A fresh
approach
to trading
Plus500 Ltd. Annual Report 2020
1
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements “ 2020 was an exceptional year for Plus500, in unprecedented
market conditions, where we delivered a record performance
due to the strength and agility of our technology and its
ability to respond rapidly to market developments and news
events. Our performance was supported by the commitment
of our people who ensured that our customers received
a consistently high quality experience.”
David Zruia, Chief Executive Officer
Read more in the
CEO's Q&A on page 8
“ strength and agility
of our technology”
2020 FINANCIAL
HIGHLIGHTS
2020 OPERATIONAL
HIGHLIGHTS
$872.5m
Revenue
2019: $354.5m
$515.9m
EBITDA¹
2019: $192.3m
59%
EBITDA Margin %
2019: 54%
$593.9m
Cash balance at period end
2019: $292.9m
434,296
Active Customers2
2019: 199,720
294,728
New Customers3
2019: 91,388
$2,009
Average Revenue Per User (ARPU)
2019: $1,775
$750
Average User Acquisition Cost (AUAC)
2019: $1,046
Plus500 Ltd. (“Plus500” or the “Company”
or, together with its subsidiaries, the “Group”)
is a leading technology platform for trading
Contracts for Difference (“CFDs”)
Plus500 Ltd. 2020 Annual Report Strategic Report
Group at a Glance
Chairman's Statement
Why Invest in Plus500
Q&A with the Chief Executive Officer
Our Technology and key market trends
Our Vision and Strategy
Our Business Model
Key Performance Indicators
Key Stakeholder Relationships
Our Approach to Environmental, Social and
Governance Matters
Financial Review
Risk Management Framework
Going Concern and Viability Statement
Governance
Chairman's introduction to Governance
UK Corporate Governance
Code Compliance Statement
Board of Directors
Governance Report
Shareholder Engagement
Report of the Nomination Committee
Report of the Audit Committee
Report of the Regulatory & Risk Committee
Report of the ESG 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
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4
7
8
14
18
20
22
24
28
32
35
40
42
43
44
46
50
51
54
58
59
60
67
76
78
80
82
86
87
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89
90
Further information
Advisors
Inside back cover
A record financial
performance, driven by
strength and differentiation
of Plus500 technology:
• Total revenue up 146% to $872.5m, with
Customer Income4, a key growth metric,
up 161% to $997.5m
• EBITDA up 168% to $515.9m
Financial Review
page 32
• Operating cash conversion5 of 106%,
leading to 103% increase in cash balances
to $593.9m
Demonstrates unrivalled
ability of Plus500
technology to respond
rapidly to news and
market events:
Our technology
page 14
Continued customer-
centric risk management
framework & further
strengthening of
governance:
Risk management framework
page 35
A new vision and strategy
to achieve future growth,
through organic investment
and targeted acquisitions:
Our strategy
page 18
• Unprecedented levels of platform usage
drove exceptional delivery across all
key metrics
• Over 82m customer trades (FY 2019: c.35m)
• Client deposits of $2.9bn (FY 2019: $1.0bn)
• Record levels of New Customers and
Active Customers, at attractive ARPU,
with reduced Customer Churn6 and AUAC
• Consistent level of service delivery for
customers, despite unparalleled
platform usage
• Implementation of targeted hedging
in FY 2021 to reduce market risk,
as appropriate
• Further diversification and broadening
of experience and expertise of the Board
of Directors (“the Board”)
• Plus500 vision is to enable simplified,
universal access to financial markets
• Evolving from a technology company
solely focused on CFDs to a multi-asset
fintech group
• Multiple compelling opportunities
available to drive future growth
• Incremental R&D investment of
approximately $50m over the next three
years for scale and innovation, including
establishment of a new R&D centre in Israel
On-going focus
on attractive shareholder
returns:
Chairman's statement
page 4
• Total shareholder returns of $278.3m
in relation to FY 2020, representing 60%
of Net Profit7, and a special dividend8
• New shareholder returns policy, with
increased emphasis on investing for
future growth:
– Return at least 50% of net profits to
shareholders through dividends and
share buybacks, with at least 50%
by way of dividends
– Ensures optimal balance between
shareholder returns, investment in
future growth and driving business
continuity over the long term, in
particular to ensure the Group has
appropriate levels of capital available
to continue managing heightened
platform usage
1. EBITDA – Earnings before interest, taxes, depreciation
and amortisation
2. Active Customers – Customers who made at least one
real money trade during the period
3. New Customers – Customers depositing for the first time
4. Customer Income – Revenue from customer spreads
and overnight charges
5. Operating cash conversion – Cash generated from
operations/EBITDA
6. Customer Churn – (Active Customers (T) + New
Customers (T+1)) – Active Customers (T+1)/
Active Customers (T)
7. Based on the Israeli corporate tax rate (23%)
8. Based on the difference between the full Israeli corporate
tax rate (23%) and the Israeli Preferred Technology
Enterprise (“PTE”) corporate tax rate (12%)
1
Group at a Glance
Plus500 is a leading technology platform for trading CFDs
internationally, offering its customers more than 2,500 different
underlying global financial instruments in more than 50 countries
and in 32 languages. Plus500 has a premium listing on the
Main Market of the London Stock Exchange (symbol: PLUS)
and is a constituent of the FTSE 250 index.
* For illustrative purposes
OUR VISION
OUR VALUES
To enable simplified, universal access
to financial markets
ACROSS DEVICES
Through best-in-class technology
ACROSS COUNTRIES
Through global scale with localised services
ACROSS PRODUCTS
Through broad range of services
OUR STRATEGY
Evolving to become a multi-asset fintech group over
time by expanding our offering, launching new products
and deepening our engagement with customers.
Technology driven
Our state of the art technology is enabled
by our on-going focus on innovation
and creativity.
Strive for excellence
We do not compromise on quality of our
product or on the talent of our people.
Keep it simple
Find the simplest and fastest way
to solve any challenge you face.
Be bold
We have an entrepreneurial approach,
motivating our people to deliver excellence.
2
Plus500 Ltd. 2020 Annual Report
OUR GLOBAL POSITION
London
Limassol
Tel Aviv
Sofia
Haifa (HQ)
Plus500 offices
The Group retains operating
licences and is regulated in the
United Kingdom, Australia, Cyprus,
Israel, New Zealand, South Africa,
Singapore and the Seychelles.
Victoria
Singapore
Sydney
Global operations
conducted from eight
offices worldwide
Around 400 people globally
Trading platform available
in over 50 countries and
in 32 languages
OUR KEY CAPABILITIES, DIFFERENTIATORS AND ENABLERS
1
2
3
4
Robust financial
foundation and
track record:
Strong functional
infrastructure
and resource:
Powerful proprietary
technology platform:
Customer centric
approach:
• Strong, resilient balance sheet
• Cash generative
• Highly scalable and lean
business model
• Industry-leading positions
in key markets
• Debt free since inception
• Embedded risk management
• Robust and agile platform
approach
• Rigorous compliance
procedures and processes
• High calibre talent and
specialist expertise
drives continued innovation
and development of Plus500's
offering for customer
• Rapidly adjusted to customer
requirements, fast-emerging
market trends and regulatory
changes
• Well known brand
• Dynamic customer acquisition
and retention engine,
driven by technology
• Significant loyal
customer base
Read more on
page 32
Read more on
pages 24 and 35
Read more on
page 14
Read more on
page 16
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Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Chairman’s
Statement
“ Plus500 entered FY 2021 in a very strong
financial position, further building on our
consistent track record of performance.”
Penny Judd, Chairman
Revenue of
$872.5m
up 146% from the prior year
Total shareholder returns of
$278.3m
in FY 2020
4
Plus500 Ltd. 2020 Annual Report “ The Board made further progress
in improving our corporate goverance
framework and practices during
the year.”
Our performance in FY 2020
2020 was an unprecedented year, during which we saw a
significant increase in the opportunities for customers to
trade and the further automation and increased accessibility
of the global trading industry. These factors helped to drive
significant growth in the overall addressable market.
Consequently, and fundamentally supported by the strength
and differentiation of our proprietary technology, Plus500
delivered a record performance during FY 2020 achieving
outstanding growth across all metrics. Our performance was
further bolstered by continued organic investment during the
year, particularly in marketing technology, to ensure we
remain well placed for the future.
Total revenue for the year was $872.5m, up 146% from the
prior year, supporting EBITDA growth of 168% to $515.9m.
The Group’s balance sheet position continued to improve,
with an increase of 103% in its cash balances at the end
of FY 2020 to $593.9m.
Our results in FY 2020 further build on our consistent track
record of operational and financial performance. Since our
IPO in 2013, up until FY 2020, Plus500 has delivered revenue
growth of 658%, operating cash conversion ranging between
88% and 108% and average EBITDA margins of approximately
57%. The Group has remained debt-free since its inception.
Outlook
Following the Group’s performance in FY 2020, and given its
market-leading proprietary trading platform, its flexible and
scalable business model, its robust financial position and
consistent track record, the Board remains confident about
the outlook for Plus500. This confidence is also based on the
establishment of a refreshed vision and strategy, approved
and signed-off by the Board in December 2020, which our
Chief Executive Officer (“CEO”), David Zruia, discusses in the
following pages. We intend to report on progress with, and
actions to help us deliver on, this strategy going forward,
starting in our Annual Report for FY 2021.
The Group has multiple opportunities from which to access
future growth through both continued organic investment
in its technology and targeted acquisitions. Supported by
successfully accessing these growth opportunities, the
Group aims to deliver growth and consistent levels of cash
generation over the medium to long term. With this in mind,
the Board looks forward to the coming year and beyond
with optimism.
This positive outlook is also based on the commitment,
expertise and conscientiousness of our people in continuing
to deliver a consistently high level of service for our customers.
We know that the current environment has been very
challenging, given the COVID-19 pandemic, and the Board
is extremely grateful to our people around the world for their
continued dedication and hard work, and we continue to do
all we can to maintain their well-being and safety.
Continued focus on Corporate Governance
During the year, the Board made further progress in
improving our corporate governance framework and
practices, in particular with an evolution of the Board’s
composition. This will further enable the Board to support
Plus500 management in delivering our future vision and
strategy, as the Group enters the next phase of its evolution
over the coming years.
There were a number of Board appointments made in
FY 2020 and during Q1 2021, following several extensive
executive search processes carried out by an external
agency. These included the appointment of David Zruia
as Executive Director and CEO during FY 2020. David was
previously Chief Operating Officer of the Group for several
years, where he drove substantial efficiency improvements
in our back office operations. He has already made a
significant positive impact as our CEO, from both strategic
and operational perspectives.
The Company made a number of Non-Executive Director
appointments during FY 2020 and in Q1 2021. Anne Grim
and Tami Gottlieb were appointed as External Directors,
(as defined on page 48), and Non-Executive Directors (“NED”)
and Sigalia Heifetz was appointed as a Non-Executive
Director. These appointments further expand the range of
the Board’s expertise and experience, with a particular focus
on continuing to diversify its gender composition, which
remains a key priority for the Board, as it continues to
improve its overall approach to Environmental, Social and
Governance (“ESG”) matters.
At the start of FY 2021, as part of the evolution of the
Board’s composition, the Company announced that two
Directors were stepping down. Gal Haber, one of Plus500’s
co-founders and its former CEO, stepped down from his
executive position as a Managing Director and as a member
of the Board in January 2021. Charles Fairbairn will be
stepping down from his position as an External Director and
Non-Executive Director at the Company’s Annual General
Meeting (“AGM”), having joined the Board at the time of the
Company’s IPO in 2013. The Board is extremely grateful
to Gal and Charles for their significant contribution to the
development of Plus500 over the years, and we wish them
the very best for the future.
5
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Chairman’s
Statement
continued
The Board also established an ESG Committee during the
year, chaired by Daniel King, with the objective of reviewing
the Company’s activities in these areas and aligning them
with industry and market best practice. The ESG Committee
initiated the development of a Materiality Assessment
to identify key ESG priorities and risk factors and to help
inform a framework for the Group’s future approach in
these areas. This assessment is outlined in detail on pages
28 and 29 of this Annual Report.
We recognise the importance of Board engagement with key
stakeholders and have detailed our approach on this matter
throughout this Annual Report, including details on specific
engagement with major shareholders and shareholder advisory
bodies on remuneration matters on pages 60 to 75.
The Board continues to monitor and review the Group’s
culture, values and performance primarily through regular
discussions with our Executive Directors and their teams.
This engagement is driven by Steve Baldwin, one of
our Non-Executive Directors, in his role as a workforce
engagement representative on the Board. This helps to
provide a channel through which employees can raise their
views and concerns directly to the Board, to help inform
the Board’s approach to supporting on-going improvements
in our organisational culture and values.
“ The Company has
continued to offer
attractive returns
for shareholders.”
Developments in the regulatory environment
The Group continues to ensure compliance with global
regulatory standards and remains well positioned for any
potential regulatory changes. The Group supports regulatory
measures in the CFD industry and it believes that they are
vital in helping to support the industry and in providing better
care and protection for customers, particularly in the current
uncertain environment.
In October 2020, the Australian Securities & Investment
Commission (“ASIC”) published its regulatory changes for the
CFD industry in Australia, to be applied from 29 March 2021.
The principal changes being:
• Leverage limits on the opening of a position by a retail client;
• A margin close-out rule on a per account basis;
• Negative balance protection on a per account basis; and
• A restriction on the incentives offered to trade CFDs.
Plus500 welcomes these changes as they are expected to
enhance the CFD trading landscape and provide additional
protection for customers. Importantly, Plus500 already
operates in compliance with most of these changes and, in
particular, has always offered negative balance protection and
maintenance margin levels to all customers in all its markets.
In addition, prominent risk disclosures are provided through
all marketing campaigns and on the Company’s websites.
Also, in October 2020, the Financial Conduct Authority
(“FCA”) announced that it was banning the sale of crypto-
derivatives to retail customers in the UK and it published
its final rules in this regard. This regulation took effect from
6 January 2021 but has had, and is expected to continue
to have, very minimal impact on Plus500’s financial
performance.
Finally, there has been no disruption to the business or the
service delivered to customers as a result of the Brexit
agreement, which came into force at the start of FY 2021.
Shareholder returns in FY 2020
The Company has continued to offer attractive returns
for shareholders, returning a total of $1,196.4m to
shareholders since its IPO in 2013, including all dividends
and the share buyback programmes in relation to FY 2020.
For FY 2020, subject to the completion of our new
share buyback programme, the resulting total returns to
shareholders amounts to $278.3m1. This includes a final
dividend of $55.6m, an interim dividend of $101.0m and a
special dividend of $29.4m. The special dividend is directly
related to the benefits of the change in tax rate, achieved in
FY 2020, following the Company’s successful accreditation
as a “Preferred Technological Enterprise” by the Israeli
Innovation Authority and the Israeli Tax Authority. This
is discussed in the Financial Review of this report. Also
included in our total shareholder returns for FY 2020 are
two share buyback programmes. These comprised of a new
share buyback programme initiated in FY 2021 to acquire up
to $25.0m of the Company’s shares, and the completion of the
previous share buyback programme of $67.3m, which was
announced in August 2020 and completed in Q1 2021.
1. The actual dividend to be paid by the Company on the dividend payment date will be less than initially estimated since the Company repurchased additional Ordinary Shares between the
date of dividend declaration and the record date of the dividend, which Ordinary Shares are held in treasury and not entitled to dividend payment.”
6
Plus500 Ltd. 2020 Annual Report New shareholder returns policy
During the year, the Board continued to assess the
availability of excess capital, in light of potential
opportunities for organic investment and targeted
acquisitions to support the Group in its long term growth
ambitions, as well as investment in the business’s continuity
over the long term, in particular to ensure that the Group
has the appropriate levels of capital available to continue
to manage the heightened platform usage. Given the
substantial and clear growth opportunities currently available
to the Group, the Board concluded that the profile of its
capital allocation policy should be more weighted towards
investment in future growth and on driving business
continuity, as the business looks to increase its scale to
capture and optimise the available growth opportunities.
With this in mind, the Board updated its shareholder returns
policy in February 2021 to ensure greater flexibility for future
investment. The Company will now be returning at least
50% of net profits to shareholders through dividends and
share buybacks, with at least 50% by way of dividends.
As with the previous policy, shareholder returns related to the
new policy will continue to be based on a 23% corporate tax
rate, for both future interim and final dividends. In addition,
the Board will continue to consider paying special dividends
at each year end. The Board will continue to assess the
availability of excess capital going forward, to ensure there
continues to be an optimal balance between shareholder
returns, investment in future growth and in driving business
continuity over the long term, in particular to ensure that
appropriate levels of available capital are maintained.
Penny Judd
Chairman
24 March 2021
Why invest in Plus500?
Evolving from a technology company solely focused on CFDs to a multi-asset fintech group.
3.
2.
Enables significant
growth opportunities
Powerful proprietary
technology platform
– Delivers competitive
advantage in product
and marketing
– Drives commercial and
shareholder value
– Enables capture of material
revenue opportunities
– Ensures customer-centric
approach
– Adjust rapidly to
regulatory changes
Expanding CFD offering
geographically: in new and
existing markets;
Launch new trading products:
in addition to CFDs, for example
share dealing;
Introduce new financial products:
apart from trading;
Deepen engagement with
customers: continuing to develop
technologies to retain customers on
the platform for the long term.
1.
Robust functional
infrastructure and
financial foundation
– Strong balance sheet
– Debt-free since inception
– Cash generative and low
cost model
– Embedded risk management
culture and approach
– Rigorous compliance
procedures and processes
– Operational and financial
track record
7
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Q&A with the
Chief Executive Officer
“ There is a lot to be excited about
at Plus500, as we continue to
rapidly develop, innovate and
grow the business.”
David Zruia, Chief Executive Officer
8
Plus500 Ltd. 2020 Annual Report You were appointed as CEO last year – what was your
career background before then?
I was honoured to become CEO of the Group last year,
having been part of the Plus500 team since 2010.
I graduated with a B.Sc. in Industrial Engineering and
Management from the Technion Israel Institute of Technology,
and joined Plus500 in 2010 as a senior manager in the
marketing department. In that role, I helped to establish our
marketing capabilities, with a view to building awareness of,
and recognition for, the Plus500 brand in key markets
around the world.
I then became COO in 2013, where I led the establishment
and development of the operational division of the Group,
including improving our payment processing, driving back
office efficiencies, enhancing our customer service
capabilities and improving our risk management processes.
So, this background has really helped me to build a strong
understanding of the Group and a deep knowledge of
our customers and our markets, which has been an ideal
platform for my role as the Group’s CEO.
What are your initial perspectives since becoming CEO?
My overall perspective is that there is a lot to be excited
about at Plus500, as we continue to rapidly develop, innovate
and grow the business, and I am thrilled to be leading the
Group as CEO at this time.
Firstly, I continue to be impressed by our proprietary
technology, which provides a robust and agile platform for
Plus500 to continue to innovate and develop our offering for
customers. The strength and agility of our technology and its
ability to respond rapidly to market developments and news
events ensured that we delivered a record performance in
2020 and that we stay ahead of the competition.
Secondly, I am excited by the talent of my colleagues at
Plus500 and I am very proud of their dedication and hard
work. Our performance in FY 2020, and in the years before,
was supported by their commitment, ensuring that our
customers received a consistently high quality experience.
We have an incredible team of highly skilled, agile and
innovative people and I want to take this opportunity to thank
them for all their effort and hard work. One of my key
priorities is to ensure that Plus500 remains an exciting and
fun place to work, to help continue to retain our high quality
talent, as well as attracting the best people in the industry.
Thirdly, I am extremely excited about the future of our
business. Supported by our technology and our people,
I believe that Plus500 is in a very strong position from which
it will develop and grow into the future. The coming years will
be a fascinating journey for our people, our customers and
our shareholders.
On that point, you have refreshed the vision and strategy
for Plus500 – can you discuss this?
Over the last few months, we have been working closely with
one of the world’s leading global strategic advisory firms to
formulate a new long term vision and growth strategy.
The refreshed vision is for Plus500 to enable simplified,
universal access to financial markets, across devices,
financial instruments and geographies. This vision will be
driven by an evolution of the Group, as we start to transition
from being a technology company solely focused on CFDs to
a multi-asset fintech group over time.
I am confident that this new vision and strategy, supported
by our success in accessing a number of significant growth
opportunities over the coming years, will enable Plus500
to further evolve and grow.
This will take place through a greater degree of revenue
diversification and higher customer retention, which will
drive longer term customer tenure and value over time.
Can you outline the growth opportunities that you mention?
We see four major growth opportunities available to us.
Firstly, we aim to expand our CFD offering geographically,
in both new markets and in markets where we already have
a presence.
Secondly, we plan to launch new trading products, in addition
to CFDs, in the coming years. For example, we aim to launch
a share dealing platform in selected markets very soon.
Our third growth opportunity is to introduce new financial
products, beyond trading products.
Our fourth growth opportunity is to deepen engagement
with our customers, by continuing to develop our technology
to attract customers, while maintaining a best-in-class
customer experience to retain them over the long term.
9
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Turning to 2020, what were the key drivers of Plus500’s
performance during the year?
2020 was an exceptional year for Plus500, in unprecedented
market conditions, where we delivered a record performance.
The primary drivers of this performance were the two
major elements I mentioned earlier – our technology and
our people.
The strength and agility of our technology demonstrated
our unrivalled ability to respond rapidly to news and market
events, as well as the scalability of the current infrastructure
we have in place. We are able to do this while maintaining
a sophisticated, efficient and responsible business model.
Our performance was also supported by the commitment
of our people who, in challenging circumstances, given
the COVID-19 pandemic, continued to work tirelessly for
our customers.
These factors helped to deliver a record performance in 2020
and enabled us to provide a consistent level of service to our
customers throughout what has been an unpredictable and
uncertain market environment.
Which key metrics particularly highlight Plus500’s
performance in 2020?
Our excellent performance in FY 2020 was reflected across
all operating and financial metrics.
We on-boarded a total of 294,728 New Customers, up from
91,388 in FY 2019, as a result of our significant on-going
investment in marketing technology to on-board New
Customers at an anticipated attractive return-on-investment.
The number of Active Customers increased to 434,296, up
from 199,720 in FY 2019.
In each of our reported regions, the number of Active
Customers more than doubled, compared to FY 2019.
Consequently, revenue growth in the year was substantial
in each region, including 185% in the UK, 142% in EEA1,
119% in Australia and 151% in the ROW2.
Customer Churn was 30.1%, a significant reduction from
64.4% in FY 2019, reflecting successful efforts in customer
retention, through investments in the Company’s technology
and its marketing technology initiatives.
A great measure of customer confidence in our technology
is customer deposits which grew significantly to $2.9bn,
from $1.0bn in FY 2019 and average deposits per Active
Customer grew significantly to $6,586, from $5,116 in
FY 2019.
Customer loyalty remained high, with 38% of our revenues
in FY 2020 derived from customers trading on the platform
for more than three years, from 27% in FY 2019, and 14%
for more than five years, from 11% in FY 2019.
Finally, ARPU also increased substantially to $2,009,
from $1,775 in FY 2019.
Q&A with the
Chief Executive Officer
continued
How do you plan to access these growth opportunities?
Does this involve any investment?
Future growth will be achieved through organic investment
in our technology and targeted acquisitions, as and
when appropriate.
Our immediate plans for organic investment are focused on
further developing our R&D capability. Specifically, we will be
incrementally investing approximately $50m over the next
three years in R&D, including the establishment of a new
R&D centre in Tel Aviv, to complement our existing R&D
centre in Haifa. This investment will help us to develop more
new products and services, to drive innovation and to further
scale our technology, all of which will help to drive further
customer attraction and retention.
With our vision, growth priorities and investment plan in
mind, I believe that Plus500 remains very well positioned
for sustainable growth in the future.
“ Plus500 remains well
positioned for the next
stage in its evolution.”
10
Plus500 Ltd. 2020 Annual Report Our commitment:
Our
response
to COVID
Supporting our business
and our stakeholders:
Our people:
Plus500 provided continuous support to our employees globally
to help them tackle the day-to-day challenges that emerged as a
result of the COVID-19 pandemic. These included increased support
for home working, guidance and advice on wellbeing issues and
increased flexibility around childcare and family support.
Our customers:
We continued to ensure a high quality service was delivered
during the year, in the face of heightened platform usage. This was
supported by several risk management features, which have been
in place since the Group’s inception. In addition, we continued to
upgrade our educational and training tools for customers.
Our local communities:
We provided a monetary donation to a hospital in the local community,
and funded the purchase of critical care medical equipment throughout
the pandemic. In addition, we supplied IT resources, food packages
and supplies to disadvantaged families in local communities.
Can you talk about Plus500’s approach
to risk management?
We maintain a robust, customer-centric approach
to risk management, which has continued to deliver
consistent results.
We continue to ensure that our risk exposures are aligned with
our risk appetite, managing risk through real-time monitoring
technology and pre-defined risk limits and thresholds. In 2021,
in light of the heightened volatility that exists, particularly in
equity markets, the Group has implemented targeted hedging,
executed on a limited basis so far, to help reduce market risk.
This adds another dimension to our existing risk management
approach and can be achieved as a result of our real-time
monitoring technology and our ability to have full visibility
on customer positions and exposures across all underlying
assets. This approach will continue to be deployed in certain
circumstances going forward, as and when appropriate.
To ensure all customers globally benefit from high quality
trading execution, the Group offers customers several risk
management features, such as negative balance protection
(to ensure guaranteed limits on potential customer losses).
These features have been embedded within our technology
since the business was founded, well ahead of them being
required under regulatory standards introduced in some
regions in recent years.
1. EEA – European Economic Area, excluding the UK
2. ROW – Rest of the World
What is your view of the outlook for FY 2021 and beyond?
Following our performance in FY 2020, which builds on
our track record from previous years, we remain confident
about the outlook for Plus500.
FY 2021 revenue will be driven through the Group’s continued
underlying growth of Active Customers and its on-going
success in attracting New Customers, with additional focus
on retention, helping to support further underlying growth of
Customer Income, a key growth metric.
FY 2021 EBITDA will be supported by Plus500’s lean, flexible
cost base and efficient business model, with continued
dynamic technological marketing investments to capture
opportunities to drive attractive return-on-investment over time.
Supported by successfully accessing the growth opportunities
I mentioned earlier, we aim to deliver growth and consistent
levels of cash generation over the medium to long term.
As a result, Plus500 remains well positioned for the next
stage in its evolution.
David Zruia,
Chief Executive Officer
24 March 2021
11
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Shaping
the trading
platform for
tomorrow
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Plus500 Ltd. 2020 Annual Report
Investing in
R&D
A major focus for investment is on further
developing our R&D capabilities. We will be
incrementally investing approximately $50m
over the next three years in R&D, in addition
to our on-going investment in that area.
This includes the establishment of a new R&D
centre in Tel Aviv, to complement our existing
R&D centre in Haifa. Tel Aviv is a leading R&D
hub for global technology firms, so there is an
opportunity to pool knowledge and attract
talent, with a view to further enriching our own
capabilities and expertise.
In Israel, we are recruiting engineers,
programmers, web designers and product
managers to help us scale up our R&D
capabilities over the coming years. This
investment in R&D will help us to deliver on
our vision of enabling simplified, universal
access to financial markets. This will be
achieved by developing more new products
and services, driving innovation and further
scaling our technology, all of which will
help to drive further customer attraction
and retention.
$50m
Incremental investment in
R&D over the next three years
“ Increased investment
in R&D will drive
innovation and further
scale our technology.”
Ari Shotland, Plus500 Chief Technology Officer
13
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Our technology and
key market trends
Powerful
technology
Plus500’s record performance in FY 2020
was achieved as a result of the strength and
differentiation of the Company’s proprietary
technology, which provides a robust and agile
platform for Plus500 to continue to innovate
and develop its offering for customers.
The proprietary nature of Plus500’s technology enables
the Group to respond rapidly to customer requirements,
emerging news-driven events and regulatory changes.
In addition, with the Company incrementally investing
approximately $50m over the next three years in its R&D
capabilities, Plus500 will be able to help drive customer
acquisition and retention over time.
During FY 2020, the Company continued to invest in its
systems architecture, to support increased platform usage
and to ensure a consistent level of service for customers.
Significant progress was made in modernising the systems
infrastructure of the platform during the year, particularly
with the implementation of Google Cloud Services, with its
data lake technology and artificial intelligence capabilities.
This provides further flexibility, security and scale to the
platform, additional server capacity and redundancy, as well
as enhanced data analysis, data processing and business
intelligence capabilities.
