Company Announcements

17 August 2022

Plus500 Ltd.

("Plus500", the "Company" or together with its subsidiaries the "Group")

Interim results for the six month period ended 30 June 2022

Plus500, a global multi-asset fintech group operating proprietary technology-based trading platforms, today announces its interim results for the six month period ended 30 June 2022[1].

Another outstanding performance, driven by continued engagement with long term, higher value customers:

-       Group revenue up 48% to $511.4m (H1 2021: $346.2m)

-       EBITDA up 63% to $305.3m (H1 2021: $187.6m)

-       EBITDA margin of 60% (H1 2021: 54%)

-       Basic earnings per share) EPS( up 52% to $2.46 (H1 2021: $1.62)

-    Over 23 million customers registered on the Group's platforms since inception, providing significant inherent  potential value and demonstrating Plus500's leadership position

-      82% of OTC[2] revenue derived from customers trading with Plus500 for more than a year

-    Customer deposits of $1.2 billion (H1 2021: $1.1 billion), emphasising customer confidence in Plus500 and resilience of its trading platforms

Significant headway made against the Group's strategic roadmap in delivering on major growth opportunities:

-       Strong progress achieved in accessing the substantial opportunities in the US futures market:

o Institutional opportunity - strategic position built as market infrastructure provider, supporting institutional clients with brokerage-execution and clearing services

o  Retail opportunity - intuitive new trading platform expected to be launched in Q3 2022 for the growing US retail futures market

-   Expansion into Japan during the period through acquisition of a regulated entity, providing access to the substantial Japanese retail trading market

-      New licence obtained in Estonia, further supporting the Group's OTC product offering in Europe

-      Continued roll-out of 'Plus500 Invest', the Group's proprietary share dealing platform

-     Launch of the Group's first major global advertising campaign, featuring actor Kiefer Sutherland, to drive global brand awareness in key strategic markets 

Further attractive returns delivered to shareholders - increased share buyback momentum:

-    Total shareholder returns in respect of H1 2022 of $170.4m, including $110.2m in share buybacks and $60.2m in dividends:

o  $60.2m new share buyback programme announced today

o  $50.0m special buyback programme announced on 13 April 2022, in line with preference for share buybacks highlighted by major Plus500 shareholders

o  $60.2m interim dividend declared today, representing $0.6238 per share

-      Updated shareholder returns policy:

o  At least 50% of net profits will continue to be paid to shareholders through share buybacks and dividends on a half-yearly basis

o  From H2 2022, at least 50% of shareholder returns to be made by way of share buybacks

o  Special share buybacks, or other distributions, will also be considered on a half yearly basis

Plus500's financial position remains extremely healthy, supported by a robust business model:

-    Cash balances of $995.5m at the end of H1 2022 (H1 2021: $722.5m), with no debts or loans since inception, enabling continued investment in future growth

-   Capital maintained for required regulatory purposes, working capital and other factors to enable additional growth, currently estimated to be approximately $525m

-      On-going strong Operating cash conversion[3] of 113%

The Board remains confident about the outlook for Plus500 for FY 2022 and beyond:

-     Following several positive upgrades to market expectations related to Plus500's financial performance, which took place earlier this year, the Board remains optimistic about the Group's performance, with sustainable growth to be delivered over the medium to long term

Financial Highlights:

Operational Highlights:

David Zruia, Chief Executive Officer, commented:

"Plus500 produced another outstanding performance in the first half of 2022, driven by the power of our market-leading proprietary technology and our consistent ability to attract and retain higher value customers over the long term. With continued operational and financial momentum being achieved, we also made substantial progress in delivering against our strategic priorities, in particular the major growth opportunities in the US, where we are continuing to make significant on-going investment, also by becoming a full clearing member of the CME Group exchanges.

"To highlight the Board's view of the current value of the Company's shares and our continued confidence in the future of Plus500, the Company has delivered further elevated levels of returns to shareholders so far this year, with $170.4m in respect of H1 2022, comprising interim dividend in the amount of $60.2m, a new share buyback programme in the amount of $60.2m and a special buyback programme of $50.0m announced in April 2022. The Board continues to expect that Plus500 will deliver sustainable growth over the medium to long term".

