Plus500 Regulatory News (PLUS)

13 August 2019

Plus500 Ltd.

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

Interim Results for the six months ended 30 June 2019

Plus500, a leading online service provider for trading Contracts for Difference ("CFDs") internationally, announces its interim results for the six months ended 30 June 2019.

Financial Highlights:

*Unaudited

Note: The prior period used for comparison is H2 2018, as all other previous periods were prior to the introduction of the European Securities and Markets Authority's (ESMA) product intervention measures on 1 August 2018

·; Company trading in line with expectations; performance improved in Q2 2019, following low levels of volatility in the financial markets in Q1 2019

·; Q2 2019 was the Company's strongest quarter for new and active customer metrics since the introduction of ESMA's product intervention measures in August 2018:

o New Customers6 numbers in Q2 2019 were 23% ahead of Q1 2019 (Q1 2019: 21,306)

o Active Customers7 numbers in Q2 2019 were 11% ahead of Q1 2019 (Q1 2019: 97,921)

o 47,540 New Customers in H1 2019 (H2 2018: 40,089)

o 141,692 Active Customers in H1 2019 (H2 2018: 142,804)

o AUAC for H1 2019 was $1,079, a reduction of 30% from H2 2018 (H2 2018: $1,537)

·; Revenue from non-EEA countries represented approximately 48% of the Group's revenues in the period (H2 2018: 40%)

·; Revenue from customer spreads and overnight charges ("customer income") totalled approximately $175 million (H2 2018: approximately $193 million)

Operational Highlights:

·; For the second consecutive year, Plus500 has been rated the No.1 CFD provider in the UK8, Germany9 and Spain10 by number of client relationships, and Australia's best CFD mobile platform11

·; Attracting a growing number of higher value customers, through the introduction of sophisticated trading tools and broadening of the product offering:

o Over 100 new CFDs introduced to the trading platform during H1 2019, including EUA commodity, Lithium and Battery and Thematic indices and Uber, following its IPO

o Leading charting functionality launched on WebTrader and iOS platforms (Android following soon), including volume indicators, drawing tools and an extensive range of technical indicators

·; Customers deposits, net at 30 June 2019 up 41% to $151.1 million (31 December 2018: $107.2 million)

·; Continued decrease in customer churn - Q2 2019 churn rate at 16% is the lowest since the Company's 2013 IPO

·; First major CFD provider to add WhatsApp to its range of customer support channels, in line with Plus500's commitment to excellence in customer service

Shareholders' returns:

·; The Board is pleased to announce an interim ordinary dividend per share of $0.2734 (total payout of $31.0 million), representing 60% of net profit

·; The Board has also decided to commence a share buyback programme, to purchase up to $50.0 million of the Company's shares

·; Revised distribution policy introduced from next reporting date (H2 2019), to return 60% of net profit to shareholders, with at least 50% of this core distribution being through dividends 

Advisers:

·; Plus500 is pleased to announce the appointment of Credit Suisse as its joint corporate broker, alongside Liberum, with effect from 13 August 2019

Outlook:

·; Overall, the Group remains on track to meet current expectations for 2019

Asaf Elimelech, Chief Executive Officer of Plus500, commented:

"The Group performed well during what was a difficult period for the entire industry. Financial markets from February 2019 to April 2019 were very stable, providing a limited number of trading opportunities for customers. Against this backdrop, the Company continued to invest in focussed marketing, with sequential increases in the number of New and Active Customers and in customer retention levels, as well as lower customer acquisition costs.

"Given the market backdrop, we continued to concentrate on delivering significant enhancements to the trading platform, with the addition of functionality which appeals to more sophisticated traders, and to the level of customer service, with Plus500 becoming the first major CFD trading provider to integrate WhatsApp as an additional customer communication channel.

"We are pleased to announce the appointment of Credit Suisse as our joint corporate broker, alongside Liberum, effective as of today. We are confident that this addition will be productive and beneficial to the Group and its stakeholders.

