Plus500 solomon capital report sample only

About Solomon Capital: SOLOMON CAPITAL [A part of DS SOLOMON HOLDINGS Ltd.] is a leading Cross Border Investment bank, providing

investment banking as well as corporate finance services that include; Fundraising, M&A, Financial Restructuring and Business Strategic

Consulting to Israeli, and International companies.. Solomon Capital is an IPO Adviser for Non-UK companies looking for going public on the AIM.

Contact; DS SOLOMON HOLDINGS LTD, www.solomon-capital.com David Solomon, 972-508-695450 [email protected]

SOLOMONCAPITAL PLUS 500 19.2.2014

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The Right Technology in the Right Market at the Right time; We believe Plus500 has the correct combination of a very strong online trading platform, most efficient online marketing tools, and automated low risk trade execution approach. This, while leveraging its abilities increasing market share in very excited sector of the CFDs [Contracts for Difference]. Strong outlook. In our view, within the next two years the company will increase its market share to about 10% of the UK CFDs market and by 2016, company revenues will increase to about $200m, generating about $85m net income [EPS of 79 GBp] No growth without risk. We see two key risks to our model. The first is unexpected new guidelines for the CFD products in the EU countries or/and in non EU Countries. The second is that the global financial markets appetite for CFDs will change.

$m 2011 2012 YoY % 2013 YoY % 2014e YoY %

Total Revenue 50.0 56.1 12% 115.0 105% 155.3 35%

Operating income 23.7 23.1 -3% 67.1 190% 86.9 30%

% Op. Income 47% 41% -13% 58% 42% 56% -4%

Net income 17.1 17.1 0% 50.6 196% 65.6 30%

EPS $ - 0.12 na 0.47 290% 0.61 30%

2013

Market Cap £m Market Cap $m Price Change PE 2013 PE 2014e Revunues YoY Growth % EBIT Net Profit % Net profit

Plus 500 381 621 160% 12.3 9.5 115 105% 58% 51 44%

IG Group 2,350 3,854 38% 16.5 14.9 621 6% 46% 143 23%

FXCM 488 717 62% 21.7 17.4 485 16% 15% 22 4%

2013

Symbol [AIM] PLUS

Market Price [ GBp ] 397

Market Cap £m 381

Market Cap $m 621

2013 P/E 12.3

2014 P/E [Est.] 9.5

Price Change 160%

Fair Market Cap £m 628

Fair Market Cap $m 982

% UPSIDE 58%

PLUS500 AS OF/19/2/2014






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Financial Highlights

Revenues: Sales grew by 105% YoY in 2013 to $115m.. We

estimate that in 2014 sales will increase to $155m

EBIT: In 2012, EBIT was about $23m and the EBIT margin

was about 41%. According , In 2013 ,the EBIT rose by 190%

to about $67m , and the EBIT margin is about 58%, We

believe the company will be able to maintain a EBIT margin of

48% in the foreseeable future, in 2014 we expect EBIT will

be about $87m.

Net income: The net income in 2013 grew up to $50m , [and

EPS is reach the 47p], we estimate a $65m as net income in

2014, EPS of 61p.

Free Cash Flow : The free cash flow in 2013 was about

$57m comparing to about $20m in 2012, and we project a

$64m in 2014.

Note : Source Plus500, Forcasast SOLOMON CAPITAL

-

50.0

100.0

150.0

200.0

250.0

2011 2012 2013 2014e 2015e 2016e

Revenues trends [$m]

$0.47

$0.61 $0.70

$0.79

2011 2012 2013 2014e

EPS ,$

23 20

57 64

74 83

2011 2012 2013 2014e 2015e 2016e

Free Cashflow [$m]






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Main KAI’s

2011 2012 2013 2014e

Revenues $m 50 56 115 155

Advertising cost $m 20 23 35 45

New Customer 33 37 57 69

Active Customer 45 58 86 118

ARPU $ 1,101 962 1,320 1,320

AUAC $ 604 628 632 650

Note : Source Plus500, Forcasast SOLOMON CAPITAL

33 37 57

69

45 58

86

118

-

50

100

150

2011 2012 2013 2014e

New Customer Active Customer






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CFD Market

Based on IG Group and Investment Trends, 23, Decmber 2013 data, we estimate the total UK CDF’s Market in 2013 was $200-

220m [excluding Spread betting] and about $250-280m including Spread betting. In 2013 plus500 reached about a 5% share of the

UK market.

32% 11% 8% 6% 1%

34%

7% 6% 5% 5%

IG CMC SAXO CAPITAL CITY INDEX PLUS500

UK CFD Market TOP 5 Providers

2012 2013






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Peer Group Analysis

IG Group Holdings plc [IGG] is a UK based company which provides retail traders with access to the financial markets. Company provides contracts for

difference (CFDs) and spread betting on over 10,000 financial markets, including forex, indices, shares, and commodities. IG has a ABOUT 34% share of

the UK CFD market [Source: Investment Trends, 23, Decmber 2013].

FXCM Inc. (FXCM), is an online provider of foreign exchange (FX) trading and related services to approximately 170,000 active retail

customers globally. The Company offers its customers access to over-the-counter (OTC) FX markets through its technology platform.