14
Importantly, there was a consistent level of service delivered
for customers during the year which was particularly notable,
given the heightened levels of trading volumes and platform
usage being managed on the platform.
The Group conducted a wide-ranging customer survey
during the year, covering over 50 countries in a variety
of languages. Using the insights from this survey, the
Group was able to implement further improvements in the
trading experience for customers, in alignment with their
requirements. This included the introduction of a number
of new features, chart enhancements, design upgrades,
service optimisations, analysis tools and tailored solutions.
In addition, the Group continued to upgrade its educational
and training tools for customers, to ensure customers fully
understand the various trading tools available, overall market
dynamics and the risks involved in trading CFDs. With this in
mind, Plus500’s “Trader’s Guide” was upgraded during the
year, a downloadable “eBook” was introduced to the platform
and a “market insights” newsfeed was initiated.
Plus500 Ltd. 2020 Annual Report Powerful
* For illustrative purposes
Key market trends in FY 2020 and Plus500’s
market position
A number of market trends emerged in 2020 and had
an influence on the performance of the Group during
the year.
The unprecedented and uncertain environment, along with
the volatility that it produced across global markets, drove
an unparalleled number of opportunities for customers to
trade throughout the year. This was evidenced by the level of
usage on Plus500’s platform, with over 82m customer trades
being executed in FY 2020, up from c.35m in FY 2019.
In addition, the global trading industry saw further
automation, with more user-friendly technologies being
introduced and developed. This drove greater accessibility to,
and popularity of, online channels by customers. To illustrate
this, over 79% of Plus500’s revenue was generated from
mobile or tablet devices and more than 74% of all customer
trades took place on mobile or tablet devices in FY 2020.
Driven by the COVID-19 pandemic, these factors supported
an expansion in the overall size of the addressable market,
with increasing interest in trading from New Customers.
These dynamics created a significant opportunity for
compliant, technology-based operators, like Plus500,
to provide a consistent level of service for customers
in this environment.
Importantly, regulatory scrutiny continued, ensuring
on-going customer protection and also creating barriers
to entry for smaller, non-compliant new operators.
This ensured a highly regulated and high quality service
was delivered for customers across the industry as a whole.
With these market trends in mind, Plus500 was extremely
well placed to manage the consequent heightened trading
volumes, supported by its technological capabilities and
its committed and skilled workforce.
As evidence of this, Plus500 maintained its leading positions
in its key markets in FY 2020 and, for the third year in a row,
remains the largest CFD provider in the UK, Germany and
Spain, based on Investment Trends 2020 Leverage
Trading Reports1.
1. Based on the total number of relationships with CFD traders for the UK and on the total number of client relationships for Germany and Spain
15
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements “ Plus500’s on-going marketing
technology investment drives our
continued success in customer
acquisition and retention.”
Nir Zatz, Plus500 Chief Marketing Officer
Dynamic
and flexible
approach to
marketing
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Our investment in
marketing
Plus500 continues to invest in targeted
marketing technology initiatives, as well as
in artificial intelligence and big data projects,
to further drive customer acquisition and
retention. During FY 2020, Plus500 increased
the level of its investment in these initiatives,
in light of the clear and substantial
opportunities available to on-board New
Customers at an anticipated attractive
return-on-investment and to drive further
retention. This investment was focused
on further increasing the efficiency of our
marketing campaigns, through initiatives
which aimed to attract more potential high
value customers and to further improve
retention rates.
with campaigns consequently delivering
measurable results. Plus500 believes
this unique and wholly-owned marketing
technology remains a fundamental driver to
the prospects and performance of the Group,
driving customer retention and cohort value
over the long term.
The Company continued to invest in
offline marketing initiatives to complement
its investment in marketing technology
initiatives. During FY 2020, the Company
signed new sports sponsorships with
Atalanta B.C. in Italy, BSC Young Boys
Football Club in Switzerland and Legia
Warsaw in Poland. The Company also
extended its existing sports sponsorships
with Club Atlético de Madrid in Spain and
the Plus500 Brumbies in Australia.
The Company’s dynamic and flexible
approach to marketing is based on its ability
to monitor and control its marketing and
customer acquisition spend, ensuring
marketing resources are efficiently targeted,
294,728
New Customers
on-boarded during FY 2020,
up 223% from FY 2019
17
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Our Vision
and Strategy
Our four pillar roadmap
to access long term
growth and value
Plus500 Vision and Strategy
Plus500 aims to enable simplified, universal
access to financial markets, as the Group starts
to evolve from a technology company solely
focused on CFDs to a multi-asset fintech
group over time.
1
2
Robust financial foundation
and functional infrastructure:
Powerful proprietary
technology:
The Group's business model is built on a robust
financial foundation, with a consistently high
level of cash generation, a resilient balance
sheet, a flexible and lean cost structure, and
minimal capital expenditure requirements.
These strong financial dynamics, driven by a
highly scalable and lean business model, have
helped us to maintain industry-leading positions
in a number of key markets.
This business is also supported by a solid
functional infrastructure, with an embedded risk
management approach, rigorous compliance
procedures and processes, supported by high
calibre talent and expertise across a range of
specialisms and geographies.
Plus500 operates a proprietary technology
trading platform for customers to trade CFDs
internationally, which is also a key enabler
for Plus500 to capture material revenue
opportunities and a major driver of competitive
advantage and commercial value.
Our technology powers our product, marketing
capabilities and back office operations, providing
a robust and agile platform for us to continue to
innovate and develop our offering for customers.
Our technology ensures that we have an
unrivalled ability to rapidly respond to news
and market events, as well as to any regulatory
changes, even in today’s unprecedented and
uncertain market environment.
18
Plus500 Ltd. 2020 Annual Report 3
4
Customer-centric
approach:
Significant potential
growth opportunities:
Plus500 has maintained a consistent customer-
centric approach, supported by the well-established
Plus500 brand, our strong market reputation and
a high quality product.
Importantly, as a result of the strength of our
technology, we have been able to continue
delivering a consistently high quality service for
our customers, driving our engagement with them.
We have also continued to invest in our dynamic
marketing technology engine, to on-board New
Customers at an anticipated attractive return-on-
investment and to drive further retention. Together,
these factors have ensured the development of
a significant, loyal customer base over time.
Future growth will be achieved by accessing
multiple opportunities, through organic
investment in the Group's technology and
targeted acquisitions. To access future growth,
the Group aims to:
• Expand its CFD offering geographically:
in new and existing markets;
• Launch new trading products: in addition
to CFDs, for example share dealing in
selected markets;
• Introduce new financial products, apart from
trading; and
• Deepen engagement with customers:
continuing to develop the technology to attract
customers, while maintaining a best-in-class
customer experience to retain them over the
long term.
19
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statementsgrow Our Business
Model
Resources and
relationships
How we create and
maximise value
Financial Capital
The Group has built a strong financial track
record, maintaining a debt-free balance sheet
since inception, with a lean and flexible cost
structure. Read more on page 32
Regulators
Regulatory activity affects the environment
within which Plus500 operates.
Responding to market trends…
Unprecedented market
environment: more
frequent opportunities
for customers to trade
Further automation &
user-friendly technologies:
greater accessibility to,
and popularity of, digital
channels by customers
Increasing interest
in trading: size of the
addressable market
expanding
On-going regulatory
scrutiny: barriers
to entry for smaller
players and continued
customer protection
Human Capital
Human capital is a key element in the ongoing
optimisation and management of the Group’s
technology platform and its ability to recruit
and retain customers. Read more on page 28
With a clear strategy…
Expand CFD offering
geographically:
in new and existing markets
Technology
Plus500 operates its robust and agile trading
platform which is based on its proprietary
technology. Read more on page 14
Introduce new
financial products:
apart from trading
Launch new
trading products:
in addition to CFDs, for example
share dealing in selected markets
Deepen engagement
with customers:
continuing to develop the
technology to attract customers
Sponsorship Partnerships
Plus500 has sponsorship agreements with
leading sports teams around the world,
to support growth in brand awareness
and brand recognition in key markets.
Service Providers
Plus500 works in partnership with a number
of providers which deliver services to support
the Company in certain activities.
20
Underpinned by…
Comprehensive risk management
Sound governance
Proprietary risk management that
incorporates real-time functionality risk
management systems and trading
threshold triggers to reduce risk
The Plus500 Board is comprised
of a diversified and experienced
group of individuals with extensive
knowledge across a number of
disciplines
Plus500 Ltd. 2020 Annual Report Our robust and scalable
business model creates
value for our stakeholders
Value created in FY 2020
How we share value
EBITDA
$515.9m
Net profit
$500.1m
Operating cash conversion
106%
Shareholder returns
$278.3m
Customer deposits
$2.9bn
Growth in Active Customer base
117%
Shareholders and investors
Attractive returns through capital growth, ordinary and special
dividends and share buybacks. Total returns in dividends and
share buybacks since IPO in 2013 amount to approximately
$1.2 billion
Regulators
The Group contributes to round table discussions within
the industry and holds regular dialogue with global regulators
Employees
Providing rewarding careers, with opportunities for our people
to achieve long term development and progression
Customers
Customers enjoy a highly rated, robust and scalable, user-friendly
trading platform with a leading position in the mobile space.
Intuitive navigation and consistency minimises the learning
curve between devices and improves user experience
Sponsorship partners
The cooperation of the Company with its sponsorship partners
provides all parties with stronger brand recognition
Service providers
Ongoing growth of the business ensures continued support
of, and collaboration with, Plus500's service providers
21
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Key Performance
Indicators (“KPIs”)
“ Our KPIs are used to benchmark revenue
generation and operating costs, and the
effectiveness of the Company’s on-going
investment in technology to maximise
efficiency and returns on investment.”
Financial KPIs
Non-financial KPIs
Revenue ($m)
EBITDA ($m)
ARPU ($)
872.5
506.0
515.9
2,365
720.4
2,009
1,775
354.5
192.3
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What it is
The Group’s revenue is the income it
generates through Customer Income
and Customer Trading Performance.
What it is
EBITDA is defined as earnings
before interest, tax, depreciation
and amortisation.
What it is
ARPU is calculated by dividing the
revenue by the number of Active
Customers in the relevant period.
Why we measure it
Revenue is a measure of the Group’s
ability to maximise the strength of its
technology, representing the total
income generated from customer
transactions in the relevant financial
period.
2020 performance
Revenue of $872.5m
(FY 2019: $354.5m)
Why we measure it
EBITDA is a measure of the Group’s
profitability and can be used to directly
compare the Group’s profitability
to that of other companies and
other sectors.
2020 performance
EBITDA of $515.9m
(FY 2019: $192.3m)
Why we measure it
This measure helps to provide an
understanding of the average
revenue we are generating on a
customer-by-customer basis.
This helps us to identify and
optimise our customer acquisition
strategies to deliver an attractive
return-on-investment over time.
2020 performance
ARPU of $2,009
(FY 2019: $1,775)
Customer Trading Performance – Gains/losses on customers’ trading positions
22
Plus500 Ltd. 2020 Annual Report
Non-financial KPIs
Average User Acquisition Cost (AUAC) ($)
Active Customers
New Customers
1,046
434,296
294,728
934
750
304,616
199,720
134,237
91,388
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2
What it is
AUAC shows the average cost of
attracting a new customer and is
calculated by dividing our total
marketing expenses by the number
of New Customers in the relevant
period.
Why we measure it
AUAC is a reflection of the marketing
cost of recruiting new customers in the
relevant period.
2020 performance
AUAC of $750
(FY 2019: $1,046)
What it is
Active Customers are customers
who made at least one trade using real
money (rather than trading through a
demo account) on the trading platform
in the relevant period.
Why we measure it
This measure reflects the level of
customer activity on the trading
platform during the relevant period.
It is an indicator of how successful
the Group is in attracting and retaining
customers, with a view to delivering
sustainable revenue and profits.
What it is
New Customers are customers who
have deposited real money into their
trading account for the first time.
Why we measure it
This metric tracks the number of
new customers the Group attracts
on a year-on-year basis. This helps
us to understand the success of our
technological capabilities.
2020 performance
294,728 New Customers on-boarded
(FY 2019: 91,388)
2020 performance
434,296 Active Customers
(FY 2019: 199,720)
23
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Key Stakeholder
Relationships
The Group aims to develop long-lasting
and valuable relationships with its key
stakeholders through open and consistent
engagement and communication, with a view
to ensuring their views and concerns are
clearly understood by the Board and fully
incorporated into the Board’s discussions
and decision-making.
CUSTOMERS
Why we engage
We aim to ensure that Plus500 continues to provide a
consistent, best-in-class service to our customers and that we
continue to listen to our customers about their requirements
and interests. This approach helps Plus500 to retain existing
customers and attract new customers. In addition, we aim
to ensure our customer care and protection is maintained,
through educational tools and risk management features.
How we engage
We engage with customers through an omni-channel
customer-centric approach. We provide a 24/7 customer
support, which is available in multiple languages across
a number of channels.
We also provide customers with a range of educational and
training tools to support them with their trading activities.
Customers are able to use our free demo account on an
unlimited basis, through which they can trial our service
in a risk-free environment.
In addition, we conduct customer surveys to better
understand their views on Plus500’s service, so that
we can continue to innovate and develop our product,
based on customer feedback.
Key focus areas
– Consistent level of service delivery
– Continued 24/7 customer service availability
– Further expansion of range of educational and training tools
– Provision of negative balance protection and other
embedded risk management features, to ensure customer
care and protection is maintained
– On-going customer surveys to ensure we remain
cognisant of customer requirements
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EMPLOYEES
REGULATORS
Why we engage
Why we engage
Regulatory oversight is an integral part of the Group’s
business, as its regulated subsidiaries retain operating
licences and are supervised by various regulators around
the world, to ensure that we are offering our service
within the appropriate regulatory rules and guidelines.
Regulatory compliance procedures are constantly reviewed
and enhanced, with a culture of compliance embedded
within the business, including open and constructive
communications with relevant regulatory bodies.
How we engage
The Group communicates with regulators on an on-going,
constructive and open basis and we participate in a
number of regulators’ co-ordination groups. In addition,
we contribute to public consultations issued by regulators
on relevant industry matters.
Key focus areas
– Continued compliance with appropriate laws, global
regulatory standards and industry best practices
– Rapid implementation of regulatory changes, driven
by our proprietary technology
– On-going communication with, and support of, regulators
in current and potential future regulatory jurisdictions
Organisational culture and employee well-being are critical
in ensuring that our service is delivered to customers,
through the on-going development of our technology by
our employees, on a consistent, long term basis. With this
in mind, the Group regards its talented and committed
employees as its key asset to enable its technology.
How we engage
The Group undertakes regular evaluation processes for
employees and provides competitive reward packages
to attract and retain high quality employees. We encourage
employees to participate in training, learning and development,
and make them aware of possible career progression
opportunities within the Group. We provide our people
with a dynamic work environment, with high quality office
facilities, and the opportunity to engage in a number of
social activities and community engagement programmes.
One of our Non Executive Directors, Steve Baldwin, is the
workforce engagement representative on the Board to
provide a channel through which employees can raise their
views directly to the Board, informing the Board’s approach
to supporting improvements in organisational culture.
In 2020, Steve reported that employee engagement and
satisfaction were high, with our employees appreciating
the Group’s enhanced efforts to maintain their safety and
well-being.
Key focus areas
– Consistent internal communication on developments
within the Group and across our industry
– Continued opportunities for training, learning,
development and career progression
– Continued communication of employee matters
to the Board
25
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statementsEngaging Key Stakeholder
Relationships
continued
COMMUNITIES
INVESTORS
Why we engage
Why we engage
Engagement with local communities is crucial from
social welfare and sustainability perspectives and, with
this in mind, the Group continues to support its local
communities.
How we engage
The Group participates in a number of projects to support
and assist local communities and charities. These include
on-going monetary contributions and the provision of
resources and equipment to a number of charities, non-profit
organisations, community centres and disadvantaged
families in local communities. The Group also maintains
strategic partnerships and alliances with community
partners, including our on-going collaboration with top tier
academic institutions, for example the Technion – Israel
Institute of Technology, through which we participate in
several innovation and entrepreneurship initiatives.
Key focus areas
– Continued financial donations
– On-going supply and provision of resources
and equipment
– Further employee engagement in local community
projects, on behalf of Plus500
– Continued focus on strategic partnerships with top tier
academic institutions
Plus500 aims to provide fair, balanced and understandable
information to investors and shareholders, to ensure their
continued support of the Company. Maintaining a close
connection to its shareholders through clear and transparent
dialogue continues to be a major focus for the Group.
The Company continues to seek ways in which to enhance
its relationship with investors.
How we engage
An open dialogue with investors is achieved through
one-to-one meetings, results presentations, conference
attendance and group meetings, such as the Annual
General Meeting. In addition, the Company produces
a variety of investor-focused material, including annual
reports, news published on the Regulatory News
Service and investor presentations, which are available
on a dedicated section of the Plus500 website. The Group
recruited a dedicated Investor Relations professional
to manage our investor engagement going forward.
Key focus areas
– On-going transparent dialogue with investors
– Open lines of communication for shareholders
– Regular collection of investor feedback and
dissemination to the Board
– Executive management participation in investor-
focused events and activities
26
Plus500 Ltd. 2020 Annual Report SERVICE PROVIDERS
SPONSORSHIP PARTNERS
Why we engage
Why we engage
Plus500 works with various service providers who support
the Group with certain activities relating to the Plus500
trading platform.
How we engage
We build strong partnerships with service providers through
an open two-way dialogue to ensure we can develop long
term valuable relationships.
Our relationships with our service providers include the
on-going review and monitoring of their performance levels,
to ensure that the Group is achieving quality and value from
the provision of their services. Ultimately, this helps to build
mutually beneficial relationships with our service providers.
Key focus areas
– On-going informal and formal two way dialogue with
our service providers
– Continued fair treatment of service providers in our
dealings with them
– Payment of service providers in a timely manner
Plus500 continues to engage in sports sponsorship
agreements to help drive brand recognition and further
build brand awareness globally and in local markets.
The Group has various sports sponsorship agreements in
place with organisations who share the same core values
as Plus500. These include Club Atlético de Madrid in Spain,
the Plus500 Brumbies in Australia. Atalanta B.C. in Italy,
BSC Young Boys Football Club in Switzerland and Legia
Warsaw in Poland.
How we engage
We maintain a positive two way relationship with the teams
which we sponsor. This is driven by factors such as on-going
online and offline marketing campaigns and the prominence
of the Company logo on team jerseys and other related
sports media.
These factors help to ensure a mutually beneficial
relationship, enhancing both Plus500 and the brands
which we sponsor.
Key focus areas
– Continued two way dialogue
– Potential brand awareness opportunities for the Group
27
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Our approach to
Environmental, Social
and Governance
(“ESG”) matters
Our technology and performance are only
as strong as the people behind it. With around
400 people spanning eight offices globally,
our high calibre talent enables flexible trading.
Plus500 remains dedicated to operating responsibly
and sustainably in all aspects of its business and believes
this approach is both its duty and an essential part of
effective management. Plus500 is committed to a range
of ESG initiatives to create tangible value for our people,
customers, local communities and charities and the
Company’s shareholders. Our core values in this area are:
• Putting our customers and stakeholders first
• Leading the industry by delivering an innovative,
high quality product
• Maintaining a dynamic and creative work environment
During 2020, the Board established an ESG Committee
with the objective of regularly reviewing the Group’s activities
in these areas and aligning them with best practice.
An introduction to the ESG Committee by Daniel King, its
Chairman, can be found on page 59 of this Annual Report.
Materiality Assessment
The ESG Committee initiated a materiality assessment to
identify key ESG priorities and risk factors, to help establish
a framework for the Group’s future approach in these
areas and, ultimately, to increase the Group’s resilience over
the long term. The assessment was prepared in conjunction
with a third-party specialist ESG consultancy, to ensure
independent verification of the process.
A range of external sources were used as reference points
for this assessment, including internationally accepted
standards and frameworks, such as SASB (Sustainability
Accounting Standards Board) and GRI (Global Reporting
Initiatives), industry trends, as well as market best practice
and investor sentiment on ESG matters. The insights
that formed the basis of the assessment were developed
following a series of internal and external interviews on
Plus500’s exposure to ESG risks and opportunities,
conducted by the specialist ESG consultancy and
Plus500 representatives.
The matrix on the following page shows Plus500’s material
ESG issues against their importance to external stakeholders
and to Plus500. In-line with best practice, Plus500 has also
considered its current level of influence over these issues.
This will help to structure the Group’s approach in 2021.
Overall, there were several consistent themes that emerged
from the interviews, with the most material matters for
Plus500 identified as follows:
• Customer care and protection: ensuring customers remain
protected from, and well informed of, the risks of trading
CFDs. This was seen not only as a specific risk to Plus500,
but also across the industry, in relation to regulation
around customer care and protection;
• Information and data security: ensuring that Plus500’s
technology remains highly secure and immune from
breaches of privacy, particularly around personal
information and data;
• Systems infrastructure: maintaining a robust systems
infrastructure, with embedded risk management features
and in-built redundancy, to ensure that Plus500 customers
receive a consistent level of service;
28
Plus500 Ltd. 2020 Annual Report • Leadership and governance: Plus500 must remain in
Organisational culture
compliance with applicable governance requirements and
regulations. Investors were particularly interested in this
area, with a specific focus on Board composition and
diversity, and ensuring that Plus500 remuneration policy
is aligned with long term shareholder interests; and
• Organisational culture: employee welfare and development,
to ensure that Plus500 continues to attract and retain high
quality talent.
ESG in 2020
Notwithstanding the Group’s Materiality Assessment
and its coming role in future strategy, Plus500 takes
seriously its role as a responsible business and is already
taking significant steps to mitigate many of these risks,
partly through continued engagement with key stakeholders.
The Risk Management Framework and Key Stakeholder
Relationships sections of this Annual Report outline how
the Group is mitigating these risks in more detail.
Our commercial success depends on the ability of our
people to continue to excel with the development of our
technology for our customers. With this in mind, we strive
to maintain a culture in which our highly talented people
can thrive, develop and engage with management and
fellow colleagues.
Plus500 operates in an entrepreneurial, innovative
environment with a culture that creates continuous
improvement in employee development and ultimately
leads to enhancements in the capability of our technology.
In a highly competitive technology market, we offer our
people rewarding careers with opportunities for training,
development and career progression. We are committed
to fair wages for all employees and we enable them to
participate in our success through competitive reward
packages, alongside share-related benefits that are linked
to the financial and operational performance of Plus500.
We are committed to equal opportunity in employment and
to creating, managing and valuing diversity in our workforce.
We maintain 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.
ESG materiality matrix – assessing the importance of risks for Plus500 and for external stakeholders
H
G
H
I
l
s
r
e
d
o
h
e
k
a
t
s
l
a
n
r
e
t
x
e
o
t
e
c
n
a
t
r
o
p
m
I
Customer care
and protection
Information and
data security
Systems infrastructure
Leadership and governance
Organisational culture
Marketing & advertising
Emissions
Diversity and
equal opportunity
Fair business
Market abuse
Anti-bribery
and corruption
Employee wellbeing
Community
investment
Energy management
Labour practices
and human rights
Employee training
and education
W
O
L
LOW
Importance to Plus500
Key ESG issue
Plus500’s influence over issue:
High
Moderate
HIGH
29
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Our approach
to ESG matters
continued
Employee wellbeing and human rights
We are fully committed to the health, safety and wellbeing
of our people and we aim to provide them with the most
optimal conditions to support a healthy and balanced work
environment. We encourage our people to make use of our
office facilities and to participate in organised social activities,
which include access to a private gym, yoga classes, team
retreats, a varied library, a fully equipped kitchen and other
benefits and social events.
In FY 2020, the Group provided continuous support to
employees globally to help them tackle the day-to-day
challenges that emerged as a result of the COVID-19
pandemic. These included increased support for home
working, guidance on wellbeing issues and flexibility
around childcare and family support.
Plus500 is committed to maintaining high ethical standards
and protecting human rights across its operations and supply
chain. The Company’s Human Rights and Modern Slavery
Statement pursuant to Section 54 of the UK Modern Slavery
Act 2015 can be found on the Company’s website.
Employee diversity
Our people come from diverse backgrounds and we ensure
that all our employees, both prospective and current, are
given access to equal opportunities. All employees, whether
they are part-time, full-time, or temporary, will be treated
fairly and with respect.
We are committed to:
• Creating an environment in which individual differences
and the contributions of all team members are recognised
and valued
• Creating a working environment that promotes dignity
and respect for every person
• Not tolerating any form of intimidation, bullying, or
harassment, and to discipline those that breach the policy
• Ensuring availability of training, development and
progression opportunities for all of our people
• Promoting equality in the workplace
30
• Encouraging anyone who feels they have been subject
to discrimination to raise their concerns and to take those
concerns seriously
• Regularly reviewing all employment practices and
procedures so that fairness is maintained at all times
The Equality and Diversity Policy is monitored and reviewed
annually by the Board to ensure that equality and diversity
is continually promoted in the workplace.
Gender equality
We are committed to the progression of our talented
women at Plus500 and we are encouraged that our female
representation across the Group is relatively strong.
Our gender diversity statistics as of 31 December 2020
are as follows:
AS OF 31 DECEMBER 2020
Board
Senior management
MALE
6 (75%)
15 (65%)
FEMALE
2 (25%)
8 (35%)
All Employees
180 (48%)
197 (52%)
TOTAL
8
23
377
Senior management in the above table includes Executive
Directors and the first layer of management below.
At the start of FY 2021, gender diversity at the Board level
was improved further, with the appointments of Sigalia
Heifetz as a Non-Executive Director and Tami Gottlieb as an
External Director and a Non-Executive Director. Consequently,
as of the date of the Annual Report, female representation
on the Board comprised 44%. These appointments not only
continue to diversify the Board’s gender composition, but
also further expand the range of the Board’s expertise and
experience. Plus500 believes that diversity across the
Board and the Group is an important element in maintaining
competitive advantage and effective governance, as well
as mitigating the risk of a “group think” culture. More
information on the Board’s Equality and Diversity Policy
can be found on page 53 of this Annual Report.
Plus500 Ltd. 2020 Annual Report Anti-bribery and anti-corruption
As a UK listed company we are subject to the 2010 UK
Bribery Act and, as an Israeli-incorporated company, we
are also subject to anti-bribery and anti-corruption provisions
under Israeli corporate law. Plus500 operates a zero tolerance
approach to bribery and corruption. The Company’s
Anti-Bribery Policy ensures it conducts all business in an
honest, ethical manner whilst acting professionally and
fairly with integrity in business dealings and relationships.
This policy applies to all our people, as well as, 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.
This policy covers:
• Bribes;
• Gifts, hospitality and expenses;
• Facilitation payments;
• Third party suppliers or agents;
• Client entertainment and benefits;
• Political contributions; and
• Charitable contributions.
The prevention, detection and reporting of bribery and
other forms of corruption are the responsibility of all of us.
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 Policy forms part of the
introduction process for all of our new recruits. All of our
people receive regular, relevant training on how to implement
and adhere to the policy and are asked to formally confirm
compliance with the policy on an annual basis.
The Board’s Regulatory & Risk Committee reviews the
implementation of the Anti-Bribery Policy. Every year the
Committee considers the policy’s suitability, adequacy
and effectiveness.
Customer care and protection
Customer care and protection is an important matter across
the industry. Plus500 continues to ensure this remains a key
priority, particularly given increasing regulatory scrutiny in
this area.
The Company is making strong progress in this regard, in
particular to educate and inform customers of the risks
involved in CFD trading, through prominent risk warnings and
an increasing number of educational features on its platform.
Measures such as negative balance protection and
maintenance margin protection, embedded in Plus500’s
technology since the inception of the Company, remain
crucial in ensuring customers are well protected.
The Group continues to ensure compliance with global
regulatory standards in this area and remains well
positioned for any potential future regulatory changes.
Community engagement
We encourage our people to get involved and contribute
to the community they live in. Workforce social initiatives
are being supported by our Social Responsibility and
Community Relations Committee comprised of workforce
volunteers, which oversees the planning and performance
of relevant activities. During the COVID-19 pandemic, the
Company provided a monetary donation to a hospital in
the local community, funded the purchase of critical care
medical equipment and provided food packages, supplies
and IT equipment to disadvantaged families in local
communities, non-profit organisations and charities.
