RESULTS PRESENTATION Year ended 31 May 215 IG FY15 RESULTS PRESENTATION P1
DISCLAIMER This presentation, prepared by IG Group Holdings plc (the Company ), may contain forward-looking statements about the Company. Forward-looking statements involve uncertainties because they relate to events, and depend on circumstances, that will, or may, occur in the future. If the assumptions on which the Company bases its forward-looking statements change, actual results may differ from those expressed in such statements. Forward-looking statements speak only as of the date they are made and the Company undertakes no obligation to update these forward-looking statements. Nothing in this presentation should be construed as a profit forecast. The financial tables contained herein contain numbers which have been rounded and therefore there may be rounding differences between subtotals and the sum of individual numbers as presented. All year on year percentages are calculated off underlying unrounded numbers. Unless otherwise stated all results are on underlying basis. The term underlying reflects the results before the impact of the Swiss franc event (Jan 215). FY15 and FY14 relates to the financial years ended 31 May 215 and 31 May 214 respectively. IG FY15 RESULTS PRESENTATION P2
INTRODUCTION PERIOD REVIEW Good growth in trading revenue Swiss franc event and Greece negotiations proved resilience of the business Material progress on strategic initiatives Significant ongoing investment in growth Underlying earnings ahead of last year Another year of strong cash generation Balance sheet remains robust Retained absolute dividend, in line with stated policy IG FY15 RESULTS PRESENTATION P3
Total dividend per share (p) PBT ( m) Revenue ( m) FY15 SUMMARY Good underlying financial performance FY15 RESULTS STATUTORY 5 YR REVENUE, PBT AND DIVIDEND UNDERLYING 1 Net trading revenue 388.4m 5 4 PBT 169.5m, PAT 131.9m Diluted EPS 35.99p Impact of Swiss franc event; reduced net trading revenue by 11.8m and diluted EPS by 5.8p 3 2 1 FY11 FY12 FY13 FY14 FY15 H2 H1 FY15 RESULTS UNDERLYING¹ 2 Net trading revenue 4.2m, up 8.1% on FY14 PBT 193.2m, down.9%, PAT 15.7m, up 2.4% 15 1 H2 H1 Effective tax rate down to 22% 5 Diluted EPS 41.7p, up 2.1% Full year dividend maintained at 28.15p, final dividend 19.7p 3 25 2 FY11 FY12 FY13 FY14 FY15 Final 15 1 Interim 5 1. Excluding impact of Swiss franc event FY11 FY12 FY13 FY14 FY15 IG FY15 RESULTS PRESENTATION P4
INCOME STATEMENT Ongoing targeted investment phase YEAR ON YEAR COMPARISON FY15 - Underlying FY14 FY15 - Statutory H1 H2 Full Year Full Year Yr on Yr Full Year m m m m % m Net trading revenue 1 197.4 22.8 4.2 37.4 8.1% 388.4 Net interest on client funds 2.4 2.1 4.5 5.5 4.5 Betting duty & FTT (4.5) (1.4) (5.9) (3.8) (6.3) Other operating income.3.3.6 2.1.6 Net operating income 195.7 23.8 399.4 374.2 6.7% 387.2 Operating costs² (89.4) (16.) (195.4) (169.1) (26.9) Depreciation and amortisation (4.9) (5.8) (1.7) (9.7) (1.7) Net interest.1 (.2) (.1) (.5) (.1) PBT 11.5 91.7 193.2 194.9 (.9%) 169.5 Tax (22.8) (19.7) (42.5) (47.7) (37.6) PAT 78.6 72.1 15.7 147.2 2.4% 131.9 Tax Rate 22.5% 21.5% 22.% 24.5% 22.2% Diluted EPS 41.7p 4.22p 2.1% 35.99p Dividend per share 28.15p 28.15p Net trading revenue ahead by 29.8m - Active clients up 7.9% - Average revenue per client constant with FY14 Betting duty up 2.1m due to increased volatility in Q2 Other operating income down as revenue share on disposed Sports business now complete Net operating income ahead by 25.2m (6.7%) Operating costs 15% higher ( 26.3m), reflecting investment in growth initiatives Change in accounting for FSCS levy entire charge booked in H2 Group effective tax rate down to 22% 1. Net trading revenue excludes interest on client funds and is presented net of introducing partner commissions 2. Restatement of FY14 regulatory fees as a result of change in accounting for FSCS levy IG FY15 RESULTS PRESENTATION P5
