Ig Group Holdings Plc · LSE:IGG
Ig — Debt Investor Presentation (November 2021)
35 slides from Ig's debt investor presentation, November 2021
Slide 1: IG Group: Proposed GBP Senior Unsecured Issuance
IG Group LEADING THE FIELD THINKING BIGGER Proposed GBP Senior Unsecured Issuance November 2021 1
Slide 2: Presenter
Presenter Charlie Rozes, Chief Financial Officer • Appointed Chief Financial Officer on 1 June 2020 • Director of IG Group Holdings plc • Highly experienced finance leader with track record of financial control and reporting, accounting, tax, M&A, investor relations, risk, compliance and audit • Hel
Slide 3: Executive summary
Executive summary • Founded in 1974 and domiciled in the UK, with a presence in 20 countries across Europe, the US, Asia, the Middle East, South Africa and Australia THE IG GROUP TODAY • An innovative, leading provider of online trading platforms, for active traders and 47 >2,200 >400,000 investors,
Slide 4: Agenda
01 Introduction to IG Group 02 Strategy 03 Overview of IG’s business model 04 Financial performance 05 Proposed bond issue 4
Slide 5: Introduction to IG Group
IG Group Introduction to IG Group
Slide 6: Global leader in online trading and investing
Global leader in online trading and investing IG is an award-winning, multi-asset class provider of online trading and investment products in 20 countries OVERALL IG PRODUCT SETS OTC BUSINESS • 19,000+ markets offered • The original cornerstone of IG; OTC leveraged derivatives are our primary specia
Slide 7: A history of innovation
A history of innovation Core competencies in technology, trading, and risk management International expansion: Germany, Singapore, • Cutting-edge, proprietary trading technology is a key Spain, France, India, Italy, Launched ambitious 30 in 3 multi-year strategy differentiator versus competitors Swe
Slide 8: Purpose, values and ESG
Purpose, values and ESG IG is a purpose-led organisation, with a clear understanding of the role we play within society OUR PURPOSE ESG HIGHLIGHTS • “Powering the pursuit of financial freedom for the ambitious” • Formalised ESG strategy with the Brighter Future framework • Our purpose acts as a guid
Slide 9: FY21 highlights
FY21 highlights 1 An outstanding year - record revenues, profits, and active clients Active clients 313,300 31% Net trading revenue £861.3m 33% First trades 134,800 39% Applications PBT £477.8m 61% 482,100 34% Average trades / day 709,200 97% 1 All metrics are on an adjusted basis excluding one-time
Slide 10: Strategy
Strategy IG Group
Slide 11: Strategy underpinned by structural shifts toward self-directed financial management
Strategy underpinned by structural shifts globally toward self-directed financial management 2.4 million1 Demographic changes Access to educational CFD/FX traders globally +20% vs. last year e.g. growing wealth resources £6.8 billion1 Global CFD/FX revenue pool +49% vs. last year Pension changes Inc
Slide 12: Globally diverse and sophisticated client base
Globally diverse and sophisticated client base KEY CLIENT HIGHLIGHTS GEOGRAPHICAL BREAKDOWN IG’s clients are informed, decisive and ambitious people who want to access Client revenue comes from many countries worldwide spanning opportunities in financial markets Europe, the US, Asia, the Middle East
Slide 13: 2019 strategy achieved ahead of schedule
2019 strategy achieved ahead of schedule CORE MARKETS 2019 GROWTH TARGET CORE MARKETS DELIVERY Grow organic revenue generated from the Core Markets by 3-5% per annum, compounded 3-5% CAGR FY19 FY20 FY21 MEDIUM-TERM TARGET SIGNIFICANT OPPORTUNITIES 2019 GROWTH TARGET SIGNIFICANT OPPORTUNITIES DELIVER
Slide 14: Future growth: Core Markets+ and High Potential Markets
Future growth: Core Markets+ and High Potential Markets Core Markets+: Revenue growth target of 5 - 7% per annum over the medium term, from FY22 High Potential Markets: Revenue growth target of 25 - 30% per annum over the medium term, from FY21 CORE MARKETS + HIGH POTENTIAL MARKETS • Our existing Co
Slide 15: tastytrade
tastytrade • $1bn acquisition in June 2021 for a consideration of $700m equity and $300m cash • Landmark acquisition expands and diversifies IG’s client offering, increasing our scale and relevance in the US, the world’s largest listed options and futures market WHO ARE TASTYTRADE THE OPPORTUNITY •
Slide 16: Overview of IG's business model
03 Overview of IG’s business model 16
Slide 17: IG's business is supported by diverse sources of revenue
IG’s business is supported by diverse sources of revenue OTC ETD Stock Trading Content & Education OTC Leveraged Derivatives Options and Futures Sharedealing All IG and tastytrade content is • Spread • Commission • Trading fees provided for free • Commission • Payment for Order • FX fees • Overnight
Slide 18: Revenue driven by proprietary technology platforms
Revenue driven by proprietary technology platforms IG systems will either internalise the trade or If the trade fits within IG’s hedge it pre-defined risk limits, it automatically in will be internalised the underlying market IG’s technology IG sources prices from performs a number of relevant excha
Slide 19: Long-standing track record of efficient risk management
Long-standing track record of efficient risk management Internalisation • Substantial volume of client exposures offset or “internalised” HEDGING COSTS STABLE PROPORTION OF CLIENT INCOME Client Income Revenue as % client income External hedging 1,400 • Proprietary technology allows automated hedging
Slide 20: Stable revenue per client for the OTC business
Stable revenue per client for the OTC business Growth of the business driven by retention and growth of active client base • The number of active clients is the key driver of revenue ACTIVE OTC CLIENTS AND REVENUE PER CLIENT PER QUARTER • Step change in the number of active clients during 160k Activ
Slide 21: Consistent revenue growth driven by acquisition and retention of clients
Consistent revenue growth driven by acquisition and retention of high quality, long-tenured clients 163 OTC leveraged revenue (£m) (56) 74 798 125 (66) 10 (27) Returning New 68 Existing clients 617 clients Existing clients 15 trading clients not (42) Returning New more trading Existing clients clien
Slide 22: Financial performance
04 Financial performance IG Group
Slide 23: Consistent financial performance
Consistent financial performance CONSISTENT 20 YEAR REVENUE GROWTH • Steady track record of consistent revenue and profit 861.3 generation over time, with a significant increase in growth 17.6% CAGR 900.0 800.0 from 2019 700.0 600.0 • Structurally high margins for financial services – more akin 500.
