REG - IG Group Hldgs plc - Results for the financial year ended 31 May 2024
25/07/2024 07:00
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RNS Number : 7386X IG Group Holdings plc 25 July 2024
LEI No: 2138003A5Q1M7ANOUD76
Results for the financial year ended 31 May 2024
25 July 2024
IG Group Holdings plc ("IG", "the Group", "the Company"), today announces its
results for the 12 months ended 31 May 2024 ("FY24").
Financial highlights 1
Delivered resilient results in slower market conditions and controlled costs
well throughout a period of leadership and organisational change.
- Total revenue of £987.3 million (FY23: £1,022.6 million), down 3%.
- Net trading revenue of £844.9 million (FY23: £941.8 million), down
10% due to reduced trading activity.
- Net interest income increased to £142.4 million (FY23: £80.8
million) reflecting higher interest rates.
- Adjusted 2 profit before tax of £456.3 million (FY23: £490.5
million), down 7%. Adjusted profit before tax margin was within the guidance
range of mid-to-high 40s at 46.2% (FY23: 48.0%). Statutory profit before tax
of £400.8 million (FY23: £449.9 million), down 11%.
- Adjusted basic EPS of 90.3 pence (FY23: 94.7 pence), down 5% on
FY23. Statutory basic EPS of 79.4 pence (FY23: 86.9 pence).
- Total capital return of £422.7 million split across dividends paid
and shares re-purchased in the period (FY23: £363.4 million).
- Proposed an increased total dividend per share of 46.2 pence (FY23:
45.2 pence) and a new share buyback programme of £150 million to be completed
by 31 January 2025.
Strategic and operational highlights
- Following the appointment of Breon Corcoran as CEO in January 2024,
new organisational structure recently created to enhance product velocity and
client centricity. Initiated work to change IG's culture to increase ownership
and accountability.
- Launched an operational improvement programme in October 2023, and
we continue to explore opportunities to enhance efficiency.
- High quality and strength of risk management framework and controls
evidenced by a 40% reduction in the Group regulatory capital requirement in
August 2023.
- Total active clients of 346,200 (FY23: 358,300) down slightly in
markets which were less volatile. First trades of 69,900 (FY23: 72,600) were
down 4%.
- tastytrade delivered record total revenue which increased 23% to
$251.8 million (£200.6 million) from $205.0 million in FY23 (£170.3 million)
reflecting 10% growth in net trading revenue ($160.1 million) and 53% growth
in interest income ($91.7 million).
Financial summary (continuing operations)
£ million (unless stated) FY24 FY24 adjusted FY23 FY23 adjusted Change % Change adjusted %
Total revenue 987.3 987.3 1,022.6 1,022.6 (3%) (3%)
Net trading revenue 844.9 844.9 941.8 941.8 (10%) (10%)
Total operating costs(1,2) 619.6 564.1 584.9 541.0 6% 4%
Profit before tax 400.8 456.3 449.9 490.5 (11%) (7%)
Profit after tax 307.7 350.3 363.7 396.5 (15%) (12%)
Basic earnings per share (p) 79.4 90.3 86.9 94.7 (9%) (5%)
Total dividend per share (p) 46.2 - 45.2 - 2% -
(1) Operating costs include net credit losses on financial assets
(2) FY24 adjusted operating costs exclude £36.4 million of costs and
recurring non-cash costs associated with the tastytrade acquisition and
integration (FY23: £39.7 million), £19.1 million relating to the operational
improvement programme and £4.2 million in FY23 relating to the sale of Nadex.
Breon Corcoran, Chief Executive Officer, commented:
"IG has a sound position in large, growing markets, underpinned by an
established brand and a loyal, high-value client base. However, I've also
identified areas requiring change. We have lots of work to do to take IG to
the next level and address the challenges we face.
"We operate in a competitive industry landscape that is changing rapidly. We
must move at pace to get closer to our customers, give them the products they
want more quickly, enhance efficiency, and add scale to win. My initial
priorities are to increase client centricity, accelerate product velocity and
develop our culture to increase ownership and accountability.
"I'm excited by the enthusiasm of our people and their commitment to
delivering sustainable, stronger growth. I'm confident that we have a solid
platform on which to build."
IG Group Investor Relations IG Group Press FTI Consulting
Martin Price / Simon Wright Angela Warburton Edward Berry / Katherine Bell
020 7573 0020 / 0099 020 7633 5382 07703 330 199 / 079 7687 0961
investors (mailto:investors@iggroup.com) @iggroup.com press@ig.com (mailto:press@ig.com) edward.berry@fticonsulting.com (mailto:edward.berry@fticonsulting.com)
(mailto:investors@iggroup.com)
/ katherine.bell@fticonsulting.com (mailto:katherine.bell@fticonsulting.com)
Further information
Analyst presentation
There will be an analyst and investor presentation at 9:30am (UK Time) on
Thursday 25 July at IG Group, Cannon Bridge House, 25 Dowgate Hill, London,
EC4R 2YA. The presentation will also be available via live audio webcast at
Webcast | IG Group
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. If you wish to listen via conference call, please use the following link
Conference call registration | IG Group
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. The audio webcast of the presentation and a transcript will be archived at:
Financial Results | IG Group
(https://www.iggroup.com/investors/financial-results/results-reports-and-presentations/result/year/2024)
.
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. They also
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. Furthermore, they reflect how 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 also consider the statutory measures.
Refer to the appendices for further information and calculations of
alternative performance measures included throughout this document, and the
most directly comparable statutory measures.
AGM and Board
This year's Annual General Meeting ("AGM") will be held on 18 September 2024.
Further details will be provided in the Notice of Meeting in due course.
Malcolm Le May will retire from the Board at the conclusion of the 2024 AGM.
We thank Malcolm for his strong contribution as a valued member of the Board
during his nine-year tenure.
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 FY23 Group Annual Report for the financial year ended
31 May 2023. The Annual Report can be found on the Company's website
(www.iggroup.com (http://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)
(https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.iggroup.com%2F&data=05%7C01%7CSimon.Wright%40ig.com%7Cfa58780cb4c445598c5a08da3f12df38%7C4b4cca9cedaf42f38e219070c5d9d76b%7C0%7C0%7C637891647530086156%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=ZopP0pt%2Bpil6u7sT7JRD8OjvetOm4sSxJJ%2FDPRvXU2A%3D&reserved=0)
provides online trading platforms and educational resources to empower
ambitious clients around the globe. Headquartered in the UK, IG Group is a
FTSE 250 company that offers clients access to ~19,000 financial markets
worldwide.
Year in Review
The Group delivered resilient results in FY24 in slower cyclical market
conditions, supported by execution of our strategy to expand and diversify by
both product and geography.
Total revenue declined 3% on the prior year, as lower trading revenue was
largely mitigated by stronger interest income. Within total revenue, trading
revenue declined 10% as weaker OTC derivatives revenue was partly offset by
growth in exchange-traded derivatives, with stock trading and investments
revenue flat.
Operating margins remained strong and adjusted costs were relatively well
controlled in the year, increasing 4% on FY23, reflecting the early benefit of
efficiency measures announced in October 2023.
The high quality and strength of our risk management frameworks and controls
was evidenced by a significant reduction in our regulatory capital
requirements in the year.
OTC derivatives
OTC total revenue declined 9% driven by lower trading revenue reflecting
moderation in active clients and lower revenue per client. Active clients
declined 6% in the year, although weakness was largely seen in Q1 and client
numbers were broadly stable over the rest of the period.
Lower trading revenue was partly offset by increased interest income,
reflecting higher monetary policy rates in several countries. These trends
were broadly similar across most geographies except Singapore which delivered
stronger trading revenue reflecting higher volumes from some of our largest
traders.
Trading revenue held up well relative to the decline in volatility across a
range of asset classes as clients remained engaged on our platform and
continued to seek trading opportunities. Trading revenue continued to be
driven by clients onboarded in prior years and retention was consistent with
long-term trends.
Exchange-traded derivatives
Our exchange-traded derivatives (ETD) business is dominated by tastytrade, our
US options, futures and equities business, which generates approximately 94%
of the Group's ETD revenue. Our ETD business also includes Spectrum, the
Group's European multi-lateral trading facility.
tastytrade total revenue increased 23% in the year in US Dollars, reflecting
trading revenue up 10% and interest income up 53%. Stronger trading revenue
was driven by increased revenue per client. Average market share of OCC
options volumes attributable to retail customers was up modestly relative to
the prior year.
Total client equity, which includes free cash and the value of open positions,
reached $5.1 billion at the end of FY24, a new record. Within this,
interest-bearing free cash balances were steady.
tastytrade's performance gathered momentum throughout the year. FY24 was a
record year for total revenue and trading revenue, H2 was a record half on
both metrics, and Q4 was a record quarter.
Almost a third of new tastytrade accounts come from outside the US, despite no
marketing historically, evidencing international demand for US options and
futures. This is also reflected in client surveys which show that our existing
OTC clients are interested in trading US options and futures.
During the year, we completed our preparations to launch tastytrade in the UK,
which went live at the beginning of June 2024. We plan to roll the offering
out to other international markets where IG already has a presence.
Spectrum revenue is driven mainly by trading activity and trading revenue
declined 12% in the year. This reflected a strong Q3 in the comparative
period, and a softer H1 in the current year. As a newer business, with a
smaller client base, revenue can be more volatile than more mature parts of
the Group which are already operating at scale. Active clients were broadly
stable.
