RESULTS PRESENTATION - iggroup.com FY18 Results... · IG has always targeted the financially sophisticated trader ... 2010 2013 2017 First offered Bitcoin, ... 10% 115.0 67.0 55.6

IG Group Holdings plc H1 FY18 Results

RESULTS PRESENTATIONHalf Year Ended 30th November 2017


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

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 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.


OVER 40 YEARS OF SUCCESS

Empower informed, decisive, adventurous people to access opportunities 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

offering 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

online 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

one of six cryptocurrency

markets at IG

Rolled out IG Smart

Portfolio


FINANCIAL PERFORMANCE

FINANCIAL POSITION

OUR CLIENTS

OPERATIONAL DEVELOPMENTS

FUTURE REGULATION

FUTURE GROWTH

AGENDA


FINANCIAL PERFORMANCE


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

0

10

20

30

40

FY14 FY15 FY16 FY17 FY18

5 YEAR REVENUE, EPS AND DIVIDEND - Underlying1

1. FY15 excludes impact of Swiss franc event

0

100

200

300

400

500

600


REVENUE (£m)

0

10

20

30

40

50


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

H1 H2 Interim FinalH1 H2


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

%


REVENUE AND ACTIVE CLIENTS

8

REVENUE AND CLIENT TRENDS1

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


US


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


US


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

Shares16%

40%24%

12%

Forex

Commodities

Options

8%

9% 16%

46%

16%

13%

H1FY18

H1FY17

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%)


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


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 VARIABILITY1

REVENUE PERFORMANCE2

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

0

Monthly reported revenue

Client commission, spread and financing

Revenue if fully hedged

Internalisation benefit No loss making days since Aug 2015

FY17FY15 FY18FY16FY180 0


0

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 VALUE2

Average value of new clients remains strong

Marketing payback period around 3 - 4 months

0

200

400

600

800

1,000

1,200

1,400

1,600

0

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


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)


FINANCIAL POSITION


OWN FUNDS

Good cash generation

14

MOVEMENT IN OWN FUNDSOWN 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

operations

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


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

of 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 LIQUIDITYBALANCE SHEET


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

FY17FY16NovMay May

FY18

MARGIN REQUIREMENT (£m)

Jun Nov

FY16

Nov

FY18

Nov

FY17

MayMay


OUR CLIENTS


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%

of 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 FY181

< 2%8%

90%

Clients

50%

30%

Revenue

20%

1. OTC Leveraged Derivatives clients only


ESTABLISHED CLIENT BASE

19

Clients have typically traded with IG for over 3 years

CLIENT ATTRITION1

Underlying retention levels remain strong and in

line with historic cohorts

REVENUE BY CLIENT TENURE H1 FY181

FY15 FY17FY14 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%

0 1 2 3 4 5 6 7 8 9 10 11 12


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 CLIENTS1

60%

72%

OTC Leveraged

Only

Multi- Product

£2,367

£2,681

H1 FY18 AVERAGE CLIENT VALUE1

OTC Leveraged

Only

Multi- Product

60%

72%

ACTIVE CLIENT RETENTION1,2

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


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

or 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


OPERATIONAL

DEVELOPMENTS

IG Group Holdings plc H1 FY18 Results23

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

ProAccount

FUTURE1

NOW1

Accounts

ProAccount

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


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 REVENUE1

HIGHER VALUE, LOWER RISK1

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%


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 ACCOUNTS1

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%


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

outcomes 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


FUTURE REGULATION


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


0

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


professional



• Stop trading

Negative

balance

protection

Limited Risk

Account


professional

• Trade with Limited Risk account and

utilise protections



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


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.”

http://www.replytoesma.trading/


FUTURE GROWTH

IG Group Holdings plc H1 FY18 Results32

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)


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


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 H2FY15

H1 H2FY16

H1 H2FY17

H1FY18

0

20

40

60

80

100

USUK EMEA EU APACEMEA non-EU

H1 H2FY16

H1 H2FY17

H1FY18


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


APPENDICES


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

of 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


APPENDIX 2: Full Year and Half Year analysis1

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

FY16H1 FYH2

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

FY17H1 FYH2

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

FY15H1 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

FY16H1 FYH2

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

FY17H1 FYH2

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

FY15H1 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

FY16H1 FYH2

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

FY17H1 FYH2

2,181

1,829

1,599

1,927

379

(22)

1,844

2,171

1,639

1,732

1,902

426

57

1,774

FY15H1 H2

UK

EMEA

APAC


US


GROUP

UK

EMEA

APAC


US



GROUP UNIQUE ACTIVE CLIENTS

UK

EMEA

APAC


US


GROUP

REVENUE (£m)

CLIENTS(‘000s)

REVENUE PER CLIENT (£)

116.7

76.6

66.0

259.3

7.3

1.8

268.4

FY18H1

47.2

36.0

30.0

113.3

14.8

29.1

(5.2)

151.9

FY18H1

2,470

2,128

2,200

2,290

492

62

1,767

FY18H1


APPENDIX 3: Quarterly analysis1

39

UK

EMEA

APAC


US


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) Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q1 Q2 Q3

UK

EMEA

APAC


US


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 FY17FY15

FY16 FY17FY15

FY16 FY17FY15

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


US



GROUP UNIQUE ACTIVE CLIENTS

Q4Q1 Q2 Q3 Q4Q1 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


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


END

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