Investor/analyst conference call:

Plus500 will host an audiocast for investors and analysts at 9.00 a.m. UK time today, which can be accessed via the following link: https://www.investis-live.com/plus500/62e0158b0d356d310002c72f/lkjh. The audiocast can also be accessed by dialing +44 20 3936 2999 and using the following access code: 566840.

The presentation materials and a recording of the audiocast will be available in due course at https://investors.plus500.com/Reports/Presentation.

For further details:

About Plus500

Plus500 is a global multi-asset fintech group operating proprietary technology-based trading platforms. Plus500 offers customers a range of trading products, including OTC ("Over-the-Counter" products, namely Contracts for Difference (CFDs)), share dealing, as well as futures and options on futures.

The Group retains operating licences and is regulated in the United Kingdom, Australia, Cyprus, Israel, New Zealand, South Africa, Singapore, the Seychelles, the United States, Estonia and Japan and through its OTC product portfolio, offers more than 2,500 different underlying global financial instruments, comprising equities, indices, commodities, options, ETFs, foreign exchange and cryptocurrencies. Customers of the Group can trade its OTC products in more than 50 countries and in 30 languages. Plus500 does not permit customers located in the US to trade its OTC products.

Plus500 does not utilise cold calling techniques and does not offer binary options. Plus500's trading platforms are accessible from multiple operating systems (Windows, iOS and Android) and web browsers. Customer care is and has always been integral to Plus500, as such, OTC customers cannot be subject to negative balances. A free demo account is available on an unlimited basis for OTC trading platform users and sophisticated risk management tools are provided free of charge to manage leveraged exposure, and stop losses to help customers protect profits, while limiting capital losses.

Plus500 shares have a premium listing on the Main Market of the London Stock Exchange (symbol: PLUS) and are a constituent of the FTSE 250 index. www.plus500.com

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain. 

Forward looking statements

This announcement contains statements that are or may be forward-looking statements. All statements other than statements of historical facts included in this announcement may be forward-looking statements, including statements that relate to the Group's future prospects, developments and strategies. The Company does not accept any responsibility for the accuracy or completeness of any information reported by the press or other media, nor the fairness or appropriateness of any forecasts, views or opinions express by the press or other media regarding the Group. The Company makes no representation as to the appropriateness, accuracy, completeness or reliability of any such information or publication.

Forward-looking statements are identified by their use of terms and phrases such as "believe", "targets", "expects", "aim", "anticipate", "project", "would", "could", "envisage", "estimate", "intend", "may", "plan", "will" or the negative of those, variations or comparable expressions, including references to assumptions. The forward-looking statements in this announcement are based on current expectations and are subject to known and unknown risks and uncertainties that could cause actual results, performance and achievements to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements. Factors that may cause actual results to differ materially from those expressed or implied by such forward looking statements include, but are not limited to, those described in the Risk Management Framework section of the Company's most recent Annual Report. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of the Group and the environment in which it is and will operate in the future. All subsequent oral or written forward-looking statements attributed to the Company or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above. Each forward-looking statement speaks only as at the date of this announcement. Except as required by law, regulatory requirement, the Listing Rules and the Disclosure Guidance and Transparency Rules, neither the Company nor any other party intends to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

Review of H1 2022 Results

Another outstanding operational and financial performance

Plus500 delivered another outstanding performance during H1 2022, which included the new operations in the US, supported by the capability and strength of the Group's market-leading proprietary technology in accessing significant new market opportunities.

This strong performance was driven by Plus500's ability to attract and retain higher-value customers, despite exogenous lower trading volumes experienced across the financial industry as a whole during the period.

The Group's robust financial position, including cash balances of $995.5m at period end, will continue to fund Plus500's position in the US futures market, as well as the Group's investment in future growth, through organic investments and targeted acquisitions to access new markets and launch new products. The Group's healthy financial position also enables further attractive returns to be delivered to shareholders, through share buybacks and dividend payments.

