TIDMIGG
RNS Number : 6404G
IG Group Holdings plc
20 July 2023
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
20 JULY 2023
Results for the financial year ended 31 May 2023
" A fourth consecutive year of record revenue as IG continues to
build an expanded and diversified business as the home for active
traders worldwide, while delivering long-term shareholder
returns."
Financial highlights (continuing operations[1])
Continued to deliver strong results in a more difficult market
backdrop.
- Total revenue increased 5% to GBP1,022.6 million (FY22:
GBP973.1 million). Adjusted[2] total revenue rose 6%.
- Net trading revenue decreased 3% at GBP941.8 million (FY22:
GBP972.3 million). Adjusted net trading revenue was down 3%.
- Interest income rose significantly to GBP80.8 million (FY22:
GBP0.8 million) reflecting higher interest rates.
- Profit before tax of GBP449.9 million (FY22: GBP477.0
million). Adjusted profit before tax of GBP490.5 million down
slightly by 1% (FY22: GBP494.3 million). Adjusted profit before tax
margin was at the top end of our guidance at 48.0% (FY22:
51.1%).
- Basic EPS of 86.9 pence (FY22: 92.9 pence). Adjusted basic EPS
of 94.7 pence (FY22: 96.3 pence), down on prior year driven by a
higher effective tax rate.
- Total capital return of GBP363.4 million split across
dividends paid and shares re-purchased in the period (FY22:
GBP186.2 million).
- Proposed an increased dividend of 45.2 pence (FY22: 44.2
pence) and a new, larger share buyback programme of GBP250
million.
Strategic highlights
Achieved further progress with our strategy to expand and
diversify into new products and geographic markets.
- High Potential Markets pro forma[3] total revenue increased
40% to GBP207.0 million (FY22: GBP148.3 million), with Core
Markets+ broadly stable, decreasing by 1% to GBP815.6 million
(FY22: GBP827.6 million).
- US total revenue increased 47% to GBP191.3 million, and 38% on
a pro forma basis, representing strong growth in an important
strategic market.
- tastytrade total revenue increased 52% to GBP170.3 million
($205.0 million) and 41% on a pro forma basis as significant growth
in interest income offset softer net trading revenue.
- Spectrum total revenue increased 68% to GBP15.7 million (FY22:
GBP9.3 million). Societe Generale and UniCredit were onboarded
during the year as third-party issuers.
- Non-OTC total revenue, which includes associated interest
income, increased to 21% of the Group total revenue (FY22: 16%)
representing continued progress on our diversification
strategy.
- Total active clients of 358,300 (FY22: 381,500) moderated
slightly but remained more than double pre-pandemic levels.
Capital allocation
In July 2022, the Group announced its new Capital Allocation
Framework, against which disciplined capital decisions are being
made.
1. Regulatory capital requirements: regulatory capital headroom
of GBP498.9 million at 31 May 2023 (31 May 2022: GBP528.2 million)
provides capacity for further business growth.
2. Organic investment: cost increases reflect investment in
technology and new projects, balanced with an adjusted profit
before tax margin of 48.0%.
3. Commitment to citizenship: as part of our ESG strategy,
pledged 1% of profit after tax to charitable causes, equating to
GBP4.0 million, via our Brighter Future Fund, now totalling over
GBP13.0 million over the past four years.
4. Regular distributions: proposed final dividend 31.94 pence
per share, representing a full year dividend of 45.2 pence per
share, up 1 pence, reflecting our progressive and sustainable
dividend policy and a pay-out of around 50% of adjusted profit
after tax.
5. Inorganic investment: evaluated certain potential
acquisitions, applying rigorous assessment criteria, but did not
identify any opportunities that met all of our requirements.
6. Additional distributions: launching a new, and larger, share
buyback programme of GBP250 million, to commence following the
completion of the existing programme, and to be substantially
completed in FY24.
Financial Summary (continuing operations)
GBP million (unless stated) FY23 FY23 (Adjusted) FY22 FY22 (Adjusted) Change % Change (Adjusted) %
Total revenue (1) 1,022.6 1,022.6 973.1 967.3 5% 6%
Net trading revenue 941.8 941.8 972.3 966.5 (3%) (3%)
Total operating costs (2,3) 584.9 541.0 501.9 464.9 17% 16%
Profit before tax(4) 449.9 490.5 477.0 494.3 (6%) (1%)
Profit after tax 363.7 396.5 396.1 410.5 (8%) (3%)
Basic earnings per share (p) 86.9 94.7 92.9 96.3 (6%) (2%)
Total dividend per share (p) 45.2 - 44.2 - 2% -
----------------------------- -------- ---------------- ------ ---------------- --------- --------------------
[1] FY22 adjusted total revenue excludes GBP5.8 million foreign
exchange hedging gain associated with the financing of the
tastytrade acquisition.
(2) Operating costs include net credit losses on financial
assets.
(3) FY23 adjusted operating costs excludes GBP39.7 million of
costs and recurring non-cash costs associated with the tastytrade
acquisition and integration (FY22: GBP33.7 million) and GBP4.2
million relating to the sale of Nadex (FY22: GBP3.3 million).
(4) FY22 adjusted profit before tax cost excludes GBP1.0 million
of one-time financing expense associated with the debt issuance,
GBP9.3 million FV gain on revaluation of Zero Hash, GBP4.1 million
of gains on sale of Small Exchange and disposal of Zero Hash.
Charlie Rozes, Acting Chief Executive Officer, commented:
"We've delivered a fourth consecutive year of record revenue as
part of our strategy to expand and diversify the Group through
great technology and innovative products, combined with outstanding
client experiences.
"We've performed well in the much more difficult market
conditions that persisted through most of the past year,
maintaining our leadership position in OTC derivatives while
building further momentum in our product and geographic expansion.
Total revenue exceeded GBP1 billion for the first time in IG's
history, more than double our revenue in FY19 when we launched the
strategy, while consistently achieving strong profit margins. A
notable highlight has been our progress in the US, with the strong
growth of tastytrade driving total revenue of GBP191.3 million,
also an all-time high for IG.
"This combination of our operating performance and capital
strength enabled us to return GBP363.4 million to shareholders
during FY23 and we're pleased to announce today an increased cash
dividend and a new GBP250 million share buyback programme.
"Our clients and our people remain at the heart of our success.
IG's commitment to offering a first-class trading experience has
resulted in a loyal, high quality global client base, demonstrated
by active client numbers remaining significantly above the levels
of just a few years ago. Our unique client base is the foundation
of our resilient growth profile.
"Looking ahead, we're well positioned to continue investing for
growth given the strength and consistency of our cash flow and
balance sheet. We keep a close watch on profit margins and in FY24
will continue to look for opportunities to achieve even greater
cost efficiency. We're the home of active traders worldwide, and we
are building a more sustainable, long-term business that delivers
for all stakeholders."
IG Group Investor Relations IG Group Press FTI Consulting
Martin Price / Simon Angela Warburton / Alayna Edward Berry / Katherine
Wright Francis Bell
07703 330 199 / 079
020 7573 0020 / 0099 020 7633 5382 / 5395 7687 0961
investors @iggroup.com press@ig.com edward.berry@fticonsulting.com
/ katherine.bell@fticonsulting.com
Further information
Analyst presentation
There will be an analyst and investor presentation at 9:30am (UK
Time) on Thursday 20 July.
The presentation will be accessible live via audio webcast at
Webcast | IG Group . If you wish to listen via conference call,
please use the following link Conference call registration | IG
Group . The audio webcast of the presentation and a transcript will
be archived at: Financial Results | IG Group .
Alternative performance measures
IG Group management believes that the alternative 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 alternative
performance measures in this document are not a substitute for
statutory measures and readers should consider the statutory
measures as well. Refer to the appendices for further information
and calculations of alternative performance measures included
throughout this document, and the most directly comparable
statutory 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
FY22 Group Annual Report for the financial year ended 31 May 2022.
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 (LSEG:IGG) is an innovative, global fintech company
that delivers dynamic online trading platforms and a robust
educational ecosystem to power the pursuit of financial freedom for
the ambitious. For nearly 50 years, the Company has evolved its
technology, risk management, financial products, and education and
content to meet the needs of its retail and institutional clients.
IG Group continues to innovate its offering for the new generation
of tomorrow's investors through its IG, tastytrade, IG Prime,
Spectrum, and DailyFX brands.
Established in 1974, IG Group is a London-headquartered FTSE 250
company offering its clients access to 19,000 financial markets
through its offices spread across Europe, North America, Africa,
Asia-Pacific and the Middle East.
Acting Chief Executive Officer's Statement
I am delighted to report a fourth consecutive year of record
total revenue for IG Group. Total revenue exceeded GBP1 billion for
the first time, more than double the revenue in FY19, and our cost
management ensured that we continue to deliver a high profit
margin.
Our success in balancing core growth with diversification over
the last four years positioned us extremely well for the difficult
market backdrop we saw during FY23, with global inflation, interest
rate rises, and macro uncertainty. A fundamental strength of ours
is that the amount of cash that we generate in the ordinary course
of business allowed us to both invest for further growth and
deliver attractive and sustainable distributions for
shareholders.
Our strategic progress in FY23
In FY19, we launched our strategy to expand and diversify the
Group by both product and geography, leveraging our
well-established strengths in trading and trading products,
technology, and risk management.
Since then, we've made great progress and while total revenue
has more than doubled, the proportion of revenue from non-OTC
products increased from 5% to 21%, and the proportion of revenue
from the UK market reduced from 42% to 33%, primarily driven by our
organic and inorganic growth in the US market.
Given its position as the world's largest financial market, our
growth in total US revenues this year, up 47% to GBP191.3 million,
is a particular highlight. The main driver of this revenue growth
is tastytrade, where significantly higher levels of interest income
offset some softer net trading revenue . In the year we laid
stronger foundations for future growth, and some highlights of our
progress at tastytrade include:
- Improving client experience by overhauling mobile
applications, creating an open API, and launching an upgraded
web-based trading platform, which is now the newest in the sector.
This delivers a scalable, powerful trading platform to our clients,
backed by outstanding customer service.
- Expanding our equity trading capabilities to capture a greater
share of our clients' trading portfolios and attract larger client
balances. This allowed us to capitalise on the rising US interest
rate cycle.
- Rebranding the brokerage firm from tastyworks to tastytrade
earlier this year, setting the stage for it to become a household
name for trading the US markets.
- Leveraging Group marketing capabilities, including search engine optimisation, and building a best-in-class marketing function.
- Launching the first-ever national brand campaign to raise the
profile and awareness of the business.
In Europe, Spectrum - our pan-European trading venue for
securitised derivatives - is a great example of our ability to
innovate at scale. Spectrum marked an important milestone this year
by welcoming two top-tier banks, Societe Generale and UniCredit, as
new product issuers. This means that European clients will have
access to thousands of new products, and we are bringing more
issuers and brokers to the exchange this year.
In our OTC business, we retained our leadership position. FY23
provided much more challenging conditions than we've seen in recent
years. Despite this, the high quality of our OTC client base shone
through, and our market-leading platform, products, and trade
execution supported their trading during the period.
Our client focus
At IG, we're driven by one unrelenting focus: to offer our
ambitious clients the opportunity to create the financial freedom
they strive for now and in the future. This means a first-class
trading experience on market-leading platforms and tools, access to
around 19,000 markets, outstanding trade execution and amazing
customer service. This passion to surpass our clients' expectations
and create inspiring experiences has enabled us to deliver
sustainable, resilient growth over decades by building and
retaining a strong and loyal client base.
We are champions of client welfare, and fair client outcomes
remain a foundation of our business. We conducted a thorough review
of our internal processes ahead of the introduction of the FCA's
new UK Consumer Duty rules that confirmed our business was already
largely compliant and we have updated our processes where
necessary. This again demonstrates our ability to grow the business
in the ever-changing global regulatory landscape. This approach is
part of our culture. It enables us to earn our clients' long-term
loyalty and trust and brings to life our values to champion the
client and do the right thing.
Understanding clients' needs and shaping our business model to
align with their interests, underpins the long-term, sustainable
performance of our business. An important aspect of our business
model is our differentiated content, which is provided through live
programming, blogs, podcasts, online courses and website content.
Across all of our channels, IG content is watched globally more
than 100 million times each year, showing the importance that
content plays in our client focused offering.
