RESULTS PRESENTATION Half Year Ended 30 th November 2017 IG Group - - PowerPoint PPT Presentation

IG Group Holdings plc H1 FY18 Results

RESULTS PRESENTATION

Half Year Ended 30th November 2017

IG Group Holdings plc H1 FY18 Results

DISCLAIMER

2

This presentation, prepared by IG Group Holdings plc (the “Company”), may contain forward-looking statements about the Company. Forward-looking statements involve known and unknown risks and uncertainties because they are beyond the Company’s control and are based on current beliefs and expectations about future events, including the results of

• perations, financial condition, liquidity, prospects, growth, strategies and dividend policy of the Company and the

industry in which it operates. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Company. 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. Some numbers and period on period percentages in this presentation have been rounded or adjusted to ensure consistency with the financial statements. This may lead to differences between subtotals and the sum of individual numbers as presented. Unless otherwise stated all results for FY15 are on underlying basis and the term ‘underlying’ reflects the results before the impact of the Swiss franc event (Jan 2015). FY18 relates to the financial year ending 31st May 2018, FY17 relates to the financial year ending 31st May 2017. H1 FY18 refers to half year ending 30th November 2017, H1 FY17 refers to half year ending 30th November 2016.

IG Group Holdings plc H1 FY18 Results

OVER 40 YEARS OF SUCCESS

Empower informed, decisive, adventurous people to access

• pportunities in the financial markets

3

IG CREATED THIS INDUSTRY WITH INNOVATION AT ITS CORE

▪ IG has always targeted the financially sophisticated trader ▪ The success of online advertising changed the accessible market and created new problems in the industry,

which the regulators are now looking to address

▪ With a history of technological advancement and adaptation IG will continue to grow following this period of

regulatory change

▪ IG’s client base is dominated by the sophisticated trader and this will remain the case in future

IG was founded

• ffering a contract on

the price of gold Phone and software system introduced to enable trades to be entered straight on to the computer system First company in the sector to launch an

• nline dealing platform

Launched first mobile trading app with live price streaming Close Out Monitor (COM) and tiered margining developed following the credit crunch Launched browser based platform, the first with no plug-in requirement

1974 1991 1998 2003 2007 2010 2013 2017

First offered Bitcoin, now

• ne of six cryptocurrency

markets at IG Rolled out IG Smart Portfolio

IG Group Holdings plc H1 FY18 Results

FINANCIAL PERFORMANCE FINANCIAL POSITION OUR CLIENTS OPERATIONAL DEVELOPMENTS FUTURE REGULATION FUTURE GROWTH

AGENDA

IG Group Holdings plc H1 FY18 Results

FINANCIAL PERFORMANCE

IG Group Holdings plc H1 FY18 Results

FY18 H1 SUMMARY

Record revenue and profit before tax performance

6

▪ Net trading revenue £268.4m, up 10% on H1 FY17 ▪ Operating expenses excluding variable remuneration £117.6m down 7% ▪ PBT £136.2m, up 29% with margin at 50.7%, up 7.7% points ▪ Own funds generated from operations £139.0m, up 38% ▪ Diluted EPS 29.3p, up 30% ▪ Interim dividend of 9.69p which represents 30% of the prior year’s total dividend

FY18 H1 RESULTS

10 20 30 40

FY14 FY15 FY16 FY17 FY18

5 YEAR REVENUE, EPS AND DIVIDEND - Underlying

1

• 1. FY15 excludes impact of Swiss franc event

100 200 300 400 500 600

FY14 FY15 FY16 FY17 FY18

REVENUE (£m)

10 20 30 40 50

FY14 FY15 FY16 FY17 FY18

EARNINGS PER SHARE (p) DIVIDEND PER SHARE (p)

H1 H2 Interim Final H1 H2

IG Group Holdings plc H1 FY18 Results

Good revenue growth, good cost management, good margin

7

▪ Net trading revenue up 10% ▪ Net operating income up 10%

– Interest on client funds of <30 bps on average balances of c.£1.25bn – Betting duty at 1% of revenue, below historical average – US lead generation revenue from DailyFX in other operating income

▪ Operating expenses down 4% ▪ PBT margin 50.7%, up 7.7% points, from

43.0% in H1 FY17

▪ Effective tax rate 20.6%

INCOME STATEMENT

FY17 £m FY16 £m Net trading revenue Net interest on client funds Betting duty & FTT Other operating income Net operating income Operating expenses Net finance expense PBT Taxation PAT Effective rate of tax Diluted EPS Dividend per share 268.4 1.8 (2.7) 1.5 269.0 (132.5) (0.3) 136.2 (28.1) 108.1 20.6% 29.3p 9.69p 244.9 1.8 (3.7) 0.5 243.5 (137.9) (0.4) 105.2 (21.9) 83.3 20.8% 22.6p 9.42p 10% 10% 4% 29% 30% 30% FY18 H1 £m FY17 H1 £m Yr on Yr %

