TIDMIGG
RNS Number : 3863A
IG Group Holdings plc
21 January 2020
IG GROUP HOLDINGS PLC
Interim results for the six months ended 30 November 2019
21 January 2020
LEI No: 2138003A5Q1M7ANOUD76
IG Group Holdings plc ("IG", "the Group", "the Company"), a
global leader in online trading, today announces its results for
the six months ended 30 November 2019 ("H1 FY20").
Highlights[1]
- The implementation of the Group's strategy is progressing as
planned, and the Group reiterates its medium-term financial targets
of:
- Revenue growth in its Core Markets at around 3-5% per annum over the medium term; and
- An increase in revenue from its Significant Opportunities
markets of GBP100 million, to around GBP160 million in FY22.
- Core Markets performing in line with plan in a more restrictive regulatory environment.
- Continued growth in the client base:
- ESMA region OTC leveraged active client numbers up 4%;
- Other Core Markets OTC leveraged active client numbers up 5%.
- Actions are progressing as planned to enable successful
navigation of the impact of regulatory change in Australia and
across the Group's Core Markets.
- The Group's portfolio of Significant Opportunities delivered
revenue of GBP40.4 million in H1 FY20, GBP12.2 million higher than
H1 FY19:
- Japan delivered revenue growth of over 80%;
- Active client numbers in the Emerging Markets grew close to 40%;
- Revenue growth of 18% in the Institutional business;
- IG US OTC FX business delivering steady growth;
- Marketing launch of the Group's Multi-lateral Trading Facility (MTF), Spectrum, in October;
- Plans in Greater China are progressing well.
Financial Summary
- Net trading revenue GBP249.9 million (H1 FY19: GBP251.0
million). H1 FY19 included two months of trading prior to the
implementation of the ESMA product intervention measures.
- Total operating expenses GBP136.3 million, reflecting
investment in the Group's strategic initiatives, in line with
guidance (H1 FY19: GBP122.1 million).
- Operating profit GBP100.1 million (H1 FY19: GBP112.5 million).
- Basic EPS 22.4 pence (H1 FY19: 24.9 pence).
Dividend
An interim dividend of 12.96 pence per share, calculated as 30%
of the FY19 full year dividend of 43.2 pence per share, will be
paid on 27 February 2020 to those members on the register at the
close of business on 31 January 2020.
FY20 Outlook
As previously guided the Group expects:
- To return to revenue growth in FY20;
- Total operating expenses, excluding variable remuneration, to
be around GBP30 million higher than FY19; and
- To maintain the 43.2 pence per share annual dividend until the
Group's earnings allow the Company to resume progressive
dividends.
June Felix, Chief Executive, commented:
"At IG, we have one clear vision - to provide the world's best
trading experience. In working to that vision, we lead our industry
by focusing on our clients and making them central to everything we
do. This client-centric approach is borne out in the behaviours of
our people who all share three common values: to champion the
client, lead the way and love what we do.
We are now six months into the delivery of our multi-year
strategy and are on track to deliver on the medium-term growth
targets we have set ourselves. Early indications are very
encouraging with continued growth in the client base in our Core
Markets, and convincing progress in the areas identified as
Significant Opportunities. I am very much looking forward to
continuing the delivery of our strategy, and also to welcoming Mike
McTighe as Chairman of IG Group in February.
I believe that IG is in an excellent position to exploit our
scale, skills and technological capability, to pivot into new
product lines, to expand our geographic reach and to serve new
client segments, as we continue to focus on delivering sustainable
growth and attractive shareholder returns."
Further information
IG Group Investor Relations IG Group Press FTI Consulting
Liz Scorer Jon Laycock Edward Berry
020 7573 0727 07 388 440127 020 3727 1046
investors@iggroup.com press@ig.com
Analyst presentation
There will be an analyst and investor presentation at 9:30am (UK
Time) on Tuesday 21 January 2020 at the IG Group offices, Cannon
Bridge House, 25 Dowgate Hill, London, EC4R 2YA.
The presentation will also be accessible live via audio webcast
at https://pres.iggroup.com/ig050. If you wish to listen via
conference call, please use the following link
https://pres.iggroup.com/ig050/vip_connect. The audio webcast of
the presentation and a transcript will be archived at:
www.iggroup.com/investors.
Disclaimer - forward-looking statements
This interim statement, prepared by IG Group Holdings plc (the
"Company"), may contain forward-looking statements about the
Company and its subsidiaries (the "Group"). 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. No assurance
can be given that such results will be achieved; actual events or
results may differ materially as a result of risks and
uncertainties facing the Group. If the assumptions on which the
Group 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 statement should be construed as a
profit forecast.
Some numbers and period on period percentages in this statement
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. Acronyms
used in this report are as defined in the Group's Annual
Report.
About IG
IG empowers informed, decisive, adventurous, people to access
opportunities in over 16,000 financial markets. With a strong focus
on innovation and technology, the company puts client needs at the
heart of everything it does.
IG's vision is to provide the world's best trading experience.
Established in 1974 as the world's first financial derivatives
firm, it continued leading the way by launching the world's first
online and iPhone trading services.
IG is an award-winning, multi-platform trading company which
allows retail, professional and institutional clients to trade
indices, commodities, currencies, warrants, options and equities 24
hours a day, 6* days a week. IG is the world's No.1 provider of
CFDs** and a global leader in forex. It provides leveraged services
with the option of limited-risk guarantees and offers an
execution-only stock trading service in the UK, Australia, Germany,
France, Ireland, Austria and the Netherlands. IG has a range of
affordable, fully managed investment portfolios, which provide a
comprehensive offering to investors and active traders.
IG is a member of the FTSE 250, with offices across Europe,
including a Swiss bank, Africa, Asia-Pacific, the Middle East and
the US. The Group holds a long-term investment grade credit rating
of BBB- with a stable outlook from Fitch Ratings.
*IG operates from 9pm Sunday (GMT) - 10pm Friday (GMT)
**Based on revenue excluding FX (from published financial
statements, June 2019)
Group Performance Review
Overview
The Group has made good initial strategic and operational
progress towards delivery of its medium-term objectives since the
announcement of its revised strategy on 22 May 2019.
Net trading revenue was GBP249.9 million, compared with GBP251.0
million in the corresponding period of the prior year. The prior
year period benefitted from two months of trading prior to the ESMA
product intervention measures coming into effect.
IG's track record of sustainable revenue growth over the medium
term has been delivered through growth in the size and quality of
its active client base. The number of unique OTC leveraged active
clients served by the Group has increased by 6% to 110,100 (H1
FY19: 103,900).
IG actively differentiates itself from others in the industry by
operating a non-conflicted, sustainable business model that ensures
its interests are aligned with those of its clients. The Group's
Board approved risk limits are set at a small fraction of the
notional exposure that IG's clients trade. Supported by real time
automated hedging, the Group delivers a consistent revenue return
on its client trading volume.
The benefit of the Group's focus on a non-conflicted business
model is demonstrated in its industry leading client tenure metrics
with 52% of the Group's OTC leveraged revenue in H1 FY20 generated
by clients who have been trading with the business for more than
three years. The Group's values and strategic proposition are
focused on ensuring that its client retention is industry
leading.
Total operating expenses excluding variable remuneration were
GBP136.3 million, 12% higher than in the prior year, in line with
Company guidance.
Operating profit was GBP100.1 million with the operating profit
margin at 40.1%. The conversion of operating profit into cash
generation is strong, with own funds generated from operations of
GBP106.3 million (H1 FY19: GBP100.1 million).
In October 2019 the Group received a long-term investment grade
credit rating of BBB- with a stable outlook from Fitch Ratings,
reflecting the Group's sound profitability, capitalisation and
well-established franchise. The Group has no current intention to
raise additional debt or to change its capital structure.
The Group has a licensed operational client facing subsidiary in
Germany, providing certainty that IG will be able to offer its
regulated financial products in all EU member states following the
UK's exit from the EU.
Delivering on our Strategy
Core Markets
Revenue in the Group's Core Markets was GBP209.5 million (H1
FY19: GBP222.8 million). The reduction in revenue is due to the
prior year period including two months of trading prior to the
implementation of the ESMA product intervention measures, and the
lower level of trading by ESMA region Professional clients in Q2
FY20 compared with a strong Q2 FY19 where clients were able to
identify a greater number of trading opportunities.
To understand the performance of the business in the ESMA region
since the product intervention measures have been in effect, the
most appropriate comparison is to compare the Q1-Q2 FY20 quarterly
average with the Q2-Q4 FY19 quarterly average when the measures
were in effect throughout.
The increase in the Group's active OTC leveraged client base in
the ESMA region is in line with the Group's growth targets for its
Core Markets. The average quarterly active client numbers in H1
FY20 were 4% higher than the Q2-Q4 FY19 average. ESMA region
average quarterly revenue was 3% higher in H1 FY20 than the
quarterly average in Q2-Q4 FY19.
Revenue in the Group's other core OTC markets was up 6%, driven
by a 5% increase in the number of active clients.
Actions to enable successful navigation of the impact of
proposed changes to the regulatory environment in Australia are
progressing as planned. These requirements are expected to be
confirmed in early 2020. Clients in Australia can elect to be
categorised as Wholesale if they meet the relevant criteria. This
can be done either through the Wealth Test or as Sophisticated
Investors under the Corporations Act. Clients in these categories
are not expected to be impacted by the product intervention
measures proposed in the Australian Securities and Investments
Commission (ASIC) consultation paper.
On 8 October 2019 the Monetary Authority of Singapore (MAS)
increased Retail client margin requirements for FX trading to 5%,
from 2%. The Group's long standing, sophisticated client base is
weighted towards clients that are able to be categorised as
Accredited, Expert or Institutional investors. Clients in these
categories are not impacted by the recent regulatory change.
The regulatory change in Singapore, and the proposed changes in
Australia, were reflected in the Group's previously stated target
of revenue growth in the Core Markets of 3-5% per annum over the
medium term.
The Group's core market businesses include the stock trading
offering which is focused on serving the needs of active equity
traders. It helps retain existing OTC leveraged clients as well as
providing an acquisition channel to attract new active traders to
the Group for whom leveraged trading products may be appropriate.