Plus500 maintained its market-leading positions in key strategic markets and was ranked as the number one OTC provider in the UK[8], Germany[9] and Spain[10] for its OTC product offering.

85% of the Group's OTC revenue in H1 2022 was generated from customers trading on mobile or tablet devices (H1 2021: over 82%) with 82% of OTC customer trades taking place on mobile or tablet devices in H1 2022 (H1 2021: over 78%). These increases highlight Plus500's continued market leadership and focus on innovation in this area.

Following the Group's excellent performance in H1 2022, and driven by its market-leading proprietary technology, Plus500 remains well positioned to access significant opportunities to grow and diversify its business operations, particularly in the US futures market, to ensure further value is delivered for shareholders.

Significant strategic progress made in H1 2022

Plus500 made substantial progress in developing its position as a global multi-asset fintech group during H1 2022, based on a strategic roadmap of entering new markets, launching new products and deepening engagement with customers. The Group will continue to invest in future growth, through further organic investments and by actively targeting additional acquisitions.

Major growth opportunities in the US futures market - institutional and retail

Plus500 has established a strong and growing position in the futures market in the US, supported by the Group's best-in-class technology and its robust financial position.

To optimise the significant retail trading opportunity, Plus500 is expected to launch in Q3 2022 an intuitive new trading platform to trade on futures, specifically designed and tailored for retail traders. This will enable the Group to benefit from the continued increase in accessibility to the futures market for the retail trading community, further benefiting from the on-going efforts by the various related exchanges in this regard.

Plus500 has also built a new strategic position as a market infrastructure provider for institutional clients in the US futures market, supporting them with its brokerage-execution and clearing services. This is supported by Plus500 becoming a full Clearing Firm Member of the CME Group exchanges during the period, and will be driven by Plus500's healthy balance sheet and its highly differentiated technological capabilities. In addition, the Group is already making progress in expanding its clearing capabilities with other exchanges in the global futures market. 

Furthermore, the Group aims to establish a new technology-based presence in the US retail futures market, utilising its technological expertise and solutions, as Plus500 has done historically with its OTC product offering. The Group will continue to allocate substantial financial and personnel resources to maximise these opportunities over the medium term.

Entering new markets and launching new products

Plus500 continued to make excellent progress in further diversifying its product portfolio and geographic footprint during H1 2022 by entering and developing new positions within new markets and launching new products.

The Group continues to target a number of new potential markets to expand its current OTC product offering and is seeking new operating licences, either organically or via acquisitions.

In February 2022, the Group obtained a new regulatory licence in Estonia, which will act as an additional foundation to the Group's business across Europe in its OTC product offering.

In March 2022, the Company completed the acquisition of a regulated entity licenced as a 'Type 1 Financial Instruments Business Operator', offering OTC products in Japan. This acquisition further expands the Group's geographic footprint into the substantial Japanese retail trading market, where Plus500 will apply its financial and technological strength to scale and develop the acquired business over time.

The Group's proprietary share dealing platform, 'Plus500 Invest', was launched in Europe on Android and iOS mobile apps during the period. This product helps to drive the expansion of the Group's product range and geographic footprint, as well as to improve customer retention and further diversify Plus500's revenue base.  

Investment in technological capabilities to drive customer engagement initiatives

In line with the Company's plan to incrementally invest approximately $50m in its R&D capability between FY 2021 and FY 2023, the Company continued to invest in technology innovation and product development during the period, which ultimately helps to drive deeper customer engagement.

With on-going investments in technology and people, particularly at the Company's R&D centres in Israel, the Group will continue leveraging the latent base of over 23 million customers registered on its platforms since inception, through retention, activation and monetisation initiatives, including a premium account offering which continues to be rolled out to additional high value customers. 

Excellent delivery against operational KPIs

The Group delivered an excellent operational performance in H1 2022, supported by the strength and resilience of the Group's proprietary technology.

Customer loyalty remained strong, with 82% of H1 2022 OTC revenue derived from customers trading with Plus500 for more than a year (H1 2021: 64%), 36% for more than three years (H1 2021: 31%) and 15% for more than five years (H1 2021: 14%).