IG Group Holdings plc H1 FY18 Results

REVENUE AND ACTIVE CLIENTS

8

REVENUE AND CLIENT TRENDS

1

OTC LEVERAGED REVENUE

by asset class

• 1. Active clients represents any client who generated revenue through OTC Leveraged

trading, or were holding a Share Dealing or Investments position at the end of the period. Multi-product clients are included in both numbers, with the overlap removed as shown

H1 FY18 H1 FY17

UK EMEA APAC OTC Leveraged Derivatives US Share Dealing & Investments GROUP 1% 14% 19% 9% 16% 85% 10% 115.0 67.0 55.6 237.6 6.3 1.0 244.9 116.7 76.6 66.0 259.3 7.3 1.8 268.4 UK EMEA APAC OTC Leveraged Derivatives US Share Dealing & Investments Multi-product clients GROUP Unique Active Clients

ACTIVE CLIENTS

(11%) 1% (1%) (5%) 13% 119% 60% 7% 47,239 36,010 30,010 113,259 14,785 29,093 (5,244) 151,893 52,965 35,828 30,314 119,107 13,045 13,302 (3,278) 142,176

REVENUE (£m) H1 FY18 H1 FY17 Yr on Yr REVENUE PER CLIENT (£) H1 FY18 H1 FY17

UK EMEA APAC OTC Leveraged Derivatives US Share Dealing & Investments GROUP 14% 14% 20% 15% 3% (15%) 3% 2,470 2,128 2,200 2,290 492 62 1,767 2,171 1,871 1,834 1,995 480 73 1,722

Yr on Yr Yr on Yr

Equity indices Shares

16% 40% 24% 12%

Forex Commodities Options

8%

9% 16% 46% 16% 13%

H1 FY18

H1 FY17

Significant increase in OTC Leveraged revenue per client

▪ Revenue from Cryptocurrencies (included

within Forex above) represented 5% of OTC Leveraged revenue in H1 FY18 (H1 FY17: <0.5%)

IG Group Holdings plc H1 FY18 Results

Client retention is fundamental to our success

9

DRIVERS OF REVENUE

Existing clients = (£23.6m)

REVENUE BRIDGES (£m)

Existing clients not trading Existing clients trading more (less) Returning clients New clients

H1 FY17 H2 FY17

Other

H1 FY18

(8.7) (20.4) 5.5 23.0

244.9 246.2

1.9 12.9 (18.4) 5.8

246.2 268.4

(0.1) 22.0

Existing clients = £0.3m

IG Group Holdings plc H1 FY18 Results

REVENUE OPTIMISATION

Business model results in low variability in revenue

10

• 1. Excluding impact of Swiss franc event (Jan 15)
• 2. Including impact of Swiss franc event (Jan 15)

REVENUE VARIABILITY

1

REVENUE PERFORMANCE

2

Daily revenue (60 day rolling average) Coefficient of variability (60 day rolling average)

REVENUE (£m) COEFFICIENT

0.0 0.5 1.0 1.5 2.0 2.5

• 0.5

1.0 1.5 2.0 2.5

FY11 FY12 FY13 FY14 FY15 FY16 FY17

REVENUE (£m)

10 20 30 40 50 60 70 80

Monthly reported revenue Client commission, spread and financing Revenue if fully hedged Internalisation benefit

▪ No loss making days since Aug 2015

FY17 FY15 FY18 FY16 FY18

IG Group Holdings plc H1 FY18 Results 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

FY14 FY15 FY16 Months from client first trade FY17 FY18

MARKETING EFFECTIVENESS

11

Continue to attract high value clients

CLIENT RECRUITMENT (excl. Nadex)

1

▪ H1 FY18 cost per first trade £1,050

– Increasingly diluted by Share Dealing & Investments

▪ H1 FY18 OTC Leveraged equivalent cost per

first trade is around £1,400

CUMULATIVE AVERAGE CLIENT VALUE

2

▪ Average value of new clients remains strong ▪ Marketing payback period around 3 - 4 months

200 400 600 800 1,000 1,200 1,400 1,600 5,000 10,000 15,000 20,000 25,000 30,000 35,000

Client first trades Marketing cost per first trade (£)