Stock trading and investments
Total revenue was up strongly reflecting higher interest income, with trading
revenue broadly flat. Client numbers were down 4% but assets under
administration (AUA) increased to £3.9 billion at the end of FY24 (FY23:
£3.3 billion), driven by market performance.
Operational efficiency
During the year we launched an operational improvement programme and recently
made changes to our organisational structure and culture. These changes will
help us to bring new products to market more quickly and efficiently.
As part of the implementation of our operational improvement programme, we
announced plans to reduce headcount by approximately 300 which represented
around 10% of the total workforce at the end of FY23. We have made good
progress implementing these changes, with headcount at 31 May 2024 of 2,570
down 8% relative to 31 October 2023, when the measures were announced. In
FY24, we incurred £19.1 million of non-recurring costs to achieve these
efficiency measures, in line with guidance of approximately £18 million.
We expect further savings and headcount reduction in FY25 as we focus on the
offshoring of some roles to our global centres of excellence, following a
period of dual running, as new teams are onboarded.
We have implemented a flatter organisational structure and moved several
central functions, including marketing, product management and some technology
teams, into four geographically-aligned divisions to enhance client centricity
and product velocity. We have continued to optimise the way that our global
centres of excellence in Poland, India and South Africa support the business
and identify opportunities to automate business processes. We are also
developing our culture to enhance ownership and accountability across the
organisation.
In the year, we also successfully migrated our data centres to new locations,
ahead of schedule.
Capital allocation
We continue to allocate capital in line with our Capital Allocation Framework.
Our first priority is ensuring that we meet our regulatory capital
requirements. On 1 January 2022, the Group transitioned to the Investment Firm
Prudential Regime ("IFPR"). As announced in September, following the first
Supervisory Review and Evaluation Process ("SREP") under the new regime, the
Group's regulatory capital requirement reduced from £497.4 million at 31 May
2023 to £289.8 million as at 31 August 2023, evidencing the high quality and
strength of our risk management frameworks and controls.
As at 31 May 2024, our Group minimum regulatory capital requirement was
£298.6 million (31 May 2023: £497.4 million) and regulatory capital
resources totalled £936.9 million (31 May 2023: £996.3 million), equating to
headroom of £638.3 million (31 May 2023: £498.9 million).
We continue to allocate 1% of post-tax profits to charitable causes. For FY24,
this equates to £3.5 million which will be proposed to be donated to
charities focused on empowerment through education.
A proposed final dividend of 32.64 pence per share represents a total dividend
for the year of 46.2 pence per share, an increase of 1 pence on the prior
year, representing a progressive and sustainable increase.
Having assessed regulatory capital headroom and alternative uses of capital,
we have announced a £150 million share buyback which will start in the coming
weeks and complete by 31 January 2025.
Outlook and guidance
In FY25, the Group expects total revenue and adjusted profit before tax to be
in line with market expectations which can be found on the IG Group website
(https://www.iggroup.com/investors/analyst-consensus) . The Group tax rate is
expected to be approximately 24%.
IG has solid positioning in large and growing target addressable markets but
there is much more we can do to unlock our potential. We have to get closer to
our customers to deliver better products tailored to their needs more quickly,
drive efficiency and add scale in the pursuit of stronger growth.
We are also developing our culture towards greater ownership and
accountability across the organisation. Delivering against these objectives
will be key to growing our market leadership and achieving sustainable,
stronger revenue growth.
Business Performance Review
All results are presented on a continuing operations basis which excludes
items related to the sale of Nadex operations which completed in FY22 and was
classified as a discontinued operation. In FY23, the Group subsequently
disposed of assets related to Nadex.
The following analysis on the income statement is presented on an adjusted
basis, which excludes certain one-off items and recurring non-cash items.
Further detail on these adjustments and a reconciliation of alternative
performance measures used in this report is contained in the appendix.
Summary Group Income Statement
FY24 FY24 adjusted FY23 FY23 adjusted Change % Change adjusted %
£m
Net trading revenue 844.9 844.9 941.8 941.8 (10%) (10%)
Net interest income 142.4 142.4 80.8 80.8 76% 76%
Total revenue 987.3 987.3 1,022.6 1,022.6 (3%) (3%)
Betting duty and other operating income(1) 1.5 1.5 0.8 (2.5)
Net operating income 988.8 988.8 1,023.4 1,020.1 (3%) (3%)
Total operating costs(2,3) (619.6) (564.1) (584.9) (541.0) 6% 4%
Operating profit 369.2 424.7 438.5 479.1 (16%) (11%)
Other net losses (3.5) (3.5) (2.6) (2.6)
Net finance income 35.1 35.1 14.0 14.0
Profit before tax 400.8 456.3 449.9 490.5 (11%) (7%)
Tax expense (93.1) (106.0) (86.2) (94.0) 8% 13%
Profit after tax 307.7 350.3 363.7 396.5 (15%) (12%)
Weighted average number of shares for the 387.8 387.8 418.7 418.7 (7%) (7%)
calculation of EPS (millions)
Basic earnings per share (pence per share) 79.4 90.3 86.9 94.7 (9%) (5%)
(1) FY23 adjusted betting duty and other operating income excludes £3.3
million of income for the reimbursement of costs relating to the sale of Nadex
(2) Operating costs include net credit losses on financial assets
(3) FY24 adjusted operating costs exclude £55.5 million of one-off items and
recurring non-cash items (FY23: £43.9 million)
Total revenue
Total revenue consists of net trading revenue and net interest income. Total
revenue was £987.3 million in FY24, down 3% on FY23.
Total revenue by product
Total revenue (£m)
FY24 FY23 Change %
OTC derivatives 732.6 806.3 (9%)
Exchange-traded derivatives 214.4 186.5 15%
Stock trading and investments 40.3 29.8 35%
Total revenue 987.3 1,022.6 (3%)
OTC derivatives total revenue was £732.6 million, down 9% reflecting softer
market conditions in the period, and lower levels of client activity.
Exchange-traded derivatives total revenue was £214.4 million, up 15% on the
prior period. This includes tastytrade total revenue of £200.6 million, up
18%, as higher interest rates increased interest income, and net trading
revenue increased 5%. Stock trading and investments total revenue was £40.3
million, up 35% on FY23, reflecting higher interest rates, while net trading
revenue was flat. Non-OTC contributed total revenue of £254.7 million in
FY24, up from £216.3 million in FY23.
Net trading revenue
Net trading revenue was £844.9 million, 10% lower than FY23 due to a
reduction in OTC derivatives revenue.
Net trading revenue performance by product
Net trading revenue (£m)
FY24 FY23 Change %
OTC derivatives 681.0 782.0 (13%)
Exchange-traded derivatives 141.1 137.1 3%
Stock trading and investments 22.8 22.7 0%
Net trading revenue 844.9 941.8 (10%)
Net interest income 142.4 80.8 76%
Total revenue 987.3 1,022.6 (3%)
Active clients (000) Net trading revenue per client (£)
FY24 FY23 Change % FY24 FY23 Change %
OTC derivatives 179.1 189.5 (6%) 3,803 4,126 (8%)
Exchange-traded derivatives(1) 92.5 91.6 1% 1,526 1,490 2%
Stock trading and investments 86.9 90.8 (4%) 263 250 5%
Total(2) 346.2 358.3 (3%)
(1) Exchange traded derivatives revenue per client calculation excludes
revenue generated from the Group's US market maker in FY23.
(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 FY24 there were 12,200 multi-product clients, compared
with 13,700 in FY23.
First
trades (000)
FY24 FY23 Change %
OTC derivatives 41.1 45.5 (10%)
Exchange-traded derivatives 24.0 21.9 10%
Stock trading and investments 8.5 9.6 (12%)
Total(1) 69.9 72.6 (4%)
(1) Total Group first trades have been adjusted to remove the clients who
traded in more than one
product category to give a unique first trade count.
OTC derivatives
OTC derivatives net trading revenue of £681.0 million was down 13%,
reflecting a reduction in client activity, with active clients declining 6% on
FY23 and average revenue per client down 8%. The reduction in active clients
was observed in Q1, with clients remaining stable since. Lower demand in the
market resulted in first trades reducing by 10% on FY23.
OTC derivatives trading revenue declined year-on-year in all geographies, with
the exception of Singapore, where trading revenue of £72.1 million increased
6%, reflecting an increase in trading from our larger clients. Average revenue
per client increased 31%, offsetting a 20% reduction in active clients.
UK and EU trading revenue was £342.5 million, down 14%. Within this, active
clients declined 7% year-on-year and revenue per client was down 8%.
Australia OTC derivatives net trading revenue of £80.9 million decreased 15%,
reflecting lower active clients and revenue per client, down 5% and 10%
respectively.
Japan OTC derivatives net trading revenue was £78.5 million, down 21% against
the record FY23 performance. Active clients were down 2% and revenue per
client was down 19%.
US OTC derivatives net trading revenue decreased 19% as net trading revenue
per client declined 22% year-on-year, while active client numbers were up 4%.
Exchange-traded derivatives
Net trading revenue from exchange-traded derivatives was £141.1 million, up
3% on FY23.
