Ig Group Holdings Plc · LSE:IGG
Ig — FY2022 Earnings Presentation
41 slides from Ig's earnings presentation, 2022
Slide 1: Results presentation, full year ended 31st May 2022
THINKING BIGGER LEADING THE FIELD Results presentation Full year ended 31st May 2022 1
Slide 2: What we will discuss today
01 CEO reflections June Felix What we will 02 Strategic progress June Felix discuss today 03 Financial performance Charlie Rozes 04 Capital Allocation Framework Charlie Rozes 05 Summary and outlook June Felix and Charlie Rozes 2
Slide 3: CEO reflections
01 CEO reflections June Felix Chief Executive Officer 3
Slide 4: CEO reflections
Group Core Markets+ High Potential CEO reflections 1. A year of strategic progress, redefining the Group 2022 − Record revenue − Evolved product and geographic offering 2. Driven by our high quality and loyal client base − Client behaviours and trading patterns remain consistent − Clients trade in a
Slide 5: Accelerating strategic progress
Group Core Markets+ High Potential Accelerating strategic progress £967m 14% 381k 31% 21.4m 275% V FY21 V FY21 V FY21 TOTAL ACTIVE TOTAL REVENUE 1 CLIENTS ADDRESSABLE MARKET PRODUCT DIVERSIFICATION GEOGRAPHIC DIVERSIFICATION FY19 FY22 FY19 FY22 13% 45% 14% 3% £467m £967m £467m £967m 10% 84% 97% 31%
Slide 6: Strategic progress
02 Strategic progress June Felix Chief Executive Officer 6
Slide 7: Strong foundations for future growth
Group Core Markets+ High Potential Strong foundations for future growth CORE MARKETS + HIGH POTENTIAL MARKETS Total revenue 1 £827.6m Total revenue 1 £139.7m Total revenue growth of 5 - 7% per annum Total revenue growth of 25 - 30% per annum over the medium term over the medium term • Sustained step
Slide 8: Significant growth across all Core Markets+
Group Core Markets+ High Potential Significant growth across all Core Markets+ £180m £160m H1 FY20 £140m NET TRADING REVENUE H2 FY20 £120m H1 FY21 £100m H2 FY21 £80m H1 FY22 £60m H2 FY22 £40m £20m £0m UK Japan EU Australia Singapore EMEA non-EU Emerging Stock trading Institutional Markets H2 FY22 v
Slide 9: Client retention continues to drive long-term value
Group Core Markets+ High Potential Client retention continues to drive long-term value OTC DERIVATIVES CLIENT RETENTION IN LINE WITH ENDURING REVENUE FROM OUR LOYAL CLIENT BASE HISTORICAL AVERAGE 100% £900m Historic average (FY15-FY17) OTC DERIVATIVES NET TRADING REVENUE 90% £800m FY18 80% £700m FY1
Slide 10: Our client base of active traders is unique
Group Core Markets+ High Potential Our client base of active traders is unique HISTORICALLY, INFLATION HAS NOT IMPACTED OUR CLIENTS SAY THEY WOULD CUT BACK ON OTHER REVENUE GROWTH DISCRETIONARY SPENDING BEFORE TRADING AND INVESTING… £1,200m 6.00% Luxury items Entertainment & socialising £1,000m 5.00
Slide 11: Outstanding growth in Japan
Group Core Markets+ High Potential Outstanding growth in Japan NET TRADING REVENUE AND ACTIVE CLIENT GROWTH FY22 PERFORMANCE FY19 £19.2m FY20 £46.6m FY21 £68.7m FY22 £98.5m £98.5m 43% NET TRADING REVENUE 414% growth FY19 – FY22 £100m 40k £90m 36,800 NET TRADING REVENUE 35k 53% £80m ACTIVE CLIENTS 30
Slide 12: Double digit growth across the High Potentials
Group Core Markets+ High Potential Double digit growth across the High Potentials PRO FORMA 1 HIGH POTENTIAL MARKETS Total revenue2 (£m) FY22 FY21 Change 20% High Potential Markets pro forma total revenue, excluding Nadex US options & futures 2 112.0 96.1 16% US FX 16.6 11.6 43% US market making Tot
Slide 13: Unlocking Spectrum's potential
Group Core Markets+ High Potential Unlocking Spectrum’s potential NET TRADING REVENUE AND ACTIVE CLIENTS FY22 PERFORMANCE FY20 £0.7m FY21 £4.9m FY22 £9.3m 1.06bn 67% €2.3bn 165% £10m 8k SECURITISED DERVIATIVES TRADED VALUE OF TURBOS TRADED £9m £9.3m 7k 90% 41.5% NET TRADING REVENUE £8m ACTIVE CLIENT
Slide 14: tastytrade's fundamentals fostering growth
