Ig Group Holdings Plc · LSE:IGG
Ig — FY2020 Earnings Presentation
38 slides from Ig's earnings presentation, Jul 23, 2020
Slide 1: Results Presentation: Full year ended 31 May 2020
| THINKING BIGGER Qa 4 w rs Ww x - 0} Z fa =< wi a Results Presentation Full year ended 31 May 2020 July 23, 2020 IG Group
Slide 2: What we will discuss today
FY20 Summary June Felix What we will discuss G4 FY20 Trading today Financial Performance Charlie Rozes Strategic Update and Outlook June Felix IG Group
Slide 3: FY20 Summary
FY20 Summary June Felix Chief Executive Officer IG Group
Slide 4: CEO Reflections
CEO Reflections 1. Outstanding performance in FY20 positions us well to deliver on our medium-term targets 2. Our response to Covid-19 shows the resilience of our people, systems and business model 3. Our financial strength, size and global scale will allow us to deliver shareholder returns while in
Slide 5: FY20 Highlights
FY20 Highlights Net trading revenue £649.2m t36x% Good underlying growth in Q1-Q3 - OTC Leveraged revenue up 9%' Exceptional Q4 performance ~ 86% higher than @3 FY20 £2 95.9m 52% 5 () * Progress achieved against our strategic targets * Successful navigation through Covid-19 Basic EPS pandemic to dat
Slide 6: Q4 FY20 Trading
Q4 FY20 Trading June Felix Chief Executive Officer IG Group
Slide 7: Our Business Model
Our Business Model Fit for purpose with unprecedented levels of market volatility Our differentiated business model, strong risk management and Board approved risk limits remain unchanged Our interests are aligned with those of our clients — Our revenue does not benefit from client trading losses, n
Slide 8: Our Technology and Operations
Our Technology and Operations Handled exceptional Q4 trading volumes and client activity DAILY TRADES AND VOLATILITY Successful implementation of business continuity plan — Smooth transition to 100% rem workin 16 90 Smooth transition to 100% remote working Trades —Vix Covid-19 and Oil volatility * O
Slide 9: Q4 Performance
Q4 Performance Record revenue and active clients QUARTERLY NET TRADING REVENUE (£m) £259.5m 51,200 a Net trading revenue New clients onboarded “ _ * “ _ °° ° | |] L [ [| [J [J : 50 ° Qi Q2 Q3 Q4 Qi Q2 Q3 a4 199,300 £1.96bn we - ; } ; ; CLIENT MONEY BALANCE (£bn) Unique clients trading Client money b
Slide 10: Q4 Client Cohort
Q4 Client Cohort Exceptional client acquisition, maintained strict onboarding standards 53% of the FY20 new clients were onboarded in Q4 FIRST TRADES - OTC LEVERAGED — 35,300 new OTC Leveraged clients — 17,900 new Stock Trading clients FY20 Full Year Q4 Cost efficient acquisition due to investment i
Slide 11: Financial Performance
Financial Performance Charlie Rozes Chief Financial Officer IG Group
Slide 12: Income Statement
Income Statement A strong rebound from the prior year (£m) FY20 FY19 %Change (£m) FY20 FY19 %Change Net trading revenue 649.2 476.9 36% Operating profit 296.0 192.9 53% Net interest on client money 5.0 6.3 Net finance (cost) / income (0.1) 1.4 Betting duty and FTT (7.4) (7.9) Profit before taxation
Slide 13: Revenue by Market
Revenue by Market High growth rates seen across all markets Revenue (£m) FY20 FY19 %Change ESMA region - OTC Leveraged 328.5 260.4 26% Other Core Markets - OTC Leveraged 198.7 149.1 33% Stock Trading & Investments 13.6 8.7 57% Total Core Markets 540.8 418.2 29% Significant Opportunities - OTC 90.0 4
Slide 14: OTC Leveraged Revenue
