elad Even-Chen are provided to the
Company pursuant to a service contract entered into by
the Company with Elad Even-Chen Consulting Services
Ltd. (“EEC CS”).

In consideration for these services, EEC CS is entitled
to a fee of NIS1,100,000 per annum, reviewed annually.
Commencing on 1 January 2019, the fee was updated
to a fee of NIS1,700,000 per annum. Either party may
terminate the Service Agreement by giving 365 days’
written notice.

As approved by the Company’s shareholders in January
2018, Elad Even-Chen is entitled to an annual bonus for
the year ending 31 December 2018 as determined by
the Remuneration Committee based on the following
criteria:

1. the size of increase in the Company’s consolidated
Net Profit in 2018 as compared to the Net Profit
Threshold (which shall equal 75 per cent of the
Company’s consolidated Net Profit in 2017);
2. the scope of regulatory licence-related activity

pursued by the Company and its subsidiaries; and

3. the discretion of the Remuneration Committee.

IMPLEMENTATION OF REMUNERATION
POLICY

Executive Directors’ Remuneration
Each of the Executive Directors provides their services
to the Company pursuant to a service contract.

Gal Haber – Managing Director
The services of Gal Haber are provided to the Company
pursuant to a service contract entered into by the
Company with Wavesoft Ltd. In addition, Gal Haber has
entered into an appointment letter with the Company. In
consideration for the services Gal Haber provides, Wavesoft
is entitled to a fee of NIS1,250,000 per annum, reviewed
annually. Commencing on 1 January 2019, the fee was
updated to a fee of NIS1,440,000 per annum. Wavesoft is
also entitled to participate in a bonus scheme on terms
decided by the Remuneration Committee. No bonus was
awarded for 2017 or 2018. Either party may terminate the
agreement by giving 60 days’ written notice.

Asaf Elimelech – Chief Executive Officer
During the year Asaf Elimelech served as Chief
Executive Officer for the Group. The Company entered
into a service contract with Asaf Elimelech Consultation
and Regulatory Services Ltd. (”AE CRS”) under which
Asaf Elimelech provides Chief Executive Officer services
to the Company.

In consideration for these services, AE CRS is entitled
to a fee of NIS1,100,000 per annum, reviewed annually.
Commencing on 1 January 2019, the fee was updated
to a fee of NIS1,700,000 per annum. Either party may
terminate the Service Agreement by giving 365 days’
written notice.

As approved by the Company’s shareholders in January
2018, Asaf Elimelech is entitled to an annual bonus for
the year ending 31 December 2018 as determined by the
Remuneration Committee based on the following criteria:

pursued by the Company and its subsidiaries; and

Plus500 Ltd. 2018 Annual ReportNon-Founders Executive Directors’ Annual Bonus Calculation

2018(i)

2019(ii)

Criteria

Outcome

Award
(USD ‘000)

Shareholders Approved

Profitability
Bonus

1.5% of the increase in the

Company’s consolidated

Net Profit in 2018 as

compared to 75% of 2017

Net Profit

1.5% multiple

2018 Net profit

minus 75% of

2017 Net profit

Profitability bonus capped at

240% of annual service fee

3,545

(NIS 4,080,000) - calculated as

0.7% of (2019 EBITDA-$200m).

33.33% is subject to deferral

Annual
Bonus

Regulatory
Bonus

The scope of regulatory

licence-related activity

pursued by the Company

and its subsidiaries

New licences

application

and no notable

breaches of

regulatory

licences in any

subsidiary

Regulatory/Operational bonus

capped at 160% of annual

service fee (NIS 2,720,000) -

new licences up to NIS 620,000;

195

regulatory compliance up to

NIS 1,200,000; personal and

operational goals up to NIS

900,000. 33.33% is subject to

deferral

The discretion of the

Remuneration Committee,

based only on exceptional

The discretion

Company

Discretionary
Bonus

of the Remuneration

elevated to the

Committee, based only on

UK Main Market

1,000

exceptional events

in June 2018

events

Grant of NIS 2,000,000 of

SARs at a base reference

price of 943.23 pence,

which will vest after two

years from the date of

grant in December 2019

Share Appreciation
Rights (iii)

LTIP

Total

Grant of NIS 2,500,000 of SARs

at a base reference price of

1,349.80 pence, with payout

963 (iv)

capped at NIS 10,000,000,

which will vest after two years

from the date of grant in

December 2020

NIS 1,000,000 of Ordinary

Shares at reference date of 1

January 2019 (adjusted for

dividends). Vesting date is

January 2022, subject to a

further two year lockup

5,703

(i) Further details are provided in the notes to the January 2018 EGM which are available at the Company's website
(ii) Further details are provided in the notes to the January 2019 EGM which are available at the Company's website
(iii) The entitlement for Share Appreciation Rights only matures following completion of two years of employment

from the grant date

(iv) The award granted is with respect to Share Appreciation Rights granted to the Non-Founder Executives in

December 2016 and were fully vested in December 2018

Plus500 Ltd. 2018 Annual ReportYear-on-year percentage change in remuneration
of CEO and all employees

Percentage change
(in US dollar amounts)
2017–2018

Base Salary/
Fees

Benefits

Annual
bonus

(3)%

(5)%

118%

(5)%

43%

Chief Executive
Officer*

All employees**

* The decrease in fees derived from financial currency
translation
** The decrease in base salaries and benefits of the
Group employees derived from the change in
employees mix rather than the change in the level of
actual base salary of existing employees.

PENSIONS

The Group operates various pension schemes. The
schemes are generally funded through payments to
insurance companies or trustee-administered pension
funds. Executive Directors do not receive pension
contribution.

CHAIRMAN AND NON-EXECUTIVE
DIRECTORS REMUNERATION

The aggregate 2018 remuneration of the Chairman of
the Company and the Non-Executive Directors consists
of annual fees of $0.4 million. The Chairman and Non-
executive Directors do not participate in any long-term
incentive or annual bonus schemes, nor do they accrue
any pension entitlement.

will not necessitate a new letter of appointment. The
appointments of Penny Judd and Steven Baldwin can
be terminated on two months’ notice by either the
Company or the Non-Executive Director.
As required under, and subject to the Companies Law,
the appointments of Charles Fairbairn and Daniel King
as External Directors are for a period of three years from
the date of appointment (which may be extended for two
more three year terms). Charles Fairbairn and Daniel King
were re-elected for a further three year term effective from
the 2016 Annual General Meeting.

The Chairman of the Company does not receive any fees
for acting as Chairman other than the fees as a Non-
Executive Director.

Each Non-executive Director is expected to commit a
minimum of 24 days per year in fulfilling their duties as
a director of the Company.

Other than the External Directors, there are no existing or
proposed service contracts or consultancy agreements
between any of the directors and the Company which
cannot be terminated by the Company within twelve
months without payment of compensation. Copies of the
directors’ letters of appointment and service agreements
are available for inspection at the Company’s registered
office.

In addition, there are more stringent regulations
around the exact roles of Non-Executive Directors. The
Audit and Remuneration Committee Chairmen must
be External Directors who once appointed serve for
three years but are then restricted from becoming the
Chairman or holding any paid role at the Company for
two years after they leave the Board.

NON-EXECUTIVE DIRECTORS’ LETTERS OF
APPOINTMENT

PAYMENTS TO DEPARTING DIRECTORS

During the year, no director has departed from the
Board and therefore there were no payments to
directors who departed in 2018, nor has it made any
payments to directors for loss of office.

On their initial appointment, each of the Non-Executive
Directors signed a letter of appointment with the
Company, for an initial period of three years. Letters
of appointment of Penny Judd and Steven Baldwin,
serving as Non-Executive Directors, have been drafted
in accordance with provision B.7.1 of the Code, thus
obliging them to retire at each Annual General Meeting
and be subject to annual re-election by shareholders to
serve for a further term of one year. The amendments
have been drafted such that renewed appointment

Plus500 Ltd. 2018 Annual ReportDirector

Penny Judd

Charles Fairbairn

Daniel King

Steven Baldwin

Role

Chair

SID

NED

2018 Fee

£90,000

£90,625*

£54,500

2019 Fee

£150,000

£120,000

£65,000

* Including fees of £15,625 for additional days during 2018

The remuneration of the Company's five most highly
compensated executives in 2018 (including two of its
Executive Directors) was as follows:

2018 Fees ($)

Asaf Elimelech

6,030,487

Elad Even-Chen

6,030,487

David Zruia

2,556,164

Nir Zatz

Mark Winton

946,746

923,443

SHARE PRICE PERFORMANCE

The following graph sets out the performance of
the Company’s share price since its listing until 31
December 2018, compared to the AIM Index and
FTSE250. These are deemed to be the most appropriate
indices for comparative purposes.

SHARES HELD BY DIRECTORS

The number of Ordinary Shares of the Company in
which the directors were beneficially interested at 1
January 2018 and at 31 December 2018 was:

Penny Judd*

1 January
2018

21,062

31 December
2018

25,691

Gal Haber

4,209,097

1,805,457

Asaf Elimelech

Elad Even-Chen

Charles Fairbairn

Daniel King

90,000

24,140

Steven Baldwin

40,000

27,169

Note: Save as disclosed above, none of the Directors has any

interest in the share capital of the Company or of any of its

subsidiaries nor persons connected to the Directors (within

the meaning of s.252 of the Companies Act) have any such

interest, whether beneficial or non-beneficial.
* The shares are registered in the name of Penny Judd’s
spouse, Julian Judd.

This Report has been approved by the Board of
Directors of Plus500 Limited.

Signed on behalf of the Board.

Daniel King
Chairman of the Remuneration Committee
12 April 2019

Plus500 Ltd. 2018 Annual ReportDIRECTORS' REPORT

The Directors of Plus500 present their report for the year ended 31 December 2018.
The Directors believe that the requisite components of this report are set out elsewhere in this Annual Report and/ or
on the Company’s website www.plus500.com, The table below sets out where the necessary disclosure can be found.

Directors

Results and dividends

Articles of Association

Share Capital

Directors that have served during the year and summaries of

the current director’s key skills and experience are set out in the

Governance Report on pages 61 to 64.

Results for the year ended 31 December 2018 are set out in the

financial review on pages 34 to 37 and the Consolidated Statement

of Comprehensive Income on page 97. Information regarding the

proposed final dividend can be found in the financial review on page

36. Dividend payments made during the year ended 31 December

2018 can be found in the notes to the Consolidated Financial

Statements on page 117.

