IG Group Holdings Annual Report 2019

FY2019 Annual Report · IG Group Holdings

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ANNUAL
REPORT

IG GROUP
HOLDINGS PLC

COMPANY OVERVIEW 01–23

Highlights
Chairman’s Statement
Chief Executive Officer’s Statement
Our Business
Our Product Suite
A History of Innovation
Our Clients

STRATEGIC REPORT 24–71

Vision and Strategy
Business Model and Risk Profile
Main Trends and Factors Likely to Affect the
Future Development, Performance and Position
of the Company’s Business
Overview of the 2019 Financial Year
Operating and Financial Review
Key Performance Indicators (KPIs)
Risk Management
Corporate Social Responsibility
Going Concern and Viability Statement

GOVERNANCE REPORT 72–133

Chairman’s Introduction to Corporate Governance
Corporate Governance Statement
The Board
Board Governance
Nomination Committee
Directors’ Remuneration Report and Policy
Audit Committee
Board Risk Committee
Directors’ Report
Statement of Directors’ Responsibilities
Independent Auditors’ Report

FINANCIAL STATEMENTS 134–181

01
04
08
16
18
20
22

26
30

35
37
40
52
56
63
71

74
76
78
80
90
93
112
120
123
126
127

SHAREHOLDER AND COMPANY INFORMATION 182–183

OUR
PURPOSE
We exist to empower
informed, decisive,
adventurous people
to access opportunities
in the financial markets.
OUR
VISION
To provide the world’s
best trading experience.

This report is online at | iggroup.com

HIGHLIGHTS

REVENUE(1)

£476.9m

OPERATING PROFIT

£192.9m

NET OWN FUNDS GENERATED FROM OPERATIONS(2)

£159.7m

BASIC EARNINGS PER SHARE

43.1p

TOTAL DIVIDEND PER SHARE

43.2p

(1) Throughout this report ‘revenue’ refers to net trading revenue (ie excluding

interest on segregated client funds and after deducting introducing
partner commissions).

(2) The Group uses alternative performance measures to provide additional

information on the performance of the business. Definitions are included in
the Key Performance Indicators on pages 52-55.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
C
O
M
P
A
N
Y
O
V
E
R
V
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Chairman’s Statement

Chief Executive Officer’s Statement

Our Business

Our Product Suite

A History of Innovation

Our Clients

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

02-23
IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
CHAIRMAN’S STATEMENT

ANDY GREEN

CHAIRMAN

A YEAR
OF PIVOTAL
CHANGE

“ During a pivotal year encompassing
significant change for the business and in
Board membership, IG’s core values of
championing the client, leading the way
and loving what we do have continued to
be a constant, underpinning our decision-
making and helping create the optimal
environment for future growth,
management development and the
development of our strategy.”

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWThe sector IG operates in has come under significant
regulatory scrutiny in recent years. Over the last 12 months
we have seen the regulatory landscape stabilise, particularly
in Europe.

REMUNERATION

We have a remuneration structure which creates a balance
between rewarding performance against annual objectives
and delivering sustainable shareholder value.

The opportunity to serve informed, decisive, adventurous
traders across the world remains very strong. IG has the
people, technology and brand strength to thrive in the
changed regulatory landscape.

My priority this year has been to oversee important changes
to ensure the Company has the ideal board composition,
strategic vision and capabilities to adapt and grow in this
new environment.

STRATEGIC LEADERSHIP

June Felix was appointed as Chief Executive Officer of IG in
October 2018. June brings a wealth of international and
broad financial services experience to IG and the Board.
June has been warmly welcomed by our people across the
Business and amongst key external stakeholders. She is
supported by an excellent executive team and I commend
the broader team for their hard work, skill and leadership
over the year.

I would also like to thank Peter Hetherington for the
tremendous contribution he made as CEO of IG. Peter
stepped down as CEO in September 2018 having served IG
in various capacities for 24 years. Peter was instrumental in
building IG and created an excellent foundation from which
the business can continue to grow.

