Ig Group Holdings Plc · LSE:IGG
Ig — Investor Day (May 2019)
41 slides from Ig's investor day presentation, May 22, 2019
Slide 1: Strategy and Business Update
Strategy and Business Update 22 May 2019 IG STRATEGY AND BUSINESS UPDATE 1 1
Slide 2: Disclaimer
Disclaimer This presentation, prepared by IG Group Holdings plc (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", “
Slide 3: Context
Context June Felix Chief Executive Officer IG STRATEGY AND BUSINESS UPDATE 3
Slide 4: My perspective on IG
My perspective on IG A great company with a strong core, underpinned by the strength of our balance sheet BUSINESS PEOPLE MODEL STANDING IG Group’s BRAND AND WITH REGULATORS strong REPUTATION core TECHNOLOGY AND CLIENTS INNOVATION IG STRATEGY AND BUSINESS UPDATE 4
Slide 5: What we will discuss today
What we will discuss today JUNE FELIX REVENUE GROWTH TARGETS • Our environment • Core markets: revenue growth at around 3-5% pa over the medium term • Where we are today • Significant opportunities: an increase • Key strategic choices in revenue of £100 million, to around • Our growth levers £160 mi
Slide 6: Our industry is experiencing headwinds and tailwinds
Our industry is experiencing headwinds and tailwinds GROWTH OPPORTUNITIES GROWTH THREATS Increasing demand for leveraged trading IG mitigates via: • Professional client base • Market leadership Growing Increasing Growing interest in Regulatory wealth self-direction international Intervention assets
Slide 7: Market leaders win under tighter regulation
Market leaders win under tighter regulation JAPAN US • Market continued to expand despite leverage • Following regulatory intervention in 2010, restrictions market declined ~25% • Largest firm more than doubled their revenue • Market share of two largest brokers increased between 2011 and 2018 from
Slide 8: Who we are
Who we are Purpose To empower informed, decisive, adventurous people to access opportunities in the financial markets Vision To provide the world’s best trading experience Values Champion the client Lead the way Love what we do IG STRATEGY AND BUSINESS UPDATE 8
Slide 9: Our Strategy
Our Strategy June Felix Chief Executive Officer IG STRATEGY AND BUSINESS UPDATE 9 9
Slide 10: How we view the business today
How we view the business today BACKGROUND • Investment has produced strong growth • Business remains concentrated • In FY19E: – 96% of revenue from OTC leveraged derivatives – ~70% of revenue from UK, EU and Australia IG STRATEGY AND BUSINESS UPDATE 10
Slide 11: Our strategic plans
Our strategic plans THREE ELEMENTS 1 Key strategic choices – our guiding principles 2 Our growth levers – how we will drive our growth 3 Market specific actions – implementing our growth levers IG STRATEGY AND BUSINESS UPDATE 11
Slide 12: Our strategic choices
Our strategic choices In pursuing our Vision we choose to: Operate a sustainable business model Provide the best client experience Win with our technology Tailor client propositions Broaden our product range Extend our geographic reach IG STRATEGY AND BUSINESS UPDATE 12
Slide 13: Our strategic choices: sustainable business model
Our strategic choices Operate a sustainable business model • Aligns our interests with our clients by hedging market exposure • Reduces variability of revenue IG STRATEGY AND BUSINESS UPDATE 13
Slide 14: Our strategic choices: best client experience
Our strategic choices Provide the best client experience • Low friction, seamless and engaging client experiences • Investing in long term relationships IG STRATEGY AND BUSINESS UPDATE 14
Slide 15: Our strategic choices: win with technology
Our strategic choices Win with our technology • Scalable • Stable • Reliable • Flexible IG STRATEGY AND BUSINESS UPDATE 15
Slide 16: Our technology capability