The Group served nearly 38,000 stock trading clients in H1 FY20 (H1
FY19: 37,000), 5,900 of whom also traded OTC leveraged
derivatives.
Significant Opportunities
As set out in its strategy, the Group is targeting an increase
in revenue from its portfolio of Significant Opportunities by
GBP100 million - from GBP60 million in FY19 to around GBP160
million in FY22. Revenue from these businesses in H1 FY20 was
GBP12.2 million higher than in the prior year period. Whilst the
Group is still at an early stage in the implementation of its
strategy, and noting that each opportunity is at a different stage
of development, there has been good initial progress.
Japan has performed strongly in the period with revenue up by
82% and active client numbers up by 75%. Growth was driven by
product differentiation, increased multi-channel marketing
investment and greater local focus driven by new local leadership.
As IG still has less than 2% share in the Japanese retail trading
market, the Group believes that further growth can be achieved
through localisation of the trading platform, continued marketing
investment, and a planned brand relaunch. The Group will also
continue to pursue partnership opportunities in Japan.
The Group's Emerging Markets business serves clients who
discover IG through reverse enquiry and who are resident in
jurisdictions where the Group does not have a physical presence.
The Group's Emerging Markets client base has increased by nearly
40% in the period.
The Group's Institutional business has a good pipeline of
opportunities and has delivered revenue growth of 18% in the
period. This business is focused on serving hedge funds and family
offices with less than US$200 million in assets under management,
who are attracted by IG's competitive, transparent pricing and
available liquidity. The Group plans to further expand its
Institutional proposition through developments in its trading
platform, and focused sales and client service.
To drive greater synergy, the Group's US businesses are now
managed as a single business unit. IG US, the OTC FX business, has
steadily increased the number of active clients it serves, and will
continue to focus on building its brand by increasing the awareness
of IG's low commissions, speed of execution and quality of customer
service compared with the competition. IG US benefits from the lead
generation provided by DailyFX, which receives around 2 million
unique visitors a month. Client acquisition for the US Exchange
Traded Derivatives business, Nadex, has been more challenging in
the period, and the business continues to refine its product
proposition and target audience.
The marketing launch of the Group's MTF, Spectrum, took place in
October. Spectrum represents a further diversification of the
Group's product range, offering European Retail clients the
opportunity to trade securitised derivatives in the form of turbo
warrants. Spectrum has successfully launched with turbo24s on
equity indices, currencies and commodities and the plan is to
expand its product set to include single name equities. Client
interest has been positive, with around 700 active clients from
launch to the end of the period. 33% of trades are made outside of
normal market hours, utilising Spectrum's unique 24-hour, five day
a week trading capability.
The Group has recruited a new Head of Greater China, who is
responsible for building the Group's presence in this region, and
for identifying and delivering routes to market that will provide
clients with access to IG's proprietary technology, broad product
capability and market leading execution. The Group is encouraged by
the pipeline of opportunities from its discussions with potential
regional partners.
Dividend
An interim dividend of 12.96 pence per share, calculated as 30%
of the FY19 full year dividend of 43.2 pence per share, will be
paid on 27 February 2020 to those members on the register at the
close of business on 31 January 2020.
FY20 Outlook
As previously disclosed the Group expects:
- To return to revenue growth in FY20;
- Total operating expenses, excluding variable remuneration, to
be around GBP30 million higher than FY19; and
- To maintain the 43.2 pence per share annual dividend until the
Group's earnings allow the Company to resume progressive
dividends.
Operating and Financial Review
Summary Group Income Statement
H1 FY20 H1 FY19 Change
GBPm GBPm %
-------------------------- -------- -------- -------
Net trading revenue 249.9 251.0 -
Net interest on client
money 2.6 3.0
Betting duty and FTT (1.4) (5.9)
Other operating income 0.9 1.7
-------------------------- -------- -------- -------
Net operating income 252.0 249.8 1%
-------------------------- -------- -------- -------
Operating expenses (136.3) (122.1)
Variable remuneration (15.6) (15.2)
-------------------------- -------- -------- -------
Total operating costs (151.9) (137.3) 11%
-------------------------- -------- -------- -------
Operating profit 100.1 112.5 (11%)
Net finance income 1.1 0.5
-------------------------- -------- -------- -------
Profit before taxation 101.2 113.0 (10%)
Taxation (18.8) (21.6)
-------------------------- -------- -------- -------
Profit for the period 82.4 91.4 (10%)
-------------------------- -------- -------- -------
Basic earnings per share 22.4p 24.9p (10%)
-------------------------- -------- -------- -------
The Group's net trading revenue in H1 FY20 was GBP249.9 million,
compared with GBP251.0 million in H1 FY19. The first half of the
prior year benefitted from two months of trading prior to the ESMA
product intervention measures coming into effect.
The Group's net trading revenue reflects the transaction fees
(spread, commission and overnight funding charges) paid by clients
for the trading service offered by the business ("client income"),
net of the Group's external hedging costs, clients' trading profits
and losses, and hedging profits and losses. In H1 FY20 the
conversion of client income to net trading revenue was consistent
with the prior year.
Operating profit in the period was GBP100.1 million, 11% lower
than H1 FY19. After net finance income of GBP1.1 million, profit
before taxation was GBP101.2 million. The effective tax rate
applied to the profit before tax for the period is 18.6% (H1 FY19:
19.1%) with profit after tax of GBP82.4 million.
Basic earnings per share of 22.4 pence is 10% lower than in the
first half of FY19.
Revenue performance by product
Net Trading Revenue
(GBPm)
---------
H1 FY20 H1 FY19 Change %
------------------------------- ---------- ---------- ---------
OTC leveraged 239.5 240.1 -
Exchange traded derivatives 7.8 8.4 (7%)
Stock trading and investments 2.6 2.5 4%
------------------------------- ---------- ---------- ---------
Group 249.9 251.0 -
------------------------------- ---------- ---------- ---------
Revenue Drivers Active Clients (000s) Revenue per client (GBP)
H1 FY20 H1 FY19 Change H1 FY20 H1 FY19 Change
% %
------------------------------- -------- -------- ------- --------- --------- -------
OTC leveraged 110.1 103.9 6% 2,175 2,311 (6%)
Exchange traded derivatives
- Nadex 11.2 12.4 (10%) 707 673 5%
Exchange traded derivatives 0.7 - - - - -
- Spectrum
Stock trading and investments 37.9 37.0 2% 69 67 3%
Multi-product clients (5.9) (5.7) 4%
------------------------------- -------- -------- -------
Group 154.0 147.6 4%
------------------------------- -------- -------- -------
OTC leveraged derivatives
In H1 FY20 the Group generated 96% of its net trading revenue
from OTC leveraged derivatives. OTC leveraged revenue in the half
was GBP239.5 million, in line with H1 FY19. The Group served 6%
more active clients in H1 FY20 which was offset by a 6% reduction
in revenue per client. The prior year period included two months of
trading prior to the implementation of the ESMA product
intervention measures, and Q2 FY20 also saw weaker market
conditions compared to a strong Q2 FY19.
Asset class OTC leveraged revenue
(GBPm)
H1 FY20 H1 FY19 Change
%
------------------ ----------- ----------- -------
Indices 104.7 111.6 (6%)
Equities 36.0 48.0 (25%)
Foreign exchange 50.9 42.2 21%
Commodities 28.6 22.1 29%
Options 9.0 11.0 (18%)
Cryptocurrencies 10.3 5.2 98%
------------------ ----------- ----------- -------
OTC leveraged 239.5 240.1 -
------------------ ----------- ----------- -------
Changes in the composition of the Group's OTC leveraged revenue
by asset class reflects both the impact of the introduction of the
ESMA measures and the differing levels of volatility in each asset
class, which impacts the extent to which clients can identify
trading opportunities.
Revenue from clients trading indices and single name equities
decreased by 6% and 25% respectively compared with H1 FY19, due to
the impact of leverage restrictions and higher volatility in these
asset classes in H1 FY19. The revenue from indices and shares
accounted for 59% of OTC leveraged revenue, compared with 66% in H1
FY19.
Revenue from clients trading foreign exchange increased by 21%
due to increased revenue from Japan where revenue predominantly
comes from FX products, and IG US which only offers FX products.
Revenue from commodities increased 29% driven by increased
volatility, particularly in oil.
Revenue from clients trading cryptocurrencies doubled from
GBP5.2 million to GBP10.3 million, reflecting increased volatility
in the first half of the year.
Exchange traded derivatives
In H1 FY20 the Group generated GBP7.8 million revenue from
exchange traded derivatives, all of which was from Nadex, the
Group's US retail focused exchange. Spectrum, the Group's European
MTF, was launched in October 2019, and did not contribute material
revenue in H1 FY20.
Stock trading and investments
Revenue from stock trading and investments was GBP2.6 million in
H1 FY20, 4% higher than in the same period in the prior year. The
H1 FY20 revenue comprises the transaction fees paid by clients on
each trade (GBP2.7 million), plus custody fees paid by clients
(GBP0.9 million) less the settlement and custody costs incurred by
the Group (GBP1.0 million).
In H1 FY19 the custody fees paid by clients were included in
other operating income.
The Group served 37,900 stock trading clients in H1 FY20, up 2%
compared with the same period in the prior year.
Revenue performance by market
Consistent with the presentation of the Group's strategy and its
financial targets, we split revenue performance into the Group's
Core Markets and the Group's portfolio of Significant
Opportunities.
The tables setting out more detail on revenue, active client
numbers, and revenue per client, are shown in the Appendix to this
document.
Core Markets
Revenue (GBPm)
H1 FY20 H1 FY19 Change
%
------------------------------- -------- -------- -------
Core Markets - ESMA region 126.6 144.7 (13%)
Other Core Markets 80.3 75.6 6%
------------------------------- -------- -------- -------
Core Markets OTC leveraged 206.9 220.3 (6%)
------------------------------- -------- -------- -------
Stock trading and investments 2.6 2.5 4%
Total Core Markets 209.5 222.8 (6%)
------------------------------- -------- -------- -------
Net trading revenue in the Core Markets was 6% lower in H1 FY20
than the same period in the prior year. This was driven by a 13%
reduction in revenue in the ESMA region which was impacted by the
introduction of the ESMA product intervention measures, and the
lower level of trading by Professional clients in Q2 FY20 compared
with a strong Q2 FY19.