The Company’s full Articles of Association can be found on the

Company’s website at https://www.plus500.co.uk/Investors/

Constitutional Documents. Any amendments made to the Articles

of Association may be made by a special resolution of shareholders.

Details of the Company’s share capital are set out in note 19 to the

Consolidated Financial Statements on page 121. At the close of

business on 11 April 2019, the Company had 113,366,768 Ordinary

Shares in issue, and additional 1,521,609 Ordinary Shares are held in

treasury by the Company.

Details on the Company’s current authority to purchase its own

Authority to purchase own shares

shares and that being sought at the forthcoming Annual General

Directors’ interests

Directors’ indemnities

Meeting are set out in the Governance Report on page 61.

Details of the directors’ beneficial interests are set out in the

Remuneration Report on page 76.

The Company has given indemnities to each of the directors in

respect of any liability arising against them in connection with the

Company’s (and any associated company’s) activities in the conduct

of their duties. These indemnities are subject to the conditions set

out in their indemnification agreements and remain in place at the

date of this report.

Directors’ and Officers’ Liability Insurance cover is in place at the

Directors’ and Officers’ Liability Insurance

date of this report. Cover is reviewed annually and the last renewal

Major interests in shares

Political contributions

Diversity policy

was carried out in October 2018.

Notifiable major shares interests of which the Company has been

made aware are set out on page 61 of the Governance Report.

The Company did not make any donations to political organisations

during the year.

In December 2018 the Company approved and published on its

website its policy on diversity https://cdn.plus500.com/media/

Investors/Docs/EqualityAndDiversityPolicy.pdf

Plus500 Ltd. 2018 Annual ReportFinancial risk

Activities in research and development

Auditors

Details of the Company’s policies on financial risk management and

the Company’s exposure to price risk, credit risk, liquidity risk and

cash flow risk are outlined in note 21 to the Consolidated Financial

Statements.

Details about the Company’s future developments can be found in

the Strategic Review on pages 18 and 19.

A resolution to reappoint Kesselman & Kesselman, a member firm

of PricewaterhouseCoopers International Limited as auditors will be

proposed at the Annual General Meeting.

Post balance sheet events

There have been no post balance sheet events.

Audit information

Each of the directors at the date of the approval of this report

confirms that:

•

so far as he/she is aware, there is no relevant audit information

of which the Company’s auditors are unaware; and

he/she has taken all the reasonable steps that he/she ought to

have taken as a director to make himself/herself aware of any

relevant audit information and to establish that the Company’s

auditors are aware of the information.

Listing Rule 9.8.4R disclosures
The table below sets out where disclosures required in compliance with Listing Rule 9.8.4R are located.

Interest capitalised and tax relief

Publication of unaudited financial information

Details of long term incentive schemes

Waiver of emoluments by a director

Waiver of future emoluments by a director

Non pre-emptive issues of equity for cash

Non pre-emptive issues of equity for cash by
major subsidiary undertakings

Page

n/a

Parent company participation in a placing by a
listed subsidiary

Contracts of significance

Provision of services by a controlling shareholder

Agreements with controlling shareholders

Shareholder waivers of dividends

Shareholder waivers of future dividends

Page

n/a

The Directors’ Report has been approved by the Board of Directors of Plus500 Limited.

Signed on behalf of the Board

Elad Even-Chen
Chief Financial Officer

12 April 2019

Plus500 Ltd. 2018 Annual ReportCORPORATE LAW

MANDATORY BIDS, SQUEEZE OUT AND SELL OUT RULES RELATING TO
THE COMPANY'S ORDINARY SHARES

As the Company is incorporated in Israel, it is subject to
Israeli law and the City Code on Takeovers and Mergers
will not apply to the Company, except to the extent the
Company incorporated in its Articles of Association
provisions analogous to Rules 4, 5, 6 and 8 of the
Takeover Code, as described below.

MERGERS

The Companies Law permits merger transactions,
provided that each party to the transaction obtains
the approval of its board of directors and shareholders
(excluding certain merger transactions which do not
require the approval of the shareholders, as set forth in
the Companies Law).

Pursuant to the Company’s Articles of Association, the
shareholders of the Company are required to approve
the merger by the affirmative vote of a majority of
the outstanding Ordinary Shares of the Company. In
addition, for purposes of the shareholder vote of each
party, the merger will not be deemed approved if a
majority of the shares not held by the other party, or
by any person who holds 25 per cent. or more of the
shares or the right to appoint 25 per cent. or more of
the directors of the other party, has voted against the
merger.

The Companies Law requires the parties to a proposed
merger to file a merger proposal with the Israeli
Registrar of Companies, specifying certain terms of
the transaction. Each merging company’s board of
directors and shareholders must approve the merger.
Shares in one of the merging companies held by the
other merging company or certain of its affiliates are
disenfranchised for purposes of voting on the merger.
A merging company must inform its creditors of the
proposed merger. Any creditor of a party to the merger
may seek a court order blocking the merger, if there is a
reasonable concern that the surviving company will not
be able to satisfy all of the obligations of the parties to
the merger. Moreover, a merger may not be completed

until at least 50 days have passed from the time that
the merger proposal was filed with the Israeli Registrar
of Companies and at least 30 days have passed from
the approval of the shareholders of each of the merging
companies.

In addition, the provisions of the Companies Law that
deal with ‘‘arrangements’’ between a company and
its shareholders may be used to effect squeeze- out
transactions in which the target company becomes
a wholly-owned subsidiary of the acquirer. These
provisions generally require that the merger be
approved by a majority of the participating shareholders
holding at least 75 per cent. of the shares voted on
the matter, as well as 75 per cent. of each class of
creditors. In addition to shareholder approval, court
approval of the transaction is required.

Under the Companies Law, in the event the Company
enters into a merger or an “arrangement” under the
Companies Law (as described above), the provisions
of the Companies Law and the Articles of Association
provisions analogous to Rules 4,5,6 and 8 of the
Takeover Code (as described below) do not apply.

COMPANIES LAW - SPECIAL TENDER OFFER

The Companies Law provides that an acquisition of
shares of a public Israeli company must be made by
means of a special tender offer if, as a result of the
acquisition, the purchaser could become a holder of 25
per cent. or more of the voting rights in the Company.
This rule does not apply if there is already another
holder of at least 25 per cent. of the voting rights in the
Company.

Similarly, the Companies Law provides that an
acquisition of shares in a public company must be
made by means of a tender offer if, as a result of the
acquisition, the purchaser could become a holder
of more than 45 per cent. of the voting rights in the
company, if there is no other shareholder of the

Plus500 Ltd. 2018 Annual Reportcompany who holds more than 45 per cent. of the
voting rights in the company.

•

A special tender offer must be extended to all
shareholders of a company but the offeror is not
required to purchase shares representing more than 5
per cent. of the voting power attached to the company’s
outstanding shares, regardless of how many shares are
tendered by shareholders. A special tender offer may be
consummated only if (i) at least 5 per cent. of the voting
power attached to the company’s outstanding shares
will be acquired by the offeror and the number of shares
tendered in the offer exceeds the number of shares
whose holders objected to the offer.

If a special tender offer is accepted, then the purchaser
or any person or entity controlling it or under common
control with the purchaser or such controlling person
or entity may not make a subsequent tender offer for
the purchase of shares of the target company and may
not enter into a merger with the target company for a
period of one year from the date of the offer, unless the
purchaser or such person or entity undertook to effect
such an offer or merger in the initial special tender offer.
Shares that are acquired in violation of this requirement
to make a tender offer will be deemed Dormant Shares
(as defined in the Companies Law) and will have no
rights whatsoever for so long as they are held by the
acquirer.

ISRAEL COMPANIES LAW -
FULL TENDER OFFER

Under the Companies Law, a person may not purchase
shares of a public company if, following the purchase,
the purchaser would hold more than 90 per cent. of
the company’s shares or of any class of shares, unless
the purchaser makes a tender offer to purchase all of
the target company’s shares or all the shares of the
particular class, as applicable. If, as a result of the
tender offer, either:

•

the purchaser acquires more than 95 per cent.
of the company’s shares or a particular class of
shares and a majority of the shareholders that did
not have a Personal Interest accepted the offer;
or the appointing of experienced and suitably
qualified staff to take responsibility for key business
functions to ensure maintenance of high standards
of performance.

the purchaser acquires more than 98 per cent.
of the company’s shares or a particular class of
shares; then, the Companies Law provides that the
purchaser automatically acquires ownership of
the remaining shares. However, if the purchaser is
unable to purchase more than 95 per cent. or 98
per cent., as applicable, of the company’s shares or
class of shares, the purchaser may not own more
than 90 per cent. of the shares or class of shares of
the target company.

ARTICLES OF ASSOCIATION –
TAKEOVER PROVISIONS

In addition to the tender offer rules applied by the
Companies Law (as described below), offers are also
subject to the takeover provisions incorporated in the
Company's Articles of Association, which provisions
are generally analogous to Rules 4, 5, 6 and 8 of the
Takeover Code.

Plus500 Ltd. 2018 Annual ReportDIRECTORS’ RESPONSIBILITY STATEMENT

Consolidated Financial Statements comply with
applicable law.

They are also responsible for safeguarding the assets
of the Group and hence for taking reasonable steps
in the prevention and detection of fraud and other
irregularities.

Each of the directors confirms that, to the best of each
person’s knowledge and belief:
•

The Group Consolidated Financial Statements,
which have been prepared in accordance with IFRS,
give a true and fair view of the assets, liabilities,
financial position and profit of the Group.
The Directors’ Report includes a fair review of the
development and performance of the business
and the position of the Group, together with a
description of the principal risks and uncertainties
that it faces.

•

The directors consider that the Annual Report and
Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Group’s performance,
business model and strategy.

The directors are also responsible for preparing
the Directors’ Report, Strategic Report, Corporate
Governance Report and the Directors’ Remuneration
Report.

On behalf of the Board

Asaf Elimelech
Chief Executive Officer
12 April 2019

The directors are responsible for preparing the annual
report and the Consolidated Financial Statements
in accordance with applicable law and regulations.
The Companies Law requires the directors to prepare
Consolidated Financial Statements for each financial
year. Under that law the directors have elected to
prepare the Consolidated Financial Statements in
accordance with International Financial Reporting
Standards as issued by the IASB (“IFRS”). The
directors must not approve the Consolidated Financial
Statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group
and the profit or loss of the Group for that period.
The directors considered the information provided in
the Annual Report and how it assists the Company's
shareholders in understanding the Group's position,
performance business model and strategy.

