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

RESULTS PRESENTATION Half Year Ended 30 th November 2017 IG Group Holdings plc H1 FY18 Results

DISCLAIMER 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 operations, 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 31 st 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 2

OVER 40 YEARS OF SUCCESS Empower informed, decisive, adventurous people to access opportunities in the financial markets IG CREATED THIS INDUSTRY WITH INNOVATION AT ITS CORE IG was founded First company in the First offered Bitcoin, now Launched browser based offering a contract on sector to launch an one of six cryptocurrency platform, the first with no the price of gold online dealing platform markets at IG plug-in requirement 1974 1998 2007 2013 2003 2010 2017 1991 Phone and software system Launched first mobile Close Out Monitor (COM) Rolled out IG Smart introduced to enable trades trading app with live and tiered margining Portfolio to be entered straight on to price streaming developed following the the computer system credit crunch ▪ 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 Group Holdings plc H1 FY18 Results 3

AGENDA FINANCIAL PERFORMANCE FINANCIAL POSITION OUR CLIENTS OPERATIONAL DEVELOPMENTS FUTURE REGULATION FUTURE GROWTH 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 FY18 H1 RESULTS ▪ 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 1 5 YEAR REVENUE, EPS AND DIVIDEND - Underlying REVENUE (£m) EARNINGS PER SHAR E (p) DIVIDEND PER SHARE (p) 600 50 40 H1 H2 H1 H2 Interim Final 500 40 30 400 30 300 20 20 200 10 10 100 0 0 0 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 1. FY15 excludes impact of Swiss franc event IG Group Holdings plc H1 FY18 Results 6

INCOME STATEMENT Good revenue growth, good cost management, good margin FY18 H1 FY17 FY17 H1 FY16 Yr on Yr £m £m £m % £m ▪ Net trading revenue up 10% Net trading revenue 268.4 244.9 10% ▪ Net operating income up 10% Net interest on client funds 1.8 1.8 – Interest on client funds of <30 bps on Betting duty & FTT (2.7) (3.7) average balances of c.£1.25bn Other operating income 1.5 0.5 – Betting duty at 1% of revenue, below Net operating income 269.0 243.5 10% historical average Operating expenses (132.5) (137.9) 4% – US lead generation revenue from Net finance expense (0.3) (0.4) DailyFX in other operating income PBT 136.2 105.2 29% ▪ Operating expenses down 4% Taxation (28.1) (21.9) ▪ PBT margin 50.7%, up 7.7% points, from PAT 108.1 83.3 30% 43.0% in H1 FY17 Effective rate of tax 20.6% 20.8% Diluted EPS 29.3p 22.6p 30% ▪ Effective tax rate 20.6% Dividend per share 9.69p 9.42p IG Group Holdings plc H1 FY18 Results 7

REVENUE AND ACTIVE CLIENTS Significant increase in OTC Leveraged revenue per client 1 REVENUE AND CLIENT TRENDS OTC LEVERAGED REVENUE by asset class REVENUE (£m) H1 FY18 H1 FY17 Yr on Yr UK 116.7 115.0 1% Options 67.0 EMEA 76.6 14% Shares 8% 55.6 APAC 66.0 19% 16% Commodities 237.6 OTC Leveraged Derivatives 259.3 9% 12% 9% 16% 6.3 US 7.3 16% 13% 1.0 Share Dealing & Investments 1.8 85% 244.9 GROUP 268.4 10% H1 H1 FY18 FY17 Yr on Yr ACTIVE CLIENTS 16% H1 FY18 H1 FY17 UK 47,239 52,965 (11%) EMEA 36,010 35,828 1% 46% APAC 30,010 30,314 (1%) Forex 24% 40% Equity indices OTC Leveraged Derivatives 113,259 119,107 (5%) US 14,785 13,045 13% Share Dealing & Investments 29,093 13,302 119% Multi-product clients (5,244) (3,278) 60% ▪ Revenue from Cryptocurrencies (included GROUP Unique Active Clients 151,893 142,176 7% within Forex above) represented 5% of OTC Yr on Yr REVENUE PER CLIENT (£) H1 FY18 H1 FY17 Leveraged revenue in H1 FY18 (H1 FY17: UK 2,470 2,171 14% <0.5%) EMEA 2,128 1,871 14% APAC 2,200 1,834 20% OTC Leveraged Derivatives 2,290 1,995 15% US 492 480 3% Share Dealing & Investments 62 73 (15%) 1. Active clients represents any client who generated revenue through OTC Leveraged GROUP 1,767 1,722 3% 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 IG Group Holdings plc H1 FY18 Results 8

DRIVERS OF REVENUE Client retention is fundamental to our success REVENUE BRIDGES (£m) 22.0 (0.1) 268.4 246.2 5.8 1.9 23.0 12.9 246.2 244.9 (18.4) 5.5 (20.4) (8.7) Existing clients = (£23.6m) Existing clients = £0.3m H1 FY17 H2 FY17 H1 FY18 Existing clients not trading Existing clients trading more (less) Returning clients Other New clients IG Group Holdings plc H1 FY18 Results 9

REVENUE OPTIMISATION Business model results in low variability in revenue 1 2 REVENUE VARIABILITY REVENUE PERFORMANCE REVENUE (£m) COEFFICIENT REVENUE (£m) 2.5 2.5 80 70 2.0 2.0 60 50 1.5 1.5 40 1.0 1.0 30 20 0.5 0.5 10 0 0 - 0 0.0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 Daily revenue (60 day rolling average) Client commission, spread and financing Coefficient of variability (60 day rolling average) Monthly reported revenue Revenue if fully hedged ▪ No loss making days since Aug 2015 Internalisation benefit 1. Excluding impact of Swiss franc event (Jan 15) 2. Including impact of Swiss franc event (Jan 15) IG Group Holdings plc H1 FY18 Results 10

MARKETING EFFECTIVENESS Continue to attract high value clients 1 2 CLIENT RECRUITMENT (excl. Nadex) CUMULATIVE AVERAGE CLIENT VALUE Client first trades Marketing cost per first trade (£) 35,000 1,600 4,000 3,500 1,400 30,000 3,000 1,200 25,000 2,500 1,000 20,000 2,000 800 15,000 1,500 600 1,000 10,000 400 500 5,000 200 0 1 2 3 4 5 6 7 8 9 10 11 12 13 0 0 H1 H2 H1 H2 H1 Months from client first trade FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 ▪ H1 FY18 cost per first trade £1,050 ▪ Average value of new clients remains strong – Increasingly diluted by Share Dealing & ▪ Marketing payback period around 3 - 4 months Investments ▪ H1 FY18 OTC Leveraged equivalent cost per first trade is around £1,400 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 IG Group Holdings plc H1 FY18 Results 11

OPERATING EXPENSES Good cost management in first half, no change to full year guidance H1 FY18 FY17 H1 FY17 FY16 Yr on Yr ▪ Increased headcount offset by lower £m £m £m % £m average cost per head Fixed remuneration (46.3) (46.2) 0% ▪ Advertising and marketing down 21% Advertising and marketing (27.7) (35.2) 21% Other costs (43.6) (44.6) 2% – Reflects lower spend in Q1 YoY Operating expenses (117.6) (126.0) 7% – Q2 spend in line with Q2 last year excl. variable remuneration ▪ H2 costs will be higher than H1 Variable remuneration (14.9) (11.9) (25%) – Regulatory fees Total Operating expenses (132.5) (137.9) 4% – Marketing – Strategic initiatives ▪ FY18 full year Operating expenses, excluding variable remuneration, expected to be similar to FY17 IG Group Holdings plc H1 FY18 Results 12