As evidence of the long-term value creation being delivered by Plus500's business model, the cumulative average revenue from Active Customers who first started trading with Plus500 during 2015 was approximately $5,300 as at the end of H1 2022 (H1 2021: approximately $5,000), highlighting the long-term, sustainable value of the Group's customer base.

Despite the external lower volumes across the financial industry, the Group onboarded a total of 57,275 New Customers during the period (H1 2021: 136,980). This included 23,535 New Customers onboarded in Q2 2022 (Q2 2021: 47,574).

The Group's number of Active Customers during H1 2022 remained robust at 216,928 (H1 2021: 333,940), including 145,506 in Q2 2022 (Q2 2021: 209,465). This was supported by continued investment in the Group's marketing technology and by strategic initiatives to drive customer retention, monetisation and activation.

Customer Churn[11] in H1 2022 was 29.7% (H1 2021: 29.3%), including 31.0% in Q2 2022 (Q2 2021: 40.0%).

Client deposits remained high in H1 2022 at $1.2 billion (H1 2021: $1.1 billion), with average deposit per Active Customer of approximately $5,400 (H1 2021: approximately $3,400), highlighting the continued strong level of confidence that customers have in Plus500 and the resilience of the Group's trading platforms.

ARPU was strong at $2,357 in H1 2022 (H1 2021: $1,037), including $1,653 in Q2 2022 (Q2 2021: $683).  

During H1 2022, in conjunction with the Group's technological marketing capability, Plus500 launched a major bespoke global advertising campaign, featuring actor Kiefer Sutherland, to build brand awareness in key strategic markets. This campaign, the first in Plus500's history, is embedded across the Group's social media platforms and other online and offline marketing channels.

Consequently, and with on-going investment in strategic markets to attract higher value customers, AUAC was at the level of $1,441 in H1 2022 (H1 2021: $622), including $1,478 in Q2 2022 (Q2 2021: $903). Given Plus500's long track record of delivering high returns on marketing investment, the Group's continued investment in this area is expected to further deliver attractive returns. 

The Group continues to expect that AUAC will rise steadily over time, as the Group's customer profile further shifts to higher value customers and as the Group invests in attracting customers to the new trading products in its portfolio and targeting additional high value customers in strategic geographies.

Continued financial delivery across all key metrics

The Group's financial performance in H1 2022 was excellent, with a further strengthening of Plus500's balance sheet and cash balances, driven by continued outstanding cash generation during the period.  

The Group generated total revenue in H1 2022 of $511.4m (H1 2021: $346.2m), including revenue of $240.5m in Q2 2022 (Q2 2021: $143.0m). Customer Income^[12], a key measure of the Group's underlying performance, remained consistent during H1 2022 at $339.8m (H1 2021: $379.2m), including $151.8m in Q2 2022 (Q2 2021: $157.7m). Customer Trading Performance[13] was $171.6m during H1 2022 (H1 2021: $(33.0m)), including $88.7m in Q2 2022 (Q2 2021: $(14.7m)). The Company continues to expect that the contribution from Customer Trading Performance will be broadly neutral over time.

EBITDA for H1 2022 was $305.3m (H1 2021: $187.6m), including $143.7m in Q2 2022 (Q2 2021: $65.9m). EBITDA margin remained high during H1 2022 at 60% (H1 2021: 54%), including 60% in Q2 2022 (Q2 2021: 46%).

Net profit in H1 2022 was $244.1m (H1 2021: $165.1m) and basic earnings per share was up 52% at $2.46 (H1 2021: $1.62).

The Group's cost base continues to be heavily weighted towards variable costs, which is a key financial strength in an uncertain and dynamic economic environment. These variable costs remain positively correlated to enhanced performance and higher volumes. During H1 2022, 73% of the Group's costs were variable (H1 2021: 73%), with the Group maintaining a flexible and well controlled cost base.

Total SG&A expenses were $207.8m during H1 2022 (H1 2021: $159.8m), the major elements of which were variable costs including marketing investment of $82.5m (H1 2021: $85.2m) and commissions to processing companies of $23.7m (H1 2021: $22.0m).