In preparing these Consolidated Financial Statements,
the directors are required to:
•

Present fairly the financial position, financial
performance and cash flows of the Group
Present information, including accounting
policies, in a manner that provide relevant, reliable,
consistent and understandable information

•

• Make judgments and accounting estimates that are

•

reasonable
State whether applicable IFRS have been followed,
subject to any material departures disclosed and
explained in the Consolidated Financial Statements;
Provide additional disclosures when compliance
with the specific requirements in IFRS is insufficient
to enable users to understand the impact of
transactions, other events and conditions on
the Group's financial position and financial
performance
Prepare the Consolidated Financial Statements on
the going concern basis unless it is inappropriate to
presume the Group will continue in business

The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position
of the Group and enable them to ensure that the

Plus500 Ltd. 2018 Annual Report87

Plus500 Ltd. 2018 Annual ReportPlus500 Limited

FINANCIAL STATEMENTS

Plus500 Ltd. 2018 Annual ReportTABLE OF CONTENTS

INDEPENDENT REPORT OF THE AUDITORS

CONSOLIDATED FINANCIAL STATEMENTS IN

U.S. DOLLARS ($):

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Page

91-95

98-99

101

102

103-127

Plus500 Ltd. 2018 Annual Report90

Plus500 Ltd. 2018 Annual ReportINDEPENDENT REPORT OF THE AUDITORS

Independence
We are independent of the Group in accordance
with the International Ethics Standards Board
for Accountants’ Code of Ethics for Professional
Accountants (IESBA Code) that is relevant to our audit
of the consolidated financial statements. We have
fulfilled our other ethical responsibilities in accordance
with the IESBA Code.

Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the consolidated financial statements of
the current period. These matters were addressed in
the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on
these matters.

To the shareholders of Plus500 Ltd.

REPORT ON THE AUDIT OF THE
CONSOLIDATED FINANCIAL STATEMENTS

Opinion
In our opinion, the consolidated financial statements
present fairly, in all material respects the consolidated
financial position of Plus500 Ltd. (the Company) and its
subsidiaries (together ‘the Group’) as at 31 December
2018 and their consolidated results of operations and
their consolidated cash flows for the year then ended
in accordance with International Financial Reporting
Standards ("IFRS") as issued by the International
Accounting Standards Board.

What we have audited
The Group’s consolidated financial statements
comprise:
•

•

the consolidated statement of financial position as
at 31 December 2018;
the consolidated statement of comprehensive
income for the year then ended;
the consolidated statement of changes in equity for
the year then ended;
the consolidated statement of cash flows for the
year then ended; and
the notes to the consolidated financial statements,
which include a summary of significant accounting
policies.

Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (ISAs). Our
responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit
of the consolidated financial statements section of our
report.

We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.

Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel, P.O Box 50005 Tel-
Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il

Plus500 Ltd. 2018 Annual ReportKEY AUDIT MATTER

Revenue recognition
The Group has developed and operates an online and
mobile trading platform within Contracts of Differences
– CFD.

The Group generates its trading revenue from dealing
spreads charged on trades executed with clients,
overnight charges levied on open customer positions
and net gains or losses from its trading activity.

The computation of revenue is carried out automatically
by using its own developed platform which is an internal
IT system (the “Platform”).

The revenue is calculated based on several parameters.
Part of the parameters that feed into that calculations
are received from external quotation suppliers and
others depend on internally developed program code
within the Platform.

The revenue depends on a combination of the effective
operation and accuracy of controls over, and access
rights to, the Platform.

HOW OUR AUDIT ADDRESSED THE KEY AUDIT
MATTER

Our audit predominantly focused on the Group's control
environment, including the IT environment. We tested key
controls over the revenue process, from the acceptance
of a new customer, through the trading activity to the
revenue that is recorded in the Company's general ledger.

We tested the operating effectiveness of IT general
controls, including: access to programs and supporting
data, program changes and computer operations for the
Platform and for the ERP system. Furthermore, we tested
program development controls over the new ERP system
implemented in 2018 (see also the “Implementation of a
new ERP system” key audit matter below).

We also tested, through a combination of controls and
substantive testing techniques, the following:

•

Profit/loss calculations in respect of closed
positions;

• Calculation of the fair value adjustment of year-end
positions held by clients and the calculation of the
“open positions” report produced by the platform;
• Appropriate use of feeds the Group receives from its
data suppliers to confirm the integrity of the feeds
used to calculate the open/ close position; and
• Controls associated with cash reconciliations

and reconciliations with external counterparties
throughout the year including client deposits/
withdrawals.

We agreed cash accounts of client deposits to external
third party evidence at the year-end by receiving
independent confirmations from banks and other third
party providers. In addition we tested the interface
between the data of client money as presented in the
Platform to the general ledger to ensure completeness
and accuracy.

Finally, to address the risk that fraudulent adjustments or
transactions had been entered into the trading systems,
we read client activity reports and read a sample of client
complaints.

No material issues noted.

Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel, P.O Box 50005 Tel-
Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il

Plus500 Ltd. 2018 Annual ReportImplementation of a new ERP system

During 2018 a new ERP system was implemented.
The new ERP system replaced the previous ERP system
which contained the general ledgers of the Company
and its subsidiaries. The new ERP system is an off-the-
shelf cloud based system.

The Group used both the new ERP system and
the pervious one in parallel as part of testing the
implementation of the new ERP system. With the Board
of Directors’ approval, and following the implementation
process, only the new ERP system is in use at the year-
end.

The Group implemented its own internal configuration
with the Platform for the revenue data stream.

Implementation of the new ERP system was a complex
process which required management attention in order
to ensure the accuracy and completeness of data
migration as well as implementing effective IT general
controls on time.

We tested the operating effectiveness of controls
related to the new ERP system and to the process of its
implementation, including:

•

IT general controls in relation to the new ERP
system with a focus on access to programs and
supporting data, program changes and computer
operations;
controls around the program development process
and migration of data, including proper testing
procedures and approvals by the Group's Board of
Directors and Group's steering committee prior to
actual system implementation;
completeness and accuracy of the information
transferred from the Platform to the new ERP
system through the new interface between both
systems. The interface between the Platform
and the new ERP system was tested prior to the
implementation of the new ERP system to ensure
completeness and accuracy before go-live; and
completeness and accuracy of balances migrated
to the new ERP system at the implementation date,
for the Company and all of its subsidiaries.

No material issues noted.

GOING CONCERN
With respect to the statement on going concern
included in the Annual Report and Accounts, we are
required to report if the directors’ statement relating
to Going Concern in accordance with Listing Rule
9.8.6R(3) is materially inconsistent with our knowledge
obtained in the audit. We have nothing to report having
performed our review.

OTHER INFORMATION
The directors are responsible for the other information.
The other information comprises all of the information
in the Annual Report and Accounts (but does not
include the consolidated financial statements and our
auditor’s report thereon).

Our opinion on the consolidated financial statements
does not cover the other information and we do not
express any form of assurance conclusion thereon.

In connection with our audit of the consolidated
financial statements, our responsibility is to read the
other information identified above and, in doing so,
consider whether the other information is materially
inconsistent with the consolidated financial statements
or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we are
required to report that fact. We have nothing to report in
this regard.

Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel, P.O Box 50005 Tel-
Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il

Plus500 Ltd. 2018 Annual Report
Based on the responsibilities described above and
our work undertaken in the course of the audit, the
Listing Rules of the United Kingdom Financial Conduct
Authority (FCA) require us also to report on certain
matters as described below.

THE DIRECTORS’ ASSESSMENT OF THE
PROSPECTS OF THE GROUP
We have nothing to report having performed a review
of the directors’ statement that they have carried out
a robust assessment of the principal risks facing the
Group and statement in relation to the longer-term
viability of the Group. Our review was substantially
less in scope than an audit and only consisted of
making inquiries and considering the directors’
process supporting their statements; checking that the
statements are in alignment with the relevant provisions
of the UK Corporate Governance Code issued in
April 2016 (the “Code”); and considering whether the
statements are consistent with the knowledge and
understanding of the group and the environment
obtained in the course of the audit.

UK CORPORATE GOVERNANCE CODE
We have nothing to report in respect of our
responsibility to report when the directors’ statement
relating to the company’s compliance with the Code
does not properly disclose a departure from a relevant
provision of the Code specified, under the Listing Rules
of the FCA, for review by the auditors.

RESPONSIBILITIES OF MANAGEMENT AND
THOSE CHARGED WITH GOVERNANCE
FOR THE CONSOLIDATED FINANCIAL
STATEMENTS
Management is responsible for the preparation and fair
presentation of the consolidated financial statements
in accordance with International Financial Reporting
Standards ("IFRS") as issued by the International
Accounting Standards Board, and for such internal
control as management determines is necessary
to enable the preparation of consolidated financial
statements that are free from material misstatement,
whether due to fraud or error.

In preparing the consolidated financial statements,
management is responsible for assessing the Group’s

ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and
using the going concern basis of accounting unless
management either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to
do so.

Those charged with governance are responsible for
overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE
AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements as
a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise
professional judgment and maintain professional
scepticism throughout the audit. We also:

•

Identify and assess the risks of material
misstatement of the consolidated financial
statements, whether due to fraud or error, design
and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the
override of internal control.

• Obtain an understanding of internal control relevant
to the audit in order to design audit procedures
that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.

Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel, P.O Box 50005 Tel-
Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il

Plus500 Ltd. 2018 Annual ReportThe engagement partner on the audit resulting in this
independent auditor’s report is Maya Ben Shmuel.

Tel Aviv, Israel
Kesselman & Kesselman
Certified Public Accountants (lsr.)
A member firm of PricewaterhouseCoopers
International Limited

Maya Ben Shmuel
Partner
Tel Aviv, Israel
12 April 2019

•

Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting
estimates and related disclosures made by
management.

• Conclude on the appropriateness of management’s

use of the going concern basis of accounting and,
based on the audit evidence obtained, whether
a material uncertainty exists related to events or
conditions that may cast significant doubt on the
Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated
financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events
or conditions may cause the Group to cease to
continue as a going concern.
Evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the
consolidated financial statements represent the
underlying transactions and events in a manner
that achieves fair presentation.

