Growth Opportunities

Growth OpportunitiesCapital Markets DayMay 2018

2CMD • May 2018

Growth Opportunities


Our Client Service

ROB BOWENIAN PEACOCK

Breakout

Our Platform& Technology

JON NOBLE

Dealing andInternalisation

MATT BRIEF

ProspectAcquisition

HEIDRUN LUYT

Introduction: Vision and ValuesPETER HETHERINGTON

Risk ManagementJOE McCAUGHRAN

Cost AnalysisPAUL MAINWARING

Growth OpportunitiesBRIDGET MESSER

ConclusionPETER HETHERINGTON

Part I Part II

Regulatory LandscapePETER HETHERINGTON

Q&A

Q&A

3CMD • May 2018


184

257299

320

367 362 370 388

456491

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Our track record of growth10 YEAR REVENUE (£m) 10 YEAR PBT (£m)

97

126

158 163

186 192 195

170

208 214


12.015.0

18.520.0

22.5 23.3

28.2 28.2

31.4 32.3


10 YEAR DIVIDENDS (p)

9% CAGR12% CAGR

12% CAGR

69

103114

131 141

132 120130

138148

£0

£500

£1,000

£1,500

£2,000

£2,500

£3,000

£3,500


10 YEAR OTC CLIENT NUMBERS2 (‘000)

Revenue/client p.a. (£)TSR 236%1, vs 80% FTSE100

1 Basis closing share price 21 May of £8.82; 2 Leveraged OTC clients, active in year

4CMD • May 2018


The recipe for growth

1. Growth from existing countries

2. Growth from new countries

3. Growth from innovation

• Increasing wealth

• Increasing self-directed involvement in financial markets

• Regulatory environment favouring established, compliant providers

3 main levers for growth: Macro trends fuel business growth

5CMD • May 2018


Macro trendIncreasing wealth

0

100,000

200,000

300,000

400,000

500,000

Source: Credit Suisse Global Wealth Databook 2017

2000 2003 2006 2009 2012 2015

+$299k, 287%

+$177k, 84%

+$115k, 71%

Australia

US

UK

+$153k, 133%

+$161k, 157%

+$114k, 126%

Singapore

France

Germany

MEAN WEALTH PER ADULT OVER TIME ($)

2017

Number of Billionaires2

637in Asia

563in the US

342in Europe

new billionaire created in Asia every other day

1

AVERAGE GDP GROWTH, LAST 10 YEARS1

1.1%

5.1%

G7countries

Emergingmarkets

1 IMF; 2 UBS/PWC Billionaires Report 2017

6CMD • May 2018


Macro trendSelf-direction becoming the norm

Self-directionbecoming the norm

Increased financial

awareness

Falling trust1

Increased access to

technology

1 Edelman Trust Barometer 2018

7CMD • May 2018


Macro trend

Winners will have:

• A bricks and mortar strategy, and compliant advertising

• Pursue long term, sustainable client relationships

• A business that does not compete on leverage

• Scale and in-house technical expertise

Regulatory change plays to our strengths

This is the IG

business model

Leverage limitsAdvertising restrictions No negative accounts

8CMD • May 2018


The recipe for growth

1. Growth from existing countries

2. Growth from new countries

3. Growth from innovation

• Increasing wealth

• Increasing self-directed involvement in financial markets

• Regulatory environment favouring established, compliant providers

3 main levers for growth: Macro trends fuel business growth

9CMD • May 2018


Growth from existing countries

1. Competitor steal

2. Product steal

3. Grow the addressable market

REVENUE BY MARKET MATURITY (£m)

0

100

200

300

400

500

600


Mature markets Untapped marketsMaturing markets

£296m

53% mkt penetration1

£173m

23% mkt penetration1

UK AUS FRA SGX GER SPA

Online share traders (‘000)

930 645 390 226 1,010 350

OTC leverage traders (‘000)

