IG GROUP HOLDINGS PLC Strategy and Business Update
22 May 2019
LEI No: 2138003A5Q1M7ANOUD76
IG GROUP HOLDINGS PLC Strategy and Business Update
IG Group Holdings plc ("IG", "the Group", "the Company"), a global leader in online trading, is today hosting a strategy and business update for investors and analysts at its London head office at 4pm.
Strategy and business update
At the update, CEO June Felix will set out the key strategic choices the Group has made in pursuit of its vision, the four growth levers that will be deployed to drive growth, and the market specific actions the Group plans to take to implement those levers to deliver sustainable growth and attractive shareholder returns. The plans lead to a clear set of medium-term financial targets that will be presented by CFO Paul Mainwaring.
June Felix, Chief Executive, commented:
"The actions that we have taken over the last two years have resulted in the Company successfully navigating the introduction of the ESMA measures.
IG has experienced significant change and will continue to do so in the future driven by regulation, shifting patterns of wealth, and the continued evolution of financial markets around the world.
I believe that IG has the capability to adapt and thrive in these evolving markets and I am excited by the opportunities we have identified and confident that the Company will return to growth after FY19.
I am looking forward to leading the implementation of IG's new strategy to deliver sustainable growth and attractive shareholder returns."
New and updated information
The Group will set out four levers that it intends to deploy to deliver revenue growth:
- Expanded distribution channels;
- A global firm with more local focus;
- Segmented target markets; and
- Multi-product offerings.
For the purposes of developing and presenting its strategy, the Group has categorised its existing businesses into two groups: core markets and significant opportunities. The categorisation has been applied to the business segments previously reported by the Group, but with the APAC segment split into Australia, Singapore, Japan, and other Asia.
In the core markets of the UK, EU (CFDs), Australia, Singapore and non-EU EMEA (Switzerland, Dubai and South Africa), the Group will deploy the levers of segmented target markets, and more local market focus. The revenue from these core markets in FY19 is expected to be around £415m.
The Group expects to deploy a combination of all four levers in the significant opportunities which comprise:
- EU: expanding into new products including Options and Turbo 24s through Spectrum, the Group's MTF;
- USA: leveraging the combination of Nadex, the RFED and Daily FX;
- Japan: product localisation and marketing;
- Other Asia: developing partnerships to access these markets; and
- Institutional segment: focused proposition for an underserved client segment.
Additionally, the Group has identified a potential opportunity to participate in the leveraged securities market for retail clients in Hong Kong. A local business development team will now be established to pursue partnerships and assess the opportunity to enter the leveraged securities market in Hong Kong.
The revenue from the significant opportunities markets in FY19 is expected to be around £60m.
Medium-term financial targets
The Group is targeting the following revenue growth from the successful implementation of this strategic plan:
- Core markets: revenue growth at around 3-5% per annum over the medium term; and
- Significant opportunities: an increase in revenue of £100 million, to around £160 million in FY22.
Assuming these targets are achieved, the Group's revenue in FY22 will be around 30% higher than in FY19.
Delivery of this targeted revenue growth will require additional investment. Operating expenses, excluding variable remuneration, are expected to be around £257 million in FY19, and are expected to increase by around £30 million in FY20. This is primarily due to additional investment in prospect acquisition to continue to promote the IG brand, to grow the size and quality of the client base, and to establish the new businesses in the EU and the USA. In subsequent years the Group expects its operating expenses, excluding variable remuneration, to increase at a lower rate than revenue.
The Group's strong financial position provides the capital and liquidity resources to deliver the new strategy, to support the business growth, and to pay dividends. The Board reiterates that the Company expects to maintain the annual dividend at 43.2p per share until the Group's earnings allow the Company to resume progressive dividends.
The presentation materials for the strategy and business update are available on the Group website http://www.iggroup.com/ from 2pm today. A recording of the presentation and Q&A will be available from 23 May.
For further information, please contact:
IG Group Investors
020 7573 0727
IG Group Press
020 7573 0060
Neil Doyle / Ed Berry
020 3727 1141 / 1046
Disclaimer - Market abuse regulation and forward-looking statements
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.
This statement, prepared by IG Group Holdings plc (the "Company"), may contain forward-looking statements about IG Group Holdings plc and its subsidiaries (the "Group"). Forward-looking statements involve uncertainties because they relate to events, and depend on circumstances, that will, or may, occur in the future. 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.
IG empowers informed, decisive, adventurous people to access opportunities in over 15,000 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 be a global leader in retail trading and investments. Established in 1974 as the world's first financial spread betting firm, it continued leading the way by launching the world's first online and iPhone trading services.
IG is now an award-winning, multi-platform trading company, 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 share dealing service in the UK, Australia, Germany, France, Ireland, Austria and the Netherlands. IG has a range of affordable, fully managed investment portfolios, to provide a comprehensive offering to investors and active traders.
It is a member of the FTSE 250, with offices across Europe, including a Swiss bank, Africa, Asia-Pacific, the Middle East and the US, where it offers on-exchange limited risk derivatives via the Nadex brand.
*Based on revenue excluding FX (from published financial statements, February 2018)
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