In US Dollars, tastytrade's net trading revenue was up 10% year-on-year to
$160.1 million. In reporting currency, tastytrade's net trading revenue in
FY24 was £127.4 million, up 5% on the prior year. Active clients increased by
1%, while revenue per client increased 4%. First trades in the period
increased by 10% on FY23.
Spectrum's net trading revenue was £13.8 million, 12% lower than FY23. Active
clients increased by 1%, with average trading revenue per client down 13%.
First trades in the period increased 10% on FY23.
Stock trading and investments
Net trading revenue from stock trading and investments was £22.8 million, in
line with FY23. Active clients reduced by 4% on the prior period while average
revenue per client increased by 5%. Assets under administration increased to
£3.9 billion at the end of FY24, up from £3.3 billion at the end of FY23.
First trades were down 12% on FY23.
Net interest income
Net interest income on client balances in FY24 was £142.4 million, up 76% on
the prior year total of £80.8 million as interest rates remained elevated.
Interest income represented 14% of total revenue, increasing from 8% in FY23,
reflecting the consistently high interest rates across the period and
significant client balances.
In our US businesses, client cash balances at the end of the period were $1.9
billion (31 May 2023: $1.9 billion). This contributed £75.6 million of
interest income (FY23: £50.4 million).
Outside the US, client balances of £2.7 billion were in line with prior year
(31 May 2023: £2.7 billion). This included £380.3 million of qualifying
money market funds (31 May 2023: nil) for which the interest is recognised in
net interest income and £430.5 million of client funds on the balance sheet
(31 May 2023: £420.4 million) for which the interest is recognised within net
finance income. Interest income earned on the segregated client money balance
and money market funds was £66.8 million compared with £30.4 million in
FY23.
Adjusted operating costs
Adjusted operating costs exclude £55.5 million of one-off items (FY23: £43.9
million) and recurring non-cash items in order to present a more accurate view
of underlying performance. A reconciliation of alternative performance
measures used in this report is shown in the appendix. Adjusted operating
costs for FY24 were £564.1 million, 4% higher than FY23.
Adjusted operating costs
£m FY24 FY23 Change %
Fixed remuneration 199.1 188.5 6%
Advertising and marketing 83.1 93.5 (11%)
Revenue related costs 57.5 47.9 20%
IT, structural market data and communications 51.5 42.5 21%
Depreciation and amortisation 44.5 29.6 50%
Legal and professional 31.9 25.9 24%
Other costs 50.4 63.1 (20%)
Variable remuneration 46.1 50.0 (8%)
Total operating costs 564.1 541.0 4%
Headcount - average 2,695 2,616 3%
Headcount - year end 2,570 2,672 (4%)
FY24 fixed remuneration was £199.1 million, up 6% on FY23. This reflects
inflationary salary increases, a 3% increase in average headcount across the
period as we continued to invest in the Group's strategic and incubator
projects, and a reduction in the capitalisation of salary costs in year, which
decreased £3 million on FY23. Following the launch of the operational
efficiency programme in October 2023, headcount reduced in H2, with year-end
headcount of 2,570, down 4% on FY23 (FY23: 2,672).
Advertising and marketing spend in the year was £83.1 million, a decrease of
11% as acquisition spend was scaled back in line with lower market demand.
Further savings were realised as a result of more targeted resource allocation
to enhance marketing return on investment.
Revenue related costs include market data charges, client payment charges,
provisions for client and counterparty credit losses and brokerage trading
fees. Revenue related costs increased by 20% to £57.5 million, due to higher
client and counterparty credit losses (increasing to £15.5 million, from
£1.1 million in FY23). This was due to an isolated provision for debts
arising from a small number of professional clients. All other costs in this
category decreased year-on-year, reflecting lower levels of client activity.
IT maintenance, structural market data charges, and communications costs were
£51.5 million, increasing 21% on FY23, reflecting ongoing investment in
technology including security enhancements, deployment of our cloud strategy
and projects to support future growth. Inflationary pressures on contract
renewals also increased costs in this category.
Depreciation and amortisation increased by £14.9 million to £44.5 million in
FY24. Our organisational restructure led to a reprioritisation of certain
investment and development activities. As a result, the remaining value of the
dailyfx.com domain name has been impaired and certain intangible work in
progress has been derecognised leading to non-recurring costs of £11.1
million. The increase also reflects the full year impact of the Small
Exchange, Inc. intangible assets acquired in March of FY23 and an increase in
capital expenditure and internal development in prior periods to support
operational projects, including the data centre migration.
Legal and professional fees were £31.9 million, an increase of 24%,
reflecting higher costs in relation to strategic and operational projects and
ongoing litigation.
Other costs, which include travel and entertainment, regulatory fees and
irrecoverable VAT, decreased by 20% to £50.4 million, reflecting a reduction
in irrecoverable VAT, regulatory fees, and lower staff-related costs.
Variable remuneration of £46.1 million includes the general bonus accrual,
share schemes and sales bonuses. The charge for the general bonus pool was
£21.8 million, down 21% reflecting the Group's performance against internal
targets relative to the comparative period. Share scheme costs, which relate
to long-term incentive plans for senior management, increased by 12% to £18.8
million (FY23: £16.8 million) including one-off acceleration of charges for
outgoing executives' share awards.
Net finance income
Net finance income in the period was £35.1 million, up from £14.0 million in
FY23. Within this, finance income was £59.9 million (FY23: £30.2 million),
partly offset by finance costs of £24.8 million (FY23: £16.2 million). Group
finance costs are largely fixed, however finance income, which reflects the
interest earned on corporate balances including client funds on balance sheet,
benefitted from higher interest rates.
Profit before tax
Profit before tax was £456.3 million on an adjusted basis, down 7% (FY23:
£490.5 million).
Taxation
The adjusted tax expense of £106.0 million (FY23: £94.0 million) is higher
than the prior year, despite lower profit before tax, due to the increase in
the effective tax rate from 19.2% in FY23 to 23.2% in FY24 reflecting the
increase in the UK Corporate Tax rate from 19% to 25% on 1 April 2023.
The effective tax rate continues to be lower than the main rate of UK
Corporate Tax as a result of lower tax rates in overseas jurisdictions where
the Group operates and through the Group's use of standard tax incentives in
line with its tax strategy which is available on the IG Group website.
The Group is not expected to be significantly impacted by the implementation
of a global minimum effective tax rate of 15%. The effective tax rate will
continue to be sensitive to several factors, including taxable profit by
geography, tax rates levied in those geographies, and the availability and use
of tax incentives and tax losses.
Earnings Per Share
Basic earnings per share reduced to 90.3 pence (FY23: 94.7 pence) on an
adjusted basis. This was due to a reduction in adjusted profit after tax of
12%, which was offset by a lower weighted average number of shares, reducing
from 418.7 million shares in FY23 to 387.8 million shares in FY24, as a result
of the ongoing share buyback.
Return of shareholder funds
In line with the Capital Allocation Framework, for FY24 the Board has
recommended a progressive final dividend per share of 32.64 pence (FY23: 31.94
pence). This will be paid on 17 October 2024, following approval at the
Company's Annual General Meeting, to those shareholders on the register at the
close of business on 20 September 2024. This represents a total FY24 dividend
of 46.20 pence per share (FY23: 45.20 pence).
During FY24, the Group has also repurchased 35,727,693 shares for total
consideration of £247.5 million (including related costs of £4.0 million) as
part of the approved share buyback programme.
Summary Group Balance Sheet
The Group continues to operate with a strong and liquid balance sheet, with
net assets at 31 May 2024 of £1,889.5 million (31 May 2023: £2,014.6
million). The balance sheet is presented on a management basis which reflects
the Group's use of alternative performance measures to monitor its financial
position. A reconciliation of these alternative performance measures to the
corresponding UK-adopted International Accounting Standards balances is shown
in the Appendix.
£m 31 May 2024 31 May 2023 Change %
Goodwill 599.0 611.0 (2%)
Intangible assets 216.6 276.5 (22%)
Property, plant and equipment(1) 20.3 17.6 15%
Operating lease net liabilities (2.3) (2.2) 5%
Other investments 1.8 1.2 50%
Investments in associates 9.9 12.5 (21%)
Fixed assets 845.3 916.6 (8%)
Cash(2) 912.3 795.2 15%
Net amounts due from brokers 783.1 825.3 (5%)
Own funds in client money 47.3 75.1 (37%)
Financial investments 115.7 234.1 (51%)
Liquid assets 1,858.4 1,929.7 (4%)
Issued debt (299.5) (299.3) -
Client funds held on balance sheet (430.5) (420.4) 2%
Turbo warrants (4.5) (2.7) 67%
Own funds 1,123.9 1,207.3 (7%)
Working capital (55.2) (74.4) (26%)
Net tax receivable 2.2 2.7 (16%)
Net deferred income tax liability (26.7) (37.6) (29%)
Net assets 1,889.5 2,014.6 (6%)
(1) Excludes right-of-use assets
(2) As per the Consolidated Statement of Cash Flows
The Group continues to be highly cash generative, with £360.0 million (FY23:
£221.4 million) generated from operations. For management purposes the Group
measures the strength of its liquidity position using an own funds measure
rather than cash, which is a combination of assets held by the Group, which
already are, or can be deployed to meet its liquidity requirements, less
restricted cash or amounts payable to clients. This broader measure is a more
stable metric to assess the Group's liquidity position.