Revenue ( m) Clients (s) REVENUE BRIDGE Positive impact from new and returning clients HALF YEAR REVENUE BRIDGES QUARTERLY ACTIVE CLIENTS¹ 187.7 2. (13.7) 5. 16.4 197.4 H2 FY14 H1 FY15 9 8 Existing clients = ( 11.7m) New / returning clients = 21.4m 7 197.4 H1 FY15 (5.) (18.8) 6.7 22.5 22.8 H2 FY15 6 5 4 3 2 Existing clients = ( 23.8m) New / returning clients = 29.2m 1 H2 FY15 1. Unique clients trading in each period IG FY15 RESULTS PRESENTATION P6
DRIVERS OF REVENUE Strong revenue growth in established markets REVENUE AND CLIENTS BY REGION Revenue Clients¹ Revenue per client FY15 FY14 Yr on Yr FY15 FY14 Yr on Yr FY15 FY14 Yr on Yr m m % s s % % UK (inc Ireland) 211.9 192.7 1% 6.4 59.3 1.9% 3,51 3,251 8.% Australia 59.2 52.2 14% 18.7 18. 3.9% 3,167 2,899 9.3% Europe 8.9 82.1 (1.5%) 29.7 26. 14% 2,73 3,156 (14%) ROW 48.2 43.4 11% 27.3 22.8 2% 1,764 1,93 (7.3%) Total 4.2 37.4 8.1% 136.1 126.1 7.9% 2,941 2,937.1% UK and Australia deliver strong revenue growth Client numbers up across all regions Very strong growth at Nadex Average revenue per client 18% of group average Europe revenue performance sluggish Continued growth in client numbers across all countries Revenue per client impacted by a number of factors including weak Euro 1. Unique clients trading in each period IG FY15 RESULTS PRESENTATION P7
Revenue per client ( ) Trades (m) Revenue per trade ( ) EUROPE Good client growth offset by lower revenue per trade REVENUE PER CLIENT TRADES AND REVENUE PER TRADE 2,8 2,6 2,4 2,2 2, 1,8 Germany Netherlands Total Europe Iberia Sweden & Norway Italy France 4. 3.5 3. 2.5 2. Trades Revenue per trade 12 1 8 6 1,6 1.5 4 1,4 1,2 1..5 2 1,. Currency depreciation impacting European results, immaterial at a group level Reversal of differential pricing on smaller Germany 3 contracts increased number of trades significantly Reduction in financing revenue as fewer contracts held overnight IG FY15 RESULTS PRESENTATION P8
Revenue ( m) REVENUE COMPOSITION Consistency provided by diversity in asset class REVENUE BY PRODUCT FY15 REVENUE COMPOSITION 2 6 5 Commodities Binaries Forex Shares Indices 1 Commodities 7% (6%) Binaries 9% (7%) Shares 17% (2%) 4 3 Forex 19% (2%) 2 1 Equity indices 48% (47%) 1. Record quarter with index volatility in October 2. FY14 revenue composition in brackets IG FY15 RESULTS PRESENTATION P9
Count of Days Revenue ( m) Coefficient DAILY REVENUE TREND Tight daily revenue distribution in line with client trading volumes FY15 REVENUE DISTRIBUTION¹ DAILY REVENUE VARIABILITY 2 3 27 24 2. 1.8 1.6 Daily revenue (6 day rolling average) Coefficient of variability (6 day rolling) 3. 2.5 21 1.4 2. 18 1.2 15 1. 1.5 12.8 9.6 1. 6.4.5 3.2 // -11.5 1. 2. 3. 4. Revenue ( m).. 1. Including impact of Swiss franc event 2. Excluding impact of Swiss franc event IG FY15 RESULTS PRESENTATION P1
OPERATING COST DETAIL Investment in initiatives and marketing to deliver future growth YEAR ON YEAR COMPARISON FY15 FY14¹ H1 H2 Full Year Full Year Yr on Yr m m m m Salaries (35.4) (38.6) (74.) (65.) Advertising and marketing (17.5) (2.3) (37.8) (31.7) Premises related costs (5.3) (5.9) (11.1) (1.) IT, market data and communications (7.8) (8.6) (16.4) (13.8) Legal and professional fees (2.4) (3.5) (5.9) (4.3) Regulatory fees¹ (.2) (6.9) (7.1) (5.4) Bad and doubtful debt (.4) (.6) (1.) (1.6) Other costs (8.4) (9.8) (18.2) (13.) Excl variable remuneration (77.3) (94.2) (171.5) (144.8) 18.4% Bonus (8.7) (8.3) (17.1) (17.2) Share based payment schemes (3.4) (3.4) (6.8) (7.1) Total operating costs (89.4) (15.9) (195.4) (169.1) 15.6% Reconciliation to post Swiss franc: Swiss franc related bad debt charge (15.1) Bonus 3.1 Share based payment schemes.5 Statutory operating costs (26.8) Underlying operating costs, excluding variable remuneration up 26.7m (18%) H2 underlying costs at 13m Adjusting for FSCS levy Increase due to step up in investment opex and marketing to support core growth Switzerland, Dubai, mobile development, gtlds and stockbroking costs ahead of revenue delivery Early indicators of potential have been encouraging Expect growth in operating costs in FY16 to be similar to increase in FY15 1. Restatement of FY14 regulatory fees as a result of change in accounting for FSCS levy IG FY15 RESULTS PRESENTATION P11