•

• Obtain sufficient appropriate audit evidence

regarding the financial information of the entities or
business activities within the Group to express an
opinion on the consolidated financial statements.
We are responsible for the direction, supervision
and performance of the Group audit. We remain
solely responsible for our audit opinion.
• We communicate with those charged with

governance regarding, among other matters,
the planned scope and timing of the audit and
significant audit findings, including any significant
deficiencies in internal control that we identify
during our audit.

Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel, P.O Box 50005 Tel-
Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il

Plus500 Ltd. 2018 Annual Report96

Plus500 Ltd. 2018 Annual ReportCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

U.S. dollars in millions

TRADING INCOME

Selling and marketing expenses

Administrative and general expenses

OPERATING PROFIT

Financial income

Financial expenses

FINANCIAL EXPENSE - NET

PROFIT BEFORE INCOME TAX

INCOME TAX EXPENSE

PROFIT AND COMPREHENSIVE INCOME FOR THE YEAR

U.S. dollars

EARNINGS PER SHARE (basic and diluted)

Note

Year ended 31 December

2018

720.4

175.9

39.2

505.3

6.1

8.4

(2.3)

503.0

124.0

379.0

2017

437.2

156.0

22.7

258.5

3.2

8.3

(5.1)

253.4

53.7

199.7

3.33

1.75

The accompanying notes are an integral part of the financial statements.

Plus500 Ltd. 2018 Annual ReportCONSOLIDATED STATEMENT OF FINANCIAL POSITION

U.S. dollars in millions

ASSETS

Non-current assets

Property, plant and equipment

Intangible assets

Deferred income taxes

Long term restricted deposit

Total non-current assets

Current assets

Income tax receivable

Other receivables

Restricted deposit

Short-term bank deposit

Cash and cash equivalents

Total current assets

TOTAL ASSETS

LIABILITIES

Non-current liabilities

Share-based compensation

Total non-current liabilities

Current liabilities

Share-based compensation

Income tax payable

Other payables

Service suppliers

Trade payables – due to clients

Total current liabilities

TOTAL LIABILITIES

As of 31 December

Note

2018

2017

3.1

0.2

0.9

0.6

4.8

0.8

11.6

0.4

315.3

328.1

332.9

0.3

7.3

9.9

20.1

14.3

0.3

51.9

52.2

3.3

0.1

0.5

0.3

4.2

17.2

7.7

0.4

0.2

241.9

267.4

271.6

4.2

2.3

12.1

22.6

4.5

45.7

The accompanying notes are an integral part of the financial statements.

Plus500 Ltd. 2018 Annual ReportCONSOLIDATED STATEMENT OF FINANCIAL POSITION

(CONTINUED)

As of 31 December

U.S. dollars in millions

Note

2018

2017

EQUITY

Ordinary shares

Share premium

Cost of Company's shares held by the Company

Retained earnings

Total equity

TOTAL EQUITY AND LIABILITIES

0.3

22.2

(9.8)

268.0

280.7

332.9

0.3

22.2

(7.5)

210.9

225.9

271.6

Asaf Elimelech
Chief Executive Officer

Elad Even-Chen
Group Chief Financial Officer

Penny Judd
Non-Executive Director and
Chairman

Date of approval of the consolidated financial statements by the Company's Board of Directors:
12 April 2019.

The accompanying notes are an integral part of the financial statements.
Registered Company number (Israel): 514142140

Plus500 Ltd. 2018 Annual Report100

Plus500 Ltd. 2018 Annual ReportCONSOLIDATED STATEMENT OF CHANGES IN EQUITY

U.S. dollars in millions

Ordinary
shares

Share
premium

Cost of
Company's
shares held by
the Company

BALANCE AT 1 JANUARY 2017

0.3

22.2

CHANGES DURING THE YEAR ENDED 31

DECEMBER 2017

Profit and comprehensive income for the year

TRANSACTION WITH SHAREHOLDERS:

Dividend

Acquisition of own shares

BALANCE AT 31 DECEMBER 2017

0.3

22.2

CHANGES DURING THE YEAR ENDED 31
DECEMBER 2018

Profit and comprehensive income for the year

TRANSACTION WITH SHAREHOLDERS:

Dividend

Acquisition of own shares

BALANCE AT 31 DECEMBER 2018

0.3

22.2

(7.5)

(2.3)

(9.8)

Retained
Earnings

Total

113.5

136.0

199.7

(102.3)

210.9

(7.5)

225.9

379.0

(321.9)

268.0

(2.3)

280.7

The accompanying notes are an integral part of the financial statements.

101

Plus500 Ltd. 2018 Annual ReportCONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in millions

OPERATING ACTIVITIES

Cash generated from operations (see Note 22)

Income tax paid, net

Interest received (paid), net

Net cash flows provided by operating activities

INVESTING ACTIVITIES

Repayment (Purchase) of deposits

Purchase of restricted deposits

Purchase of property, plant and equipment and intangible assets

Net cash flows used in investing activities

CASH FLOWS USED IN FINANCING ACTIVITIES

Dividend paid to equity holders of the Company

Acquisition of own shares

Net cash flows used in financing activities

Year ended 31 December

2018

2017

495.0

(98.4)

3.8

400.4

0.2

(0.3)

(0.6)

(0.7)

278.7

(66.5)

(0.2)

212.0

(0.2)

(0.6)

(1.0)

(321.9)

(102.3)

(2.3)

(7.5)

(324.2)

(109.8)

INCREASE IN CASH AND CASH EQUIVALENTS

75.5

101.2

BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR

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

BALANCE OF CASH AND CASH EQUIVALENTS AT END OF THE YEAR

241.9

(2.1)

315.3

136.5

4.2

241.9

The accompanying notes are an integral part of the financial statements.

102

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - GENERAL INFORMATION

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

The address of the Company's principal offices is
Building 25, Matam, Haifa 3190500, Israel.

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 ("European Economic Area") and the Middle East
and has customers located in more than 50 countries.
The Group operates through operating subsidiaries
regulated by the FCA (Financial Conduct Authority) in
the UK, ASIC (Australian Securities and Investments
Commission) in Australia, the CySEC (Cyprus Securities
and Exchange Commission) in Cyprus, the ISA (Israeli
Securities Authority) in Israel, the FMA (Financial
Market Authority) in New Zealand, the FSCA (Financial
Sector Conduct Authority) in South Africa and the MAS
and Enterprise (Monetary Authority of Singapore) in
Singapore.

The Company also have a subsidiary in Bulgaria which
provides operational services to the Group.

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.

NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

a. Basis of accounting and accounting policies
The Group's financial information as of 31 December
2018 and 2017 and for each of the two years in the
period ended on 31 December 2018 are in compliance
with International Financial Reporting Standards that
consist of standards and interpretations issued by the
International Accounting Standard Board (hereafter –
IFRS).

The significant accounting policies described below
have been applied consistently in relation to all the
reporting periods, unless otherwise stated.

The financial information has been prepared under the
historical cost convention, subject to adjustments in
respect of revaluation of financial assets at fair value
through profit or loss presented at fair value.

b. 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 consolidated financial
statements.

c. Principles of consolidation
The Company controls the subsidiaries since it is
exposed to, or has rights to, variable returns from its
involvement with the entities and has the ability to
affect those returns through its power over them.

103

Plus500 Ltd. 2018 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)

1. The consolidated financial statements

include the accounts of the Company and its
subsidiaries.

Intercompany balances and transactions
between the Group's entities have been
eliminated.

3. Accounting policies of the subsidiaries have
been changed where necessary to ensure
consistency with the policies adopted by the
Group.

d. Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the
operating segments.
As stated in note 1 above, the Group operates in one
operating segment: CFD trading.

e. Foreign currency translation
1. Functional and Presentation Currency

Items included in the financial information of each
of the Group’s entities are measured using the
currency of the primary economic environment
in which that entity operates (the "functional
currency"). The consolidated financial statements
are presented in U.S. dollars ("USD"), which is the
Group's functional and presentation currency.

2. Transactions and balances

Foreign currency transactions in currencies different
from the functional currency (hereafter – "foreign
currency") are translated into the functional currency
using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured.
Gains and losses arising from changes in exchange
rates are presented in the consolidated statement
of comprehensive income among "financial income
(expenses)".

104

f. Trading income
Trading income represents gains (including
commission) and losses arising on client trading
activity, primarily in contracts for difference on shares,
indices, commodities, cryptocurrencies and foreign
exchange. Open client positions are carried at fair
value and gains and losses arising on this valuation
are recognised as trading income, as well as gains and
losses realised on positions that have closed.

g. Leases
Leases in which a significant portion of the risks and
rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under
operating leases (net of any incentives received from
the lessor) are charged to profit or loss on a straight-line
basis over the period of the lease.

h. Share-based compensation
The Group operates a cash- settled share-based
compensation plan, under which it receives services
from employees as consideration for Share Appreciation
Rights. The fair value of the employee services received
in exchange for the grant of the rights are recognised
as an expense in the consolidated statements of
comprehensive income. At the end of each reporting
period, the Group evaluates the Share Appreciation
Rights based on their fair value and the change in the
fair value is recognised in the consolidated statements
of comprehensive income.

i. Current income tax
Tax is recognised in the consolidated statement of
comprehensive income.

The current income tax charge is calculated on the
basis of the tax laws enacted at the statement of financial
position date in countries where the Company and the
subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken
in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis
of amounts expected to be paid to the tax authorities.

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)

j. Deferred income tax
Deferred income tax is recognised, using the liability
method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements.

Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted
by the balance sheet date and are expected to apply
when the related deferred income tax asset is realised
or the deferred income tax liability is settled.

The Group recognises deferred taxes on temporary
differences arising on investments in subsidiaries,
except where the timing of the reversal of the temporary
difference is controlled by the Group and it is probable
that the temporary difference will not reverse in the
foreseeable future.

Depreciation is calculated using the straight-line
method to allocate the cost of property, plant and
equipment less their residual values over their
estimated useful lives, as follows:

Computers and office equipment

Leasehold improvements

Percentage
of annual
depreciation

6-33

Leasehold improvements are amortised by the straight-
line method over the terms of the lease, which is shorter
than the asset's useful life.

The asset’s residual values, the depreciation method
and useful lives are reviewed, and adjusted if
appropriate, at least once a year.

Deferred income tax assets are recognised only to the
extent that it is probable that future taxable profit will be
available against which the temporary differences can
be utilised.