H1 H2 FY16 H1 H2 FY17 H1 FY18

1 2 3 4 5 6 7 8 9 10 11 12

• 1. Excludes Nadex from marketing spend and First Trades, Irrecoverable VAT included in

the marketing spend

• 2. Client value curves are OTC Leveraged clients only

13

IG Group Holdings plc H1 FY18 Results

Good cost management in first half, no change to full year guidance

12

▪ Increased headcount offset by lower

average cost per head

▪ Advertising and marketing down 21%

– Reflects lower spend in Q1 YoY – Q2 spend in line with Q2 last year

▪ H2 costs will be higher than H1 – Regulatory fees – Marketing – Strategic initiatives ▪ FY18 full year Operating expenses,

excluding variable remuneration, expected to be similar to FY17

OPERATING EXPENSES

Fixed remuneration Advertising and marketing Other costs Operating expenses

• excl. variable remuneration

Variable remuneration Total Operating expenses 0% 21% 2% 7% (25%) 4% (46.3) (27.7) (43.6) (117.6) (14.9) (132.5) FY17 £m FY16 £m H1 FY18 £m H1 FY17 £m Yr on Yr % (46.2) (35.2) (44.6) (126.0) (11.9) (137.9)

IG Group Holdings plc H1 FY18 Results

FINANCIAL POSITION

IG Group Holdings plc H1 FY18 Results

OWN FUNDS

Good cash generation

14

MOVEMENT IN OWN FUNDS OWN FUNDS FLOW

FY17 £m FY17 £m FY16 £m 31 May 17 £m 31 May 16 £m FY17 £m FY16 £m FY17 £m FY16 £m 30 Nov 17 £m 30 Nov 16 £m Operating profit Depreciation and amortisation Share based compensation Change in working capital Own funds generated from operations As % of Operating profit Taxes paid Net own funds generated from

• perations

136.5 8.8 3.2 (9.5) 139.0 102% (22.2) 116.8 105.6 7.5 4.5 (16.6) 101.0 96% (23.0) 78.0 FY17 £m FY17 £m FY16 £m 30 Nov 17 £m 30 Nov 16 £m Net own funds generated from operations Net financing Investments

• Purchase of DailyFX
• Capital expenditure
• Purchase of own shares by EBT

Net own funds generated before dividends Dividends Net own funds flow Own funds at start of the year Impact of movement exchange rates Own funds at end of period 116.8

• (3.0)

(5.5) (4.6) 103.7 (84.0) 19.7 614.3 (6.2) 627.8 78.0 0.2 (29.8) (7.1) (1.0) 40.3 (84.1) (43.8) 587.7 9.1 553.0

IG Group Holdings plc H1 FY18 Results

BALANCE SHEET & LIQUIDITY

Strong financial position

15

Goodwill Intangible assets Property, plant and equipment Fixed assets Liquid asset buffer Amounts at brokers Cash in IG bank accounts Own funds in client money Liquid assets Short term bank borrowing Title Transfer funds Client deposits at IG Bank SA Own funds Working capital Tax payable Deferred tax assets Net assets / Shareholders’ funds 107.8 46.2 15.8 169.8 81.3 396.3 251.9 61.1 790.6 (50.0) (69.1) (43.7) 627.8 (36.9) (18.5) 8.6 750.8 108.1 48.6 17.4 174.1 81.2 376.1 230.9 43.2 731.4

• (60.0)

(57.1) 614.3 (49.1) (13.1) 9.1 735.3 108.2 50.0 13.4 171.6 82.6 338.6 201.8 28.3 651.3 (50.0) (28.6) (19.7) 553.0 (39.1) (12.2) 7.4 680.7 31 May 17 £m 30 Nov 16 £m 30 Nov 17 £m Liquid assets Broker margin requirement Client deposits at IG Bank SA Other non-UK liquid assets Own funds in client money Available liquidity at end of period

• f which is:

Held as liquid assets buffer Interim dividend due RCF Drawings 790.6 (370.7) (43.7) (105.8) (61.1) 209.3 81.3 35.6 50.0 Committed RCF Additional sources of liquidity 110.0 30 Nov 17 £m

AVAILABLE LIQUIDITY BALANCE SHEET

IG Group Holdings plc H1 FY18 Results 100 200 300 400 500

• 2,000

4,000 6,000 8,000 10,000

BROKER MARGIN

Broker margin requirement driven by notional size of hedging positions

16

NOTIONAL POSITIONS (£m)

▪ IG remains 99% hedged - internalisation

plus external hedge

▪ H1 FY18 period end margin £371m

– £67m related to cryptocurrencies

▪ H1 FY18 average margin £359m (FY17: £286m) ▪ H1 FY18 peak margin £411m (FY17: £367m)

Client Notional IG Notional IG Residual Exposure May Nov Nov FY17 FY16 Nov May May FY18

MARGIN REQUIREMENT (£m)