Net financial income amounted to $9.0m in H1 2022 (H1 2021: $2.3m), predominantly due to foreign exchange and translation differences, in addition to interest received related to fixed deposits. 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.

As at the end of H1 2022, total assets were $1,072.5m (H1 2021: $770.0m) with equity of $798.3m, representing approximately 74% of the balance sheet.

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 cash generated from operations during the period of $344.9m (H1 2021: $163.4m) and 113% Operating cash conversion achieved (H1 2021: 87%).  

As a result, with the Group remaining debt-free, cash and cash equivalents balance at the end of H1 2022 was $995.5m (FY 2021: $749.5m, H1 2021: $722.5m).

These levels of cash generation and cash balances enabled Plus500 to continue delivering significant levels of shareholder returns. During H1 2022, the Company announced two share buyback programmes totalling $105.0m, a $55.0m buyback programme announced on 15 February 2022 in relation to FY 2021 and a $50.0m special buyback programme announced on 13 April 2022 in respect to H1 2022.  In H1 2022, the Company executed share buybacks totalling $51.7m. In addition, $59.9m were declared as final and special dividends in February 2022 in relation to FY 2021 and paid to shareholders on 11 July 2022.

The consolidated financial statements are presented in US dollars, which is the Company's functional and presentation currency. Foreign currency transactions and balances in currencies different from the US dollar are translated into the US dollar using the exchange rates prevailing on the dates of the transactions or at the balance sheet date.

Plus500's successful track record has been built on robust structural foundations

The operational, commercial and financial achievements of Plus500 have been built on the strong structural foundations of compliance, risk management, sustainability and governance. These elements ensure that the Group is able to deliver a seamless and robust commercial offering for more than 23 million registered customers.

Sustainability - customer care and protection, organisational culture

Plus500 ensures a high degree of care and protection for its customers, with measures such as negative balance protection and maintenance margin, embedded for all of its customers on the Group's OTC trading platform. In addition, a free demo account is available on an unlimited basis for the Group's OTC customers. The Group has a range of educational tools on its platforms, to help inform customers of the potential risks involved in trading.

During the period, the Company launched a Trading Academy portal, which includes training videos, an eBook, relevant news alerts and detailed FAQ on key trading dynamics. In the US, Plus500 is developing a range of educational content for customers, which is expected to be launched during Q3 2022.

Plus500 operates an entrepreneurial and high-performance organisational culture to empower on-going improvements in employee development, attraction and retention, through training, learning, community engagement, welfare and career progression.

Governance - Board changes during H1 2022

The range of the Board's experience, knowledge and expertise continues to broaden, with further diversification of its gender composition achieved during the period. The representation of women on the Board remains well ahead of the 33% target set by the "Hampton-Alexander Review on gender equality in leadership positions" framework and the FCA's diversity and inclusion requirements, as currently 50% of the Board members are women.

There were a number of changes to the composition of the Board during the period to further strengthen Plus500's leadership position. In March 2022, Prof. Varda Liberman, a renowned international expert in the field of decision-making and behavioural economics, was appointed as an Independent Non-Executive Director.

In June 2022, Daniel King completed his maximum nine-year tenure as an Independent Non-Executive Director and External Director. Anne Grim has taken Daniel King's place as a member of the Nomination Committee and as Chair of the Remuneration Committee, and Steve Baldwin has replaced Daniel King as Chair of the ESG Committee. In addition, with effect from 16 August 2022, David Zruia, the CEO and a Director, has been appointed as an additional member of the ESG Committee.

Investor engagement - Capital Markets Day

Following the launch of the Group's new Investor Relations website during the period, to further improve investor engagement and drive education and better understanding of Plus500 amongst the investor community, the Company's management team is hosting a virtual Capital Markets Day on Monday, 19 September 2022. This event will provide further information on key elements of Plus500's investment case, business model and major growth opportunities for the Group.