An assets' carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.

k. Property, plant and equipment
The cost of a property, plant and equipment item is
recognised as an asset only if: (a) it is probable that the
future economic benefits associated with the item will
flow to the Group and (b) the cost of the item can be
measured reliably.

Property, plant and equipment are stated at historical
cost less accumulated depreciation. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items and only when the two criteria
mentioned above for recognition as assets are met.

l. Financial instruments
Starting 1 January 2018, IFRS 9 – "Financial
Instruments" is effective.

1. Classification

From 1 January 2018, the Group classifies its
financial assets in the following measurement
categories:
these to be measured subsequently at fair value
through profit and loss, and
these to be measured at amortised cost.

•

The classification depends on the entity's business
model for managing the financial assets and the
contractual terms of the cash flows.

For assets measured at fair value, gains and losses
will be recorded in the statement of comprehensive
income.

105

Plus500 Ltd. 2018 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)

2. Recognition and derecognition

Regular way purchases and sales of financial
assets are recognised on trade-date, the date on
which the Group commits to purchase or sell the
assets. Financial assets are derecognised when
the rights to receive cash flows from the financial
assets have expired or have been transferred and
the Group has transferred substantially all the risks
and rewards of ownership.

3. Measurement

At initial recognition, the Group measures a
financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit
or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at
FVPL are expensed in profit or loss.

Financial assets with embedded derivatives are
considered in their entirety when determining
whether their cash flows are solely payment of
principal and interest.

Details on how the fair value of financial
instruments is determined are disclosed in note 21.
.

4. Accounting policies applied until

31 December 2017
The Group has applied IFRS 9 retrospectively, and
has elected not to restate comparative information.
As a result, the comparative information provided
continues to be accounted for in accordance with
the group’s previous accounting policy, as follows:

Classification
Until 31 December 2017, the group classified its
financial assets in the following categories:
•

financial assets at fair value through profit and
loss,
loans and receivables

•
The classification depended on the purpose
for which the financial assets were acquired.

106

Management determined the classification of its
financial assets at initial recognition.

(a). Financial instruments at fair value through

profit and loss
This category includes financial assets and
financial liabilities held for trading. A financial
instrument is classified in this category if acquired
principally for the purpose of selling in the short-
term, or if designated by management in this
category. Derivatives are also categorised as held
for trading unless they are designated as hedges.
Assets in this category are classified as current
assets if expected to be settled within 12 months;
otherwise, they are classified as non-current.
The Group's financial instruments at fair value
through profit or loss comprise 'Financial derivative
open positions' offset from, or presented with,
'Customer deposits, net' within 'Trade payables
- due to clients' (see note 2j) in the consolidated
statements of financial position.

(b). Loans and receivables

Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are
not quoted in an active market. They are included
in current assets, except for maturities greater than
12 months after the statement of financial position
date. These are classified as non-current assets.
The Group's loans and receivables comprise 'Cash
and cash equivalents', 'Short-term bank deposit',
'Restricted deposits', 'Accounts receivable' and
'Long-term restricted deposit' in the consolidated
statements of financial position.

Recognition and derecognition
Investments are initially recognised at fair value
plus transaction costs for all financial assets
not measured at fair value through profit or loss.
Financial assets are derecognised when the rights
to receive cash flows from the investments have
expired or have been transferred and the Group has
transferred substantially all risks and rewards of
ownership. A financial instrument is derecognised

Plus500 Ltd. 2018 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)

when the contract that gives rise to it is settled,
sold, cancelled or expires.

Gains or losses arising from changes in the fair value
of the 'financial instruments at fair value through profit
or loss' category are presented in the consolidated
statements of comprehensive income within 'Trading
income' in the period in which they arise.

Measurement
Financial assets measured at fair value through
profit or loss, are initially recognised at fair value and
transaction costs are expensed in profit or loss.
Financial assets at fair value through profit or loss are
subsequently carried at fair value. Receivables are
measured in subsequent periods at amortised cost
using the effective interest method.

Offsetting financial instruments
Financial assets and liabilities are offset and the net
amount reported in the consolidated statements of
financial position when there is a legally enforceable
right to offset the recognised amounts and there is
an intention to settle on a net basis, or realise the
asset and settle the liability simultaneously.

The legally enforceable right must not be contingent
on future events and must be enforceable in the
normal course of business and in the event of
default, insolvency or bankruptcy of the Company or
the counterparty.

m. Cash and cash equivalents
Cash and cash equivalents include cash in hand, short-
term bank deposits and other highly liquid short-term
investments, the original maturity of which does not
exceed three months.

requirements. Segregated client funds comprise retail
client funds held in segregated client money accounts.

Segregated client money accounts hold statutory
trust status restricting the Group’s ability to control the
monies and accordingly such amounts are not reflected
as Company's assets in the consolidated statements of
financial position.

n. Dividends
Dividend distribution is recognised as a liability in the
Group's statement of financial position on the date on
which the dividends are approved by the Group’s Board
of Directors.

o. Employee benefits and Pension Obligations
The Group operates various pension schemes. The
schemes are generally funded through payments to
insurance companies or trustee-administered pension
funds.

The Group has defined contribution plans. A defined
contribution plan is a pension plan under which the
Group pays fixed contributions into a separate entity.
The Group has no legal or constructive obligations
to pay further contributions if the fund does not hold
sufficient assets to pay all employees the benefits
relating to employee service in the current and prior
periods.

The Group pays contributions to publicly or
privately administered pension insurance plans on a
mandatory basis. The Group has no further payment
obligations once the contributions have been paid.
The contributions are recognised as employee benefit
expense commensurate with receipt from employees of
the service in respect of which they are entitled for the
contributions.

All of the subsidiaries, except the subsidiary in Bulgaria,
hold money on behalf of clients in accordance with the
client money rules required by the relevant regulatory
framework. Such monies are classified as ‘segregated
client funds’ in accordance with the regulatory

p. Other payables and service suppliers
Other payables and service suppliers are obligations to
pay for services that have been acquired in the ordinary
course of business from suppliers. Other payables and
service suppliers are classified as current liabilities if

107

Plus500 Ltd. 2018 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)

payment is due within one year or less. If not, they are
presented as non-current liabilities.

Other payables and service suppliers are recognised
initially at fair value and subsequently measured at
amortised cost using the effective interest method.

q. Trade payables – due to clients
As part of its business, the Group receives from its
customer's deposits to secure their trading positions,
held in segregated client money accounts.

Assets or liabilities resulting from profits or losses on
open positions are carried at fair value. Amounts due
from or to clients are netted against, or presented with,
the deposit with the same counterparty where a legally
enforceable netting agreement is in place and where it
is anticipated that assets and liabilities will be netted on
settlement.

Trade payables - due to clients represent balances with
clients where the combination of customer's deposits
and the valuation of financial derivative open positions
result in an amount payable by the Group.

Trade payables - due to clients are classified as current
liabilities as the demand is due within one year or less.

r. New International Financial Reporting Standards,
Amendments to Standards and New interpretations:

New and amended standards adopted by the Group
for the first time for the financial year beginning on or
after 1 January 2018:

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
recognises 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

108

(CONTINUED)

recognition, in which an entity recognises revenue in
accordance with that core principle by applying the
following five steps:
1.
2.
3. Determine the transaction price.
4. Allocate the transaction price to the separate
performance obligations in the contract.

Identify the contract(s) with a customer.
Identify the performance obligations in the contract.

5. Recognise 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 fulfil a contract. The standard extends the disclosure
requirements regarding revenue and requires, among
other things, that entities disclose qualitative and
quantitative information about significant judgments
made by management in determining the amount and
timing of the revenue.

The Group adopted the standard using the modified
retrospective method of adoption as of January
1, 2018. Any cumulative impact of the adoption
was recognised in retained earnings as of January
1, 2018 and comparatives were not restated. The
implementation of IFRS 15 had no material effect on
the Group's consolidated financial statements.

Standards not yet adopted:

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 recognise 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 recognise depreciation of leases assets

Plus500 Ltd. 2018 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)

separately from interest on lease liabilities in the
income statement.

The Company has reviewed all of the Group's leasing
arrangements over the last year in light of the new lease
accounting rules in IFRS 16. The standard will affect
primarily the accounting for the Company’s operating
leases.

The Company will apply the standard from its
mandatory adoption date of January 1, 2019. The
Company intends to apply the simplified transition
approach and will not restate comparative amounts for
the year prior to first adoption.

IFRS 16 was issued in January 2016. It will result in
almost all leases being recognised on the balance sheet
by lessees, as the distinction between operating and
finance leases is removed. Under the new standard,
an asset (the right to use the leased item) and a
financial liability to pay rentals are recognised. The only
exceptions are short-term and low-value leases.

The adoption of IFRS 16 will not have a material effect
on the Group's consolidated financial statements.

IFRIC 23 – Uncertainty over income tax treatments:
IFRIC 23 clarifies how the recognition and
measurement requirements of IAS 12 "Income Taxes"
are applied where there is uncertainty over income tax
treatments.

An uncertain tax treatment is any tax treatment applied
by an entity where there is uncertainty over whether
that treatment will be accepted by the tax authority.
The uncertainty may exist until the relevant taxation
authority or a court takes a decision in the future.
Consequently, a dispute or examination of a particular
tax treatment by the taxation authority may affect an
entity’s accounting for a current or deferred tax asset
or liability. IFRIC 23 provides guidance on accounting
treatment for the following issues related to income
tax-related uncertainties:
•

how to determine the measurement unit for
considering the accounting treatment, i.e. whether
an entity considers uncertain tax treatments

(CONTINUED)

•

separately;
the assumptions an entity makes about the
examination of tax treatments by taxation
authorities;
how an entity determines taxable profit (tax loss),
tax bases, unused tax losses, unused tax credits
and tax rates; and
how an entity considers changes in facts and
circumstances.

IFRIC 23 is effective for annual periods beginning on or
after 1 January 2019.
Earlier application is permitted. The Group is reviewing
the expected impact of IFRIC 23 on its consolidated
financial statements. The adoption of IFRIC 23 will
not have a material effect on the Group's consolidated
financial statements.

Amendment to IAS 12 "Taxes on Income"
(hereinafter "the Amendment to IAS 12")
The Amendment to IAS 12, which was issued as part
of the Annual Improvements to IFRS Standards 2015–
2017 cycle, clarifies that the income tax consequences
of dividends are recognised when a liability to pay a
dividend is recognised. The income tax consequences
of dividends are recognised in profit or loss for
the period, other comprehensive income or equity
according to where the entity originally recognised
those past transactions or events.