Jun Nov FY16 Nov FY18 Nov FY17 May May

IG Group Holdings plc H1 FY18 Results

OUR CLIENTS

IG Group Holdings plc H1 FY18 Results

Client base is sophisticated and high value

18

▪ 50% revenue is generated by the most valuable c.2% of

clients, trading on average 3,800 times in H1 FY18

▪ 80% revenue is generated by the most valuable c.10%

• f clients, trading on average 1,900 times in H1 FY18

▪ These clients are all informed, decisive, adventurous,

prosperous individuals that fully understand our products

▪ They might be;

– A fund manager trading their own personal wealth – An IT specialist who runs their own consultancy – Self-made through property investments now running a number of businesses and trading as part of their daily routine

WHO ARE OUR CLIENTS

REVENUE FROM TRADING CLIENTS H1 FY18

1

< 2% 8%

90%

Clients

50% 30%

Revenue

20%

• 1. OTC Leveraged Derivatives clients only

IG Group Holdings plc H1 FY18 Results

ESTABLISHED CLIENT BASE

19

Clients have typically traded with IG for over 3 years

CLIENT ATTRITION

1

▪ Underlying retention levels remain strong and in

line with historic cohorts

REVENUE BY CLIENT TENURE H1 FY18

1

FY15 FY17 FY14 FY16 Months from client first trading FY18

% of Revenue

10+ years 7 to 10 years 5 to 7 years 3 to 5 years 2 to 3 years 1 to 2 years 7 to 12 months 0 to 6 months 8% 18% 12% 12% 11% 19% 12% 8%

• 1. OTC Leveraged Derivatives clients only

50%

0% 20% 40% 60% 80% 100% 1 2 3 4 5 6 7 8 9 10 11 12

IG Group Holdings plc H1 FY18 Results

Retention and extension of our client relationships

20

▪ Complementary products that expand IG’s

client offering – Share Dealing & Investments

▪ Aim to enhance the total value and extend the

lifespan of client relationships

▪ Over 5,200 clients are now multi-product,

generating revenue from Leveraged trading and holding stockbroking positions

▪ Multi-product clients on average were 13%

more valuable than standard Leveraged clients

BROAD PRODUCT OFFERING

MULTI-PRODUCT CLIENTS

1

60% 72%

OTC Leveraged Only Multi- Product

£2,367 £2,681

H1 FY18 AVERAGE CLIENT VALUE

1

OTC Leveraged Only Multi- Product

60% 72%

ACTIVE CLIENT RETENTION

1,2

• 1. Cohort limited to clients from countries where IG offers Share Dealing & Investments products
• 2. The percentage of clients trading in H1 FY17 still trading in H1 FY18

IG Group Holdings plc H1 FY18 Results

Marketing is targeted and spend is discretionary

21

▪ Define a clear target client for whose needs,

characteristics and objectives this financial instrument is compatible

▪ Our positive target market for a standard retail

account in the UK are clients who: – Have previous experience trading derivatives – Have sufficient levels of income and investments – Have a high risk appetite – Are seeking to speculate on financial markets

• r to hedge exposure held in other portfolios

▪ IG will only accept clients who meet our

appropriateness and wealth criteria, in line with our intended target market

CLIENT ACQUISITION

ONLINE MARKETING

▪ Bid on key terms that associate positively

with this target market

▪ Marketing spend is driven by in house

algorithms that are continually refined to improve effectiveness

▪ Ability to flex marketing spend according

to market conditions

▪ Employ specialised onboarding teams to

assist clients through the application process

TARGET MARKET

IG Group Holdings plc H1 FY18 Results

OPERATIONAL DEVELOPMENTS

IG Group Holdings plc H1 FY18 Results 23

Professional accounts provide the highest value and lowest regulatory concern

• 1. The images above are diagrammatical with the circle sizes showing approximate value to the company now and in the future for the EU & UK. Not to scale

ACCOUNT TYPES IN UK & EU

Accounts Regulatory concern

Standard Retail Account LR Account Pro Account

FUTURE

1

NOW

1

Accounts

Pro Account LR Account

▪ Historically the majority of IG’s clients and

revenue have come from accounts classified as standard retail

▪ With regulatory changes clients are now

migrating towards 2 account types – Limited Risk – Professional Regulatory concern

▪ The number of professional accounts will increase

and we believe the category will become the largest revenue generator for the Group

▪ Limited Risk accounts will increase in value as all

clients who do not elect to become professional will need to migrate to a Limited Risk account

IG Group Holdings plc H1 FY18 Results

Growing professional categorisation

24

▪ No current regulatory advantage for a client to

elect to be categorised as professional

▪ In November an online process was rolled out to

enable clients who qualified to elect to become professional

▪ Prior to this, approximately 5% of IG’s UK and EU

revenue was generated by clients classified as professional – Clients categorised as professional on the 19th January generated over 25% of UK and EU revenue over the previous 3 months