OTC Leveraged Revenue Strong contribution from both existing and new clients (Em) 700 650 600 550 500 450 400 350 300 FY18 (98) Existing clients trading less Existing clients not trading Returning clients 68 66 Existing clients trading more New clients FY19 (27) (42) a Existing Returning clients not
Slide 15: Q1-Q3 Revenue Performance
Q1-Q3 Revenue Performance Good progress delivered prior to Q4, in line with targets OTC Leveraged Revenue (£m) Active Clients (000) Q1-Q3 Q1-Q3 % Q1-Q3 Q1-Q3 % FY20 FY19 Change FY20 FY19 Change ESMA region" 197.0 200.3 (2%) 73.1 74.1 (1%) Other Core Markets 122.1 110.6 10% 34.0 31.6 7% Core Markets
Slide 16: Operating Expenses
Operating Expenses Planned investment to support further growth (Em) FY21 cost guidance: 310 5 * Operating expenses Change in lease . ia — £295m FY20 underlying Ce || Charitable cost base to grow ~3% donation u — £10m investment to 290 5 ree support next stage of 3 Other Significant Opportunities 6
Slide 17: Financial Position
Financial Position Highly cash generative, strengthened position in FY20 £m FY20 FY19 Own funds generated from operations 345.0 198.1 as % of operating profit 117% 103% Own funds' 832.5 720.8 Liquid assets’ 1,073.9 928.1 Available liquidity’ 504.0 375.5 Regulatory capital headroom! 273.8 183.8 “— Di
Slide 18: Strategic Update and Outlook
Strategic Update and Outlook June Felix Chief Executive Officer IG Group
Slide 19: Core Markets
Core Markets Our medium-term target: Revenue growth at around 3-5% pa over the medium term Good revenue and client growth prior to Q4 Record Q4 client acquisition 55% of OTC Leveraged revenue generated from clients trading with IG for more than 3 years Existing client base extremely active during Q4
Slide 20: Core Markets Q1-Q3
Core Markets Q1-Q3 Active client base fuelling delivery of our medium-term targets ESMA region' Significant recovery in the Retail client base 26% increase in revenue 8% growth in active ee EMEA ex EU? 14% increase in revenue 6% growth in active clients Australia? 10% increase in revenue 8% growth i
Slide 21: Significant Opportunities
Significant Opportunities Our medium-term target: An increase in revenue of £100 million, to around £160 million in FY22 * Applied 4 growth levers to drive progress across the portfolio > Expanded distribution channels: Creating corporate partnerships that accelerate and expand our market penetratio
Slide 22: Significant Opportunities
Significant Opportunities Strong progress towards FY22 target 90% growth in active clients’ Partnership discussions advancing JAPAN EMERGING Launched IG International MARKETS 37% growth in active clients! GREATER New leadership in place CHINA Partnership discussions advancing IG US growing client ba
Slide 23: FY21 Outlook
FY21 Outlook On track to deliver our medium-term targets Anticipate a reversion to more normalised levels of volatility in the course of FY21 in March Capital, funding and liquidity remain very strong Additional £10m investment to support the planned next stage in development of the Significant Oppo
Slide 24: Conclusion
Conclusion * IG has always been client focused, continually evolving and innovating to meet our clients needs * Our robust risk management, differentiated business model and strategy have withstood many challenges * The strength of our financial position allows us to invest for growth and deliver at
Slide 25: Appendices
Appendices IG
Slide 26: ESMA region - underlying performance
Appendix 1 ESMA region - underlying performance OTC Leveraged Average Average Quarterly Revenue (£m) Quarterly Active Clients (000) Q1-Q3 Q2-Q4 % Q1-Q3 Q2-Q4 % FY20 FY19 Change FY20 FY19 Change Professional clients 39.8 40.3 (1%) 5.0 5.1 (1%) Retail clients 25.9 20.6 26% 50.2 46.4 8% ESMA region * 6