The revenue from the other Core Markets in H1 FY20 increased by
6% compared with the same period in the prior year.
OTC leveraged - ESMA region
H1 FY19 included two months of trading prior to the
implementation of the ESMA product intervention measures. To
understand the performance of the business in the ESMA region since
the measures have been in effect, the most appropriate comparison
is to compare the Q1-Q2 FY20 quarterly average with the Q2-Q4 FY19
quarterly average when the product intervention measures were in
effect throughout.
ESMA region Quarterly average
Q1-Q2 FY20 Q2-Q4 FY19 Change
%
-------------------------- ----------- ----------- -------
Revenue (GBPm) 63.3 61.2 3%
Active clients (000s) 53.6 51.5 4%
Revenue per client (GBP) 1,181 1,188 (1%)
-------------------------- ----------- ----------- -------
ESMA region Professional Quarterly average
Q1-Q2 FY20 Q2-Q4 FY19 Change
%
-------------------------- ----------- ----------- -------
Revenue (GBPm) 38.6 40.5 (5%)
Active clients (000s) 5.0 5.1 (2%)
Revenue per client (GBP) 7,719 7,915 (2%)
-------------------------- ----------- ----------- -------
ESMA region Retail Quarterly average
Q1-Q2 FY20 Q2-Q4 FY19 Change
%
-------------------------- ----------- ----------- -------
Revenue (GBPm) 24.7 20.7 19%
Active clients (000s) 48.6 46.4 5%
Revenue per client (GBP) 508 447 14%
-------------------------- ----------- ----------- -------
The FY20 quarterly average ESMA region revenue (Q1-Q2 FY20) was
3% higher than the FY19 average (Q2-Q4 FY19).
The number of average quarterly active clients was 4% higher,
driven by an increase in the number of active Retail clients. The
number of active Retail clients in the ESMA region fell sharply in
the period immediately after the implementation of the ESMA product
intervention measures, and there has been a steady recovery in the
active Retail client base. The number of Professional clients
active in each quarter of FY20 has remained very similar to the
Q2-Q4 FY19 period.
Client acquisition in H1 FY20 was strong with 9,105 clients
trading with the business for the first time. The quarterly average
for first trades in H1 FY20 was 9% higher than the Q2-Q4 FY19
average.
Average revenue per client was little changed, with the H1 FY20
quarterly average revenue per client 1% lower than the Q2-Q4 FY19
quarterly average. Revenue per Retail client increased 14%, offset
by a reduction in the revenue per Professional client of 2%.
Professional clients are more sensitive to market volatility
than Retail clients and therefore the revenue from this cohort is
more variable. The quarterly average Professional revenue per
client in H1 FY20 was GBP7,719, 2% lower than the Q2-Q4 FY19
quarterly average. The lower average revenue per Professional
client reflects the impact of weaker market conditions in Q2 FY20,
when Professional clients found fewer opportunities to trade than
in Q2 FY19.
The proportion of the ESMA region revenue generated by
Professional clients in H1 FY20 was 61%, compared with 66% in the
Q2-Q4 period.
OTC leveraged - Other Core Markets
H1 FY20 H1 FY19 Change
%
-------------------------- -------- -------- -------
Revenue (GBPm) 80.3 75.6 6%
Active clients (000s) 29.6 28.2 5%
Revenue per client (GBP) 2,712 2,681 1%
-------------------------- -------- -------- -------
The Group's other Core Markets comprise the Group's businesses
in Australia, Singapore, Switzerland, Dubai and South Africa.
Revenue from these markets increased by 6% in H1 FY20, to GBP80.3
million. The number of active clients increased by 5%, with 5,175
first trades in the half, 23% higher than in the first half of
FY19. Revenue per client was little changed.
Product intervention measures in Australia are expected to come
into effect in early 2020. Revenue and client numbers in Australia
in H1 FY20 increased by 4%, driven by a 17% increase in first
trades, while revenue per client remained unchanged.
In Singapore, the impact of increased margin requirements for FX
trading, which came into effect in October 2019, contributed to a
3% reduction in revenue per client. This effect was however offset
by a 7% increase in active clients.
Significant Opportunities
Revenue (GBPm)
H1 FY20 H1 FY19 Change
%
---------------------------------- -------- -------- -------
Japan 16.2 8.9 82%
Emerging Markets 11.3 8.1 40%
US 9.6 8.4 14%
Institutional 3.3 2.8 18%
---------------------------------- -------- -------- -------
-Total Significant Opportunities 40.4 28.2 43%
---------------------------------- -------- -------- -------
Active Clients ('000) Revenue per client GBP
H1 FY20 H1 FY19 Change H1 FY20 H1 FY19 Change
% %
------------------- -------- -------- ------- -------- -------- -------
Japan 10.4 5.9 75% 1,553 1,499 4%
Emerging Markets 4.5 3.3 39% 2,495 2,481 1%
US 14.0 12.4 13% 684 673 2%
Institutional 0.2 0.1 30% 19,508 21,580 (10%)
------------------- -------- -------- ------- -------- -------- -------
Spectrum 0.7 - - - - -
------------------- -------- -------- ------- -------- -------- -------
Total Significant
Opportunities 29.8 21.7 37% 1,358 1,299 5%
------------------- -------- -------- ------- -------- -------- -------
Revenue from the Group's portfolio of Significant Opportunities
was GBP40.4 million in H1 FY20, 43% higher than in the same period
in the prior year.
The total number of active clients has increased by 37% with a
5% increase in average revenue per client. The active client
numbers include both OTC leveraged clients and the Exchange Traded
Derivatives clients served by Nadex.
The number of active OTC leveraged clients in the Group's
Significant Opportunities increased by 92% with 17,900 active
clients in H1 FY20. The Group acquired 8,469 new OTC leveraged
clients in the half, compared with 2,143 in the first half of the
prior year.
Revenue from Japan was GBP16.2 million, 82% higher than in the
same period in the prior year. The number of active clients
increased by 75%, driven by strong new client acquisition, with
4,433 first trades in H1 FY20, compared with 938 in the first half
of the prior year. New local leadership and a higher level of
marketing investment has contributed to the significant growth in
this market, along with the success of the Knockouts product which
was introduced in October 2018.
Emerging Markets revenue of GBP11.3 million was 40% higher than
H1 FY19, with a 39% increase in the number of active clients.
Revenue per client remained stable. This business serves clients
who discover IG through reverse enquiry and are resident in
jurisdictions where the Group does not have a physical presence.
First trades in the half were 46% higher than the same period in
the prior year, showing that there is growing demand in these
markets for the products that IG provides.
The Group's US businesses are now managed as a single business
unit, and include Nadex, the Group's retail focused exchange, and
IG US, the Group's OTC FX business, which went live in January 2019
with active marketing commencing in March 2019. Nadex revenue was
GBP7.8 million in H1 FY20, 7% lower than in the same period in the
prior year. The number of active clients was down by 10%,
reflecting a reduction in the number of new clients acquired in the
period. IG US delivered revenue of GBP1.8 million in H1 FY20 with
2,800 active clients. There has been good momentum in client
acquisition, with an average of 380 new clients per month. The
Group is actively exploring additional ways to optimise client
acquisition through its online financial publisher, DailyFX. In H1
FY20 DailyFX delivered around 500,000 unique visitors on average
per month in North America which is 35% higher than in the prior
year period.
The Group's Institutional business generated revenue of GBP3.3
million in the half, an increase of 18% compared with the same
period in the prior year, with a 30% increase in the number of
active institutional clients. Revenue per client was 10% lower,
driven by unusually high revenue per client in Q1 of FY19 which was
skewed by a single large client's trading.
Spectrum, the Group's European MTF, which went live in October
2019, did not generate a material revenue in the period. Initial
client interest has been positive, with around 700 active clients
in the period.
Operating expenses by activity
GBPm
H1 FY20 H1 FY19 Change
------------------------------------------------- -------- -------- -------
Prospect acquisition 39.1 35.5 3.6
Sales and client management 13.1 10.8 2.3
Technology 27.2 26.2 1.0
Operations (excl. premises) 13.6 13.7 (0.1)
Premises 3.8 6.5 (2.7)
Business administration (excl. regulatory fees) 27.4 25.8 1.6
Regulatory fees 1.3 (2.0) 3.3
-------- -------- -------
Cash operating expenses 125.5 116.5 9.0
------------------------------------------------- -------- -------- -------
Capitalised salary costs (1.7) (3.2) 1.5
Depreciation lease assets 3.4 - 3.4
Depreciation and amortisation - other 9.1 8.8 0.3
------------------------------------------------- -------- -------- -------
Total operating expenses 136.3 122.1 14.2
------------------------------------------------- -------- -------- -------
The Group has guided that operating expenses, excluding variable
remuneration, are expected to increase by around GBP30 million in
FY20. Operating expenses in the first half of GBP136.3 million are
GBP14.2 million higher than in the prior year period, in line with
that guidance.
The presentation of the Group's operating expenses by activity
category provides an analysis of the operating expenses by the
driver of the spend. The table above also splits out property costs
separately to show the impact of the implementation of IFRS16, and
splits out regulatory fees to highlight the significant variance in
this expense line.
Expenditure on prospect acquisition, which is targeted at
attracting suitable prospects for conversion into new clients, has
increased by GBP3.6 million reflecting increased investment in
external advertising and marketing, and increased salary costs. The
mix of external advertising and marketing spend has changed
compared with the prior year period, with a reduction in centrally
managed online spend reflecting improved efficiency and investment
in the Group's search engine optimisation capability, and an
increase in locally managed and brand related spend, to enable a
more localised marketing approach.
Sales and client management costs have increased by GBP2.3
million, primarily driven by the increase in headcount in this area
including a number of specialist hires to enable the delivery of
the Group's strategic initiatives in both the Core Markets and the
Significant Opportunities. In addition, as the business continues
to expand its geographic reach and the number of payment options it
offers to clients, the costs of payment provider services have
increased.
The Group's expenditure on technology increased by GBP1.0
million reflecting investment in headcount.
The Group's operations expenditure (excluding the change to the
treatment of property leases under IFRS16) is little changed.