▪ If leverage restrictions are implemented as

proposed we are on track for well over 50% of revenues to be generated from professional clients

PROFESSIONAL CATEGORISATION IN UK & EU

UK & EU REVENUE

1

HIGHER VALUE, LOWER RISK

1

▪ We have rejected over 50% of requests to

become professional to date

▪ Just over 2,400 clients are categorised as

professional today

% Professional

1 Nov 2017

% Other

5% 95%

• 1. All figures in this slide refer to OTC Leveraged Derivatives EU and UK clients / revenues generated 3 months to December 2017

19 Jan 2018

<75% >25%

IG Group Holdings plc H1 FY18 Results

LIMITED RISK ACCOUNTS AND ONBOARDING

It’s the right thing to do

25

• 2. BaFIN effective from August 2017
• 1. Limited Risk accounts include no negative accounts and those that limit the downside risk per trade plus provide a guaranteed no negative balance on the account

▪ 56% of new Leveraged first trades are now

Limited Risk

▪ Excluding the US, 42% of first trades in H1

FY18 were Limited Risk

▪ Limited Risk accounts are now the standard in

France and Germany2 – Both delivered good growth in the period

LIMITED RISK ACCOUNTS

1

70% 30% 75% 25% 89% 11% 69% 66% 34% 69% 31% 88% 12% 100%

▪ Implemented in June ▪ Hard stop on appropriateness ▪ Savings and income combination must meet pre-

determined criteria

– Non Leveraged accounts have lowest

requirements

– Standard retail account has highest

requirements

▪ Reduced marketing spend initially to allow in house

algorithms to be optimised

▪ Initial indications suggest new clients in the period

are more valuable than the prior period

APPROPRIATENESS & WEALTH HURDLES

Limited Risk Account UK EMEA US Standard Account APAC

54% 46% 46% 54% 78% 22% 100%

IG Group Holdings plc H1 FY18 Results

REVIEW OF PARTNERS

Ensuring good client and market outcomes

26

▪ Extensive technology programme to prepare

for MiFID II in excess of 10 man years

▪ Wide ranging changes to reporting

requirements to deliver increased transparency to clients – Provision of data on product behaviour – Transparency on risk – Transparency on costs and charges – Increase in transaction reporting from 24 to 65 fields – Collection of NI and LEI identifiers required for every individual and corporate client respectively

MIFID AND PARTNER RELATIONSHIPS

▪ IG requires that its partners offer the same quality

• utcomes as IG

▪ Reviewed all UK and EU relationships

– Global review to follow

▪ Identified less than 25 UK and EU relationships that

met stringent new criteria and will be maintained

▪ Partners must;

– Be committed to providing good client outcomes – Have transparent and appropriate fee structures – Be of sufficient scale

▪ Every partner relationship will be closely monitored by

IG’s compliance team

PREPARATION FOR MIFID II

IG Group Holdings plc H1 FY18 Results

FUTURE REGULATION

IG Group Holdings plc H1 FY18 Results

We are closer to regulatory certainty

28

▪ Following ESMA and FCA statements on December 18th and a “call for evidence” from ESMA on

January 18th we have clearer proposals and timings

▪ Themes remain

Disproportionate leverage restrictions by asset class Suitability of binary product No negative balance protection by account Automated margin close out from 50% of initial margin ESMA are specifically looking at how cryptocurrencies fit within the MiFID framework and how best to protect retail clients that trade this product Standardised risk warning Restriction on the offering of trading incentives

▪ The call for evidence closes on 5th February 2018 ▪ IG will work determinedly to try to ensure regulators identify the best measures to achieve their aim of

improving client outcomes

EU AND UK REGULATION

OUR VIEW

X

✓ ✓ ✓ ✓ ✓ ✓

IG Group Holdings plc H1 FY18 Results

200 400 600 800 1,000 1,200 1,400 1,600

Potential Regulation Mitigating Action Potential Client Action

Leverage limits Live process to enable clients to request professional categorisation

• Elect to be categorised as

professional

• Trade with less headroom
• Increase funding and trade as before
• Trade with an offshore entity
• Trade alternative products
• Trade less frequently or in smaller

size Ban on binaries trading Live process to enable clients to request professional categorisation

• Elect to be categorised as

professional

• Trade with an offshore entity
• Trade alternative products
• Stop trading

Negative balance protection Limited Risk Account

• Elect to be categorised as

professional

• Trade with Limited Risk account and

utilise protections

• Trade with an offshore entity
• Trade alternative products

RESPONSES TO REGULATION

Retail clients affected by changes can take action

29

Impact

Margin requirement: Other assets Margin requirement: Equities

CLIENT DEPOSITS (£m)