The Group participated in a number of other projects in
FY 2020 to support and assist local communities, charities
and the Group’s employees during the year. These included
on-going monetary contributions to various charities,
including the Australia Bushfire Relief.
Plus500 also maintains strategic partnerships and alliances
with community partners, such as our ongoing collaboration
with top tier academic institutions like the Technion –
Israel Institute of Technology, participating in innovation
and entrepreneurship initiatives.
Impact on the environment
We conduct our business using an online technology
platform and therefore we have a relatively low environmental
impact. Nonetheless, we are committed to managing our
environmental impact and are fully aware that by considering
the environment in our decision-making, particularly around
technology adoption and office selection, we can minimise
our impact.
Despite our relatively small emissions footprint, we aim to
continually assess and review climate-related risks and
opportunities, with a view to improving our environmental
performance. Elements under review include waste
management and recycling programmes. We are also
examining potential avenues to reduce our greenhouse gas
emissions to net zero.
We recognise the significance of climate change for all
businesses and we are aware of the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD).
In FY 2021, we will be giving careful consideration to how
we can report against the TCFD framework appropriately,
starting in the FY 2021 Annual Report, with oversight from
the ESG Committee.
“ Plus500 remains committed to
operating responsibly and sustainably
in all aspects of its business.”
31
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Financial
Review
Elad Even-Chen
Chief Financial Officer
“ Our excellent financial
performance in 2020 was
driven by the strength
and differentiation of our
technology platform, which
demonstrated an unrivalled
ability to respond rapidly
to news and market events.”
32
Revenue:
$872.5m
(FY 2019: $354.5m)
EBITDA:
$515.9m
(FY 2019: $192.3m)
Net profit:
$500.1m
(FY 2019: $151.7m)
Operating Cash Conversion:
106%
(FY 2019: 88%)
Plus500 Ltd. 2020 Annual Report In the context of an unprecedented market
environment, Plus500 delivered a record
financial performance in FY 2020, with
outperformance across all key metrics.
Revenue and EBITDA
Net financial income
The Group generated total revenue of $872.5m in FY 2020
(FY 2019: $354.5m). The underlying performance of the
business remained robust, driven by the extremely high
volume of customer trades throughout the year, with
Customer Income increasing to $997.5m (FY 2019: $382.4m).
This was offset by Customer Trading Performance1 which
was $(125.0m) in FY 2020 (FY 2019: $(27.9m)). Customer
Trading Performance is expected to be broadly neutral
over time, as evidenced by the Group’s performance in
recent years.
Driven by this growth in revenue, and supported by the
Group’s lean and flexible cost base, EBITDA for FY 2020
was $515.9m (FY 2019: $192.3m). This EBITDA performance
was achieved despite the Group’s heightened investment in
its marketing technology during the year to on-board New
Customers at an anticipated attractive return-on-investment.
EBITDA margin in FY 2020 was 59% (FY 2019: 54%).
Our cost base
Costs remained well controlled during the year and 80%
of the Group’s costs were variable (FY 2019: 71%), with the
Group maintaining a flexible cost base. The Group’s variable
costs remain positively correlated to enhanced performance
and higher volumes, including marketing investment and
payment processing expenses.
With the level of New Customers during FY 2020 increasing
by 223% to a record level, marketing costs increased by
131% to $221.1m while AUAC was substantially lower at
$750. We will continue to invest in our dynamic marketing
technology to ensure that Plus500 is able to capture
opportunities to drive future anticipated attractive return-on-
investment. In addition, the Group continues to expect that
AUAC will rise steadily over time as its customer profile
continues to shift to higher value customers.
Total Selling, General and Administrative expenses increased
by 118% to $358.9m during the year (FY 2019: $164.4m),
driven mainly by marketing investment and processing
expenses, to support an enhanced performance and higher
platform usage during the year.
Net financial income amounted to $9.7m in FY 2020
(FY 2019: net financial expenses of $0.8m), predominantly
due to foreign exchange and translation differences, in
addition to interest received related to fixed deposits and
tax rebates. A substantial proportion of the Group’s cash
is held in US dollars in order to provide a natural hedge,
thereby reducing the impact of currency movements on
financial expenses.
Group’s Corporation Tax status
During the year, the Company became one of the first
companies to receive approval from both the Israeli Tax
Authority (“ITA”) and the Israeli Innovation Authority (“IIA”)
under the new tax regime, recognising the Company as
a "Preferred Technological Enterprise" (“PTE”).
Consequently, the Plus500 Ltd. corporation tax rate for
FY 2017, FY 2018, FY 2019 and FY 2020 was reduced from
24% in FY 2017 and from 23% in the following financial
years to 12% in each of these years. Subject to the Company
complying with statutory thresholds, the Company’s
Corporation Tax rate is expected to remain at 12% for
FY 2021.
Over $150m of initial repayments and cash savings are
expected to be delivered, the majority of which has already
been received, either through cash savings in respect of
FY 2020 or through tax rebates including a c.$47m rebate
received from the ITA in H2 2020, an additional c.$30m
already received in Q1 2021 and a further rebate, of c.$35m,
expected to be received later in FY 2021.
In addition, the withholding tax rate applicable for dividends
has been reduced from 25% to 20%. This has been applicable
since the final dividend for FY 2019 and will continue to be
applicable for future dividends, up to FY 2021.
Net profit and earnings per share
Net profit for the year was $500.1m (FY 2019: $151.7m).
Due to the Company’s recognition as a PTE, the net profit
for FY 2020 was higher by $85.2m than the net profit would
have been ($414.9m) had the Company not received this
tax accreditation.
Earnings per share for the year increased by 249% to $4.71
(FY 2019: $1.35), driven by the Group’s improved operational
and financial performance and the reduction in tax rate.
1. Customer Trading Performance – gains/losses on customers’ trading positions
33
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Financial
Review
continued
Balance sheet and cash generation
As of 31 December 2020, total assets increased by 96%
to $620.2m, compared to $316.9m as of 31 December 2019,
with equity of $555.6m representing approximately 90% of
the balance sheet (31 December 2019: $284.1m).
In addition, the Board initiated a new share buyback
programme in 2021 to acquire up to $25.0m of the
Company’s shares. Subject to the completion of this
programme, the resulting total distribution to shareholders
for FY 2020 amounts to $278.3m¹.
During FY 2020, the Company executed its existing share
buyback programmes, with 5,584,528 Ordinary Shares
purchased during the year, amounting to a total of $88.8m,
at an average share price of £12.66.
The Company’s previous shareholder return policy was
to return at least 60% of net profits to shareholders as
a normal return on a half yearly basis, with at least 50%
of this distribution being made by way of dividends.
However, given the substantial and clear growth
opportunities currently available to the Group, the Board
concluded that the profile of its capital allocation policy
should be more weighted towards investment in future
growth and on driving business continuity, as the business
looks to increase its scale to capture and optimise the
available growth opportunities.
Consequently, the Board updated its shareholder returns
policy in February 2020 to ensure greater flexibility for future
investment. The Company will now be returning at least 50%
of net profits to shareholders through dividends and share
buybacks, with at least 50% by way of dividends. As with the
previous policy, shareholder returns related to the new policy
will continue to be based on a 23% corporate tax rate, for
both future interim and final dividends. In addition, the Board
will continue to consider paying special dividends at each
year end.
Elad Even-Chen
Chief Financial Officer
24 March 2021
The Group remains highly cash generative, supported by
the relatively low levels of capital expenditure as a result
of its automation and technological capabilities, with
106% operating cash conversion achieved during FY 2020
(FY 2019: 88%). Cash generated from operations during
the year was $546.6m (FY 2019: $170.1m).
During the year, the Group utilised $88.8m of cash in
executing its existing share buyback programmes.
In addition, $141.6m was paid in dividends to shareholders
(FY 2019: share buyback programme totalled $47.2m and
dividends paid to shareholders were $101.1m). The Group
continued to be debt-free, as it has been since its inception
in 2008, with cash balances and cash equivalents at the
end of FY 2020 significantly increasing to $593.9m
(FY 2019: $292.9m).
Presentation of currencies
The Consolidated Financial Statements are presented in
US dollars, which is the Group’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 balance sheet date.
Shareholder returns
The Board has declared in respect of H2 2020 total
shareholder returns of dividend and share buyback of
$110.0m, in addition to the total shareholder returns for
H1 2020 of $168.3m.
Shareholder returns include a final dividend for the year
ended 31 December 2020 of $55.6m, representing
$0.5422 per share (final dividend 2019: $0.3767 per share)
and a special dividend for the year ended 31 December 2020
of $29.4m, representing $0.2870 per share. Both dividends
had an ex-dividend date of 25 February 2021, with a record
date of 26 February 2021, and a payment date of 12 July
2021. This makes a total dividend for the year of $186.0m,
representing $1.7823 per share (total dividend for 2019:
$0.6501 per share).
The special dividend is directly related to the benefits of the
change in tax rate from the Israeli statutory rate of 23% to
12%, following the Company’s successful accreditation as
a PTE by the IIA and ITA, as outlined above.
1. The actual dividend to be paid by the Company on the dividend payment date will be less than initially estimated since the Company repurchased additional Ordinary Shares between the
date of dividend declaration and the record date of the dividend, which Ordinary Shares are held in treasury and not entitled to dividend payment.
34
Plus500 Ltd. 2020 Annual Report Risk Management
Framework
“ The Group has developed a
comprehensive risk mitigation
plan, to control exposures and
provide robust solutions.”
Assessing and
managing our risks
The Group maintains a robust, customer-centric approach
to the management and control of risks, which is fully
embedded within the Group’s technology and its day-to-day
operating procedures.
Furthermore, the Group has developed a comprehensive
risk mitigation plan, to control exposures and provide
robust solutions. These procedures comprise of 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
executive management.
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 Group
recognises the importance of understanding and managing
these risks and has determined levels of risk that it believes
are efficient. Policies and procedures have been developed
within a robust risk management framework that attempts
to minimise various risks, including market risk.
Plus500’s target customer base is exclusively individual
customers and the trading platform is not available to
institutional or corporate traders. As a result, Plus500
has a low customer concentration and therefore does not
rely on trading activity from a small number of very large
customers – the largest customer in FY 2020 contributed
less than 1% of total Group revenue.
Additionally, the Group's risk management framework
ensures that risk exposures are strictly limited. The Group
employs a combination of real-time monitoring technology
and predefined limits to ensure risk is effectively managed.
In addition, at the start of FY 2021, the Group initiated
targeted hedging, on a limited basis, with a view to reducing
market risk. This focused approach will continue to be
deployed in certain circumstances going forward, as and
when appropriate.
Plus500 monitors trading levels and exposure limits
(for example by customer, instrument and asset class),
and credit risk is limited by having all customers accounts
pre-funded. The Group also offers negative balance
protection and a margin close-out policy to all of its
customers on a global basis.
35
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Risk Management
Framework
continued
While the unprecedented market conditions experienced in
FY 2020 and in FY 2021 to date are resulting in short term
fluctuations in Customer Trading Performance, the Group
continues to expect that contribution from this revenue
component will be broadly neutral over time.
As per Plus500’s business model, revenues are mainly driven
by the volume of trades executed on its trading platform
and the associated Customer Income. Since the Company’s
IPO in 2013, Customer Income has accounted for
approximately 97% of Group revenues.
Governance
The role of the Board
The Board is ultimately responsible for the risk strategy,
having developed a Risk Governance Framework, which is
regularly reviewed and assessed by the Board, particularly
with regards to current and emerging risks.
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 is responsible 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
Group's most significant risks to the achievement of
strategic objectives and reviewing the Group's risk policy.
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 business.
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 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
threshold(s) are reviewed and amended.
“ The Group has
developed proprietary
risk management
systems that incorporate
various real-time
financial risk limits.”
36
Plus500 Ltd. 2020 Annual Report
c. Hedging
To further manage risk the Group has a hedging approach
in place which would, in extremis, mitigate exposure of the
Group as a whole beyond certain thresholds. In FY 2021,
the Group implemented targeted hedging, executed so far
on a limited basis, with a view to reducing market risk.
This focused approach will continue to be deployed in
certain circumstances going forward, as and
when appropriate.
Second line of defence
A strong compliance function is in place in all of the Group's
regulated subsidiaries. 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 on the recommendation
of the Audit Committee, which also oversees the internal
auditor’s work plan, monitors its activities and assesses its
performance. 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
The Board has overall responsibility for the Group'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
Group's systems are designed to provide the Board with
reasonable assurance that issues are identified on a timely
basis and dealt with appropriately.
The Group'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 in 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 internal controls system;
• A regular review of risk limits, with a view to conducting
targeted hedging to reduce market risk, as and when
appropriate;
• The reporting to, and review by, the Board on changes
in legislation, regulatory requirements and practices
within the sector, accounting and regulatory and legal
developments pertinent to the Group; and
• The appointment of experienced and suitably qualified
staff to take responsibility for key business functions to
ensure maintenance of high standards of performance.
Risk assessment and review
During FY 2019, the Board carried out a robust assessment
of principal and emerging risks facing the Group and how
these risks are managed or mitigated in accordance with
Provision 28 of the Code. Principal 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 24
to the Consolidated Financial Statements. During FY 2020,
the Board assessed, and continues to assess, emerging
risks but has not identified any emerging risks that have not
already been captured as principal risks through the Group's
risk assessment process.
The annual and ongoing elements of the Group’s risk
management processes are controlled by an established
risk identification, assessment and monitoring process.
The risk assessment process identified certain risks
which were narrowed down into major risks monitored
by the executive management and the Regulatory & Risk
Committee, then further consolidated into nine principal
risks closely monitored by the Board.
Throughout 2020 and up to the date of this report, the Board
has reviewed the effectiveness of the Group’s internal controls
system. 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, covering all
controls, including financial and operational controls and
compliance with applicable laws and regulations.
37
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Risk Management
Framework
continued
RISK
DESCRIPTION
MANAGEMENT AND MITIGATION
Business and strategic risks
Legal and
jurisdictional
risk
Regulatory risk
The risk that changes in the legal and
regulatory frameworks in which the Group
currently operates could adversely affect
its performance
• Diversification of jurisdictions in which the Group offers
its services
• Monitoring legal and regulatory developments and taking
actions to remain in compliance
Regulatory changes could result in the product
offering becoming less profitable, restrictions
on the product marketing, or a ban on the
product offering in one or more of the countries
in which the Group operates
• Monitoring market and regulatory sentiment, developments
and advice from compliance functions on actual and possible
changes and taking remedial action
• Maintaining an open and robust dialogue with regulators
Customer care
and protection risk
The risk that a lack of customer care and
protection by the Company could negatively
impact customer welfare, particularly in relation
to compliance with regulations on this issue
• Continued efforts to educate and inform customers of the
risks involved in CFD trading, through required risk disclosures,
educational features and by offering an unlimited and free
demo account
• Negative balance protection has an on-going feature of the
Plus500 platform since inception. This guarantees that
maximum losses of all customers are limited to the amount
of their deposits.
• Other risk management features, including margin close-out
policy, are also embedded with Plus500’s technology
• Assessment of potential customers prior to and during the
completion of the on-boarding process
Financial risks
Business risk
The risk of a commercially adverse impact
on the business resulting from:
• The Group’s strategic decision making failing
to seize business opportunities or react to
changes in the market. This risk may result
in damage or loss, financial or otherwise,
to the Group as a whole
• The risk that a third-party organisation
on which the Group relies significantly
will inadequately provide or fail to deliver
its outsourced activities or contractual
obligations to the standard required
• Robust governance, challenge and oversight
• Managing the Group in line with the agreed strategy,
policies and risk appetite and periodic reviews of such
assumptions compared to developments in the markets,
business and regulation
• Developing redundancies for material services provided by
third parties by having secondary providers and alert systems,
as well as automated processes to operate redundancies
• Due diligence performed on service providers
• Service level agreements in place and regular monitoring
of performance
• Input from best-in-class advisors involved in decision-making
process of strategic developments and initiatives
Market risk
The risk of exposure to the market.
The market risk is mainly comprised
of the following main factors:
• Price movements
• Foreign currency exposures
The Group manages market risks by steering/balancing natural
hedge and the Group risk tolerance. Market risk is mitigated by:
• The Group's proprietary technology platform which enables
real time position monitoring and alerts to help the Group to
constantly manage market exposure and adjust its 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
• Targeted hedging is conducted on a limited basis, as appropriate
38
Plus500 Ltd. 2020 Annual Report RISK
DESCRIPTION
MANAGEMENT AND MITIGATION
Financial risks continued
Credit risk
The risk of clients or counterparties 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 in their
account (mainly due to sharp market
movements); such losses are absorbed by
the Group (negative balance protection has
always been offered to all the Group’s
customers, in all markets and across all
underlying assets)
• Institutional credit risk:
The risk that financial counterparties will
not meet their obligations, risking both client
and Group assets
• Client Credit Risk:
The Group has a “no-credit” policy in which customers can only
fund their accounts from their own resources, with all accounts
being pre-funded. Customers 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 continue to operate within the
applicable standards and also diversify the Group’s assets
across those financial institutions to reduce risk
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
Operational risks
Operational risk
The risk of enduring losses resulting from
inadequate or failed internal processes due to
people, failed technology deployment, adoption
and innovation, external events (such as natural
disasters, major utilities or infrastructure failure
etc.) or the inability to attract and maintain
competent staff which the Group requires for
operational purposes
• Business and regulatory sign-off of processes and procedures
to ensure business efficiency and regulatory compliance
• Invest in system development to improve process automation
• Monitoring, quality checks and robust analysis of performance
to identify errors, inefficiencies, underlying causes and
mitigation plans
• Centralised operations – to enable rapid implementation
of business innovation, adjustments to business and regulatory
changes, monitoring and maintaining high standards and
cost-efficient structure
• Centralised technical operations, to ensure Group-wide
monitoring, issue handling and analysis
• Unified IT strategy focused on performance and growth
• Continuous development efforts towards operational risk
framework to ensure risk recognition and timely control
• Recruitment of highly competent employees and developed
employee retention programmes, with enhanced staff training
and oversight
• Additional support through Google Cloud services, providing
further flexibility, security and scale to our platform
• 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)
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 inability to offer its services
• Operate 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
• The risk of loss or misuse of individuals’
network activity
personal information provided to the Group
• 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 standards as well as backup processes to enable
service availability in the event of failures
• Privacy as culture – creating awareness among employees
of privacy-related matters including proper use of personal
information, protection of such information and loss prevention
• Robust privacy oriented compliance program to ensure
compliance with applicable data privacy regulations
39
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Going Concern and
Viability Statement
Going Concern
Having given due consideration to the nature of the
Group’s business, the Group's budget, liquidity resources
and cash flow forecasts for the period of three years
ending 31 December 2023, taking into account the Group's
anticipated investment commitments and working capital
requirements, the Board considers that the Company and the
Group as a whole 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 over a period of at least twelve months from the date
of approval of the Consolidated Financial Statements and
the consideration of the various risks set out on pages 35
to 39 and the financial risks described in note 24 to the
Consolidated Financial Statements.
Viability Statement
In accordance with Provision 31 of the Code, the Board
has considered the Group’s current financial position
and future prospects, its strategy, risk appetite and the
potential impact of the principal risks and how these are
managed 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 three year assessment ending
31 December 2023.
The Directors confirm that they have performed a robust
assessment of the principal risks facing the Group as
detailed on pages 35 to 39 including those that will threaten
its business model, future performance and liquidity.
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.
• 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
sufficient cash generation to support operations.
In addition, we believe the Group will continue to be
viable beyond the three years as mentioned above, in
accordance with our business model.
• 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 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 changes, revenue growth from strategic
initiatives and cost growth required to support initiatives.
The budget was reviewed by the Board in December
2020 and in February 2021 and received final approval
in February 2021.
• Ongoing review and monitoring of risks: these have
been identified in the Group’s Risk Appetite Statement,
outlined in the Group’s principal risks and uncertainties
and are monitored monthly by management, with
review and challenge from the Regulatory &
Risk Committee. Based on the various scenario’s
tested, the Company has sufficient liquidity and
headroom to operate its business.
Viability
Scenario stress testing of available liquidity and capital
adequacy are central to understanding the Group's viability.
This testing replicates adverse market conditions and
regulatory change, and is 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 scenario stress testing showed that,
due to the robust nature of the business, the Group would
be able to withstand these scenarios, both in isolation and
combined scenarios, over the financial planning period by
taking management actions that have been identified.
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.
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 particular
of regulatory changes, 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.
40
Plus500 Ltd. 2020 Annual Report G
o
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a
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Contents
Chairman's Introduction to Governance
UK Corporate Governance
Code Compliance Statement
Board of Directors
Governance Report
Shareholder Engagement
Report of the Nomination Committee
Report of the Audit Committee
Report of the Regulatory & Risk Committee
Report of the ESG Committee
Report of the Remuneration Committee
Directors’ Remuneration Report
Directors’ Report
Corporate Law
Directors' Responsibility Statement
42
43
44
46
50
51
54
58
59
60
67
76
78
80
41
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Chairman’s Introduction
to Governance
Penny Judd
Chairman
“ Corporate Governance
has remained a key
theme for the Board
and this year we have
managed to diversify the
composition of the Board
significantly.”
42
Dear shareholder
I would like to take this opportunity to give you an overview
of the work of the Board during 2020. Corporate governance
has remained a key theme for the Board during the year,
and this year we have managed to diversify the composition
of the Board significantly, in line with the Code and the
recommendations of the Hampton-Alexander Review
on gender equality in leadership positions.
In 2020, we have continued our efforts to dedicate
considerable time evaluating the work of the Board and its
committees. As noted in last year’s Annual Report, during 2019
we undertook an independent third party review by Genius
Boards Limited (“Genius Boards”). This was a valuable exercise
which resulted in a number of important recommendations
which were implemented during the course of 2020, together
with having an additional internal review in 2020.
As also noted, we were seeking to appoint an additional
Non-Executive Director to complement the Board’s existing
skill set and to further diversify its composition. I am delighted
that at our 2020 AGM, Ms. Anne Grim was appointed
as a Non-Executive Director and External Director, and as
announced on 4 February 2021, Ms. Sigalia Heifetz was also
appointed as a Non-Executive Director. Furthermore, as
recently approved at our 2021 Extraordinary General Meeting
(“EGM”) held on 16 March, Ms. Tami Gottlieb was appointed
as a Non-Executive Director and External Director.
Anne is an excellent addition to the Board, given her expertise
in customer experience, strategic planning and execution,
technology innovation and business transformation. Both
Tami and Sigalia have a deep knowledge of the corporate
landscape in Israel and have also worked with a number of
international high growth businesses. Sigalia has advised
many Israel-based companies on their international growth
ambitions, while Tami has an extensive background in the
financial services sector, across a range of specialisms.
Anne’s, Tami’s and Sigalia’s combined experience and
expertise will be invaluable for Plus500 as we look to continue
to grow our business. These appointments further diversify
the composition of the Board and have broadened the
Board’s breadth of experience and knowledge.
As announced on 5 January 2021, Gal Haber, one of Plus500’s
co-founders and its former CEO, stepped down from his
executive position as a Managing Director and as a member
of the Board. The Board is extremely grateful to Gal for his
significant contribution to the development of Plus500 over
the years, and we wish him the very best for the future.
As announced on 4 February 2021, our long serving Senior
Independent Non-Executive Director (“SID”) and External Director,
Charles Fairbairn, has informed the Board of his decision to step
down from the Board on the earlier of our forthcoming 2021
Plus500 Ltd. 2020 Annual Report UK Corporate Governance Code
Compliance Statement
As a Main Market listed company, following its
admission to the Main Market of the London Stock
Exchange, and with respect to 2020, Plus500 is
required to comply with corporate governance
policies and practices consistent with the UK
Corporate Governance Code 2018 (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 2020 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 2020,
the Company has complied with the provisions
of the Code, other than in respect of the directors’
re-election mechanism and in relation to pay ratios
and pay gaps. 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 who
meet certain statutory requirements of independence.
The Company’s External Directors are Charles
Fairbairn (until stepping down), Daniel King, Anne
Grim and Tami Gottlieb. The 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 is not required to compile gender pay gaps
and pay ratios under the Companies Law whereas
companies incorporated in the United Kingdom are
required to do so under UK legislation.
Chairman’s Introduction to Governance
continued
AGM or 30 June 2021. I would like to take the opportunity, both
personally and on behalf of the Board, to thank Charles for his
substantial contribution to the development of Plus500 since
its IPO in 2013. His wise counsel and sage advice have been
very much appreciated and we wish him all the best for the
future. Upon Charles’ stepping down from the Board, Anne
Grim will serve as the Senior Non-Executive Director.
Executive remuneration remains a significant area of
observation for UK listed companies. We consulted with
external consultants in previous years in order to align
remuneration with shareholders’ expectations and we
took seriously the votes against the Executive Directors’
remuneration at the 2020 AGM. The Remuneration Committee
subsequently engaged extensively with shareholder bodies
and key shareholders with respect to the feedback that was
provided, and the Company took the assistance of an external
advisor in order to restructure its Remuneration Policy, as
further detailed in the Remuneration Committee Report.
Shareholder engagement is extremely important and I will
continue to meet regularly with key shareholders, as will the
rest of the Board, to ensure we represent their interests.
The Nomination Committee continues to review the skills
that we need while always considering diversity and the need
for independent thinking and challenge. The Committee will
also continue to review the size of the Board to confirm that it is
appropriate with a good mix of skills, experience and knowledge
and the ability to maintain appropriate oversight of the executive
team and provide constructive challenge and support.
Our oversight of the significant risks including regulatory,
financial and technology challenges facing the Group continues.
The Regulatory & Risk Committee reviews these risks and
receives assurance from management and the Group’s
advisors as to how they are understood and mitigated to
the level of risk acceptable to the Board.
The Audit Committee continues its work overseeing the
internal controls of the business and is assisted in this by
our internal auditors. It also works closely with our external
auditors and oversees the production of the Consolidated
Financial Statements.
Also, in 2020 we have established the Environmental, Social
& Governance (“ESG”) Committee to assess the Group’s
impacts and interactions with ESG aspects. We have been
supported by an external advisor and conducted an ESG
materiality assessment, according to which the Group shall
draw its ESG roadmap for the coming years.
The following report describes the activities of the Board
and its committees during 2020 in more detail.
Penny Judd
Chairman
43
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements 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 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.
1. PENNY JUDD
Chairman
3. ELAD EVEN-CHEN
Group Chief Financial Officer and Director
Date of appointment: June 2016
Date of appointment: July 2016
Penny Judd is a Non-Executive Director,
Chair of the Board and Chair of the Regulatory
& Risk Committee.
Elad Even-Chen is the Chief Financial
Officer of the Group and Vice President
of Business Development.
Penny sits on the Boards of AIM listed Trufin Plc
and Alpha Financial Management Consulting Plc
as a Non-Executive Director, Senior Independent
Director and Chair of the Audit Committee. She
also sits on the Board of AIM listed Team17 Plc
as a Non-Executive Director and Chair of the
Audit Committee.
Penny started her career at KPMG qualifying as
a chartered accountant and specialising in Audit
and Corporate Finance before joining the London
Stock Exchange where she was Head of Equity
Markets at the UKLA. She then moved to
Cazenove & Co as a corporate financier and was
a consultant at the London Investment Banking
Association before moving into a career in
Compliance. Penny was a Managing Director
and EMEA Head of Compliance firstly for UBS
Limited and then Nomura International Plc
before moving into her current portfolio career.
2. DAVID ZRUIA
Chief Executive Officer and Director
Date of appointment: April 2020
David Zruia is the Chief Executive Officer.
David joined the Group in 2010 as a senior
manager in the marketing department. In that
role, David was instrumental in establishing the
Group’s marketing capabilities and in building
awareness of, and recognition for, the Plus500
brand in key markets around the world. He was
appointed as the Group COO in 2013 and led
the establishment and management of the
operational division of the Group, including KYC
processes, payment processing, back office,
customer service and risk management.
David holds a B.Sc. in Industrial Engineering and
Management from the Technion - Israel Institute
of Technology.
Elad joined the Group in 2011.
Elad’s responsibilities cover a broad range
of finance, business, corporate and
strategic functions.
Elad is responsible for Plus500’s strategic
business development projects which enable
the Group's business and financial expansion.
Elad has an extensive corporate finance,
legal and regulatory background. Over the last
10 years he has held a number of positions
within the Group also acting as the Company
Secretary, risk manager and Head of IR.
Elad is a certified accountant in Israel and, prior
to joining the Group, he was a senior associate
at KPMG.