Prior to the Amendment to IAS 12, its provisions
were relevant to situations where the tax rates on the
distributed profit were different from the tax rate on
undistributed profits. The Amendment clarifies that
those provisions are relevant to all tax consequences of
dividends.

The Amendment to IAS 12 is effective for annual
reporting periods beginning on or after 1 January
2019 to the income tax consequences of dividends
recognised on or after the beginning of the earliest
comparative period. Earlier application is permitted.
The first-time adoption of the amendment to IAS 12 will
not have a material impact on the Group's consolidated
financial statements.

109

Plus500 Ltd. 2018 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 3 - TRADING INCOME

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:

U.S. dollars in millions

European Economic Area (EEA) *

United Kingdom

Australia

Rest of the World

Year ended 31 December

2018

384.7

100.5

84.8

150.4

720.4

2017

247.8

68.6

23.7

97.1

437.2

* Other than the United Kingdom which presented separately in the table above.

NOTE 4 - SELLING AND MARKETING EXPENSES

Year ended 31 December

U.S. dollars in millions

Payroll and related expenses

Variable Bonuses

Share-based compensation

Commission to agents

Advertising

Commissions to processing companies

Server and data feeds commissions

Third party customer support

Sundry

110

2018

15.0

2.9

4.3

15.6

109.8

20.1

6.9

0.5

0.8

175.9

2017

10.9

2.0

2.8

27.0

90.0

16.9

5.8

0.1

0.5

156.0

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 5 - ADMINISTRATIVE AND GENERAL EXPENSES

U.S. dollars in millions

Payroll and related expenses

Variable Bonuses

Share-based compensation

Professional fees and regulatory fees

Office expenses

Travelling expenses

Public company expenses

Non-refundable VAT

Sundry

Year ended 31 December

2018

2017

7.1

10.1

4.6

*6.2

5.0

0.8

*3.1

1.6

0.7

39.2

7.1

2.9

2.7

3.0

4.1

0.7

0.8

0.7

22.7

*These amounts in 2018 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 6 - AUDITORS' REMUNERATION

U.S. dollars in millions

Audit Plus500 Ltd's consolidated financial statements

Audit of Plus500 Ltd's subsidiaries

Total audit fees

Other assurance related services

Tax compliance services

Total non-audit fees

Total fees

Year ended 31 December

2018

2017

0.2

0.4

*0.4

0.2

0.6

1.0

0.2

0.4

0.1

0.2

0.6

*These amounts include expenses related to the admission to the premium listing segment of the official list of the
UK Listing Authorities (see note 1).

111

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 7 - SHARE-BASED COMPENSATION

a. Background
The Group grants "Share Appreciation Rights" to selected employees upon approval of the Board of Directors and
management (hereafter - the grant).

The rights are settled in cash two years after the date of grant for these who remains employed by the Group.

The rights represent the total amount of grant divided by the average closing price of the ordinary shares of the
Company on the Main Market over the course of the 60 trading days immediately preceding the dates of grant
(hereafter - the share price on grant date).

As of the end of each period, the fair value of the rights is calculated by the number of rights, as calculated on grant
date, multiplied by the average closing price of the ordinary shares of the Company on the Main Market over the
course of the 60 trading days immediately preceding the end of each period (or the payout date) divided by the
share price on grant date.

b. The following table specifies the dates of grants and the grant rights as of each date

Grant date

Settlement date

Share price
(GBP)*

Number of rights
granted

Number of
employees

522.94

388.81

563.25

541.21

943.23

1,075.70

1,528.93

1,349.80

894

3,122

3,722

3,321

286

3,490

107

As at 31 December

2018

7.3

0.3

2017

4.2

1 January 2015

1 January 2017

3 January 2016

3 January 2018

17 April 2016

17 April 2018

30 December 2016

30 December 2018

31 December 2017

31 December 2019

19 March 2018

19 March 2020

1 July 2018

1 July 2020

30 December 2018

30 December 2020

* Share price in pence on grant date.

c. Share based compensation liability

U.S. dollars in millions

Current liability

Non-current liability

112

Plus500 Ltd. 2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 7 - SHARE-BASED COMPENSATION (continued)

d. Share based compensation expenses

U.S. dollars in millions

Selling and marketing expenses

Administrative and general expenses

e. Share based – number of rights outstanding

Number of rights

Opening balance as at January 1

Rights granted

Rights exercised

Rights forfeited

Closing balance as at December 31

Year ended 31 December

2018

4.3

4.6

8.9

2018

9,702

3,834

(6,319)

(146)

7,071

2017

2.8

2.7

5.5

2017

7,752

3,321

(867)

(504)

9,702

During 2018 and 2017, 6,319 and 867, respectively rights were exercised in total amount of $12.9 million and $0.9 million.

113

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - INCOME TAX EXPENSE

(CONTINUED)

a. Corporate taxation in Israel
In December 2016, the Economic Efficiency Law (Legislative Amendments for Implementing the Economic Policy for
the 2017 and 2018 Budget Year), 2016 was published, introducing a gradual reduction in corporate tax rate from 25% to
23%. However, the law also included a temporary provision setting the corporate tax rate in 2017 at 24%. As a result, the
corporate tax rate was 24% in 2017 and is 23% in 2018 and thereafter.

b. Corporate taxation in subsidiaries

Principal tax rate

Subsidiary

2018

19%

12.5%

30%

2017

19%

12.5%

30%

Tax regulation

Tax laws in the United Kingdom

Tax laws in Cyprus

Tax laws in Australia

Other subsidiaries in the Group do not have significant taxable income and the overall effect of the income of those
subsidiaries on the Group's tax expenses is immaterial.

c. Deferred income taxes
The Deferred income taxes relates mainly to payroll expenses of the share-based compensation plan (see note 7). The
Deferred tax assets were computed in 2018 and 2017 at tax rate of 23% and 23%, respectively and a portion for $ 0.8
million and $ 0.1 million will be settled in 2019 and 2020, respectively.

d. Taxes on income included in the consolidated income statements for the reported periods

Year ended 31 December

U.S. dollars in millions

Current taxes:

Current taxes in respect of current year's profits

Deferred income taxes:

Recognition of deferred taxes asset (See c above)

Taxes on income expenses

2018

124.4

(0.4)

124.0

2017

53.8

(0.1)

53.7

114

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - INCOME TAX EXPENSE (continued)

(CONTINUED)

e. Reconciliation of the theoretical tax expense
Following is a reconciliation of the theoretical tax expense, assuming all income is taxed at the regular tax rates
applicable to companies in Israel (note 8a above) and the actual tax expense:

Year ended 31 December

U.S. dollars in millions

Income before taxes on income,
as reported in the consolidated income statements

Theoretical tax expense in respect
of this year's income - at 23% (2017: 24%)

Decrease in taxes resulting from different tax rates
applicable to foreign subsidiaries

Increase (decrease) in taxes in respect of currency
differences and expenses not deductible for tax purposes

Tax expenses in relation to previous years

Taxes on income for the reported period

2018

503.0

115.7

(1.2)

4.3

5.2

124.0

2017

253.4

60.8

(3.1)

(4.0)

53.7

f. Effect of adoption of IFRS in Israel, on tax liability
As mentioned in note 2a, the Group prepares its financial statements in accordance with IFRS. IFRS standards differ
from accounting principles generally accepted in Israel and accordingly, the preparation of financial statements in
accordance with IFRS may reflect a financial position, results of operations and cash flows that are materially different
from those presented in financial statements presented in accordance with accounting principles generally accepted
in Israel. The Company is filing to the Israeli tax authorities, its Israeli tax returns, in accordance to Israeli GAAP.

During 2014, the Government of Israel published a law memorandum in connection with the amendment to the
Income Tax Ordinance (hereafter – the law memorandum) resulting from application of IFRS in the financial
statements. Generally, the law memorandum adopts IFRS. However, it suggests several amendments to the
Income Tax Ordinance that will serve to clarify and determine the manner of computing taxable income for tax
purposes in cases where the manner of computation is unclear and IFRS is incompatible with the principles of the
tax method applied in Israel. At the same time, the law memorandum generally adopts IFRS. The legislation process
involving the law memorandum has not been completed, and is not likely to be completed in the near future.

As the legislation process relating to the law memorandum has not been completed, management believes that
the temporary provision for 2007 to 2013 may be extended to cover 2014-2018 as well. Due to the application
of temporary provision on the 2007-2013 tax years, as above, and the possibility for extension to 2014-2018,
management expects at this stage that the new legislation will not apply to tax years preceding 2018.

Considering that the temporary provision applies to the 2007-2013 tax years and Company's assessment on the
likelihood for extension to cover 2014-2018, as above, the Company computed its taxable income for 2009-2018
based on the Israeli accounting standards that existed prior to adopting IFRS in Israel.

115

Plus500 Ltd. 2018 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 8 - INCOME TAX EXPENSE (continued)

g. Final tax assessments

The Company was recently audited by the Israeli Tax Authorities ("ITA") for corporate income tax purposes for the
years 2014 to 2016 (including).

All of the subsidiaries have only been subject to self-assessments since their incorporation.

NOTE 9 - 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)

Profit attributable to equity holders of the Company (In U.S dollars)

379,026,541

Weighted average number of ordinary shares in issue*

113,895,770

31 December

2018

2017

199,675,000

114,420,058

* After weighting the effect of the buyback programme. See note 10

NOTE 10 - 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.

In October 2018, the Board approved a programme to buy back an initial amount of US$10 million of the Company’s
ordinary shares. The buyback programme ran from 23 October 2018 and was funded from the Company’s net cash
balances. During 2018 the Company bought back 130,963 ordinary shares (or 0.1%) in the capital of the Company
for an aggregate purchase price of $2.3 million pursuant to these buyback programmes. Shares were bought back
at an average price of £13.58.

During the period starting 1 January 2019 up to the signing date of the consolidated financial statements (see note
23), The Company bought back additional 410,500 ordinary shares (or 0.4%) in the capital of the Company for an
aggregate purchase price of $5.5 million pursuant to these buyback programmes. Shares were bought back at an
average price of £11.03.