BOARD EVOLUTION

I have been grateful for the valuable contribution made by
our Executive Directors. Bridget Messer and Jon Noble
joined the Board at the beginning of the year. Their
significant experience and deep knowledge of IG has further
enhanced the quality of debate around the Board table.
I would also like to extend my thanks to Paul Mainwaring
who served as interim CEO while we completed the process
which resulted in June’s appointment, and who has
continued to provide invaluable input to Board debate.

We have also made changes amongst our Non-Executive
Directors. In September 2018, we added two experienced
Non-Executive Directors to the Board. Sally-Ann Hibberd
has a wealth of current and previous Main Market-listed
experience, and Jonathan Moulds brings with him significant
financial services experience at the highest level, as well as a
deep understanding of IG’s products.

I would like to thank Sam Tymms who stepped down from
the Board in March to pursue other opportunities. Sam’s
comprehensive regulatory experience was invaluable while
we navigated the challenges of evolving regulation.

We will be reviewing the Directors’ Remuneration Policy and
the main incentive arrangements during the next few
months to ensure they support the delivery of the new
strategy. We will consult with shareholders as part of
the review.

EARNINGS AND DIVIDENDS

As we guided at the beginning of the financial year, our
revenue and earnings in the 2019 financial year were lower
than in the 2018 financial year. However, as previously
stated, the Board is maintaining the annual dividend at 43.2
pence per share.

The Board intends to maintain this level of dividend until
the Group’s earnings allow for progressive dividends.
This intention reflects the confidence of the Board in the
prospects of the Group, specifically in our ability to deliver
revenue and profit growth. It also reflects the strength of the
Group’s financial position – with respect to both regulatory
capital and liquidity.

We are therefore recommending a final dividend for the
2019 financial year of 30.24 pence per share taking the
full-year dividend to 43.2 pence per share.

IG’s PEOPLE

As a market-leading, innovative financial services company
that delivers through advanced technology, we are driven
by our people. They have a diversity of thought and love of
what they do, which is crucial to our ability to lead the way
in our sector.

Our people have shown significant resilience and creativity
during a period of uncertainty. They have embraced the
new leadership and participated in the development of an
exciting new strategy. They are the embodiment of our
values. They love what they do, lead the way and champion
the client.

Champion the client

Lead the way

Love what we do

Over the last 12 months our people have been instrumental
in delivering key projects for the business, including IG’s
multilateral trading facility (MTF) Spectrum in Germany, and
the launch of IG’s retail foreign exchange dealer (RFED) in
the US. I would like to thank them for their continued
commitment to the Company.

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CHAIRMAN’S STATEMENT CONTINUED

STRATEGY AND FUTURE GROWTH

On 22 May, June Felix unveiled a new growth strategy
that has been well received by our people, clients and
key external stakeholders. The strategy will see IG deliver
growth in its core markets and from significant opportunities,
as it deploys four growth levers. These levers will result in
expanded distribution channels; more tailored products
and marketing; customised offerings for IG’s three client
segments; and an expanded range of innovative products.

In its established core markets, IG will focus on developing
the size and quality of its customer base through localised
products and marketing, and customisation of its offering
for different client segments.

To address the significant opportunities IG will also diversify
into new products and expand its distribution channels.

To achieve this IG will utilise its extensive experience and
adaptable technology to meet the diverse needs of traders
around the world – the team has identified particular
opportunities outside Europe which offer excellent
growth opportunities.

I am confident that IG has the right strategy and right
Executive team and Board to return to growth this year and
continue to deliver sustainable returns to shareholders into
the future.

LOOKING FORWARD

This has been my fifth and final year as Chairman of IG. It has
been a pleasure to serve as Chairman for such a dynamic,
innovative and exciting company. During my tenure we have
gone through a period of unprecedented change across the
industry. I am pleased to see the regulatory landscape begin
to crystallise over the last 12 months, and the Company take
positive steps to ensure we are well-positioned to benefit
and grow in the new landscape. With that in mind I think that
now is a good time for a new Chairman to steer IG through
its next chapter. I will be stepping down at the AGM in
September, and we hope to announce my successor by then.