Elad holds a B.A. in Accounting and Economics
from Tel-Aviv University, an LL. B Degree from
the College of Management and an MBA
(specialising in Financial Management) from
Tel-Aviv University.
4. STEVE BALDWIN
Independent Non-Executive Director
Date of appointment: June 2017
Steve Baldwin is a Non-Executive Director
and Chairman of the Nomination Committee.
Steve is currently the Chairman of TruFin Plc
and is also a Non-Executive Director of The
Edinburgh Investment Trust Plc. Prior to joining
Macquarie Capital, Steve was a Corporate
Finance Director at JP Morgan Cazenove for
ten years and previously a Vice President of
Corporate Finance at UBS. He qualified as a
Chartered Accountant at Coopers & Lybrand.
Steve 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.
Committee membership Key:
Nomination
Audit
Regulatory & Risk
Remuneration
ESG
Disclosure
Chairman
1
2
3
4
44
Plus500 Ltd. 2020 Annual Report
5
6
7
8
9
5. CHARLES FAIRBAIRN
Senior Independent Non-Executive
Director and External Director
Date of appointment: July 2013
*
Charles Fairbairn is a Non-Executive Director,
the Senior Independent Director and Chairman
of the Audit Committee.
Charles has held similar positions for a number of
publicly traded companies over the past 20 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 22 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.
As announced on 4 February 2021, Mr. Fairbairn
has informed the Board of his decision to step
down from the Board on the earlier of our
forthcoming 2021 AGM on 30 June 2021.
*
The Committee membership reflects his memberships
in FY 2020 and until 3 February 2021. As announced,
as of 4 February 2021, Charles no longer sits on any of
the Board Committees other than the Audit Committee
which he chairs.
6. ANNE GRIM
Independent Non-Executive Director
and External Director
Date of appointment: September 2020
Anne Grim is a Non-Executive Director.
Anne is an experienced executive turned advisor,
consultant and Board Director with more than
30 years in senior financial services leadership
roles at Barclays, Wells Fargo, American Express,
Mastercard and most recently (and formerly) as
Chief Customer Officer at Fidelity International.
Her expertise is in customer experience,
strategic planning and execution, technology
innovation and business transformation.
Anne is currently an independent non-executive
Board member for Insight Investment, Metro Bank
PLC, RateSetter and Openwork Holdings Ltd.
Anne is also an Advisor to the Investment
Association's FinTech Engine and a Trustee
on the UK board of Opportunity International.
7. DANIEL KING
Independent Non-Executive Director
and External Director
Date of appointment: June 2013
Daniel King is a Non-Executive Director
and Chairman of the Remuneration and
ESG Committees.
Daniel has spent the last two decades in
executive and senior management roles within
technology corporates as well as start-ups as
an operator, advisor and investor with a focus
on Fintech, eCommerce technology, Big Data, BI,
Analytics, SaaS platforms, and Marketplaces for
both B2B and B2C. He has extensive knowledge
in investing, fundraising, and scaling high-growth
companies including international expansion.
Daniel is currently a Venture Partner with
Seedcamp, one of Europe’s largest Venture
Capital firms for early stage funding. He is also
Chairman of StitcherAds a platform for social
commerce. Previously he was President & COO
for Profitero, a SaaS provider of online insights
and e-commerce intelligence for retailers
and brands and prior to that was a specialist
consultant to the UK Government working for
the Department of Investment and Trade (DIT)
as Head of High Growth & Emerging Markets.
Daniel was previously Managing Partner of Blue
Leaf Capital, a private boutique venture capital and
advisory services company based in London and
has 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.
8. TAMI GOTTLIEB
Independent Non-Executive Director
and External Director
Date of appointment: March 2021
Tami Gottlieb is a Non-Executive Director.
Upon Charles Fairbairn’s stepping down from
the Board, Tami will chair the Audit Committee.
Tami has a long track record in the financial
services industry in Israel and is currently an
External Director at Bank Leumi Le’Israel Ltd.
– one of Israel's two largest commercial banks,
where she is Chairperson of the Audit and
Financial Reports Committees and a member
of the Remuneration and Business & Credit &
Strategy Committees, having previously been
on the Technology Committee and on the Risk
Management Committee. Tami Gottlieb is also
Chairperson at Shefayim Holdings Corporation,
an External Director at Extell Limited, an
Independent Director at Arad Investments
and Development Ltd and a Director at Emilia
Development. She is also a founder and Managing
Director of Harvest Capital Markets Ltd, a wealth
management and corporate finance boutique.
Tami holds a Bachelor’s Degree in International
Relations from the Hebrew University of
Jerusalem and a Master’s Degree in Economics
from Indiana University.
9. SIGALIA HEIFETZ
Independent Non-Executive Director
Date of appointment: February 2021
Sigalia Heifetz is a Non-Executive Director.
Sigalia holds non-executive directorships at
a number of leading Israel-based corporations
across a range of sectors and industries,
including Nesher Israel Cement Enterprises Ltd,
Clal Biotechnology Industries Ltd, Golf & Co Ltd,
Maman Cargo Terminals and Handling Ltd,
Tamar Petroleum Ltd, Mashav Initiating &
Development Ltd and Vesta Investment
& Management. She also previously held
Non-Executive positions at Bet Shemesh
Engines Ltd and Hadera Paper, prior to which
she was an audit partner at accountancy
firm BDO.
Sigalia holds a Bachelor’s Degree in Accounting
and Economics from Tel Aviv University and an
EMBA from INSEAD and Tsinghua University.
45
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Governance
Report
The Board
The Board maintains full control and direction over
appropriate strategic, financial, organisational and
compliance issues. The Company’s organisational 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 activities during the year
The Board agrees an annual calendar and forward meeting
agenda during the previous year and additionally meets at
such other times as required. The matters accepted by the
Board for consideration at Board meetings are business
strategy, operational highlights and current trading, quarterly
forecasts, budget and financial performance, governance,
organisational culture and risk & regulation.
Board Activity in 2020
Strategy
A comprehensive strategy discussion was held in
December 2020, with the presence of a well-known
external strategic advisory firm, at which the Board
discussed actions to deliver on the strategy for the
coming years, as set out on pages 18 to 19.
Business,
operational
highlights and
current trading
The Board received monthly updates including CEO
reviews, financial performance updates, business
development updates and risk and regulatory
compliance reports
Quarterly
forecasts and
budget
Updates were provided and discussed on a
monthly basis. Discussions on the 2021 budget
were held in December 2020 and in February 2021
and it received final approval in February 2021
Financial
performance
Governance,
risk and
regulation
The Board reviewed and approved the ongoing
trading updates and results announcements.
The Board considered and approved dividend
distributions and share buybacks, the Consolidated
Financial Statements and the Annual Report
The Board received updates and conducted
discussions about regulatory developments and
emerging risks. It also received training
and briefings on regulatory changes and updates,
in addition to ongoing updates on compliance
matters. In 2020 the Board composition has been
significantly diversified. Also, an ESG Committee
was established
Whistleblowing The Board reviewed and approved the Group’s
Whistleblowing Policy, as it does on an annual
basis
Culture and
values
The Board continued to monitor and review
the Group's culture, values and performance
primarily through regular discussions with
the Executive Directors and their teams, and also
through Steve Baldwin, in his role as the workforce
engagement representative on the Board who held
a round table session with employees from various
departments of the Company
Other
An internal effectiveness evaluation of the Board
and its committees has been conducted
Board committees
The Board has appointed six principal committees to
which certain aspects of the Board’s work are delegated:
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 51 to 53.
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 54 to 57.
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 page 58.
46
Plus500 Ltd. 2020 Annual Report Governance Report
continued
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 and Chief Financial
Officer, the Chairman and the other Non-Executive Directors,
the Company Secretary and other senior executives and the
Company's remuneration policy. The Committee’s
responsibilities, main activities and priorities for the next
reporting cycle are set out on pages 60 to 66.
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 the
Market Abuse Regulations 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. Whenever necessary, the Committee meets
to discuss the content of announcements proposed to be
released to the Stock Exchange and approve their content
where relevant.
Environmental, Social and Governance (“ESG”) Committee
The ESG Committee has been delegated responsibility for
considering the adequacy of the Group’s ESG policies and
processes. The Committee’s responsibilities, main activities
and priorities for the next reporting cycle are set out on
page 59.
Operation of the Board
The Board is responsible 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
• Recommending appointments to the Board.
The Company Secretary, Hila Barak, 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. Hila Barak is
a certified lawyer in Israel since 2012 and holds an Executive
MBA from the University of Haifa. 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
12 occasions in 2020 to review, formulate and approve the
Group’s strategy, budgets and corporate actions and to
oversee the Group’s progress towards its goals. The Board
also holds regular conference calls to update the members
on operational and other business matters. A summary of
the key activities of the Board in 2020 is set out on page 46.
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 has accordingly implemented an internal
induction plan for newly appointed directors in which it
provides the directors with training sessions via internal
meetings, presentations and conversations which are
conducted by Company advisors, management and other
relevant persons 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 the relevant 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
Executives, 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 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, CFD trading and other financial
instrument expertise.
47
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Governance
Report
continued
Board composition
As of the date of the 2020 Annual Report, the Board is
comprised of two Executive Directors: David Zruia and Elad
Even-Chen, and seven Non-Executive Directors: Penny Judd
(Chairman of the Board), Charles Fairbairn (Senior Non-
Executive Director), Daniel King, Steve Baldwin, Anne Grim,
Sigalia Heifetz and Tami Gottlieb. Penny Judd was
independent on appointment, in accordance with the
requirements of the Code. 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 Executive Officer, the Chief
Financial Officer or the Chairman. Upon Charles Fairbairn's
stepping down from the Board, Anne Grim shall serve as the
Senior Non-Executive Director.
In 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 Charles Fairbairn (until stepping down), Daniel King,
Anne Grim and Tami Gottlieb. Under the Companies Law
the term of office of an External Director is three years,
which can be extended for two additional three-year terms.
Also, External Directors are elected by shareholders subject
to 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 2021 Notice of AGM.
Board composition and attendance in FY 2020
Chairman
Penny Judd
Executive Directors
David Zruia (appointed as of 20 April 2020)
Elad Even-Chen
Gal Haber1
Asaf Elimelech (until 20 April 2020)
Senior Independent Non-Executive, External Director
Charles Fairbairn2
Independent Non-Executive, External Director
Daniel King
Anne Grim (appointed as of 16 September 2020)
Tami Gottlieb (appointed as of 16 March 2021)
Independent Non-Executive Director
Steve Baldwin
Sigalia Heifetz (appointed as of 4 February 2021)
SCHEDULED MEETINGS
ELIGIBLE TO ATTEND
SCHEDULED MEETINGS
ATTENDED
12
8
12
12
4
12
12
4
0
12
0
12
8
12
12
4
12
12
4
0
12
0
1. As announced on 5 January 2021, Gal Haber has stepped down from his office as a director, as of that date.
2. As announced on 4 February 2021, Charles Fairbairn will step down from the Board on the earlier of our forthcoming 2021 AGM or 30 June 2021.
48
Plus500 Ltd. 2020 Annual Report Governance Report
continued
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 FTSE 100 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 shall not attend that meeting
(unless the chair of the Board, the Audit Committee or the
Remuneration Committee, as the case may be, determines
that such person’s presence at the meeting is required for
presentation of the relevant transaction) 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 has a personal interest in the transaction, then
shareholders’ approval 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
this year.
Board evaluation
As described in the 2019 Annual Report, Plus500, in
accordance with Provision 21 of the Code, carried out an
external Board Evaluation in 2019, with the feedback report
presented by Genius Boards.
The evaluation covered attending several Board meetings
and Committee meetings, interviewing the Board of
Directors, the Company Secretary and several executives
and relevant advisors to the Company.
The Company expects to have its next externally facilitated
Board evaluation in 2022, in accordance with the
recommendation specified in Provision 21 of the Code
that FTSE 350 companies shall consider to have such
an external evaluation once every three years.
During the year, the Board also conducted an internal
Board effectiveness evaluation, led by the Chairman with
the support of the Company Secretary. The Board members
were requested to complete questionnaires and to evaluate
the performance of the Board and its committees during
2020, as well as the performance of the Chairman and
their own performance as Board members. The findings
determined, among other things, that the Board has made
good progress from FY 2019 in relation to:
• Time management at the Board and Committee meetings
• Board composition – gender and fields of experience
and expertise
• Progressing well in the governance journey
• Technology innovation and creativity
• Management information is freely available to the
relevant parties
• Good regulatory, risk and business knowledge
on the Board
• Timeliness of succession planning.
Opportunities for improved effectiveness were also
identified and the Board, supported by the Company
Secretary, will apply themselves delivering the agreed
actions arising from the internal review in 2021.
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 2020,
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, and
provides the information necessary for shareholders to
assess the Company's position, performance, business
model and strategy.
49
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Shareholder
Engagement
The Company encourages the engagement of both
institutional and private investors. During 2020, in light of
COVID-19 restrictions and related public health guidance
by various governments, the majority of investor meetings
were conducted by the Company through virtual channels,
including conference calls and video conferences. The Chief
Executive Officer, David Zruia, and Chief Financial Officer,
Elad Even-Chen met regularly with institutional investors,
particularly with regard to the issuance of half and full year
results. They were accompanied at these meetings by the
Company's Head of Investor Relations, who was appointed
during 2020 to manage Plus500's relationships and
communications with the investment community.
The Chairman of the Board and the Senior Independent
Non-Executive Director also met regularly with key investors
during the year.
Communication with private individuals is maintained
through the Annual General Meeting and any Extraordinary
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, Regulatory & Risk and ESG 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 on
its website (www.plus500.com), which includes copies of
the Company’s press releases, financial presentations
and reports.
Regular updates are provided to the Board on meetings
with shareholders and analysts, as well as on brokers'
opinions. Non-Executive Directors are available to meet
major shareholders, as required. Investors are also
encouraged to contact the Company’s Head of Investor
Relations at: ir@Plus500.com.
Major interests in shares
As at 22 March 2021, 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 3% or more of the Company’s capital or voting rights:
FUND MANAGER
Odey Asset Management
BlackRock Inc
Schroder Investment Management
The Vanguard Group, Inc
Acadian Asset Management
NUMBER
OF
SHARES
8,745,493
5,376,062
5,218,342
4,719,073
3,537,448
%
8.57
5.25
5.11
4.63
3.47
2020 Annual General Meeting
The 2020 Annual General Meeting was held on 16 September
2020 as a virtual meeting, due to the UK governance
restrictions following the COVID-19 pandemic.
All resolutions which were voted on in the framework of the
meeting were duly passed by shareholders by means of a
poll vote.
2021 Annual General Meeting
In light of the UK governance prohibiting indoor public
gatherings due to the COVID-19 pandemic and limitations
on international travel, the Company's 2021 Annual General
Meeting will be held as a virtual meeting.
Details of all resolutions to be proposed at the 2021 Annual
General Meeting will be included in the Notice of Annual
General Meeting to be circulated by the Company to all
shareholders in due course.
50
Plus500 Ltd. 2020 Annual Report
Report of the
Nomination
Committee
Committee composition
The Nomination Committee comprises Steve Baldwin and Daniel King, and is
chaired by Steve Baldwin. The Code recommends that a majority of the members of
a nomination committee should be Independent Non-Executive Directors. The Board
considers Steve Baldwin and Daniel King to be independent for the purposes of the
Code. Details of the skills and experience of the Committee members are set out at
page 53 of the report. Details of individual attendance at meetings are set out in the
Committee attendance table below.
Committee attendance (in FY 2020)
Steve Baldwin (Chair)
Daniel King
Charles Fairbairn1
Gal Haber2
Scheduled meetings
eligible to attend
Scheduled meetings
attended
8
8
8
8
8
8
8
8
Dear shareholder
As the Chairman of the Nomination Committee, I am pleased
to take this opportunity to give you an overview of the work
of the Committee during 2020.
The Board is committed to evaluating and reviewing the
structure, size and composition of the Board on a continual
basis, including the balance of skills, knowledge, experience
and diversity of the Board while factoring in the Company’s
strategy, risk appetite and future development.
During 2020 the Committee led the search for a new
CEO to succeed Asaf Elimelech. This involved agreeing
the leadership credentials and desired experiences for the
executive role. An external headhunter, True Europe LLP
(“True Search”) was engaged to support the process and
to identify both external and internal candidates with the
required skills, experience and diversity credentials. As part
of the selection and appointment process, candidates
completed extensive leadership assessment testing.
Other than in respect of recruitment services, True Search
has no other connection with the Company or any of its
Directors. After a thorough and transparent process,
David Zruia (previously the Group COO) was identified
as the best suited candidate and his permanent appointment
was announced in July 2020.
Also during the year, the Committee undertook a review
of the broader composition of the Board and took into
account an external review conducted in 2019 as set out
in our 2019 Annual Report. The Committee identified a
need to add further Independent Non-Executive Directors to
increase the Board‘s talent diversity and was also mindful
that two Non-Executive Directors and External Directors had
served since the Company’s IPO in 2013 and would not be
eligible under the Companies Law for re-election in 2022.
The Committee engaged the services of True Search and
candidate briefs were compiled and lists of appropriate
candidates for each brief were drawn up with input from
the Board and its advisors.
The Board is committed to diversity of gender, ethnicity,
background, nationality and professional experience and
these were the key pillars of the searches. Hence, I am
delighted that our Board composition has been significantly
diversified during FY 2020 and Q1 2021 by the addition
of three Non-Executive Directors – Ms. Anne Grim,
Ms. Sigalia Heifetz and Ms. Tami Gottlieb.
This increases the gender diversity on the Board, and
ensures that the Company increases its talent diversity,
in line with the Code and the recommendations of the
Hampton-Alexander Review on gender equality in leadership
positions. Following these additional appointments, I am
pleased to report that as of the date of this Annual Report
the Board comprises 44% female Directors.
Due to the enhanced role of the Nomination Committee set
out in the Code, we are continuing to develop our programme
of activity accordingly. Throughout 2020, the Nomination
Committee also dedicated time to review and discuss
succession planning across the business.
The Committee is continuing to take steps to ensure that
there is a strong talent pipeline with the necessary set of
skills and expertise, whilst considering female representation
and other diversity pillars as part of this process.
Steve Baldwin
Chairman of the Nomination Committee
1. As announced on 4 February 2021, as of that date, Charles Fairbairn is no longer a member of the Committee.
2. As announced on 5 January 2021, as of that date, Gal Haber is no longer a director nor a member of the Committee
51
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Report of the
Nomination
Committee
continued
“ The Board has taken
significant steps to
increase gender diversity
through the appointment
of three new female
Non-Executive Directors.”
Committee responsibilities and activities
The Nomination Committee has responsibility for reviewing
the structure, size and composition (including the skills,
knowledge and experience) of the Board, considering
succession planning and ensuring diversity at Board-level.
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,
whilst remaining committed to diversity of gender, ethnicity,
background, nationality and professional experience and
developing a talent pipeline reflective of this diversity.
A summary of the major activities and decisions
of the Committee in 2020 is set out below:
Board
composition
Succession
planning
Diversity
• Re-election of directors
• Review of core skills and experience of
the Board and the independence of the
Non-Executive Directors
• Review of membership of committees
• Appointment of three Non-Executive Directors
(two of which during Q1 2021)
• Appointment of one Executive Director (CEO)
• Review tenure of the directors
• Review of the Company’s succession plans
• Foster the development of talented
employees throughout the business
•
Review and amendment of Equality and
Diversity Policy, in line with the Code and the
33% target for female board representation
set out in the Hampton-Alexander Review.
• Review of diversity on the Board, and
significantly increase the female
representation on the Board
2019 external &
2020 internal
Board evaluation
• Discussion and assessment of the 2019
external and the 2020 internal Board
evaluation findings
52
Plus500 Ltd. 2020 Annual Report Report of the Nomination Committee
continued
Following the activities of the Committee in 2020, the
Committee is confident that each director brings a unique
set of skills and experience which enable the Board to be
reflective of a diverse and varying range of perspectives and
opinions and to enable the Company to achieve its strategy
and targets going forward.
The Committee believes that each Director’s contribution is
important to the Company’s long term sustainable success.
Priorities for FY 2021
In the coming year the Committee will continue to focus
on key themes such as diversity and succession planning
and ensuring a diverse talent pipeline throughout the Group.
As noted above, in 2020 and Q1 2021, three additional
female Non-Executive Directors were appointed to the Board.
Diversity
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 (page 30); and
• Reviewing this policy from time to time and continuing
to disclose this policy in the Annual Report.
As stated above, the Board has taken significant steps
to increase gender diversity through the appointment of
three new female Non-Executive Directors in 2020 and Q1
2021. The Committee notes the updated requirement under
the Disclosure Guidance and Transparency Rules (DTR) for
the Company’s 2020 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 ESG report on pages 28 to 31.
Board Diversity Policy
OBJECTIVES
PROGRESS UPDATE
Ensuring the selection and
appointment process for
employees and directors
includes a diverse range
of candidates
Improve gender diversity
at Board and senior
management level
Review Board equality
& diversity policy
Succession planning
Review employees’ recruitment
procedure which includes non-
discriminatory selection process,
allowing the recruitment of a
diverse workforce
Three female Non-Executive
Directors were appointed in
FY 2020 and in Q1 2021, following
the appointment of True Search
by the Board
The Committee has reviewed
and approved the Board's
equality & diversity policy
The Committee has spent time in 2020 considering the
important matter of succession planning across the
business. In order to ensure minimal business disruption
in the event of any unexpected senior management or
Board departures, the Committee is committed to continue
developing plans for identifying appropriate successors in
the short, medium and long-term, whilst also having regard
to the importance of diversity throughout the Group.
Due to the size of the Group, it is not always possible to
identify internal successors for all roles throughout the
business. Nevertheless, the Committee has reviewed plans
for the succession of senior management roles throughout
the business and has identified appropriate candidates as
potential successors.
Relevant skills and experience on the Board
PENNY
JUDD
DAVID
ZRUIA
ELAD
EVEN-CHEN
CHARLES
FAIRBAIRN
DANIEL
KING
STEVE
BALDWIN
ANNE
GRIM
SIGALIA
HEIFETZ
TAMI
GOTTLIEB
Audit and risk management
NED
ED
Finance, banking, financial services
and fund management
Capital raising, mergers, acquisitions,
investment and transactions
Marketing
Compliance & Regulation
Shareholder relations
Digital technology
Innovation
ESG
NED
NED
NED
ED
ED
ED
ED
ED
Executive Director NED
Non-Executive Director
NED
NED
NED
ED
ED
ED
ED
ED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
NED
53
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Report of the
Audit Committee
Committee composition
The Code recommends that an audit committee should comprise at least three
members who are Independent Non-Executive Directors, and that at least one
member should have recent and relevant financial experience. The Companies Law
requires that an audit committee consist of at least three directors qualified to serve
as members of an audit committee under the Companies Law, including all External
Directors, and must be comprised of a majority of directors meeting certain
independence criteria of the Companies Law. The chairman of the audit committee
must be an External Director.
The Audit Committee is chaired by Charles Fairbairn, and its other members are
Daniel King, Steve Baldwin, Anne Grim (as of November 2020) and Tami Gottlieb
(as of March 2021). All of the members are therefore independent Non-Executive
Directors under the Code and meet the criteria for independence under the Companies
Law. Charles Fairbairn, Daniel King, Anne Grim and Tami Gottlieb are considered
External Directors under the Companies Law. Upon Charles’ stepping down from the
Board, Tami Gottlieb will chair the Audit Committee.
The Board consider that Charles Fairbairn and Tami Gottlieb have recent and relevant
financial experience in accordance with the requirements of the Code. Details of the
skills and experience of the Committee members are set out on page 53. Details of
individual attendance at meetings are set out in the Committee attendance
table below.
Committee attendance (in FY 2020)
Charles Fairbairn (Chair)
Daniel King
Steve Baldwin
Anne Grim
Scheduled meetings
eligible to attend
Scheduled meetings
attended
5
5
5
1
5
5
5
1
Dear shareholder
I am pleased to take this opportunity to give you an overview
of the work of the Audit Committee during 2020. The Audit
Committee performs a key role in the Group’s governance
framework, in assessing internal controls across the Group
and ensuring the integrity of the Group’s financial results.
Both financial reporting and the associated assurance of
these reports that the Audit Committee is responsible for
review have been important priorities during the year.
With the assistance of Deloitte, our internal auditor, we
reviewed and monitored a multi-year internal audit plan and
associated risk survey which we will continue to review 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 2021.
Charles Fairbairn
Chairman of the Audit Committee
Committee responsibilities and activities
The Audit Committee is responsible 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 and review 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, to
oversee the performance of the Company’s internal auditor
and the internal control functions and to establish and
monitor whistleblower procedures.
The Audit Committee meets not less than four times a year
and otherwise as required. The Audit Committee met on
five occasions during 2020. 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
meets privately with the external auditor.
54
Plus500 Ltd. 2020 Annual Report
Report of the Audit Committee
continued
A summary of the major activities and decisions of the
Committee in 2020 is set out below:
Financial
performance
review
Internal audit
review
External audit
review
Risk control
Review of the financial performance
and Consolidated Financial Statements
of the Company
Review assessments of the control
environment via internal audit reports,
and progress on implementing internal
and audit recommendations
Review progress on implementing external
audit recommendations. Monitor and review
the effectiveness and independence of the
external audit function
Assist the Board in the monitoring of the
Group’s internal controls and risk management
systems and their effectiveness
Significant accounting and financial judgements in 2020
The Committee considered a number of significant
accounting and financial judgements and estimates, which
were discussed with the external auditors in the planning
stage of the audit, and received the external auditor’s
confirmation that no additional matters have arisen and
require the Committee’s attention.
The significant judgements considered were: revenue
recognition, uncertain tax positions, the control environment,
non-compliance with laws and regulations and appropriateness
of the going concern basis of the Consolidated Financial
Statements and the level of cash required within the business
to satisfy both external regulators and the Group’s attitude to
market risk.
External auditor
It is the responsibility of the Audit Committee to keep under
review the scope and cost effectiveness of the external
auditor. This includes recommending to the Board the
appointment of the external auditor and 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 state of the Company, to the extent necessary to
express their audit opinion.
Performance and effectiveness of the external auditor
Kesselman & Kesselman, a member firm of
PricewaterhouseCoopers International Limited, is retained
to perform audit and audit-related work on the Company
and the majority of its subsidiaries. The Committee assesses
the auditor’s independence and effectiveness at least on an
annual basis, through closed sessions and inquiries by the
Committee members and the external auditor.
The Audit Committee monitors the nature and extent of non-
audit work undertaken by the auditors. Given the non-audit work
undertaken by the external auditor and the Committee’s oversight
of its work, the Committee is satisfied that the independence
and objectivity of the external auditor was adequately
safeguarded throughout 2020. Nevertheless, the external
auditor’s independence and objectivity is kept under review
and is a standing item on the agenda for the Audit Committee.
In addition, the Audit Committee periodically monitors the cost
of non-audit work undertaken by the external auditor. 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 auditor’s independence
and objectivity being undermined through the award of this task.
Having assessed the external auditor’s effectiveness and
independence during 2020, the Audit Committee concluded
that the auditor has demonstrated professional scepticism and
judgement and 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 upcoming Annual General Meeting.
Audit tender process
The Company will tender the external auditor appointment for
the financial year ended 31 December 2023. The Committee
remains satisfied with the external audit process and is
currently not planning to undertake a formal tender process
until the financial period ended 31 December 2023. The Group
is required to rotate the audit partner responsible for the Group
audit every five years, with this year being the fourth year for
the current audit partner, Ms. Maya Ben Shmuel.
Non-audit services
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 2020, Kesselman & Kesselman, a member firm of
PricewaterhouseCoopers International Limited, provided
non-audit services, such as tax assessments and advice and
regulatory reporting requirements, which totaled $0.3 million
(including assurance related services of $0.1 million).
The assurance related services include mainly local regulatory
reporting requirements for the regulated subsidiaries which are
linked directly with the external auditors’ services. In addition,
part of the non-audit services in the amount of $0.1 million are
related to tax assessments which are provided by the external
auditor according to common practice in specific territories.
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. 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
event that the provision of non-audit services would exceed
$50,000, the Committee would request Board approval.