The GBP1.6 million increase in business administration costs
excluding regulatory fees primarily reflects higher professional
fees incurred in support of the implementation of the strategy.
The Group is charged regulatory fees by the various regulators
in the jurisdictions in which it operates, and in addition is
required to make a contribution to the Financial Services
Compensation Scheme (FSCS) in the UK. The Group estimates the cost
of the FSCS levy which is booked in full in the second half of the
year. The actual charge is notified to the Group in the first half
of the following year. The net credit to the income statement in H1
FY19 reflects the release in that period of part of the FSCS levy
charge recognised in H2 FY18. The full year charge for regulatory
fees in FY20 is expected to be around GBP6 million.
Operating expenses by cost type
GBPm
H1 FY20 H1 FY19 Change
--------------------------------------- -------- -------- ---------------
Fixed remuneration 56.6 51.7 4.9
Advertising and marketing 27.5 25.6 1.9
Premises 3.8 6.5 (2.7)
Regulatory fees 1.3 (2.0) 3.3
Other structural costs 34.6 31.5 3.1
Depreciation lease assets 3.4 - 3.4
Depreciation and amortisation - other 9.1 8.8 0.3
Operating expenses 136.3 122.1 14.2
--------------------------------------- -------- -------- ---------------
Headcount at end of period 1,889 1,810 4%
--------------------------------------- -------- -------- ---------------
The analysis of operating expenses by cost type shows that of
the GBP14.2 million increase, GBP4.9 million is due to higher fixed
remuneration costs reflecting the investment in headcount and
capabilities and GBP1.9 million is due to increased external
advertising and marketing spend. The GBP3.1 million increase in
structural costs (excluding property and regulatory fees) reflects
the higher professional fees and higher payment card charges.
Variable remuneration
GBPm
H1 FY20 H1 FY19 Change
%
-------------------------- -------- -------- -------
Share based compensation 4.9 4.4 11%
Sales bonuses 3.0 2.7 11%
General bonuses 7.7 8.1 (5%)
-------------------------- -------- -------- -------
Variable remuneration 15.6 15.2 3%
-------------------------- -------- -------- -------
Share based compensation costs relate to the long-term incentive
plans for senior management and reflect the size of the awards and
the extent to which they are expected to vest, which is driven
predominantly by EPS and relative TSR performance.
Sales bonuses increased by 11% reflecting higher commission
payments to sales staff for the onboarding and management of their
own sourced high value clients. The charge for the general bonus
pool is GBP0.4 million lower than in the prior year period
reflecting the release of an over accrual from the prior year.
Net finance income
The Group earned net finance income of GBP1.1 million during H1
FY20, (H1 FY19: GBP0.5 million) comprising finance income of GBP3.7
million and finance costs of GBP2.6 million.
The Group earned net interest income on its cash balances and
its gilts holdings of GBP2.5 million in the period, GBP1.0 million
higher than in the same period in the prior year, reflecting larger
average cash balances and increased holdings of gilts.
The Group earns and pays interest on its cash balances at
hedging brokers. The Group earned GBP0.6 million net interest
income on its balances with hedging brokers during the six-month
period (H1 FY19: GBP0.4 million).
The Group pays fees and interest relating to its debt
facilities. The cost of these facilities totalled GBP1.7 million in
the period (H1 FY19: GBP1.6 million).
In H1 FY20 the Group has recognised a GBP0.3 million interest
charge relating to the financing element of operating leases
arising from the application of IFRS 16 Leases with effect from the
start of the financial year.
Taxation
The effective tax rate (ETR) applied to the profit before tax
for the period is 18.6%. This reflects the forecast full year ETR
for FY20 (FY19 actual ETR: 18.5%).
The Group's ETR is dependent on a mix of factors including
taxable profit by geography, the tax rates levied in those
geographies and the availability and use of taxable losses.
The forecast ETR applied to the H1 FY20 profit before tax is
calculated based on tax rates substantively enacted as at 30
November 2019. This includes a reduction in the rate of UK
Corporation Tax to 17% from 19% with effect from 1 April 2020. If
the UK Corporation Tax rate remains at 19% the Group's forecast ETR
for FY20 would be 18.9%.
The Group's future ETR may also be impacted by changes in the
Group's business activities, client composition and regulatory
status, as these changes could impact the Group's ability to
benefit from an exemption from the UK Bank Corporation Tax
Surcharge.
Dividend
The Board has declared an interim dividend of 12.96 pence per
share, calculated as 30% of the full year dividend per share for
the prior year.
The interim dividend will be paid on 27 February 2020 to those
members on the register at the close of business on 31 January
2020.
Own funds flow
GBPm H1 FY20 H1 FY19
----------------------------------------- -------- --------
Operating profit 100.1 112.5
Lease asset depreciation 3.4 -
Depreciation and amortisation - other 9.1 8.8
Lease liability payments (3.3) -
Share based compensation 4.5 4.9
Change in working capital (7.5) (26.1)
----------------------------------------- -------- --------
Own funds generated from operations 106.3 100.1
----------------------------------------- -------- --------
as % of operating profit 106% 89%
Taxes paid (31.5) (19.9)
----------------------------------------- -------- --------
Net own funds generated from operations 74.8 80.2
----------------------------------------- -------- --------
The Group uses own funds generated from operations, and net own
funds generated from operations, as its key measures of cash
generation. Cash generation remains strong with own funds generated
from operations of GBP106.3 million, with a cash conversion rate,
calculated as own funds generated from operations divided by
operating profit, of 106%.
Tax payments of GBP31.5 million reflect the payment of the
GBP13.8 million balance of the UK corporation tax liability for
FY19, GBP18.0 million of tax in respect of the UK FY20 liability
and the payment of GBP2.2 million of overseas tax, partly offset by
the receipt of GBP2.5 million of UK tax overpaid in earlier
periods.
Tax payments in H1 FY20 were significantly higher than in H1
FY19 due to the acceleration of UK Corporation Tax quarterly
instalment payments. The Group has made four instalment payments in
H1 FY20, versus the two payments previously required in a six-month
period, due to a change in UK tax legislation.
Movement in own funds
GBPm H1 FY20 H1 FY19
----------------------------------------- -------- --------
Net own funds generated from operations 74.8 80.2
Net financing receipts 0.7 0.1
Capital expenditure (7.9) (9.6)
----------------------------------------- -------- --------
Purchase of own shares (1.5) (1.9)
----------------------------------------- -------- --------
Pre-dividend increase in own funds 66.1 68.8
----------------------------------------- -------- --------
Dividends paid (111.4) (123.3)
Decrease in own funds (45.3) (54.5)
Own funds at start of the period 720.8 746.1
Impact of movement in exchange rates (5.1) 3.0
----------------------------------------- -------- --------
Own funds at the end of period 670.4 694.6
----------------------------------------- -------- --------
Capital expenditure in the period of GBP7.9 million relates to
internally developed software, and the purchase of third-party
software and IT equipment.
Dividend payments in the period reflect the final dividend for
the year ended 31 May 2019.
Summary Group balance sheet
GBPm 30 Nov 2019 31 May 2019 30 Nov 2018
------------------------------- ------------ ------------ ------------
Goodwill 107.9 108.1 108.1
Intangible assets 40.0 43.4 45.5
Property, plant and equipment 15.6 14.4 15.1
------------------------------- ------------ ------------ ------------
Operating lease net asset 0.2 - -
------------------------------- ------------ ------------ ------------
Fixed assets 163.7 165.9 168.7
------------------------------- ------------ ------------ ------------
Liquid asset buffer 84.3 84.4 82.1
Amounts at brokers 391.8 419.3 398.9
Cash in IG bank accounts 416.4 373.3 393.4
Own funds in client money 38.1 51.1 43.1
------------------------------- ------------ ------------ ------------
Liquid assets 930.6 928.1 917.5
Short term bank borrowings (20.0) - -
Long term bank borrowings (100.0) (100.0) (100.0)
Client deposits IG Bank SA (43.6) (31.6) (34.0)
Title transfer funds (96.6) (75.7) (88.9)
Own funds 670.4 720.8 694.6
------------------------------- ------------ ------------ ------------
Working capital (34.7) (43.1) (36.0)
Tax receivable / (payable) 2.9 (10.4) (18.0)
Deferred tax net asset 8.3 8.6 8.2
------------------------------- ------------ ------------ ------------
Net assets 810.6 841.8 817.5
------------------------------- ------------ ------------ ------------
The operating lease net asset of GBP0.2 million at 30 November
2019 reflects the adoption of IFRS16, Leases, with effect from 1
June 2019. The balance comprises a GBP24.9 million right of use
asset offset by a GBP24.7 million lease liability. These figures
reflect the discounted value of minimum future operating lease
payments.
Available liquidity
GBPm 30 Nov 2019 31 May 2019
-------------------------------------- ------------ ------------
Liquid assets 930.6 928.1
Broker margin requirement (334.3) (314.0)
Cash balances in non-UK subsidiaries (183.5) (187.5)
Own funds in client money (38.1) (51.1)
-------------------------------------- ------------ ------------
Available liquidity at end of period 374.7 375.5
-------------------------------------- ------------ ------------
of which:
Held as liquid asset buffer 84.3 84.4
Dividend due 47.8 111.3
-------------------------------------- ------------ ------------
The Group requires liquidity to fund its day-to-day operations,
primarily to fund the margin that its hedging brokers require to
support the Group's hedging positions, the regulatory and working
capital of its subsidiaries, and to fund adequate buffers in client
money accounts.
The average broker margin requirement in H1 FY20 was GBP329.4
million, with a peak broker margin requirement of GBP380.8 million
in November. The level of broker margin is driven by the notional
value of the Group's open hedging positions which vary with client
trading activity and the extent to which client trades can be
internalised. At 30 November 2019, the broker margin requirement
was GBP334.3 million (31 May 2019: GBP314.0 million).
Cash held by subsidiaries outside the UK was GBP183.5 million at
30 November 2019 (31 May 2019: GBP187.5 million). This cash is held
for the purposes of local regulatory and working capital
requirements.
In addition, as at 30 November 2019 the Group had access to
GBP80 million additional liquidity through the available undrawn
commitment under its Revolving Credit Facility.