Our commitment to communities and our people
We've pledged to contribute annually the equivalent of 1% of
post-tax profits to charitable causes, and we're proud to deliver
on this promise. We're supporting projects around the world with a
particular focus on the theme 'empowerment through education'. For
example, we work in partnership with Teach For All and their
international network. With a shared purpose to make educational
systems work for every child, these partnerships continue to make a
real difference. As part of this ongoing commitment, by the end of
FY26 our goal is to positively impact the lives of one million
people around the world.
Making a positive impact in our communities is important to
everyone at IG. Our people passionately support this commitment,
with over a third of our employees engaging in voluntary and
charitable activities this year.
Our people are the driving force behind our operational
performance as a company. Their continued engagement and personal
commitment to our goals and ambitions is of critical importance. To
support them through this challenging period of high inflation
rates, we've undertaken a special remuneration review focused on
our most impacted colleagues, providing one-off cost of living
booster payments and pay rises.
Strong financial performance
Total revenue of GBP1,022.6 million was up 5% on prior year. Our
performance reflected two important factors. First, we broadly
maintained our levels of trading revenue and avoided the sharp
decline following the pandemic as seen by many others in the
industry. Second, we capitalised on the interest rate cycle and
drove significant increases in interest income.
As we projected last year, interest income was the principal
revenue growth driver in FY23, generating GBP80.8 million in FY23,
compared to just GBP0.8 million in FY22. The increase in interest
rates has also meant that our net finance line was positive, as the
return from our corporate cash outweighed the cost of the small
level of issued debt and our revolving credit facility, which
remained undrawn as at 31 May 2023.
Disciplined cost management remained a priority, even with the
challenges of translational foreign exchange headwinds and high
levels of inflation across many of our regions. While this impacted
some of our supplier costs, the main impact was on our people, and
we took steps to ensure that we are financially supporting our
people globally. Consequently, while this drove higher rates of
fixed remuneration growth, we retained our highly skilled and
talented people and avoided elevated levels of attrition.
We've earned a reputation as an innovative business, and
critical, but careful, decisions were taken throughout the year to
decide on capital allocated to new organic growth initiatives. We
operate a formal 'incubator' process which in recent years produced
new ventures such as our OTC business in the US and our European
ETD business. We are disciplined allocators of capital and we'll
always prioritise allocation to foster innovation and organic
growth.
In FY23, we balanced the levels of investment for future growth
with delivering a sustainable profit margin. Our adjusted profit
margin for the year was 48%, down slightly on our prior year margin
of 51% but well within the mid-to-high 40's range that we're
managing to. We've grown revenues at a steady rate over the past 20
years, at consistently high margins. We keep a close watch on
profit margins and in FY24 will continue to look for opportunities
to achieve even greater cost efficiency.
Our effective tax rate was 19.2%, versus 17.0% in FY22, due to
some one-off adjustments in the prior year and the impact of the
increased UK corporate tax rate which rose sharply from 19% to 25%
in April 2023.
Earnings per share of 94.7p was down slightly year on year
reflecting lower profit after tax, partially offset by a reduction
in the number of shares in issue as a result of the on-going share
buyback programme, which is now being enlarged for FY24. We expect
the share count to continue to reduce, as the full impact of the
buyback programmes are reflected.
Capital and liquidity
Our FY23 results announcement marks the one-year anniversary of
the publication of our Capital Allocation Framework. The framework
has been well received by all our stakeholders, and our Board has
been embedding it internally as we evaluate the most effective uses
of capital.
Our first priority is ensuring that we meet our regulatory
capital requirements. In January 2022, the Group transitioned to
the Investment Firms Prudential Regime, and since then has had a
static, transitory minimum capital requirement. At the end of the
year our regulatory capital headroom above that requirement was a
very healthy GBP498.9 million.
Our commitment to charitable causes, with a focus on empowerment
through education, remained strong. In FY22, we pledged to allocate
1% of post-tax profits to these causes, and we're fulfilling this
commitment again with an additional pledge of GBP4.0 million.
Our proposed final dividend of 31.94 pence represents a total
dividend for the year of 45.2 pence, an increase of 1 pence on the
prior year, representing progressive and sustainable increases.
During the year, we considered certain acquisitions to
accelerate progress on our strategy but did not identify anything
which met our range of criteria. We'll maintain a disciplined
approach towards capital allocation across the Group.
Having assessed our regulatory capital headroom and our
alternative uses of capital, we've announced an additional
distribution to shareholders, in the form of a GBP250 million share
buyback. We expect this to be substantially completed within FY24.
The announcement of a new share buyback programme demonstrates our
ability to invest for growth while also providing attractive
returns to shareholders.
Liquidity management was another strong point of our financial
performance. The peak broker margin requirement during the year was
GBP757.5 million (FY22 peak margin: GBP774.7 million). Our robust
liquidity position supports client trading across a variety of
market conditions. The broker margin requirement at the period end
was GBP678.2 million, resulting in an available liquidity balance
of GBP792.9 million.
Guidance
The medium-term guidance that we set out in July 2021 was that
we would anticipate total revenue growth of 25-30% in our High
Potential Markets from FY21, and total revenue growth of 5-7% in
our Core Markets+ portfolio from FY22. We reiterate this guidance,
and we're confident in delivering this.
We anticipate that interest income will continue to be a
material stream of revenue within our total revenue line. In the
US, we maintain our guidance that for every 25 basis points rise in
the Fed Funds rate, we would expect an additional $ 4 million of
revenue on an annual basis. Outside of the US and for net finance,
we expect higher income in FY24 than in FY23 reflecting the
annualisation effect of rate increases last year and projected
interest rate increases in FY24.
We maintain our guidance that we would expect to achieve an
adjusted profit before tax margin of mid-to-high 40s over the
medium term. We keep a close watch on profit margins and in FY24
will continue to look for opportunities to achieve even greater
cost efficiency.
On effective tax rate, the recent increases in the UK corporate
tax rate will cause further upwards pressure in FY24. We now expect
the Group's effective tax rate to be approximately 24% for FY24,
slightly below the UK corporate tax rate of 25%.
In summary, we've achieved another consecutive year of record
total revenue, combined with good cost management and a strong
balance sheet, which puts us in an excellent position to invest in
the business, execute our strategy, and provide attractive returns
to our shareholders.
Business Performance Review
Summary Group Income Statement
FY23 FY23 FY22 FY22 Change Adjusted
GBPm adjusted adjusted % change
%
-------------------------------- -------- ----------- -------- ----------- --------- -----------
Net trading revenue(1) 941.8 941.8 972.3 966.5 (3%) (3%)
Net interest income 80.8 80.8 0.8 0.8 nm nm
-------------------------------- -------- ----------- -------- ----------- --------- -----------
Total revenue 1,022.6 1,022.6 973.1 967.3 5% 6%
-------------------------------- -------- ----------- -------- ----------- --------- -----------
Betting duty and other
operating income(2) 0.8 (2.5) 6.1 4.6
-------------------------------- -------- ----------- -------- ----------- --------- -----------
Net operating income 1,023.4 1,020.1 979.2 971.9 5% 5%
-------------------------------- -------- ----------- -------- ----------- --------- -----------
Total operating costs(3,4) (584.9) (541.0) (501.9) (464.9) 17% 16%
-------------------------------- -------- ----------- -------- ----------- --------- -----------
Operating profit 438.5 479.1 477.3 507.0 (8%) (5%)
-------------------------------- -------- ----------- -------- ----------- --------- -----------
Other net gains/(losses)(5) (2.6) (2.6) 11.1 (2.3)
Net finance income / (cost)(6) 14.0 14.0 (11.4) (10.4)
-------------------------------- -------- ----------- -------- ----------- --------- -----------
Profit before tax from
continuing operations 449.9 490.5 477.0 494.3 (6%) (1%)
-------------------------------- -------- ----------- -------- ----------- --------- -----------
(1) FY22 adjusted excludes GBP5.8 million foreign exchange
hedging gain associated with the financing of the tastytrade
acquisition.
(2) FY23 adjusted betting duty and other operating income
excludes GBP3.3 million income for the reimbursement of costs
relating to the sale of Nadex (FY22: GBP1.5 million).
(3) Operating costs include net credit losses on financial
assets.
(4) FY23 adjusted operating costs excludes GBP39.7 million of
costs and recurring non-cash costs associated with the tastytrade
acquisition and integration (FY22: GBP33.7 million) and GBP4.2
million relating to the sale of Nadex (FY22: GBP3.3 million).
(5) FY22 excludes GBP9.3 million fair value (FV) gain on
revaluation of Zero Hash, GBP4.1 million of gains on sale of Small
Exchange and disposal of Zero Hash.
(6) FY22 adjusted net finance cost excludes GBP1.0 million of
one-time financing expense associated with the debt issuance.
Statutory results
On a statutory basis, net trading revenue from continuing
operations was GBP941.8 million, down 3% on FY22, reflecting a
reduction in client activity. The Group's total revenue of
GBP1,022.6 million, increased by 5%, driven by significantly higher
levels of interest income. Net operating income increased by 5% to
GBP1,023.4 million (FY22: GBP979.2 million).
Statutory operating costs, including net credit loss on
financial assets, were GBP584.9 million, 17% higher than FY22. The
Group's statutory profit before tax for FY23 was GBP449.9 million,
down 6% on FY22.
The results are presented on a continuing operations basis which
excludes items related to the sale of Nadex operations which
completed in FY22 and classified as a discontinued operation. In
FY23, the Group subsequently disposed of assets related to
Nadex.
Adjusted results
The following analysis reflects a continuing operations and
adjusted basis, which excludes certain one-off items and recurring
non-cash items in order to present a more accurate view of
underlying performance. A reconciliation of non-GAAP measures used
in this report is contained in appendix 1.
Adjusted total revenue by product
Adjusted total revenue (GBPm)
FY23 FY22 Change %
------------------------------- -------------------- ------ ---------
OTC derivatives 806.3 810.2 -
Exchange traded derivatives 186.5 123.1 51%
Stock trading and investments 29.8 34.0 (12%)
------------------------------- -------------------- ------ ---------
Group 1,022.6 967.3 6%
------------------------------- -------------------- ------ ---------
Adjusted total revenue consists of adjusted net trading revenue
and net interest income. Adjusted total revenue was GBP1,022.6
million in FY23, up 6% on FY22. OTC derivatives total revenue was
GBP806.3 million, slightly below that of the FY22 record year for
OTC. Exchange traded derivatives total revenue was GBP186.5
million, up 51% on the prior period. Within exchange traded
derivatives, tastytrade total revenue was GBP170.3 million
(GBP120.9 million trading revenue and GBP49.4 million interest
income), up 52% on FY22 and 41% on a pro forma basis which includes
a full 12 months of tastytrade revenue in the comparative period,
benefitting from both increasing Fed Funds rates and favourable
translational foreign exchange, offset by a reduction in net
trading revenues. Stock trading and investments total revenue was
GBP29.8 million, down 12% due to a reduction in client trading
activity.
Non-OTC revenue made up 21% of total revenue in FY23,
considerably up from 16% in FY22 reflecting the continued
diversification of our revenue.
Adjusted net trading revenue
Adjusted net trading revenue was GBP941.8 million, 3% lower than
FY22 as the challenging macroeconomic environment impacted trading
activity.
Net trading revenue performance by product
Adjusted net trading revenue (GBPm)
FY23 FY22 Change %
------------------------------- --------------------- ------ ---------
OTC derivatives 782.0 811.5 (4%)
Exchange traded derivatives 137.1 121.2 13%
Stock trading and investments 22.7 33.8 (33%)
------------------------------- --------------------- ------ ---------
Net trading revenue 941.8 966.5 (3%)
------------------------------- --------------------- ------ ---------
Net interest income 80.8 0.8 nm
------------------------------- --------------------- ------ ---------
Group total revenue 1,022.6 967.3 6%
------------------------------- --------------------- ------ ---------
Active clients (000) Net trading revenue per
client (GBP)
FY23 FY22 Change FY23 FY22 Change
% %
----------------------------- ----------- ---------- ----------- -------- -------- ---------
OTC derivatives 189.5 199.8 (5%) 4,126 4,063 2%
Exchange traded derivatives
(1) 91.6 104.5 (12%) 1,490 1,142 31%
Stock trading and
investments 90.8 93.2 (3%) 250 363 (31%)
----------------------------- ----------- ---------- ----------- -------- -------- ---------
Group(2) 358.3 381.5 (6%)
----------------------------- ----------- ---------- -----------
(1) Exchange traded derivatives revenue per client calculation
excludes revenue generated from the Group's US market maker.
