IG : Annual results

IG Group Holdings plc

LEI No: 2138003A5Q1M7ANOUD76

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO, OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.

FOR IMMEDIATE RELEASE

Results for the financial year ended 31 May 2021

22 July 2021

IG Group Holdings plc ("IG", "the Group", "the Company"), a global leader in online trading, today

announces its results for the twelve months ended 31 May 2021 ("FY21").

"IG delivered record revenue and profit, underpinned by a significant increase in the number of high- quality, active clients. IG exceeded expectations against its growth targets and today issues new, upgraded guidance. The completion of the tastytrade acquisition after the year-end accelerates IG's growth and diversification ambitions, particularly in the important US market"

Highlights

• A record performance across all key metrics in FY21:
• • Net trading revenue up 31% to £853.4 million (FY20: £649.2 million). Excluding one-time hedging costs associated with the financing of the tastytrade acquisition, adjusted net trading revenue was £861.3 million
  • Total active clients rose 31% to 313,300 (FY20: 239,600) and new clients onboarded rose 39%
    to 134,800 (FY20: 96,900). IG now services a substantially larger client base going into FY22
  • New client retention rates remain comparable to historical averages, providing confidence that the larger client base is sustainable
  • Profit before taxation up 52% to £450.3 million (FY20: £295.9 million), while adjusted profit before taxation up 61% to £477.8 million. Revenue outperformance and good cost control delivered positive operating leverage and an adjusted profit before tax margin of 55.5% (FY20: 45.6%)
  • Maintained strong capital and liquidity positions that continued to support client growth, with regulatory capital resources of £860.7 million (31 May 2020: £675.5 million)
  • Final proposed dividend of 30.24 pence per share, which would represent a full-year dividend of 43.2 pence per share (FY20: 43.2 pence per share)
• Completed the landmark tastytrade acquisition on 28 June, a transaction that expands and diversifies IG's product range into US options and futures, the world's largest listed derivatives market
• • Trading and new client acquisition at tastytrade remained strong in the calendar year to date prior to the deal completion
• Exceeded expectations against the May 2019 strategic growth targets:
• • Core Markets revenue of £709.5 million (FY20: £540.8 million), up 31% on the prior year
  • Significant Opportunities revenue of £151.8 million (FY20: £108.4 million), up £43.4 million, substantially achieving our revenue target one year ahead of plan
• Core Markets and Significant Opportunities replaced, with new strategic guidance:
• • Core Markets is replaced by 'Core Markets+' and now includes Japan, Emerging Markets, and IG Prime. We anticipate the revenue generated from these businesses to moderate in FY22 and then deliver growth of 5 - 7% per annum over the medium term, up from the previous 3 - 5% guidance
  • Significant Opportunities is replaced by 'High Potential Markets' and now includes tastytrade. We anticipate revenue growth of 25 - 30% per annum over the medium term from pro forma

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FY211, with tastytrade aiming for revenue growth at the higher end of this range over the medium term and above this range in FY22, as the business is early in its growth lifecycle

• Improved MSCI rating from 'BBB' to 'A' and achieved lifetime carbon-neutral status; continued to make distributions from our Brighter Future Fund

Financial Summary

					FY21						Change
	£ million (unless stated)		FY21			FY20		Change %		(Adjusted)
			(Adjusted)
										%
	Net trading revenue	853.4		861.3a	649.2	31%	33%
	Total operating costsb	406.0		386.4c	358.5	13%	8%
	Profit before taxation	450.3	477.8	295.9	52%	61%
	Profit after taxation	371.9	399.4	240.4	55%	66%
	Basic earnings per share		100.7p		108.2p		65.3p	54%	66%
	Total dividend per share		43.2p		43.2p		43.2p		unchanged		unchanged

1. Excludes £7.9 million unrealised foreign exchange hedging loss associated with the tastytrade acquisition financing.
2. Total operating costs include net credit losses on financial assets.
3. Excludes £19.6 million of one-time costs associated with the tastytrade acquisition.

June Felix, Chief Executive Officer, commented:

"I am thrilled to announce a record-breaking performance for the Group and the substantial achievement of the revenue target for our Significant Opportunities portfolio one year ahead of plan. This record set of results has been delivered during a global pandemic and is a testament to the hard work and dedication of our people, the long-standing investments in making our technology resilient, and the strength of our client offering.

We empower our clients as they identify opportunities to trade, providing them with a superior platform, innovative products and high-quality service to deliver an excellent trading experience. We are rewarded by their loyalty and advocacy.