Margin requirement ( m) BROKER MARGIN Margin requirement stepped back up following Swiss franc event MARGIN REQUIREMENT 3 FY13 H1 FY13 H2 FY14 H1 FY14 H2 FY15 H1 FY15 H2 243m 246m 273m 285m 188m 25m 28 26 24 22 2 18 16 14 12 FY14 Peak 29m FY15 Peak 294m IG FY15 RESULTS PRESENTATION P12
NET OWN FUNDS AVAILABLE Another year of good cash generation NET OWN FUNDS AVAILABLE 1 APPLICATION OF OWN FUNDS AVAILABLE 1 FY15 FY14 2 m m Own funds generated from operations 136.8 16.6 Movement in working capital 7.9 (3.3) Other (including capex) (13.5) (12.) Pre-dividend increase in own funds 131.2 145.3 Dividend (112.8) (84.8) Increase in own funds 18.4 6.5 Own funds - at start of period 487.3 429.3 Exchange gains/(losses) on own funds 1.4 (2.5) Own funds - at end of period 57.1 487.3 Broker margin requirement (24.8) (285.1) Net own funds available 32.3 22.2 FY15 m Net own funds available 32.3 Overseas regulatory and working capital (53.5) Funds required for segregation (27.6) Own funds available for liquidity 221.2 Held as liquid assets buffer 83.1 Dividend due 71.8 Additional sources of liquidity: m Client funds held on balance sheet 11.6 Undrawn committed banking facility 16. Increase in overseas regulatory capital primarily due to local licences in Switzerland and Dubai 1. Refer to the Preliminary Results for the calculation of own funds 2. Restatement of FY14 regulatory fees as a result of change in accounting for FSCS levy IG FY15 RESULTS PRESENTATION P13
REGULATION No significant recent developments but continue to monitor UPDATE Europe FTT Little progress in negotiations Timeframe moves into 216 or beyond MIFID II Level 2 text due in September 215, but no material concerns from level 1 Gambling Commission Expect binaries regulation to move to FCA during 215, levelling the playing field Singapore Continue to assume FX leverage proposals are applied CRD IV Phased application of capital regime from 216 IG FY15 RESULTS PRESENTATION P14
THANK YOU BUSINESS UPDATE IG FY15 RESULTS PRESENTATION P15
STRATEGIC PROGRESS Track record of investment and delivery INVESTMENT ROADMAP FY11 FY12 FY13 FY14 FY15 FY16 Geographic Nadex develop technology and product set refine offering marketing and revenue growth China exploratory discussions with potential partners Netherlands marketing and revenue growth South Africa marketing and revenue growth Norway marketing and revenue growth Ireland marketing and revenue growth Switzerland establish office marketing and revenue growth Dubai establish office marketing and revenue growth FY17 Product UK Stockbroking develop IT marketing and revenue growth Netherlands stockbroking marketing and revenue growth German stockbroking marketing and revenue growth International roll out ishares marketing and revenue growth Platform and distribution Mobile marketing and revenue growth Conversion process process development marketing and revenue growth gtlds acquiring rights to gtlds develop infrastructure building websites to drive client recruitment Digital marketing marketing and revenue growth IG FY15 RESULTS PRESENTATION P16