Andy Green, Chairman
23 July 2019

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWIG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
CHIEF EXECUTIVE OFFICER’S STATEMENT

JUNE FELIX

CHIEF EXECUTIVE OFFICER

MY
PERSPECTIVE
ON IG

“ IG is a business with a clear purpose – to
empower informed, decisive, adventurous
people to access opportunities in the financial
markets – and authentic values that are truly
embodied by our employees and reflected in
our culture: champion the client, lead the way,
love what we do.”

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWINTRODUCTION

I am honoured to have been appointed Chief Executive
Officer of IG Group, especially at such a pivotal time in the
Company’s journey.

I believe that IG is a brilliant company with talented
employees and following a thorough analysis of our
environment, business, people, culture and new market
opportunities, I am pleased to articulate a new growth
strategy for IG that builds on our key strengths.

I am looking forward to sharing my thoughts on IG and our
new strategy with you in this, my first CEO’s statement at IG.

KEY STRENGTHS

In my eight months as CEO of IG Group, and the preceding
three years as a Non-Executive Director, I have seen
first-hand that IG’s long-term success is built on six key
strengths that clearly differentiate us.

Business model and risk management
Our business model ensures alignment between the
interests of our clients and IG, via internalising client
positions (allowing individual client trades to offset against
each other) and a clear hedging policy. Our revenue is
earned from client transaction fees and is driven by client
volumes, not client performance.

This approach supports our long-term focus on sustainable
growth, which has allowed IG to operate successfully for 45
years. During that time we have developed a deep expertise
and created well-established processes and technology for
identifying and managing risks, giving our many
stakeholders confidence that we have the capacity to
manage the risks we face, and can continue to operate even
under stressed conditions.

Brand and reputation
IG is a global leader in online trading and the trusted
partner for more than 178,500 clients. Our focus on these
clients has enabled us to grow internationally while
maintaining our leadership in the UK market. I’m very proud
of our reputation for client-focused, innovative technology,
service and execution.

Clients and client experience
Working at IG, I’ve been struck by the way in which
employees embody our value of championing the client – it
really is their default way of thinking and at the heart of our
corporate culture.

The operating model and offices around the world support
this by allowing us to provide an exceptional 24-hour service
to clients. This has helped us acquire and retain clients of
the highest quality. They are informed, self-directed,
sophisticated traders who are loyal to IG and our services.
I’m delighted that we have the best client tenure statistics in
the industry.

Technology and innovation
Our success has been founded on developing technology
that is market-leading and empowering for clients. We have
an advanced technology estate that combines cutting-edge
proprietary technology with off-the-shelf solutions for
commoditised applications. Over the last 45 years we have
consistently been the first to market with innovative new
products delivered via digital technologies.

Our trading platforms are designed to provide an intuitive,
personalised experience for traders of all styles, allowing
them to trade when they want, what they want, in the size
they want and how they want.

Conduct and standing with regulators
We adhere to the highest regulatory standards, differentiate
ourselves within the industry through our good conduct and
are well-positioned to continue to adapt to regulatory
change and to thrive in an evolving market.

We always seek to operate in the client’s best interests and
ensure that all clients are treated fairly. As an example we
provide educational materials to help our clients understand
our products and services well, so that they gain utility from
trading. This approach results in a high level of trust in the
business by clients and is an important contributor to lasting
client relationships.

We communicate with regulators in an open and constructive
manner, informing them of business plans and ensuring our
actions are consistent with regulatory expectations.

People and culture
In recent months I have had the pleasure of visiting many of
our offices around the world, and have met with hundreds of
our employees. I’ve been consistently impressed by their
passion and ability to deliver. Our experienced, long-serving
team really are our greatest asset. They understand the
obligations that come with being the market leader in a
regulated industry, operating with integrity and with respect
for clients, regulators and other stakeholders.