(2) Total Group active clients have been adjusted to remove the
clients who are active in more than one product category
(multi-product clients) to give a unique client count. In FY23
there were 13,700 multi-product clients, compared with 16,000 in
FY22.
OTC derivatives
OTC derivatives net trading revenue of GBP782.0 million, was
down 4%, reflecting a 5% reduction in active clients (FY23:
189,500) as client activity moderated against a more difficult
macroeconomic backdrop year over year, particularly in Q3. Net
trading revenue per client increased 2% on the FY22 average,
reflecting the high quality of our client base.
UK and EU OTC derivatives revenue was GBP397.9 million, down 8%,
with almost all of the year-on-year difference driven by a
difficult comparison to an exceptionally strong Q3 in FY22. Q4
revenue however increased 16% on Q3, as client trading activity
increased. Active clients in the year declined 6%, with a 2% lower
average net trading revenue per client.
Japan OTC derivatives revenue was GBP99.3 million, up 1% on the
record FY22 performance, with active clients increasing 10%, and
average net trading revenue per client decreasing by 8%. We
continue to see exciting opportunities to grow this business
further through the launch of new products and effective marketing
programs.
Australia OTC derivatives revenue of GBP95.2 million increased
8%, with average revenue per client up 29%, more than offsetting a
16% decline in the active client base.
Institutional OTC derivatives revenue was up 35% at GBP13.3
million with a significantly higher net trading revenue per client
and active client numbers remaining level.
US OTC derivatives revenue increased 17% as net trading revenue
per client increased 31% year on year benefitting from the
increasing quality of the client base and some translational
foreign exchange benefit.
Exchange traded derivatives
Net trading revenue from exchange traded derivatives was
GBP137.1 million, up 13%, and 6% higher than FY22 on a pro forma
basis, which includes a full 12 months of tastytrade revenue in the
comparative period.
tastytrade's net trading revenue in the period increased 10% to
GBP120.9 million, and 2% on a pro forma basis. Active clients
reduced by 16% on a pro forma basis, reflecting normalisation
against the higher levels of activity in FY22 and lower levels of
new client acquisition in the period. The decline in active clients
was more than offset by increased revenue per client, up 22%, due
to improvements in the client mix and favourable translational
foreign exchange rates.
Spectrum's revenue was GBP15.7 million, up 68%, as revenue per
client increased significantly to GBP2,286, up 67%, as the exchange
onboarded Societe Generale and UniCredit as new issuers.
Stock trading and investments
Net trading revenue from stock trading and investments was
GBP22.7 million, down 33%, reflecting a 31% reduction in average
net trading revenue per client as trade frequency per client
reduced. The number of active clients reduced slightly and assets
under management at the end of the period remained in line with
FY22 at GBP3.3 billion.
Net interest income
Net interest income on client balances was GBP80.8 million
increasing significantly from GBP0.8 million reported in FY22.
Interest on client balances made up 8% of total revenue in FY23,
increasing from 5% in H1 to 11% in H2. This increase reflected the
rising interest rate cycle and the significant client money
balances held throughout the year.
In our US businesses, client balances at the end of the year
were $1.9 billion (31 May 2022: $2.0 billion). This contributed
GBP50.4 million of interest (FY22 GBP1.9 million).
Outside of the US, client balances of GBP2.7 billion were down
12% (31 May 2022: GBP3.1 billion). This included GBP420.4 million
of client funds on the balance sheet (31 May 2022: GBP519.4
million) for which the interest is recognised within the net
finance income line. Interest income recognised on the remaining
segregated client money balance was GBP30.4 million compared with a
net interest cost of GBP1.1 million in FY22.
Operating Costs
Total adjusted operating costs for FY23 were GBP541.0 million,
16% higher than FY22. The increase reflected approximately GBP16.2
million of translational foreign exchange headwinds, inflationary
increases, the GBP4.0 million pledge to charitable causes, and
higher technology related costs as we continue to invest in
innovation and resiliency.
Adjusted operating costs from continuing operations
GBPm FY23 FY22 Change %
-------------------------------- ------ ------ ---------
Fixed remuneration 188.5 150.1 26%
Advertising and marketing 93.5 87.1 7%
Revenue related costs 47.9 45.3 6%
-------------------------------- ------ ------ ---------
IT, structural market data and
comms 42.5 35.0 21%
-------------------------------- ------ ------ ---------
Depreciation and amortisation 29.6 28.5 4%
Legal and professional 25.9 16.8 54%
Other costs 63.1 44.2 42%
Variable remuneration 50.0 57.9 (14%)
-------------------------------- ------ ------ ---------
Total operating costs 541.0 464.9 16%
-------------------------------- ------ ------ ---------
Headcount - average 2,616 2,408 9%
-------------------------------- ------ ------ ---------
FY23 fixed remuneration was GBP188.5 million, up 26%, reflecting
increased headcount, translational foreign exchange on non-GBP
salaries, salary increases driven partly by inflation, and a
one-off cost of living payment to more than 60% of our people.
Headcount growth was primarily in technology areas and reflected
continued investments in new development projects and the running
of our global trading platforms and infrastructure.
Advertising and marketing spend increased by 7% to GBP93.5
million. This reflected marketing investments in Germany and
tastytrade to support our strategic goal of growing our exchange
traded derivatives business and diversifying the Group's revenue
base.
Revenue related costs include market data charges, client
payment charges, provisions for client and counterparty credit
losses and brokerage trading fees. Although net trading revenue was
lower in FY23, revenue related costs increased by 6% to GBP47.9
million reflecting a change in revenue mix, in particular higher
brokerage trading fees due to a larger volume of US index options
traded by clients.
IT maintenance, structural market data charges, and
communications costs were GBP42.5 million, an increase of 21%
reflecting increased investments in technology to expand
infrastructure capacity to support future growth and periodic
spikes in client trading.
Depreciation and amortisation costs increased 4% to GBP29.6
million. Legal and professional fees were GBP25.9 million, an
increase of 54%, reflecting higher costs in relation to strategic
and operational projects.
Other costs, which include staff related costs (such as travel
and entertainment), regulatory fees and irrecoverable VAT,
increased by 42%. Also included was the GBP4.0 million pledge to
charitable causes, representing 1% of FY22 adjusted profit after
tax, which was approved by the Board in September 2022.
Additionally, other costs increased due to higher travel and
entertainment as staff returned to the office and travel frequency
increased.
Within variable remuneration was the general bonus accrual,
share schemes and sales bonuses. The charge for the general bonus
pool was GBP27.6 million, down 15%, reflecting a lower level of
outperformance to internal targets relative to the comparative
period, offset by increases due to headcount growth and salary
inflation. Share schemes costs relating to the long-term incentive
plans for senior management reduced by 6% to GBP16.8 million (FY22:
GBP17.8 million) reflecting the lower share price, and lower levels
of performance against internal targets in comparison to prior
year. Sales bonuses decreased by 25% to GBP5.6 million reflecting
lower commission payments to sales staff.
Net finance income
Net finance income in the period was GBP14.0 million, up from a
GBP10.4 million adjusted cost in FY22. Within this, finance income
was GBP30.2 million (FY22: GBP3.4 million), offset by finance costs
of GBP16.2 million (FY22: GBP13.8 million). Group finance costs are
fixed, however the finance income, which reflected the interest
earned on corporate balances including client funds on balance
sheet, benefitted from the rising interest rate cycle.
Earnings Per Share
GBPm (unless stated) FY23 FY23 adjusted FY22 FY22 adjusted Change % Adjusted change %
------------------------------------- ------- -------------- ------- -------------- --------- ------------------
Profit before tax from continuing
operations 449.9 490.5 477.0 494.3 (6%) (1%)
------------------------------------- ------- -------------- ------- -------------- --------- ------------------
Tax (86.2) (94.0) (80.9) (83.8)
------------------------------------- ------- -------------- ------- -------------- --------- ------------------
Profit after tax from continuing
operations 363.7 396.5 396.1 410.5 (8%) (3%)
------------------------------------- ------- -------------- ------- -------------- --------- ------------------
Weighted average number of shares
for the
calculation of EPS (millions) 418.7 418.7 426.3 426.3 (2%) (2%)
Basic earnings per share (pence per
share) 86.9 94.7 92.9 96.3 (6%) (2%)
------------------------------------- ------- -------------- ------- -------------- --------- ------------------
Profit before tax was GBP449.9 million in FY23, and GBP490.5
million on an adjusted basis, 1% lower than FY22.
The effective tax rate (ETR) was 19.2% based on profit before
tax from continuing operations (FY22: 17.0%). The ETR was lower
than the average main rate of UK corporate tax in the period of
20%, where the majority of the Group's profits were taxed,
primarily as a result of standard UK tax incentives and adjustments
to prior year estimates. The ETR for FY24 is anticipated to be
around 24% on an adjusted basis, due to the sharp increase in UK
corporate tax rate from 19% to 25% from 1 April 2023. The ETR is
dependent on several factors including taxable profit by geography,
tax rates levied in those geographies and the availability and use
of taxable losses. The future ETR may also be impacted by changes
in our business activities, client composition and regulatory
status, which could affect our exemption from the UK Bank
Corporation Tax surcharge.
Profit after tax was GBP363.7 million, down 8% on FY22, and 3%
lower on an adjusted basis. Basic EPS was 86.9 pence, down 6% on
FY22 and 2% lower on an adjusted basis due to the reduction in
profits, partly offset by a lower share count reflecting our share
buyback programme.
Dividend
The final dividend for FY23 of 31.94 pence per share was
proposed by the Board. This will be paid on 19 October 2023,
following approval at the Company's Annual General Meeting, to
those shareholders on the register at the close of business on 22
September 2023. This represents a total FY23 dividend paid of 45.2
pence per share (FY22: 44.2 pence per share).
Summary Group Balance Sheet
The balance sheet is presented on a management basis which
reflects the Group's use of alternative performance measures to
monitor its financial position, with particular focus on own funds
and liquid assets which are deployed to meet the Group's liquidity
requirements. These alternative performance measures are reconciled
to the corresponding statutory balances in the appendix.
GBPm 31 May 2023 31 May 2022 Change %
------------------------------------- ------------ ------------ ---------
Goodwill 611.0 604.7 1%
Intangible assets 276.5 292.1 (5%)
Property, plant and equipment(1) 17.6 16.7 5%
Operating lease net liabilities (2.2) (2.0) 10%
Other investments 1.2 - nm
Investments in associates 12.5 14.8 (16%)
------------------------------------- ------------ ------------ ---------
Fixed assets 916.6 926.3 (1%)
------------------------------------- ------------ ------------ ---------
Own cash 730.2 1,245.9 (41%)
Issued debt (299.3) (299.2) -
Client funds held on balance sheet (420.4) (519.4) (19%)
Turbo warrants(2) (2.7) (1.5) 80%
Net amounts due from brokers 825.3 657.1 26%
Own funds in client money 75.1 64.2 17%
Financial investments 234.1 - nm
Liquid assets threshold requirement 65.0 106.7 (39%)
Own funds 1,207.3 1,253.8 (4%)
------------------------------------- ------------ ------------ ---------
Working capital (74.4) (82.5) (10%)
Net current assets held for sale - 0.4 (100%)
Tax receivable/(payable) 2.7 (20.5) (113%)
Net deferred tax liability (37.6) (49.7) (24%)
------------------------------------- ------------ ------------ ---------
Net assets 2,014.6 2,027.8 (1%)
------------------------------------- ------------ ------------ ---------
(1) Excludes right-of-use assets.
(2) Recognised in client funds held on balance sheet in the
prior year.
During FY23, Group's fixed assets decreased by GBP9.7 million.
The decrease in fixed assets was driven by annual depreciation and
amortisation of GBP61.8 million offset by additions of GBP26.2
million in intangibles and property, plant and equipment, GBP8.7
million on the Small Exchange acquisition, GBP7.6 million lease
payment and a GBP10.8 million increase from foreign exchange. The
Group's working capital increased by GBP8.1 million, which was
primarily driven by a lower general bonus accrual compared to prior
year.