55
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Report of the
Audit Committee
continued
KEY FINANCIAL REPORTING AND SIGNIFICANT FINANCIAL JUDGEMENTS
HOW THE ISSUE WAS ADDRESSED BY THE AUDIT COMMITTEE
Revenue recognition
The recognition of revenue is
a key matter to be reviewed,
monitored and tested
Uncertain tax positions
The Audit Committee is
responsible for the adequate
of the uncertain tax positions
Review and
assessment of the
control environment
Review and
assessment of
non-compliance
with laws and
regulations
Review and
assessment of
appropriateness
of the going concern
basis of the Financial
Statements and
long-term viability
Review and
assessment of the
level of cash required
within the business to
satisfy both external
regulators and the
Group's attitude to
market risk
The Audit Committee is ultimately
responsible for the supervision of
the control environment. A key role
of the Committee is to provide
oversight and reassurance to the
Board with regard to the integrity of
the Company’s financial reporting,
internal control policies and
procedures for the identification,
assessment and reporting of risk
A key risk to the business is
the fact that the Group’s
business is subject to various
laws and regulations in different
jurisdictions according to
its activity
Going concern and viability
are key matters for the
operations of the Group
The Group requires a level of cash
to ensure that it can operate its
trading platform and maintain
sufficient cash in its regulated
entities to satisfy regulatory and
operational needs
• The Audit Committee held meetings, among others, with the operation, R&D
and risk teams to verify compliance of revenue recognition from all related
aspects such as: IT general controls, access to programs and supporting
data, program changes and computer operations for the platform and for
the ERP system
• The Audit Committee also discussed this matter with the external auditor
at the planning and conclusion phases of the audit
• The Audit Committee concluded the revenue recognition process is
appropriate and controls are effective and are appropriately disclosed
in the Financial Statements
• The Audit Committee held meetings, among others, with management and
tax advisors to assist in assessing the technical aspect of the Group's tax
positions. Including understanding the correspondence with the different tax
authorities and reviewing other third parties advice obtained by management
• The Audit committee discussed this matter with the external auditor through
the process of the audit
• The Audit Committee concluded that the provision for uncertain tax
positions is reasonable
• The Audit Committee reviewed the internal audit reports produced in the
year, discussed key findings with management and reviewed the
implementation of all internal audit report recommendations brought
forward from previous years, in addition the Committee reviewed key audit
risk topics in assessing the internal audit reports produced for 2020
• The Audit Committee concluded the internal controls are effective.
No significant internal control failings were identified during the year.
Where any gaps were identified, processes were put in place to address
them and these are continually monitored
• The Committee, in conjunction with the work of the Regulatory & Risk
Committee, reviewed regulatory reports prepared by the dedicated team,
in addition to reviews performed by external consultants to ensure
compliance with local regulations in the areas the Group operates in
• The Committee considers the grid of audits and regulatory assessments
and reviews their findings. The relevant aspects of such assessments to
the Committees’ work are discussed and assessed by the Committee
• Based on discussions with management and discussions held in the
Regulatory & Risk Committee, the Audit Committee came to the conclusion
that the Group is compliant with the required regulations
• The Audit Committee has reviewed the assessment setting out the key
assumptions related to the nature of the Group’s business, budget reports
and cash flow forecasts for the period of three years ending 31 December
2023, taking into account the Group’s anticipated investment commitments
and working capital requirements
• These reports detailed the impact of outcomes of stress tests after
applying multiple scenarios to determine how the Group is able to cope
with deterioration in liquidity profile or capital position
• The Audit Committee agreed to recommend the Going Concern and Viability
Statement to the Board for approval
• The Audit Committee reviews on an ongoing basis the level of cash required
from a regulatory, operationally and risk perspective
• The Audit Committee concluded that the cash amounts held are sufficient
56
Plus500 Ltd. 2020 Annual Report Report of the Audit Committee
continued
Fair, balanced and understandable
The Audit Committee undertakes a duty to
consider whether the 2020 Annual Report and
Consolidated Financial Statements taken as a
whole, are fair, balanced and understandable, while
final determination lies within the responsibilities
of the Board. The Audit Committee, on behalf of
the whole Board, also assesses whether there is
enough information in the Annual Report and
Consolidated Financial Statements necessary
for shareholders to evaluate the financial position,
performance, governance, business model and
strategy of the Group.
The process
Under the Companies Law, the Committee is
required to review the Consolidated Financial
Statements and to recommend to the Board of
Directors to approve the Consolidated Financial
Statements.
During the drafting process of the 2020 Annual
Report and Consolidated Financial Statements, the
Committee is given the opportunity to comment and
provide feedback on the drafts. 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 2020 Annual Report and
Consolidated Financial Statements are
representative of the year and, taken as a whole,
present a fair, balanced and understandable
overview and provides the information necessary
for shareholders to assess the financial position,
governance, performance, business model and
strategy of the Group.
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 5% 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
• a member of the Company’s independent accounting
firm, or anyone on its behalf.
The role of the internal auditor is to examine, among other
things, the Company’s compliance with applicable laws
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 and the Committee has done so
in FY 2020. The Committee concluded that the internal audit
function was an effective provider of assurance over the
Company’s risks and controls and appropriate resources
were available as required. Brightman Almagor Zohar & Co.
(Deloitte Israel), a member firm of Deloitte Touche Tohmatsu
Limited, serves as the Company’s internal auditor.
Whistleblowing policy
The Group operates a Whistleblowing Policy which
encourages all individuals within the Group (e.g., employees,
partners, consultants, contractors etc.) to feel confident to
voice concerns internally in a responsible, anonymous and
effective manner when they discover information which they
believe shows serious malpractice or impropriety, and to
question and act upon those concerns. It provides a method
of properly addressing bona fide concerns of such individuals,
while offering whistleblowers protection from victimisation,
harassment or disciplinary proceedings. The Audit Committee
reports to the Board on the effectiveness of the Group’s
whistleblowing mechanism and on any matter that arises
as a result of it. The current Whistleblowing Policy supervisor
is Daniel King. No whistleblowing complaints were received
in 2020.
57
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Report of the
Regulatory & Risk
Committee
Committee composition
The Regulatory & Risk Committee is chaired by Penny Judd. The other members are
Elad Even-Chen, Charles Fairbairn (until 4 February 2021), Sigalia Heifetz (appointed as
of February 2021) and Tami Gottlieb (appointed as of March 2021). The Regulatory &
Risk Committee receives monthly updates from management on risk, compliance and
regulatory issues and reviews the related internal reports. Details of individual
attendance at meetings is set out in the Committee attendance table below.
Committee attendance (in FY 2020)
Penny Judd (Chair)
Charles Fairbairn1
Elad Even-Chen
Asaf Elimelech2
Scheduled meetings
eligible to attend
Scheduled meetings
attended
4
4
4
2
4
4
4
2
Dear shareholder
Committee responsibilities and activities
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 undertook a thorough review of the
risks to the business and updated its internal risk matrix
accordingly. We have also monitored new areas of regulatory
compliance such as emerging risks and developments in
securities markets regulation.
The Committee and the Board have received reports on
the implementation of preparation for the anticipated ASIC
product intervention measures with respect to retail
customers in Australia and potential Brexit scenarios.
The Committee received comfort that the applicable
measures have been considered and effectively implemented.
Our priorities for the coming year will be to continue to monitor
regulatory changes and to seek to continue to enhance the
risk assessment and monitoring within the business in the
face of changing regulatory and market conditions, including
the impact of the COVID-19 pandemic.
The Regulatory & Risk Committee meets not less than three
times a year and otherwise as required. The Regulatory & Risk
Committee has responsibility for providing oversight with
respect to current and potential future risk exposures of the
Group and for overseeing and monitoring the Group’s compliance
with applicable laws, regulations and orders as required.
Its activity includes reviewing relationships with regulatory
authorities such as the Financial Conduct Authority (FCA) in
the UK, the Australian Securities and Investments Commission
(ASIC) in Australia, the Cyprus Securities and Exchange
Commission (CySEC) in Cyprus, the Israel Securities Authority
(ISA) in Israel, the Financial Markets Authority (FMA) in New
Zealand, the Financial Sector Conduct Authority (FSCA) in
South Africa, the Monetary Authority of Singapore (MAS) in
Singapore, the Financial Services Authority (FSA) in the
Seychelles and other regulatory authorities, as appropriate,
in jurisdictions where the Group has a significant operation;
reviewing risk assessment programmes and internal controls.
The Regulatory & Risk Committee has responsibility for
reviewing the Company’s most significant risks to the
achievement of strategic objectives and any emerging risks,
reviewing the Group’s Risk Policy, ensuring that the Company’s
Board ethics are being adhered to.
A summary of the major activities and decisions of the
Committee in 2020 is set out below.
Penny Judd
Chair of the Regulatory & Risk Committee
Regulatory review • Periodic regulatory and compliance
reports review
• Oversee the implementation of new
regulatory requirements
• Monitor and assess the Group’s relationships
with regulatory authorities
• Review licence applications submitted during
the period
Review periodic risk reports
•
• Review risk assessment programmes
and internal risk management controls
Licence
application review
Risk review and
assessment
1. As announced on 4 February 2021, Charles Fairbairn is no longer a member of the Regulatory & Risk Committee, as of that date
2. As announced on 20 April 2020, Asaf Elimelech has stepped down from his office as a director, as of that date
58
Plus500 Ltd. 2020 Annual Report
Report of the
ESG Committee
Committee composition
The ESG Committee is chaired by Daniel King. The other members are Steve Baldwin
and Anne Grim. The Committee was established in Q3 2020 and held two meetings
in FY 2020. Details of individual attendance at meetings is set out in the Committee
attendance table below.
Committee attendance (in FY 2020)
Daniel King (Chair)
Steve Baldwin
Anne Grim
Scheduled meetings
eligible to attend
Scheduled meetings
attended
2
2
2
2
2
2
Dear shareholder
During 2020, the Board established its ESG Committee,
with the objective of reviewing the Group’s ESG activities
and aligning them with industry and market best practice.
As the Chairman of this newly established Committee,
I am pleased to take the opportunity to give you an initial
overview of the work of the ESG Committee, its objectives
and priorities.
• Social: the Group’s interactions with employees, commercial
counterparties, stakeholders and the communities in which
it operates and the role of the Group in society, workplace
policies (for example, employee relations and engagement,
diversity, non-discrimination and equality of treatment,
health and safety and well-being), ethical procurement,
any social or community projects undertaken by the Group
and social aspects of the supply chain, community and
stakeholder engagement or partnerships; and
The Group is committed to developing its ESG strategy and
plan, and will broaden its disclosure on ESG in order to ensure
key stakeholders, including shareholders, employees and
customers, have a clear and comprehensive understanding
of the Group’s activities in these areas.
As a starting point, this year, the Committee initiated the
development of a Materiality Assessment to identify key
ESG priorities and risk factors and to establish a framework
for the Group’s future approach in these areas.
This in-depth assessment has helped the Committee to
formulate an ESG roadmap for 2021 and I look forward
to reporting on the Committee’s progress in this regard
in next years’ Annual Report.
The overall responsibilities of the ESG Committee are
to assess the following:
• Environmental: the Group’s impact on natural environment
and its adaptation to climate change including greenhouse
gas emissions, energy consumption, generation and use
of renewable energy, biodiversity and habitat, impact on
water resources and the status of water bodies, pollution,
resources efficiency, the reduction and management
of waste, and the environmental impact of the Group’s
supply chain;
Governance: the ethical conduct of the Group’s business
including its business ethics policies, code of conduct and
counterparty due diligence.
The Committee was supported by an external ESG specialist
advisor to assist conducting an ESG materiality assessment
for the Group to identify its key priorities in ESG areas and,
accordingly, devise a future framework and strategy for
ESG matters.
This assessment, the framework for which was based on
internationally accepted standards and frameworks such
as the Sustainability Accounting Standards Board (SASB)
and the Global Reporting Initiative (GRI), was driven by the
findings and insights from interviews with a number of key
individuals from the Board and the executive team, as well
as conversations with several major shareholders.
The assessment identified the following elements as
the most material ESG issues for Plus500: customer care
and protection, information and data security, systems
infrastructure, leadership and governance and organisational
culture. More details of this Materiality Assessment can be
found in the ESG report on pages 28 to 29.
Daniel King
Chairman of the ESG Committee
59
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Report of the
Remuneration
Committee
Remuneration Committee composition
The Code recommends a remuneration committee to consist of at least three members
and that all of its members be Non-Executive Directors, independent in character and
judgement and free from any relationship or circumstance which may, could or would
be likely to, or appear to, affect their judgement.
The Companies Law requires a remuneration committee to consist of at least three
members, and all of the External Directors must be members of the committee (one of
which to be appointed as the chair) and constitute the majority thereof. The remaining
members must be directors who qualify to serve as members of the Audit Committee
as defined in the Companies Law and whose compensation is in accordance with the
compensation requirements applicable to the External Directors.
The Remuneration Committee comprises of five independent Non-Executive Directors:
Daniel King, Steve Baldwin, Anne Grim, Sigalia Heifetz and Tami Gottlieb and is
chaired by Daniel King. Anne Grim joined the Committee on 12 November 2020.
Both Sigalia Heifetz and Tami Gottlieb joined the Committee on 4 February 2021 and
16 March 2021, respectively. Daniel King, Anne Grim and Tami Gottlieb are considered
External Directors under the Companies Law. Details of the skills and experience of the
Remuneration Committee members can be found on page 53.
Committee attendance (in FY 2020)
Remuneration Committee
Daniel King
Charles Fairbairn1
Steve Baldwin
Anne Grim
Scheduled meetings
eligible to attend
Scheduled meetings
attended
7
7
7
1
7
7
7
1
Dear shareholders
As the Chairman of the Plus500 Remuneration Committee,
and on behalf of the Board, I am pleased to present the
Remuneration Committee Report for the year ended
31 December 2020.
Plus500 is a corporate entity registered in Israel and is
therefore not legally required to comply with the requirements
applicable to a UK incorporated listed company. The policy
and Remuneration Report being brought to shareholders for
approval has been prepared with a view of the standards for
a UK listed company, while making required adjustments in
order to conform to the requirements under the Israeli law
and market practices in Israel.
To this end our Directors’ Remuneration Report provides
a short overview of the new Directors’ Remuneration policy
that is being brought to the 2021 AGM and the Annual Report
on Remuneration that sets out the remuneration paid in
respect of performance in 2020.
To align with Israeli law requirements, our AGM notice
and accompanying documentation will include the
following, which should be considered alongside this
Remuneration Report:
• An introduction from me explaining the proposed
changes to our policy and operation of policy. This will
include the information in respect of these matters that
you would expect to see in the Annual Statement of
a UK incorporated and listed company
• The new Directors’ Remuneration policy to be approved
by shareholders at our 2021 AGM
• The operation of policy for 2021 (which for a UK incorporated
company would be included in the Annual Report on
Remuneration with the remuneration paid in respect of
2020 performance)
• Details of a tax bonus which it is proposed to be paid to our
Chief Financial Officer (“CFO”)
Following approval of our new Directors’ Remuneration policy
at our 2021 AGM, that policy will be included in next year’s
Remuneration Report.
1. As announced on 4 February 2021, as of that date Charles Fairbairn is no longer a member of the Remuneration Committee.
60
Plus500 Ltd. 2020 Annual Report Report of the Remuneration Committee
continued
Going forward, shareholders’ approval will be sought for
our Remuneration Policy once every three years or earlier
if a change to policy is required. Shareholders will be aware
that as an Israeli company we are generally required to obtain
shareholder approval to the remuneration packages for
our Executive Directors. If changes are made to the annual
remuneration packages, shareholders’ approval will be sought.
The Committee understands that historically shareholders
have had concerns about Executive Directors pay and has
therefore undertaken a thorough and comprehensive review
of the remuneration policy and operation over the last few
months with the support of external advisors Korn Ferry
and a clear understanding of market practice and investor
expectations. This has been followed with a period of
consultation with a substantial number of our shareholders
and shareholder advisory bodies. Feedback from investors
has been positive overall noting the substantial changes
made. Investors have also understood that there are a small
number of matters that are not fully aligned with UK investor
expectations and that the Committee will look to review again
these matters over the policy period and at the latest at the
next policy renewal. Following initial feedback the Committee
refined certain aspects of its original proposals and is grateful
for investor feedback on these matters.
The new remuneration policy and operation of policy for
FY2021 which we intend to bring for the approval of our
shareholders provides some far-reaching changes from the
current policy and operation to ensure that we are making
significant strides to align to a UK norm. The Committee is
however cognisant of distinct sector and market dynamics in
Israel where Plus500 is headquartered, the competition over
talent in the Israeli market place and in the sector as a whole.
It would also like to emphasise that the changes proposed
have a significant impact on the way in which the current
Executive Directors are paid. The Committee will therefore
continue its journey over future policy reviews, keeping the
approach and the structure of the Executive Directors’
packages under review but very much hopes that investors
will be supportive of the substantial progress that has been
made in moving towards a UK norm at this time.
As part of our remuneration policy review we have considered
our remuneration reporting. Our 2020 Remuneration Report
provides clearer and more transparent disclosures more
closely aligned to UK practice. We will continue to evolve this
reporting to provide additional disclosures in future years so
as to make our disclosure more aligned to UK best practice
and the UK Directors’ Remuneration Reporting Regulations.
Business performance
We have had our best ever year in 2020 delivering total
revenue of $872.5m (up 146%), EBITDA of $515.9m
(up 168%) and earnings per share of $4.71 (up 249%).
While we have had to deal with the impact of COVID-19 in
terms of managing our business, we have not been affected
in the same way as many other businesses. The Company
has not received any government support and none of the
employees have been furloughed but have retained their
normal remuneration arrangements with payment of bonuses
in the usual way reflecting business performance for 2020.
2020 operation of policy
As announced on 20 April 2020, our former CEO
Asaf Elimelech stepped down from the Board on that
date. Under his contractual arrangement, he is entitled to
be paid base service fees and incentives for his twelve
months’ notice period, as referred to on page 70. As
announced on 5 January 2021, the Executive Director,
Gal Haber, stepped down from the Board on that date.
We were delighted to announce the permanent appointment
of David Zruia, an internal appointment, on 7 July 2020 as
our new CEO, following his appointment as interim CEO on
20 April 2020. Some very limited adjustments were made
to David’s remuneration package on his appointment as the
Committee was cognisant of the wider remuneration review
that was being carried out. David’s salary was increased to
NIS 1,520,000.
The CFO’s base service fees remained unchanged from 2019.
Following a year of exceptional performance, the annual bonus
targets were met in full with bonus payable to David Zruia of
$1,015,000 and Elad Even-Chen of $1,972,000.
Under our new policy, Share Appreciation Rights will no longer
be awarded to the Executive Directors. During 2020 the legacy
2018 Share Appreciation Rights held by both Executive
Directors, vested.
Full details of the remuneration payable for 2020 performance
and performance against targets is set out in the Annual
Report on Remuneration.
The Committee is comfortable that the remuneration paid
for 2020 is aligned to the excellent performance in the year
and investor returns.
61
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements The Committee would ask shareholders to support this
one-off payment which will be presented to shareholders
for approval at our 2021 AGM as a separate resolution.
It is proposed that this payment is made net of tax entirely
in shares (instead of paying wholly in cash as was originally
proposed), which will be held by the CFO for at least a two year
period and longer to the extent shareholding requirements
are not met. This ensures that the CFO is aligned to the
longer-term performance and shareholder interests.
Concluding remarks
The Committee and I sincerely hope that investors will be
supportive of our new policy and operation of policy for 2021
and will therefore support the shareholder resolutions to
approve our new policy, the remuneration proposed as
part of the operation of policy for 2021 and the separate
resolution to approve the CFO’s tax bonus. I am grateful
for the engagement, feedback and support we have received
from our shareholders as we have finalised these new
remuneration arrangements.
Daniel King
Chairman of the Remuneration Committee
24 March 2021
Report of the
Remuneration
Committee
continued
Payment of tax bonus to CFO
Shareholder approval was sought in 2020 (and the
resolution withdrawn) to approve a tax bonus of NIS 4.25m
to Elad Even-Chen in respect of negotiations with the tax
authorities and obtaining beneficial tax rates and tax rebates
for the Company in the amount of more than $150m. Due to
this unprecedented ruling the Company already enjoys cash
savings at the level of approximately $50m, cash rebates
at the level of approximately $115m and also significant cash
savings continuing into 2021.
The Board is in no doubt that the Preferred Technological
Enterprise status would not have been secured were it not for
Elad Even-Chen’s enormous and unrelenting commitment to
achieving it. The fact that these approvals for the years 2017,
2018, 2019, 2020 and 2021 were secured during the height
of the COVID-19 pandemic when face to face meetings and
discussions were not possible is all the more impressive.
This bonus opportunity, targets assessment of performance
and proposed payment made by the Remuneration Committee
was done on the basis of assessing the real value of this
project while understanding that this particular project is not
typically part of the ongoing duties of a CFO.
The Committee understands investor concerns that this
bonus opportunity was not disclosed as part of the forward
looking remuneration arrangements for 2020 in the 2019
Remuneration Report. At the time the Board was not sure the
objective was at all achievable and the financial implications
of achieving it were commercially sensitive. We have included
in the Annual Report on Remuneration and our 2021 AGM
materials further details about this bonus objective to provide
full retrospective disclosure.
The Committee also understands investors’ concerns
regarding discretionary, one off payments and as mentioned
above, to address shareholders concerns and noting this is
not a market norm in UK listed companies, the Remuneration
Committee is removing the ability to do so in our new policy.
62
Plus500 Ltd. 2020 Annual Report Report of the Remuneration Committee
continued
Annual report on
remuneration 2020
This section of the Annual Report describes the
implementation of the Terms of Reference, Israeli
law requirements and the provisions of the Code.
Committee responsibilities and activities
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 Companies Law provisions and subject to the
remuneration policy of the Group, 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
determined by the Committee.
The other key activities of the Committee pursuant to
the Companies Law and the written terms of reference
of the Remuneration Committee for 2020 are as follows:
• Reviewing the remuneration policy
• Approving and recommending to the Board and,
where applicable, the shareholders, the total individual
remuneration package of the Chairman, each Executive
and Non-Executive Director, the Chief Executive Officer,
Chief Financial Officer, Managing Director and other
office holders (including bonuses, incentive payments
and share options or other share awards);
• 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, the Remuneration
Committee is required 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;
• Approving and determining the targets for any
performance-related pay schemes; and
• Reviewing the design of all share incentive plans for
approval by the Board and (if required or deemed
appropriate) the shareholders.
The Company is planning to approve new terms of reference
in 2021 (which will be available on the Company’s website
once approved).
63
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Report of the
Remuneration
Committee
continued
Summary of major activities and
decisions of the Committee in 2020
Salary/base
service fees
• Executive Directors’ remuneration review
• Review and approval of Non-Executive
Directors’ fees
• Review and approval of Chairman’s fees
• Review of senior management fees
Bonus
• Review of the performance of the Chief
Executive Officer and the Executive Directors
compared to the targets set and approval of
annual bonus awards for 2020 based on
performance targets
• Review of Executive Director’s 2020 LTIP and
RSUs plans (including addition of KPIs)
• Review of updated clawback and
malus provisions
Long Term
Incentive Plan
(“LTIP”)/Restricted
Share Units
(“RSUs”)
Governance
• Review of corporate governance and
determining appropriate levels of disclosure for
the 2020 Directors’ Remuneration Report
• Review of 2020 AGM season remuneration
report results, and investor and shareholder
advisory bodies’ views on remuneration
• Review of the Committee’s terms of reference
in light of the Code and the Companies Law
• Review of 2020 Annual Remuneration Report
Other
• Review of remuneration consultant costs
and appointment
• Review of workforce remuneration policies
and comparison of such policies with senior
management policies
• Review talent pipeline and its remuneration
The Company Secretary ensures that the Remuneration
Committee fulfills 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 on a
broader Group level
Remuneration policy
Pursuant to the Companies Law, all public Israeli companies,
including companies whose shares are only publicly traded
outside of Israel, such as the Company, are required to adopt a
written remuneration policy for their executives and directors,
which addresses certain items prescribed by the Companies
Law. The adoption, amendment and restatement of the policy
is to be recommended by the Remuneration Committee and
approved by the Board and the Company’s shareholders.
In 2020 the Remuneration Committee has recommended to
amend the Company’s Remuneration Policy for Directors and
Executives to provide that the remuneration packages of the
Company’s executives shall be subject to clawback and malus
provisions authorising the Remuneration Committee to reduce
any payout due (including, for the avoidance of doubt) in the
event of: (i) discovery of a material misstatement in the
audited consolidated accounts of the Company (which include
the Company’s subsidiaries) resulting in a restatement of such
accounts; and/or (ii) it is determined that the assessment of
the payout was based on error, or inaccurate or misleading
information; and/or; (iii) action or conduct of a participant
which, in the reasonable opinion of the Remuneration Committee,
amounts to fraud or material dishonesty or leads to employment
termination for serious misconduct; and/or (iv) the Company
or a subsidiary of the Company suffers a material failure of
risk management, provided that the participant’s fraud or
material dishonesty or gross negligence significantly
contributed to such material failure of risk management.
In any such event, the Remuneration Committee may also
(i) require the participant to pay to the Company an amount
equal to some or all of the payout; and/or (ii) reduce the
amount of any future bonus payable to the participant; and/or
(iii) reduce or cancel any awards under any other Company
equity or cash incentive plan, that have not yet been satisfied.
The above mentioned amendments were approved by the
shareholders at the 2020 AGM held on 16 September 2020.
The Committee understands that historically shareholders
have had concerns about Executive Directors pay and has
therefore undertaken a thorough and comprehensive review
of the remuneration policy and operation over the last few
months with the support of external advisors Korn Ferry and a
clear understanding of market practice and investor expectations.
This has been followed by a period of consultation with a
substantial number of our shareholders and shareholder
advisory bodies.
64
Plus500 Ltd. 2020 Annual Report Report of the Remuneration Committee
continued
Following its review, the Committee intends to bring
to shareholders for approval at its 2021 AGM a new
Remuneration Policy and operation of policy for FY 2021.
The new remuneration policy and operation of policy for
FY 2021 provides some far-reaching changes from the current
policy and operation to ensure that we are making significant
strides to align to a UK norm. The Committee is however
cognisant of distinct sector and market dynamics in Israel
where Plus500 is headquartered, the competition over talent
in the Israeli market place and in the sector as a whole.
It would also like to emphasise that the changes proposed
have a significant impact on the way in which the current
Executive Directors are paid. The Committee will therefore
continue its journey over future policy reviews, keeping the
approach and the structure of the Executive Directors’
packages under review but very much hopes that investors
will be supportive of the substantial progress that has been
made in moving towards a UK norm at this time.
In developing the new Remuneration Policy, the Remuneration
Committee consulted with major shareholders (covering
over 50% of the issued share capital) for their views on the
proposals and also engaged with shareholder advisory bodies.
Based on the independent advice received from Korn Ferry,
as well as the feedback received from the major shareholders
and the shareholder advisory bodies, a new Remuneration
Policy shall be brought for the shareholders’ approval at the
Company’s 2021 AGM.
Amongst other matters that will be set out more fully in our
2021 AGM notice and accompanying materials, the new
Remuneration Policy for Executive Directors provides for the:
• Reduction of incentive quantum and rebalancing from short
term to long-term incentives;
• Changes to the annual bonus structure which includes a
reduction of the maximum bonus opportunity and moving
the entire deferred bonus element into shares;
• Removal from the policy of the ability to pay discretionary
bonuses going forward; and
• Changes to the long term incentive structure which includes
removal of the Share Appreciation Rights long-term
incentive which pays out 100% in cash, replacing this with
performance shares.
Stakeholder engagement
Employees
The Board regularly communicates with and receives
feedback from the Group’s employees through a variety of
channels. Steve Baldwin, as the designated Non-Executive
Director dedicated to workforce engagement, meets on
a yearly basis with the workforce and at such meetings
employees have the opportunity to share their views,
including on executive and employee remuneration.
In addition, employees can contact Steve Baldwin directly
via email on matters they wish to discuss with him or with
the Board. Steve Baldwin also regularly communicates with
employees who have connections with other stakeholders
of the Company, such as customers and suppliers. Steve reports
any key messages deriving from such conversations to the
Board and ensures that such messages are considered as
part of the Board’s decision-making process. The Company is
not obliged to comply with Section 172 of the UK Companies
Act 2006. Plus500 holds regular employee workshops and
briefings on a variety of topics and conducts round table
discussions with employees.
The Company seeks to consider and act on employee
feedback and is committed to ensuring that its remuneration
structures are supported by its employees. The Company is
also continually working to develop best practice in line with
the Code and is considering whether additional channels of
employee communication are required in order to better
develop employee engagement and foster stronger
connections with its workforce.