116

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - DIVIDEND

(CONTINUED)

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

Date of declaration

Amount of dividend
US $ in millions

Amount of dividend
per share US $

Date of payment to
shareholders

5 February 2017

4 August 2017

14 February 2018

10 August 2018

75.0

27.2

164.9

157.0

0.6528

0.2388

1.4479

1.3786

3 July 2017

23 November 2017

23 July 2018

22 November 2018

On 12 February 2019 the Company declared a final dividend in an amount of $70.4 million. See note 23.

NOTE 12 - PROPERTY, PLANT AND EQUIPMENT

Composition of assets, grouped by major classifications and changes therein in 2018 is as follows:

U.S. dollars in millions

Cost

Balance at beginning of year

Additions

Balance at end of year

Accumulated depreciation

Balance at beginning of year

Additions

Balance at end of year

Depreciated balance as of 31 December 2018

Depreciated balance as of 31 December 2017

Computers and
office equipment

Leasehold
improvements

Total

1.3

0.3

1.6

0.8

0.5

1.3

0.3

0.5

3.7

0.1

3.8

0.9

0.1

1.0

2.8

5.0

0.4

5.4

1.7

0.6

2.3

3.1

3.3

117

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - OTHER RECEIVABLES

(CONTINUED)

U.S. dollars in millions

Prepaid expenses

Other

As of 31 December

2018

8.7

2.9

11.6

2017

6.4

1.3

7.7

As of 31 December 2018 and 2017, the total amount of prepaid expenses includes mainly expenses related to
Company's sponsorship agreement with Atletico Madrid Football Club (see note 18b).
All the financial assets included among current assets are for relatively short-periods; therefore, their fair values
approximate or are identical to their carrying amounts.

NOTE 14 - CASH AND CASH EQUIVALENTS

Cash and cash equivalents by currency of denomination:

As of 31 December

2018

288.5

76.0

12.5

19.3

7.8

18.1

422.2

(106.9)

315.3

2017

208.7

91.8

33.6

38.2

9.4

17.7

399.4

(157.5)

241.9

U.S. dollars in millions

USD

EURO

GBP

AUD

NIS

Other

Gross cash and cash equivalents

Less: segregated client funds

Own cash and cash equivalents

118

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - OTHER PAYABLES

U.S. dollars in millions

Payroll and related expenses

Accrued expenses

Other

(CONTINUED)

As of 31 December

2018

17.0

2.8

0.3

20.1

2017

7.9

4.0

0.2

12.1

The financial liabilities included among other payable, and accruals are for relatively short periods; therefore, their
fair values approximate or are identical to their carrying amounts.

NOTE 16 - SERVICE SUPPLIERS

Service suppliers are comprised mainly of amounts due to advertising service suppliers, their fair values
approximate or are identical to their carrying amounts.

NOTE 17 - TRADE PAYABLES - DUE TO CLIENTS

As of 31 December

U.S. dollars in millions

Customers deposits, net*

Segregated client funds

* Customers deposits, net are comprised of the following:

Customers deposits

Less- financial derivative open positions:

Gross amount of assets

Gross amount of liabilities

2018

107.2

(106.9)

0.3

145.2

(46.8)

8.8

107.2

2017

162.0

(157.5)

4.5

188.4

(45.7)

19.3

162.0

* As of 31 December 2018, and 2017, the total amount of 'Trade payables - due to clients' includes bonuses to the clients.

119

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 - COMMITMENTS

(CONTINUED)

a. The Company and its subsidiaries lease office space and real estate under several non-cancellable operating
lease agreements. The validity of the agreements will expire in the years from 2019 to 2021 with an option to
extend them by another 3 to 5 years. Future minimum lease payments for existing long-term, non-cancelable
operating leases as of 31 December 2018 are as follows:

U.S. dollars in millions

2019

2020

2021

2022

2023 and further

Total

1.7

1.1

0.7

0.4

0.2

4.1

b. The Company and Club Atlético de Madrid, S.A.D. (hereafter - Atlético Madrid) entered into a sponsorship

agreement on 3 October 2017 under which the Company is entitled to advertise and promote itself as the main
sponsor of Atlético Madrid for the 2018/19, 2019/20 and 2020/21 seasons.

c. The Company and Brumbies Rugby, the Australian professional rugby union team (hereafter - the Brumbies) entered
into a sponsorship agreement on 1 October 2017 under which the Company is entitled to advertise and promote
itself as the official sponsor of the Brumbies for three seasons between 1 January 2018 to 31 December 2020.

120

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 19 - SHARE CAPITAL

Composed of ordinary shares of NIS 0.01 par value, as follows:

Authorised

Issued and fully paid

Less treasury shares *

Outstanding shares

Number of shares 31 December

2018

300,000,000

114,888,377

(1,111,109)

113,777,268

2017

300,000,000

114,888,377

(980,146)

113,908,231

* Number of shares that was bought by the Company as part of the buyback Programme.

NOTE 20 - RELATED PARTIES AND KEY MANAGMENT

a. Definition

The Directors and other members of management classify as "persons discharging management responsibility"
in accordance with IAS24 and the Market Abuse Regulation are considered to be the Key management
personnel of the Company.
The Directors' Remuneration Report discuss all benefits and share-based payments earn during the year and
the preceding year by the directors.
Include five founding shareholders: one of those shareholders is a Director.
These shareholders provide services to the Company directly or through companies, they control.

b. Company's liability in respect of related parties and key management services (part of Other Payable)

U.S. dollars in millions

Related parties and Key Management liability

As at 31 December

2018

14.0

2017

6.0

121

Plus500 Ltd. 2018 Annual ReportNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 - RELATED PARTIES AND KEY MANAGEMENT (continued)

(CONTINUED)

c. Expenses to related parties and key management

U.S. dollars in millions

Service fees (Selling and marketing expenses)

Service fees (Administrative and general expenses)

Directors fees (Administrative and general expenses)

Year ended 31 December

2018

5.8

15.2

0.8

2017

3.2

7.7

0.7

The average number of key management personal during the year was 20 (FY17: 19).

On 1 January 2019 the Board of directors approved
a long-term incentive plan for two Non-Founders
Executive Directors'. The terms of the plan are NIS
1,000,000 of ordinary shares at reference date of 1
January 2019 (adjusted for dividends). Vesting date is
January 2022, subject to a further two year lockup.

NOTE 21 - FINANCIAL RISK MANAGEMENT

The Group specialises in the field of Contracts for
Differences (‘‘CFD’’) for retail clients only, primarily
on commodities, indices, stocks, options, ETFs,
cryptocurrencies and foreign exchange.
The Group activities expose it to a variety of financial
risks: market risk (including currency risk and price
risk), credit risk and liquidity risk. The Group's overall
risk management programme focuses on the
unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group's
financial performance.

a. Market risk

The management of the Group deems this risk as
the highest risk the Group incurs.
Market risk is the risk that changes in market prices
will affect the Group's income or the value of its
holdings of financial instruments. This risk can be
divided into market price risk and foreign currency
risk, as described below.

122

The Group's market risk is managed on a Group-
wide basis and exposure to market risk at any point
in time depends primarily on short term markets
conditions and the levels of client activity. The
Group utilises market position limits for operational
efficiency and does not take proprietary positions
based on an expectation of market movements.
As a result, not all net client exposures are hedged
and the Group may have a substantial net position
in any of the financial market in which it offers
products.

The Group's market risk policy incorporates a
methodology for setting market position limits,
consistent with the Group risk appetite, for each
financial instrument in which the Group clients can
trade, as well as certain markets which the CEO
considers to be correlated.

These limits are determined based on the Group
clients’ trading levels, volatilities and the market
liquidity of the underlying financial product or asset
class and represent the maximum long and short
client exposure that the Group will hold without
hedging the net client exposure.

The Group's real-time market position monitoring
system is intended to allow it to continually
monitor its market exposure against these limits.
If exposures exceed these limits, the Group either
hedges, or new client positions are rejected under
the Group's policy.

Plus500 Ltd. 2018 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21 - FINANCIAL RISK MANAGEMENT

It is the approach of the Group to observe during
the year the 'natural' hedge arising from the Group's
global clients in order to reduce the Group's net
market exposure.

The Group's exposure to market risk at any point
in time depends primarily on short-term market
conditions and client activities during the trading
day. The exposure at each statement of financial
position date may therefore not be representative
of the market risk exposure faced by the Group over
the year. The Group's exposure to market risk is
determined by the exposure limits described above
which change from time to time.

1. Market price risk
This is the risk that the fair value of a financial
instrument fluctuates as a result of changes
in market prices other than due to the effect of
transactional foreign currency exposures or interest
rate risks.

The Group has market price risk as a result of its
trading activities CFDs on foreign exchange, stocks,
indices, commodities, cryptocurrencies and ETFs,
part of which is naturally hedged as part of the
overall market risk management. The exposure is
monitored on a Group-wide basis.

Exposure limits are set by the risk manager for each
product, and also for groups of products where it is
considered that their price movements are likely to be
positively correlated.

(CONTINUED)

2. Foreign currency risk
Transactional foreign currency exposures represent
financial assets or liabilities denominated in
currencies other than the functional currency of the
Group. Transaction exposures arise in the normal
course of business.

Foreign currency risk is managed on a Group-wide
basis, while the Group exposure to foreign currency
risk is not considered by the Board of Directors to
be significant. The Group monitors transactional
foreign currency risks including currency statement
of financial position exposures, equity, commodity,
interest and other positions denominated in foreign
currencies and trades on foreign currencies.

At 31 December 2018, if the U.S. dollar had
strengthened by 1% against Euro with all other
variables unchanged the exposure in respect of
balance denominated in Euro on income after taxes
is $ 0.4 million (2017: $0.3 million); if the U.S dollar
had strengthened by 1% against Australian Dollar
with all other variables unchanged the exposure in
respect of balance denominated in Australian Dollar
on income after taxes is $ 0.3 million (2017: $0.3
million) ; if the U.S dollar had strengthened by 1%
against GBP with all other variables unchanged the
exposure in respect of balance denominated in GBP
on income after taxes is $ 0.5 million (2017: $ 0.1
million):

The exposure in respect to balances denominated
in other currencies is immaterial.

Daily profit on closed positions:

b. Credit risk

U.S. dollars in millions

2018

2017

Highest profit

Highest loss

Average

19.4

(2.0)

1.9

10.5

(4.1)

1.2

During the years 2018 and 2017, as to the closed
positions, there were 336 and 313 profitable trading
days, respectively.

The Group operates a real-time mark-to-market
trading platform with customers' profits and losses
being credited and debited automatically to their
accounts.