Group Core Markets+ High Potential tastytrade’s fundamentals fostering growth TASTYTRADE 1 TOTAL REVENUE AND INTEREST RATES FY22 PERFORMANCE £112m 3 FY19 FY20 FY21 FY22 $64.4m $91.7m $138.7m $162.1m 16% $180m 2.50% TOTAL REVENUE 2.5 $160m 2.00% $140m FEDERAL FUNDS RATE 2 £1.6bn TOTAL REVENUE $120m 1
Slide 15: Building on our success and expertise
Group Core Markets+ High Potential Building on our success and expertise • Scaling marketing and growing brand presence − 300% improvement in paid search performance − Improved efficiency of client acquisition through SEO • Platform and product enhancements to broaden customer reach − Risk and analy
Slide 16: Financial performance
03 Financial performance Charlie Rozes Chief Financial Officer 16
Slide 17: An outstanding year – record revenues, profits and active clients
An outstanding year – record revenues, profits and active clients £967.3m £494.3m 96.3p £4.7bn 44.2p Full year 14% 4% 7% 49% 1p TOTAL PROFIT CLIENT MONEY DIVIDEND 1 BASIC EPS REVENUE BEFORE TAX BALANCE 2 PER SHARE 1 Total revenue includes interest on client money 2 Client money balance as at 31 May
Slide 18: Another record year, and profit margin in excess of 50%
Another record year, and profit margin in excess of 50% Adjusted basis (£m) FY22 FY21 Change Net trading revenue 966.5 845.2 14% Interest on client money 0.8 0.3 • Adjusted net trading revenue up 14% Total revenue 967.3 845.5 14% − Excluding tastytrade, revenue up 1% Betting duty and other operating
Slide 19: Revenues now larger and more diverse
Revenues now larger and more diverse £600m £500m £500m £466m • Revenue momentum maintained £437m £409m £391m • Record revenue for full year and H2, despite NET TRADING REVENUE £400m tough comparative periods £300m • Changes in scale and mix of revenue now more £243m evident £200m • Group H2 FY22 rev
Slide 20: Capitalising on a much larger client base
Capitalising on a much larger client base Adjusted net trading revenue (£m) FY22 FY21 Change OTC derivatives 811.5 798.2 2% Exchange traded derivatives 121.2 8.3 nm • OTC derivatives net trading revenue up 2% with Stock trading and investments 33.8 38.7 (13%) reduction in active clients offset by hi
Slide 21: Balancing investment with cost management
Balancing investment with cost management Adjusted operating costs (£m) FY22 FY21 Change Fixed remuneration 150.1 127.0 18% Advertising and marketing 87.1 67.4 29% • Operating costs increase 24% reflecting Revenue related costs 45.3 28.3 60% the inclusion of 11 months of tastytrade costs in FY22 IT,
Slide 22: Capital Allocation Framework
04 Capital Allocation Framework Charlie Rozes Chief Financial Officer 22
Slide 23: Our considerations and priorities
Our considerations and priorities DRIVERS FOR CHANGE FRAMEWORK UNDERPINNED BY THREE KEY PRIORITIES • Completed landmark acquisition of tastytrade as well as the sale of Nadex and the Small Exchange RESPONSIBILITY • Completed comprehensive debt refinancing and broadened the funding base of the Group
Slide 24: Capital allocation framework
Capital allocation framework 1) REGULATORY CAPITAL REQUIREMENTS Hold an appropriate level of regulatory capital and liquidity 2) ORGANIC INVESTMENTS Generate operating return on existing capital and invest organically for future growth 3) COMMITMENT TO CITIZENSHIP Commitment to donate 1% of profit a
Slide 25: Starting from a very strong position
Starting from a very strong position REGULATORY CAPITAL HEADROOM • The Group’s business model is highly capital £1,026m and cash generative in the ordinary course of business £861m • Transition in January 2022 to IFPR was £676m neutral to the Group £528m £370m £559m £570m • Record performance in con
Slide 26: Three things are being delivered today
Three things are being delivered today: 1 A progressive ordinary dividend, with modest but sustainable annual growth Supplemented, where necessary, with a buyback/special dividend to deliver around 2 50% of adjusted profit after tax, in total Additional Distribution of surplus capital above what is
Slide 27: Framework in action