Revenue ( s) GEOGRAPHIC EXPANSION Executed on targeted overseas expansion SWITZERLAND DUBAI 1,2 1, 8 Sweden Italy Netherlands Norway Iberia France (incl Lux) Germany Switzerland Office soft-launched June 215 Fully authorised by the DFSA with a licence to provide financial services to retail and professional clients 6 Full client service capability in English and Arabic 4 Localised products, website and opening hours 2 1 2 3 4 5 6 7 8 9 1 11 12 Months from office launch CHINA Switzerland progressing at least in line with other office openings CSRC rep office licence in Shanghai Facilitates partnership discussions for longterm opportunities IG FY15 RESULTS PRESENTATION P17
Volume (s) Members trading First trades Marketing cost per first trade ( ) NADEX Recent growth increases confidence in the future PERFORMANCE TREND FIRST TRADES 6 5 Volume (contracts traded) Members trading 4,5 4, 3,5 1,2 1, First trades Marketing cost per first trade ( ) 1,2 1, 4 3, 8 8 3 2,5 2, 6 6 2 1,5 4 4 1 1, 5 2 2 Full year revenue of 5.3m, up 68% on prior year. H2 75% ahead of H1 Improved efficiency of marketing spend and lower recruitment cost per first trade Increased marketing towards year end Operational improvements Product set extended in the year IG FY15 RESULTS PRESENTATION P18
% of client initiated transactions MOBILE Mobile usage grows at all stages of the client relationship CURRENT USE OF MOBILE AT IG PROGRESS 4% 35% 3% 25% 2% 15% 1% Proportion of transactions from mobile continues to grow Mobile increasingly important in client recruitment Continuous improvement across the range of apps Significantly increased app downloads and prospects starting application process App conversion dependant on improvements to application process 5% % IG FY15 RESULTS PRESENTATION P19
First trades Marketing cost per first trade ( ) CLIENT RECRUITMENT - EFFICIENCY Early evidence of success in improving client recruitment IMPROVING CLIENT CONVERSION CLIENT RECRUITMENT (EXCL NADEX) Automating identification process where possible 1, First trades Marketing cost per first trade ( ) 1,6 Easy document uploading Incremental improvements to application form and early client experience 9, 8, 7, 6, 5, 1,4 1,2 1, 8 IMPROVING MARKETING EFFICIENCY First trades (excluding Nadex) up 14% year on year, and 26% H2 on H1 4, 3, 2, 1, 6 4 2 Marketing moving increasingly online Increasing marketing spend on improved targeting IG FY15 RESULTS PRESENTATION P2
CLIENT RECRUITMENT - GTLDs Positioning IG for changes in web usage and search engine ranking A Top Level Domain is the extension to the right of the dot, e.g. -.com,.co.uk Successful application for 7 gtlds.spreadbetting.forex.trading.nadex.cfd.broker.markets Strategy is to broaden the online reach of IG to increase client recruitment Increased presence in the search engines Higher ranking in search engines for relevant terms Category leadership Improved client journey IG FY15 RESULTS PRESENTATION P21
Assets under management ( m) Accounts Collateral accounts Collateral value ( m) STOCKBROKING Early stages of key strategic initiative to broaden addressable market FIRST FUNDED / TRADED ACCOUNTS 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 COLLATERAL 1, 9 8 7 6 5 4 3 2 1 ASSETS UNDER MANAGEMENT 14 12 1 8 6 4 2 UK and Ireland launched in September International roll-out commenced; Netherlands launched in March, Germany launched in July 65% of accounts are new to IG Clear evidence of cross sell Over 8 accounts linked for collateral 1 9 8 7 6 5 4 3 2 1 IG FY15 RESULTS PRESENTATION P22
Assets under management ($bn) STRATEGIC DEVELOPMENT Extending product set to address sophisticated investors ETF MARKET REVOLUTION BLACKROCK PARTNERSHIP 2, 1,5 US Significant overlap between active traders and sophisticated investors 1, EMEA Entered partnership with BlackRock to promote ETFs on IG s platform Joint marketing approach Joint branding 5 US inception: 1994 EMEA inception: 2 EMEA today Bespoke investment portfolios designed by BlackRock Long-term opportunity to complement core business 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18 19 2 Years since inception US and EMEA ETF industry AuM growth since inception (Source: BlackRock, Bloomberg, as of 31/12/214) IG FY15 RESULTS PRESENTATION P23