Following a sustained period of strong acquisition, elevated demand and new client retention, IG now services a substantially larger client base, which provides a quality asset going into FY22. Today, we believe that we are in a better position than ever before. We have announced revised and upgraded growth guidance that reflects our outperformance in FY21, our strategic acquisition of tastytrade and the quality of our client proposition, putting us in a position of strength to continue to deliver sustainable value for our shareholders."

Further information
IG Group Investor Relations	IG Group Press	FTI Consulting
Liz Scorer	Ramon Kaur	Neil Doyle
020 7573 0727	020 7573 0060	07771 978 220
[e-mail]	[e-mail]	[e-mail]

Analyst presentation

There will be an analyst and investor presentation at 9:30am (UK Time) on Thursday 22 July.

The presentation will be accessible live via audio webcast at Results, reports and presentations | IG Group. If you wish to listen via conference call, please use the following link Conference call registration page | IG Group. The audio webcast of the presentation and a transcript will be archived

at:www.iggroup.com/investors.

1 See Appendix 1

2

Non-IFRS performance measures

IG Group management believes that the non-IFRS performance measures included in this document provide valuable information to the readers of the financial statements as they enable the reader to identify a more consistent basis for comparing business performance between financial periods and provide more detail concerning the elements of performance which the managers of these businesses are most directly able to influence or are relevant for an assessment of the Group. They also reflect an important aspect of the way in which operating targets are defined and performance is monitored by IG Group management. However, any non-IFRS performance measures in this document are not a substitute for IFRS measures and readers should consider the IFRS measures as well. Refer to appendix 2 for further information and calculations of non-IFRS performance measures included throughout this document, and the most directly comparable IFRS measures.

Forward-looking statements

This preliminary statement, prepared by IG Group Holdings plc (the "Company"), may contain forward- looking statements about the Company and its subsidiaries (the "Group"). Such forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "projects", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other various or comparable terminology.

Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors which are beyond the Company's control and are based on the Company's beliefs and expectations about future events as of the date the statements are made. If the assumptions on which the Group bases its forward-looking statements change, actual results may differ from those expressed in such statements. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including those set out under "Principal Risks" in the FY20 Group Annual Report for the financial year ended 31 May 2020. The Annual Report can be found on the Company's website (www.iggroup.com).

Forward-looking statements speak only as of the date they are made. Except as required by applicable law and regulation, the Company undertakes no obligation to update these forward-looking statements.

No offer or solicitation

This announcement is not intended to, and does not constitute, or form part of, any offer to sell or an invitation to purchase or subscribe for any securities or a solicitation of any vote or approval in any jurisdiction.

No profit forecasts or estimates

No statement in this announcement is intended as a profit forecast or estimate for any period

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 Group has been at the forefront of trading innovation since 1974. Since then, we've evolved into a global fintech company incorporating the IG, tastytrade, IG Prime, Spectrum, Nadex and DailyFX brands, with a presence in Europe, North America, Africa, Asia-Pacific and the Middle East.

Our award-winning products and platforms empower ambitious people the world over to unlock opportunities around the clock, giving them access to over 19,000 financial markets. Today, more than 400,000 clients call IG Group home.

IG Group Holdings plc is an established member of the FTSE 250 and holds a long-term investment grade credit rating of BBB- with a stable outlook from Fitch Ratings.

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Chief Executive Officer's Review

Record year for revenue, profit and active clients

We are a purpose-led global financial technology and trading business that seeks to provide our clients with the access, products, tools and education they need to take control of their financial future. This year has been outstanding for the Group in a number of ways.

We built on our record performance from the first six months of the financial year to deliver our best- ever set of results, with adjusted net trading revenue up 33% on the prior year at £861.3 million. Revenue growth was driven by our substantially larger client base, with 313,300 clients trading with us during the year, 31% higher than the prior year, which represents a significant increase in the size of our active client base.

While we undoubtedly benefitted from the sustained high levels of financial market volatility, we believe it is the long-standing investment that we have made in our technology, in our brand and marketing, and in our people that made these results possible. This investment positioned the Group to efficiently capture the increased demand for our products generated by the macro tailwinds of increasing self- directed investing, wealth accumulation and transfer, and digital sophistication.

In FY21, we delivered a 39% increase in first trades to 134,800 from a 15% increase in targeted marketing investment. The new clients we have onboarded are exhibiting similar characteristics to our existing client base with retention rates remaining comparable to historical averages. This gives us confidence in the sustainability and quality of our client base. Clients continued to fund their accounts, with IG holding funds of £3.1 billion at 31 May, which equates to an average client balance of more than £10,000. Well-funded accounts indicate that a client is ready to trade when they identify the right opportunity.