Regulatory capital resources
GBPm 30 Nov 2019 31 May 2019
--------------------------------------------- ------------ ------------
Shareholders' funds 810.6 841.8
--------------------------------------------- ------------ ------------
Less interim profit/ declared dividends (82.4) (111.3)
Less goodwill (107.9) (108.1)
Less intangible assets (40.0) (43.4)
Less deferred tax assets - (9.0)
Less value adjustment for prudent valuation (1.2) (1.1)
--------------------------------------------- ------------ ------------
Regulatory Capital resources 579.1 568.9
--------------------------------------------- ------------ ------------
Pillar 1 Risk Exposure Amounts (REA)
GBPm 30 Nov 2019 31 May 2019
----------------------------------- ------------ ------------
Total Pillar 1 REA 1,892.7 1,875.9
----------------------------------- ------------ ------------
Capital ratio 30.6% 30.3%
Required capital ratio
----------------------------------- ------------ ------------
Pillar 1 minimum 8.0% 8.0%
Individual Capital Guidance (ICG) 9.4% 9.4%
----------------------------------- ------------ ------------
ICG requirement 17.4% 17.4%
Combined buffer requirement 3.1% 3.1%
----------------------------------- ------------ ------------
Total requirement % 20.5% 20.5%
=================================== ============ ============
Total requirement - GBPm 388.2 385.0
Capital headroom - GBPm 190.9 183.8
----------------------------------- ------------ ------------
The Group's Capital Ratio at 30 November 2019 was 30.6% compared
with the required minimum capital ratio, including the combined
buffer requirement, of 20.5%.
Principal risks and uncertainties
The principal risks and uncertainties which could impact the
Group for the remainder of the current financial year remain
consistent with those detailed in the 2019 Group Annual Report.
There have been no significant changes in the Group's risk
management framework in the six-month period ended 30 November 2019
and up to the date of approval of the Consolidated Condensed
Interim Financial Statements.
IG's Risk Taxonomy categorises the principal risks faced by the
firm into five areas: the risks inherent in the regulatory
environment, the risks inherent in the commercial environment,
business model risk, operational risk and conduct risk.
Detail on all of the above risks and how they are managed is
included on pages 56 to 62 of the 2019 Group Annual Report, which
is available on the Group's website.
Segregated client funds
At 30 November 2019 the Group held GBP1,401.0 million (31 May
2019: GBP1,349.2 million) of client money in segregated bank
accounts, and GBP1,178.5 million (31 May 2019: GBP1,096.8 million)
of client assets in third party custodian accounts. These amounts
are segregated client money and assets, and are therefore excluded
from the balance sheet.
Consolidated Interim Income Statement
for the six months ended 30 November 2019 (unaudited)
Unaudited Unaudited
six months ended six months ended
30 November 2019 30 November 2018
---------------------------------------------------------------- ----- ------------------ ------------------
Note GBPm GBPm
Trading revenue 254.0 257.2
Introducing partner commissions (4.1) (6.2)
---------------------------------------------------------------- ----- ------------------ ------------------
Net trading revenue 3 249.9 251.0
Betting duty and financial transaction taxes (1.4) (5.9)
Interest income on segregated client funds 3.0 3.2
Interest expense on segregated client funds (0.4) (0.2)
Other operating income 0.9 1.7
---------------------------------------------------------------- ----- ------------------ ------------------
Net operating income 252.0 249.8
Operating costs 4 (151.9) (137.3)
---------------------------------------------------------------- ----- ------------------ ------------------
Operating profit 100.1 112.5
Finance income 3.7 2.2
Finance costs (2.6) (1.7)
---------------------------------------------------------------- ----- ------------------ ------------------
Profit before taxation 101.2 113.0
Taxation 5 (18.8) (21.6)
Profit for the period and attributable to owners of the parent 82.4 91.4
================================================================ ===== ================== ==================
Earnings per ordinary share
- basic 6 22.4p 24.9p
- diluted 6 22.2p 24.6p
Consolidated Interim Statement of Comprehensive Income
for the six months ended 30 November 2019 (unaudited)
Unaudited Unaudited
six months six months ended
ended 30 November
30 November 2018
2019
--------------------------------------------- --------------- --------------------
GBPm GBPm GBPm GBPm
Profit for the period 82.4 91.4
Other comprehensive income / (expense):
Items that may be subsequently reclassified
to the Income Statement:
Changes in the fair value of financial
assets held at fair value through other
comprehensive income, net of tax (0.1) (0.1)
Foreign currency translation gain / (loss) (6.1) 4.4
--------------------------------------------- -------- ----- --------- ---------
Other comprehensive income / (expense)
for the period (6.2) 4.3
--------------------------------------------- --------------- --------- ---------
Total comprehensive income attributable
to owners of the parent 76.2 95.7
============================================= =============== ========= =========
Consolidated Interim Statement of Financial Position
at 30 November 2019 (unaudited)
Unaudited Unaudited
30 November 2019 31 May 2019 30 November 2018
--------------------------------- -------------------- -------------- ------------------
Note GBPm GBPm GBPm
Assets
Non-current assets
Property, plant and equipment 8 40.5 14.4 15.1
Intangible assets 9 147.9 151.5 153.6
Financial investments 10 139.5 189.9 141.4
Deferred income tax assets 9.0 9.0 8.4
--------------------------------- ------- ----------- -------------- ------------------
336.9 364.8 318.5
--------------------------------- ------- ----------- -------------- ------------------
Current assets
Trade receivables 11 270.1 301.1 318.2
Other assets 12 24.5 33.1 4.3
Prepayments 9.0 9.7 8.6
Other receivables 5.3 5.3 2.7
Income tax receivable 4.2 - -
Cash and cash equivalents 416.4 373.3 393.4
Financial investments 10 85.1 35.3 62.3
--------------------------------- ------- ----------- -------------- ------------------
814.6 757.8 789.5
--------------------------------- ------- ----------- -------------- ------------------
TOTAL ASSETS 1,151.5 1,122.6 1,108.0
================================= ======= =========== ============== ==================
Liabilities
Non-current liabilities
Borrowings 99.7 99.6 99.5
Lease liabilities 18.0 - -
Deferred income tax liabilities 0.5 0.4 0.2
118.2 100.0 99.7
--------------------------------- ------- ----------- -------------- ------------------
Current liabilities
Trade payables 13 144.1 110.4 123.3
Other payables 50.4 60.0 49.5
Borrowings 20.0 - -
Lease liabilities 6.7 - -
Income tax payable 1.5 10.4 18.0
222.7 180.8 190.8
--------------------------------- ------- ----------- -------------- ------------------
Total liabilities 340.9 280.8 290.5
--------------------------------- ------- ----------- -------------- ------------------
Equity
Share capital and share premium 206.8 206.8 206.8
Other reserves 72.8 80.2 73.4
Retained earnings 531.0 554.8 537.3
--------------------------------- ------- ----------- -------------- ------------------
Total equity 810.6 841.8 817.5
--------------------------------- ------- ----------- -------------- ------------------
TOTAL EQUITY AND LIABILITIES 1,151.5 1,122.6 1,108.0
================================= ======= =========== ============== ==================
Notes 1 to 16 are an integral part of these Consolidated Interim
Condensed Financial Statements.
These Consolidated Interim Condensed Financial Statements were
approved by the Board of Directors on 21 January 2020 and signed on
its behalf by:
P R Mainwaring, Chief Financial Officer
Consolidated Interim Statement of Changes in Equity
for the six months ended 30 November 2019 (unaudited)
Share capital and share
premium Other reserves Retained earnings Total equity
GBPm GBPm GBPm GBPm
---------------------------------- ------------------------ ----------------- -------------------- ---------------
At 31 May 2018 206.8 71.6 563.7 842.1
---------------------------------- ------------------------ ----------------- -------------------- ---------------
Profit for the period - - 91.4 91.4
Other comprehensive income for
the period - 4.3 - 4.3
---------------------------------- ------------------------ ----------------- -------------------- ---------------
Total comprehensive income for
the period - 4.3 91.4 95.7
---------------------------------- ------------------------ ----------------- -------------------- ---------------
Equity-settled employee
share-based payments - 4.9 - 4.9
Transfer of share-based payment
reserve - (5.5) 5.5 -
Employee Benefit Trust purchase
of shares - (1.9) - (1.9)
Equity dividends paid - - (123.3) (123.3)
---------------------------------- ------------------------ ----------------- -------------------- ---------------
At 30 November 2018 206.8 73.4 537.3 817.5
================================== ======================== ================= ==================== ===============
At 31 May 2019 206.8 80.2 554.8 841.8
---------------------------------- ------------------------ ----------------- -------------------- ---------------
IFRIC 23 transitional adjustment - - 0.5 0.5
IFRS 16 transitional adjustment - - 0.5 0.5
---------------------------------- ------------------------ ----------------- -------------------- ---------------
At 1 June 2019 206.8 80.2 555.8 842.8
Profit for the period - - 82.4 82.4
Other comprehensive expense for
the period - (6.2) - (6.2)
---------------------------------- ------------------------ ----------------- -------------------- ---------------
Total comprehensive (expense) /
income for the period - (6.2) 82.4 76.2
---------------------------------- ------------------------ ----------------- -------------------- ---------------
Equity-settled employee
share-based payments - 4.5 - 4.5
Transfer of share-based payment
reserve - (4.2) 4.2 -
Employee Benefit Trust purchase
of shares - (1.5) - (1.5)
Equity dividends paid - - (111.4) (111.4)
At 30 November 2019 206.8 72.8 531.0 810.6
================================== ======================== ================= ==================== ===============
Consolidated Interim Cash Flow Statement
for the six months ended 30 November 2019 (unaudited)
Unaudited Unaudited
six months six months
ended 30 ended 30
November November
2019 2018
-------------------------------------------- ----- ------------ ------------
Note GBPm GBPm
Operating activities
Operating profit 100.1 112.5
Depreciation and amortisation 12.5 8.8
Share-based payments charge 4.5 4.9
Decrease in trade and other receivables 39.9 88.8
Increase / (decrease) in trade and other
payables 25.0 (29.1)
-------------------------------------------- ----- ------------ ------------
Cash generated from operations 182.0 185.9
-------------------------------------------- ----- ------------ ------------
Income taxes paid (31.5) (19.9)
Net cash flow generated from operating
activities 150.5 166.0
-------------------------------------------- ----- ------------ ------------
Investing activities
Interest received 3.1 1.8
Purchase of property, plant and equipment (5.0) (3.4)
Payments to acquire and develop intangible
assets (2.9) (6.2)
Net cash flow from sale / purchase of
financial investments 1.2 (29.8)
Net cash flow used in investing activities (3.6) (37.6)
-------------------------------------------- ----- ------------ ------------
Financing activities
Interest paid (2.4) (1.7)
Lease payments (3.3) -
Equity dividends paid to owners of the
parent 7 (111.4) (123.3)
Employee Benefit Trust purchase of own
shares (1.5) (1.9)
Drawdown of term loan net of fees - 99.5
Net drawdown on Revolving Credit Facility 20.0 -
Net cash flow used in financing activities (98.6) (27.4)
-------------------------------------------- ----- ------------ ------------
Net increase in cash and cash equivalents 48.3 101.0
Cash and cash equivalents at the beginning
of the period 373.3 289.7
Impact of movement in foreign exchange
rates (5.2) 2.7
Cash and cash equivalents at the end
of the period 416.4 393.4
============================================ ===== ============ ============
1. General information
The Group provides online trading services allowing clients
access to various financial markets, including indices, shares,
forex, commodities, options and cryptocurrencies.