148 61 21 30 62 36

OTC penetration %

16% 9% 4% 13% 6% 10%

IG market penetration

FX 31% 19% 29% 19% 10% 13%

CFD 28% 45% 42% 25% 15% 13%

SB 55% n/a n/a n/a n/a n/a

Market penetration1

3 main tools to grow our client base:

1 Investment Trends 2017 reports

10CMD • May 2018


Growth from existing countriesFewer, better clients

1 OTC leverage traders, active in FY17

£80,000

£12,000

£700

2%

8%

50%

30%

• Huge variation in client value

• Investment Trends does not distinguish between value and volume of clients

• “Market share” has limitations

• Investment Trends is advancing a new methodology this year to report market penetration by value segment

148,000Clients

£475m

Revenue

£3,200Rev per client

FY17 CLIENT SEGMENTATION1

11CMD • May 2018


Growth from new countries

Strong track record of opening new offices

• 15 offices opened or bought since 2002

• 54% of group revenue in FY17, or £266m

Timeline of geographic expansion

Well placed to grow in to additional new markets:

• Regulatory environment favours bricks and mortar

• Highly experienced management team

• Strong global brand

Spain

France

2006

Singapore

Italy

Germany

2007 2011

NetherlandsNOW CLOSED

2013

NorwayNOW CLOSED

2014

Switzerland

2018

US RFEDPLANNED

2009

Nadex, USACQUISITION

2015

Dubai

2002

Australia

2009

Sweden

2008

JapanACQUISITION

2010

SouthAfrica

ACQUISITION

2012

IrelandNOW CLOSED

12CMD • May 2018

Growth Opportunities1 Investment Trends US Foreign Exchange report 2017

Growth from new countries

1 US RFED

• 85,000 active FX traders1

• Poorly served market

• High barriers to entry

2 Smaller launches

• New regulatory regimes being issued

• Regulators will engage with established, trusted providers

3 Regional strategies

• Use education and analysts to access regions that do not have a regulatory regime

• Constantly looking for expansion opportunities

Where next ?

2 Switzerland

• Only new banking license issued in 5 years

1 Dubai

• First CFD retail endorsement

Some examples

13CMD • May 2018


Growth from Innovation“It’s in our DNA”

14CMD • May 2018


Growth from Innovation

Equity indices

Shares16%

Forex

Commodities

Options

9%

16%

46%

16%

13%

H1FY18

H1FY17

OTC LEVERAGED REVENUEBY ASSET CLASS

8%

12%

24%

40%

• 11% of Q3 revenue (reported in Forex)

• Built at low cost in 2013

• Response to client demand

1 Crypto currency CFDs

• £880m in AuA

• 8% cross-sell to leverage

• Added value to the core business

2 Share Dealing for the active trader H1 FY18 AVERAGE CLIENT VALUE1 ACTIVE CLIENT RETENTION2

OTC LevOnly

£2,367£2,681

OTC LevOnly

Multi-Product

60%

72%

1 In countries where IG offers Share Dealing; 2 The percentage of clients trading in H1 FY17, still trading in H1 FY18

Multi-Product

15CMD • May 2018


Growth from Innovation

MTF Initiative

• Offensive

– 1m new listings in Q4 20171

– European preference for this structure & product

• Defensive

– Safe harbour

Well positioned to deliver

• Regulatory expertise

• Attract and convert European

• Strong balance sheet

• Technological prowess

• Deutsche Bank

• Commerzbank

• Unicredit

• Goldman Sachs

• UBS

• BBVA

• Nomura

• BNP

1 European Structured Investment Products Association, Q4 2017 report

ESTIMATED MARKET SIZE

€1.96bnTotal EU (ex UK) Leveraged market

€788mTotal EU (ex UK) CFD market

€118mIG’s EU (ex UK) share

Only possible because of our history of innovation

16CMD • May 2018


Conclusion

• Room to grow from all levers

3 main levers for growth

Macro trends fuel business growth

Strong track record of growth and innovation

• We find a way that works

Growth Opportunities

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