Plus500 continues to deliver significant returns to shareholders

In the nine years since the Company's IPO year, during which time the macro environment and global economic conditions have continued to fluctuate, Plus500 has generated significant levels of cash from operations at approximately $2.7 billion and returned approximately $1.6 billion to shareholders through dividends and share buybacks. This includes returns in respect of H1 2022 totalling $170.4m, of which $60.2m through dividend, $60.2m through a new share buyback programme and $50.0m through a special buyback programme announced on 13 April 2022.

Updated shareholder returns policy

Following continued engagement with shareholders, and after much consideration, the Board has decided to update the Company's shareholder returns policy, from the current policy of returning at least 50% of net profits to shareholders through dividends and share buyback programmes, with at least 50% of this distribution being made by way of dividends.

With the updated policy, the Company will continue to return at least 50% of net profits to shareholders through share buyback programmes and dividends, but from H2 2022, given the preference for share buybacks from a number of Plus500's major shareholders, at least 50% of shareholder returns will be made by way of share buybacks. This shareholder returns policy will continue to apply to net profits on a half-yearly basis and will continue to be based on a 23% corporate tax rate, for both interim and final distributions.

The Board will also consider executing special share buybacks, or other distributions, on a half yearly basis, dependent on fiscal year results as well as on investment and growth opportunities.

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, investments in future growth and in driving business continuity over the long term, in particular to ensure that appropriate levels of available capital are maintained for required working capital, regulatory purposes and other factors, which is currently estimated to be approximately $525m.

Shareholder returns related to H1 2022

The Board is pleased to declare today a total return of $120.4m in relation to H1 2022, comprising of an interim dividend and a new share buyback programme. 

The interim dividend for H1 2022 of $60.2m[14], representing $0.6238 per share, has an ex-dividend date of 25 August 2022, a record date of 26 August 2022 and a payment date of 11 November 2022.

To emphasise its strong belief in the positive outlook for Plus500, and reflecting the robust financial position of the Group, the Board has resolved to conduct a new share buyback programme to acquire up to $60.2m of the Company's shares, which will commence following the completion of the current share buyback programmes.

During H1 2022, the Company executed its existing share buyback programmes, with 2,670,651 ordinary shares purchased during the period, amounting to a total of $51.7m, at an average share price of £14.98.  The remaining share buyback programmes declared during H1 2022 in the amount of approximately $56.1m as at 30 June 2022, will continue to run during the second half of 2022, in addition to the new share buyback programme of $60.2m announced today.

At 30 June 2022, the Company held in treasury a total of 17,320,083 ordinary shares, which were purchased since the commencement of Plus500's initial share buyback programmes in 2017, representing 15.1% of the Company's issued share capital (the total treasury shares held by the Company comprise the shares purchased less issued treasury shares).

The Board remains confident about the outlook for Plus500

Following several positive upgrades to market expectations related to Plus500's financial performance, which took place earlier this year, the Board remains optimistic about the Group's performance, with sustainable growth to be delivered over the medium to long term.

Plus500 will continue to pursue several major growth opportunities, through organic investments and by actively targeting acquisitions. Therefore, the Group remains well-positioned to deliver sustainable growth over the medium and long term as a global multi-asset fintech group.

Plus500 LTD.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022 (UNAUDITED)

The accompanying notes are an integral part of the condensed consolidated interim financial information.

Plus500 LTD.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 JUNE 2022 (UNAUDITED)

Date of approval of the condensed consolidated interim financial information by the Company's Board of Directors: 17 August 2022

Registered Company number (Israel): 514142140

The accompanying notes are an integral part of the condensed consolidated interim financial information.

Plus500 LTD.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022 (UNAUDITED)

The accompanying notes are an integral part of the condensed consolidated interim financial information.

Plus500 LTD.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022 (UNAUDITED)

The accompanying notes are an integral part of the condensed consolidated interim financial information.