The Consolidated Interim Condensed Financial Statements of the
Group for the six months ended 30 November 2019 were authorised for
issue by the Board of Directors on 21 January 2020. IG Group
Holdings plc is a public limited company incorporated and domiciled
in England and Wales. The Company's ordinary shares are traded on
the London Stock Exchange.
The interim information, together with the comparative
information contained in this report for the six months ended 30
November 2018, does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006. The interim
information is unaudited but has been reviewed by the Company's
auditors, PricewaterhouseCoopers LLP, and their report appears at
the end of these Consolidated Interim Condensed Financial
Statements. The Financial Statements for the year ended 31 May 2019
have been audited and reported on by the Company's auditors and
delivered to the Registrar of Companies. The report of the auditors
on those accounts was unqualified and did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
2. Basis of preparation and accounting policies
Basis of preparation
The Consolidated Interim Condensed Financial Statements for the
six months ended 30 November 2019 have been prepared in accordance
with the Disclosure and Transparency Rules (DTR) of the Financial
Conduct Authority and in accordance with IAS 34 Interim Financial
Reporting. The Consolidated Interim Condensed Financial Statements
are presented in Sterling.
The Consolidated Interim Condensed Financial Statements do not
include all of the information and disclosures required in the
Annual Financial Statements and should be read in conjunction with
the Group's Annual Report for the year ended 31 May 2019 which was
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU.
Throughout this report, FY20, FY19 and FY18 refer to the
financial years ended 31 May 2020, 31 May 2019 and 31 May 2018
respectively. H1 FY20, H1 FY19 and H1 FY18 refer to the six months
ended 30 November 2019, 30 November 2018 and 30 November 2017
respectively.
Going concern basis of accounting
The Group meets its day-to-day working capital requirements
through its available liquid assets and committed banking
facilities. The Group's liquid assets exclude all monies held in
segregated client money accounts.
In assessing whether it is appropriate to adopt the going
concern basis in preparing the Financial Statements, the Directors
have considered the resilience of the Group, taking account of its
liquidity position and cash generation, the adequacy of capital
resources, the availability of external credit facilities and the
associated financial covenants, and stress-testing of liquidity and
capital adequacy taking into account the principal risks faced by
the business. Further details of these principal risks and how they
are mitigated and managed is documented in the Risk Management
section in the 2019 Group Annual Report on page 56.
The Directors' assessment has considered future performance,
solvency and liquidity over a period of at least 12 months from the
date of approval of the Consolidated Interim Condensed Financial
Statements. The Board, following the review by the Audit Committee,
has a reasonable expectation that the Group has adequate resources
for that period, and confirm that they consider it appropriate to
adopt the going concern basis in preparing the Consolidated Interim
Condensed Financial Statements.
Critical accounting estimates and judgements
The preparation of financial statements requires the Group to
make estimates and judgements that affect the amounts reported for
assets and liabilities as at the interim reporting date, and the
amounts reported for revenue and expenses during the period.
The nature of estimates means that actual outcomes could differ
from those estimates. In the Directors' opinion, the accounting
estimates or judgements that have the most significant impact on
the presentation or measurement of items recorded in the financial
statements are the following:
(a) Carrying value of intangible assets (excluding goodwill)
(estimate) - the Group undertook an analysis as at 30 November 2019
in relation to the DailyFX intangible asset, which has a carrying
value of GBP21.7 million at 30 November 2019, to determine whether
there were any indicators of impairment. The Group considered the
number of first trades generated by the asset, the attrition rate
of customers, the average net trading income generated by each
active client and an assessment of the overall economic environment
to determine whether there were any indicators that would require a
full impairment assessment to be undertaken. The Group concluded
that there were no indicators of impairment. The Group also
considered the estimated life of DailyFX and concluded that the
useful life of 10 years remained appropriate.
(b) Tax charge (estimate) - the calculation of the Group's total
tax charge involves a degree of estimation. In calculating the tax
charge, the Group makes assumptions about the availability of
reliefs, such as the UK Patent Box, the availability of future
profits to support the recognition of deferred tax assets and
assessments of the outcome of tax enquiries as the tax treatment of
some transactions and the application of tax legislation cannot be
finally determined until formal resolution has been reached with
the relevant tax authority. The Group recognises a tax charge for
open tax matters based on an assessment of the taxes that may be
due. Tax payable may ultimately be materially more or less than the
amount already accounted for. Further information is disclosed in
Note 8 of the FY19 Annual Report.
(c) DailyFX asset acquisition (judgement) - determining whether
the purchase of DailyFX during the year ended 31 May 2017 was a
business combination or an asset purchase was a matter of critical
accounting judgement which remains relevant for the period ended 30
November 2019 given the size of the asset on the Group's Statement
of Financial Position at GBP21.7 million. The purchase included the
website together with its historical content and lead list. In
order to enable lead capturing and to re-establish the DailyFX Plus
facility, which captures details on new subscribers, the
infrastructure necessary for operating and integrating the website
needed to be rebuilt. A number of the DailyFX staff were offered
and subsequently accepted roles with IG. Therefore, whilst inputs
had been acquired, the processes that IG would ultimately benefit
from had to be recreated and rebuilt or separately acquired.
Accordingly, the Group accounted for the transaction as an asset
purchase as not all the requirements for a business combination
were met.
(d) Accounting for cryptocurrencies (judgement) - the Group has
recognised GBP24.5 million of cryptocurrencies and rights to
cryptocurrencies on its Statement of Financial Position as at 30
November 2019 (31 May 2019: GBP33.1 million). The accounting
treatment adopted is based on IAS2, Inventories, and the assets are
disclosed as 'Other assets' in the Statement of Financial Position.
The accounting treatment of cryptocurrencies is considered to be a
critical accounting judgement.
New accounting standards and interpretations - standards and
amendments adopted during the year
The accounting policies adopted in the preparation of the
Consolidated Interim Condensed Financial Statements are consistent
with those followed in the preparation of the Group's Annual
Consolidated Financial Statements for the year ended 31 May 2019,
except for the adoption of new standards and interpretations from 1
June 2019. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
In the six-month period to 30 November 2019 the Group has
applied, for the first time, IFRS 16, Leases. The adoption of this
standard did not require restatement of prior year Financial
Statements. As required by IAS 34, Interim Financial Reporting, the
nature and effect of adoption of this standard is disclosed
below.
In the six-month period to 30 November 2019 the Group has also
applied, for the first time, IFRIC 23, Uncertainty over Income Tax
Treatment. The adoption of this interpretation did not require
restatement of prior year Financial Statements.
IFRS 16 Leases
IFRS 16 was endorsed by the EU in November 2017 and is effective
for periods beginning on or after 1 January 2019. IFRS 16 reflects
a major change in the way that operating leases are accounted for.
Whereas previously the annual lease expense was recognised in the
income statement, with future minimum rentals payments disclosed in
the notes, IFRS 16 requires all leased assets, except for
short-term or low value leases, to be recognised as an asset on the
balance sheet, with a corresponding lease liability. This has the
effect of grossing up the balance sheet. The depreciation of the
asset is recognised in the income statement, along with a
corresponding finance cost.
Where the Group is the lessee, it now recognises a right-of-use
(RoU) asset and a related lease liability from the date at which
the RoU asset has been obtained. The lease liability is measured as
the net present value of future lease payments, which are
discounted at the Group's estimated incremental secured borrowing
rate. For low value or short-term leases, payments are recognised
as lease payments on a straight-line basis over the lease term.
These are recognised as premises costs in operating expenses.
Where the Group is a lessor, these arrangements are classified
as operating leases, with income recognised on a straight-line
basis over the lifetime of the lease.
Transition considerations
IFRS 16 has been adopted using the modified retrospective
approach to measure the lease asset and liability as if a lease was
entered on 1 June 2019. The lease liability is measured at the
present value of future lease payments, discounted using the
Group's estimated incremental secured borrowing rate. The RoU asset
is initially measured at cost, comprising the initial measurement
of lease liability, adjusted for lease payments made at or before
commencement date, restoration costs, and lease incentives. Under
the modified retrospective approach comparative figures are not
restated and as such these continue to be measured and presented
under IAS 17.
IFRS 16 has had a significant impact on the Group's balance
sheet. Prior to adoption, the future minimum rentals payable for
operating leases, all of which relate to office accommodation in
various locations around the world, totalled GBP28.6 million at 31
May 2019 (2018: GBP25.4 million). As at 1 June 2019, the Group
recognised a RoU asset of GBP24.0 million, a lease liability of
GBP24.5 million and an adjustment to retained earnings of GBP0.5
million.
Lease related depreciation of GBP3.4 million and an interest
expense of GBP0.3 million has been recognised in the Consolidated
Income Statement for the six months ended 30 November 2019. Under
IAS 17, Leases, the corresponding operating lease expense
recognised in operating expenses would have been GBP3.2
million.