Under the Group's policy, costumers cannot owe
the Group's funds when losing more than they have
in their accounts.

123

Plus500 Ltd. 2018 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 21 - FINANCIAL RISK MANAGEMENT
(continued)

Client credit risk - Client credit risk principally
arises when a customer's total funds deposited
(margin and free equity) are insufficient to cover
any trading losses incurred. In particular, costumer
credit risk can arise where there are significant,
sudden movements in the market (i.e. due to high
general market volatility or specific volatility relating
to an individual financial instrument in which a
customer has an open position).

The Group's offering is margin-traded. If the market
moves adversely by more than the customer's
maintenance margin, the Group is exposed to
customer credit risk.

The principal types of customer credit risk
exposures are managed by monitoring all customer
positions on a real time basis. If customers funds
are below the required margin level, customers
positions are liquidated (margin call).

Institutional credit risk - The risk that financial
counterparties will not meet their obligation, risking
both client and the Group’s assets:

The carrying amount of the Group's financial assets
best represents their maximum exposure to credit
risk.

The Group has no material financial assets that are
past due or impaired as at the reporting dates.

As of 31 December 2018 and 2017 counterparties
holding of the Group's cash and cash equivalents,
credit cards, client funds and deposits have credit
ratings as follows:

Credit Rating*

2018

2017

AA+ to AA-

A+ to A-

Remaining

counterparties

15%

76%

42%

47%

11%

* The financial institutions were rated by the same
third party.

The amounts held by the remaining counterparties
are held in a few banks worldwide. The balance in
each of those banks does not exceed 4% of total
cash and cash equivalents, credit cards, client
funds and deposits.

The Group’s largest credit exposure to any single
bank as of 31 December 2018 was $ 118 million
or 28% of the exposure to all banks (2017: $ 98.4
million or 25%).

c. Concentration risk

Concentration risk is defined as all risk exposures
with a loss potential which is large enough to
threaten the solvency or the financial position of the
Group. In respect of financial risk, such exposures
may be caused by credit risk, market risk, liquidity
risk or a combination or interaction of those risks
(see note 3).

124

Plus500 Ltd. 2018 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21 - FINANCIAL RISK MANAGEMENT
(continued)

d. Liquidity risk

Liquidity risk is the risk that the Group will
encounter difficulty in meeting obligations arising
from its financial liabilities that are settled by
delivering cash or other financial assets.

Liquidity risk is managed centrally and on a Group-
wide basis. The Group's approach to managing
liquidity is to ensure it will have sufficient liquidity
to meet its financial liabilities when due, under both
normal circumstances and stressed conditions.

The Group's approach is to ensure that there will
be no material liquidity mismatches with regard
to liquidity maturity profiles due to the very short-
term nature of its financial assets and liabilities.
Liquidity risk can, however, arise as a result of
the Group's adopting what it considers to be best
industry practice in placing some retail client funds
in segregated client money accounts. A result
of this policy is that short-term liquidity ‘gaps’
can potentially arise in periods of very high client
activity or significant increases in global financial
market levels.
The contractual maturity of the financial liabilities is
up to two months.

e. Capital Management

1. Plus500UK
The UK Subsidiary is regulated by the FCA.
The UK Subsidiary manages its capital resources
on the basis of regulatory capital requirements
(hereafter Pillar 1) and its own assessment of
capital required to support all material risks
throughout the business (hereafter - Pillar 2). The
UK Subsidiary manages its regulatory capital
through an Internal Capital Adequacy Assessment
Process (known as the ICAAP) in accordance with
guidelines and rules implemented by the FCA. Both
Pillar 1 and Pillar 2 assessments are compared with
total available regulatory capital on a daily basis
and monitored by the management of the Group.

(CONTINUED)

As of 31 December 2018 and 2017, the UK
Subsidiary had £ 33.3 million and £ 24.3 million,
respectively, of regulatory capital resources,
which is in excess of both its regulatory capital
requirement (Pillar 1) and the internally measured
capital requirement (Pillar 2).

2. Plus500CY
The CY Subsidiary is regulated by CySEC.
The CY Subsidiary manages its capital resources
on the basis of regulatory capital requirements
(hereafter - Pillar 1) and its own assessment
of capital required to support all material risks
throughout the business (hereafter - Pillar 2). The
CY Subsidiary manages its regulatory capital
through an Internal Capital Adequacy Assessment
Process (known as the ICAAP) in accordance with
guidelines and rules implemented by the CySEC.

The CY Subsidiary monitors on a frequent basis
its Pillar 1 capital requirements and ensures
that its capital position remains always above
the minimum regulatory thresholds. As of 31
December 2018 and 2017, the regulatory capital
of the CY Subsidiary was € 56.5 million and € 52.8
million, respectively, which is in excess of both its
regulatory capital requirement (Pillar 1) and the
internally measured capital requirement (Pillar 2).

As of 31 December 2018 and 2017, Pillar 1 Capital
Adequacy ratio was 40.4% and 17.2% respectively.
Moreover, the Group is evaluating its overall risk
profile and capital position through its internal
capital adequacy assessment process, which is
performed at least on an annual basis.

3. Plus500AU
The AU Subsidiary is regulated by ASIC.
The AU Subsidiary manages its capital resources
on the basis of regulatory capital requirements
and its own assessment of capital required to
support all material risks. The AU Subsidiary
manages its capital through its Net Tangible Assets

125

Plus500 Ltd. 2018 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

NOTE 21 - FINANCIAL RISK MANAGEMENT
(continued)

requirement could result in significant fines,
penalties, or other enforcement actions, increased
costs of doing business through adverse judgment
or settlement, reputational harm, the diversion
of significant amounts of management time and
operational resources, and could require changes
in compliance requirements or limits on the Group’s
ability to expand its product offerings, or otherwise
harm or have a material adverse effect on the
Group’s business.

g. Fair value estimation

Financial derivative open positions (offset from, or
presented with, deposits from clients within 'Trade
payable - due to clients') (see also note 17) are
measured at fair value through profit or loss using
valuation techniques. The said valuation techniques
are based on inputs other than quoted prices in
active market that are observable for the asset or
liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) (level 2).

These valuation techniques maximise the use of
observable market data where it is available and
rely as little as possible on entity specific estimates.
Since all significant inputs required for the fair value
estimations of the said instruments are observable,
the said instruments are included in level 2.

Specific valuation techniques used to value
financial instruments are based on quoted market
prices at the statement of financial position date
and an additional predetermined amount.

(NTA) assessment in accordance with rules and
guidelines implemented by ASIC.

As at 31 December 2018 and 2017, the AU
Subsidiary held Net Tangible Assets of AUD16.3
million and AUD13.8 million, respectively, of
regulatory capital, which is in excess of its NTA
requirements.

4. Plus500SG
The SG Subsidiary is regulated by MAS.
The SG Subsidiary manages its capital resources
on the basis of regulatory capital requirements and
its own assessment of capital required to support
all material risks. The SG Subsidiary manages its
capital in accordance with rules and guidelines
implemented by MAS.

As at 31 December 2018 and 2017, the SG
Subsidiary held regulated capital of SGD 7.1 million
and SGD 1.6 million, respectively, of regulatory
capital, which is in excess of its MAS requirements.

5. Plus500IL
The IL Subsidiary is regulated by the ISA.
The IL Subsidiary manages its capital resources
on the basis of regulatory capital requirements and
its own assessment of capital required to support
all material risks. The IL Subsidiary manages its
capital in accordance with rules and guidelines
implemented by ISA.

As at 31 December 2018 and 2017, the IL
Subsidiary held regulated capital of $3.5 million
and $3.8 million, respectively, of regulatory capital,
which is in excess of its ISA requirements.

f. Other business risks

The Group’s business is subject to various laws
and regulations in different countries according
to its activity and other countries from where the
Company operates. Any regulatory action, tax or
legal challenge against the Group for
non-compliance with any regulatory or legal

126

Plus500 Ltd. 2018 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22 - CASH GENERATED FROM OPERATIONS

U.S. dollars in millions

Cash generated from operations activities

Net income for the period

Adjustments required to reflect the cash flows from operating
activities:

Depreciation and amortisation

Liability for share-based compensation

Settlement of share-based compensation

Taxes on income

Interest expenses (income)

Foreign exchange losses (gains) on operating activities

Operating changes in working capital:

Decrease (increase) in other receivables

Increase (decrease) in trade payables due to clients

Increase in other payables

Increase (decrease) in Service suppliers

Cash flows from operating activities

(CONTINUED)

Year ended 31 December

2018

379.0

0.7

8.9

(5.5)

124.0

(4.2)

0.5

124.4

(3.9)

(4.2)

8.0

(8.3)

(8.4)

495.0

2017

199.7

0.7

5.5

(0.9)

53.7

0.2

(4.1)

55.1

2.0

2.8

16.8

2.3

23.9

278.7

NOTE 23 - SUBSEQUENT EVENTS

On 12 February 2019 the Company declared a final dividend in an amount of $70.4 million ($0.6191 per share). The
dividend is due to be paid to the shareholders on 9 July 2019.

During the year 2019 up to the signing date of the consolidated financial statements for the year ended 31 December
2018, the Company has continued to purchase its own shares under the buyback programme. See note 10.

127

Plus500 Ltd. 2018 Annual ReportPlus500 Limited

FURTHER INFORMATION

128

Plus500 Ltd. 2018 Annual ReportADVISORS

Sponsor and Broker
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY, UK

Joint Broker
Berenberg
Joh. Berenberg, Gossler & Co. KG
60 Threadneedle Street
London EC2R 8HP, UK

Independent Auditors
Kesselman & Kesselman, a member firm of
PricewaterhouseCoopers International Limited
Trade Tower
25 Hamered Street
Tel Aviv 6812508, Israel

Financial PR
MHP Communications
6 Agar Street
London WC2N 4HN, UK

Legal Advisor (Israel)
Naschitz, Brandes, Amir & Co.
5 Tuval Street
Tel Aviv 6789717, Israel

Legal Advisor (United Kingdom)
Bryan Cave Leighton Paisner LLP
Adelaide House
London Bridge
London EC4R 9HA, UK

Depositary
Link Market Services Trustees Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU, UK

Registrar
Link Market Services Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

129

Plus500 Ltd. 2018 Annual ReportPlus500 Limited

ANNUAL REPORT AND ACCOUNTS 2018
www.plus500.com

Published in April 2019