"Our first half performance, and trading to date in the third quarter 2019, is consistent with current expectations for 2019. Underlying operational performance and new customer acquisition metrics remain robust. We are confident we can continue to outperform our peer group in terms of customer acquisition, by maintaining the level of highly targeted marketing investment to exploit market opportunities as they appear, with these new customers expected to provide incremental revenues in due course.

"Overall, the Board remains optimistic about Plus500's future prospects and its potential to create value for all stakeholders."

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.

1 EBITDA - Earnings before interest, taxes, depreciation and amortisation

2 Earnings per share - Calculated based on weighted average number of Ordinary Shares in issue as of 30 June 2019

3 ARPU - Average Revenue Per User

4 AUAC - Average User Acquisition Cost

5 Operating cash conversion - Cash generated from operations / EBITDA

6 New Customers - Customers depositing for the first time during the period

7 Active Customers - Customers who made at least one real money trade during the period

8 By total number of relationships with UK CFD traders. Investment Trends 2019 UK Leverage Trading Report

9 By total number of client relationships. Investment Trends 2019 Germany Leverage Trading Report

10 By total number of client relationships. Investment Trends 2019 Spain Leverage Trading Report

11 By own client rating. Investment Trends 2018 Australia Leveraged Trading Report

Plus500 will host an analyst presentation at 9.30 a.m. today at the offices of Liberum, 25 Ropemaker

St, London, EC2Y 9LY.

There is an audio conference call for those who would like to dial in:

The presentation materials will be available at https://www.plus500.co.uk/Investors/CompanyReports 

For further details:

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 Company'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", "projects", "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 factors. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such entity and the environment in which each 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.

About Plus500

Plus500 operates an online trading platform for individual customers to trade CFDs internationally. The Group offers more than 2,400 different underlying global financial instruments, comprising equities, indices, commodities, options, ETFs, foreign exchange and cryptocurrencies. Individual customers of Plus500 can trade CFDs in more than 50 countries and in 32 languages. The trading platform is accessible from multiple operating systems (Windows, smartphones (iOS, Android and Windows Phone), tablets (iOS, Android and Surface) and web browsers). Plus500 retains operating licences and is regulated in the United Kingdom, Australia, Cyprus, Israel, New Zealand, South Africa and Singapore. Customer care is integral to Plus500: customers cannot be subject to negative balances and there are no commissions on trades. Plus500 does not utilise cold calling techniques and does not offer binary options. A free demo account is available on an unlimited basis for platform users, and sophisticated risk management tools are provided free of charge to manage your leveraged exposure, and stop losses to help customers protect profits and limit capital losses. Plus500 is listed on the main market of the London Stock Exchange, under the symbol PLUS. www.plus500.com

Business Update

Introduction

The Group's performance in the first half of 2019 was satisfactory, against a backdrop of low levels of volatility in financial markets in the first quarter of the year. The Company continues to perform in line with expectations, with revenue improving in the second quarter and costs remaining carefully controlled, enabling continued market leading levels of focussed marketing investment.

The first two quarters of 2019 were markedly different, with very low volatility in financial markets in the first quarter followed by more normal trading conditions in the second quarter of 2019. As a result, customer income increased approximately 13% quarter on quarter.

Customer metrics improved steadily through the period. The number of Active Customers and the level of New Customer recruitment in the second quarter of 2019 were both at their highest since the first quarter of 2018, which was marked by extreme movements in cryptocurrency values, and was prior to the implementation of ESMA's product intervention measures in August 2018. Average User Acquisition Cost (AUAC) also dropped steadily through the period as a result of the Group's efficient marketing initiatives and the first signs of reduced competition materialised.

The Company also responded rapidly to evolving market trends and customer demand, introducing more than 100 new trading instruments during the first half of 2019.

Overall, compared to H2 2018, first half of 2019 revenues were down 42% to $148.0 million (H2 2018: $254.9 million) and profit before income tax was down 59% to $63.9 million (H2 2018: $156.6 million), reflecting the low volatility within the first quarter. In the second quarter revenues were up sequentially by 75% to $94.1m (Q1 2019: $53.9m).

Shareholders' returns

The Board is pleased to announce an interim dividend of $0.2734 per share (H1 2018: $1.3786), a total pay-out of $31.0 million12, representing 60% of net profit in the period. The ex-dividend date is 29 August 2019, the record date 30 August 2019 and payment date 28 November 2019.