2013

Market Cap £m Market Cap $m Price Change PE 2013 PE 2014e Revunues YoY Growth % EBIT Net Profit % Net profit

Plus 500 381 621 160% 12.3 9.5 115 105% 58% 51 44%

IG Group 2,350 3,854 38% 16.5 14.9 621 6% 46% 143 23%

FXCM 488 717 62% 21.7 17.4 485 16% 15% 22 4%

2013

Note : IG, Year end 31 May, FXCM Year end 31 Dec. 2013e- Avg. Estimations






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The Valuation

Our DCF model is based on a WACC of 11%, standard in the sector. Our TGR is 3%, which we view as reasonable given the current

growth rate.

Asumptions Notes

Risk-free rate (Rf) 3.0% L. T risk-free rate l bonds .

Market premium (Mp) 6.0% Equity Market Risk Premium London

Beta 1.40 Industry Beta Small- firm risk premium 0.0%

Company-specific risk premium 6.0% Based on our assumption, regulation risk and more

Cost of equity (Re) 13.2%

Pretax cost of debt 5.0% Based on the Company L.T Cost of debt

Effective tax rate 25.0% Represents the average long-term effective tax rate

Cost of debt 3.8%

% ofLT equity to total Asset 75.0% Base on the company projections and Peer group analysys

WACC 10.8%






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Stable growth 3.0% Cost of Capital 10.8%

Stable growth

982 2.5% 3.0% 3.5% 4.0% 4.5%

DCF 179 9.0% 1,133 1,210 1,301 1,410 1,543

Discount Terminal Value 724 9.5% 1,069 1,136 1,213 1,304 1,414

Total Discount Cash Flow 902 10.0% 1,014 1,072 1,138 1,216 1,308

Net Financial Liability 10.5% 965 1,016 1,074 1,141 1,219

Surplus Assets 80 11.0% 922 967 1,018 1,076 1,143

Equity Value 982 11.5% 884 924 969 1,020 1,078

Current Market Cap [£m] 381 Fair Market Value [£m] 603

Current Market Cap [$m] 621 Fair Market Value [$m] 982

Current Share price [p] 397 Fair Market Price [p] 628

Co

st

of

Cap

ital

PLUS-500 DCF VALUATION [$,Millions]

Equity Value

23 20

57 64

74

83

2010 2011 2012 2013 2014e 2015e

Free Cash Flow$ millions






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2011 2012 2013 2014e 2015e 2016e

16% 35% 18% 12%

50.0 56.1 115.0 155.3 183.2 205.2

Total Revenue 50.0 56.1 115.0 155.3 183.2 205.2 R&D 18.5 - - - - -

M&S 24.2 28.9 44.3 62.1 75.1 84.1

G&A 2.1 4.1 3.6 6.2 7.3 8.2

Operating income 23.7 23.1 67.1 86.9 100.8 112.8

Other income (expense) -0.7 - - - - -

Income before taxes 23.0 23.1 67.1 86.9 100.8 112.8

Provision for income taxes 5.9 6.0 16.5 21.4 24.8 27.7

Net income 17.1 17.1 50.6 65.6 76.0 85.1

25%

Weighted average shares [M] 108 108 108 108

Earnings per share 0.12$ 0.47$ 0.61$ 0.70$ 0.79$

Operating income 23.7 23.1 67.1 86.9 100.8 112.8

Tax Payed -4.7 -3.4 -10.0 -21.4 -24.8 -27.7

Adjustments 4.0 0.1 -0.1 -1.0 -1.0 -1.0

Cash Flow from Op. 23.0 19.8 57.0 64.6 75.0 84.1

PLUS500 LTD [$,Millions]






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Disclaimer The analysis presented in this report is designed to provide information only, and is in no way to be deemed the expression of an opinion, offer, recommendation or advice regarding the purchase and/or holding of and/or sale of the securities and/or financial assets described herein. The research was conducted on the basis of publicly available information, which DS SOLOMON HOLDINGS Ltd. presume to be reliable, though no independent check was conducted to verify the reliability, accuracy, or completeness of the information. Moreover, the information contained in this report makes no pretense of providing all information a potential investor would require; nor does it claim to provide a full analysis of all the facts and details appearing in the report. The information, details, and analysis herein, including the opinions expressed, are subject to changes without additional clarifications being issued to that effect. This report is solely the product of its preparer’s individual analysis, reflecting his understanding of the companies under review herein as of the date of publication. This report is not to be deemed, in any fashion, an alternative to investment advice that takes into consideration the special needs of a given individual. DS SOLOMON HOLDINGS Ltd., as well as its shareholders, employees, and those working under its auspices, are in no way responsible for any damage or loss that might be incurred from the use of this report, if such damage or loss were to occur. Nor can they provide a guarantee or be responsible for the reliability, accuracy, or completeness of the information set forth in this report. This report is the exclusive property of DS SOLOMON HOLDINGS Ltd. It is not to be conveyed to a third party, or copied, duplicated, quoted, published or made public in any way, printed, photocopied, recorded or copied, in whole or in part, without obtaining express written consent in advance.

Plus500 solomon capital report sample only

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