The Group recognised a GBP13.2 million decrease in net assets
during the period driven by a GBP46.5 million decrease in own funds
offset by a reduction of GBP35.3 million in tax and deferred tax
liabilities.
Liquidity
The Group maintained a strong liquidity position, ensuring that
it had sufficient resources under both normal circumstances and
stressed conditions to meet its working capital and other liquidity
requirements, which included broker margin requirements, regulatory
and working capital needs of its subsidiaries, and funding of
adequate buffers in client money accounts.
The Group's available liquidity comprised assets available at
short notice to meet additional liquidity requirements, which were
typically increases in broker margin.
GBPm 31 May 2023 31 May 2022 Change %
------------------------------------------------ ------------ ------------ ---------
Own cash 730.2 1,245.9 (41%)
Net amounts due from brokers 825.3 657.1 26%
Own funds in client money 75.1 64.2 17%
Financial investments 234.1 - -
Liquid assets threshold requirement 65.0 106.7 (39%)
------------------------------------------------ ------------ ------------ ---------
Liquid assets 1,929.7 2,073.9 (7%)
------------------------------------------------ ------------ ------------ ---------
Broker margin requirement (678.2) (629.5) 8%
Cash balances in non-UK subsidiaries (383.5) (342.9) 12%
Own funds in client money (75.1) (64.2) 17%
------------------------------------------------ ------------ ------------ ---------
Available liquidity 792.9 1,037.3 (24%)
------------------------------------------------ ------------ ------------ ---------
of which:
------------------------------------------------ ------------ ------------ ---------
Held to meet regulatory liquidity requirements 65.0 106.7 (39%)
------------------------------------------------ ------------ ------------ ---------
Dividend due 130.6 134.8 (3%)
------------------------------------------------ ------------ ------------ ---------
The composition of the Group's liquid assets changed during the
period, with more liquid assets held as financial investments (UK
government securities) rather than cash. This was a result of
changes in regulations that require the Group to post securities
into segregated accounts instead of cash to meet initial margin
requirements at certain brokers. The impact on the Group's liquid
assets was that the UK government securities held by the Group
increased by GBP210.3 million, with a corresponding reduction in
the cash balance at 31 May 2023. The Group held GBP372.3 million of
UK government securities to satisfy margin requirements. The
Group's cash balance also reduced as a result of dividends paid
during FY23 of GBP188.1 million, share buyback of GBP175.2 million
and tax paid of GBP116.6 million, offset by cash generated from
total operations of GBP296.2 million.
Net amounts due from brokers increased by GBP168.2 million. The
balance comprised open derivative positions, cryptocurrency assets,
cash and UK government securities held on account by the Group's
hedging and execution counterparties. The broker margin requirement
at 31 May 2023 was GBP48.7 million higher than the requirement at
31 May 2022. The maximum margin requirement during the period was
GBP757.5 million in August 2022, lower than the Group's highest
broker margin requirement of GBP774.7 million which occurred in H1
FY22.
The Group's available liquidity reduced by GBP244.4 million
during the period, which was more than the overall fall in liquid
assets of GBP144.2 million. This was driven by an increase in
broker margin requirements and the Group holding higher cash
balances in non-UK subsidiaries to meet local cash requirements at
the end of the year. The Group regularly repatriates cash from its
overseas subsidiaries, and for liquidity management and planning
purposes the Group excludes cash held by non-UK subsidiaries from
available liquidity. The amount of cash held in entities outside
the UK was GBP383.5 million as at 31 May 2023 (31 May 2022:
GBP342.9 million).
The Group's available liquidity is subject to meeting other
requirements including regulatory liquidity requirement within the
Investment Firms Prudential Regime (IFPR). IFPR has a basic liquid
assets requirement and a liquid assets threshold requirement, which
can be met with both cash and certain financial investments. As at
31 May 2023, GBP65.0 million was held as liquid asset threshold
requirement, 39% lower than 31 May 2022 due to removal of the
transitional IFPR arrangement.
In addition to cash recognised on the balance sheet, as at 31
May 2023, the Group held GBP2,303.9 million (31 May 2022:
GBP2,577.9 million) of client money in segregated bank accounts,
which is not recognised on the Group's balance sheet. These client
funds are held separately from the Group's own cash balances and
are excluded from the Group's liquid assets.
Own Funds
The Group measures the strength of its liquidity position using
an "own funds" measure, instead of just cash, as it is a broader
and more stable measure than cash. Own funds include liquid assets,
less issued debt, turbo warrants and client funds on the balance
sheet. As at 31 May 2023, the Group had a cash balance of GBP730.2
million (31 May 2022: GBP1,245.9 million) compared with an own
funds balance of GBP1,207.3 million (31 May 2022: GBP1,253.8
million).
GBPm 31 May 2023 31 May 2022 Change %
------------------------------- ------------ ------------ ---------
Liquid assets 1,929.7 2,073.9 (7%)
Client funds on balance sheet (420.4) (519.4) (19%)
Turbo warrants (2.7) (1.5) 80%
Issued debt (299.3) (299.2) 0%
Own funds 1,207.3 1,253.8 (4%)
------------------------------- ------------ ------------ ---------
Client funds on balance sheet are funds on deposit with the
Group's Swiss banking subsidiary, IG Bank SA, and client funds held
by other subsidiaries which are not subject to the same legal or
regulatory protections as client money held off balance sheet,
including funds held by the Group under title transfer
arrangements.
The Group has GBP 300 million, 3.125% senior unsecured bonds due
in 2028. The Group also has access to a GBP350 million revolving
credit facility which was undrawn at 31 May 2023 (31 May 2022:
undrawn). The Group has the option to request an increase in the
revolving credit facility size to GBP400.0 million. The total
available credit facilities have risen from GBP600 million at 31
May 2022, to GBP650 million as at 31 May 2023, with the potential
to rise to GBP700 million if the new revolving credit facility is
increased in size.
Own Funds Flow
GBPm FY23 FY22
------------------------------------------------------------------------------------------- -------- --------
Own funds generated from operations 467.5 536.5
as % of operating profit 107% 112%
Taxes paid (116.6) (99.2)
Net own funds generated from operations 350.9 437.3
------------------------------------------------------------------------------------------- -------- --------
Net interest and fees received 10.2 (13.2)
Capital expenditure and capitalised development costs (26.2) (17.5)
Net own funds movement from acquisitions and disposals of subsidiaries and investments in
associates (2.8) (14.7)
Purchase of own shares held in employee benefit trusts (14.6) (6.7)
Pre-dividend increase in own funds 317.5 385.2
------------------------------------------------------------------------------------------- -------- --------
Cash paid for share buyback (175.2) -
Dividends paid (188.1) (186.2)
------------------------------------------------------------------------------------------- -------- --------
(Decrease)/Increase in own funds (45.8) 199.0
Own funds at start of the period 1,253.8 1,058.5
(Decrease)/Increase in own funds (45.8) 199.0
Impact of movement in exchange rates (0.7) (3.7)
Own funds at the end of period 1,207.3 1,253.8
------------------------------------------------------------------------------------------- -------- --------
Own funds decreased by GBP45.8 million, excluding the impact of
foreign exchange rates. This was driven by share buybacks completed
in FY23 of GBP175.2 million, dividends paid of GBP188.1 million,
purchase of own shares held in the Employee Benefit Trust of
GBP14.6 million and capital expenditure of GBP26.2 million, offset
by net own funds generated from operations of GBP350.9 million.
Regulatory Capital
The Group is supervised on a consolidated basis by the Financial
Conduct Authority in the UK, which requires sufficient regulatory
capital at both Group and individual entity levels to cover risk
exposures, valued according to applicable rules, and any additional
regulatory financial obligations imposed.
The Group's regulatory capital resources, which totalled
GBP996.3 million as at 31 May 2023 (31 May 2022: GBP1,025.6
million), are an adjusted measure of shareholders' funds taking
into account FY23 profits which are included in the regulatory
capital calculation once signed off by the auditors. Shareholders'
funds comprise share capital, share premium, retained earnings and
other reserves, and as at 31 May 2023 totalled GBP2,014.6 million
(31 May 2022: GBP2,027.8 million).
The Group's regulatory capital requirement as at 31 May 2023 was
GBP497.4 million (31 May 2022: GBP497.4 million). The Group's
capital headroom was GBP498.9 million (31 May 2022: GBP528.2
million), demonstrating the solid capital base.
GBPm 31 May 2023 31 May 2022
---------------------------------------------------------- ------------ ------------
Shareholders' funds 2,014.6 2,027.8
Less foreseeable / declared dividends (127.6) (134.8)
Less remaining share buyback (22.5) -
Less goodwill and intangible assets (829.9) (833.7)
Less deferred tax assets (23.2) (17.5)
Less significant investment in financial sector entities (13.7) (14.8)
Less value adjustment for prudent valuation (1.4) (1.4)
---------------------------------------------------------- ------------ ------------
Regulatory capital resources 996.3 1,025.6
Total requirement 497.4 497.4
Regulatory capital headroom 498.9 528.2
---------------------------------------------------------- ------------ ------------
Consolidated Income Statement
for the year ended 31 May 2023
Year ended Year ended
31 May 2023 31 May 2022
Note GBPm GBPm
Continuing operations
Trading revenue 949.7 982.0
Introducing partner commissions (7.9) (9.7)
----------------------------------------- ----- ------------- -------------
Net trading revenue 2 941.8 972.3
Betting duty and financial transaction
taxes (10.4) (2.5)
Interest income on client funds 81.8 3.5
Interest expense on client funds (1.0) (2.7)
Other operating income 11.2 8.6
----------------------------------------- ----- ------------- -------------
Net operating income 1,023.4 979.2
Operating costs (583.8) (499.2)
Net credit losses on financial assets (1.1) (2.7)
----------------------------------------- ----- ------------- -------------
Operating profit 438.5 477.3
Finance income 30.2 3.4
Finance costs (16.2) (14.8)
Gain on disposal of associates - 4.1
Share of loss after tax from associates (2.6) (2.3)
Fair value gain on convertible loan
note - 9.3
Profit before tax 449.9 477.0
Tax expense 3 (86.2) (80.9)
----------------------------------------- ----- ------------- -------------
Profit for the year from continuing
operations 363.7 396.1
Profit for the year from discontinued
operations 1.3 107.8
----------------------------------------- ----- ------------- -------------
Profit for the year attributable to
owners of the parent 365.0 503.9
----------------------------------------- ----- ------------- -------------
Earnings per ordinary share for profit
from continuing operations:
Basic 4 86.9p 92.9p
Diluted 4 86.1p 92.1p
----------------------------------------- ----- ------------- -------------
Earnings per ordinary share for profit
attributable to owners of the parent:
Basic 4 87.2p 118.2p
Diluted 4 86.4p 117.2p
----------------------------------------- ----- ------------- -------------
Consolidated Statement of Comprehensive Income
for the year ended 31 May 2023
Year ended 31 Year ended 31
May 2023 May 2022
GBPm GBPm GBPm GBPm
------------------------------------ --------
Profit for the year 365.0 503.9
Other comprehensive income:
Items that may be subsequently
reclassified to the Consolidated
Income Statement:
Changes in the fair value of
financial assets held at fair
value through other comprehensive
income, net of tax (11.9) (4.0)
Foreign currency translation
gain attributable to continuing
operations 3.2 67.4
Foreign currency translation
loss attributable to discontinued
operations - (3.0)
Other comprehensive (loss)/income
for the year, net of tax (8.7) 60.4
------------------------------------ -------- ------ ------- -------
Total comprehensive income
for the year 356.3 564.3
Total comprehensive income
attributable to owners of the
parent arising from:
Continuing operations 355.0 459.5
Discontinued operations 1.3 104.8
------------------------------------ -------- ------ ------- -------
356.3 564.3
------------------------------------ -------- ------ ------- -------
Consolidated Statement of Financial Position
as at 31 May 2023
31 May 31 May 2022
2023
Note GBPm GBPm
---------------------------------------- ----- -------- ------------
Assets
Non-current assets
Goodwill 6 611.0 604.7
Intangible assets 7 276.5 292.1
Property, plant and equipment 36.1 36.6
Financial investments 8 379.6 134.8