CONCLUSION SUMMARY Delivered in the year on strategic priorities Good top line growth Working on range of exciting initiatives Broadening IG product set to appeal to wider audience Continuing to invest for growth Resilience of business demonstrated during Greece weekend negotiations Good regulatory relationships IG retains strong financial position to support future dividend growth IG FY15 RESULTS PRESENTATION P24
THANK YOU APPENDICES IG FY15 RESULTS PRESENTATION P25
Appendix 1: Net trading revenue per client HALF YEAR ANALYSIS 1 Revenue ( m) FY12 FY13 FY14 FY15 H1 H2 Full Year H1 H2 Full Year H1 H2 Full Year H1 H2 Full Year UK (inc Ireland) 12.1 89.7 191.8 86.9 99.5 186.5 93.4 99.3 192.7 16.8 15.1 211.9 Australia 32.7 25.2 58. 28.2 28.1 56.3 27. 25.2 52.2 28.7 3.5 59.2 Europe 37.8 34.5 72.2 32.1 39. 71. 4.2 41.9 82.1 4.5 4.4 8.9 ROW 22.8 22. 44.9 21.8 26.3 48.1 22.1 21.3 43.4 21.4 26.8 48.2 Total 195.5 171.3 366.8 169. 192.9 361.9 182.7 187.7 37.4 197.4 22.8 4.2 Clients (s) FY12 FY13 FY14 FY15 H1 H2 Full Year H1 H2 Full Year H1 H2 Full Year H1 H2 Full Year UK (inc Ireland) 59.2 53.5 74.9 5.8 52.1 68.3 46.2 45.4 59.3 45.8 46.7 6.4 Australia 16.8 14.8 2.6 14.8 15. 19. 14.4 13.8 18. 14.1 15. 18.7 Europe 17.2 18. 23.2 18.7 19.8 24.7 19.7 2.9 26. 21.5 24. 29.7 ROW 19.5 18.1 24.6 17.9 19.1 24.2 17.3 17.6 22.8 18.9 21.6 27.3 Total 112.7 14.4 143.3 12.2 16. 136.1 97.7 97.7 126.1 1.3 17.3 136.1 Revenue per Client ( ) FY12 FY13 FY14 FY15 H1 H2 Full Year H1 H2 Full Year H1 H2 Full Year H1 H2 Full Year UK (inc Ireland) 1,726 1,676 2,561 1,711 1,911 2,731 2,24 2,188 3,251 2,333 2,252 3,51 Australia 1,947 1,77 2,88 1,9 1,868 2,965 1,872 1,826 2,894 2,35 2,38 3,167 Europe 2,194 1,91 3,112 1,712 1,969 2,882 2,39 2,7 3,156 1,882 1,686 2,72 ROW 1,17 1,215 1,826 1,222 1,375 1,991 1,273 1,29 1,93 1,137 1,235 1,764 Total 1,734 1,641 2,56 1,653 1,819 2,66 1,871 1,921 2,937 1,969 1,891 2,941 1. Unique clients trading in a each period with revenue stated as Net Trading Revenue IG FY15 RESULTS PRESENTATION P26
Appendix 2: Client trading activity CLIENT RETENTION RATE TREND FY12 FY13 FY14 FY15 New clients (s) 67.6 55.9 55. 71. First trades (s) 48. 37.9 33.7 4.9 Implied conversion rate (%) 71% 68% 61% 58% Total active clients (s) 143.3 136.1 126.1 136.1 Clients trading from prior period (s) 95.3 98.1 92.4 95.2 Clients trading from prior period (%) 72% 68% 68% 75% FY12 FY13 FY14 FY15 H1 H2 H1 H2 H1 H2 H1 H2 New clients (s) 36.6 31. 27. 28.8 26.9 28.1 29.7 41.3 First trades (s) 26. 22. 18.7 19.2 16.4 17.3 17.5 23.4 Implied conversion rate (%) 71% 71% 69% 67% 61% 62% 59% 57% Total active clients (in period) 112.7 14.4 12.2 16. 97.7 97.7 1.3 17.3 Clients trading from prior period (s) 86.7 82.4 83.5 86.8 81.3 8.4 82.8 83.8 Clients trading from prior period (%) 85% 73% 8% 85% 77% 82% 85% 84% IG FY15 RESULTS PRESENTATION P27
Appendix 3: Regulatory capital YEAR ON YEAR COMPARISON FY15 FY14 2 m m Regulatory capital Total Tier 1 592.6 567. Intangible assets (124.) (122.7) Investment in own shares (1.2) (1.1) Deferred tax asset¹ (7.1) (7.1) Total capital resources (a) 46.3 436.1 Capital resources requirement - Pillar 1 (b) 111.3 115.4 (a-b) 349. 32.7. 1. The new CRD IV requirements which came into force on 1 January 214 require deferred tax assets relating to future profitability to be deducted from Tier 1 Capital to determine capital resources for the Group. 2. Restatement of FY14 regulatory fees as a result of change in accounting for FSCS levy IG FY15 RESULTS PRESENTATION P28
THANK YOU END IG FY15 RESULTS PRESENTATION P29