The Group saw a decline of £71.3 million in the carrying value of its fixed
assets in the period. Most of the Group's intangible assets, including
goodwill, are US Dollar assets and foreign exchange movements resulted in a
fall in the value of fixed assets by £16.5 million. There was also continued
amortisation of intangible assets associated with the tastytrade acquisition
of £31.3 million and depreciation of the Group's tangible assets of £18.9
million. Organisational changes during FY24 which included allocating
technology and marketing resources from central teams into divisional teams,
resulted in a reprioritisation of internal development activities, and the
derecognition of £3.1 million intangible work in progress. The decision to
discontinue investment in the dailyfx.com website led to an £8.1 million
impairment of the domain name.
The impact on net assets of the fall in value of fixed assets and own funds
was offset by a £19.2 million decrease in working capital requirements and a
£10.4 million fall in current and deferred tax liabilities. Working capital
requirements at 31 May 2024 were lower than at 31 May 2023 due to a lower
bonus reflecting the Group's performance for the year, and higher interest
receivable on Group cash balances due to continued higher interest rates.
Current and deferred tax liabilities have reduced predominately from the
unwinding of a deferred tax liability which was recognised upon the
acquisition of tastytrade.
The Group's own funds decreased by £83.4 million during FY24 due to a £71.3
million decrease in liquid assets and a £10.1 million increase in client
funds on balance sheet. The ongoing share buyback continues to be a key driver
in the reduction of the Group's own funds balance. The Group made cash
payments of £245.6 million (FY23: £175.2 million) to acquire and cancel
shares in the period.
£m (unless stated) FY24 FY23
Own funds generated from operations 453.0 467.5
As a percentage of operating profit 123% 107%
Income taxes paid (102.9) (116.6)
Net own funds generated from operations 350.1 350.9
Net own funds generated from/(used in) investing activities 11.9 (18.8)
Purchase of own shares held in Employee Benefit Trust (13.3) (14.6)
Payments made for share buyback (245.6) (175.2)
Equity dividends paid to owners of the parent (178.3) (188.1)
Net own funds (used in) financing activities (437.2) (377.9)
Decrease in own funds (75.2) (45.8)
Own funds at the start of the period 1,207.3 1,253.8
Decrease in own funds (75.2) (45.8)
Impact of movement in foreign exchange rates (8.2) (0.7)
Own funds at the end of the period 1,123.9 1,207.3
Liquidity
The Group maintains a strong liquidity position, ensuring sufficient liquidity
under both normal circumstances and stressed conditions to meet its liquidity
requirements. These liquidity requirements include broker margin, regulatory
liquidity and working capital needs of its subsidiaries, and the funding of
adequate buffers in segregated client money accounts.
£m 31 May 2024 31 May 2023 Change %
Liquid assets 1,858.4 1,929.7 (4%)
Broker margin requirement (677.7) (678.2) -
Cash balances in non-UK subsidiaries (381.1) (383.5) (1%)
Own funds in client money (47.3) (75.1) (37%)
Available liquidity 752.3 792.9 (5%)
Available liquidity is a measure of the Group's ability to meet additional
liquidity requirements at short notice, typically increases in broker margin.
Balances such as non-UK cash balances and own funds in client money are
excluded from this measure as these cannot be immediately allocated.
The Group optimises its liquidity position by centralising funds within the
UK, where the majority of market risk resides. This ensures sufficient
liquidity can be deployed as required. The Group continually reviews and
optimises the return on deploying this liquidity, through fixed income
instruments, money market funds and bank deposits. Significant time has been
invested into developing strong banking relationships to ensure competitive
interest rates on bank deposits.
The Group's available liquidity is supported by its strong and diverse funding
profile. This includes £328.7 million of liquidity through title transfer
arrangements. The Group has a £400.0 million revolving credit facility and a
£250.0 million committed repo facility providing the ability to quickly and
efficiently convert financial investments into cash.
The Group's funding profile is further supported by its £1.0 billion Euro
Medium-Term Note programme, from which it has £300.0 million notes in issue,
maturing November 2028. The Group maintains an active dialogue with a variety
of debt stakeholders, leading to the Group's long-term credit rating from
Fitch being placed on positive outlook in September 2023.
In addition to the cash recognised on the balance sheet, as at 31 May 2024,
the Group held £2,282.6 million (31 May 2023: £2,303.9 million) of client
money in segregated bank accounts and qualifying money market funds, which are
held separately from the Group's own cash balances. Client balances are
excluded from both the Group's balance sheet and liquid assets as the Group
does not have control over these balances.
Regulatory capital
The Group is supervised on a consolidated basis by the UK's Financial Conduct
Authority (FCA), which requires it to hold sufficient regulatory capital at
both Group and in its UK-regulated entities to cover risk exposures. The
Group's capital headroom was £638.3 million (31 May 2023: £498.9 million).
£m 31 May 2024 31 May 2023
Shareholders' funds 1,889.5 2,014.6
Less foreseeable / declared dividends (118.0) (127.6)
Less remaining share buyback (29.7) (22.5)
Less goodwill and intangible assets (767.3) (829.9)
Less deferred tax assets (24.6) (23.2)
Less significant investments in financial sector entities (11.7) (13.7)
Less value adjustment for prudent valuation (1.3) (1.4)
Regulatory capital resources 936.9 996.3
Total requirement 298.6 497.4
Headroom above minimum capital requirement 638.3 498.9
The Group's regulatory capital resources, which totalled £936.9 million at 31
May 2024 (31 May 2023: £996.3 million) are an adjusted measure of
shareholders' funds. Shareholders' funds comprise share capital, share
premium, retained earnings, translation reserve, merger reserve and other
reserves.
The Group's regulatory capital requirement as at 31 May 2024 was £298.6
million (31 May 2023: £497.4 million), which has reduced significantly
compared to the previous year. The FCA completed its Supervisory Review and
Evaluation Process during the year and the outcome was a reduction in the
overall regulatory capital requirement. This reduction reflects the removal of
the transitional Individual Capital Guidance, and regulatory capital is now
based on the Group's own assessment of capital requirements which varies daily
with our internal risk assessment.
The main factors which drive the Group's internal risk assessment are market,
credit and operational risks. Credit risks include potential client debts in
the event of a sudden market move as well as exposure to hedging
counterparties and banking counterparties should one or more of them default.
Operational risk covers a wide range of potentially severe events, from a
ransomware attack to a manual error when entering a trade on the dealing
system. Market risk varies on a daily basis since the Group is counterparty to
a high volumes of trades from clients around the world and positions are
changing constantly. The largest daily movement in capital requirements during
FY24 was £32.6 million.
The Group also has regulated entities in overseas jurisdictions which are
subject to the rules set by other regulators. These regulations are calculated
on a different basis to the FCA regulations and may result in incremental
capital requirements or the holding of additional buffers.
Consolidated Income Statement
for the year ended 31 May 2024
Year ended Year ended
31 May 2024 31 May 2023
Note £m £m
Continuing operations
Trading 852.4 949.7
revenue
Introducing partner commissions (7.5) (7.9)
Net trading revenue 2 844.9 941.8
Betting duty and financial transaction taxes (5.3) (10.4)
Interest income on client funds 145.7 81.8
Interest expense on client funds (3.3) (1.0)
Other operating income 6.8 11.2
Net operating income 988.8 1,023.4
Operating costs (604.1) (583.8)
Net credit losses on financial assets (15.5) (1.1)
Operating profit 369.2 438.5
Finance income 59.9 30.2
Finance costs (24.8) (16.2)
Share of loss after tax from associates (2.4) (2.6)
Fair value loss on financial investments reclassified on disposal (1.1) -
Profit before tax 400.8 449.9
Tax expense 3 (93.1) (86.2)
Profit for the year from continuing operations 307.7 363.7
Profit for the year from discontinued operations - 1.3
Profit for the year attributable to owners of the parent 307.7 365.0
Earnings per ordinary share for profit from continuing operations attributable
to owners of the parent:
Basic 4 79.4p 86.9p
Diluted 4 78.4p 86.1p
Earnings per ordinary share for profit attributable to owners of the parent:
Basic 4 79.4p 87.2p
Diluted 4 78.4p 86.4p
Consolidated Statement of Comprehensive Income
for the year ended 31 May 2024
Year ended 31 May 2024 Year ended 31 May 2023
£m £m £m £m
Profit for the year 307.7 365.0
Other comprehensive income
Items that may be subsequently reclassified to the Consolidated Income
Statement:
Debt instruments at fair value through other comprehensive income:
- fair value gain/(loss), net of tax
- fair value loss on financial investments reclassified to the
Consolidated Income Statement on disposal
6.9 (11.9)
1.1 -
Foreign currency translation (loss)/gain (22.6) 3.2
Other comprehensive (expense) for the year, net of tax (14.6) (8.7)
Total comprehensive income for the year 293.1 356.3
Total comprehensive income attributable to owners of the parent arising from:
Continuing operations 293.1 355.0
Discontinued operations - 1.3
293.1 356.3
Consolidated Statement of Financial Position
as at 31 May 2024
31 May 2024 31 May 2023
Note £m £m
Assets
Non-current assets
Goodwill 6 599.0 611.0
Intangible assets 216.6 276.5
Property, plant and equipment 41.8 36.1
Financial investments 7 351.4 379.6
Investment in associates 9.9 12.5
Other investments 1.8 1.2
Prepayments 5.4 0.3
Deferred tax assets 3 24.6 23.2
1,250.5 1,340.4
Current assets
Cash and cash equivalents 8 983.2 798.5
Trade receivables 9 508.3 570.4
Financial investments 7 109.3 226.8
Other assets 36.6 15.0
Prepayments 27.4 25.3
Other receivables 15.3 10.0
Income tax receivable 3 10.3 8.8
1,690.4 1,654.8
TOTAL ASSETS 2,940.9 2,995.2
Consolidated Statement of Financial Position
as at 31 May 2024
31 May 2024 31 May 2023
Note £m £m
Liabilities
Non-current liabilities
Debt securities in issue 10 298.1 297.6
Other payables 1.3 1.2
Lease liabilities 15.1 13.3
Deferred tax liabilities 3 51.3 60.8
365.8 372.9
Current liabilities
Trade payables 11 493.3 478.0
Other payables 175.5 116.2
Lease liabilities 8.7 7.4
Income tax payable 3 8.1 6.1
685.6 607.7
TOTAL LIABILITIES 1,051.4 980.6
Equity
Share capital and share premium 13 125.8 125.8
Translation reserve 98.2 120.8
Merger reserve 590.0 590.0
Other reserves 14 (22.9) (16.9)
Retained earnings 1,098.4 1,194.9
TOTAL EQUITY 1,889.5 2,014.6
TOTAL EQUITY AND LIABILITIES 2,940.9 2,995.2
The preliminary announcement was approved by the Board of Directors on 24 July
2024 and signed on its behalf by:
Charles A.