Framework in action £411m • Full year ordinary dividend of 44.2 pence per share – up 1p on FY21 £150m Additional • Commencement of buyback programme of Distributions up to £150 million • Regular Distributions of around 50% of £191m adjusted profit after tax Regular Distributions • Dividend per share
Slide 28: Summary and outlook
05 Summary and outlook June Felix and Charlie Rozes 28
Slide 29: Guidance and outlook
Guidance and outlook CORE MARKETS+ • Target 5-7% total revenue growth per annum over the medium term HIGH POTENTIAL • Target 25-30% total revenue growth per annum over the medium term MARKETS • FY23 operating costs anticipated to drive off H2 FY22 run rate plus inflation impact of OPERATING COSTS mi
Slide 30: Powering towards a stronger future
Powering towards a stronger future Multiple growth levers in the significant and growing global market Diversified business by geography and product Market-leading content, technology and platforms High quality client base driving sustained and enduring value Strong balance sheet supporting flexible
Slide 31: Q&A
Q&A IG Group °
Slide 32: Appendices
Appendices IG Group °
Slide 33: Reconciliation of non-IFRS performance measures
Appendix 1 Reconciliation of non-IFRS performance measures Adjusted revenue (£m) FY22 FY21 Adjusted profit before taxation and EPS £m (unless stated) FY22 FY21 Net trading revenue 972.3 837.3 Earnings per share 92.9p 99.8p Foreign exchange (gain)/loss associated with Weighted average number of share
Slide 34: Net trading revenue and drivers - Core Markets+
Appendix 2 Net trading revenue and drivers - Core Markets+ Revenue (£m) FY22 FY21 FY20 UK 328.1 317.4 240.7 EU 103.4 102.7 87.8 EMEA non-EU 50.4 56.5 53.8 Australia 88.3 119.7 88.2 Singapore 73.5 74.5 56.7 Japan 98.5 68.7 46.6 Emerging Markets 42.8 34.7 28.4 Institutional 9.9 12.3 9.2 Total OTC leve
Slide 35: Net trading revenue and drivers – High Potential Markets
Appendix 3 Net trading revenue and drivers – High Potential Markets Revenue (£m) FY22 FY21 FY20 US FX 16.6 11.6 5.8 Total OTC leveraged 16.6 11.6 5.8 ETDs – MRM 1.8 3.5 3.2 ETDs - tastytrade 110.0 - - ETDs - Spectrum 9.3 4.9 0.6 Total exchange traded derivatives 121.1 8.4 3.8 Total High Potential Ma
Slide 36: Net trading revenue and drivers - Core Markets+
Appendix 4 Net trading revenue and drivers - Core Markets+ FY22 FY22 FY21 FY21 FY20 FY20 Revenue (£m) H2 H1 H2 H1 H2 H1 UK 170.9 157.2 167.4 150.0 148.0 92.7 EU 52.2 51.2 53.6 49.0 54.7 33.1 EMEA non-EU 24.5 25.9 28.2 28.4 32.5 21.3 Australia 43.1 45.2 58.1 61.6 51.4 36.9 Singapore 36.8 36.7 38.4 36
Slide 37: Net trading revenue and drivers – High Potential Markets
Appendix 5 Net trading revenue and drivers – High Potential Markets FY22 FY22 FY21 FY21 FY20 FY20 Revenue (£m) H2 H1 H2 H1 H2 H1 US FX 9.1 7.5 6.4 5.2 4.2 1.6 Total OTC leveraged 9.1 7.5 6.4 5.2 4.2 1.6 ETDs – MRM 0.8 1.0 1.6 1.9 1.8 1.3 ETDs - tastytrade 57.3 52.8 - - - - ETDs - Spectrum 5.5 3.8 2.
Slide 38: Strategy embeds ESG across our business
Appendix 6 Strategy embeds ESG across our business Financial education Products Onboarding and safeguards Security • Became a constituent of the FTSE4Good Index Equality, diversity and inclusion • Pledged 1% of annual post-tax profits to community outreach each year until 2025 People Talent developm
Slide 39: OTC leveraged net trading revenue bridge
Appendix 7 OTC leveraged net trading revenue bridge (81) 102 163 (7) (87) (£m) (56) 798 812 Existing clients trading less 6 74 (66) New Existing Returning clients clients not clients 10 trading New Existing Existing Returning clients 617 clients not clients clients trading trading more FY20 FY21 FY2
Slide 40: Cost guidance waterfall
Appendix 8 Cost guidance waterfall Adjusted operating costs £m 15.4 19.1 464.9 Higher variable 443.0 remuneration (12.7) 430.3 FY22 cost driven by profit growth outperformance Nadex against internal guidance 4.4% discontinued targets operations operating costs Combined IG and tastytrade Continuing O
Slide 41: Forward-looking statements 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", “projects”,