Shareholders
The Chair of the Board and the Chair of the Remuneration
Committee are in regular communication with shareholders
of the Company on a variety of matters and are grateful for
shareholders’ engagement and feedback.
As mentioned in the Remuneration Committee Chairman’s
Statement and the section above on our remuneration policy,
in developing the new Policy, the Committee consulted with
major shareholders (covering over 50% of the issued share
capital) for their views on the proposals and also engaged with
other shareholder advisory bodies. Feedback from investors
has been positive overall noting the substantial changes
made. Investors have also understood that there are a small
number of matters that are not fully aligned with UK investor
expectations and that the Committee will look to review again
these matters over the policy period and at the latest at the
next policy renewal. Following initial feedback, the Committee
refined certain aspects of its original proposals and is grateful
for investor feedback on these matters.
65
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Report of the
Remuneration
Committee
continued
Approach to recruitment and promotions of Directors
Non-Executive Directors
Plus500 believes that strong, effective leadership is
fundamental to its continued growth and success in the
future. This requires the ability to attract, retain, reward
and motivate highly-skilled Executive Directors, with the
competencies needed to excel in a rapidly changing
marketplace and to continually motivate their employees.
When setting remuneration packages for new Executive
Directors, pay will be set in line with the remuneration policy
of the Company. Several factors will be considered, including:
the geography in which the role competes or is recruited from;
the candidate’s experience and skills; and the remuneration
levels of other Executive Directors and colleagues in peer
companies and market standards and norms in the UK.
If necessary, new Executive Directors may be provided
with contributions towards relocation expenses, housing,
school fees etc., but for no more than necessary.
Non-Executive Directors are appointed for a one year term
and are subject to re-election at each AGM. Notwithstanding,
External Directors are appointed by shareholders for a three
year term and are subject to re-election by shareholders
at an EGM or AGM every three years. The term of office
can be terminated by the Non-Executive Director with two
months written notice, or by the Company with immediate
effect if the Non-Executive Director is not re-elected or is
otherwise removed from office in accordance with the
Articles. Notwithstanding, External Directors’ service may
be terminated by the Company only in such circumstances
and manner provided under the Companies Law.
Upon termination no additional payments are due.
According to the Companies Law, the appointment of
External Directors is for a period of three years from the
date of appointment (which may be extended for two more
three-year terms).
The table below details the date and period of appointment of each Non-Executive Director
NAME
POSITION
DATE OF
APPOINTMENT
TO THE BOARD
OF DIRECTORS
DATE OF
RE-APPOINTMENT
TO THE BOARD
OF DIRECTORS
PERIOD OF
APPOINTMENT
Penny Judd
Independent Non-Executive Director and Chairman
June 2016
September 2020
1 year
Charles Fairbairn1
Senior Independent Non-Executive Director and External Director
July 2013
June 2019
3 years
Anne Grim
Independent Non-Executive Director and External Director
September 2020
September 2020
3 years
Daniel King
Independent Non-Executive Director and External Director
Steve Baldwin
Independent Non-Executive Director
Sigalia Heifetz
Independent Non-Executive Director
June 2013
June 2017
February 2021
Tami Gottlieb
Independent Non-Executive Director and External Director
March 2021
June 2019
3 years
September 2020
1 year
N/A
N/A
Until the
2021 AGM
3 years
The table below details the date and period of appointment of each Executive Director presiding
NAME
POSITION
David Zruia
Executive Director
Elad Even-Chen
Executive Director
Gal Haber2
Executive Director
DATE OF
APPOINTMENT
TO THE BOARD
OF DIRECTORS
April 2020
July 2016
June 2013
DATE OF
RE-APPOINTMENT
TO THE BOARD
OF DIRECTORS
PERIOD OF
APPOINTMENT
September 2020
1 year
September 2020
1 year
September 2020
1 year
1. As announced on 4 February 2021, Charles Fairbairn will step down from the Board at the earlier of the 2021 AGM or 30 June 2021.
2. Until stepping down on 5 January 2021.
66
Plus500 Ltd. 2020 Annual Report Directors’
Remuneration
Report
Annual report on remuneration 2020
Introduction
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 2020.
Audited information – Directors’ remuneration – 1 January 2020 to 31 December 2020
Single figure of remuneration
The detailed emoluments received by the Executive and Non-Executive Directors during the year ended 31 December 2020
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.
SALARY/BASE
SERVICE FEES6
SOCIAL
EXPENSES
TOTAL
FIXED
PAY
ANNUAL
BONUS
SHARE
APPRECIATION
RIGHTS
TOTAL
VARIABLE
PAY
TOTAL
(US$000)
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Executive Directors
David Zruia1
Elad Even-Chen
Asaf Elimelech2
Gal Haber3
Non-Executive Directors
Penny Judd (Chairman)
Charles Fairbairn4
Anne Grim5
Daniel King
Steve Baldwin
319
498
498
418
194
153
36
88
88
235
480
480
403
192
152
–
83
83
87
66
406
301
1,015
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
498
480
1,972
498
480
1,972
418
403
–
194
192
153
152
36
88
88
–
83
83
–
–
–
–
–
477
785
785
–
–
–
–
–
–
752
964
964
–
–
–
–
–
–
323
1,767
800
2,173
1,101
665
2,936 1,450
3,434
1,930
665
2,936 1,450
3,434
1,930
–
–
–
–
–
–
–
–
418
403
–
–
–
–
–
–
–
–
–
–
194
153
36
88
88
192
152
–
83
83
1. David Zruia was appointed as the Company’s CEO and as an Executive Director on 20 April 2020
2. As announced on 20 April 2020, Asaf Elimelech stepped down from the Board and from his office as the Company’s CEO, as of that date.
3. As announced on 5 January 2021, Gal Haber stepped down from the Board, as of that date.
4. As announced on 4 February 2021, Charles Fairbairn will step down from the Board at the earlier of the 2021 AGM or 30 June 2021.
5. Anne Grim was appointed as a Non-Executive Director and External Director on 16 September 2020.
6. The remuneration terms comprised of a salary for David Zruia and service contract fees for Elad Even-Chen (the “base service fees”).
* General notes:
(a) No Long Term Incentive Plan (“LTIP”) or Restricted Share Units (“RSUs”) awards had performance periods ending in the financial year ended on 31 December 2020 or in the financial
year to 31 December 2019. In line with the UK reporting regulations, LTIP awards shall be reported in the year that the performance period ends with the value of the award on vesting.
No LTIP awards presented accordingly.
(b) Payments are not prorated and are presented for the entire year.
(c) Further details are provided in the notes to the 2020 EGM which are available at the Company's website.
67
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Directors’
Remuneration
Report
continued
Executive Directors’ service contracts
Some of the Executive Directors provide their consulting services to the Company pursuant to a service contract. The terms
of their service contracts are summarised below.
Elad Even-Chen - Chief Financial Officer
The consulting services of Elad Even-Chen are provided to the Company through Elad Even-Chen Consulting Services Ltd.,
pursuant to the service contract entered into by the parties. Elad Even-Chen Consulting Services Ltd. is also entitled to
participate in a bonus, SAR, LTIP schemes and other contractual related expenses on terms decided by the Remuneration
Committee for specific projects provided by the consultant.
Asaf Elimelech – Former Chief Executive Officer (stepped down on 20 April 2020)
The consulting services of Asaf Elimelech were provided to the Company through Asaf Elimelech Consultation and Regulatory
Services Ltd., pursuant to the service contract entered into by the parties. Asaf Elimelech Consultation and Regulatory
Services Ltd. is also entitled to participate in a bonus, SAR, LTIP schemes and other contractual related expenses on terms
decided by the Remuneration Committee for specific projects provided by the consultant.
Gal Haber – Managing Director (stepped down on 5 January 2021)
The consulting services of Gal Haber were provided to the Company through Wavesoft Ltd., pursuant to the service contract
entered into by the parties. Wavesoft Ltd. is also entitled to participate in a bonus scheme and other contractual related
expenses on terms decided by the Remuneration Committee.
Commentary on the single figure table
Base salary, base service fees and social and other contractual related expenses
David Zruia was appointed as permanent CEO on 7 July 2020 having held the role on an interim basis since 20 April 2020.
David Zruia’s annual salary was set at NIS 1,520,000 with effect from 20 April 2020. The Committee considered this to be below
the market rate in part to reflect that this is his first Directorship of a listed company and that it would also be reviewed as part of
the wider review of the remuneration policy being undertaken. Elad Even-Chen's base service fees remained the same as in 2019
at NIS 1,700,000.
Annual Bonus
The 2020 annual bonus for the Executive Directors was determined based on the achievement of the performance
measures and targets set out below:
FINANCIAL METRICS
WEIGHTING
OBJECTIVES
PERFORMANCE
ACHIEVEMENT
(% OF MAXIMUM)
EPS
60%
Achievement of an EPS growth rate, where the
minimum threshold is EPS ($1.2) and the maximum
payout is made for reaching a 15%. increase from
the minimum threshold, EPS ($1.38) calculated on a
linear basis.
Actual EPS for FY 2020 is $4.71
100%
The Committee carefully assessed performance against objectives set for the annual bonus and noting exceptionally strong
performance against all of the objectives set, determined full achievement of the objectives.
The details of some of the specific targets and performance against them are not disclosed as the Board believes they are
commercially sensitive. They will remain market sensitive because they are an integral part of our on-going business operations.
The Remuneration Committee has provided as much information as it is able, given the nature of the objectives, so that
investors can be comfortable that the Remuneration Committee has used a thorough approach in setting the objectives
and targets and measuring the outcome.
68
Plus500 Ltd. 2020 Annual Report Directors’ Remuneration Report
continued
NON-FINANCIAL
METRICS
WEIGHTING
OBJECTIVES
Strategic
13.3%
Operational
13.3%
Risk
13.3%
Total
40%
Achievement against Board approved strategic plan,
covering the following areas:
• Platform improvement/investment plans
• Expansion into new locations
• Securing new licences
• Market position
• Employee engagement
• Performance reviews
• Diversity
• Systems availability measured with reference to
the cost to the Company of incidents caused by
system issues and underpinned by maintaining
systems availability of 99.98%
Achievement assessed by Chair of Risk Committee
against:
• Risk Register
• Breaches Register
• Enhancement of risk controls and stress testing
• Relationship with regulators
• Reputation management
PERFORMANCE
Parameters achieved for 2020 and include
for example:
• Significant technical platform improvements
made in the year
• Progress made in working toward securing
new licenes in several territories
• As set out on page 25, significant progress
on employee engagement achieved
• As set out on page 30, significant progress
on our diversity strategy achieved
Parameters achieved for 2020
Parameters achieved for 2020
ACHIEVEMENT
(% OF MAXIMUM)
100%
100%
100%
100%
Based on the performance described above the Committee agreed the following 2020 bonus awards based on 100% of the
maximum opportunity.
2020 bonus awards (US$000)
David Zruia
Elad Even-Chen
Asaf Elimelech
CASH BONUS
DEFERRED BONUS
TOTAL ANNUAL BONUS
677
1,315
1,315
338
657
657
1,015
1,972
1,972
MAXIMUM OPPORTUNITY AS
PERCENTAGE OF ANNUAL
SALARY/BASE SERVICE FEES*
230%
400%
400%
*
Percentage calculation based on annual employee/contractual agreements in NIS.
An amount equal to 33.33% of the Annual Bonus achieved (the “Deferred Amount”) shall be paid in three equal installments
on 31 December 2021, 31 December 2022 and 31 December 2023 (each, a “Deferred Payment Date”), with 50% of the deferred
amount paid on each Deferred Payment Date in cash and 50% paid by way of allotment of ordinary shares of the Company.
According to David's employment agreement the deferred bonus for the year 2020 will be settled entirely in cash. The number
of ordinary shares allotted on any Deferred Payment Date shall be calculated based on the ordinary share price at 1 January
2020, as adjusted for dividends.
In respect of the year 2019, the Deferred Amount of $262,000 vested for Elad Even-Chen and Asaf Elimelech in December
2019, shall be paid in three equal installments on 31 December 2020, 31 December 2021 and 31 December 2022 (each, a
“Deferred Payment Date”), with 50% of the deferred amount paid on each Deferred Payment Date in cash and 50% paid by way
of allotment of ordinary shares of the Company. The number of ordinary shares allotted on any Deferred Payment Date shall
be calculated based on the ordinary share price at 1 January 2019, as adjusted for dividends.
69
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Directors’
Remuneration
Report
continued
Share Appreciation Rights (“SARs”) vested during 2020
SARs are a deferred cash incentive subject to continued providing service or employment over a long term periods and tied to
the long term performance of the Company’s ordinary shares.
SARs granted to the Executives in December 2018 and fully vested in December 2020 are summarised in the table below.
David Zruia
Elad Even-Chen
Asaf Elimelech
GRANT DATE
VEST DATE
GRANT AMOUNT (USD)
VESTED VALUE (USD)
30 December 2018
30 December 2020
30 December 2018
30 December 2020
30 December 2018
30 December 2020
517,653
663,658
663,658
752,082
964,168
964,168
In respect of the year 2020 SARs grants, the remuneration package to David Zruia included SARs granted in the amount
of $634,737 (NIS 2,200,000) in December 2019 and will be vested after three years in December 2022. The remuneration
package to Elad Even-Chen included SARs granted in the amount of $721,293 (NIS 2,500,000) in December 2019 and will
be vested after three years in December 2022. Elad Even-Chen’s 2020 SARs grant amount remained unchanged from
2019 while the vesting period increased from two to three years.
2020 LTIP / RSUs Awards
Scheme interests awarded during the year ending 31 December 2020
Executive Directors were granted Long Term Incentive Plan (“LTIP”) and Restricted Share Units (“RSUs”) Grants in respect of
2020 which will vest after three years to the extent performance targets and KPIs have been achieved, as summarised in the
table below.
PERFORMANCE MEASURE
WEIGHTING
Relative TSR vs FTSE 250
EPS
HR Criteria
40%
40%
20%
THRESHOLD
(30% OF MAX)
Median
5% p.a.
TARGETS
MAXIMUM
(100% OF MAX)
Upper Quartile
12% p.a.
Achievement against Board approved strategic plan, covering the following areas:
• Employee attrition rates
• Development of the R&D team
The details for the LTIPs and RSUs awards granted to each Executive Director is shown below.
David Zruia
Elad Even-Chen
GRANT DATE
1 January 2020
1 January 2020
NUMBER OF
SHARES GRANTED
FACE VALUE OF
THE AWARD (USD)
19,870
24,837
230,814
288,517
VESTING DATE
1 January 2023
1 January 2023
MAXIMUM OPPORTUNITY AS
PERCENTAGE OF ANNUAL
SALARY/BASE SERVICE FEES1
53%
59%
1. Percentage calculation based on annual amounts of the contractual agreements in NIS.
General notes:
(a) Face value of the award calculated with reference to share price on 1 January 2020 of 886 pence and FX rate USD/ILS of 3.466
(b) David Zruia's award is structured as an RSU, in accordance with the provisions of the Capital Gain route under Section 102 of the Israeli Tax Ordinance.
(c) The grant made to Asaf Elimelech lapsed on his leaving the Company, subject to his contractual agreement of 12 months' notice period
The grant will vest on the third anniversary, with any shares vesting subject to a two-year post-vesting holding lock-up period.
On the third anniversary of the grant date, and subject to fulfilling the vesting conditions, the Company shall allot to the employee
or service contractor, ordinary shares with an aggregate value of up to the initial value granted on the grant date, subject to
achieving specific KPI’s as described in the table above for each plan.
The number of Ordinary Shares allotted on the vesting date shall be calculated based on the Ordinary Share price at grant date
as specified in the table above for each plan, as adjusted for dividends (with any amounts adjusted for dividends payable in cash).
The allotted ordinary shares will be transferred out of the treasury shares of the Company.
70
Plus500 Ltd. 2020 Annual Report Directors’ Remuneration Report
continued
Payments to past Directors and payments for Loss of Office
Executive Director Gal Haber stepped down from the Board on 5 January 2021. He does not receive annual bonus or
long-term incentive awards.
Executive Director Asaf Elimelech, former CEO, stepped down from the Board on 20 April 2020. He has a twelve months’
notice period and continued with the Group in a transitional role alongside the Interim CEO until our new CEO was appointed
including retaining his role as a Director of certain Group’s subsidiaries. In accordance with his contractual agreement and
in line with the remuneration approved by shareholders, Asaf Elimelech was paid his base service fees, annual bonus and
receives incentives that have vested by 31 December 2020. There are no unvested amounts payable after 31 December 2020.
All amounts paid are set out in the Single figure of remuneration table.
Further information on 2020 remuneration
Directors’ shareholdings and share plan interests
Summary of Directors’ shareholdings and share plan interests as at 31 December 20201.
OUTSTANDING SCHEME
INTERESTS AS AT 31/12/2020
BENEFICIAL OWNERSHIP IN SHARES
SUBJECT TO
PERFORMANCE
CONDITIONS
WITHOUT
PERFORMANCE
CONDITIONS
AS AT
1 JANUARY
2020
AS AT
31 DECEMBER
20202
SHAREHOLDING
REQUIREMENT
(% OF SALARY/
BASE SERVICE FEES)
CURRENT
SHAREHOLDING
AS AT 31/12/2020
(% OF SALARY/
BASE SERVICE FEES)
19,870
45,517
–
–
–
–
–
–
–
–
37,080
37,080
–
–
–
–
–
–
12,000
30,460
30,460
17,000
54,100
51,4608
1,805,457
2,069,769
25,691
55,000
–
25,691
55,000
–
27,169
27,169
–
–
200%
200%
N/A
N/A
–
–
–
–
–
71%
203%
N/A
N/A
–
–
–
–
–
Executive Directors
David Zruia
Elad Even-Chen3
Asaf Elimelech4
Gal Haber5
Non-Executive Directors
Penny Judd6
Charles Fairbairn7
Anne Grim
Daniel King
Steve Baldwin
1. 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.
2. As at 31 December 2020 and up to the date of this Annual Report.
3. The shares are registered in the name of Elad Even-Chen Consulting Services Ltd.
4. The shares are registered in the name of Asaf Elimelech Consultation and Regulatory Services Ltd.
5. The shares are registered in the name of Wavesoft Ltd.
6. The shares are registered in the name of Penny Judd’s spouse, Julian Judd.
7. As announced on 4 February 2021, Charles Fairbairn will step down from the Board at the earlier of the 2021 AGM or 30 June 2021.
8. Asaf Elimelech shareholding as at date when stepped down from the Board, 20 April 2020.
General notes:
(a) Outstanding scheme interest as at 31 December 2020 include 2019 and 2020 LTIP/RSU awards that have not vested, and vested deferred bonus for 2019 and 2020.
(b) Beneficial ownership in shares include all share plan interests together with any holdings of ordinary shares.
(c) Current shareholding as at 31 December 2020 as a % of salary/base service fees were calculated based on share price as at 31 December 2020 and FX GBP/ILS as of that date.
71
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Directors’
Remuneration
Report
continued
Performance graph and table
Plus500 was admitted to the Alternative Investment Market of the London Stock Exchange on 24 July 2013. Following a
period of sustained growth, the Company applied for Admission to the main market which became effective on 26 June 2018.
The chart below shows the TSR performance of £100 invested in Plus500 at IPO vs performance of the FTSE All Share index.
As part of the Company’s commitment to strengthen corporate governance, the reporting of Directors’ remuneration in 2020
is being aligned to a greater extent with the regulations as applicable to a UK incorporated company. This disclosure will be
built up over the coming years in line with the requirements.
TSR performance of £100 invested in Plus500 at IPO vs performance of the FTSE All Share index
x
e
d
n
I
0
5
2
E
S
T
F
s
v
O
P
I
t
a
d
e
t
s
e
v
n
i
0
0
1
£
f
o
l
e
u
a
V
£3,000
£2,500
£2,000
£1,500
£1,000
£500
£0
Plus500
FTSE AllShare index
31 Dec
2012
31 Dec
2013
31 Dec
2014
31 Dec
2015
31 Dec
2016
31 Dec
2017
31 Dec
2018
31 Dec
2019
31 Dec
2020
CEO single figure total remuneration ($000s)
Annual bonus achieved for 2020 (as % of maximum opportunity)
2020
2,173
100%
Relative importance of the spend on pay
The following table sets out the change in dividends and overall spend on pay in the years ended 31 December 2020 and 2019.
Total gross employee and other related expenses pay
Dividends
Share buybacks
*
Includes the increase of the Group number of employees and service contractors.
2019
31.5
101.1
47.2
2020
50.8
141.6
88.8
PERCENTAGE CHANGE
61%*
40%
88%
The Company continues to update and tailor its Remuneration Report disclosures to align with UK corporate governance best
practice. To this end, the 2020 Annual Report includes several new elements of disclosure in the Remuneration Report, with
further additional reporting and disclosure expected to be included in the Remuneration Report of the 2021 Annual Report.
72
Plus500 Ltd. 2020 Annual Report
Directors’ Remuneration Report
continued
Non-Executive Directors’ letters of appointment
External board appointments
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.
The letters of appointment of Penny Judd, Steve Baldwin and
Sigalia Heifetz as Non-Executive Directors require them to retire
and be subject to re-election at each Annual General Meeting
in accordance with Provision 18 of the Code. The letters
have been drafted such that renewed appointment will not
necessitate a new letter of appointment. The appointments
of Penny Judd, Steve Baldwin and Sigalia Heifetz can be
terminated by the Non-Executive Director with a two months
written notice, or by the Company with immediate effect if
the Non-Executive Director is not re-elected or is otherwise
removed from office in accordance with the Articles.
As required under, and subject to the Companies Law, the
appointments of Charles Fairbairn, Daniel King, Anne Grim
and Tami Gottlieb 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 third and final three-
year term effective from the 2019 AGM. As announced by the
Company, Charles will be stepping down from the Board at
the earlier of 2021 AGM or 30 June 2021. Anne Grim was
elected for her first three-year term effective from the 2020
AGM. Tami Gottlieb was elected for her first three-year term
effective from the 2021 Extraordinary General Meeting.
Each Non-Executive Director is expected to commit to
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. The Chairman of the Company does not
receive any fees for acting as Chairman other than the fees
as a Non-Executive Director.
Where Board approval is given for an Executive Director to
accept an outside non-executive directorship, the individual
is entitled to retain any fees received. The Board assesses
and confirms that such appointment will not have any
material impact on the performance of the Director, and will
not affect the Director's commitments and duties as a
Director of the Company.
Steve Baldwin is currently a Non-Executive Director of TruFin
Plc and The Edinburgh Investment Trust Plc.
Penny Judd is currently a Non-Executive Director of TruFin
Plc, Alpha Financial Markets Consulting Plc and Team17
Group Plc.
Anne Grim is currently a Non-Executive Director of Insight
Investment, Metro Bank PLC, RateSetter and Openwork
Holdings Ltd.
Sigalia Heifetz currently holds non-executive directorships at
a number of leading Israel-based corporations across a
range of sectors and industries, including Nesher Israel
Cement Enterprises Ltd, Clal Biotechnology Industries Ltd,
Golf & Co Ltd, Maman Cargo Terminals and Handling Ltd and
Tamar Petroleum Ltd.
Tami Gottlieb is currently an External Director at Bank Leumi
Le’Israel Ltd. – one of Israel's two largest commercial banks,
where she is Chairperson of the Audit and Financial Reports
Committees and a member of the Remuneration and
Business & Credit & Strategy Committees, having previously
been on the Technology Committee and on the Risk
management Committee. Tami Gottlieb is also Chairperson
at Shefayim Holdings Corporation, an External Director at
Extell Limited, an Independent Director at Arad Investments
and Development Ltd and a Director at Emilia Development.
She is also a founder and Managing Director of Harvest
Capital Markets Ltd, a wealth management and corporate
finance boutique.
Non-Executive Director fees
The current annual fees for our presiding Non-Executive
Directors are as follows:
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.
NAME
Penny Judd
ROLE
Chair
Charles Fairbairn1
NED & SID, External Director
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.
Anne Grim
Daniel King
NED, External Director
NED, External Director
Steve Baldwin
NED
Tami Gottlieb
NED, External Director
Sigalia Heifetz
NED
FEE
£150,000
£120,000
£75,000
£75,000
£75,000
£75,000
£75,000
1. As announced on 4 February 2021, Charles Fairbairn will step down from the Board
at the earlier of the 2021 AGM or 30 June 2021.
73
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Directors’
Remuneration
Report
continued
External advisors
From 17 November 2020 and in respect of the 2020 Annual Report and 2021 Remuneration Policy, the Remuneration
Committee received independent advice from Korn Ferry LLC on the Remuneration Policy review and market practice.
Korn Ferry is a signatory to the Remuneration Consultants’ Code of Conduct and has confirmed to the Committee that
it adheres in all aspects to the terms of the Code. The Remuneration Committee is satisfied that the advice provided by
Korn Ferry LLC in relation to remuneration matters is objective and independent.
The Committee appointed KPMG LLC in 2019 in respect of the 2020 remuneration policy, as remuneration consultants
(non-audit services). KPMG LLC provided remuneration assistance with the transition to a more UK corporate governance
compliant structure after the move to the Main Market in June 2018 and advice in relation to compliance with the Code.
Their advice linked Executive remuneration, Non-Executive remuneration and recent shareholder guidance, with similar companies
and market developments. KPMG LLC 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. KPMG Ltd. is the
auditor of Plus500CY Ltd., it is a different and separate entity from KPMG LLC that provided the remuneration consultancy
work. KPMG LLC has no connection to the Company or individual directors. As such, the Committee is satisfied that the
advice provided by KPMG LLC in relation to remuneration matters is objective and independent.
Statement of voting on remuneration at 2020 meetings
The table below shows votes cast by proxy at the EGM held on 20 February 2020 and the AGM held on 16 September 2020
in respect of the Directors’ remuneration.
AGM RESOLUTIONS
Amend Remuneration Policy
Approve fees to Anne Grim
Approve increase in fees to Steve Baldwin
Approve increase in fees to Daniel King
Approve increase in salary to David Zruia
Approve grant of RSU to David Zruia
FOR
% VOTES CAST
AGAINST
% VOTES CAST
VOTE WITHHELD
64,445,724
67,747,466
67,383,802
67,383,802
67,220,665
65,457,861
95.44
100.00
99.51
99.51
99.22
96.62
3,077,629
0
331,969
331,969
526,591
2,289,395
4.56
0.00
0.49
0.49
0.78
3.38
12,505,940
12,281,827
210
210
12,282,037
12,282,037
EGM RESOLUTIONS
Remuneration terms for Asaf Elimelech
Remuneration terms for Elad Even-Chen
FOR
% VOTES CAST
AGAINST
% VOTES CAST
VOTE WITHHELD
50,106,651
50,157,827
64.57
64.59
27,495,009
27,495,009
35.43
35.41
77,601,660
77,652,836
74
Plus500 Ltd. 2020 Annual Report Directors’ Remuneration Report
continued
Most highly remunerated executives in 2020
The table below shows the remuneration of the Company's
five most highly compensated executives in 2020 (including
two Executive Directors and one former Executive Director):
Asaf Elimelech
Elad Even-Chen
Ari Shotland
David Zruia
Nir Zatz
2020 FEES ($)
3,433,753*
3,433,753
2,300,919
2,173,567
1,922,036
*
Includes payments for the full year ended 31 December 2020
Implementation of policy in 2021
2021 Non-founder Executive Directors' remuneration
The Remuneration Committee has continued its efforts to
modify the remuneration arrangements of the Executive
Directors to better align executive compensation with
UK governance standards followed by Main Market-listed
companies and move further towards a structure in line with
investor expectations and developments in best practice.
The Company intends to issue its 2021 AGM notice
regarding a new Directors’ Remuneration Policy that we are
seeking shareholder approval for this policy at its 2021 AGM
and the operation of policy proposed for FY2021, following
the consultation currently being undertaken with support
from Korn Ferry LLC with respect to shareholder advisory
bodies and shareholders’ feedback.
The Committee has undertaken a thorough and
comprehensive review of the remuneration policy and
operation over the last few months with the support of
external advisors, Korn Ferry, and a clear understanding
of market practice and investor expectations. Following its
review, the Committee is in the process of establishing the
new remuneration policy that will be put to shareholders at
the 2021 AGM. Our review has covered all elements of pay
including the weighting of fixed to variable pay and short
to long term incentives to arrive at an overall structure of
packages which the Committee considers investors will
be able to support.