In summary, IG is a business with tremendous strengths and
dedicated, highly capable employees. We are well-positioned
to continue to navigate and thrive in an evolving regulatory
environment, capitalise on growing and shifting patterns of
wealth, attract an increasing number of self-directed investors
and traders, and actively participate in the continued
evolution of financial markets around the world.

PURPOSE, VALUES AND VISION

IG is a business with a clear purpose – to empower
informed, decisive, adventurous people to access
opportunities in the financial markets – and authentic values
that are truly embodied by our employees and reflected
in our culture: champion the client, lead the way, love what
we do.

As part of our strategic development we reviewed our vision
and updated it to reflect what we are seeking to provide: the
world’s best trading experience.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

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CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED

GROWTH LEVERS

By analysing local markets and our operational capabilities
we identified four levers we will deploy to drive growth.
Three of these are new or have been previously
underutilised and one (multi-product) is a lever we will
continue to deploy.

The levers are:

• Expanded distribution channels

We will create partnerships that accelerate and expand
our reach. For example, we have already had a number of
promising discussions with potential partners in Asia.

• A global firm with more local focus

We will tailor products and marketing to local needs by
integrating more local context and content. In Japan, for
example, we are updating our user experience to ensure
we meet local expectations.
• Segmented target markets

We will customise our offering for our three client
segments (high-value, retail and institutional) to ensure
we meet the needs of each. The services we offer will
reflect the different priorities of each segment. For
example, for the high-value segment we are adding
access to new content and tools to support their
sophisticated trading strategies.

• Multi-product

We will continue to expand our innovative product range,
where appropriate, to empower our clients to access
opportunities in financial markets. During the financial
year we launched a US margined forex business, options
in Europe and developed a multilateral trading facility,
Spectrum, to allow our European clients to trade turbo
warrants on a 24/5 basis.

MEDIUM-TERM FINANCIAL TARGETS

As a result of our new strategy we expect to achieve
the following:

• Core markets

Revenue growth at around 3-5% pa over the
medium term

• Significant opportunities

An increase in revenue of £100 million, to around
£160 million in the 2022 financial year

Achievement of these targets will result in revenue in the
2022 financial year being around 30% higher than in the
2019 financial year.

The Board expects to maintain the 43.2 pence per share
annual dividend until the Group’s earnings allow the Board
to resume progressive dividends.

I’m very proud of our reputation for
industry-leading technology, service
and execution.

JUNE FELIX
CHIEF EXECUTIVE OFFICER

STRATEGIC CHOICES

In pursuing our vision we have made six strategic choices
that underpin how we operate. They are:

• Operate a sustainable business model

• Provide the best client experience

• Win with our technology

• Tailor client propositions

• Broaden our product range

• Extend our geographic reach

OUR BUSINESS TODAY

As part of our strategic development process we
categorised our business into two groups: core markets
and significant opportunities. Our core markets are large
established markets in which we already have a significant
presence; they consist of the UK, EU, EMEA non-EU,
Australia and Singapore. Significant opportunities represent
geographies, client segments and product segments where
we currently have a presence, but there are opportunities to
build on our strengths, serve more clients and deliver
significant revenue growth.

DEVELOPMENT OF OUR STRATEGY

Since my appointment, I have been working with my
executive team and key employees from across the business
to develop an ambitious, bottom-up strategy underpinned
by our six key strengths and aligned with our strategic
choices and values.

This involved an extensive review of our current business
and a critical examination of potential opportunities
undertaken by employees across IG and supported by
external expertise.

We announced the resulting growth strategy on 22 May
2019, and this was well received by internal and key external
stakeholders. We expect that successful delivery of the
strategy will result in revenue in the 2022 financial year
being around 30% higher than in the 2019 financial year. To
achieve this we will deploy four growth levers across our
business units.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWThis is an exciting period for IG as we
evolve the business to ensure it can
continue to deliver strong, sustainable
growth in the long term.