Financial assets pledged as collateral 8 - 25.3
Investment in associates 12.5 14.8
Other investments 1.2 -
Prepayments 0.3 -
Deferred income tax assets 3 23.2 17.5
---------------------------------------- ----- -------- ------------
1,340.4 1,125.8
Current assets
Cash and cash equivalents 9 798.5 1,246.4
Trade receivables 10 570.4 469.5
Financial investments 8 226.8 200.9
Financial assets pledged as collateral 8 - 35.1
Other assets 15.0 14.2
Prepayments 25.3 23.2
Other receivables 10.0 9.8
Income tax receivable 3 8.8 -
1,654.8 1,999.1
---------------------------------------- ----- -------- ------------
Assets classified as held for sale - 1.2
---------------------------------------- ----- -------- ------------
TOTAL ASSETS 2,995,2 3,126.1
---------------------------------------- ----- -------- ------------
Liabilities
Non-current liabilities
Debt securities in issue 11 297.6 297.2
Other payables 1.2 -
Lease liabilities 13.3 13.0
Deferred income tax liabilities 3 60.8 67.2
372.9 377.4
---------------------------------------- ----- -------- ------------
Current liabilities
Trade payables 12 478.0 571.2
Other payables 116.2 119.5
Lease liabilities 7.4 8.9
Income tax payable 3 6.1 20.5
607.7 720.1
---------------------------------------- ----- -------- ------------
Liabilities directly associated
with assets classified as held for
sale - 0.8
---------------------------------------- ----- -------- ------------
TOTAL LIABILITIES 980.6 1,098.3
---------------------------------------- ----- -------- ------------
Consolidated Statement of Financial Position (continued)
for the year ended 31 May 2023
31 May 31 May 2022
2023
GBPm GBPm
--------------------------------- --- -------- ------------
Equity
Share capital and share premium 14 125.8 125.8
Translation reserve 120.8 117.6
Merger reserve 590.0 590.0
Other reserves (16.9) 8.4
Retained earnings 1,194.9 1,186.0
--------------------------------- --- -------- ------------
TOTAL EQUITY 2,014.6 2,027.8
--------------------------------- --- -------- ------------
TOTAL EQUITY AND LIABILITIES 2,995.2 3,126.1
--------------------------------- --- -------- ------------
The preliminary announcement was approved by the Board of
Directors on 19 July 2023 and signed on its behalf by:
Charles Rozes
Chief Financial Officer
Registered Company number: 04677092
Consolidated Statement of Changes in Equity
for the year ended 31 May 2023
Share Share Translation Merger Other Retained
capital premium reserve reserve reserves earnings Total
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ----- ------------ ------------- ------------ ------------ ------------ ------------ --------
At 1 June 2021 - 125.8 53.2 81.0 12.8 860.5 1,133.3
---------------- ----- ------------ ------------- ------------ ------------ ------------ ------------ --------
Profit for the
year and
attributable
to owners of
the parent - - - - - 503.9 503.9
Other
comprehensive
income/(loss)
for the year - - 64.4 - (4.0) - 60.4
---------------- ----- ------------ ------------- ------------ ------------ ------------ ------------ --------
Total
comprehensive
income/(loss)
for the year - - 64.4 - (4.0) 503.9 564.3
---------------- ----- ------------ ------------- ------------ ------------ ------------ ------------ --------
Tax recognised
directly in
equity on
share-based
payments 3 - - - - - 0.5 0.5
Equity
dividends paid 5 - - - - - (186.2) (186.2)
Employee
Benefit Trust
purchase of
own shares - - - - (6.7) - (6.7)
Transfer of
vested awards
from the
share-based
payment
reserve - - - - (7.3) 7.3 -
Equity-settled
employee
share-based
payments - - - - 13.6 - 13.6
Issue of
ordinary share
capital for
the
acquisition of
tastytrade - - - 509.0 - - 509.0
---------------- ----- ------------ ------------- ------------ ------------ ------------ ------------ --------
At 31 May 2022 - 125.8 117.6 590.0 8.4 1,186.0 2,027.8
---------------- ----- ------------ ------------- ------------ ------------ ------------ ------------ --------
At 1 June 2022 - 125.8 117.6 590.0 8.4 1,186.0 2,027.8
---------------- ----- ------------ ------------- ------------ ------------ ------------ ------------ --------
Profit for the
year and
attributable
to owners of
the parent - - - - - 365.0 365.0
Other
comprehensive
(loss)/income
for the year - - 3.2 - (11.9) - (8.7)
---------------- ----- ------------ ------------- ------------ ------------ ------------ ------------ --------
Total
comprehensive
income/(loss)
for the year - - 3.2 - (11.9) 365.0 365.3
---------------- ----- ------------ ------------- ------------ ------------ ------------ ------------ --------
Tax recognised
directly in
equity on
share-based
payments 3 - - - - - 1.0 1.0
Equity
dividends paid 5 - - - - - (188.1) (188.1)
Share buyback - - - - (2.1) (176.6) (178.7)
Employee
Benefit Trust
purchase of
own shares - - - - (14.6) - (14.6)
Transfer of
vested awards
from the
share-based
payment
reserve - - - - (7.6) 7.6 -
Equity-settled
employee
share-based
payments - - - - 13.3 - 13.3
Share-based
payments
converted to
cash-settled
liabilities - - - - (2.4) - (2.4)
At 31 May 2023 - 125.8 120.8 590.0 (16.9) 1,194.9 2,014.6
---------------- ----- ------------ ------------- ------------ ------------ ------------ ------------ --------
Consolidated Statement of Cash Flows
for the year ended 31 May 2023
Year ended Year ended
31 May 2023 31 May 2022
Note GBPm GBPm
--------------------------------------- ----- ------------- -------------
Operating activities
Cash generated from operations(1) 221.4 810.6
Interest received on client
funds 75.8 3.5
Interest paid on client funds (1.0) (2.7)
Income taxes paid (116.6) (99.2)
Net cash flows generated from
operating activities 179.6 712.2
--------------------------------------- ----- ------------- -------------
Investing activities
Interest received 25.6 3.2
Net cash flow to investment
in associates - (1.9)
Purchase of property, plant
and equipment (11.6) (8.5)
Payments to acquire and develop
intangible assets (14.6) (9.0)
Net proceeds from disposal of
subsidiaries 1.8 143.3
Net proceeds from disposal of
investments in associates 0.2 24.5
Net cash flow from financial
investments (225.8) (57.1)
Net cash flow to acquire subsidiaries (4.8) (193.5)
Net cash flows used in investing
activities (229.2) (99.0)
--------------------------------------- ----- ------------- -------------
Financing activities
Interest paid (12.2) (11.0)
Financing fees paid (3.2) (5.4)
Interest paid on lease liabilities (0.5) (0.6)
Repayment of principal element
of lease liabilities (7.1) (7.5)
Drawdown on term loan - 150.0
Repayment of term loans - (250.0)
Net proceeds from issue of debt
securities - 299.2
Payments made for share buyback (175.2) -
Equity dividends paid to owners
of the parent 5 (188.1) (186.2)
Employee Benefit Trust purchase
of own shares (14.6) (6.7)
Net cash flows used in financing
activities (400.9) (18.2)
--------------------------------------- ----- ------------- -------------
Net (decrease)/increase in
cash and cash equivalents (450.5) 595.0
Cash and cash equivalents at
the beginning of the year 1,246.4 655.2
Impact of movement in foreign
exchange rates (0.7) (3.8)
--------------------------------------- ----- ------------- -------------
Cash and cash equivalents at
the end of the year 9 795.2 1,246.4
--------------------------------------- ----- ------------- -------------
(1) Cash generated from operations includes cash generated from
both continuing and discontinued operations and excludes net
interest on client funds
Notes
for the year ended 31 May 2023
1. Basis of preparation
The financial information in this announcement is derived from
IG Group Holdings plc's Group Financial Statements but does not,
within the meaning of Section 435 of the Companies Act 2006,
constitute statutory accounts for the years ended 31 May 2023 or 31
May 2022.
Although the financial information has been prepared in
accordance with the recognition and measurement criteria of
UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 (UK IAS), this preliminary
statement does not itself contain sufficient information to comply
with UK IAS and the applicable legal requirements of the Companies
Act 2006. The Group will publish its Annual Report and Financial
Statements for the year ended 31 May 2023 in August 2023 and these
will be delivered to the Registrar of Companies following the
Company's Annual General Meeting on 20 September 2023.
The Group's auditors, PricewaterhouseCoopers LLP, have reported
on those Financial Statements and the report was unqualified, did
not emphasise any matters nor contained any statements under
Section 498(2) or (3) of the Companies Act 2006.
Copies of full Financial Statements will be available via the
Group's corporate website at www.iggroup.com in August 2023. Copies
will also be available for posting to all shareholders upon request
from the Group's Headquarters, Cannon Bridge House, 25 Dowgate
Hill, London, EC4R 2YA.
The Financial Statements are prepared on a going concern basis
and are consistent with the Group's 2022 Annual Report, with the
exception of changes in policy on presentation, and the following
accounting policies adopted due new transactions in the year:
-- equity arising from transactions with shareholders
-- notional pooling arrangement
There were no new standards, amendments or interpretations
issued and made effective during the current year which have had a
material impact on the Group.
Reclassification of comparatives
To ensure consistency with the current period, comparative
figures have been reclassified where the presentation of the
financial information has been changed. The adjustments are:
(i) Interest received on client funds of GBP81.8 million (31 May
2022: GBP3.5 million) and interest paid on client funds of GBP1.0
million (31 May 2022: GBP2.7 million) have been presented as
separate line items in the Consolidated Statement of Cash
Flows.
(ii) The ordering of the financial statement line items in the
Consolidated Income Statement has been updated in the current year,
to reflect a more appropriate presentation given changes in the
business. As a result of changing interest rates, finance income
(31 May 2023: GBP30.2 million; 31 May 2022: GBP3.4 million) and
finance costs (31 May 2023: GBP16.2 million; 31 May 2022: GBP14.8
million) have increased. Accordingly, these line items are now
presented immediately below the operating profit line.
New accounting policies
Notional pooling arrangement
The Group entered into a notional multi-currency pooling
arrangement (the Pool). There is no legally enforceable right to
offset the amounts due to the Pool against the amounts due from the
Pool across different currencies, nor is there an intention for
settlement to take place on a net basis, the Group shows a gross
presentation for these balances on the Consolidated Statement of
Financial Position, and amortises over the expected life of the
security. The overdraft balance of the Pool is included in other
payables.
1. Basis of preparation (continued)
Equity arising from transactions with shareholders
Upon entering into a contract with a bank or broker which
includes an obligation for that bank or broker to acquire the
Group's own shares, a financial liability is recognised at the
present value of the amount payable to the bank or broker, taking
into consideration the contractual terms with of the broker
agreement, with a corresponding debit to the share buyback reserve,
which is included within other reserves. Following initial
recognition, the financial liability is measured in accordance with
the Group's existing accounting policies for financial liabilities.
The amount recognised in the share buyback reserve is reduced by
the consideration paid for the purchase of own shares and
transferred to retained earnings. The amount of the Group's issued
share capital is reduced by the nominal value of the shares
repurchased and transferred to the capital redemption reserve,
which forms part of other reserves.
Where the contract to repurchase shares expires prior to
completing the repurchase, and incomplete delivery of the shares
has taken place, the remaining balance recognised in the share
buyback reserve is reversed along with the remaining financial
liability. Any consideration paid to acquire own shares which
exceeds the amount initially recognised is a transaction related
cost and recognised directly in equity.
2. Segmental analysis
The Executive Directors are the Group's Chief Operating Decision
Maker (CODM). Management has determined the reportable segments
based on the information reviewed by the CODM for the purposes of
allocating resources and assessing performance.
The Group manages market risk and a number of other activities
on a Group-wide portfolio basis and accordingly a large proportion
of costs are incurred centrally. These central costs are not
allocated to individual segments for decision-making purposes for
the CODM, and, accordingly, these costs have not been allocated to
segments. Additionally, the Group's assets and liabilities are not
allocated to individual segments and not reported as such for
decision making purposes to the CODM. Therefore, the segmental
analysis shown below does not include a measure of profitability,
nor a complete segmented balance sheet, as this would not reflect
the information which is received by the CODM on a regular
basis.
The CODM are presented a view of total revenue split by product.
