Ig Group Holdings Plc · LSE:IGG
Ig — FY2024 Earnings Presentation
40 slides from Ig's earnings presentation, July 2024
Slide 1: Results presentation
Results presentation Full year ended 31 May 2024 1
Slide 2: Agenda
1. Early impressions 2. Financial performance Agenda 3. Initial priorities 2
Slide 3: Early impressions
IG Group Early impressions
Slide 4: Early impressions
Early impressions Some relevant scale in OTC derivatives Resonance with high-value, typically older clients Well established brand A solid platform for growth Strong compliance and risk management Highly cash generative …but considerable work to do on culture and tech stack 4
Slide 5: Supportive industry structural growth drivers
Supportive industry structural growth drivers Digital engagement improving Technology Growth of self-directed trading and investing access to financial markets Content & Increasing interest in financial 5-year market CAGRs (2018-23): education markets Core CFD markets (active clients) +4% 1 Resultin
Slide 6: Large target addressable markets
Large target addressable markets Product TAM penetration Estimated TAM IG revenue (FY24) CFDs / FX 9% >£8bn1 £733m Exchange traded <3% >£8bn2 £201m futures & options Turbo-like products <1% >£1bn3 £14m Share dealing & <1% >£30bn4 £40m managed funds 1 Internal estimate for global OTC retail opportuni
Slide 7: A fast-paced competitive landscape
A fast-paced competitive landscape Small number of global players with relevant scale OTC Some local market champions / long tail of sub-scale players derivatives Emerging B2B2C enablers (e.g. CMC supporting Revolut) Exchange US market dominated by large players with broad product ranges tra
Slide 8: A constantly evolving regulatory landscape
A constantly evolving regulatory landscape Growth throughout regulatory change Regulatory outlook Total revenue has grown throughout 987 Regulation will continually evolve and impact parts periods of regulatory change of our business supported by diversification (£ million) We continue to adapt
Slide 9: Lots of work to do to grow market leadership
Lots of work to do to grow market leadership Product Culture Efficiency Product and UX needs to Requirement to increase Expense growth has be more responsive to ownership and exceeded revenue growth client needs accountability in recent years Lack of successful product Reluctance to fail f
Slide 10: Financial performance
O02 IG Group Financial performance
Slide 11: FY24 summary
FY24 summary Increasingly diversified revenue enhancing earnings resilience through the cycle Costs better controlled Significant reduction in minimum regulatory capital requirements Returned £423m of capital via dividends and buybacks Embedding a new organisational structure 11
Slide 12: Year in review
Year in review Total revenue (£m) Total revenue £987.3m (3%) 846 967 1,023 987 Adjusted profit before tax 654 574 £456.3m 483 (7%) FY18 FY19 FY20 FY21 FY22 FY23 FY24 Adjusted basic EPS 90.3p (5%) Adjusted profit before tax (£m) Capital returned in FY24 £423m 16% 474 494 491 456 281 296 Dividend per
Slide 13: P&L
P&L Adjusted basis (£m) FY24 FY23 Change Net trading revenue 844.9 941.8 (10%) Decline in trading revenue reflecting soft Net interest income 142.4 80.8 76% market conditions versus a stronger prior Total revenue 987.3 1,022.6 (3%) year comparative Betting duty and other operating income 1.5 (2.5)
Slide 14: Performance by product line
Performance by product line Net trading revenue (£m) FY24 FY23 Change OTC derivatives 681.0 782.0 (13%) Total net trading revenue down 10% driven by Exchange traded derivatives 141.1 137.1 3% weaker OTC derivatives performance Stock trading and investments 22.8 22.7 - Total Group 844.9 941.8 (10%)
Slide 15: Our OTC market position has weakened
Our OTC market position has weakened IG OTC primary account market share1 Our global OTC market leadership position has 32% UK Australia Singapore weakened as evidenced by declining primary account share in several geographies 24% 21% Product velocity and customer experience are key to 19% stren
Slide 16: tastytrade well placed in a growing market
tastytrade well placed in a growing market OCC options volumes (ADV - m)1 tastytrade revenue ($m) tastytrade client funding ($bn) Trading revenue 252 Client equity (market 5.1 45 Interest income value of open positions) 42 Client cash balances 40 205 92 3.7 34 3.4 162 60 3.2 3.2 139 1.9 1.3 23 1.3 2
Slide 17: Operating costs better controlled
Operating costs better controlled Adjusted operating costs (£m)1 FY24 FY23 Change Tapered total operating cost growth on prior year Fixed remuneration 199.1 188.5 6% levels (FY23 +16%) Advertising and marketing 83.1 93.5 (11%) Fixed remuneration includes £2 million severance Revenue related cost
Slide 18: Update on litigation and risk management
Update on litigation and risk management Defending a class action matter filed in 2023 against two IG Group operating entities in Australia relating to alleged historical conduct Litigation Successfully defended a claim for alleged losses relating to nickel trades in 20221 Taking legal action
Slide 19: The Group capital position remains strong
The Group capital position remains strong £1,200m Minimum Group regulatory capital requirement reduced by 40% to £299 million at 31 May 2024, £1,000m driven by our strong risk management +£30m framework £800m Regulatory capital resource includes a deduction £499m for the remainder of the current