Seasonality of operations
The Directors consider that there is no predictable seasonality
to the Group's operations.
Net trading revenue
Net trading revenue represents trading revenue after deducting
introducing partner commissions.
The segmental analysis shown below has been prepared on the same
basis as FY19 and more details can be found on page 141 of the 2019
Group Annual Report. The segmental analysis does not include a
measure of profitability, nor a segmented Consolidated Interim
Statement of Financial Position, as this would not reflect the
information which is received by the Group's Chief Operating
Decision Maker on a regular basis.
Net trading revenue by geography:
Unaudited Unaudited
six months ended six months ended
30 November 2019 30 November 2018
GBPm GBPm
UK 97.9 108.9
EU 33.4 38.6
EMEA - Non-EU 21.8 20.6
Australia 35.7 36.4
Singapore 22.0 21.4
Japan 16.2 8.9
Emerging Markets 13.3 7.9
USA 9.6 8.3
------------------ ------------------
249.9 251.0
================== ==================
Net trading revenue by product:
Unaudited Unaudited
six months ended six months ended
30 November 2019 30 November 2018
GBPm GBPm
OTC leveraged derivatives 239.5 240.1
Exchange traded derivatives 7.8 8.4
Stock trading and investments 2.6 2.5
249.9 251.0
================== ==================
4. Operating costs
Unaudited Unaudited
six months ended six months ended
30 November 2019 30 November 2018
GBPm GBPm
Fixed remuneration 56.6 51.7
Variable remuneration 15.6 15.2
------------------ ------------------
Employee related expenses 72.2 66.9
------------------ ------------------
Advertising and marketing 27.5 25.6
Depreciation and amortisation 12.5 8.8
Premises related costs 3.8 6.5
Regulatory fees 1.3 (2.0)
Loss allowance 0.5 (0.5)
Other structural costs 34.1 32.0
------------------ ------------------
151.9 137.3
================== ==================
5. Taxation
The Income Tax expense of GBP18.8 million (H1 FY19: GBP21.6
million) is recognised based on management's estimate of the
effective tax rate for the full year of 18.6% (H1 FY19: 19.1%). The
actual effective tax rate for FY19 was 18.5%.
6. Earnings per ordinary share
Basic earnings per ordinary share is calculated by dividing the
profit for the period attributable to ordinary equity holders of
the parent by the weighted average number of ordinary shares in
issue during the period, excluding shares held as own shares in the
Group's Employee Benefit Trusts. Diluted earnings per ordinary
share is calculated using the same profit figure as that used in
basic earnings per ordinary share and by adjusting the weighted
average number of ordinary shares assuming the vesting of all
outstanding share scheme awards and that vesting is satisfied by
the issue of new ordinary shares.
Weighted average number of ordinary shares Unaudited Unaudited
30 November 2019 30 November 2018
Basic 367,995,715 367,441,946
Dilutive effect of share-based payments 3,151,170 4,150,519
------------------ ------------------
Diluted 371,146,885 371,592,465
================== ==================
Unaudited Unaudited
six months six months
ended ended
30 November 30 November
2019 2018
Basic earnings per ordinary share 22.4p 24.9p
Diluted earnings per ordinary share 22.2p 24.6p
============= =============
7. Dividends paid and proposed
The Group paid a final dividend of 30.24 pence per share for
FY19 totalling GBP111.4 million during H1 FY20. The Group paid a
final dividend of 33.51 pence per share for FY18 totalling GBP123.3
million during H1 FY19.
The proposed interim dividend for FY20 of 12.96 pence per share
totalling GBP47.8 million was approved by the Board on 21 January
2020 and has not been included as a liability at 30 November 2019.
This dividend will be paid on 27 February 2020 to those members on
the register at the close of business on 31 January 2020.
8. Property, plant and equipment
Office equipment,
Leasehold fixtures and Computer and other
improvements fittings equipment Right-of-use assets Total
GBPm GBPm GBPm GBPm GBPm
Net book value - 30
November 2019
(unaudited) 6.4 1.9 7.3 24.9 40.5
===================== ==================== ==================== ==================== ======
Net book value - 31
May 2019 5.9 2.3 6.2 - 14.4
===================== ==================== ==================== ==================== ======
Net book value - 30
November 2018
(unaudited) 5.8 2.3 7.0 - 15.1
===================== ==================== ==================== ==================== ======
The Group has implemented IFRS16, Leases, with effect from 1
June 2019, and has recognised right-of-use assets of GBP24.9
million at 30 November 2019. Further details are provided in note
2.
9. Intangible assets
Internally developed Software and
Goodwill Domain Names software licences Total
GBPm GBPm GBPm GBPm GBPm
Net book value - 30
November 2019
(unaudited) 107.9 23.0 14.0 3.0 147.9
===================== ================== ===================== ===================== ======
Net book value - 31
May 2019 108.1 25.4 14.6 3.4 151.5
===================== ================== ===================== ===================== ======
Net book value - 30
November 2018
(unaudited) 108.1 26.8 14.5 4.2 153.6
===================== ================== ===================== ===================== ======
10. Financial investments
Financial investments are UK Government securities held for the
following purposes:
Unaudited Unaudited
30 November 2019 31 May 2019 30 November 2018
GBPm GBPm GBPm
Liquid asset buffer 84.3 84.4 82.1
Collateral at brokers 140.3 140.8 121.6
------------------ ------------ ------------------
224.6 225.2 203.7
================== ============ ==================
Split as:
Non-current portion 139.5 189.9 141.4
Current portion 85.1 35.3 62.3
224.6 225.2 203.7
================== ============ ==================
11. Trade receivables
Unaudited Unaudited
30 November 30 November
2019 31 May 2019 2018
GBPm GBPm GBPm
Amounts due from brokers 227.1 245.4 273.1
Own funds in client money 41.2 53.9 43.1
Amounts due from clients 1.8 1.8 2.0
------------- ------------ -------------
270.1 301.1 318.2
============= ============ =============
Amounts due from brokers represent balances with brokers where
the combination of cash held on account and the valuation of
financial derivative open positions results in an amount due to the
Group. In addition to the Amounts due from brokers, the Group held
UK Government Securities as collateral at brokers, which are
classified as Financial investments in the Group's Statement of
Financial Position.
Own funds in client money represents the Group's own cash held
in segregated client funds, in accordance with the UK's Financial
Conduct Authority (FCA) CASS rules and similar rules of other
regulators in whose jurisdiction the Group operates, and includes
GBP3.5 million (31 May 2019: GBP13.5 million and 30 November 2018:
GBP10.6 million) to be transferred to the Group on the following
business day.
Amounts due from clients arise when a client's total funds
deposited with the Group are insufficient to cover any trading
losses incurred or when a client utilises a trading credit limit,
stated net of an allowance for impairment.
12. Other assets
Other assets are cryptocurrencies and rights to
cryptocurrencies, which are owned and controlled by the Group for
the purpose of hedging the Group's exposure to clients'
cryptocurrency trading positions. The Group holds cryptocurrencies
on exchange and in vaults as follows:
Unaudited Unaudited
30 November 30 November
2019 31 May 2019 2018
GBPm GBPm GBPm
Exchange 9.4 14.2 4.3
Vaults 15.1 18.9 -
------------- ------------ -------------
24.5 33.1 4.3
============= ============ =============
13. Trade payables
Unaudited Unaudited
30 November 30 November
2019 31 May 2019 2018
GBPm GBPm GBPm
Client funds held on balance
sheet 140.1 107.4 122.9
Amounts due to clients 4.0 3.0 0.4
------------- ------------ -------------
144.1 110.4 123.3
============= ============ =============
Client funds held on balance sheet comprise title transfer funds
and client monies deposited with the Group's Swiss banking
subsidiary. These amounts are included within cash and cash
equivalents in the Group's Statement of Financial Position.
Amounts due to clients represent balances that will be
transferred from the Group's own cash into segregated client funds
on the following business day in accordance with the UK's Financial
Conduct Authority 'CASS' rules and similar rules of other
regulators in whose jurisdiction the Group operates.
14. Related party transactions
The basis of remuneration of key management personnel remains
consistent with that disclosed in the 2019 Group Annual Report.
There were no other related party transactions which had a material
impact on these Consolidated Interim Condensed Financial
Statements.
15. Contingent liabilities and provisions
There are currently no contingent liabilities expected to have a
material adverse impact on the Group's Consolidated Interim
Condensed Financial Statements. The Group had no material
provisions at 30 November 2019 (year ended 31 May 2019 and period
ended 30 November 2018: GBPnil).
16. Financial risk management
Financial risks arising from financial instruments are analysed
into market, credit, concentration and liquidity risks. These
Consolidated Interim Condensed Financial Statements do not include
all financial risk management information and disclosures required
in the Annual Financial Statements. Details of how these risks are
managed are discussed in the financial risk management note in note
27 of the 2019 Group Annual Report.
There has not been a significant change in the Group's financial
risk management processes or policies since the year end.
The financial instruments valuation hierarchy, the definitions
and details of the inputs and the valuation techniques in
determining the fair values of the Group financial instruments are
shown in note 26 of the 2019 Group Annual Report.
There have been no changes in the valuation techniques for any
of the Group's financial instruments held at fair value in the
period (year ended 31 May 2019 and period ended 30 November 2018:
none). There were no transfers between Level 1 and Level 2 fair
value measurements, and no transfers into or out of Level 3 for the
period ended 30 November 2019 (year ended 31 May 2019 and period
ended 30 November 2018: none).
Statement of Directors' Responsibilities
The Directors confirm to the best of their knowledge that the
Consolidated Interim Condensed Financial Statements have been
prepared in accordance with IAS 34 "Interim Financial Reporting",
give a true and fair view of the assets, liabilities, financial
position and profit and loss of the Group, and that the interim
management report herein includes a fair review of the information
required by Disclosure and Transparency Rules 4.2.7 and 4.2.8,
namely:
-- an indication of important events that have occurred during
the six months ended 30 November 2019 and their impact on the
Consolidated Interim Condensed Financial Statements, and a
description of the principal risks and uncertainties for the
remaining six months of the financial year; and
-- material related party transactions in the six months ended
30 November 2019 and any material changes in the related party
transactions described in the last Annual Report.