Our technology capability A BROAD, FLEXIBLE SYSTEM DELIVERY CAPACITY Delivered over the last 12 months: • MTF and issuer • Turbo warrant market maker • Options account • Knockouts • New EU subsidiary (IG Europe) • US RFED 40% of our people work in technology Proprietary system Purchased commoditised
Slide 17: What our technology supports
What our technology supports Pan-EU MTF CFTC regulated Market making exchange Options Content distribution Robo-advice CFDs Spread betting Share dealing FX OUR TECHNOLOGY IG STRATEGY AND BUSINESS UPDATE 17
Slide 18: Our growth levers
Our growth levers NEW CONTINUING Expanded A global firm with Segmented Multi distribution channels more local focus target markets product Accelerated and Localised marketing and Customised offerings OTC, ETD and non- expanded distribution customer experience for high-value, retail leveraged offerin
Slide 19: Our Strategy: Core markets
Our Strategy: Core markets Targeting revenue growth at around 3-5% per annum over the medium term IG STRATEGY AND BUSINESS UPDATE 19
Slide 20: Core markets: Market characteristics
Core markets: Market characteristics UK AND AUSTRALIA EU EMEA NON-EU AND SINGAPORE 164k ~200k 72k OTC leveraged traders: UK OTC leveraged traders OTC leveraged traders ~400k 75k on exchange Singapore OTC leveraged traders: AUS leveraged traders largest market OTC derivatives Germany Institutional de
Slide 21: Core markets: Our position today
Core markets: Our position today UK AND AUSTRALIA EU EMEA NON-EU AND SINGAPORE 42% 17% 26% IG’s market share of IG’s share of IG’s market share premium traders: UK premium traders in Singapore 17% France 45% IG’s market share of IG has the largest share IG’s market share premium traders: AUS of prim
Slide 22: Core markets: Our strategy
Core markets: Our strategy Grow revenue, focusing on high value and institutional client segments 1 Focus on high value segment • Preferred fees • New account features • Exclusive content • Expanded premium client service 2 • Granular acquisition • Apply machine learning to Tailor acquisition optimi
Slide 23: Our Strategy: Significant opportunities
Our Strategy: Significant opportunities Targeting an increase in revenue of £100 million, to around £160 million in FY22 IG STRATEGY AND BUSINESS UPDATE 23
Slide 24: Significant Opportunity 1: EU (new products)
Significant Opportunity 1: EU (new products) Expand product set to capture greater share of leveraged trading market MARKET CHARACTERISTICS OUR POSITION TODAY OUR STRATEGY • Launched CFDs in Europe in • New Products: ~400k 2006 – Turbo warrants on exchange traders – Options • Market growth through c
Slide 25: Significant Opportunity 1: EU (new products)
Significant Opportunity 1: EU (new products) Disrupt the turbo market SPECTRUM STRENGTHS OF OUR OFFERING TARGET MARKETS Superior UX 24 hour trading Retail client focused liquidity Third-party distribution • Full marketing launch • B2C via IG Europe in September 2019 • B2B – distribute via other brok
Slide 26: Significant Opportunity 2: USA
Significant Opportunity 2: USA Win significant share in margin FX market MARKET CHARACTERISTICS OUR OFFERING TODAY OUR STRATEGY • Offer high-quality news and analysis to 695k engaged audience futures and options traders • 1.7m unique global monthly visitors 90k • Launched in January 2019; initial in
Slide 27: Significant Opportunity 3: Japan
Significant Opportunity 3: Japan Product disruption, tailored local products and partnerships to grow market share MARKET CHARACTERISTICS OUR POSITION TODAY OUR STRATEGY • Low market share (~2%) • Target active FX traders £1bn • Clear demand for innovative • Tailor UX to meet local revenue products:
Slide 28: Significant Opportunity 4: Asia