The Board believes enhanced shareholder value can now be delivered from buying back the Company's shares. As a consequence, the Board will today announce a material share buyback programme to purchase up to $50.0 million of the Company's shares, which will commence immediately from the date of that announcement.

It remains the Board's policy to return 60% of net profits to shareholders. This will be distributed going forward through a combination of dividends and buyback, with at least 50% of this distribution being made by way of dividends. This policy will apply to net profits on a half-yearly basis. The Board will continue to assess the availability of any excess capital and prioritise its use, as it has always done, where any identified opportunities will be carefully assessed against the long term benefit of organic investment or additional returns to shareholders.

12 The total estimated dividend payout of $31.0 million is calculated based on 113,289,768 Ordinary Shares issued and outstanding on 13 August 2019. If the Company repurchases any Ordinary Shares between 13 August 2019 and the dividend record date of 30 August 2019, thereby resulting in such repurchased Ordinary Shares being reclassified as dormant shares that are not entitled to dividends, then the actual total dividend payout will be reduced accordingly.

Technology and operational review

During the period, the Group continued to invest in its core business, while pursuing opportunities to broaden and enhance its brand awareness and diversify its customer base internationally, both inside and outside the EEA.

Technology

Significant effort was applied to upgrading the functionality and appearance of the trading platform, to both improve retention of current customers and appeal to higher value customers. In the period, the Company added an analysis package to the WebTrader and iOS platforms (with Android following soon), including volume indicators, drawing tools and an extensive range of technical indicators. Responding to demand, traders can now also alter the appearance of the WebApp platform to select light or dark, with dark mode quickly becoming popular. The Company also added more than 100 new financial instruments to the platform, responding rapidly to either news flow or customer demand.

The Company has continually upgraded its customer service channels, evolving from email to market-leading live chat. In the half year period, WhatsApp was introduced and is already significantly reducing the use of email and lowering response times for customers. Plus500 is the first major CFD provider to successfully incorporate WhatsApp in its platform as part of its customer support channels.

During H1 2019, the popularity and use of the Group's mobile and tablet offering continues, and this represents 79% of the Group's total revenues (H2 2018: 79%), with over 70% of all customer trades being completed on a mobile device.

Operational

For the first half of 2019, Active Customers numbers decreased by 1% to 141,692 (H2 2018: 142,804) and New Customers increased by 19% to 47,540 (H2 2018: 40,089). Both Active and New Customer numbers rose from the first quarter to the second quarter of 2019 by 11% and 23% respectively. Customer retention improved, with the churn rate down from 25% in the first quarter 2019 to 16% in the second - the lowest level achieved by the Group since its IPO in 2013.

The Group continued to invest heavily in targeted marketing, assisted by its leading-edge technology. In the period, there were the first signs of reduced absolute levels of marketing across the Company's peer group; this, together with the success of the Group's optimisation initiatives, led to a reduction in AUAC, which fell to $1,079 in H1 2019 (H2 2018: $1,537) and $956 in Q2 2019 (Q1 2019: $1,230), in addition to an increase in the rate of New Customer recruitment, particularly in the second quarter of 2019.

As part of the Group's lean cost structure, the Board has decided that one South African licence from the Financial Sector Conduct Authority ("FSCA") is sufficient in order to deliver the best value to the Group. The activity of the South African licence will continue to be operated via Plus500's Australian subsidiary, Plus500AU Pty Ltd, which also holds a regulatory licence from the FSCA, in addition to its regulatory licences from the Australian Securities and Investments Commission ("ASIC") and the Financial Markets Authority ("FMA") in New Zealand. The FSCA licence of Plus500SA Pty Ltd has therefore been relinquished.

Regulatory update

The regulatory climate continued to develop through the period. As anticipated, in Europe, several national regulators sought to reflect the ESMA product intervention measures which came into force in August 2018, with only minor differences. Based on this, after the period end, on 31 July 2019, ESMA announced that it will not renew the temporary restriction on the marketing, distribution or sale of CFDs to retail customers in the European Union (EU). The notice came 12 months after the measures took effect for the first time, and majority of EU-member states have adopted national product intervention measures relating to CFDs. Plus500 will continue to offer CFDs in accordance with applicable laws, regulations and industry best practice.