▪ IG’s clients typically have significant

excess margin on their account

Client deposits and Title Transfer 2015 2016 2017

IG Group Holdings plc H1 FY18 Results

Our clients have significant concerns

30

▪ Clients have the power to respond to ESMA’s

‘Call for Evidence’

▪ We have received over 2,000 responses to date ▪ Responses are consistently negative ▪ We are committed to giving our clients a voice

www.replytoesma.trading

RESPONSES TO REGULATION: CLIENTS

“The proposed measures will adversely affect the business of reputable, honest and highly professional providers …and drive many smaller traders into the hands of unregulated and unscrupulous operators.…. Again, the effects may be precisely the opposite of those intended.” “These new measures are wholly

• unnecessary. I have been a trader for over a
• decade. Retail accounts such as those with IG

… offer an effective use of capital. I am fully aware of the risks involved in speculation. That is my responsibility.” “These proposals are totally disproportionate to the risk involved. This would severely restrict my trading…. Whilst I understand the need to protect investors, experienced traders like myself are being unduly penalised by these proposals.”

IG Group Holdings plc H1 FY18 Results

FUTURE GROWTH

IG Group Holdings plc H1 FY18 Results 32

▪ Developing Multi-lateral Trading Facility (MTF) to

address the significant EU market in on exchange Leveraged trading

▪ On exchange market in Europe is significantly larger

than OTC providing an opportunity to appeal to a wider client base

▪ Product will be Limited Risk with a mandated

guaranteed stop

PRODUCT AND REGIONAL DEVELOPMENT

New development in Germany

EU SUBSIDIARY

▪ Applying for BaFIN licence ▪ Utilise existing base in Dusseldorf ▪ Expand local team to include key

management, control and oversight functions

▪ Will serve as a regional hub for the EU ▪ Completion in the next financial year

MTF

Total EU Leverage Market Total EU CFD Market IG’s EU Share

EU MARKET (excl UK)

IG Group Holdings plc H1 FY18 Results

Application filed for US retail FX dealer licence

33

▪ CEO has been appointed internally and recruitment for other key roles has begun ▪ Consider the US margin FX market to be currently underserved following the exit of the largest competitor ▪ Currently 85,000 active forex traders and approximately 25,000 new traders per year1, with only three

significant providers

▪ Opportunity to build IG brand in the US in addition to Nadex ▪ Utilise reach of DailyFX which achieves over one million unique visitors per month, of which c.18% are from

the US – US visitors that convert into leads will go directly to IG’s US business once live

OPPORTUNITY IN THE US

• 1. Investment Trends US FX Report, released September 2017

IG Group Holdings plc H1 FY18 Results

Allocating resource to growth areas

34

▪ Identify countries where opportunity is expanding and focus resources accordingly ▪ Resulting in increased marketing allocation to APAC which is delivering consistent growth in revenue ▪ Revenue in EMEA non-EU is growing well and contributing an increasing amount to Group performance

OPPORTUNITIES OUTSIDE THE EU

OTC LEVERAGED REVENUE OUTSIDE UK & EU (£m)

30% 38% 43% 33% 30% 37% 34% 29% 32% 33% 11% 10% 9% 9% 9% 22% 18% 26% 28%

0% 20% 40% 60% 80% 100%

20%

EVOLVING MARKETING FOCUS

APAC EMEA non-EU

20%

H1 H2 FY15 H1 H2 FY16 H1 H2 FY17 H1 FY18 20 40 60 80 100

US UK EMEA EU APAC EMEA non-EU

H1 H2 FY16 H1 H2 FY17 H1 FY18

IG Group Holdings plc H1 FY18 Results

Strong platform for growth

35

▪ Record revenues and profit in H1 FY18 ▪ Active positioning for regulatory change

– If ESMA proposals had been in place in the previous financial year, we estimate a reduction in revenue of less than 10%

▪ Strong start to second half

– Operating costs to be higher in H2

▪ Growth opportunities continue to exist outside of EU ▪ Delivered a sustainable business for 40 years by placing good client outcomes at the heart of

everything we do

▪ We will lead the way

CONCLUSION

IG Group Holdings plc H1 FY18 Results

APPENDICES

IG Group Holdings plc H1 FY18 Results

Leverage limits from ESMA Call for evidence – 18th January 2018

Leverage limits on the opening of a position by a retail client. The contemplated leverage limits would apply to any payment made to a product provider for the purpose of entering into a CFD, excluding commission and transaction fees. They would range from 30:1 to 5:1 to reflect the historical price behaviour of different classes

• f underlying assets.