Whilst Plus500 is a corporate entity registered in Israel
and is therefore not legally required to comply with the
requirements applicable to a UK incorporated listed
company, the policy that will be brought to shareholders for
approval was prepared with a view of the standards for a
UK listed company, while making the required adjustments
in order to conform to the requirements under the Israeli
law and market practices in Israel.
The Committee’s proposals include some far-reaching
changes from the current policy to ensure that we are
making significant strides to align to a UK norm. The
Committee is however cognisant of distinct sector and
market dynamics in Israel where Plus500 is headquartered,
the competition over talent in the Israeli market place and
in the sector as a whole and that the changes proposed
have a significant impact on the way in which the current
Executive Directors are paid. The Committee will therefore
continue its journey over future policy reviews, keeping the
approach and the structure of the Executive Directors’
packages under review but hopes that investors will be
supportive of the substantial progress that has been made
in moving towards a UK norm at this time.
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
24 March 2021
75
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Directors' Report
The Directors of Plus500 present their report for the year
ended 31 December 2020. 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
Directors that have served during the year and summaries of the current Directors’ key
skills and experience are set out on pages 44 to 45 and on page 53.
Results and dividends
Articles of Association
Share Capital
Results for the year ended 31 December 2020 are set out in the financial review on
pages 32 to 34 and the Consolidated Statement of Comprehensive Income on page 86.
Information regarding the proposed final and special dividends can be found in the financial
review on page 34. Dividend payments made during the year ended 31 December 2020
can be found in the notes to the Consolidated Financial Statements on page 104.
The Company’s full Articles of Association can be found on the Company’s website at
cdn.plus500.com/media/Investors/ConstitutionalDocuments/ArticlesOfAssociation.pdf
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 22 to the Consolidated Financial
Statements on page 108. At the close of business on 24 March 2021, the Company had
101,989,491 Ordinary Shares in issue, and additional 12,898,886 Ordinary Shares are held
in treasury by the Company.
Authority to purchase own shares
The Company has authority to purchase its own shares and a further authority will
be sought at the upcoming Annual General Meeting.
Directors’ interests
Details of the Directors’ beneficial interests are set out in the Remuneration Report
on page 71.
Directors’ indemnities
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
Directors’ and Officers’ Liability Insurance cover is in place at the date of this report.
Cover is reviewed annually and the last renewal was carried out in October 2020.
Major interests in shares
Notifiable major shares interests of which the Company has been made aware are set
out on page 50 of the Governance Report.
Political contributions
The Company did not make any donations to political organisations during the year.
Equality & Diversity policy
In December 2020 the Company reapproved and published on its website its policy
on equality & diversity.
cdn.plus500.com/media/Investors/CorporateGovernance/EqualityAndDiversityPolicy.pdf
Financial risk
Details of the Company’s policies on financial risk management and the Company’s
exposure to market price risk, credit risk, liquidity risk and cash flow risk are outlined
in note 24 to the Consolidated Financial Statements.
Research and Development
Details about the Company’s future developments can be found in
the Strategic Report on page 13.
76
Plus500 Ltd. 2020 Annual Report Directors' Report
continued
Auditors
A resolution to reappoint Kesselman & Kesselman, a member firm of
PricewaterhouseCoopers International Limited as external auditors will be proposed
at the 2021 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
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
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
24 March 2021
n/a
n/a
Page 67 to 72
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
77
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements Corporate 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
(the "Takeover Code") will not apply to the Company, except
to the extent the Company has 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,
pursuant to the Companies Law, 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% or more of the
shares or the right to appoint 25% 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, under certain circumstances, 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% of the shares voted on the matter,
as well as 75% 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 follows
described) do not apply.
78
Plus500 Ltd. 2020 Annual Report Corporate Law
continued
Companies Law – Special tender offer
Companies Law – Full 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 shall become a holder of 25% or more of the
voting rights in the company. This rule does not apply if there
is already another holder of at least 25% of the voting rights
in the company.
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% 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% 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 purchaser acquires more than 98% 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% or 98%, as applicable, of the company’s shares or class
of shares, the purchaser may not own more than 90% 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 above), 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.
Similarly, the Companies Law provides that an acquisition
of shares in a public 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 more than 45% of the
voting rights in the company, if there is no other shareholder
of the company who holds more than 45% of the voting
rights in the company.
In addition, under the Companies Law, the entry by two
or more shareholders into a shareholders' agreement,
where such shareholders' agreement will result in such
shareholders holding in concert shares in a company in an
amount exceeding the thresholds set out above, may also be
subject to the requirement to publish a special tender offer.
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% 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 at least 5% 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.
79
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements 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's 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, taken as
a whole, is fair, balanced and understandable, and provides
the information necessary for shareholders to assess the
Group's position, 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.
This report has been approved by the Board.
Signed on behalf of the Board
David Zruia
Chief Executive Officer
24 March 2021
Directors'
Responsibility
Statement
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 Comprehensive Income 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 provides relevant, reliable, consistent
and understandable information;
• Make judgements 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 Consolidated Financial
Statements comply with applicable law.
80
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Contents
82–85
Independent Report of the Auditors
Consolidated Financial Statements
in US Dollars ($):
86
Consolidated Statement of Comprehensive Income
87
Consolidated Statement of Financial Position
88
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
89
Notes to the Consolidated Financial Statements 90–114
81
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Financial statements
Independent report
Independent report
of the auditors
of the auditors
To the shareholders
To the shareholders
of Plus500 Ltd.
of Plus500 Ltd.
Report on the audit of the
Report on the audit of the
Consolidated Financial Statements
Consolidated Financial Statements
Opinion
Opinion
In our opinion, the consolidated financial statements present fairly, in
In our opinion, the consolidated financial statements present fairly, in
all material respects the consolidated financial position of Plus500 Ltd.
all material respects the consolidated financial position of Plus500 Ltd.
(the “Company”) and its subsidiaries (the “Group”) as at 31 December
(the “Company”) and its subsidiaries (the “Group”) as at 31 December
2020 and its consolidated results of operations and its consolidated
2020 and its consolidated results of operations and its consolidated
cash flows for the year then ended in accordance with International
cash flows for the year then ended in accordance with International
Financial Reporting Standards (“IFRSs”) as issued by the International
Financial Reporting Standards (“IFRSs”) as issued by the International
Accounting Standards Board.
Accounting Standards Board.
What we have audited
What we have audited
The Group’s consolidated financial statements comprise:
The Group’s consolidated financial statements comprise:
Basis for opinion
Basis for opinion
We conducted our audit in accordance with International Standards
We conducted our audit in accordance with International Standards
on Auditing (ISAs). Our responsibilities under those standards are
on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the
further described in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
appropriate to provide a basis for our opinion.
Independence
Independence
We are independent of the Group in accordance with the International
We are independent of the Group in accordance with the International
Ethics Standards Board for Accountants’ Code of Ethics for
Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code) that is relevant to our audit
Professional Accountants (IESBA Code) that is relevant to our audit
of the consolidated financial statements. We have fulfilled our other
of the consolidated financial statements. We have fulfilled our other
ethical responsibilities in accordance with the IESBA Code.
ethical responsibilities in accordance with the IESBA Code.
• The consolidated statement of
• The consolidated statement of
financial position as at
financial position as at
Key audit matters
Key audit matters
31 December 2020;
31 December 2020;
• The consolidated statement of comprehensive income for the year
• The consolidated statement of comprehensive income for the year
then ended;
then ended;
• The consolidated statement of changes in equity for the year
• The consolidated statement of changes in equity for the year
then ended;
then ended;
• The consolidated statement of cash flows for the year then ended;
• The consolidated statement of cash flows for the year then ended;
and
and
• The notes to the consolidated financial statements, which include
• The notes to the consolidated financial statements, which include
a summary of significant accounting policies.
a summary of significant accounting policies.
Key audit matters are those matters that, in our professional
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the consolidated
judgement, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were
financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial
addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do
statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
not provide a separate opinion on these matters.
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Kesselman & Kesselman, PwC Israel, 146 Derech Menachem Begin St. Tel-Aviv 6492103,
Kesselman & Kesselman, PwC Israel, 146 Derech Menachem Begin St. Tel-Aviv 6492103,
P.O. Box 7187 Tel-Aviv 6107120 Telephone: +972 -3- 7954555, Fax: +972 -3- 7954556, www.pwc.com/il
P.O. Box 7187 Tel-Aviv 6107120 Telephone: +972 -3- 7954555, Fax: +972 -3- 7954556, www.pwc.com/il
Plus500 Ltd. 2020 Annual Report
Financial statements
Independent report
of the auditors
To the shareholders
of Plus500 Ltd.
Report on the audit of the
Consolidated Financial Statements
Basis for opinion
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.
In our opinion, the consolidated financial statements present fairly, in
all material respects the consolidated financial position of Plus500 Ltd.
We believe that the audit evidence we have obtained is sufficient and
(the “Company”) and its subsidiaries (the “Group”) as at 31 December
appropriate to provide a basis for our opinion.
2020 and its consolidated results of operations and its consolidated
cash flows for the year then ended in accordance with International
Financial Reporting Standards (“IFRSs”) as issued by the International
Independence
Accounting Standards Board.
What we have audited
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
The Group’s consolidated financial statements comprise:
ethical responsibilities in accordance with the IESBA Code.
• The consolidated statement of
financial position as at
Key audit matters
31 December 2020;
• The consolidated statement of comprehensive income for the year
• The consolidated statement of changes in equity for the year
• The consolidated statement of cash flows for the year then ended;
then ended;
then ended;
and
• The notes to the consolidated financial statements, which include
a summary of significant accounting policies.
Key audit matters are those matters that, in our professional
judgement, 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.
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Kesselman & Kesselman, PwC Israel, 146 Derech Menachem Begin St. Tel-Aviv 6492103,
P.O. Box 7187 Tel-Aviv 6107120 Telephone: +972 -3- 7954555, Fax: +972 -3- 7954556, www.pwc.com/il
Financial statements
continued
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
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Revenue recognition
The Group has developed and operates an online and mobile trading
platform for trading Contracts for Difference (“CFDs”).
The Group generates its trading income from Customer Income,
which includes revenue from customer spreads and overnight
charges, and Customer Trading Performance, which
includes
gains/losses on customers’ trading positions.
The computation of revenue is carried out automatically by using
its own developed platform which
IT system
(the “Platform”).
internal
is an
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
in the Company’s
general ledger.
is recorded
ii
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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.
In addition, we tested program development controls over the
ERP system.
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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.
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 calculate
feeds used
integrity of
the
the
to confirm
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 amounts 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 Platform, we read client activity
reports and read a sample of client complaints.
No material issues noted.
intercompany transactions across several tax
Uncertain tax provisions
As discussed in Notes 3 and 10 to the consolidated financial
statements, the Group operates in a multinational tax environment
and is subject to tax laws, regulations and transfer pricing guidelines
jurisdictions.
for
Furthermore, the Company is subject to several tax assessments in
Israel for the years 2017–2019. The subsidiaries of the Group have
not yet been subject to tax assessments since their inception. The
Group recognises tax provisions from uncertain tax positions when
there is more likely than not a likelihood that the tax position will be
sustained upon examination by the taxation authorities based on the
technical merits of the position.
Auditing management’s estimate of amounts related to tax provisions
involves auditor judgement and challenging management because
management’s estimates are complex, judgemental and based on
interpretations of tax laws, regulations and legal rulings.
included assessing
tax positions. This
Among the audit procedures we performed, we involved our tax
specialists to assist us in assessing the technical merits of the
Group’s
the Group’s
correspondence with the relevant tax authorities and evaluating
income tax opinions or other third-party advice obtained by the Group.
In addition, we evaluated the appropriateness of the Group’s
accounting
the Group’s
assumptions and data used to determine the amount of tax provision
and to recognised and tested the accuracy of the calculations. We
also evaluated whether the Group’s disclosures complied with the
accounting framework.
tax positions. We analysed
for
its
No material issues noted.
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Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Independent report
of the auditors
continued
Going concern
We have reviewed the Directors’ statement relating to Going Concern
as if the Company was a UK incorporated premium listed entity.
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 (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.
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, or we are voluntarily
reporting, on certain matters as described below.
The Directors’ assessment of the prospects of the Group
We have reviewed 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 as if the Company was
a UK incorporated premium listed entity. 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 July 2018 (the “Code”); and
considering whether the statements are consistent with the knowledge
acquired by us in performing our audit. We have nothing to report having
performed our review.
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 IFRSs 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
judgement 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.
• Evaluate
the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
Kesselman & Kesselman, PwC Israel, 146 Derech Menachem Begin St. Tel-Aviv 6492103,
P.O. Box 7187 Tel-Aviv 6107120 Telephone: +972 -3- 7954555, Fax: +972 -3- 7954556, www.pwc.com/il
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Plus500 Ltd. 2020 Annual Report
Financial statements
continued
• 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.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
the matters communicated with
those charged with
From
governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements
of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
The 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
24 March 2021
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Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Consolidated statement
of comprehensive income
US dollars in millions
Trading income
Selling and marketing expenses
Administrative and general expenses
Operating profit
Financial income
Financial expenses
Financial income (expense) – net
Profit before income tax
Income tax expense
Profit and comprehensive income for the year
US dollars
Note
4
5
6
10
Year ended 31 December
2020
872.5
315.4
43.5
513.6
16.6
6.9
9.7
523.3
23.2
500.1
2019
354.5
138.9
25.5
190.1
6.7
7.5
(0.8)
189.3
37.6
151.7
Earnings per share (basic and diluted)
11
4.71
1.35
The accompanying notes are an integral part of the financial statements.
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86
Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Consolidated statement of financial position
US dollars in millions
Assets
Non-current assets
Property, plant and equipment
Right of use assets
Long term other receivables
Total non-current assets
Current assets
Income tax receivable
Other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Liabilities
Non-current liabilities
Lease liabilities (net of current maturities)
Share-based compensation
Total non-current liabilities
Current liabilities
Share-based compensation
Income tax payable
Other payables
Service suppliers
Current maturities of lease liabilities
Trade payables – due to clients
Total current liabilities
TOTAL LIABILITIES
Equity
Ordinary shares
Share premium
Cost of Company’s shares held by the Company
Retained earnings
Total equity
TOTAL EQUITY AND LIABILITIES
Note
2020
2019
As of 31 December
15
20
10
14
16
20
9
9
10
17
18
20
19
22
12
2.5
6.0
1.7
10.2
6.1
10.0
593.9
610.0
620.2
5.3
1.8
7.1
7.4
2.2
22.8
22.5
1.6
1.0
57.5
64.6
0.3
22.2
(145.7)
678.8
555.6
620.2
2.8
5.3
1.2
9.3
2.8
11.9
292.9
307.6
316.9
4.1
–
4.1
4.8
1.8
10.3
10.0
1.6
0.2
28.7
32.8
0.3
22.2
(57.0)
318.6
284.1
316.9
David Zruia
Chief Executive Officer
Elad Even-Chen
Group Chief Financial Officer
Penelope Judd
Non-Executive Director and Chairman
Date of approval of the consolidated financial statements by the Company’s Board of Directors: 24 March 2021.
The accompanying notes are an integral part of the financial statements.
Registered Company number (Israel): 514142140
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87
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Consolidated statement of changes in equity
Ordinary
shares
Share
premium
Cost of
Company’s
shares held by
the Company
Retained
earnings
Total
0.3
22.2
(9.8)
268.0
280.7
US dollars in millions
Balance at 1 January 2019
Changes during the year ended 31 December 2019
Profit and comprehensive income for the year
Transaction with shareholders:
Dividend
Acquisition of treasury shares
–
–
–
–
–
–
Balance at 31 December 2019
0.3
22.2
Changes during the year ended 31 December 2020
Profit and comprehensive income for the year
Share based compensation
Transaction with shareholders:
Dividend
Issue of treasury shares to settle equity share
based compensations
Acquisition of treasury shares
–
–
–
–
–
–
–
–
–
–
–
–
(47.2)
(57.0)
–
–
–
151.7
151.7
(101.1)
(101.1)
–
(47.2)
318.6
284.1
500.1
1.8
500.1
1.8
(141.6)
(141.6)
0.1
(88.8)
(0.1)
–
–
(88.8)
Balance at 31 December 2020
0.3
22.2
(145.7)
678.8
555.6
The accompanying notes are an integral part of the financial statements.
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Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Consolidated statement of cash flows
US dollars in millions
Operating activities:
Cash generated from operations (see Note 25)
Income tax paid, net
Interest received, net
Net cash flows provided by operating activities
Investing activities:
Purchase of property, plant and equipment
Net cash flows used in investing activities
Financing activities:
Dividend paid to equity holders of the Company
Payment of principal in respect of lease liabilities
Acquisition of treasury shares
Net cash flows used in financing activities
Year ended 31 December
2020
2019
546.6
(23.1)
5.2
528.7
(0.3)
(0.3)
(141.6)
(1.8)
(88.8)
(232.2)
170.1
(47.6)
4.8
127.3
(0.1)
(0.1)
(101.1)
(1.8)
(47.2)
(150.1)
Increase (decrease) in cash and cash equivalents
296.2
(22.9)
Balance of cash and cash equivalents at beginning of the year
Gains from exchange differences on cash and cash equivalents
Balance of cash and cash equivalents at end of the year
The accompanying notes are an integral part of the financial statements.
292.9
4.8
593.9
315.3
0.5
292.9
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89
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
Note 1 – General information
b. Going concern
Information on activities
Plus500 Ltd. (the “Company”) and its subsidiaries (the “Group”) has
developed and operates an online and mobile trading platform within the
Contracts for Difference (“CFDs”) sector enabling its international
customer base of
individual customers to trade CFDs on over
2,500 underlying financial instruments internationally. The Group offers
CFDs referenced to shares,
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 European Economic Area
(EEA) and the Middle East and has customers located in more than
50 countries. The Group operates through operating subsidiaries
regulated by the Financial Conduct Authority (FCA) in the UK, the
Australian Securities and
in
Australia, the Cyprus Securities and Exchange Commission (CySEC)
in Cyprus, the Israel Securities Authority (ISA) in Israel, the Financial
Markets Authority (FMA) in New Zealand, the Financial Sector
Conduct Authority (FSCA) in South Africa, the Monetary Authority of
Singapore (MAS) in Singapore and the Financial Services Authority
(FSA) in the Seychelles.
Investments Commission (ASIC)
The Company also has 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 FCA
and to trading on the London Stock Exchange Main Market for
listed securities.
The Group is engaged in one operating segment – CFD trading.
The address of the Company’s principal offices is Building 25,
MATAM, Haifa 31905, Israel.
Note 2 – Summary of significant
accounting policies
a. Basis of accounting and accounting policies
The Group’s consolidated financial information as of 31 December 2020
and 2019 and for each of the two years in the period ended on
31 December 2020 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.
The Group has considerable financial resources, and a substantial
active customer base which is diversified geographically worldwide.
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.
1. The consolidated financial statements include the accounts of
the Company and its subsidiaries.
2. 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. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of the Company’s ordinary shares in issue during the
year excluding ordinary shares purchased by the Company and held
as treasury shares.
Diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume exercise
of all potential dilutive ordinary shares. The instruments that are
potentially dilutive ordinary shares are equity instruments granted
to employees and service contractors (see note 9). A calculation is
done to determine the number of shares that could have been
acquired at fair value (determined as the average annual market share
price of the Company’s shares) based on the monetary value of the
subscription rights attached to outstanding equity instruments. The
number of ordinary shares calculated as above is compared with the
number of ordinary shares that would have been issued assuming the
exercise of the equity instruments (see also note 11).
e. 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.
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Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 2 – Summary of significant
accounting policies continued
f. 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 US 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)”.
g. Trading income
Trading
includes
income represents Customer Income, which
revenue from customer spreads and overnight charges, and
Customer Trading Performance, which includes gains/losses on
customers’ trading positions, arising on client trading activity,
primarily in contracts for difference on shares, indices, ETFs, options,
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.
h. Share-based compensation
1. Cash settled
The Group operates a cash-settled share-based compensation plan,
under which it receives services from employees and service
contractors as consideration for Share Appreciation Rights. The fair
value of the employee and service contractors 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 (“SARs”) based on their fair value as prorated over the period
and the change in prorated fair value is recognised in the consolidated
statements of comprehensive income.
2. Equity settled
The Group operates equity-settled share-based compensation plans,
under which it receives services from employees and service
contractors as consideration for ordinary shares and Restricted Share
Units (“RSUs”). The fair value of the services received by employees
and service contractors in exchange for the grant of ordinary shares
or RSUs are recognised as an expense in the consolidated statements
of comprehensive income.
The fair value of equity settled share based payment arrangements
granted to employees and service contractors is recognised as an
employee benefit expense and other related expenses applicable for
the service contractors, with a corresponding increase in equity. The
total amount to be expensed is determined by reference to the fair
value of the equity instruments granted:
• including any market performance conditions (e.g. the Company’s
share price)
• excluding the impact of any service and non-market performance
vesting conditions (e.g. profitability, sales growth targets and
continuing to be employed or rendering services to the entity over
a specified time period), and
• including the impact of any non-vesting conditions (e.g. the
requirement for employees and service contractors to hold shares
for a specific period of time).
The total expenses are recognised over the vesting period, which is
the period over which all of the specified vesting conditions are to be
satisfied. At the end of each period, the Group revises its estimates of
the number of ordinary shares and RSUs that are expected to vest
based on the non-market performance vesting and service
conditions. The impact of the revision to original estimates, if any, in
the statement of income, is recognised with a corresponding
adjustment to equity.
i. Treasury shares
Treasury shares are ordinary shares of the Company held by the
Company and presented as a reduction of Equity, at the consideration
paid, including any incremental attributable costs, net of tax. Treasury
shares do not have a right to receive dividends or to vote. The Board
approves share buyback programmes. The share buyback
programmes are funded from the Company’s net cash balances. The
ordinary shares are being purchased at fair value (see note 12).
j. 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 its 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.
Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject
to interpretation and considers whether it is probable that a taxation
authority will accept an uncertain tax treatment. The Group measures
its tax balances either based on the most likely amount or the
expected value, depending on which method provides a better
prediction of the resolution of the uncertainty.
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Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 2 – Summary of significant
accounting policies continued
k. Deferred income tax
m. Financial instruments
1. Classification
The Group classifies
measurement categories according to IFRS 9:
financial assets
its
in
the
following
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.
• Those to be measured subsequently at fair value through profit and
loss, and
• Those to be measured at amortised cost.
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.
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.
l. 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.
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
10
Leasehold improvements are depreciated by the straight-line method
over the terms of the lease (including reasonably assured options
periods), or the estimated useful life (10 years) of the improvements,
whichever is shorter.
The asset’s residual value, the depreciation method and useful lives
are reviewed, and adjusted if appropriate, at least once a year.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount.
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.
Financial assets are classified as current if they are expected to
mature within 12 months after the end of the reporting period,
otherwise, they are classified as non-current.
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 (FVTPL), transaction costs that are directly attributable
to the acquisition of the financial asset. Transaction costs of financial
assets carried at FVTPL 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 24.
n. Cash and cash equivalents
Cash and cash equivalents include cash on hand, short-term bank
deposits and other highly liquid short-term investments, the original
maturity of which does not exceed three months.
All of the subsidiaries, except the subsidiary in Bulgaria, hold money
on behalf of their 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 requirements. Segregated client funds comprise 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 Group’s assets in the consolidated
statements of financial position.
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Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 2 – Summary of significant
accounting policies continued
o. Dividends
Dividend distribution is recognised as a liability in the Group’s
statement of financial position in the period which the dividends
are approved by the Group’s Board of Directors.
p. 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.
q. 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 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.
r. Trade payables – due to clients
As part of its business, the Group receives from its customers
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 customers’ deposits and the valuation of financial
derivative open positions result in an amount payable by the Group.
Trade payables – due to clients are reported in the balance sheet and
classified as current liabilities as the demand is due within one year
or less.
s. IFRS 16 – “Leases” (hereafter – IFRS 16)
The Group accounts for leases in accordance with International
Financial Reporting Standards No.16 “Leases” (“IFRS 16”).
The Group’s leases include real estate lease agreements. At inception
of a contract, the Group assesses whether a contract is, or contains,
a lease. A contract is, or contains, a lease if the contract conveys the right
to control the use of an identified asset for a period of time in exchange
for consideration. The Group reassesses whether a contract is, or
contains,
a lease only if the terms and conditions of the contract are changed .
At the commencement date, the Group measures the lease liability at
the present value of the lease payments that are not paid at that date,
including, inter alia, the exercise price of the purchase options if the Group
is reasonably certain to exercise that option. Simultaneously, the Group
recognises a right-of-use asset in the amount of the lease liability.
The lease term is the non-cancellable period for which the Group has the
right to use an underlying asset, together with both the periods covered by
an option to extend the lease if the Group is reasonably certain to exercise
that option and periods covered by an option to terminate the lease if the
Group is reasonably certain not to exercise that option.
After the commencement date, the Group measures the right-of-use
asset applying the cost model, less any accumulated depreciation and
any accumulated
for any
remeasurement of the lease liability.
losses and adjusted
impairment
Assets are depreciated by the straight-line method over the estimated
useful lives of the right of use assets or the lease period, whichever is
shorter. The depreciation periods for the real estate leases by the
Group is between one to five years.
Under IFRS 16 all leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is available for
use by the Group. Each lease payment is allocated between the liability
and finance cost. The finance cost is charged to statement of income over
the lease period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period.
Payments associated with short-term leases of real estate and all
leases of low-value assets are recognised on a straight-line basis as
an expense in the statement of income. Short-term leases are leases
with a lease term of 12 months or less without a purchase option.
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Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 2 – Summary of significant
accounting policies continued
t. 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 2020:
Definition of Material – Amendment to IAS 1 and IAS 8:
The IASB has made amendments to IAS 1 Presentation of Financial
Statements and IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors which use a consistent definition of
materiality throughout International Financial Reporting Standards
for Financial Reporting,
and
clarify when information is material and incorporate some of the
guidance in IAS 1 about immaterial information. In particular, the
amendments clarify:
the conceptual Framework
• That the reference to obscuring information addresses situations
in which the effect is similar to omitting or misstating that
information, and that an entity assesses materiality in the context
of the financial statements as a whole, and
• The meaning of ‘primary users of general purpose financial
statements’ to whom those financial statements are directed, by
defining them as ‘existing and potential investors, lenders and other
creditors’ that must rely on general purpose financial statements
for much of the financial information they need.
Note 3 – Significant accounting estimates
Considering uncertain tax positions
The assessment of amounts of current and deferred taxes requires
the Group’s management to take into consideration uncertainties that
its tax position will be accepted and of incurring any additional tax
expenses. This assessment is based on estimates and assumptions
based on interpretation of tax laws and regulations, and the Group’s past
experience. It is possible that new information will become known in
future periods that will cause the final tax outcome to be different from the
amounts that were initially recorded, such differences will impact the
current and deferred income tax assets and liabilities in the period in
which such determination is made. See also note 2j and note 10.
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94
Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 4 – Trading income
The Trading income attributed to geographical areas according to the location of the customer is as follows:
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US dollars in millions
European Economic Area (EEA)*
United Kingdom
Australia
Rest of the World
* Other than the United Kingdom which is presented separately in the table above.
Note 5 – Selling and marketing expenses
US 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
Other
Year ended 31 December
2019
150.9
38.6
51.2
113.8
354.5
Year ended 31 December
2019
14.9
2.2
1.9
8.1
87.5
15.8
7.2
0.4
0.9
138.9
2020
365.3
109.9
112.0
285.3
872.5
2020
18.0
4.8
6.6
16.9
204.2
53.0
8.4
0.6
2.9
315.4
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Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 6 – Administrative and general expenses
US 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
Depreciation and amortisation
Note 7 – Operating expenses
US dollars in millions
Employee benefit and other related expenses
IT and Technology costs
Commissions to processing companies
Advertising, marketing and commission to agents
Professional and regulatory fees
Depreciation and amortisation
Other
Year ended 31 December
2019
7.7
3.0
1.8
5.8
2.8
0.5
0.9
0.8
2.2
25.5
Year ended 31 December
2019
31.5
28.6
15.8
74.2
5.8
2.2
6.3
164.4
2020
8.0
6.8
6.6
14.6
2.7
0.1
0.9
1.5
2.3
43.5
2020
50.8
55.3
53.0
174.2
14.6
2.3
8.7
358.9
In the year ended 31 December 2020 and 2019, IT and Technology costs together with additional allocated other technological related costs
were $70.3 million and $40.3 million, respectively.