Total revenue is an alternative performance measure which is
comprised of net trading revenue and net interest on client funds.
In the prior year, the CODM were presented with a view of net
trading revenue split by product. This change is due to net
interest on client funds being a more significant source of revenue
in the year ended 31 May 2023. The presentation for prior year
comparatives has been updated to reflect this.
Total revenue by reportable segment
Net trading revenue represents trading revenue that the Group
generates from client trading activity after deducting introducing
partner commissions. Net interest on client funds represents
interest earned on segregated client money balances after deducted
interest paid in relation to the same balances. These two balances
collectively make up total revenue earned for the Group. The CODM
uses total revenue as the primary measure of performance of the
various segments of the Group. The CODM considers business
performance from a product perspective, split into OTC derivatives,
exchange traded derivatives, stock trading and investments and net
interest on client funds. The products shown in the segmental
analysis below are aggregated where these products are economically
similar in nature.
The segmental breakdown of total revenue is as follows:
Year ended Year ended
31 May 2023 31 May 2022
GBPm GBPm
----------------------------------------------- ------------- -------------
OTC derivatives 782.0 817.3
Exchange traded derivatives 137.1 121.2
Stock trading and investments 22.7 33.8
----------------------------------------------- ------------- -------------
Net trading revenue 941.8 972.3
Net interest on client funds 80.8 0.8
----------------------------------------------- ------------- -------------
Total revenue from continuing operations(1) 1,022.6 973.1
----------------------------------------------- ------------- -------------
Total revenue from discontinued operations(1) - 9.4
----------------------------------------------- ------------- -------------
(1) Please refer Appendix 1 for the reconciliation to the
Consolidated Income Statement
2. Segmental analysis (continued)
The CODM also considers business performance based on
geographical location. This geographical split reflects the
location of the office that manages the underlying client
relationship.
Year ended Year ended
31 May 2023 31 May 2022
GBPm GBPm
-------------------------------------------- ------------- -------------
Net trading revenue by geography
UK 322.0 365.3
Japan 99.3 98.5
Australia 99.8 96.2
Singapore 68.8 74.1
EMEA Non-EU 55.3 53.5
Emerging markets 39.5 43.2
-------------------------------------------- ------------- -------------
UK, APAC & Emerging markets 684.7 730.8
US 140.9 128.6
EU 116.2 112.9
-------------------------------------------- ------------- -------------
Net trading revenue 941.8 972.3
Net interest on client funds - US 50.4 1.9
Net interest on client funds - Other 30.4 (1.1)
-------------------------------------------- -------------
Total revenue from continuing operations 1,022.6 973.1
-------------------------------------------- ------------- -------------
Total revenue from discontinued operations - 9.4
-------------------------------------------- ------------- -------------
The Group does not derive more than 10% of revenue from any one
single client. In relation to prior year comparative information,
the UK geographic segment, and the OTC derivatives segment,
includes a GBP5.8 million foreign exchange gain arising from
financing of the tastytrade acquisition in prior year. No such
gains have been recognised in the current year.
The segmental breakdown of non-current assets excluding
financial investments, financial assets pledged as collateral and
deferred income tax assets, based on geographical location is as
follows:
31 May 2023 31 May 2022
GBPm GBPm
-------------------------- ------------ ------------
US 770.7 795.1
UK 152.6 133.8
EU 5.7 5.5
EMEA Non-EU 4.7 7.3
Australia 0.4 0.8
Japan 1.9 0.8
Singapore 0.3 -
Emerging markets 0.1 3.4
-------------------------- ------------ ------------
Total non-current assets 936.4 946.7
-------------------------- ------------ ------------
3. Taxation
Tax on profit on ordinary activities
Tax charged in the Consolidated Income Statement:
Year ended Year ended
31 May 2023 31 May 2022
GBPm GBPm
------------------------------------------- ------------- -------------
Current income tax
UK corporation tax 75.1 79.1
Non-UK corporation tax 24.3 39.3
Adjustment in respect of prior years (6.1) (6.1)
------------------------------------------- ------------- -------------
Total current income tax 93.3 112.3
------------------------------------------- ------------- -------------
Deferred income tax
Origination and reversal of temporary
differences (7.4) (1.6)
Adjustment in respect of prior years 0.8 (1.0)
Impact of change in tax rates on deferred
tax balances (0.1) 0.3
------------------------------------------- ------------- -------------
Total deferred income tax (6.7) (2.3)
------------------------------------------- ------------- -------------
Total tax expense 86.6 110.0
------------------------------------------- ------------- -------------
Total tax expense attributable to:
Continuing operations 86.2 80.9
Discontinued operations 0.4 29.1
------------------------------------------- ------------- -------------
Tax not charged to Consolidated Income
Statement
Tax recognised in other comprehensive
income (6.2) 0.5
Tax recognised directly in equity (1.0) (0.5)
------------------------------------------- ------------- -------------
Reconciliation of the total tax expense
The standard UK corporation tax rate for the year ended 31 May
2023 is 20%(1) (31 May 2022: 19%). Taxation outside the UK is
calculated at the rates prevailing in the relevant jurisdictions.
The tax expense in the Consolidated Income Statement for the year
can be reconciled as set out below:
(1) (Blended UK corporation tax rate, being 10 months of 19% and
2 months of 25%.)
Year ended Year ended
31 May 2023 31 May 2022
GBPm GBPm
----------------------------------------------------------------- ------------- -------------
Profit before taxation
From continuing operations 449.9 477.0
From discontinued operations 1.7 136.9
----------------------------------------------------------------- ------------- -------------
Total profit before tax 451.6 613.9
----------------------------------------------------------------- ------------- -------------
Profit multiplied by the UK standard rate of corporation tax
of 20 %(1) (y ear ended 31 May 2022: 19.0%) 90.3 116.7
Higher taxes on overseas earnings 3.4 7.9
Adjustment in respect of prior years (5.3) (8.2)
Expenses not deductible for tax purposes 1.6 0.8
Patent Box deduction (3.2) (7.0)
Impact of change in tax rates on deferred tax balances (0.1) 0.3
Recognition and utilisation of losses previously not recognised (0.4) (1.2)
Current year losses not recognised as deferred tax assets 0.3 0.7
----------------------------------------------------------------- ------------- -------------
Total tax expense attributable to: 86.6 110.0
Continuing operations 86.2 80.9
Discontinued operations 0.4 29.1
----------------------------------------------------------------- ------------- -------------
3. Taxation (continued)
The effective tax rate for the year is 19.2% (31 May 2022:
17.9%).
In the UK, a corporation tax rate of 25% (effective from 1 April
2023) was substantively enacted on 24 May 2021. This will impact
the Group's future tax charge accordingly. The deferred tax assets
and liabilities have been assessed at the tax rates that are
expected to apply when the related asset is realised or liability
settled.
Deferred income tax assets
31 May 2023 31 May 2022
GBPm GBPm
---------------------------------------------- ------------ ------------
Tax losses available for offset against
future profits 3.8 3.7
Temporary differences arising on share-based
payments 4.8 3.7
Temporary differences arising on fixed
assets 1.1 2.1
Other temporary differences 13.5 8.0
---------------------------------------------- ------------ ------------
23.2 17.5
---------------------------------------------- ------------ ------------
Deferred income tax liabilities
31 May 2023 31 May 2022
GBPm GBPm
------------------------------------------- ------------ ------------
Temporary differences arising on business
combinations (57.6) (62.9)
Temporary differences arising on fixed
assets (0.2) (0.2)
Other temporary differences (3.0) (4.1)
------------------------------------------- ------------ ------------
(60.8) (67.2)
------------------------------------------- ------------ ------------
4. Earnings per ordinary share
Basic earnings per share is calculated by dividing the profit
for the year attributable to owners of the parent by the weighted
average number of ordinary shares in issue during the year,
excluding shares held as own shares in the Group's Employee Benefit
Trusts and shares repurchased and cancelled under the share buyback
programme. Diluted earnings per share is calculated using the same
profit figure as that used in basic earnings per share and by
adjusting the weighted average number of ordinary shares assuming
the vesting of all outstanding share scheme awards.
Year ended Year ended
31 May 2023 31 May 2022
Earnings attributable to owners of the
parent (GBPm) 365.0 503.9
Weighted average number of shares
Basic 418,693,685 426,289,898
Dilutive effect of share-based payments 3,869,357 3,614,236
----------------------------------------- ------------- -------------
Diluted 422,563,042 429,904,134
----------------------------------------- ------------- -------------
Year ended Year ended
31 May 2023 31 May 2022
------------------------------------------------ ------------- -------------
Basic earning per ordinary share 87.2p 118.2p
* Attributable to continuing operations 86.9p 92.9p
* Attributable to discontinued operations 0.3p 25.3p
------------------------------------------------ ------------- -------------
Diluted earning per ordinary share 86.4p 117.2p
* Attributable to continuing operations 86.1p 92.1p
* Attributable to discontinued operations 0.3p 25.1p
------------------------------------------------ ------------- -------------
5. Dividends paid and proposed
Year ended Year ended
31 May 2023 31 May 2022
GBPm GBPm
------------------------------------------ ------------- -------------
Final dividend for FY22 at 31.24 pence
per share (FY21: 30.24p) 133.2 130.3
Interim dividend for FY23 at 13.26 pence
per share (FY22: 12.96p) 54.9 55.9
------------------------------------------ ------------- -------------
188.1 186.2
------------------------------------------ ------------- -------------
The final dividend for the year ended 31 May 2023 of 31.94 pence
per share was proposed by the Board on 19 July 2023 and has not
been included as a liability at 31 May 2023. This dividend will be
paid on 19 October 2023, following approval at the Company's AGM,
to those members on the register at the close of business on 22
September 2023.
6. Goodwill
The movement in the goodwill balance for the year is as
follows
31 May 2023 31 May 2022
GBPm GBPm
------------------------------------- ------------ ------------
At the beginning of the year 604.7 107.3
Additions - business acquisition - 462.4
Disposals - (13.4)
Impact of foreign exchange movement 6.3 48.4
------------------------------------- ------------ ------------
At the end of the year 611.0 604.7
------------------------------------- ------------ ------------
Goodwill has been allocated for impairment testing purposes to
cash-generating units (CGU) as follows
31 May 2023 31 May 2022
GBPm GBPm
-------------- ------------ ------------
US 509.2 502.8
UK 100.9 100.9
South Africa 0.8 0.9
Australia 0.1 0.1
-------------- ------------ ------------
611.0 604.7
-------------- ------------ ------------
Goodwill arose as follows:
- US - from the acquisition of tastytrade on 28 June 2021
- UK - from the reorganisation of the UK business on 5 September 2003
- South Africa - from the acquisition of Ideal CFDs on 1 September 2010
- Australia - from the acquisition of the non-controlling
interest in IG Australia Pty Limited in the year ended 31 May
2006
Impairment testing
The Group's goodwill balance has been subject to a full
impairment assessment and there has not been any impairment
recognised for the above CGUs (31 May 2022: GBPnil). For the
purposes of the Group's impairment testing of goodwill, the
carrying amount of each CGU is compared to the estimated
recoverable amount of the relevant CGU and any deficits are
considered impairments requiring recognition in the year.
The carrying amount of a CGU includes only those assets that can
be attributed directly to it, or allocated on a reasonable and
consistent basis.
The estimated recoverable amount for each CGU was determined
using the VIU method. For all CGUs, the recoverable amount was
higher than the carrying value. The Group's largest goodwill
balance is associated with the US CGU.
6. Goodwill (continued)
Key assumptions used in the calculation of the recoverable
amount of the US CGU
The key assumptions for the VIU calculations are those regarding
the future cash flow projections, long-term growth rate, and the
discount rate.
Future cash flow projections:
The future cash flow projections cover a period of four years,
reflecting the period over which the Board strategically assess
performance. A declining growth rate of 16.0%-6.0% was used to
extrapolate the final year of the four-year forecast period for a
further three years. The terminal value was calculated based on the
seventh year. The growth rate for the years five to seven was
applied as the US business is not expected to reach a steady state
growth rate by the end of year four.