Slide 20: Our capital allocation framework
Our capital allocation framework Hold an appropriate level of regulatory capital and liquidity. Headroom of £638 1) Regulatory capital requirements million at 31 May 2024 (31 May 2023: £499 million). 2) Organic investments Generate operating return on existing capital and invest organically for grow
Slide 21: FY25 guidance
FY25 guidance Total revenue and adjusted PBT expected to be in line with market expectations1 Tax rate expected to be approximately 24% £150 million share buyback will commence following completion of the existing programme and is expected to complete by 31 January 2025, subject to share price
Slide 22: Initial priorities
IG Group Initial priorities
Slide 23: How to win
How to win Invest in product and deliver it quickly Improve Deliver operating acquisition and leverage retention Drive scale advantage Control costs Grow revenue 23
Slide 24: Initial priorities
Initial priorities Product Culture Efficiency Get closer to our clients Increase ownership and Seek opportunities to and deliver products and accountability reduce cost to serve experiences that meet their needs Move faster to close Drive scalability initiatives not delivering Broaden cu
Slide 25: Existing product assessment
Product Culture Efficiency Existing product assessment No current offering Fully developed offering1 EMEA UK EU Australia Singapore Japan USA2 Institutional Overall ex EU OTC derivatives Exchange- traded derivatives Stock trading and investments Crypto 1 With potential to optimise existing offering
Slide 26: Getting closer to our customers
Product Culture Efficiency Getting closer to our customers Old structure New structure Customers Customers Strategic enablers2 Commercial 1 International APAC & ME Americas Commercial Technology Product UK Technology Product Group functions Smaller, more agile group functions New structure enhances
Slide 27: Our leadership team
Product Culture Efficiency Our leadership team Functional leaders Divisional leaders Adam Wheelwright JJ Kinahan Chief Technology Officer Executive Directors Head of Americas 1 year at IG, background in 2 years at IG, background in Breon Corcoran fintech and capital markets brokerage and market maki
Slide 28: Seeking greater efficiency
Product Culture Efficiency Seeking greater efficiency Cost growth has exceeded revenue growth Actions taken in FY24 are beginning to in recent years enhance efficiency Our efficiency programme has reduced period end headcount… FY23, 2,672 12% FY19, 1,788 9% FY24, 2,570 FY21, 2,067 …and changed our g
Slide 29: Summary
Summary A solid platform for growth Strong structural growth drivers and large addressable market opportunities Three initial priorities - product velocity, culture and efficiency Lots of work to do to unlock our potential 29
Slide 30: Q&A
Q&A IG Group
Slide 31: Appendices
Appendices IG Group
Slide 32: Reconciliation of alternative performance measures
Appendix 1 Reconciliation of alternative performance measures Adjusted operating costs (£m) FY24 FY23 Adjusted profit before taxation and EPS £m (unless stated) FY24 FY23 Operating costs 604.1 583.8 Earnings per share 79.4 86.9 Net credit losses on financial assets 15.5 1.1 Weighted average number o
Slide 33: Regulatory capital headroom bridge
Appendix 2 Regulatory capital headroom bridge Headroom Headroom May 23 May 24 33
Slide 34: OTC client attrition curves
Appendix 3 OTC client attrition curves 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0 1 2 3 4 5 6 7 8 9 10 11 Months after first trade FY19 FY20 FY21 FY22 FY23 FY24 34
Slide 35: Our updated Brighter Future Framework
Appendix 4 Our updated Brighter Future Framework Framework produced in line with Planet UN Sustainable Development Goals People Best practice Focus of our Brighter Future Fund on empowerment through education. Announced an additional Products Community £3.5 million donation to charitable cause
Slide 36: Net trading revenue and drivers: OTC derivatives
Appendix 5 Net trading revenue and drivers: OTC derivatives Revenue (£m) FY24 FY23 FY22 UK 255.0 297.6 328.1 EU 87.5 100.3 103.4 EMEA non-EU 44.3 49.3 50.4 Australia 80.9 95.2 88.3 Singapore 72.1 68.3 73.5 Japan 78.5 99.3 98.5 Emerging Markets 36.6 39.3 42.8 Institutional 10.2 13.3 9.9 US FX 15.8 19
Slide 37: Net trading revenue and drivers: ETDs and stock trading
Appendix 6 Net trading revenue and drivers: ETDs and stock trading Revenue (£m) FY24 FY23 FY22 ETDs – US market maker - 0.5 1.8 ETDs - tastytrade 127.4 120.9 110.0 ETDs - Europe 13.8 15.7 9.3 Total exchange traded derivatives 141.1 137.1 121.1 Revenue (£m) FY24 FY23 FY22 Stock trading and investment
Slide 38: Net trading revenue and drivers: OTC derivatives
Appendix 7 Net trading revenue and drivers: OTC derivatives FY24 FY24 FY23 FY23 FY22 FY22 Revenue (£m) H2 H1 H2 H1 H2 H1 UK 134.3 120.7 140.2 157.3 170.9 157.2 EU 45.7 41.8 48.4 51.9 52.2 51.2 EMEA non-EU 24.0 20.3 23.6 25.6 24.5 25.9 Australia 39.3 41.6 46.0 49.3 43.1 45.2 Singapore 37.1 35.1 31.7
Slide 39: Net trading revenue and drivers: ETDs and stock trading
Appendix 8 Net trading revenue and drivers: ETDs and stock trading FY24 FY24 FY23 FY23 FY22 FY22 Revenue (£m) H2 H1 H2 H1 H2 H1 ETDs – US market maker - - 0.1 0.5 0.8 1.0 ETDs - tastytrade 69.2 58.2 59.7 61.2 57.3 52.8 ETDs - Europe 8.4 5.4 10.2 5.4 5.5 3.8 Total exchange traded derivatives 77.5 63.
Slide 40: 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",