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Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 8 – Auditors’ remuneration
US dollars in millions
Audit of 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
Note 9 – Share based compensation
a. Cash settled share based compensation programs
Year ended 31 December
2020
2019
0.2
0.3
0.5
0.1
0.2
0.3
0.8
0.2
0.3
0.5
0.1
0.2
0.3
0.8
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1. Background
The Group grants “Share Appreciation Rights” to selected employees and service contractors upon approval of the Board of Directors
and management (the “Grant”).
The rights are settled in cash at the end of the period of two or three years after the Grant date for those who remain employed
or continue to render services as a service contractor by the Group.
The rights represent the total amount of the 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 (the “Share Price on Grant Date”).
As of the end of each period, the fair value of the rights is calculated by the total Grant amounts 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) including dividends paid between the grant date and the end of each period (or the vesting
date) 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 end of each period, as prorated over the period.
2. The following table specifies the dates of grants and the grant rights as of each date
Grant date
Settlement date
31 December 2017
31 December 2019
19 March 2018
1 July 2018
19 March 2020
1 July 2020
30 December 2018
30 December 2020
31 December 2019
31 December 2021
31 December 2019
31 December 2022
12 February 2020
12 February 2022
31 August 2020
31 August 2022
30 December 2020
30 December 2022
30 December 2020
30 December 2023
* Share price in GBP pence on grant date
Share price
(GBP)*
Number of
rights granted*
Number
of employees
943.23
1,075.70
1,528.93
1,349.80
797.85
797.85
855.46
1,303.93
1,507.08
1,507.08
3,321
286
58
3,490
3,503
2,925
40
97
2,342
647
72
1
5
107
105
5
2
6
127
3
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Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 9 – Share based compensation continued
a. Cash settled share based compensation programs ccoonnttiinnuueedd
3. Cash settled share based compensation liability
US dollars in millions
Current liability
Non-current liability
4. Cash settled share based compensation expenses
US dollars in millions
Selling and marketing expenses
Administrative and general expenses
5. Cash settled share based – number of rights outstanding
Opening balance as at 1 January
Rights granted
Rights vested
Rights forfeited
Closing balance as at 31 December
2020
7.4
1.8
9.2
2020
6.6
5.1
11.7
2020
10,210
3,126
(3,668)
(900)
8,768
As at 31 December
2019
4.8
–
4.8
Year ended 31 December
2019
1.9
1.8
3.7
Number of rights
2019
7,071
6,428
(3,187)
(102)
10,210
During 2020 and 2019, 3,668 and 3,187 rights were vested in total amount of $8.6 million and $4.7 million, respectively. The average vesting
price per granted right was approximately $2,351 and $1,475, respectively.
b. Equity settled share based compensation programs
Background
The Group grants long term incentive plans (“LTIP”) to selected employees located outside of Israel and service contractors (the “LTIP Grants”).
The Group grants Restricted Stock Units (“RSUs”) to selected employees located in Israel (the “RSUs Grants”).
In respect of certain projects, the Group grants bonuses with a partial deferred element settled in ordinary shares of the Company to selected
service contractors (the “Deferred Bonuses”).
During 2020, the Group recognised $1.5 million as expenses in respect of the equity share based compensation plans and Deferred Bonuses in
the statement of comprehensive income as administrative and general expenses and an amount of $0.3 million booked to retained earnings.
On 31 December 2020, the Company issued 5,280 of its treasury shares, in accordance with the Deferred Bonuses plan of 2019. The Company
recognised the value of the issued shares on 31 December 2020 according to the fair value measured on 1 January 2019.
As of 31 December 2020, retained earnings include an amount of $1.7 million in respect of the equity share based compensation and
Deferred Bonuses plans.
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98
98
Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 9 – Share based compensation continued
b. Equity settled share based compensation programs ccoonnttiinnuueedd
1. LTIP Grants
The following table specifies the dates of LTIP Grants and the number of ordinary shares as of each date, as granted for employees and service contractors.
Grant date
1 January 2019
1 January 2020
Settlement date
1 January 2022
1 January 2023
* Share price in GBP pence on grant date
Share
price
(GBP)*
1,370
886
Number
of ordinary
shares granted
Number
of employees and
service contractors
15,259
75,627
1
7
On 1 January 2019 and on 1 January 2020, LTIP Grants of NIS 1,000,000 for each grant, were granted to a former service contractor of the
Company. As of 31 December 2020, the grants were forfeited as the continuance service condition was not achieved. The table above does not
include those grants. The number of ordinary shares granted on grant date 1 January 2020 and 1 January 2019 and which were forfeited were
24,837 and 15,259 ordinary shares, respectively.
The 2019 LTIP Grant is subject to service condition and is not subject to any additional KPIs or conditions.
The 2020 LTIP Grant is subject to service condition and additional KPIs as follows:
KPI
TSR
%
40%
EPS
40%
DESCRIPTION
Subject to achieving the three-year FTSE 250 TSR target and calculated
on a linear basis, with 30% payable upon achievement of median TSR
for FTSE 250 and 100% payable upon achievement of upper quartile TSR
for FTSE 250
Subject to achieving the three-year compounded annual EPS growth rate
and calculated on a linear basis, with 30% payable upon achievement of 5%
compounded annual EPS growth rate and 100% payable upon achievement
of 12% compounded annual EPS growth rate
TYPE OF CONDITION
Market
Performance
HR
20%
Subject to achieving HR criteria related to churn and growth of specific departments Performance
The fair value at grant date of the LTIP Grant is measured according to the value of the grant amount and expensed over the vesting period
with a corresponding increase in equity, taking into account the best available estimate of the number of shares expected to vest under the
service and performance conditions.
On the third anniversary of the grant date, and subject to fulfilling the service, the Company shall allot to the employee or service contractor,
ordinary shares with an aggregate value of up to the initial value granted on the grant date, subject to achieving specific KPIs as described in
the table above for each plan.
The number of ordinary shares allotted on the vesting date shall be calculated based on the ordinary share price at grant date as specified in
the table above for each plan, as adjusted for dividends (with any amounts adjusted for dividends payable in cash).
The allotted ordinary shares will be transferred out of the treasury shares of the Company.
The ordinary shares allotted on the vesting date shall be subject to a two-year lock-up beginning on the vesting date.
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99
99
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 9 – Share based compensation continued
b. Equity settled share based compensation programs ccoonnttiinnuueedd
2. RSUs Grants
The following table specifies the dates of RSUs Grants and the number of units as of each date.
Grant
date
Vesting
date
Share price
(GBP)*
Number of
RSUs granted
Number of
employees
1 January 2020
1 January 2023
886
116,045
8
* Share price in GBP pence on grant date
Each RSU represents the right to receive one ordinary share, par value of NIS 0.01 per share, subject to the terms and conditions of the
grant as approved by the Board of Directors and in accordance with the provisions of the Capital Gain route under Section 102 of the Israeli Tax
Ordinance and regulations (“ITO”) (the “102 Capital gain Route”).
The employees are entitled to the RSUs upon completing a three years’ service period in addition to KPIs as follows:
KPI
TSR
%
40%
EPS
40%
Description
Subject to achieving the three-year FTSE 250 TSR target and calculated on a linear
basis, with 30% payable upon achievement of median TSR for FTSE 250 and 100%
payable upon achievement of upper quartile TSR for FTSE 250
Type of condition
Market
Subject to achieving the three-year compounded annual EPS growth rate and calculated
on a linear basis, with 30% payable upon achievement of 5% compounded annual EPS
growth rate and 100% payable upon achievement of 12% compounded annual EPS
growth rate
Performance
HR
20%
Subject to achieving HR criteria related to churn and growth of specific departments
Performance
On the vesting date, the employees shall be entitled to a cash payment equal to the aggregate dividends paid in cash to shareholders that were
payable from 1 January 2020 up to 31 December 2022 with respect to the number of issued shares that were actually allotted to the employee
on the vesting date with respect to the RSUs.
The allotted ordinary shares will be transferred out of the treasury shares of the Company. On the vesting date, the shares will be transferred
to the trustee by the Company.
The ordinary shares allotted on the vesting date shall be subject to a two-year lock-up period beginning on the vesting date.
3. Deferred bonus Grants
The following table specifies the dates of Deferred Bonuses grants and the number of shares as of each date.
The service providers are entitled for the Deferred Bonuses upon completing a year service period in addition to KPIs.
The deferred bonuses shall be paid in three equal instalments beginning on 31 December of the year after the vesting date, by way of allotment
of ordinary shares of the Company. The number of ordinary shares allotted on any Deferred Payment Date shall be calculated based on the
ordinary share price on grant date, as adjusted for dividends.
Grant date
Vesting date
1 January 2019
1 January 2020
31 December 2019
31 December 2020
* Share price in GBP pence on grant date
Share price
(GBP)*
Number of ordinary
shares on grant date
Number of
Service contractors
1,370
886
13,834
56,298
2
2
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100
100
Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 10 – Income tax expense
Law for the Encouragement of Capital Investments, 5719-1959
The Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment Law, provides certain incentives for
capital investments in production facilities (or other eligible assets) by “Industrial Enterprises” (as defined under the Investment Law).
New Tax benefits under the 2017 Amendment that became effective on 1 January 2017 (“2017 Amendment”)
The 2017 Amendment was enacted as part of the Economic Efficiency Law that was published on 29 December 2016, and is effective as
of 1 January 2017. The 2017 Amendment provides new tax benefits for two types of Technology Enterprises, as described below, and is in
addition to the other existing tax beneficial programs under the Investment Law.
The 2017 Amendment provides that a technology company satisfying certain conditions will qualify as a Preferred Technology Enterprise and will
thereby enjoy a reduced corporate tax rate of 12% on income that qualifies as Preferred Technology Income, as defined in the Investment Law.
Dividends distributed by a Preferred Technology Enterprise, paid out of Preferred Technology Income, are generally subject to withholding tax
at source at the rate of 20% or such lower rate as may be provided in an applicable tax treaty (subject to the receipt in advance of a valid
certificate from the Israel Tax Authority allowing for a reduced tax rate).
a. Company taxation in Israel
The full corporate tax rate in Israel for the years 2020 and 2019 was 23%.
Under the amendment of the Encouragement of Capital Investment Law which became effective in January 2017, provided the conditions
stipulated therein are met, technological income derived by Preferred Companies from “Preferred Technological Enterprise” (as defined in the
2017 Amendment) (“PTE”), would be subject to reduced corporate tax rates of 12%.
A Preferred Company distributing dividends from technological income derived from its PTE, would subject the recipient to a 20% tax
(or lower, if so provided under an applicable tax treaty).
In May 2019 the Company obtained a tax ruling from the Israeli Tax Authorities (“ITA”) and subject to the Company complying with the
conditions stipulated by the tax ruling which the Company met and the Encouragement of Capital Investment Law, the Company
is considered as a PTE. As a result, the Company’s corporate tax rate for the years 2020 and 2021 is 12%.
At the beginning of July 2020, the Company received an approval from the Israeli Innovation Authority that together with the tax ruling received
from the ITA in May 2019, recognising the Company as a PTE for the years 2017, 2018 and 2019. Accordingly, the applicable tax rates
for the preferred technological income of a PTE for these years is 12%. Corporate tax rate for the years 2017, 2018 and 2019 was 24%, 23% and
23%, respectively.
In July 2020 the Company received approximately $47.0 million rebates (including interest) reflecting the reduced tax rate for tax year 2018.
A rebate in respect of the year 2017 was received in January 2021 (refer to note 26) and a rebate in respect of the year 2019 is expected to be
received from the ITA in 2021.
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101
101
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 10 – Income tax expense continued
b. Tax assessments
The Company is currently subject to several tax audits in relation to 2017–2020 tax years.
The assessments of amounts of current and deferred taxes requires the Group’s management to take into consideration uncertainties that its
tax position will be accepted and of incurring any additional tax expenses. This assessment is based on estimates and assumptions based on
interpretation of tax laws and regulations, and the Group’s past experience. It is possible that new information will become known in future
periods that will cause the final tax outcome to be different from the amounts that were initially recorded, such differences will impact the
current and deferred income tax assets and liabilities in the period in which such determination is made.
c. Corporate taxation in subsidiaries
Subsidiary
UK
CY
AU
Principal tax rate
2020
19%
12.5%
30%
2019 Tax regulation
19% Tax laws in United Kingdom
12.5% Tax laws in Cyprus
30% 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.
d. Deferred income taxes
The deferred income taxes relate mainly to payroll and related expenses of the cash settled share-based compensation plans (see note 9).
The deferred tax assets were computed in 2020 and 2019 at tax rates of 12% and 23%, respectively and a portion of $1.0 million will be settled
in 2021.
e. Taxes on income included in the consolidated income statements for the reported periods
Year ended
31 December
2020
2019
78.7
(55.1)
23.6
(0.4)
23.2
37.3
–
37.3
0.3
37.6
US dollars in millions
Current taxes:
Current taxes in respect of current year’s profits
Tax income in respect of previous years
Deferred income taxes:
Change of deferred tax assets (see d above)
Taxes on income expenses
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102
102
Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 10 – Income tax expense continued
f. Reconciliation of the theoretical tax expense
Following is a reconciliation of the theoretical tax expense, assuming all income is taxed at the regular corporate tax rate applicable to
a Company in Israel (note 10a above) and the actual tax expense:
US dollars in millions
Income before taxes on income, as reported in the consolidated income statements
Year ended
31 December
2020
2019
523.3
189.3
Theoretical tax expense in respect of this year’s income – at 23%
120.4
43.5
Less tax benefits arising from preferred technological income in respect of the current year
Decrease in taxes resulting from different tax rates applicable to foreign subsidiaries
Increase in deferred tax expenses as a result of the decrease in the applicable tax rate for preferred technological income
Decrease in taxes in respect of currency differences and expenses not deductible for tax purposes
Tax income in relation to previous years
Taxes on income for the reported period
Note 11 – Earnings per share
(33.8)
(0.5)
0.3
(8.1)
(55.1)
–
(2.9)
–
(2.9)
(0.1)
23.2
37.6
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.
Profit attributable to equity holders of the Company (in US dollars)
500,147,555
151,657,311
Year ended 31 December
2020
2019
Weighted average number of ordinary shares in issue*:
Basic
Dilutive effect of equity share-based payments
Diluted
Earnings per share (basic and diluted in US dollars)
* After weighting the effect of the buyback programme. See note 12
106,086,540
112,460,599
212,352
32,184
106,298,892
112,492,783
4.71
1.35
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103
103
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 12 – Acquisition of the Company’s shares held by the Company
The Board of Directors approves share buyback programmes. The share buyback programmes are funded from the Company’s net
cash balances.
Year ended
31 December
2019
2020
Number of ordinary
shares purchased
Aggregate purchase amount
(US $ in millions)
Average price
of shares purchased
4,746,566
5,584,528
47.2
88.8
£8.19
£12.66
On 31 December 2020, the Company issued 5,280 of its treasury shares, in accordance with the deferred bonuses plan of 2019 (see note 9).
During the period starting 1 January 2021 and up to the signing date of the consolidated financial statements (see note 26), the Company
repurchased an additional 1,461,963 ordinary shares (or 1.3%) in the capital of the Company for an aggregate purchase amount of $27.5 million
pursuant to these share buyback programmes. The ordinary shares were bought back at an average price of £13.61.
Note 13 – Dividend
The amounts of dividends for the years 2020 and 2019 declared and distributed by the Company’s Board of Directors are as follows:
Date of declaration
12 February 2019
13 August 2019
12 February 2020
11 August 2020
Amount
of dividend
US $ in millions*
Amount
of dividend per share
US $
Date of
payment to shareholders
70.2
30.9
40.6
101.0
0.6191
0.2734
0.3767
0.9531
9 July 2019
28 November 2019
13 July 2020
11 November 2020
On 17 February 2021 the Company declared a final dividend and a special dividend in the amounts of $55.6 million and $29.4 million,
respectively. See note 26.
* Between the dividend announcement date and the record date of the dividend, the number of issued and outstanding ordinary shares of the Company decreased as a result of the
repurchase by the Company of ordinary shares during such period and the classification of such repurchased ordinary shares as treasury shares that are not entitled to dividends.
However this did not affect the dividend per share as announced on the dividend announcement date.
Note 14 – Other receivables
US dollars in millions
Prepaid expenses
Other
As of 31 December
2019
7.8
4.1
11.9
2020
6.6
3.4
10.0
As of 31 December 2020 and 2019, the total amount of prepaid expenses includes mainly expenses related to the Company’s sponsorship
agreements (see note 21).
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.
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104
104
Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 15 – Property, plant and equipment
Composition of assets, grouped by major classifications and changes therein in 2020 is as follows:
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Computers and
office equipment
Leasehold
improvements
Other
Total
US 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 2020
Depreciated balance as of 31 December 2019
Note 16 – Cash and cash equivalents
Cash and cash equivalents by currency of denomination:
US dollars in millions
USD
EUR
GBP
AUD
NIS
Other
Gross cash and cash equivalents
Less: segregated client funds
Own cash and cash equivalents
1.7
0.3
2.0
1.4
0.2
1.6
0.4
0.3
3.8
–
3.8
1.5
0.4
1.9
1.9
2.3
0.3
–
0.3
0.1
–
0.1
0.2
0.2
5.8
0.3
6.1
3.0
0.6
3.6
2.5
2.8
2020
543.3
250.7
91.2
90.0
18.1
69.5
1,062.8
(468.9)
593.9
As of 31 December
2019
275.5
104.9
12.4
23.7
12.5
26.5
455.5
(162.6)
292.9
ii
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mm
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105
105
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 17 – Other payables
US dollars in millions
Payroll and related expenses
Accrued expenses
Other
As of 31 December
2019
8.5
1.6
0.2
10.3
2020
19.0
3.6
0.2
22.8
The financial liabilities included among other payables and accruals are for relatively short periods; therefore, their fair values approximate or
are identical to their carrying amounts.
Note 18 – 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 19 – Trade payables – due to clients
US 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
* As of 31 December 2020 and 2019, the total amount of ‘Trade payables – due to clients’ includes bonuses to the clients
2020
469.9
(468.9)
1.0
As of 31 December
2019
162.8
(162.6)
0.2
507.2
221.1
(123.8)
86.5
469.9
(68.3)
10.0
162.8
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106
106
Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 20 – Leases
The Group has real estate lease agreements.
a. Rights-of-use assets
Real estate leases
At 1 January 2019
Additions
Amortisation
At 31 December 2019
Additions
Amortisation
At 31 December 2020
b. Lease liabilities
Real estate leases
At 1 January 2019
Additions
Interest expense
Lease payments
Exchange differences
At 31 December 2019
Additions
Interest expense
Lease payments
Exchange differences
At 31 December 2020
US dollars in millions
6.7
0.2
(1.6)
5.3
2.4
(1.7)
6.0
US dollars in millions
6.7
0.2
0.3
(1.8)
0.3
5.7
2.4
0.2
(1.8)
0.4
6.9
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107
107
Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 21 – Commitments
a. The Company and Club Atlético de Madrid, S.A.D. (“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. On 24 April 2020 the Company and Atlético Madrid signed an extension of the agreement for the season 2021/22.
b. The Company and Brumbies Rugby, the Australian professional rugby union team (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. On 19 September 2020, the Company and the Brumbies signed an addendum to extend the
agreement for the season from 1 January 2021 to 31 December 2021.
c. The Company and Club BSC Young Boys Betriebs AG (“BSC Young Boys”) entered into a sponsorship agreement on 2 June 2020
under which the Company is entitled to advertise and promote itself as the main sponsor of BSC Young Boys for the 2020/21, 2021/22
and 2022/23 seasons.
d. The Company and Club Legia Waeszawa S.A (“Legia”) entered into a sponsorship agreement on 9 August 2020 under which the Company is
entitled to advertise and promote itself as the main sponsor of Legia for the 2020/21, 2021/22 and 2022/23 seasons.
e. The Company and Club Atalanta Bergamasca Calcio SPA (“Atalanta”) entered into a sponsorship agreement on 18 August 2020 under which
the Company is entitled to advertise and promote itself as the main sponsor of Atalanta for the 2020/21, 2021/22 and 2022/23 seasons.
Note 22 – 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 ordinary shares 31 December
2020
2019
300,000,000
300,000,000
114,888,377
114,888,377
(11,436,923)
(5,857,675)
103,451,454
109,030,702
* Number of accumulated ordinary shares that were purchased by the Company as part of the share buyback programmes, less issue of treasury shares.
Note 23 – Related parties and key management
a. Key management personnel definition
The Board of Directors and other members of management are classified as Persons Discharging Management Responsibility (“PDMR”) in
accordance with IAS 24 and the Market Abuse Regulation.
The Directors’ Remuneration Report discusses all the benefits and share-based payments earned during the year and the preceding year
by the Directors.
b. Company’s liability in respect of related parties and key management services (part of Other Payable)
US dollars in millions
Related party and Key Management liability
As at 31 December
2019
5.3
2020
13.6
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Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 23 – Related parties and key management continued
c. Expenses to related parties and key management
US dollars in millions
Service fees (Selling and marketing expenses)
Service fees (Administrative and general expenses)
Non-Executive Directors fees (Administrative and general expenses)
The average number of key management personnel during the year was 23 (FY 2019: 20).
Note 24 – Financial risk management
Year ended 31 December
2020
7.1
13.5
0.6
2019
4.3
7.0
0.6
The Group operates in the field of CFDs for individual clients only and offers CFDs referenced to shares, indices, commodities, options, ETFs,
cryptocurrencies and foreign exchange.
The Group’s 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.
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
market conditions and the levels of client activity. The Group utilises market position limits for operational efficiency. Not all net client exposures
are hedged and the Group may have a substantial net position in any of the financial markets in which it offers products. In FY 2021, the
Company implemented targeted hedging, with a view to reducing market risk. This focused approach will continue to be deployed in certain
circumstances going forward, as and when appropriate.
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.
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.
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.
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Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 24 – Financial risk management continued
a. Market risk ccoonnttiinnuueedd
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 risk.
The Group has market price risk as a result of its CFDs trading activities on shares, indices, commodities, options, ETFs, cryptocurrencies
and foreign exchange, 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 department and management for each product, and also for groups of products where it is considered that
their price movements are likely to be positively correlated. The exposures are being reviewed by the Risk & Regulatory Committee.
Daily profit on closed positions:
US dollars in millions
Highest profit
Highest loss
Average
2020
76.9
(20.9)
2.4
2019
7.6
(4.7)
0.9
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.
If the US dollar had strengthened by 1% in respect of balances denominated in other currencies, with all other variables unchanged, the exposure
on income after taxes in respect of those balances would be a gain (loss) of:
US dollars in millions
EUR
AUD
GBP
As of 31 December
2019
0.1
(0.1)
0.3
2020
(0.5)
(0.9)
0.1
The exposure in respect of balances denominated in other currencies is immaterial.
b. Credit risk
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, customers cannot owe the Group funds when losing more than they have in their accounts, all customer accounts
are pre-funded.
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, customer 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.
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Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 24 – Financial risk management continued
b. Credit risk ccoonnttiinnuueedd
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 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 2020 and 2019 counterparties holding of the Group’s cash and cash equivalents, credit cards, client funds and deposits
have credit ratings as follows:
Credit Rating*
AA+ to AA-
A+ to A-
BBB+ to B+
Remaining counterparties
* The financial institutions were rated by the same third party
2020
27%
46%
25%
2%
2019
26%
42%
25%
7%
As of 31 December 2020 the amounts held by the remaining counterparties are held in a few banks worldwide. The balance in each of those
banks does not exceed 1% (2019: 3%) 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 2020 was $217.1 million or 20% of the exposure to all banks
(2019: $79.9 million or 18%).
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.
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.
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 to service suppliers is generally up to two months.
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Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 24 – Financial risk management continued
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.
As of 31 December 2020 and 2019, the UK Subsidiary had £41.8 million and £35.1 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 2020 and 2019, the regulatory capital of the CY Subsidiary was €71.7 million and €71.7 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 2020 and 2019, Pillar 1 Capital Adequacy ratio was 17.9% and 31.2% 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, FMA and FSCA.
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 (NTA) assessment in accordance with rules
and guidelines implemented by ASIC and FMA and Capital Liquidity assessment in accordance with rules and guidelines implemented by FSCA.
As at 31 December 2020 and 2019, the AU Subsidiary held Net Tangible Assets of AUD 33.2 million and AUD 21.1 million, respectively,
of regulatory capital, which is in excess of its NTA requirements from ASIC, FMA and FSCA.
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 2020 and 2019, the SG Subsidiary held regulated capital of SGD 7.8 million and SGD 7.2 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 2020 and 2019, the IL Subsidiary held regulated capital of $10.2 million and $8.0 million, respectively, of regulatory capital,
which is in excess of its ISA requirements.
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Plus500 Ltd. 2020 Annual Report
Financial statements
continued
Note 24 – Financial risk management continued
e. Capital Management ccoonnttiinnuueedd
6. Plus500SEY
The SEY Subsidiary is regulated by the FSA.
The SEY 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 SEY Subsidiary manages its capital in accordance with rules and guidelines implemented by FSA.
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 actions, tax or legal challenges against the Group for non-compliance with any regulatory or legal
requirement could result in significant fines, penalties, or other enforcement actions, increased costs of doing business through adverse
judgement 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
19) 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 markets 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 (trading spread).
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Plus500 Ltd. 2020 Annual ReportStrategic reportGovernanceFinancial statements
Financial statements
Notes to the consolidated financial statements
continued
Note 25 – Cash generated from operations
US dollars in millions
Cash generated from operating activities
Net income for the period
Adjustments required to reflect the cash flows from operating activities:
Year ended 31 December
2020
2019
500.1
151.7
Depreciation and amortisation
Amortisation of right of use assets
Liability for share-based compensation
Settlement of share-based compensation
Equity share-based compensation
Taxes on income
Interest expenses in respect of leases
Exchange differences in respect of leases
Interest income
Foreign exchange gains on operating activities
Operating changes in working capital:
Decrease (increase) in other receivables
Increase (decrease) in trade payables due to clients
Increase (decrease) in other payables
Increase (decrease) in Service suppliers
Cash generated from operating activities
Note 26 – Subsequent events
0.6
1.7
11.7
(5.2)
1.8
23.2
0.2
0.4
(5.2)
(8.3)
20.9
1.9
0.8
10.4
12.5
25.6
546.6
0.6
1.6
3.7
(7.5)
–
37.6
0.3
0.3
(4.8)
(0.3)
31.5
0.1
(0.1)
(8.8)
(4.3)
(13.1)
170.1
In January 2021 the Company received from the ITA approximately a $30.0 million rebate (including interest) reflecting the reduced tax rate
for 2017. This amount is not reflected in the consolidated financial statements for the period ended 31 December 2020.
On 17 February 2021 the Company declared a final dividend in an amount of $55.6 million ($0.5422 per share). The dividend is due to be paid
to the shareholders on 12 July 2021.
On 17 February 2021 the Company declared a special dividend in an amount of $29.4 million ($0.2870 per share). The dividend is due to be
paid to the shareholders on 12 July 2021.
On 17 February 2021, the Board of Directors has resolved in principle to conduct a new share buyback programme to buy back an amount of
up to $25.0 million of the Company’s ordinary shares.
During the year 2021 up to the signing date of the consolidated financial statements for the year ended 31 December 2020, the Company has
continued to purchase its own shares under the share buyback programme. See note 12.
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Plus500 Ltd. 2020 Annual Report
Further information
Advisors
Sponsor and Joint Broker
Financial PR
Depositary
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY, UK
Joint Broker
Credit Suisse International
1 Cabot Square, Canary Wharf
London E14 4QJ, UK
Independent Auditors
Kesselman & Kesselman, a member
firm of PricewaterhouseCoopers
International Limited
Trade Tower
25 Hamered Street
Tel Aviv 6812508, Israel
MHP Communications
60 Great Portland Street
London W1W 7RT, UK
Legal Advisor (Israel)
Herzog, Fox & Neeman
4 Weizmann Street
Tel Aviv 6423904, Israel
Legal Advisor (United Kingdom)
Bryan Cave Leighton Paisner LLP
Adelaide House
London Bridge
London EC4R 9HA, UK
Link Market Services Trustees Limited
The Registry
Central Square,
29 Wellington Street
Leeds LS1 4DL, UK
Registrar
Link Market Services Limited
The Registry
Central Square,
29 Wellington Street
Leeds LS1 4DL, UK
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