In particular:

▪ For CFDs in major currency pairs1, which have relatively low historical volatility, a limit of 30:1 is being

considered

▪ For CFDs in non-major currency pairs and major equity indices2, a limit of 20:1 is being considered ▪ For CFDs in gold, a relatively stable commodity, a limit of 20:1 is being considered ▪ For CFDs in commodities other than gold, and for CFDs in minor equity indices, a limit of 10:1 is being

considered; and

▪ For individual equities, which tend to be relatively volatile, and for any underlying not otherwise listed above,

a limit of 5:1 is being considered A leverage limit of 5:1 on the opening of a CFD implies that the client must post initial margin of at least 20% of the initial exposure of the CFD. Similarly, a leverage limit of 20:1 on the opening of a CFD implies that the client must post initial margin of at least 5% of the initial exposure of the CFD

APPENDIX 1: ESMA Leverage Proposals

1. Any currency pair comprising any two of the following currencies: US Dollar, Euro, Japanese Yen, Pound Sterling, Canadian Dollar or Swiss Franc 2. Any of the following equity indices: Financial Times Stock Exchange 100 (FTSE 100); Cotation Assistée en Continu 40 (CAC 40); Deutsche Bourse AG German Stock Index 30 (DAX30); Dow Jones Industrial Average (DJIA); Standard & Poors 500 (S&P 500); NASDAQ Composite Index (NASDAQ); Nikkei Index (Nikkei 225); Standard & Poors / Australian Securities Exchange 200

37

IG Group Holdings plc H1 FY18 Results

APPENDIX 2: Full Year and Half Year analysis

1

38

• 1. Unique active clients in each period with revenue stated as Net Trading Revenue

203.7 95.6 95.6 394.8 5.3 0.2 400.2 FY 106.4 53.1 50.3 209.8 4.8 0.3 214.8 222.3 117.3 104.7 444.3 11.2 0.8 456.3 116.0 64.2 54.4 234.5 6.4 0.5 241.5

FY16

H1 FY H2 115.0 67.0 55.6 237.6 6.3 1.0 244.9 223.0 137.5 114.1 474.6 14.1 2.4 491.1 108.0 70.5 58.5 237.0 7.8 1.4 246.2

FY17

H1 FY H2 102.1 48.1 45.3 195.5 1.9 (0.0) 197.4 101.5 47.5 50.3 199.3 3.4 0.2 202.8

FY15

H1 H2 59.2 35.5 35.3 130.1 10.0 3.1 (1.5) 141.6 FY 46.1 30.5 30.1 106.7 9.1 4.0 (1.5) 118.2 59.9 41.6 36.4 137.9 15.2 6.7 (2.4) 157.5 48.0 34.2 29.3 111.5 10.6 6.7 (2.1) 126.7

FY16

H1 FY H2 53.0 35.8 30.3 119.1 13.0 13.3 (3.3) 142.2 64.7 45.9 37.4 148.0 22.3 20.4 (5.0) 185.8 48.1 37.2 29.8 115.1 15.8 20.4 (4.3) 147.1

FY17

H1 FY H2 46.8 26.3 28.3 101.5 5.1 0.9 (0.4) 107.1 46.8 29.0 29.0 104.8 7.9 3.1 (1.4) 114.3

FY15

H1 H2 3,438 2,689 2,708 3,035 529 50 2,826 FY 2,307 1,743 1,671 1,966 527 71 1,818 3,710 2,821 2,879 3,223 734 122 2,897 2,419 1,876 1,856 2,104 607 80 1,907

FY16

H1 FY H2 2,171 1,871 1,834 1,995 480 73 1,722 3,446 2,997 3,051 3,207 630 115 2,643 2,248 1,920 1,959 2,068 494 68 1,680

FY17

H1 FY H2 2,181 1,829 1,599 1,927 379 (22) 1,844 2,171 1,639 1,732 1,902 426 57 1,774

FY15

H1 H2 UK EMEA APAC OTC Leveraged Derivatives US Share Dealing & Investments GROUP UK EMEA APAC OTC Leveraged Derivatives US Share Dealing & Investments Multi-product clients GROUP UNIQUE ACTIVE CLIENTS UK EMEA APAC OTC Leveraged Derivatives US Share Dealing & Investments GROUP

REVENUE (£m) CLIENTS (‘000s) REVENUE PER CLIENT (£)

116.7 76.6 66.0 259.3 7.3 1.8 268.4

FY18

H1 47.2 36.0 30.0 113.3 14.8 29.1 (5.2) 151.9

FY18

H1 2,470 2,128 2,200 2,290 492 62 1,767

FY18

H1

IG Group Holdings plc H1 FY18 Results

APPENDIX 3: Quarterly analysis

1

39

UK EMEA APAC OTC Leveraged Derivatives US Share Dealing & Investments GROUP

REVENUE (£m)

