IG Group Holdings plc · LSE:IGG
IG — Investor Presentation (November 2020)
29 slides from IG's investor presentation, November 2020
Slide 1: Investor Presentation November 2020
LEADING THE FIELD THINKING BIGGER Investor Presentation November 2020
Slide 2: Introduction
() 1 Introduction IG Group
Slide 3: Who we are
Who we are • Our purpose – To empower informed, decisive, adventurous people to access opportunities in financial markets • Founded in 1974 • FTSE 250 with a market capitalisation of £2.9bn1 • FY20 revenue – 95% from OTC Leveraged Derivatives – 3% from Exchange Traded Derivatives – 2% from Stock Tra
Slide 4: Our history
Our history 46 years of innovation IG was founded First company in the Launched browser based First offered Bitcoin Launched US offering a contract sector to launch an platform, the first with no products RFED and our on the price of gold online dealing platform plug-in requirement European MTF, Spe
Slide 5: IG Group's key strengths
IG Group’s key strengths A great company with a strong foundation, underpinned by the strength of our b BUSINESS PEOPLE MODEL & & RISK CULTURE MANAGEMENT CONDUCT & STANDING IG Group’s BRAND WITH REGULATORS key & REPUTATION strengths TECHNOLOGY CLIENTS & AND CLIENT INNOVATION EXPERIENCE 5
Slide 6: Strategy
() y, Strategy IG Group
Slide 7: Our medium term financial targets
Our medium term financial targets • Announced in May 2019 • Core Markets: revenue growth at around 3-5% pa over the medium term • Significant Opportunities: an increase in revenue of £100 million, to around £160 million by FY22 • Assuming these targets are achieved, revenue in FY22 will be around 30
Slide 8: Utilising our growth levers
Utilising our growth levers NEW EXPANDING Expanded A global firm Segmented Multi distribution channels with more local target markets product focus Accelerated and Localised marketing Customised OTC, ETD and expanded and customer offerings for non-leveraged distribution via experience high-value, of
Slide 9: FY20 strategic progress – Core Markets
FY20 strategic progress – Core Markets Good growth prior to exceptional Q4 • Good revenue and client growth in Q1-Q3 FY20 – Significant recovery in Retail client base in ESMA region +26% revenue, +8% active clients1 – EMEA ex EU +14% revenue, +6% active clients2 – Australia +10% revenue, +8% active
Slide 10: FY20 strategic progress - Significant Opportunities
FY20 strategic progress- Significant Opportunities Strong progress delivered towards FY22 target £1bn FX market 90% growth in active clients¹ JAPAN 2m FX traders Partnership discussions advancing EMERGING Increasing wealth and financial Launched IG International MARKETS sophistication driving growth
Slide 11: FY20 results highlights, Q1 revenue update and financial position
03 FY20 results highlights, Q1 revenue update and financial position 11
Slide 12: FY20 highlights
FY20 highlights Net trading revenue • Good underlying growth in Q1-Q3 – OTC Leveraged revenue up 9%¹ £649.2m 36% • Exceptional Q4 performance PBT – 86% higher than Q3 FY20 • Progress achieved against our £295.9m 52% strategic targets Basic EPS • Successful navigation through Covid- 19 pandemic to da
Slide 13: Q1 revenue update
Q1 revenue update • Very strong performance in Q1 Revenue by product (£m) Q1 Q1 % • Net trading revenue of £209m, +62% (Q1 FY20: FY21 FY20 Change £129.1m) OTC Leveraged 195.1 123.0 59% • Driven by continued high levels of trading activity Exchange Traded Derivatives 6.3 3.8 64% from existing clients
Slide 14: Q1 revenue update - FY21 Outlook
Q1 revenue update - FY21 Outlook On track to deliver our medium-term targets • Anticipate a reversion to more normalised levels of volatility over the course of FY21 • Current trading has continued to reflect elevated levels of volatility, however this has moderated since the peak in March • Capital
Slide 15: 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 Net finance (cost) / 5.0 6.3 (0.1) 1.4 money income Betting duty and FTT (7.4) (7.9) Profit before taxatio
Slide 16: Financial position
Financial position 31 May 31 May 31 May 31 May BALANCE SHEET (£m) AVAILABLE LIQUIDITY (£m) 20 19 20 19 Fixed assets 164.3 165.9 Liquid assets 1,073.9 928.1 Liquid asset buffer 83.8 84.4 Broker margin requirement (326.0) (314.0) Amounts at brokers 437.4 419.3 Non-UK cash balances (177.4) (187.5) Cash
Slide 17: Supporting information
Supporting information 17
Slide 18: Business model
Business model 18
Slide 19: How do we manage market risk?
How do we manage market risk? Internalisation • We net off client long and short % OF CLIENT VOLUME HEDGED - May 2020 positions on products and markets which £558bn £23bn £176bn £10bn are correlated 90% 87% 88% 54% • The volume and breadth of our clients’ trading gives us an advantage − Global footp
Slide 20: How do we manage market risk?
How do we manage market risk? Automated hedging when risk limits reached 20
Slide 21: Low variability of revenue
Low variability of revenue 3 loss making days in past 6 years, no loss making days in FY20 £10m £5m £0m (£5m) (£10m) Swiss franc de-peg (£15m) FY15 FY16 FY17 FY18 FY19 FY20 21
Slide 22: Financial information
Financial information 22
Slide 23: Revenue by market
Revenue by market High growth rates seen across all markets Revenue (£m) FY20 FY19 % Change • Increased revenue across all ESMA region – OTC Leveraged 328.5 260.4 26% markets, boosted by record Q4 Other Core Markets – OTC Leveraged 198.7 149.1 33% • Core Markets revenue up 29% Stock Trading & Invest
Slide 24: Operating expenses
Operating expenses Planned investment to support further growth (£m) FY21 cost guidance: 310 5 • Operating expenses Change in 9 309 – £295m FY20 lease accounting Charitable donation underlying cost base 7 to grow ~3% 290 5 295 Bad debt charge – £10m investment to 8 Other support next stage 6 (6) act
Slide 25: Operating expenses by type and activity
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 28.1 22.2 26% Bad debts 11.0 1.8 n/m management Regulatory f
Slide 26: Broker margin
Broker margin £500m £450m £400m £350m £300m £250m £200m £150m FY15 FY16 FY17 FY18 FY19 FY20 £100m PEAK: £294m PEAK: £258m PEAK: £366m PEAK: £453m PEAK: £456m PEAK: £381m AVERAGE: £220m AVERAGE: £214m AVERAGE: £286m AVERAGE: £372m AVERAGE: £332m AVERAGE: £316m £50m £0m 26
Slide 27: Q4 performance
Q4 performance Record revenue and active clients QUARTERLY NET TRADING REVENUE (£m) 300 £259.5m 51,200 250 200 150 Net trading revenue New clients 86% up on Q3 onboarded 100 204% up on Q3 50 0 199,300 £1.96bn Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY19 FY20 CLIENT MONEY BALANCE (£bn) Unique clients Client money 2.
Slide 28: Q4 client cohort
Q4 client cohort Exceptional client acquisition, maintained strict onboarding standards • 53% of the FY20 new clients were onboarded in FIRST TRADES – OTC LEVERAGED Q4 – 35,300 new OTC Leveraged clients FY20 Full Year Q4 – 17,900 new Stock Trading clients • Cost efficient acquisition due to investme
Slide 29: 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”,
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