Rozes
Chief Financial Officer
Registered Company number: 04677092
Consolidated Statement of Changes in Equity
for the year ended 31 May 2024
Share capital Share premium Translation reserve Merger reserve Other reserves Retained earnings Total
Note £m £m £m £m £m £m £m
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 income/(loss) for the year - - 3.2 - (11.9) - (8.7)
Total comprehensive income/(loss) for the year - - 3.2 - (11.9) 365.0 356.3
Tax recognised directly in equity on share-based payments 3 - - - - - 1.0 1.0
Equity dividends paid 5 - - - - - (188.1) (188.1)
Movement due to share buyback 13 - - - - (2.1) (176.6) (178.7)
Employee Benefit Trust purchase of own shares 14 - - - - (14.6) - (14.6)
Transfer of vested awards from the share-based payment reserve 14 - - - - (7.6) 7.6 -
Equity-settled employee share-based payments - - - - 13.3 - 13.3
Share-based payments converted to cash-settled liabilities 14 - - - - (2.4) - (2.4)
At 31 May 2023 - 125.8 120.8 590.0 (16.9) 1,194.9 2,014.6
At 1 June 2023 - 125.8 120.8 590.0 (16.9) 1,194.9 2,014.6
Profit for the year and attributable to owners of the parent - - - - - 307.7 307.7
Other comprehensive income/(loss) for the year - - (22.6) - 8.0 - (14.6)
Total comprehensive income/(loss) for the year - - (22.6) - 8.0 307.7 293.1
Tax recognised directly in equity on share-based payments 3 - - - - - 1.4 1.4
Equity dividends paid 5 - - - - - (178.3) (178.3)
Movement due to share buyback 13 - - - - 0.6 (244.7) (244.1)
Employee Benefit Trust purchase of own shares 14 - - - - (13.3) - (13.3)
Transfer of vested awards from the share-based payment reserve 14 - - - - (17.4) 17.4 -
Equity-settled employee share-based payments - - - - 16.7 - 16.7
Share-based payments converted to cash settled liabilities 14 - - - - (0.6) - (0.6)
At 31 May 2024 - 125.8 98.2 590.0 (22.9) 1,098.4 1,889.5
Consolidated Statement of Cash Flows
for the year ended 31 May 2024
( )
Year ended Year ended
31 May 2024 31 May 2023
Restated(1)
Note £m £m
Operating activities
Cash generated from operations(2) 360.0 221.4
Interest received on client funds 142.7 75.8
Interest paid on client funds (2.8) (1.0)
Income taxes paid (102.9) (116.6)
Net cash flows generated from operating activities 397.0 179.6
Investing activities
Interest received 50.6 25.6
Purchase of property, plant and equipment (15.2) (11.6)
Payments to acquire and develop intangible assets (2.3) (14.6)
Net proceeds from disposal of subsidiaries - 1.8
Net proceeds from disposal of investments in associates - 0.2
Proceeds from sale of financial investments 251.8 251.7
Payments for purchase of financial investments (89.9) (477.5)
Net cash flow on acquisition of subsidiaries - (4.8)
Net cash flow on acquisition of other investments (0.6) -
Net cash flows generated from/(used in) investing activities 194.4 (229.2)
Financing activities
Interest paid (18.0) (12.2)
Financing fees paid (3.2) (3.2)
Interest paid on lease liabilities (1.3) (0.5)
Repayment of principal element of lease liabilities (6.6) (7.1)
Payments made for share buyback (245.6) (175.2)
Equity dividends paid to owners of the parent 5 (178.3) (188.1)
Purchase of own shares held in Employee Benefit Trust (13.3) (14.6)
Net cash flows (used in) financing activities (466.3) (400.9)
Net increase/(decrease) in cash and cash equivalents 125.1 (450.5)
Cash and cash equivalents at the beginning of the year 795.2 1,246.4
Impact of movement in foreign exchange rates (8.0) (0.7)
Cash and cash equivalents at the end of the year 8 912.3 795.2
( )
(1) Refer to note 1 for further information
(2) Cash generated from operations includes cash generated from both
continuing and discontinued operations and excludes net interest on client
funds.
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 2024 or 31 May 2023.
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 2024 in August 2024 and these will be delivered to the Registrar
of Companies following the Company's Annual General Meeting on 18 September
2024.
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 2024. 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 2023 Annual Report.
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.
Restatement of comparatives
Proceeds from sale of financial investments of £251.8 million (31 May 2023:
£251.7 million) and payments for purchase of financial investments of £89.9
million (31 May 2023: £477.5 million) were presented on a net basis in prior
year. However, in the current year these balances have been presented as
separate line items in the Consolidated Statement of Cash Flows, in accordance
with requirements of IAS 7 - Statement of Cash Flow. To ensure consistency
with the current year, comparative figures have also been presented
separately.
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 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 comprises net trading revenue and
net interest on client funds.
Total revenue by reportable segment
Net trading revenue represents trading revenue that is generated from clients
trading activities after deducting introducing partner commissions. Net
interest on clients funds represents interest earned on client money balances
after deducting interest paid to clients. These two amounts collectively make
up total revenue. The CODM uses total revenue as the primary measure of
performance of the segments. The CODM considers business performance from a
product perspective, split into OTC derivatives, exchange-traded derivatives,
stock trading and investments and net interest on clients funds. The products
shown in the segmental analysis are aggregated where these products are
economically similar in nature.
2. Segmental analysis (continued)
The segmental breakdown of total revenue is as follows:
Year ended Year ended
31 May 2024 31 May 2023
£m £m
OTC derivatives 681.0 782.0
Exchange-traded derivatives 141.1 137.1
Stock trading and investments 22.8 22.7
Net trading revenue 844.9 941.8
Net interest on client funds 142.4 80.8
Total revenue 987.3 1,022.6
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 2024 31 May 2023
£m £m
Net trading revenue by geography:
UK 280.3 322.0
Australia 84.7 99.8
Japan 78.5 99.3
Singapore 72.4 68.8
EMEA Non-EU 47.8 55.3
Emerging markets 36.7 39.5
UK, APAC & Emerging markets 600.4 648.7
US 143.2 140.9
EU 101.3 116.2
Net trading revenue 844.9 941.8
Net interest on client funds - US 75.6 50.4
Net interest on client funds - Other 66.8 30.4
Total revenue 987.3 1,022.6
The Group does not derive more than 10% of revenue from any one single client.
The segmental breakdown of non-current assets excluding financial investments,
other investments and deferred tax assets, based on geographical location is
as follows:
Year ended Year ended
31 May 2024 31 May 2023
£m £m
US 716.5 770.7
UK 133.3 152.6
EMEA Non-EU 9.1 4.7
EU 8.0 5.7
Japan 2.4 1.9
Australia 2.3 0.4
Singapore 1.1 0.3
Emerging markets - 0.1
Total non-current assets 872.7 936.4
3. Taxation
Tax on profit on ordinary activities
Tax charged in the Consolidated Income Statement:
Year ended Year ended
31 May 2024 31 May 2023
£m £m
Current income tax:
UK corporation tax 68.9 75.1
Non-UK corporation tax 34.6 24.3
Adjustment in respect of prior years 2.0 (6.1)
Total current income tax 105.5 93.3
Deferred income tax:
Origination and reversal of temporary differences (8.4) (7.4)
Adjustment in respect of prior years (2.8) 0.8
Impact of change in tax rates on deferred tax balances (1.2) (0.1)
Total deferred income tax (12.4) (6.7)
Total tax expense 93.1 86.6
Tax expense attributable to:
Continuing operations 93.1 86.2
Discontinued operations - 0.4
Tax expense not charged to Consolidated Income Statement:
Tax recognised in other comprehensive expense 2.2 (6.2)
Tax recognised directly in equity (1.4) (1.0)
Reconciliation of the total tax expense
Year ended Year ended
31 May 2024 31 May 2023
£m £m
Profit before taxation
From continuing operations 400.8 449.9
From discontinued operations - 1.7
Total profit before tax 400.8 451.6
Profit before tax multiplied by the UK standard rate of corporation tax
of 25.0% (31 May 2023: 20.0%) 100.2 90.3
Expenses not deductible for tax purposes 3.0 1.6
Current year losses not recognised as deferred tax assets 1.2 0.3
Adjustment in respect of prior years 0.3 (5.3)
Patent Box deduction (7.0) (3.2)
Recognition and utilisation of losses previously not recognised (2.8) (0.4)
Impact of change in tax rates on deferred tax balances (1.2) (0.1)
Impact of overseas tax rates (0.6) 3.4
Total tax expense attributable to: 93.1 86.6
Continuing operations 93.1 86.2
Discontinued operations - 0.4
The standard UK corporation tax rate for the year ended 31 May 2024 is 25.0%
(31 May 2023: 20.0%). 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:
3. Taxation (continued)
The effective tax rate for the year is 23.2% (31 May 2023: 19.2%).