A list of current directors is maintained on the IG Group
Holdings plc website: www.iggroup.com
On behalf of the Board
P R Mainwaring
Chief Financial Officer
Independent review report to IG Group Holdings plc
Report on the Consolidated Interim Condensed Financial
Statements
Our conclusion
We have reviewed IG Group Holdings plc's Consolidated Interim
Condensed Financial Statements (the 'Interim Financial Statements')
in the interim results of IG Group Holdings plc for the 6-month
period ended 30 November 2019. Based on our review, nothing has
come to our attention that causes us to believe that the Interim
Financial Statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
What we have reviewed
The Interim Financial Statements comprise:
-- The consolidated interim statement of financial position as at 30 November 2019;
-- The consolidated interim income statement and consolidated
statement of comprehensive income for the
-- period then ended;
-- The consolidated interim cash flow statement for the period then ended;
-- The consolidated interim statement of changes in equity for the period then ended; and
-- The explanatory notes to the interim financial statements.
The Interim Financial Statements included in the interim results
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2 to the Interim Financial Statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the Interim Financial Statements and the
review
Our responsibilities and those of the Directors
The interim results, including the Interim Financial Statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the interim results in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the interim results based on our review.
This report, including the conclusion, has been prepared for and
only for the Company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of Interim Financial Statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
21 January 2020
London
(a)The maintenance and integrity of the IG Group website is the
responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the Financial Statements since they were
initially presented on the website.
(b)Legislation in the United Kingdom governing the preparation
and dissemination of Financial Statements may differ from
legislation in other jurisdictions
Appendix
1. Core Markets
Revenue (GBPm)
H1 FY20 H2 FY19 H1 FY19
------------------------------- -------- -------- --------
UK 93.4 87.7 106.3
EU 33.2 29.4 38.4
EMEA ex EU 21.4 22.0 18.9
Australia 37.0 33.1 35.5
Singapore 21.9 19.5 21.2
------------------------------- -------- -------- --------
Total OTC Core 206.9 191.7 220.3
Stock trading and investments 2.6 3.4 2.5
------------------------------- -------- -------- --------
-Total Core 209.5 195.1 222.8
------------------------------- -------- -------- --------
Active Clients ('000) Revenue per client (GBP)
H1 FY20 H2 FY19 H1 FY19 H1 FY20 H2 FY19 H1 FY19
------------------- -------- -------- -------- --------- -------- --------
UK 38.9 38.6 41.5 2,396 2,269 2,559
EU 23.6 22.5 24.8 1,409 1,306 1,546
EMEA ex EU 5.6 5.4 5.4 3,818 4,104 3,527
Australia 15.9 15.1 15.3 2,326 2,185 2,322
Singapore 8.1 7.5 7.6 2,709 2,591 2,805
------------------- -------- -------- -------- --------- -------- --------
Total OTC Core 92.1 89.1 94.6 2,245 2,150 2,329
Stock trading and
investments 37.9 37.9 37.0 69 90 67
--------- -------- --------
Multi-product (5.3) (5.4) (5.6)
------------------- -------- -------- --------
Total Significant
Opportunities 124.7 121.6 126.0
------------------- -------- -------- --------
2. Significant Opportunities
Revenue (GBPm)
H1 FY20 H2 FY19 H1 FY19
----------------------- -------- -------- --------
Japan 16.2 10.5 8.9
Emerging Markets 11.3 9.5 8.1
US 1.8 0.2 -
Institutional 3.3 2.3 2.8
----------------------- -------- -------- --------
Total OTC Significant
Opportunities 32.6 22.5 19.8
ETD - US 7.8 8.4 8.4
-Total Significant
Opportunities 40.4 30.9 28.2
----------------------- -------- -------- --------
Active Clients ('000) Revenue per client (GBP)
H1 FY20 H2 FY19 H1 FY19 H1 FY20 H2 FY19 H1 FY19
----------------------------------------- -------- -------- --------- -------- --------
Japan 10.4 6.9 5.9 1,553 1,515 1,499
Emerging Markets 4.5 4.3 3.3 2,495 2,240 2,481
US 2.8 0.8 - 594 242 -
Institutional 0.2 0.1 0.1 19,508 16,063 21,580
----------------------------------- ----- -------- -------- --------- -------- --------
Total OTC Significant
Opportunities 17.9 12.1 9.3 1,814 1,851 2,129
ETD - US 11.2 12.1 12.4 707 700 673
ETD - EU 0.7 - - - - -
----------------------------------- ----- -------- -------- --------- -------- --------
-Total Significant Opportunities 29.8 24.2 21.7 1,358 1,276 1,299
----------------------------------- ----- -------- -------- --------- -------- --------
3. Quarterly analysis - Core Markets
Revenue (GBPm)
Q2 FY20 Q1 FY20 Q4 FY19 Q3 FY19 Q2 FY19 Q1 FY19
-------------------- -------- -------- -------- -------- -------- --------
UK 46.1 47.3 44.8 42.8 51.1 55.2
EU 15.4 17.8 15.6 13.7 15.6 22.8
EMEA ex EU 10.4 11.0 11.3 10.7 10.1 8.9
Australia 17.1 19.9 17.1 15.9 17.9 17.4
Singapore 10.0 11.9 10.4 9.2 10.4 10.9
-------------------- -------- -------- -------- -------- -------- --------
Total OTC Core 99.0 107.9 99.2 92.3 105.1 115.2
Stock trading and
investments 1.3 1.3 2.6 0.8 1.3 1.2
-------------------- -------- -------- -------- -------- -------- --------
-Total Core 100.3 109.2 101.8 93.1 106.4 116.4
-------------------- -------- -------- -------- -------- -------- --------
Active Clients ('000)
Q2 FY20 Q1 FY20 Q4 FY19 Q3 FY19 Q2 FY19 Q1 FY19
------------------- -------- -------- -------- -------- -------- --------
UK 33.1 33.5 32.6 32.8 32.5 35.4
EU 20.5 20.1 19.2 19.0 18.6 21.3
EMEA ex EU 4.7 4.7 4.6 4.4 4.5 4.4
Australia 12.7 13.8 12.7 12.7 13.2 12.5
Singapore 7.0 6.8 6.5 6.5 6.5 6.6
------------------- -------- -------- -------- -------- -------- --------
Total OTC Core 78.0 78.9 75.6 75.4 75.3 80.2
Stock trading and
investments 37.9 38.3 37.9 37.4 37.0 37.2
Multi-product (4.6) (4.8) (4.6) (4.7) (4.8) (4.9)
------------------- -------- -------- -------- -------- -------- --------
-Total Core 111.3 112.4 108.9 108.1 107.5 112.5
------------------- -------- -------- -------- -------- -------- --------
Revenue per client (GBP)
Q2 FY20 Q1 FY20 Q4 FY19 Q3 FY19 Q2 FY19 Q1 FY19
UK 1,391 1,414 1,377 1,307 1,569 1,561
EU 754 884 815 723 841 1,066
EMEA ex EU 2,204 2,348 2,483 2,413 2,228 2,028
Australia 1,357 1,439 1,348 1,253 1,366 1,399
Singapore 1,429 1,759 1,595 1,400 1,597 1,640
------------------- -------- -------- -------- -------- -------- --------
Total OTC Core 1,270 1,367 1,315 1,224 1,396 1,436
Stock trading and
investments 36 33 68 22 36 31
------------------- -------- -------- -------- -------- -------- --------
4. Quarterly analysis - Significant Opportunities
Revenue (GBPm)
Q2 FY20 Q1 FY20 Q4 FY19 Q3 FY19 Q2 FY19 Q1 FY19
------------------------ -------- -------- -------- -------- -------- --------
Japan 8.5 7.7 4.9 5.5 5.0 3.9
Emerging Markets 5.4 5.9 5.3 4.2 4.9 3.2
US 1.0 0.7 0.2 - - -
Institutional 1.5 1.8 1.2 1.0 1.3 1.5
------------------------ -------- -------- -------- -------- -------- --------
Total OTC Significant
Opportunities 16.4 16.1 11.6 10.7 11.2 8.6
ETD - US 4.1 3.8 4.4 4.1 4.5 3.9
-Total Significant
Opportunities 20.5 19.9 16.0 14.8 15.7 12.5
------------------------ -------- -------- -------- -------- --------
Active Clients ('000)
Q2 FY20 Q1 FY20 Q4 FY19 Q3 FY19 Q2 FY19 Q1 FY19
----------------------- -------- -------- -------- -------- -------- --------
Japan 8.9 8.1 6.0 5.6 5.2 4.9
Emerging Markets 3.4 3.5 3.6 3.1 2.8 2.3
US 2.2 1.7 0.8 - - -
Institutional 0.1 0.1 0.1 0.1 0.1 0.1
----------------------- -------- -------- -------- -------- -------- --------
Total OTC Significant
Opportunities 14.6 13.4 10.5 8.8 8.1 7.3
ETD - US 7.8 8.3 8.8 8.7 8.6 9.1
ETD - EU 0.7 - - - - -
----------------------- -------- -------- -------- -------- -------- --------
-Total Significant
Opportunities 23.1 21.7 19.3 17.5 16.7 16.4
----------------------- -------- -------- -------- -------- -------- --------
Revenue per client (GBP)
Q2 FY20 Q1 FY20 Q4 FY19 Q3 FY19 Q2 FY19 Q1 FY19
----------------------- -------- -------- -------- -------- -------- --------
Japan 961 951 817 996 968 791
Emerging Markets 1,581 1,688 1,477 1,398 1,791 1,391
US 451 398 240 70 - -
Institutional 11,416 13,405 9,529 7,783 10,898 13,439
----------------------- -------- -------- -------- -------- -------- --------
Total OTC Significant
Opportunities 1,127 1,197 1,102 1,232 1,404 1,172
ETD - US 518 463 499 466 516 429
ETD - EU - - - - - -
----------------------- -------- -------- -------- -------- -------- --------
-Total Significant
Opportunities 888 918 828 850 946 759
----------------------- -------- -------- -------- -------- -------- --------
[1] The basis for calculation of the various metrics is detailed
within the Operating and Financial Review.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SEAEFSESSEIF
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January 21, 2020 02:00 ET (07:00 GMT)
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