Significant Opportunity 4: Asia Target two growth plays in rapidly expanding market MARKET CHARACTERISTICS OUR POSITION TODAY OUR STRATEGY • Focus on serving organic 47.8% demand Size of CAGR in Chinese online opportunity retail securities 2012-2017 • Non-tailored proposition Leveraged securities •
Slide 29: Significant Opportunity 4: Asia – Play 1
Significant Opportunity 4: Asia – Play 1 Establish partnerships to scale more quickly MARKET CHARACTERISTICS OUR STRATEGY • Establish local presence in Hong Kong to 45% access Greater China of global online retail securities trading volume from Greater China Partner with Offer locally 75% major Asia
Slide 30: Significant Opportunity 4: Asia – Play 2
Significant Opportunity 4: Asia – Play 2 Investigate options to disrupt the listed leveraged securities market MARKET CHARACTERISTICS OUR STRATEGY Listed leveraged product market is growing fast • Use our extensive experience of operating 140 a trading venue for leveraged securities 120 • Obtain the
Slide 31: Significant opportunity 5: Institutional
Significant opportunity 5: Institutional Gain a meaningful share of ~£500m small hedge fund and family office market MARKET CHARACTERISTICS OUR POSITION OUR STRATEGY • Tier 1 prime brokers • Currently serve • Target <$200m AUM hedge funds concentrating on larger funds dozens of such clients and fami
Slide 32: Our future
Our future WE WILL HAVE New distribution channels, including partnerships Expanded and localised geographic offering, especially in Asia More diverse client base Broader product range Under investigation IG STRATEGY AND BUSINESS UPDATE 32
Slide 33: Financials
Financials Paul Mainwaring Chief Financial Officer IG STRATEGY AND BUSINESS UPDATE 33
Slide 34: FY19E financial performance
FY19E financial performance REVENUE Underlying £m FY18 FY19E £m FY18 FY19E change change Revenue 569 475 ESMA region 375 263 (30%) (26%) Other income 2 - Rest of the World 173 190 10% 2% Net operating income 571 475 OTC Leveraged 548 453 (17%) (17%) Share dealing 4 5 Operating expenses (254) (257) N
Slide 35: Medium term financial targets: Revenue
Medium term financial targets: Revenue “Core markets: revenue growth at around 3-5% pa over the medium term” CORE MARKETS OUR PLANS £m FY19E • Benefit from continued growth in demand UK 185 • Gain market share through: EU 75 – Better client segmentation Australia 70 – Localisation EMEA non-EU 40 • F
Slide 36: Medium term financial targets: Revenue
Medium term financial targets: Revenue “Significant opportunities: an increase in revenue of £100 million, to around £160 million in FY22” SIGNIFICANT OPPORTUNITIES OUR PLANS £m FY19E EU (new products): Japan: EU (new products) - • Options • Product localisation USA 17 • Spectrum and marketing to Ja
Slide 37: Medium term financial targets: Operating Expenses
Medium term financial targets: Operating Expenses £m FY18 FY19E FY20 Subsequent years Prospect acquisition 79 75 +~25% In line with revenue Sales and client service 29 29 +~10% In line with revenue Technology development 28 32 +~10% +~3% pa Other activities 105 110 +~3% +~3% pa Cash Operating Expens
Slide 38: Capital, liquidity and dividends
Capital, liquidity and dividends “The Board expects to maintain the 43.2p per share annual dividend until the Group’s earnings allow the Board to resume progressive dividends” REGULATORY CAPITAL AVAILABLE LIQUIDITY H1 FY19 H1 FY19 Risk exposure amounts (REA) £1,819m Current liquid assets £918m Requi
Slide 39: Summary
Summary June Felix Chief Executive Officer IG STRATEGY AND BUSINESS UPDATE 39
Slide 40: Conclusion: IG has a bright future
Conclusion: IG has a bright future Harness IG’s unique strengths, scale and balance sheet to achieve sustainable growth • Build on our strong core business • Extend to new geographies • Add new products • Serve a broader set of sophisticated client segments • Expand our distribution channels IG STRA
Slide 41: Q&A
Q&A IG STRATEGY AND BUSINESS UPDATE 41