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 2024 31 May 2023
£m £m
Tax losses available for offset against future profits 4.5 3.8
Temporary differences arising on share-based payments 4.4 4.8
Temporary differences arising on fixed assets - 1.1
Other temporary differences 15.7 13.5
24.6 23.2
Deferred income tax liabilities
31 May 2024 31 May 2023
£m £m
Temporary differences arising on business combinations (47.8) (57.6)
Temporary differences arising on fixed assets (1.3) (0.2)
Other temporary differences (2.2) (3.0)
(51.3) (60.8)
Deferred income tax recovery
31 May 2024 31 May 2023
£m £m
Deferred tax assets to be recovered within 12 months 9.8 4.4
Deferred tax assets to be recovered after 12 months 14.8 18.8
24.6 23.2
Deferred income tax settlement
31 May 2024 31 May 2023
£m £m
Deferred tax liabilities to be settled within 12 months (8.4) (7.4)
Deferred tax liabilities to be settled after 12 months (42.9) (53.4)
(51.3) (60.8)
The recognised deferred tax asset reflects the extent to which it is
considered probable that future taxable profits can be offset against the tax
losses carried forward.
Share-based payment awards have been charged to the Consolidated Income
Statement but are not allowable as a tax deduction until the awards are
exercised. The excess of the expected tax relief in future years over the
amount charged to the income statement is recognised as a credit directly to
equity.
3. Taxation (continued)
Unrecognised deferred tax assets
31 May 2024 31 May 2023
Gross unrecognised losses for tax purposes Tax value of loss Expiry date Gross unrecognised losses for tax purposes Tax value of loss Expiry date
£m £m £m £m
Overseas trading losses 6.0 1.4 N/A 16.1 4.1 N/A
UK capital losses 23.5 5.9 N/A 23.5 5.9 N/A
29.5 7.3 39.6 10.0
The Group has an unrecognised deferred tax asset of £7.3 million (31 May
2023: £10.0 million) in respect of prior and current year losses, the
recoverability of which is dependent on sufficient taxable profits of the
entities.
The movement in the deferred income tax assets included in the Consolidated
Statement of Financial Position is as follows:
Year ended Year ended
31 May 2024 31 May 2023
£m £m
At the beginning of the year 23.2 17.5
Tax credited/(charged) to the Income Statement 4.5 (0.3)
Tax (charged)/credited to other comprehensive expense (2.2) 6.2
Tax credited directly to equity 0.1 0.6
Impact of movements in foreign exchange rates 0.1 -
Reallocations between deferred tax assets and liabilities (1.1) (0.8)
At the end of the year 24.6 23.2
The movement in the deferred income tax liability included in the Consolidated
Statement of Financial Position is as follows:
Year ended Year ended
31 May 2024 31 May 2023
£m £m
At the beginning of the year (60.8) (67.2)
Amounts arising on acquisitions in the year - (0.6)
Tax credited to the income statement 7.9 7.0
Impact of movements in foreign exchange rates 0.5 (0.8)
Reallocations between deferred tax assets and liabilities 1.1 0.8
At the end of the year (51.3) (60.8)
Factors affecting the tax charge in future years
Factors that may affect the Group's future tax charge include the geographic
location of the Group's earnings, the tax rates in those locations, changes in
tax legislation, the recognition of previously unrecognised tax losses and the
resolution of open tax issues. The Group's future tax charge may also be
impacted by changes in the Group's business activities, client composition and
regulatory status, which could impact the Group's exemption from the UK Bank
Corporation Tax Surcharge.
The calculation of the Group's total tax charge involves a degree of
estimation and judgement with respect to the recognition of deferred tax
assets, which are dependent on the Group's estimation of future profitable
income, transfer pricing and of certain items whose tax treatment cannot be
finally determined until resolution has been reached with the relevant tax
authority. The Group operates in a number of jurisdictions worldwide, and tax
laws in those jurisdictions are themselves subject to change.
3. Taxation (continued)
The OECD Pillar 2 global minimum tax rules come into force for the Group from
1 June 2024. The tax footprint of the Group is such that the Pillar 2 rules
are not expected to have a material impact on the Group's tax charge as there
is currently insignificant activity in low tax jurisdictions. The Group has
applied the exception under IAS 12 - Income taxes to recognising and
disclosing information about deferred taxes related to Pillar 2 and therefore,
there was no impact on the recognition and measurement of deferred tax
balances as a result of the legislation being substantively enacted.
The Group determines its tax liability by taking into account its tax risks
and it makes provision for those matters where it is probable that a tax
liability will arise. Tax payable may ultimately be materially more or less
than the amount already accounted for.
4. Earnings per ordinary share
Basic earnings per ordinary share is calculated by dividing the profit for the
year attributable to ordinary equity holders 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. Diluted earnings
per ordinary share is calculated using the same profit figure as used in basic
earnings per ordinary share and by adjusting the weighted average number of
ordinary shares assuming the vesting of all outstanding share scheme awards.
Year ended Year ended
31 May 2024 31 May 2023
Profit attributable to owners of the parent (£m) 307.7 365.0
Weighted average number of shares:
Basic 387,771,781 418,693,685
Dilutive effect of share-based payments 4,648,739 3,869,357
Diluted 392,420,520 422,563,042
Year ended Year ended
31 May 2024 31 May 2023
Basic earning per ordinary share 79.4p 87.2p
- Attributable to continuing operations 79.4p 86.9p
- Attributable to discontinued operations 0.0p 0.3p
Diluted earning per ordinary share 78.4p 86.4p
- Attributable to continuing operations 78.4p 86.1p
- Attributable to discontinued operations 0.0p 0.3p
5. Dividends paid and proposed
Year ended Year ended
31 May 2024 31 May 2023
£m £m
Final dividend for FY23 at 31.94 pence per share (FY22: 31.24p) 126.7 133.2
Interim dividend for FY24 at 13.56 pence per share (FY23: 13.26p) 51.6 54.9
178.3 188.1
A final dividend for the year ended 31 May 2024 of 32.64 pence per share was
approved by the Board on 24 July 2024 and has not been included as a liability
at 31 May 2024. This dividend will be paid on 17 October 2024, following
approval at the Company's Annual General Meeting (AGM), to those members on
the register at the close of business on 20 September 2024.
6. Goodwill
The movement in the goodwill balance for the year is as follows:
31 May 2024 31 May 2023
£m £m
At the beginning of the year 611.0 604.7
Impact of foreign exchange movement (12.0) 6.3
At the end of the year 599.0 611.0
Goodwill has been allocated for impairment testing purposes to the CGUs as
follows:
31 May 2024 31 May 2023
£m £m
US 497.2 509.2
UK 100.9 100.9
South Africa 0.8 0.8
Australia 0.1 0.1
599.0 611.0
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
2023: £nil). 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 is based upon the higher of the
value-in-use (VIU) and the Fair Value Less Cost of Disposal (FVLCD) for each
CGU. For all CGUs, the recoverable amount was higher than the carrying value
and was determined using the VIU method. The Group's largest goodwill balance
is associated with the US CGU.
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 rates.
Future cash flow projections:
The future cash flow projections of seven years were based on the most recent
financial forecasts considered for the US CGU. The future cash flow
projections cover a period of four years, reflecting the period over which the
North American Board strategically assess performance. A declining growth rate
of 14.0% to 6.0% was used to extrapolate net trading revenue in the final year
of the four-year forecast period for a further three years, as the US business
is not expected to reach a steady state growth rate by the end of year four.
The terminal value was calculated based on the seventh year.
6. Goodwill (continued)
The cash flow projections 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 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, whilst operating costs such
as marketing and headcount expenditure are expected to grow to support the
future growth in revenue. The cash flow projections also take into account
assumptions relating to working
capital requirements and capital expenditure.
Long-term growth:
The long-term growth is used to extrapolate the cash flows to perpetuity for
the US CGU. A long-term growth rate of 2.0% (31 May 2023: 2.0%) has been
applied to derive a terminal value based on the cash flows in year seven.
Discount rates:
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 the post-tax WACC. The pre-tax
discount rate applied to the seven-year cash flow period and thereafter is
20.8% (31 May 2023: 19.6%). The year-on-year movement in the discount rate is
as a result of rising interest rates and the change in the weighting between
cost of equity and debt.