The cash flow projections are based on the most recent four-year
plan and take into account historical performance, together with
the Group's views on future achievable growth relating to growth of
market share and increased client acquisition. Key assumptions are
the projected annual growth of net trading revenue and cost growth,
which impacts the EBITDA margin. Net trading revenue growth is
driven by increasing client numbers based on assumptions relating
to acquisition, conversion and retention of clients. EBITDA margin
is based on net trading revenue, interest on client money and cost
assumptions. Interest on client money is based on our expectation
of future longer term interest rates and increases in total client
money balances as the underlying client base increases during the
forecasted period. Revenue related costs are forecasted to increase
over the four-year period in line with revenue projections and cost
growth reflects higher marketing expenditure and continued
investment in technology. The cashflow projections also take into
account assumptions relating to working capital requirements and
capital expenditure.
The forecasts do not include revenues arising from tastytrade's
planned expansion outside of the US market.
Long-term growth
The regional long-term growth is used to extrapolate the cash
flows to perpetuity for each CGU. The forecast period of four years
is extrapolated for a further three years using a declining growth
rate, reducing the rate down to a long-term growth rate of 2.0% (31
May 2022: 2.0%) which has been applied to derive a terminal value
based on the cash flows in year seven.
Discount rate
The discount rate used to calculate the recoverable amount of
the US CGU is based on a post-tax weighted average cost of capital
(WACC). The discount rate depends on a number of inputs reflecting
the current market assessment of the time value of money,
determined by external market information, and inputs relating to
the risks associated with the cash flows which are subject to
management's judgement.
A pre-tax discount rate is derived from a post-tax WACC. At the
date of the 2023 impairment assessment the pre-tax discount rate
applied to the seven-year cash flow period and thereafter, to
determine the recoverable amount is 19.6%. For the 2022 impairment
assessment, if the four-year cash flows were extrapolated for three
years in line with the current year methodology, a discount rate of
19.8% would have been applied. The year on year movement in the
discount rate is as a result of the impact of rising interest rates
being offset by a reduction in entity specific risk premiums
included in the discount rate.
The recoverable amount determined for a seven-year cash flow
period for 31 May 2023 and 31 May 2022 would be the same as that
determined for a four-year cash flow period with an adjusted
pre-tax discount rate applied.
6. Goodwill (continued)
Sensitivity to changes in key assumptions
The recoverable amount at 31 May 2023 exceeds the carrying
amount of the cash-generating unit by GBP27.0 million. The
assessment excludes the projected future cash flows arising from
tastytrade's planned expansion outside the US market. Were the
projected cash flows from international expansion included this
would add headroom.
The impact of sensitivities to reasonable changes in a single
variable and the change required to reduce headroom to nil are
shown in the following table
Assumption Sensitivity Reduction Impairment Changes required
applied in recoverable GBPm to reduce headroom
amount (GBPm) to nil
Net trading
revenue growth (5.0)% (104.7) (77.7) 1.2% underperformance
EBITDA margin (10.0)% (85.1) (58.1) 3.2% underperformance
Discount rate 0.5% (29.3) (2.3) 0.6% increase
Long-term
growth rate (0.5)% (17.9) - 0.8% reduction
Key assumptions used in the calculation of the recoverable
amount of the CGUs excluding the US CGU
Future cash flow projections
The future cash flow projections cover a period of four years,
reflecting the period over which the Board strategically assess
performance. Projected revenue is based on assumptions relating to
client acquisition and trading activity, and assumptions on
interest earned on client funds. Projected costs are based on
assumptions relating to revenue-related costs, including trading
and client transaction fees, and structural costs. Projected
profitability takes into account historical performance and the
Group's knowledge of the current market, together with the Group's
views on the future achievable growth.
Regional long-term growth
Regional long-term growth is used to extrapolate the cash flows
to perpetuity for each CGU. After a management forecast period of
four years, a long-term growth rate of 2.0% (31 May 2022: 2.0%) has
been applied to the cash flows to derive a terminal value.
Discount rates
The discount rates used to calculate the recoverable amount of
each CGU are based on a post-tax WACC which is specific to each
geographical region. The discount rate depends on a number of
inputs reflecting the current market assessment of the time value
of money, determined by external market information, and inputs
relating to the risks associated with the cash flow of each
individual CGU which are subject to management's judgement.
The post-tax WACC is grossed up to a pre-tax discount rate. The
pre-tax discount rate applied to calculate the recoverable amount
of each CGU is as follows:
31 May 2023 31 May 2022
UK 14.0% 12.0%
Australia 16.0% 13.0%
South Africa 21.0% 18.0%
6. Goodwill (continued)
Sensitivity to changes in key assumptions excluding the US
CGU
The VIU calculation has been subject to a sensitivity analysis
reflecting reasonable changes in individual key assumptions. For
all goodwill balances, there is sufficient headroom in the
recoverable amount of the CGU based on the assumptions made, and
there is no reasonably likely scenario under which material
impairment could be expected to occur based on the testing
performed.
7. Intangible assets
Customer Trade names Non-compete Internally Domain names Software and Total
relationships agreements developed licences
software
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------------- ------------ -------------- ------------- ------------- -------------- ----------
Net book
value - 31
May 2022 161.9 58.7 25.8 26.7 14.7 4.3 292.1
-------------- -------------- ------------ -------------- ------------- ------------- -------------- ----------
Net book
value - 31
May 2023 147.1 55.2 19.7 34.8 11.0 8.7 276.5
-------------- -------------- ------------ -------------- ------------- ------------- -------------- ----------
8. Financial investments and financial assets pledged as
collateral
31 May 2023 31 May 2022
GBPm GBPm
-------------------------- ------------ ------------
UK Government securities 606.4 351.1
Term deposits - 45.0
-------------------------- ------------ ------------
606.4 396.1
-------------------------- ------------ ------------
Split as:
Non-current portion 379.6 160.1
Current portion 226.8 236.0
-------------------------- ------------ ------------
606.4 396.1
-------------------------- ------------ ------------
The Group held GBP372.3 million UK Government securities as at
31 May 2023 (31 May 2022: GBP289.9 million) to satisfy margin
requirements.
Following the introduction of the Uncleared Margin Rules (UMR)
which came into effect in September 2022, the Group is required to
pledge collateral, which is held in segregated custody accounts, to
meet the initial margin requirements of certain brokers. Previously
initial margin requirements were met with a combination of cash and
UK Government securities held in unsegregated accounts. As a result
of this change, the UK Government securities held by the Group has
increased. The business model for holding UK Government Securities
is unchanged and so the Group continues to recognise and measure
the assets as fair value through other comprehensive income.
Additionally, as at 31 May 2023, the Group holds GBP35.0 million of
financial assets which are not recognised on balance sheet as
collateral from certain brokers to satisfy the requirements of
UMR.
9. Cash and cash equivalents
31 May 2023 31 May 2022
GBPm GBPm
-------------------- ------------ ------------
Cash at bank 627.4 808.9
Money market funds 171.1 437.5
-------------------- ------------ ------------
798.5 1,246.4
-------------------- ------------ ------------
The Group's Swiss banking subsidiary, IG Bank S.A., is required
to protect customer deposits under the FINMA Privileged Deposit
Scheme. At 31 May 2023, IG Bank S.A. was required to hold GBP34.8
million (31 May 2022: GBP35.1 million) in satisfaction of this
requirement. This amount, which represents restricted cash, is
included in the cash at bank balance above.
9. Cash and cash equivalents (continued)
The amount of segregated client funds held at 31 May 2023 was
GBP2,303.9 million (31 May 2022: GBP2,577.9 million). Included
within these balances is GBP232.5 million (31 May 2022: GBP236.7
million) of segregated client funds for customers of the Group's
Japanese subsidiary, IG Securities Limited. Under local Japanese
law, the Group is liable for any credit losses suffered by clients
on the segregated client money balance. These amounts are held
off-balance sheet due to the Group being unable to use these client
funds. The interest received on segregated client funds is included
within net operating income.
Reconciliation to Consolidated Statement of Cash Flows
31 May 2023 31 May 2022
GBPm GBPm
---------------------------------------- ------------ ------------
Cash and cash equivalents 798.5 1,246.4
Amounts due to the Pool (3.3) -
---------------------------------------- ------------ ------------
Balances as per Consolidated Statement
of Cash Flows 795.2 1,246.4
---------------------------------------- ------------ ------------
10. Trade receivables
31 May 2023 31 May 2022
GBPm GBPm
--------------------------- ------------ ------------
Amounts due from brokers 486.6 381.0
Own funds in client money 79.4 85.5
Amounts due from clients 4.4 3.0
--------------------------- ------------ ------------
570.4 469.5
--------------------------- ------------ ------------
Amounts due from brokers represent balances with brokers and
execution partners where the combination of cash held on account
and the valuation of financial derivative open positions, or
unsettled trade receivables, results in an amount due to Group.
Own funds in client money represent 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
GBP24.7 million (31 May 2022: GBP7.6 million) to be transferred to
the Group on the following business day.
Amounts due from clients arise when a client's total funds held
with the Group are insufficient to cover any trading losses
incurred by the client or when a client utilises a trading credit
limit. Amounts due from clients are stated net of an allowance for
impairment.
11. Debt securities in issue
In FY22 the Group issued GBP300.0 million 3.125% senior
unsecured bonds due in 2028. The issued debt has been recognised at
fair value less transaction fees. As at 31 May 2023, GBP1.7 million
unamortised arrangement fees are recognised on the Statement of
Financial Position (31 May 2022: GBP2.0 million).
The Group also has access to a GBP350.0 million revolving credit
facility, which has increased as a result of two accordions to the
existing revolving credit facility being signed in FY23. The Group
has the option to request an increase in the revolving credit
facility size to GBP400.0 million. The Group also had the option to
request a maturity extension of one year, which was exercised in
FY23. The revolving credit facility will now mature in October
2025. In addition, the Group has the option to extend the maturity
for a further year, subject to borrower request and lender
consent.
Under the terms of the revolving credit facility agreement, the
Group is required to comply with financial covenants covering
maximum levels of leverage and debt to equity. The Group has
complied with all covenants throughout the year.
12. Trade payables
31 May 2023 31 May 2022
GBPm GBPm
------------------------ ------------ ------------
Client funds
UK 253.9 359.0
US 56.1 34.1
EU 55.4 71.6
EMEA Non-EU 49.0 48.8
Singapore 1.1 1.5
Japan 4.9 4.4
------------------------ ------------ ------------
Total client funds 420.4 519.4
Issued turbo warrants 2.7 1.5
Amounts due to brokers 48.6 28.0
Amounts due to clients 6.3 22.3
------------------------ ------------ ------------
478.0 571.2
------------------------ ------------ ------------
Client funds reflects the Group's liability for client monies
which are recognised on balance sheet in cash and cash
equivalents.
Amounts due to brokers represents balances where the value of
unsettled positions, or the value of open derivatives positions
held in accounts which are not covered by an enforceable netting
agreement, results in an amount payable by the Group.
Amounts due to clients represent balances that will be
transferred from cash and cash equivalents 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.
13. Contingent liabilities and provisions
In the ordinary course of business, the Group is subject to
legal and regulatory risks in a number of jurisdictions which may
result in legal claims or regulatory action against the Group.
Through the Group's ordinary course of business there are ongoing
legal proceedings and engagements with regulatory authorities.
Where possible, an estimate of the potential financial impact of
these legal proceedings is made using management's best estimate,
but where the most likely outcome cannot be determined no provision
is recognised.
The Group is subject to a group of related claims that could
have a financial impact of approximately GBP20.5 million as at 31
May 2023 (31 May 2022: GBP20.6 million). There have been no
significant developments during the year and it is still not
possible to determine whether any amounts will be payable to the
clients. As a result, no provision has been recognised.
The Group has received notice of a class action served against
one of its operating entities during the financial year ended 31
May 2023. There has been no significant development since the claim
was served and it is not possible to determine amounts that could
be payable to the clients. As a result, no provision has been
recognised.
Under the terms of the agreement with the Group's clearing
broker for its operations in the US, Apex Clearing Corporation, the
Group guarantees the performance of its customers in meeting
contracted obligations. In conjunction with the clearing broker,
the Group seeks to control the risks associated with its customer
activities by requiring customers to maintain collateral in
compliance with various regulatory and internal guidelines.
Compliance with the various guidelines is monitored daily and,
pursuant to such guidelines, the customers may be required to
deposit additional collateral, or reduce positions where
necessary.
