IG Group Holdings plc · LSE:IGG
IG — H1 FY24 Earnings Presentation
34 slides from IG's earnings presentation, January 2024
Slide 1: Results presentation, half year ended 30 November 2023
Results presentation Half year ended 30 November 2023
Slide 2: What we will discuss today
What we will discuss today O01. CEOreflections O02 Financial performance O03 _— Strategic progress O04 Q&A
Slide 3: CEO reflections
CEO reflections IG Group
Slide 4: H1 achievements
H1 achievements Vv Vv Vv Delivered attractive margins despite soft market conditions tastytrade delivered another consecutive record half year of total revenue Commenced operational improvement programme saving £50 million on a run rate basis by FY26 Strength of risk management system evidenced by m
Slide 5: Financial performance
O02 Financial performance IG Group
Slide 6: First half performance
First half performance Adjusted basis (£m) H1 FY24 H1 FY23, Change Net trading revenue 402.4 494.9 (19%) * Trading revenue performance reflected the Net interest OH re 190% soft market conditions against a strong et interest income : : ° comparative period, offset by interest Total revenue 472.6 519
Slide 7: Trading revenues impacted by lower volatility
Trading revenues impacted by lower volatility Adjusted trading revenue (£m) H1 FY24 H1 FY23 Change OTC derivatives 327.7 416.5 (21%) Exchange traded derivatives 63.6 67.1 (5%) Stock trading and investments 11.1 11.3 (1%) Total Group 402.4 494.9 (19%) Active clients (000) H1 FY24 H1 FY23 Change OTC d
Slide 8: Cost growth for the half in line with guidance
Cost growth for the half in line with guidance Adjusted operating costs (Em) H1FY24._-H1FY23_—_ Change . papered cost growth down from ful year due Fixed remuneration 100.2 93.1 8% © series OF actions on variable COSts Advertising and marketing 43.8 43.7 - * Marketing costs in line reflecting a swit
Slide 9: Robust capital position maintained
Robust capital position maintained * Minimum regulatory capital requirement reduced by over 40% to £290 million at 30 Nov 2023, £1,000m driven by our strong risk management framework tei22m * Regulatory capital resource reduced in the £800m period due to timing of distributions in the year: - Final
Slide 10: Strategic progress
Strategic progress IG Group
Slide 11: Strategy to grow through multiple revenue streams has delivered strong results
Strategy to grow through multiple revenue streams has delivered strong results FY19 - FY23 total revenue CAGR of 21%! FY19 -FY23 geographic growth +£349m Over-the- counter Exchange Ayr revenue Stock traded’ CAGR trading Ayr revenue 9 4yr revenue CAGR 1 5 % CAGR 83% 34% All growth periods are from FY
Slide 12: Multiple growth levers in Core Markets+
Multiple growth levers in Core Markets+ in le ©& Scale our business in Improve hedging underweight efficiency regions & Reduce attrition Annualised benefit from long tenured from rising interest client base rates in FY24 New product innovation and
Slide 13: Significant opportunities in High Potential Markets
Significant opportunities in High Potential Markets IG US and International Spectrum growth tastytrade is Major platform growth to support the growing market upgrades and opportunities still portfolio share in a growing enhancements largely untapped market Annualised benefit from rising interest rat
Slide 14: tastytrade powering ahead...
4y StockBrokers on tastytrade powering ahead... Options * Another consecutive record half of total revenue, Trading now generating 20% of the Group’s revenue 2024 . . a. . Chicago Tribune tN * Trading revenue up in lower volatility environment * Diversified revenue streams tastytrade ($m) H1 FY24 H1
Slide 15: ..With an excellent trajectory for growth
..With an excellent trajectory for growth tastytrade total client equity continues to increase... .as does retail market share... 3.2% an 4.2 ~ 41 40 40 3.0% | ye ys ¥ ¥ Mm Retail market share - - -3 per. Mov. Avg. (Retail market share) $ billion w w % OCC retail volumes" bv Ny ON RB & ®& BS se ez 5
Slide 16: Operational improvement programme: enhancing efficiency and streamlining the business
Operational improvement programme: Enhancing efficiency and streamlining the business Delayering De-centralising Automating Location strategy + Flatter organisational * Enhancing our regional + Dedicated Al programme * Reducing headcount in structure to reduce structure by aligning in Marketing, tes
Slide 17: Operational improvement programme: how we're doing it
Operational improvement programme: how we're doing it How the programme will be executed Significant cost savings expected Run rate cost saving of £50 million by FY26, phased over the over the medium term next 3 years achieved through: £60 JV 10% net reduction in global headcount’ £50 £40 Vv Expandi
Slide 18: Large, high-quality client base ready to trade