In Australia, ASIC received product intervention powers, similar to those possessed by European regulators, which will enable them to more directly address any abuses in the sales and marketing of a broad range of complex financial products. The Company continues to assume that ASIC will seek to consult on the future rules around the industry, with potential for the introduction of certain restrictions.

In June 2019, Facebook decided not to carry advertising for CFD trading; this was not a material customer recruitment channel for the Company.

During the first half of 2019, around 48% of revenue was generated outside the EEA (H2 2018: 40%; H1 2018: 29%; Q2 2019: 44%), whilst approximately 23% of Group revenue was generated by Elective Professional Clients within the EEA (Q2 2019: 22%).

Financial review

The Group's net trading revenue in the first half of 2019 totalled $148.0 million (H2 2018: $254.9 million). Customer income totalled approximately $175 million (H2 2018: approximately $193 million). The revenue fall in the first half of 2019 was primarily due to low levels of market volatility in the first quarter of 2019.

Positive customer trading performance (Market P&L) reduced revenue by approximately $27 million in the first half of 2019 (H2 2018: Negative customer trading performance of approximately $61 million), the vast majority of which occurred in the first quarter of 2019.

*Unaudited

EBITDA in the first half of 2019 was $65.6 million (H2 2018: $157.0 million), a decrease of 58%, with EBITDA margins decreasing from 62% in H2 2018 to 44% in H1 2019. EBITDA in Q2 2019 increased from Q1 2019 by 356% to $53.8 million (Q1 2019: $11.8 million), with EBITDA margins increasing from 22% in Q1 2019 to 57% in Q2 2019. Net profit for the period was $51.6 million (H2 2018: $117.3 million). With strong operating leverage due to the nature of the cost base, EBITDA is highly correlated to movements in top line revenue. To date, the Group has remained profitable through all external market conditions.

Plus500 continues to be highly cash generative, with 68% of operating cash conversion (H2 2018: 103%). Plus500's total assets increased by 7% from $332.9 million at 31 December 2018 to $357.0 million at 30 June 2019, with cash balances increasing to $327.3 million (31 December 2018: $315.3 million), and equity of $256.1 million representing approximately 72% of the balance sheet (31 December 2018: $280.7 million). Cash balances at 30 June 2019 are stated including a total of $70.2 million which was paid out in dividends (2018 final) on 9 July 2019. All amounts stated exclude client funds which are held in segregated bank accounts, in line with industry best practice.

Strategic update

The Company has continued to outperform the competition through a period of change for the industry, while enhancing its operations as it has grown and expanded internationally. The success of Plus500 to this point has been premised on an entrepreneurial approach, adapting rapidly to changing customer requirements, resulting in a market-leading offering delivered through cutting-edge proprietary technology. This has been enabled by the recruitment and development of the best people, the delivery of operational efficiencies and a cost to revenue ratio well below the competitor set.

The Board remains confident in the prospects of the business going forward. Future success and value creation will be based on delivery on a number of fronts:

·; The Company has significantly outgrown the competition organically over past decade and is confident this will continue, enabled by superior customer targeting, leading marketing techniques and disciplined customer onboarding processes.

·; Profitability has been enhanced by a concentration on cost efficiency. Plus500 will continue to emphasise cost control, remaining lean and investing only where it is confident in delivering superior returns.

·; The Company is considering multiple additional growth opportunities through:

o expansion into new geographic regions or acceleration within current regions through new regulatory licences;

o product extension enabled by further development of the current technology platform, enhancing customer acquisition rates and improving retention levels; and

o value-adding targeted acquisition(s), made possible by the imposition of increasingly strenuous regulatory standards, which enhance the position of the compliant industry leaders.

·; Delivering best-in-class customer service is key to success. Plus500 will emphasise enhancements to its current trading platform to build on its reputation for excellent customer service and to provide trading functionality which will appeal to and satisfy the more sophisticated traders.