Sensitivity to changes in key assumptions
The recoverable amount exceeds the carrying amount of the cash-generating
unit. The impact of sensitivities to reasonable changes in a single variable
and the change required to reduce headroom to nil are shown in the tables
below.
The VIU calculation has been subject to a sensitivity analysis reflecting
reasonable changes in individual key assumptions. The below table shows the
impact of reasonable changes in individual key assumptions for the cash flow
period for 31 May 2024. There is sufficient headroom in the recoverable amount
of the CGU based on the assumptions made.
FY24 Assumption Sensitivity applied Reduction in recoverable amount Impairment Changes required to reduce headroom to nil
£m £m
Net trading revenue rate (5.0)% (131.1) nil 12.0% underperformance
EBITDA margin (10.0)% (101.2) nil 14.4% underperformance
Discount rates 0.5% (34.8) nil 7.0% increase
Long-term growth rate (0.5)% (20.6) nil 7.9% reduction
FY23 Assumption Sensitivity applied Reduction in recoverable amount Impairment Changes required to reduce headroom to nil
£m £m
Net trading revenue rate (5.0)% (104.7) (77.7) 1.2% underperformance
EBITDA margin (10.0)% (85.1) (58.1) 3.2% underperformance
Discount rates 0.5% (29.3) (2.3) 0.6% increase
Long-term growth rate (0.5)% (17.9) nil 0.8% reduction
Key assumptions used in the calculation of the recoverable amount of CGUs
excluding US
Future cash flow projections:
The Group has changed their approach to financial planning, with a shorter
forecasting period being used in response to factors both driven by, and
impacting, the industry. The future cash flow projections now cover a period
of three years, reflecting the period over which the Group 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.
6. Goodwill (continued)
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 three years, a long-term
growth rate of 2.0% (31 May 2023: 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 2024 31 May 2023
UK 14.1% 14.0%
South Africa 19.6% 21.0%
Australia 15.3% 16.0%
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. Financial investments
Year ended Year ended
31 May 2024 31 May 2023
£m £m
UK Government securities 460.7 606.4
Split as:
Non-current portion 351.4 379.6
Current portion 109.3 226.8
460.7 606.4
The Group held £345.0 million UK Government securities as at 31 May 2024 (31
May 2023: £372.3 million) to satisfy margin requirements.
The Group also held £139.2 million (31 May 2023: £35.0 million) of financial
assets as collateral from certain brokers, which are not recognised on balance
sheet.
8. Cash and cash equivalents
31 May 2024 31 May 2023
£m £m
Cash at bank 622.6 627.4
Money market funds 360.6 171.1
983.2 798.5
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 2024,
IG Bank S.A. was required to hold £34.7 million (31 May 2023: £34.8 million)
to satisfy this requirement. This amount, which represents restricted cash, is
included in the cash at bank balance in the table above.
Segregated client funds and client funds invested in qualifying money market
funds amounted to £2,282.6 million as at 31 May 2024 (31 May 2023: £2,303.9
million). Included within these balances is £226.2 million (31 May 2023:
£232.5 million) of segregated client funds for customers of the Group's
Japanese subsidiary, IG Securities Limited. Under Japanese law, the Group is
liable for any credit losses suffered by clients on the segregated client
money balance. The Group also holds similar balances in its German subsidiary,
IG Europe GmbH, where under German law the Group is liable for credit losses
suffered by clients on segregated client money balances, above the deposit
protection insurance offered by the local financial regulator. The Group's
exposure against these balances amounted to £158.4 million as at 31 May 2024
(31 May 2023: £95.4 million). Both 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 2024 31 May 2023
Note £m £m
Cash and cash equivalents as per Consolidated Statement of Financial Position 983.2 798.5
Amounts due to the Pool (70.9) (3.3)
Balances as per Consolidated Statement of Cash Flows 912.3 795.2
9. Trade receivables
31 May 2024 31 May 2023
£m £m
Amounts due from brokers 456.0 486.6
Own funds in client money 49.4 79.4
Amounts due from clients 2.9 4.4
508.3 570.4
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 the Group.
Own funds in client money represent the Group's own cash held in segregated
clients bank accounts, in accordance with the FCA CASS rules and similar rules
of other regulators in whose jurisdiction the Group operates and includes
£16.0 million (31 May 2023: £24.7 million) to be transferred to the Group on
the following business day.
Amounts due from clients arise when clients' total funds held with the Group
are insufficient to cover any trading losses incurred by clients, when clients
utilise trading credit limits or when clients are due to pay the Group fees in
relation to the services received. Amounts due from clients are presented net
of an allowance for impairment.
Allowances for expected credit losses on trade receivable balances are
disclosed in note 30 of the Group Annual Report.
10. Debt securities in issue
The Group issued £300.0 million 3.125% senior unsecured bonds due in 2028.
The issued debt has been initially recognised at fair value less transaction
fees. As at 31 May 2024, £1.4 million unamortised arrangement fees are
recognised on the Consolidated Statement of Financial Position (31 May 2023:
£1.7 million).
The Group also has access to a £400.0 million revolving credit facility,
which increased by £25.0 million in November 2023 and a further £25.0
million in May 2024 as a result of accordions to the existing revolving credit
facility. The revolving credit facility will mature in October 2026, after the
Group exercised its option in October 2023 to extend the maturity for a
further year.
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.
11. Trade payables
31 May 2024 31 May 2023
£m £m
Client funds
UK 280.3 253.9
US 47.8 56.1
EU 41.7 55.4
EMEA Non-EU 53.3 49.0
Japan 6.7 4.9
Singapore 0.7 1.1
Total client funds 430.5 420.4
Amounts due to brokers 54.5 48.6
Issued turbo warrants 4.5 2.7
Amounts due to clients 3.8 6.3
493.3 478.0
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 derivative 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 represents balances that will be transferred from cash
and cash equivalents into segregated client funds on the following business
day in accordance with the FCA CASS rules and similar rules of other
regulators in whose jurisdiction the Group operates.
12. Contingent liabilities and provisions
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 has ongoing litigation in respect of a class action lawsuit served
against two of its operating entities in 2023. The class action covers the
period from May 2017 to August 2023 and relates to the sale of OTC derivative
products to retail clients in Australia. The action is at an early procedural
stage and it is not possible to determine the potential outcome or to reliably
estimate any potential liability, so no provision has been recognised.
The Group is also subject to a group of claims that could have a financial
impact of approximately £19.4 million as at 31 May 2024 (31 May 2023: £20.5
million). The claims are for damages arising from the alleged wrongful
reversal of client nickel trades on 8 March 2022. On 11 July 2024 the Group
obtained a favourable ruling from the High Court of the Republic of Singapore
in relation to one of the claims against the Group, totalling £13.1 million.
There have been no significant developments during the year in relation to the
remainder of the claims. As a result, no provision has been recognised.
12. Contingent liabilities and provisions (continued)
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.
Other than stated above, the Group does not expect there to be other
contingent liabilities that would have material adverse impact on the
Consolidated Financial Statements. The Group had no material provisions as at
31 May 2024 (31 May 2023: £nil).
13. Share capital and share premium
Number of shares Share capital Share premium account
( )
£m £m
Allotted and fully paid
(i) Ordinary shares (0.005p)
At 1 June 2022 431,574,455 - 125.8
Shares bought back and immediately cancelled (22,626,613) - -
At 31 May 2023 408,947,842 - 125.8
At 1 June 2023 408,947,842 - 125.8
Shares bought back and immediately cancelled (35,854,101) - -
At 31 May 2024 373,093,741 - 125.8
(ii) Deferred redeemable shares (0.001p)
At 1 June 2023 65,000 - -
At 31 May 2024 65,000 - -
(iii) Redeemable preference shares (£1.00)
At 1 June 2023 40,000 - -
Redemption of preference shares (40,000) - -
At 31 May 2024 - - -
On 25 January 2023, the Board approved a buyback of up to £50.0 million. This
commenced on 1 April 2023 and completed on 26 July 2023, with the purchase and
cancellation of 3,644,714 shares made during FY24.
On 19 July 2023, the Board approved a £250.0 million buyback programme. This
commenced on 2 August 2023 with a £100.0 million tranche which was completed
on 30 October 2023, with the purchase and cancellation of 15,307,818 shares.
The second £150.0 million tranche began on 7 November 2023 and as at 31 May
2024, 16,775,161 shares had been bought back under this tranche for a total
consideration of £122.0 million.
As at 31 May 2024, the Group has repurchased 35,727,693 shares, with an
aggregate nominal value of £1,786.38, for total consideration of £247.5
million (including related costs of £4.0 million). As at 31 May 2024 the
Group had 66,685 shares repurchased but not cancelled.
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.
13. Share capital and share premium (continued)
Deferred redeemable shares
These shares carry no entitlement to dividends and no voting rights.
During FY24, there have been no changes to the Group's deferred redeemable
shares (31 May 2023: none).
Redeemable preference shares
The Group's preference shares were fully redeemed in December 2023, resulting
in a £nil balance as at 31 May 2024 (31 May 2023: £40,000). The preference
shares are no longer required as part of the Group's capital structure so
approval for redemption was granted by the Board on 18 May 2023.