Large, high-quality client base ready to trade How our wider client base will drive active traders Clients with a live account have already passed account opening - they are ‘pre-approved traders’ Semi-active' and active clients: 691k impact in reactivating clients who may not have traded An increas
Slide 19: Growth in client balances provides future trading potential
Growth in client balances provides future trading potential Total client assets continue to grow despite market headwinds 10 9 8 * Over £9.3 billion of client cash and assets held 7 through IG Group, up from £2.6 billion in FY19 § 6 * Total client balance remains resilient despite 58 lower volatilit
Slide 20: Our clients continue to seek trading opportunities
Our clients continue to seek trading opportunities 93% 77% fal of clients expect their of our clients intend to trading volumes to continue trading leverage increase or remain the products for at least 5 years same in the next 6 months ce) 827% L_] of clients would be interested in trading other pro
Slide 21: Culture of innovation continues
Culture of innovation continues SP M European retail exchange offering 24/5 derivatives trading Deep liquidity pool created in partnership with some of the leading retail issuers and distributors in Europe Strong revenue growth since launch Highly scalable platform ‘tastycrypto Crypto trading platfo
Slide 22: A compelling investment case
A compelling investment case 2e9 Well positioned to benefit from the structural growth of self-directed trading and investing ©) Strong and scalable global competitive position in large and growing markets Q Differentiated client experience driven by high-quality execution, content and technology aN
Slide 23: Q&A
Q&A IG Group
Slide 24: Appendices
Appendices IG Group
Slide 25: Guidance and outlook
Appendix 1 Guidance and outlook * Medium-term guidance of total revenue growth of 5-7% for Core Markets+ and 25-30% for High Potential Markets per annum For US interest income, we expect a movement of c.$4m per 25bps change in the Fed Funds rate Operational improvement programme to save £10m in FY24
Slide 26: Reconciliation of alternative performance measures
26 Appendix 2 Reconciliation of alternative performance measures Adjusted operating costs (£m) H1FY24 H1FY23 Adjusted profit before taxation and EPS £m (unless stated) H1FY24 H1FY23 Operating costs 299.9 278.8 Earnings per share 33.4p 45.8p Net credit losses on financial assets 10.5 11 Weighted aver
Slide 27: OTC client attrition curves in line with previous years
Appendix 3 OTC client attrition curves in line with previous years —FY20 —FY21 —— FY22 — FY23 ----Historic average (FY16-FY 19) Year 1 Year 2 Year 3 Year 4
Slide 28: Half year cost walk
Appendix 4 Half year cost walk _ Reg fees & £ million 14 variable rem Advertising IT and other Revenue 5 & marketing related costs r | — 9 P| | (10) Fixed _ Revenue | | ee Advertising ©) and other remuneration related costs remuneration & marketing Ll 1 J Reg fees & +3Y variable rem | ] 3% +7% H1 FY
Slide 29: Regulatory capital headroom bridge
Appendix 5 Regulatory capital headroom bridge £ million 127 Dividend paid Shares M ‘i 208 repurchased Fane in Income in (127) 24 commitment the period 61 — | (151) Movement in movement / (100) Movement in foreseeable requirement dividend Headroom Adjusted headroom Headroom May 23 Nov 23
Slide 30: Broker margin
30 Appendix 6 Broker margin £900m £800m £700m £600m £500m £400m £300m £200m £100m FY18 PEAK: £453m. AVERAGE: £372m FY19 PEAK: £456m AVERAGE: £332m FY20 PEAK: £381m AVERAGE: £316m FY21 PEAK: £683m. AVERAGE: £489m FY22 PEAK: £775m. AVERAGE: £633m_ FY23 H1 FY24 PEAK: £758m AVERAGE: £633m PEAK: £757m AV
Slide 31: Our Brighter Future Framework
Appendix 7 Our Brighter Future Framework * Approved £4 million donation to the Brighter Future Fund * 795 colleagues taken part in Best volunteering and fundraising events People ©) practice * Chicago Tribune announced IG e e e North America as a Top Workplace in Chicago T * Finalist in ‘Responsible
Slide 32: Net trading revenue and drivers - Core Markets+
Appendix 8 Net trading revenue and drivers - Core Markets+ H1 H2 H1 H2 H1 H2 H1 H2 H1 Revenue(£m) FY24 FY23 FY23. FY22 FY22 FY21 FY21 FY20_ FY20 UK 120.7 1402 157.3 1709 157.2 1674 1500 1480 92.7 EU 418 48.4 51.9 52.2 51.2 53.6 49.0 547 33.1 EMEA non-EU 20.3 23.6 25.6 24.5 25.9 28.2 28.4 32.5 21.3 A
Slide 33: Net trading revenue and drivers - High Potential Markets
Appendix 9 Net trading revenue and drivers — High Potential Markets H1 H2 H1 H2 H1 H2 H1 H2 H1 Revenue(£m) FY24 FY23, FY23, FY22 FY22 FY21 FY21 FY20 FY20 US options and futures 58.2 59.7 61.2 67.3 52.8 - - - 7 US FX 75 8.6 11.0 94 75 64 5.2 42 1.6 US market making - 0.1 0.5 08 1.0 16 1.9 1.8 1.3 Tot
Slide 34: Disclaimer
Disclaimer This presentation, prepared by IG Group Holdings pie (the "Company"), may contain forward-looking statements about the Company and its subsidiaries (the "Group"). Such forward-looking statements can be identified by the use of forward- looking terminology, including the terms "believes",