·; Capital discipline will remain a central tenet of Plus500's strategy. The Company will seek to maximise returns for all its stakeholders by either utilising capital which is surplus to operational requirements to deliver superior growth, or returning it to shareholders.

·; In delivering on its strategy, Plus500 will always be respectful of and seek to operate within all global regulatory standards.

Principal risks and uncertainties

During the six months to 30 June 2019 and up to the date of approval of the interim financial statements there have been no significant changes in the Group's risk management framework. Details of the Group's approach to risk management and its principal risks and uncertainties for the remainder of the current financial year remain consistent with those detailed in the Group's 2018 Annual Report and Accounts (set out on pages 40 to 43 of the Group's 2018 Annual Reports and Accounts which is available on the Company's website: www.plus500.com). 

Outlook

The Group's first half performance, and trading to date in the third quarter, remain in-line with current full year expectations. Like all operators in the sector, Plus500's performance for the remainder of the year is dependent, among other things, on financial market conditions providing sufficient trading opportunities for customers. Underlying operational performance and new customer acquisition rates remain robust. The Company is confident of continuing to outperform its peer group in terms of customer acquisition, and is making efforts to further improve the customer trading experience in order to increase retention rates and appeal to more sophisticated traders; success here is expected to provide incremental revenues in due course.

Overall, the Board remains optimistic about Plus500's future prospects and its potential to create value for all stakeholders.

Statement of Directors' Responsibilities

The Directors confirm to the best of their knowledge that the condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" ("IAS 34"), as issued by the International Accounting Standards Board, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the undertakings included in the consolidation as a whole for the period ended 30 June 2019, as required by the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority:

·; an indication of important events that have occurred during the six months ended 30 June 2019 and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and 

·; material related party transactions in the six months ended 30 June 2019 and any material changes in the related party transactions described in the last Annual Report.

The Directors of Plus500 Ltd are as listed in the Plus500 Ltd 2018 Annual Report. A list of current Directors is maintained on the Company's website: www.plus500.com 

On behalf of the Board

Elad Even-Chen

Chief Financial Officer

Plus500 LTD.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2019 (UNAUDITED)

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

Plus500 LTD.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 JUNE 2019 (UNAUDITED)

Date of approval of the condensed consolidated interim financial statements by the Company's Board of Directors: 13 August 2019 Registered Company number (Israel): 514142140

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

Plus500 LTD.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2019 (UNAUDITED)

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

Plus500 LTD.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2019 (UNAUDITED)

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

Plus500 LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 1 - GENERAL INFORMATION

Information on activities

Plus500 Ltd (hereafter - the Company) and its subsidiaries (hereafter- the Group) has developed and operates an online and mobile trading platform within the CFD sector enabling its international customer base of individual customers to trade CFDs on over 2,400 underlying financial instruments internationally. The Group currently offers CFDs referenced to equities, indices, commodities, options, ETFs, cryptocurrencies and foreign exchange.

The Group's offering is available internationally with a significant market presence in the UK, Australia, the 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 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 and the Monetary Authority of Singapore (MAS) in Singapore.

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 UK Listing Authorities (the "official list") and to trading on the London Stock Exchange PLC's Main Market for listed securities and trading of the Company's shares on the AIM market of London Stock Exchange PLC was cancelled.

The Group is engaged in one operating segment - CFD trading.

NOTE 2 - BASIS OF PREPARATION

Basis of accounting and accounting policies

These condensed consolidated interim financial statements for the six-month period ended 30 June 2019 have been prepared in accordance with IAS 34 - 'Interim financial reporting' as issued by the International Accounting Standards Board. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2018, which have been prepared in accordance with IFRS. These condensed consolidated interim financial information are reviewed and not audited.

Going concern

The Group has considerable financial resources, a broad range of financial instruments and a geographically diversified business. As a consequence, the Directors believe that the Group is well placed to manage its business risks in the context of the current economic outlook. Accordingly, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Directors therefore continue to adopt the going concern basis in preparing these condensed consolidated interim financial statements.

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 2018 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.