14. Other reserves
Share-based payments reserve Own shares held Employee Benefit Trusts FVOCI reserve Share buyback reserve Total other reserves
£m £m £m £m £m
At 1 June 2022 18.5 (6.0) (4.1) - 8.4
Share buyback liability - - - (2.1) (2.1)
Employee Benefit Trust purchase of shares - (14.6) - - (14.6)
Transfer of vested awards from share-based payment reserve (7.6) - - - (7.6)
Equity-settled employee share-based payments 13.3 - - - 13.3
Exercise of employee share awards (11.3) 11.3 - - -
Change in value of financial assets held at fair value through other - - (11.9) - (11.9)
comprehensive income
Share-based payments converted to cash-settled liabilities (2.4) - - - (2.4)
At 31 May 2023 10.5 (9.3) (16.0) (2.1) (16.9)
At 1 June 2023 10.5 (9.3) (16.0) (2.1) (16.9)
Share buyback liability - - - (1.5) (1.5)
Transfer of completed share buyback - - - 2.1 2.1
Employee Benefit Trust purchase of shares - (13.3) - - (13.3)
Transfer of vested awards from share-based payment reserve (17.4) - - - (17.4)
Equity-settled employee share-based payments 16.7 - - - 16.7
Exercise of employee share awards (18.1) 18.1 - - -
Change in value of financial assets held at fair value through other - - 6.9 - 6.9
comprehensive income
Share-based payments converted to cash-settled liabilities (0.6) - - - (0.6)
Fair value loss reclassified to Consolidated Income Statement on disposal - - 1.1 - 1.1
At 31 May 2024 (8.9) (4.5) (8.0) (1.5) (22.9)
The share-based payments reserve relates to the estimated cost of
equity-settled employee share plans based on a straight-line basis over the
vesting period. The FVOCI reserve includes unrealised gains or losses in
respect of financial investments, net of tax.
The share buyback reserve relates to the amount due by the Group to the
intermediary bank for the repurchase of the Group's own shares.
14. Other reserves (continued)
Own shares held in Employee Benefit Trusts
The movements in own shares held in Employee Benefit Trusts in respect of
employee share plans during the year were as follows:
Year ended Year ended
31 May 2024 31 May 2023
Number Number
At the beginning of the year 1,332,921 659,929
Subscribed for and purchased during the year 1,845,229 2,112,631
Exercise and sale of own shares held in trust (2,549,838) (1,439,639)
At the end of the year 628,312 1,332,921
The Group has a UK-resident Employee Benefit Trust which holds shares in the
Company to satisfy awards under the Group's HMRC-approved Share incentive
Plan. At 31 May 2024, 160,832 ordinary shares (31 May 2023: 147,895) were held
in the Trust. The market value of the shares at 31 May 2024 was £1.3 million
(31 May 2023: £1.0 million).
The Group has a Jersey-resident Employee Benefit Trust which holds shares in
the Company to satisfy awards under the Long-term Incentive Plan and Sustained
Performance Plan. At 31 May 2024 the Trust held 455,751 ordinary shares (31
May 2023: 1,171,960). The market value of the shares at 31 May 2024 was £3.7
million (31 May 2023: £7.9 million).
The Group has an Australian-resident Employee Equity Plan Trust which holds
shares in the Company to satisfy awards under a SIP. At 31 May 2024, 11,729
ordinary shares (31 May 2023: 13,066) were held in the Trust. The market value
of the shares at 31 May 2024 was £0.1 million (31 May 2023: £0.1 million).
15. Subsequent events
During the period from 1 June 2024 to 22 July 2024, the Group repurchased
2,939,818 ordinary shares with a nominal value of 0.005p for an aggregate
purchase amount of £25.2 million (including related costs of £0.8 million).
The total number of shares repurchased under the share buyback programme since
1 June 2023 up until 22 July 2024 amounted to 38,667,511.
On 11 July 2024, the Group obtained a favourable ruling in respect to a Group
of claims. For further details refer to note 12.
There have been no other subsequent events that have a material impact on the
Group's financial information.
Appendix
Property, plant and equipment excluding right-of-use asset
£m 31 May 2024 31 May 2023
Property, plant and equipment 41.8 36.1
Right-of-use assets (21.5) (18.5)
Property, plant and equipment(1) 20.3 17.6
(1) Excludes right-of-use assets.
Operating lease net liabilities
£m 31 May 2024 31 May 2023
Right-of-use assets 21.5 18.5
Lease liabilities (current) (8.7) (7.4)
Lease liabilities (non-current) (15.1) (13.3)
Operating lease net liabilities (2.3) (2.2)
Own cash
£m 31 May 2024 31 May 2023
Cash and cash equivalents 983.2 798.5
Less: Amounts due to pooling arrangement (note 8) (70.9) (3.3)
Own cash 912.3 795.2
Issued debt
£m 31 May 2024 31 May 2023
Debt securities in issue (298.1) (297.6)
Unamortised fees capitalised (note 10) (1.4) (1.7)
Issued debt (299.5) (299.3)
Net amounts due from brokers
£m 31 May 2024 31 May 2023
Financial investments - UK Government securities held at brokers (note 7) 345.0 372.3
Trade receivables - amounts due from brokers (note 9) 456.0 486.6
Trade payables - amounts due to brokers (note 11) (54.5) (48.6)
Other assets 36.6 15.0
Net amounts due from brokers 783.1 825.3
Financial investments
£m 31 May 2024 31 May 2023
Financial investments (note 7) 460.7 606.4
Less: Financial investments - UK Government securities held at brokers (note (345.0) (372.3)
7)
Financial investments 115.7 234.1
Net deferred tax liability
£m 31 May 2024 31 May 2023
Deferred tax assets (note 3) 24.6 23.2
Deferred tax liabilities (note 3) (51.3) (60.8)
Net deferred tax liability (26.7) (37.6)
Net tax receivable
£m 31 May 2024 31 May 2023
Income tax receivable (note 3) 10.3 8.8
Income tax payable (note 3) (8.1) (6.1)
Net tax receivable 2.2 2.7
Own funds in client money
£m 31 May 2024 31 May 2023
Trade receivables - own funds in client money (note 9) 49.4 79.4
Less: Trade payables - amounts due to clients(1) (2.1) (4.3)
Own funds in client money 47.3 75.1
(1)Amounts considered as part of own funds.
Working capital
£m 31 May 2024 31 May 2023
Prepayments (non-current) 5.4 0.3
Prepayments (current) 27.4 25.3
Amounts due from clients (note 9) 2.9 4.4
Unamortised fees capitalised (note 10) 1.4 1.7
Other receivables 15.3 10.0
Other payables (non-current) (1.3) (1.2)
Other payables - Accruals (98.6) (109.4)
Other payables - Payroll taxes, social security and other taxes (6.0) (3.5)
Trade payables - amounts due to clients(1) (1.7) (2.0)
Working capital (55.2) (74.4)
(1)Amounts considered part of working capital.
Net own funds generated from operations
£m FY24 FY23
Cash generated from operations 360.0 221.4
Interest received on client funds 142.7 75.8
Interest paid on client funds (2.8) (1.0)
Cash generated from operations net of client interest 499.9 296.2
- (Increase) in other assets (21.6) (0.8)
- (Decrease)/increase in trade payables (18.5) 95.3
- Decrease/(increase) in trade receivables (10.2) 102.5
- Repayment of principal element of lease liabilities (6.6) (7.1)
- Interest paid on lease liabilities (1.3) (0.5)
- Fair value movement in financial investments 11.3 (18.1)
Own funds generated from operations (A) 453.0 467.5
Profit before tax (B) 400.8 449.9
Conversion rate from profit to cash (A/B) % 113% 104%
Adjusted operating costs
£m FY24 FY23
Operating costs 604.1 583.8
- Net credit losses on financial assets 15.5 1.1
Operating costs inc. net credit losses 619.6 584.9
- Operating costs relating to the operational improvement (19.1) -
programme
- Amortisation on tastytrade acquisition intangibles and recurring (35.1) (37.0)
non-cash costs
- Operating costs relating to the tastytrade acquisition and (1.3) (2.7)
integration
- Operating costs relating to the Nadex sale - (4.2)
Adjusted operating costs 564.1 541.0
Adjusted profit before tax and earnings per share
£m (unless stated) FY24 FY23
Earnings per share (p) (Consolidated Income Statement) 79.4 86.9
Weighted average number of shares for the 387.8 418.7
calculation of EPS (millions) (note 4)
Profit after tax (Consolidated Income Statement) 307.7 363.7
Tax expense (Consolidated Income Statement) 93.1 86.2
Profit before tax (Consolidated Income Statement) 400.8 449.9
- Operating costs relating to the operational improvement 19.1 -
programme
- Operating costs relating to the tastytrade acquisition and 1.3 2.7
integration
- Amortisation on tastytrade acquisition intangibles and recurring 35.1 37.0
non-cash costs
- Operating costs relating to the Nadex sale - 4.2
- Operating income relating to the Nadex sale - (3.3)
Adjusted profit before tax (A) 456.3 490.5
Adjusted tax expense (106.0) (94.0)
Adjusted profit after tax 350.3 396.5
Adjusted earnings per share (pence per share) 90.3 94.7
Adjusted total revenue (B) 987.3 1,022.6
Adjusted PBT margin (A/B) % 46.2% 48.0%
1 On a continuing operations basis which in FY23 excludes 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 the Appendix.
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