Delivering on our strategy

In May 2019 we announced ambitious targets: to grow revenue from our Core Markets by 3 - 5% per annum over the medium-term and to deliver an incremental £100 million from our portfolio of Significant Opportunities by FY22. FY21 saw us exceed our expectations against these targets.

Our Core Markets delivered revenue of £709.5 million representing a compound annual growth rate (CAGR) of 30% over the two-year period since the announcement of our targets. The rate of growth achieved by these markets is materially ahead of our expectations and has been supported by a sustained period of high market volatility and our ability to capture the opportunities that this presented.

Within the UK and European businesses we have seen a substantial increase in the number and value of retail clients, with the revenue generated by these clients growing in FY21 by over 50% on the prior year. IG's brand strength in this region has facilitated this growth, with IG capturing 29% of primary accounts and a market-leading position in the UK.1 We also remain a market leader across the EU leveraged market.

Our stock trading business grew its revenue by 184% in FY21 and now serves almost 90,000 active clients with assets under administration of £3.3 billion. This business had an outstanding Q3 with 18,300 first trades bolstered by a peak in interest in a small number of US equities in response to the 'short squeeze' initiated on those stocks by retail traders collaborating through social media.

In our Significant Opportunities portfolio, we delivered revenue of £151.8 million, substantially achieving the £160 million revenue target one year ahead of plan and providing evidence of the Group's ability to diversify our revenue base. We chose to accelerate our strategy in January when we announced our acquisition of tastytrade, a high-growth,high-margin US options and futures platform that materially

1 Investment Trends UK Trading Behaviour Report, May 2021.

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enhances our presence in the US and provides an additional exchange traded derivatives (ETD) business to our portfolio.

In Japan, we saw continued success with our focus on localisation, driving a 48% year-on-year increase in revenue to £68.7 million. Following extensive local market research, we delivered a targeted programme of customisation for our Japanese clients in FY21. This was supported by increased investment in social media to further build our online presence and a successful use of influencers to strengthen our multi-channel marketing approach. Our experience in Japan provides a proven approach for further geographic expansion.

Spectrum, our pan-European multilateral trading facility (MTF), continued to build momentum in FY21 following its launch in October 2019 (FY20), doubling its client base to 5,400 while more than tripling the revenue per client. In January, we signed our first third-party Standard Member and are in advanced discussions with major brokers and issuers who are interested in partnering with us to deliver additional on-exchange products across the EU. We will continue to invest in this opportunity to deliver the next stage of growth and will be launching an expanded product set in FY22.

Revised strategic growth guidance

Following the completion of the tastytrade acquisition on 28 June, and the substantial achievement of our earlier strategic growth targets one year ahead of plan, we are now upgrading our guidance on the medium-term revenue growth of the business.

We have replaced Core Markets with 'Core Markets+' which now includes the existing businesses together with the now established businesses of IG Prime, Japan, and Emerging Markets. The expanded group broadly consists of all of our over-the-counter (OTC) derivatives businesses as well as our stock trading business. We expect the revenue generated from these businesses to moderate in FY22 and then deliver growth of 5 - 7% per annum over the medium term. The pro forma revenue from these businesses in FY21 was £825.2 million1.

We have replaced Significant Opportunities with 'High Potential Markets' which now includes those businesses where we anticipate higher rates of medium-term growth and further diversification of the Group's revenue. This brings together all of our US businesses, including tastytrade, and Spectrum in Europe. Pro forma FY21 revenue from this portfolio would have been £136.7 million1, of which £100.6 million would have been contributed by tastytrade. We anticipate revenue growth of 25 - 30% per annum over the medium term for these businesses overall, with tastytrade anticipated to deliver revenue growth at the higher end of this range. For FY22, we would anticipate tastytrade to be above this range, on an annualised basis, as the business remains early in its growth lifecycle.

tastytrade

The tastytrade acquisition is a strategic transaction that expands and diversifies the Group's growth drivers through entry into the world's largest listed derivatives market. With an estimated 1.5 million retail traders, the US options and futures market is larger than the global CFD/FX and European turbo markets combined.2

The transaction significantly increases the scale and relevance of IG's existing US businesses through the acquisition of a fast-growing,high-margin brokerage business, tastyworks, that is well-positioned to benefit from the structural growth in self-directed investing in the US listed options and futures market. The team have also proven their ability to innovate and disrupt with the creation of their uniquely developed financial media network to bring authentic, fun and actionable research and content to their clients through tastytrade. I am personally thrilled to welcome the tastytrade group of businesses to the

1. See Appendix 1.
2. Latest Investment Trends market reports and internal analysis.

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