The Group does not expect there to be other contingent
liabilities that would have material adverse impact on the Group
Financial Statements. The Group had no material provisions as at 31
May 2023 (31 May 2022: GBPnil).
14. Share capital and share premium
Number of Share capital Share premium
shares account
GBPm GBPm
------------------------------------ ------------- -------------- --------------
Allotted and fully paid:
(i) Ordinary shares (0.005p)
At 31 May 2021 370,299,455 - 125.8
Issued during the year 61,275,000 - -
------------------------------------ ------------- -------------- --------------
At 31 May 2022 431,574,455 - 125.8
Shares bought back and immediately (22,626,613) - -
cancelled
------------------------------------ ------------- -------------- --------------
At 31 May 2023 408,947,842 - 125.8
------------------------------------ ------------- -------------- --------------
In prior year, the Group issued 61,000,000 shares as part of the
total consideration for the acquisition of tastytrade Inc. The
shares were issued on 28 June 2021 and upon issue the total value
of the shares was GBP509.4 million, based on the closing share
price on 28 June 2021. The issue of shares was determined to
qualify for merger relief under section 612 of the Companies Act
2006, and the amount in excess of the nominal value of the ordinary
shares was recognised in the merger reserve, along with issue costs
of GBP0.4 million which were directly attributable to the issue of
the shares.
On 21 July 2022, the Group announced a share buyback programme
with a maximum aggregate market value equivalent to GBP150.0
million, to be completed in two tranches of GBP75.0 million each.
It was also announced that all shares repurchased as part of the
programme would be cancelled. The first tranche commenced on 21
July 2022 and completed on 12 October 2022, with the purchase and
cancellation of 9,613,152 shares. The second tranche commenced on
25 October 2022 completed on 20 March 2023, with the purchase and
cancellation of 9,635,113 shares.
On 25 January 2023, the Board approved an additional share
buyback programme of up to GBP50.0 million. This commenced on 1
April 2023 and as at 31 May 2023 has resulted in the purchase and
cancellation of 3,571,441 shares.
As at 31 May 2023 the Group has repurchased 22,819,706 shares,
with an aggregate nominal value of GBP1,140.99, for total
consideration of GBP176.6 million (including related costs of
GBP0.8 million). As at 31 May 2023 the Group had 193,093 shares
repurchased but not cancelled.
During FY22, 275,000 ordinary shares with an aggregate nominal
value of GBP13.75 were issued to the Employee Benefit Trust to
satisfy the exercise of Sustained Performance Plan and Long-term
Incentive Plan awards for consideration of GBP13.75. No shares were
issued in the current year. Except as the ordinary shareholders
have agreed or may otherwise agree, on winding up of the Company,
the balance of assets available for distribution, after the payment
of all of the Company's creditors and subject to any special rights
attaching to other classes of shares, are distributed among the
shareholders according to the amounts paid up on shares by
them.
15. Subsequent events
During the period from 1 June 2023 to 17 July 2023, the Group
repurchased 3,386,082 ordinary shares with a nominal value of
0.005p for an aggregate purchase amount of GBP23.0 million
(including related costs of GBP0.1 million), bringing the total
number of shares repurchased under the share buyback programme to
26,205,788.
On 19 July, the Board approved an additional share buyback
programme of GBP250 million. It is anticipated that the programme
will commence under the existing shareholder authority granted at
the 2022 AGM and will conclude under the authority proposed for
approval at the 2023 AGM, following approval at the 2023 AGM .
There have been no other subsequent events that have a material
impact on the Group's financial information.
Appendices
Appendix 1
Adjusted total revenue
GBPm FY23 FY22
--------------------------------------- -------- ------
Net trading revenue (Note 2) 941.8 972.3
Interest income on client funds 81.8 3.5
Interest expense on client funds (1.0) (2.7)
Foreign exchange gain associated with
the tastytrade acquisition - (5.8)
--------------------------------------- -------- ------
Adjusted total revenue 1,022.6 967.3
--------------------------------------- -------- ------
Adjusted operating costs
GBPm FY23 FY22
----------------------------------------------------------------- ---------- ----------
Operating costs 583.8 499.2
* Net credit losses on financial assets 1.1 2.7
Operating costs inc. net credit losses 584.9 501.9
* Operating costs relating to the tastytrade
acquisition and integration (2.7) (2.0)
* Amortisation on tastytrade acquisition intangibles
and recurring non-cash costs (37.0) (31.7)
* Operating costs relating to the Nadex sale (4.2) (3.3)
Adjusted operating costs 541.0 464.9
----------------------------------------------------------------- ---------- ----------
Adjusted profit before tax and earnings per share
GBPm (unless stated) FY23 FY22
------------------------------------------------------------------- ----------------- ----------
Earnings per share (p) (Note 4) 86.9 92.9
------------------------------------------------------------------- ----------------- ----------
Weighted average number of shares for the 418.7 426.3
calculation of EPS (millions)
-------------------------------------------------------------------
Profit after tax 363.7 396.1
------------------------------------------------------------------- ----------------- ----------
Tax expense 86.2 80.9
------------------------------------------------------------------- ----------------- ----------
Profit before tax 449.9 477.0
------------------------------------------------------------------- ----------------- ----------
* Foreign exchange gain associated with the tastytrade
acquisition - (5.8)
* Operating income relating to the Nadex sale (3.3) (1.5)
* Operating costs relating to the Nadex sale 4.2 3.3
* Amortisation on tastytrade acquisition intangibles
and recurring non-cash costs 37.0 31.7
* Operating costs relating to the tastytrade
acquisition and integration 2.7 2.0
* Financing costs relating to the debt issuance - 1.0
* Gains on sale of Small Exchange and disposal of Zero
hash - (4.1)
* Movement in the FV of convertible debt associated
with Zero Hash - (9.3)
Adjusted profit before tax (A) 490.5 494.3
------------------------------------------------------------------- ----------------- ----------
Adjusted tax expense (94.0) (83.8)
------------------------------------------------------------------- ----------------- ----------
Adjusted profit after tax 396.5 410.5
------------------------------------------------------------------- ----------------- ----------
Adjusted earnings per share (pence per share) 94.7 96.3
------------------------------------------------------------------- ----------------- ----------
Adjusted total revenue (B) 1,022.6 967.3
------------------------------------------------------------------- ----------------- ----------
Adjusted PBT margin ( A/B) % 48.0% 51.1%
------------------------------------------------------------------- ----------------- ----------
Total revenue - High Potential Markets and tastytrade
GBPm FY23 FY22 Pro forma FY22 Change % Pro forma change %
------------------------ ------ ------ --------------- --------- -------------------
High Potential Markets 207.0 139.7 148.3 48% 40%
Tastytrade 170.3 111.9 120.5 52% 41%
------------------------ ------ ------ --------------- --------- -------------------
Appendix 2
Operating lease net liabilities
GBPm 31 May 2023 31 May 2022
--------------------------------- ------------ ------------
Right-of-use assets(1) 18.5 19.9
Lease liabilities (current) (7.4) (8.9)
Lease liabilities (non-current) (13.3) (13.0)
Operating lease net liabilities (2.2) (2.0)
--------------------------------- ------------ ------------
(1) Amounts identified as right-of-use assets from property,
plant and equipment
Own cash
GBPm 31 May 2023 31 May 2022
------------------------------------------------------------ ------------ ------------
Cash and cash equivalents (Note 9) 798.5 1,246.4
Financial investments - termed cash (Note 8) - 45.0
Less: cash held to meet liquid asset threshold requirement (65.0) (45.5)
Less: amounts due to the Pool (3.3) -
Own cash 730.2 1,245.9
------------------------------------------------------------ ------------ ------------
Issued debt
GBPm 31 May 2023 31 May 2022
------------------------------------------- ------------ ------------
Debt securities in issue (297.6) (297.2)
Unamortised fees capitalised(1) (Note 11) (1.7) (2.0)
Issued debt (299.3) (299.2)
------------------------------------------- ------------ ------------
(1) Unamortised arrangement fees recognised in debt securities
in issue
Financial investments
GBPm 31 May 2023 31 May 2022
--------------------------------------------------------------------------- ------------ ------------
Financial investments and financial assets pledged as collateral (Note 8) 606.4 396.1
Less: Financial investments held at broker (Note 8) (372.3) (289.9)
Financial investments 234.1 106.2
--------------------------------------------------------------------------- ------------ ------------
Net amounts due from brokers
GBPm 31 May 2023 31 May 2022
-------------------------------------------------- ------------ ------------
Financial investments - UK Government securities
held at brokers (Note 8) 372.3 289.9
Trade receivables - amounts due from broker
(Note 10) 486.6 381.0
Trade payables - amounts due to broker (Note
12) (48.6) (28.0)
Other assets 15.0 14.2
Net amounts due from brokers 825.3 657.1
-------------------------------------------------- ------------ ------------
Own funds in client money
GBPm 31 May 2023 31 May 2022
--------------------------------------------------------- ------------ ------------
Trade receivables - own funds in client money (Note 10) 79.4 85.5
Less: trade payables - amounts due to clients(1) (4.3) (21.3)
Own funds in client money 75.1 64.2
--------------------------------------------------------- ------------ ------------
(1) Amounts considered as part of own funds
Liquid asset threshold requirement
GBPm 31 May 2023 31 May 2022
----------------------------------------------------- ------------ ------------
Financial investments - regulatory liquidity
requirements - 61.2
Cash held to meet regulatory liquidity requirements 65.0 45.5
Liquid asset threshold requirement 65.0 106.7
----------------------------------------------------- ------------ ------------
Working capital
GBPm 31 May 2023 31 May 2022
----------------------------------------------------------------- ------------ ------------
Prepayments (non-current) 0.3 -
Prepayments (current) 25.3 23.2
Amounts due from clients (Note 10) 4.4 3.0
Unamortised fees capitalised (Note 11) 1.7 2.0
Other receivables 10.0 9.8
Other payables - other borrowings (1.2) -
Other payables - accruals (109.4) (112.6)
Other payables - payroll taxes, social security and other taxes (3.5) (6.9)
Trade payables - amounts due to clients(1) (2.0) (1.0)
Working capital (74.4) (82.5)
----------------------------------------------------------------- ------------ ------------
(1) Amounts considered part of working capital
Net own funds generated from operations
GBPm FY23 FY22
------------------------------------------------------ ------- --------
Cash generated from operations 221.4 810.6
Interest received on client funds 75.8 3.5
Interest paid on client funds (1.0) (2.7)
------------------------------------------------------ ------- --------
Cash generated from total operations 296.2 811.4
------------------------------------------------------ ------- --------
* Increase in other assets (0.8) (16.1)
* Increase/(decrease) in trade payables 95.3 (209.4)
* Increase/(decrease) in trade receivables 102.5 (37.7)
* Repayment of lease liabilities (7.1) (7.5)
* Interest paid on lease liabilities (0.5) (0.6)
* Fair value movement in gilts (18.1) (3.6)
Own funds generated from operations (A) 467.5 536.5
------------------------------------------------------ ------- --------
Profit before tax (B) 449.9 477.0
------------------------------------------------------ ------- --------
Conversion rate from profit to cash (A/B) % 104% 112%
------------------------------------------------------ ------- --------
Net own funds movement from acquisitions and disposals of
investments in subsidiaries and associates
GBPm FY23 FY22
------------------------------------------------------------------------------------------- ------ --------
Net cash flow to investment in associates - (1.9)
Net proceeds from disposal of subsidiaries 1.8 143.3
Proceeds from disposal of investments in associates, net of cash disposed 0.2 24.5
Net cash flow to acquire subsidiaries (4.8) (193.5)
Net own funds derecognised upon disposal of subsidiary - (2.7)
Net own funds recognised upon acquisition of subsidiary - 15.6
Net own funds movement from acquisitions and disposals of investments in subsidiaries and
associates (2.8) (14.7)
------------------------------------------------------------------------------------------- ------ --------
[1] Discontinued operations consist of the operations of North
American Derivatives Exchange, Inc ("Nadex").
[2] Adjusted metrics exclude revenue and costs relating to
non-recurring or non-cash items. A reconciliation to statutory
measures is in Appendix 1.
[3] Pro forma basis reflects revenue in the comparative period
for the full 12 months, including the period prior to the
acquisition of tastytrade.
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July 20, 2023 02:00 ET (06:00 GMT)
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