47.9 23.1 26.0 97.1 2.1 0.1 99.2 Q4 43.7 21.7 19.4 84.8 0.8

• 85.6

58.4 26.4 25.9 110.7 1.1 (0.0) 111.8 Q1 Q2 Q3 53.6 24.3 24.3 102.2 1.3 0.1 103.6 55.7 33.8 25.9 115.4 3.8 0.3 119.5 54.5 24.1 25.1 103.7 2.2 0.1 106.0 51.9 29.0 25.2 106.1 2.6 0.1 108.9 60.3 30.4 28.5 119.1 2.6 0.2 122.0 53.0 29.8 25.2 108.0 3.0 0.5 111.4 62.0 37.2 30.4 129.7 3.3 0.5 133.4 51.1 33.5 28.2 112.8 3.9 0.6 117.4

CLIENTS (‘000s)

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 UK EMEA APAC OTC Leveraged Derivatives US Share Dealing & Investments GROUP

REVENUE PER CLIENT (£)

1,273 980 1,061 1,132 341 38 1,059 Q4 1,212 1,033 826 1,052 235

• 1,020

1,439 1,180 1,042 1,261 304 (22) 1,214 Q1 Q2 Q3 1,373 1,041 998 1,178 287 27 1,120 1,488 1,224 1,063 1,290 492 45 1,171 Q4 1,396 989 968 1,161 349 39 1,085 1,436 1,156 1,026 1,236 417 37 1,149 Q1 Q2 Q3 1,508 1,092 1,129 1,281 401 49 1,185 1,220 1,041 983 1,105 335 45 974 1,469 1,228 1,188 1,321 373 39 1,137 Q1 Q2 Q3 1,291 1,089 1,126 1,182 381 38 987

FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 FY15

37.6 23.6 24.5 85.8 6.1 3.1 (1.2) 93.7 36.1 21.0 23.5 80.6 3.3

• 83.9

40.6 22.4 24.8 87.8 3.8 0.9 (0.4) 92.1 39.1 23.4 24.3 86.8 4.5 2.1 (0.9) 92.4 37.4 27.6 24.4 89.4 7.6 6.7 (1.8) 102.0 39.1 24.3 25.9 89.3 6.2 3.4 (1.3) 97.6 36.1 25.1 24.6 85.8 6.2 4.0 (1.3) 94.7 40.0 27.8 25.2 93.0 6.6 4.9 (1.5) 103.0 43.4 28.7 25.6 97.7 9.0 10.3 (2.5) 114.5 42.2 30.3 25.6 98.1 8.7 13.3 (2.8) 117.3 39.6 30.8 25.0 95.4 10.3 16.4 (3.3) 118.9 UK EMEA APAC OTC Leveraged Derivatives US Share Dealing & Investments Multi-product clients GROUP UNIQUE ACTIVE CLIENTS Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 56.9 37.0 30.3 124.2 3.9 0.8 128.8 Q4 1,430 1,174 1,197 1,285 345 37 1,035 Q4 39.8 31.5 25.3 96.6 11.2 20.4 (3.8) 124.4 58.8 39.0 33.1 130.9 3.4 0.9 135.2 57.9 37.7 32.9 128.4 3.8 0.9 133.2 Q1 Q2 1,498 1,293 1,316 1,384 333 35 1,082 1,502 1,265 1,291 1,369 385 33 1,038 Q1 Q2 39.2 30.2 25.2 94.6 10.3 24.2 (4.1) 124.9 38.6 29.8 25.5 93.8 10.0 29.1 (4.6) 128.3 Q1 Q2

FY18 FY18 FY18

• 1. Unique active clients in each period with revenue stated as Net Trading Revenue

IG Group Holdings plc H1 FY18 Results

APPENDIX 4: Regulatory Capital

40

FY16 £m FY17 £m FY17 £m FY16 £m 30 Nov 17 £m 30 Nov 16 £m Shareholders' Funds less foreseeable declared dividends less acquisition intangibles less intangible assets less deferred tax assets Capital resources Pillar 1 Risk Exposure Amounts (REA) Total Pillar 1 REA Capital Ratio Required Capital Ratio Pillar 1 minimum Individual Capital Guidance (ICG) ICG Requirement Plus combined buffer requirement Total Requirement (%) Total Requirement - £m Capital Headroom - £m 750.8 (35.6) (107.8) (46.2) (8.6) 552.6 1,951.8 28.3% 8.0% 9.4% 17.4% 1.6% 19.0% 370.8 181.8 680.7 (34.6) (108.2) (50.0) (7.4) 480.5 1,647.6 29.2% 8.0% 9.4% 17.4% 0.6% 18.0% 296.6 183.9 A B A/B = C D E D+E = F G F+G = H HxB = I A-I

IG Group Holdings plc H1 FY18 Results

END