Plus500 LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

NOTE 1 - GENERAL INFORMATION

Information on activities

Plus500 Ltd. (the "Company") and its subsidiaries (the "Group") is a global multi-asset fintech group operating proprietary technology-based trading platforms. Plus500 offers customers a range of trading products, including OTC ("Over-the-Counter" products, namely Contracts for Difference (CFDs)), share dealing, as well as futures and options on futures. The Company has developed and operates an online and mobile trading platform within the OTC sector, enabling its international customer base of individual customers to trade OTC products on over 2,500 underlying financial instruments internationally.

The Group's offering is available internationally with main market presence in the UK, Australia, the US, the European Economic Area ("EEA") and the Middle East and has customers located in more than 50 countries worldwide. The Group operates through operating subsidiaries regulated by 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, the Commodities Futures Trading Commission ("CFTC") in the US, the Estonian Financial Supervision Authority ("EFSA") in Estonia and the Financial Services Agency ("FSA") in Japan.

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

The Company has been listed since 2013 on the London Stock Exchange. Since 2018, Plus500 Ltd. has been a FTSE 250 listed entity, following the Company's shares being admitted to the premium listing segment of the Official List and to trading on the London Stock Exchange Main Market for listed securities.

The Group operates in three operating sectors: OTC-CFD trading; share dealing; and futures and options on futures. The Group presents its operation as one operating segment.

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

NOTE 2 - BASIS OF PREPARATION

Basis of accounting and accounting policies

These condensed consolidated interim financial information for the six month period ended 30 June 2022 have been prepared in accordance with IAS 34 - 'Interim financial reporting' as issued by the International Accounting Standards Board. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2021, which have been prepared in accordance with IFRS. This condensed consolidated interim financial information is reviewed and not audited.

Going concern

The Group has considerable financial resources, a broad range of financial instruments and a substantial active customer base which is geographically diversified. As a consequence, the Company's Board of Directors (the "Board") believes that the Group is well placed to manage its business risks in the context of the current economic outlook. Accordingly, the Board has a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Board therefore continues to adopt the going concern basis in preparing this condensed consolidated interim financial information.

Plus500 LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued)

NOTE 3 - ACCOUNTING POLICIES

Significant accounting policies and computation methods used in preparing the condensed consolidated interim financial information are consistent with those used in preparing the 2021 annual financial statements, except for the following:

Income tax in interim periods is recognised based on management's best estimate of the annual income tax rate expected (see note 8).

NOTE 4 - TRADING INCOME

The trading income attributed to geographical areas according to the location of the customer is as follows:

NOTE 5 - SELLING AND MARKETING EXPENSES

Plus500 LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued)

NOTE 6 - ADMINISTRATIVE AND GENERAL EXPENSES

NOTE 7 - OPERATING EXPENSES

The presentation below reflects the breakdown of operating expenses by nature of expense:

In the year ended 31 December 2021 and the six months periods ended 30 June 2022 and 30 June 2021, IT and technology costs, together with additional allocated other technological related costs, were $58.4 million, $33.3 million and $22.5 million, respectively.

Plus500 LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued)

NOTE 8 - INCOME TAX EXPENSES 

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 (the "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, as described below, and is in addition to the other existing tax beneficial programmes under the Investment Law.

The 2017 Amendment provides that a technology company satisfying certain conditions will qualify as a Preferred Technological Enterprise ("PTE") 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 PTE, 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 ("ITA") allowing for a reduced tax rate).

a.    Company taxation in Israel

The full corporate tax rate in Israel for the years 2022 and 2021 is 23%.

Under the 2017 Amendment, provided the conditions stipulated therein are met, technological income derived by Preferred Companies from "Preferred Technological Enterprise" (as defined in the 2017 Amendment), would be subject to reduced corporate tax rates of 12%.

A Preferred Company distributing dividends from technological income derived from its PTE would generally subject the recipient to a 20% tax (or lower, if so provided under an applicable tax treaty).

At the beginning of July 2020, the Company received an approval from the Israeli Innovation Authority ("IIA") that together with the tax ruling received from the ITA in May 2019, recognises the Company as a PTE for the years 2017, 2018 and 2019. Accordingly, the applicable tax rate for the preferred technological income of a PTE for these years was 12%. The Company is also considered as PTE for the years 2020 and 2021. As a result, the Company's corporate tax rate for the years 2021 and 2020 is 12%.