Slide 27: Revenue by client tenure
Appendix 2 Revenue by client tenure 0-6 months | 9% 7-12 months | 2 1-3 years PEA 3-5 years MES4 5+ years HRYA4 FY20 55% 5% 10% 30% 16% 39% FY19 OTC LEVERAGED 55% 27
Slide 28: Revenue by year onboarded
Appendix 3 Revenue by year onboarded CUMULATIVE AVERAGE OTC LEVERAGED CLIENT VALUE (£) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 IG Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 ‘FY 15 excludes impact of Swiss Franc event Year 6 OTC LEVERAGED REVENUE BY YEAR ONBOARDED (£m) 450 400 350 300 25
Slide 29: OTC Leveraged revenue by asset class
Appendix 4 OTC Leveraged revenue by asset class Commodities = Cryptocurrencies S,, 29
Slide 30: Operating expenses by type and activity
Appendix 5 Operating expenses by type and activity BY COST TYPE (£m) FY20 FY19 Change BY COST ACTIVITY (£m) FY20 FY19 Change Fixed remuneration 116.4 106.3 9% Prospect acquisition 87.2 72.5 20% Advertising and marketing 61.8 51.7 20% Client sales and management 28.1 22.2 26% Bad debts 11.0 1.8 n/m T
Slide 31: Own funds
Appendix 6 Own funds OWN FUNDS FLOW (£m) FY20 FY19 MOVEMENT IN OWN FUNDS (£m) FY20 FY19 Operating profit 296.0 192.9 Net own funds generated from operations 287.9 159.7 Depreciation and amortisation 18.9 17.3 Net financing (costs) / receipts (0.8) 0.5 Lease asset depreciation 6.7 - Capital expenditu
Slide 32: Financial position
Appendix 7 Financial position BALANCE SHEET (£m) 31 May 20 31 May 19 Fixed assets 164.3 165.9 Liquid asset buffer 83.8 84.4 Amounts at brokers 437.4 419.3 Cash in IG bank accounts 486.2 373.3 Own funds in client money 66.5 51.1 Liquid assets 1,073.9 928.1 Bank borrowings (100.0) (100.0) Client funds
Slide 33: Broker margin
Broker margin Appendix 8 £381m AVERAGE: £316m PEAK: FY19 £456m AVERAGE: £332m PEAK: FY18 £453m AVERAGE: £372m PEAK: FY17 £366m AVERAGE: £286m PEAK: FY16 £258m PEAK: £294m FY15 AVERAGE: £220m PEAK: £500m £450m £400m £350m £300m £250m £200m £150m £100m £50m £0m 33 IG
Slide 34: Half year analysis - Core Markets
Appendix 9 Half year analysis - Core Markets Revenue (£m) FY20 H2 FY20H1 FY19H2 FY19H1 UK 148.0 92.7 87.2 105.8 EU 64.7 33.1 29.2 38.2 EMEA ex EU 32.5 21.3 21.9 18.9 Australia 61.3 36.9 32.9 35.3 Singapore 36.2 21.5 19.2 20.9 Total OTC Leveraged 321.7 205.5 190.4 219.1 Stock Trading & Investments 9.
Slide 35: Half year analysis - Significant Opportunities
Appendix 10 Half year analysis — Significant Opportunities Revenue (Em) FY20H2 FY20H1 _FYI9H2_—~FY19H1 Japan 30.6 16.0 10.4 88 Emerging Markets 17.2 11.2 94 8.0 us 42 1.6 0.2 - Institutional 58 34 2.2 29 Total OTC Leveraged 578 32.2 22.2 19.7 ETDs-Nadex 99 78 85 83 ETDs- Spectrum o7 0.0 : - Total Si
Slide 36: Quarterly analysis - Core Markets
Appendix 11 Quarterly analysis - Core Markets Fy20 FY20 FY20 FY20| FYI9 FY19 FY19_ FY19 Revenue (Em) @4 @3 Q2 Qi @4 @3 Q2 Qi UK 936 544 458 470/ 445 427 608 550 EU 378 «169° 184177] 156) 138.7155 22.7 EMEA ex EU 202 123 103 110] 113 107 100 89 Australia 322 192 171 198] 170 159 179 17.4 Singapore 24
Slide 37: Quarterly analysis - Significant Opportunities
Appendix 12 Quarterly analysis — Significant Opportunities Fy20 FY20 FY20 FY20| FY19 FY19 FY19_ FY19 Revenue (£m) a4 Qs Q2 Qi a4 @3 @2 Qi Japan 199 107 84 76] 48 55 50 39 Emerging Markets 109 63 53 59} 52 42 49 34 us 28 13 10 06; 02 0.0 - - Institutional 38 20 1.6 18 1.2 1.0 1.4 15 TotalOTC Leverage
Slide 38: Forward-looking statements notice
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", “projects”,