Slide 24: Income Statement: Significant expansion of profit margin to 56%
Income Statement: Significant expansion of profit margin to 56% (£m) FY20 FY21 % Change OTC leveraged 617.2 798.2 29% • Revenue growth underpinned by increase in active Stock trading & investments 13.6 38.7 184% client base, driven by strong client acquisition and Exchange traded derivatives 18.4 24
Slide 25: Cash Flow: Highly cash generative business
Cash Flow: Highly cash generative business (£m) FY17 FY18 FY19 FY20 FY21 Cash generated from operations 224.1 276.6 256.8 349.6 573.5 Income taxes paid (45.3) (48.9) (38.4) (57.1) (83.0) • Highly cash generative business Net cash flow generated from operations 178.8 227.7 218.4 292.5 490.5 supported
Slide 26: Conservative balance sheet
Conservative balance sheet (£m) FY17 FY18 FY19 FY20 FY21 Fixed assets and intangibles 174.1 166.9 165.9 193.6 178.6 Financial investments and financial assets • Low proportion of non-current assets pledged as collateral 52.4 111.6 189.9 83.8 188.7 Deferred income tax assets 9.1 9.1 9.0 11.5 12.9 • B
Slide 27: Significant liquidity headroom
Significant liquidity headroom IG maintains a strong liquidity position at all times, ensuring sufficient liquidity under both normal circumstances and stressed conditions to meet its working capital and other liquidity requirements STRONG HEADROOM OVER LIQUIDITY REQUIREMENTS LIQUID ASSETS BREAKDOWN
Slide 28: Significant capital headroom
Significant capital headroom ROBUST CAPITAL BUFFERS (% REA) • IG is regulated on a consolidated basis by the UK Financial Conduct Authority • Capital adequacy ratios Headroom £233m £146m £159m £184m £274m £370m • Regulatory requirement calculated at 19.9% 34.9% 33.5% 30.3% • Internal policy to have
Slide 29: Proposed bond issue
O5 IG Group Proposed bond issue
Slide 30: Proposed bond issue
Proposed bond issue TRANSACTION RATIONALE INDICATIVE GBP SENIOR UNSECURED TERMSHEET • Provide stable long term funding to the group Issuer IG Group Holdings plc • Diversify the group’s sources of funding and extend the duration Instrument GBP Fixed Rate Senior Unsecured Notes of its debt Size GBP250
Slide 31: Contacts
Contacts Deputy Company Secretary Aurelia Gibbs +44 20 7896 0011 cosec@ig.com Investor Relations Contact Richard Heading +44 20 7573 0742 investors@ig.com Treasurer Jasmeet Matharu +44 20 7573 0385 jasmeet.Matharu@ig.com 31
Slide 32: Reconciliation of non-IFRS performance measures
Appendix 1 Reconciliation of non-IFRS performance measures Adjusted profit before taxation and EPS FY20 FY21 Adjusted revenue (£m) FY20 FY21 % Change £m (unless stated) Net trading revenue 649.2 853.4 31% Earnings per share (p) 65.3 100.7 Unrealised FX hedging loss Weighted average number of shares
Slide 33: Not for distribution to any U.S. person
NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR TO ANY PERSON OR ADDRESS IN THE U.S., AS DEFINED IN REGULATION S OF THE U.S. SECURITIES ACT 1933, AS AMENDED. IMPORTANT: You must read the following before continuing. The following applies to the presentation materials following this page, and you are ther
Slide 34: Securities have not been registered under the Securities Act
The securities referred to herein have not been and will not be registered under the Securities Act or the laws of any state or other jurisdiction of the United States, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regula
Slide 35: Information not intended to be relied on as advice
The information given in this presentation is not intended to be relied on either as particular advice or for making investment decisions. By receiving this presentation each investor is deemed to represent that it is a sophisticated investor and possesses sufficient investment expertise to understa
IG Group Holdings — Debt Investor Presentation (November 2021) on 6ix