New accounting standards adopted during the year

IFRS 16 - "Leases" (hereafter - IFRS 16)

This note explains the impact of the adoption of IFRS 16 Leases on the Group's financial statements and discloses the new accounting policies that have been applied from 1 January 2019.

The Group has adopted IFRS 16 retrospectively from 1 January 2019, but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 January 2019. The nature and effect of these changes are disclosed below.

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 January 2019. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 4%.

Right-of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at 31 December 2018. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

The recognised right-of-use assets relate to office space and real estate type of assets.

NOTE 4 - TRADING INCOME

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

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

NOTE 5 - SELLING AND MARKETING EXPENSES

NOTE 6 - ADMINISTRATIVE AND GENERAL EXPENSES

\* These amounts in 2018 include an aggregate amount of $4.0 million which is related to the

admission to the premium listing segment of the official list of the UK Listing Authorities.

See note 1.

NOTE 7 - EARNINGS PER SHARE

Earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. See note 9.

*After weighting the effect of the buyback programme.

NOTE 8 - DIVIDEND

The amounts of dividends and the amounts of dividends per share for the years 2018 and 2019 declared and distributed by the Company's Board of Directors are as follows:

NOTE 8 - DIVIDEND (continued)

* Between the date of the dividend announcement (12 February 2019) and the record date of the dividend (22 February 2019) the number of issued and outstanding Ordinary Shares of the Company decreased by 225,000 Ordinary Shares from 113,682,268 Ordinary Shares to 113,457,268 Ordinary Shares, as a result of the repurchase by the Company of Ordinary Shares during such period and the classification of such repurchased Ordinary Shares as dormant shares that are not entitled to dividends. Accordingly, 113,457,268 Company Ordinary Shares were entitled to payment of the dividend of $0.6191 per share on 9 July 2019, resulting in an aggregate dividend to all Company shareholders of $70.2 million. See note 13.

NOTE 9 - ACQUISITION OF THE COMPANY'S SHARES BY THE COMPANY

In August 2017, the Board approved a programme to buy back up to $27.21 million of the Company's Ordinary Shares. The buyback programme expired on 1 February 2018. The programme was funded from the Company's net cash balances. The Company bought back 980,146 Ordinary Shares (or 0.9%) in the capital of the Company for an aggregate purchase amount of $7.5 million pursuant to these buyback programmes. Shares were bought back at an average price of £5.98.

In October 2018, the Board approved a programme to buy back an initial amount of $10 million of the Company's Ordinary Shares. The buyback programme ran from 23 October 2018 and was funded from the Company's net cash balances. During the buyback programme until 31 December 2018 the Company bought back 130,963 Ordinary Shares (or 0.1%) in the capital of the Company for an aggregate purchase amount of $2.3 million pursuant to these buyback programmes. Shares were bought back at an average price of £13.58.

During the six-month period ended 30 June 2019, the Company bought back an additional 487,500 Ordinary Shares (or 0.4%) in the capital of the Company for an aggregate purchase amount of $6.0 million pursuant to these buyback programmes. Shares were bought back at an average price of £10.13. See note 13.

NOTE 10 - TRADE PAYABLES- DUE TO CLIENTS

*Customers deposits, net are comprised of the following:

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

NOTE 11 - CASH GENERATED FROM OPERATIONS

Non-cash transactions

In 2019, the Company declared a dividend in an amount of $70.2 million ($0.6191 per share). The dividend was paid to shareholders on 9 July 2019. See note 8.

NOTE 12 - FINANCIAL RISK MANAGEMENT

Financial risks arising from financial instruments are analysed into market, credit, concentration and liquidity risks. These condensed interim financial statements do 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 2018 Plus500 Ltd Annual Report.

There has not been a significant change in the Group's financial risk management processes or policies since the year end.

NOTE 13 - SUBSEQUENT EVENTS

On 13 August 2019 the Company declared an interim dividend in an amount of $31.0 million ($0.2734 per share). The dividend record date is 30 August 2019 and it will be paid to the shareholders on 28 November 2019.

On 13 August 2019, the Board approved a programme to buy back an amount of up to $50.0 million of the Company's Ordinary Shares.