In January 2022, the Company's status as a PTE, as accredited by the ITA under the tax regime in Israel, has been extended for the years 2022, 2023, 2024, 2025 and 2026, subject to the Company complying with the conditions of the Law for the Encouragement of Capital Investments. Consequently, the Company's corporate tax rate for each of these years will be reduced from 23% to 12% and the withholding tax rate applicable for dividends will be reduced from 25% to 20%, subject to the receipt in advance of a valid certificate from the ITA allowing for a reduced tax rate.

Plus500 LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued)

NOTE 8 - INCOME TAX EXPENSES (continued)

In January 2021, the Company received approximately $30.0 million rebates (including interest) reflecting the reduced tax rate for FY 2017 and in August 2021, the Company received approximately $37.2 million in tax rebates (including interest) reflecting the reduced tax rate for FY 2019.

b.    Tax assessments

The Company has final tax assessments up to the year 2019.

The assessments of amounts of current and deferred taxes require 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.     Taxes on income included in the consolidated income statement for the reported periods

Plus500 LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued)

NOTE 9 - EARNINGS PER SHARE

Earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

  *After weighting the effect of Company's share buyback programmes (see note 11).

NOTE 10 - DIVIDENDS

The amounts of dividends and the amounts of dividends per share for the years 2022 and 2021 declared and distributed by the Board are as follows:

*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.

Plus500 LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued)

NOTE 11 - COST OF COMPANY'S SHARES HELD BY THE COMPANY

The Board approves share buyback programmes. The share buyback programmes are funded from the Company's net cash balances.

During the six month period ended 30 June 2022, the Company issued a total of 14,165 of its treasury shares.

NOTE 12 - TRADE PAYABLES - DUE TO CLIENTS

* The total amount of 'Trade payables - due to clients' includes bonuses to clients.

Plus500 LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued)

NOTE 13 - CASH GENERATED FROM OPERATIONS

Non-cash transactions

On 15 February 2022, the Board declared a dividend in an amount of $59.9 million ($0.5995 per share). The dividend was paid to shareholders on 11 July 2022 (see note 10).

NOTE 14 - FINANCIAL RISK MANAGEMENT

Financial risks arising from financial instruments are analysed into market, credit, concentration and liquidity risks. The condensed interim financial information does not include all financial risk management information and disclosures required in the annual financial statements. Details of how these risks are managed are discussed in the financial risk management note of the 2021 annual financial statements.

Further to the mentioned above, there has not been a significant change in the Group's financial risk management processes or policies since year end 2021.

Plus500 LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued)

NOTE 15 - ACQUISITIONS

On 19 July 2021, Plus500US Inc., a wholly owned subsidiary of the Company, completed the acquisition of all of the membership interests of Cunningham Commodities LLC. ("Cunningham"), a regulated Futures Commission Merchant ("FCM"), and Cunningham Trading Systems LLC. ("CTS"), a technology trading platform provider, operating in the futures and options on futures market. The acquisition consideration was funded from the Company's existing cash balances and was paid on completion. The measurement period for the acquisition ended on 19 July 2022.

The assets and liabilities recognised as a result of this acquisition are as follows:

On 21 March 2022, the Company completed the acquisition of 100% of the issued and outstanding share capital of EZ Invest Securities, Co., Ltd. ("EZ Invest"). EZ Invest is licenced as a Type 1 Financial Instruments Business Operator, regulated by the Financial Services Agency (FSA) in Japan. The acquisition consideration was funded from the Company's existing cash balances and was paid on completion.

The assets and liabilities recognised as a result of this acquisition are as follows:

NOTE 16 - SUBSEQUENT EVENTS

On 17 August 2022 the Board declared an interim dividend in an amount of $60.2 million ($0.6238 per share). The dividend record date is 26 August 2022 and it will be paid to the shareholders on 11 November 2022.

On 17 August 2022, the Board approved a new programme to buy back an amount of up to $60.2 million of the Company's ordinary shares.