JUNE FELIX
CHIEF EXECUTIVE OFFICER

ORGANISATIONAL DESIGN

In order to support the delivery of our strategy we have
undertaken an organisational design review, in concert with
external consultants. Through this process we identified a
number of design principles that guided our thinking,
including: facilitating quick and effective decision-making,
empowering local teams and enabling a drive for scale.

We have amended our organisational design to allow our
business units (such as the UK, Australia and the US) greater
autonomy to focus on growing the transaction fees we
receive from clients. In doing this our business units will be
assisted by teams such as product and marketing,
technology, and trading and operations who support the
growth and help to convert this to profit. Also within this
support category is our business change team who will
orchestrate the delivery of key projects across our core
markets and significant opportunities.

I am delighted that Jon Noble has agreed to take on a new
role as Chief Operating Officer, responsible for our trading
and operations and business change teams. Jon will be
overseeing delivery of our significant opportunities.

Our business units and support teams are underpinned by
four foundational areas: governance, finance, risk and
compliance, and people, who collectively ensure our
business is sustainable and that we have strong controls.
Finally, our strategy and corporate development team will
help to guide our future as they identify, analyse and, where
appropriate, recommend future investments and
opportunities to the Executive Committee and Board.

LOOKING FORWARD

This is an exciting period for IG as we evolve the business to
ensure it can continue to deliver strong, sustainable growth
in the long term.

To achieve this, we will execute our strategy, enabling us to
take advantage of the tailwinds driving the growth of trading
activity globally and in doing so expect to return to revenue
growth in the coming financial year. I am looking forward to
leading my talented and experienced team and engaging
with our many stakeholders as we do so.

June Felix, Chief Executive Officer
23 July 2019

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED

JUNE FELIX

CHIEF EXECUTIVE OFFICER

INTERNATIONAL
LEADER
HELD SENIOR POSITIONS IN THE US,
EUROPE AND ASIA

APPOINTED CEO 2018

4 YEARS OF EXPERIENCE ON THE
IG BOARD

AWARD WINNING INNOVATOR:
HOLDER OF THE EDISON AWARD
– HONOURING EXCELLENCE IN

TECHNOLOGICAL INNOVATION

ELECTED INTO THE INNOVATORS’
HALL OF FAME

TRACK RECORD
OF DELIVERING
INNOVATIVE STRATEGIC
SOLUTIONS, GROWTH
AND SHAREHOLDER
VALUE AT:

VERIFONE, LED THE COMPANY’S
LARGEST REGION

MANAGED

2,000+

REVENUES
EMPLOYEES ~US$600m

5bn

TRANSACTIONS PER ANNUM

CITIBANK, LED THE TECHNOLOGY TEAM
DELIVERING INNOVATIVE SOLUTIONS

AT CITIBANK LED A TEAM
OF OVER 600 TO BUILD
A REVOLUTIONARY NEW
HEALTHCARE PLATFORM

IBM, DROVE STRATEGY, ALLIANCES
AND INVESTMENTS TO GROW THE
GLOBAL BANKING AND FINANCIAL
MARKETS DIVISION

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWDEEP EXPERTISE IN
BUILDING STRATEGIC
COMMERCIAL
PARTNERSHIPS

A SUCCESSFUL AND HIGH-PROFILE
FEMALE LEADER:
• RANKED AMONG THE MOST

INFLUENTIAL WOMEN IN PAYMENTS

• FOUNDER OF THE WOMEN’S

EUROPEAN NETWORK

• ELECTED TO THE COMMITTEE OF 200

– AN INVITATION-ONLY ORGANISATION OF
THE WORLD’S MOST SUCCESSFUL FEMALE
ENTREPRENEURS AND CORPORATE LEADERS

EXPERIENCE IN:

TECHNOLOGY

DIGITAL

BANKING

PRODUCT
INNOVATION

SALES AND
MARKETING

STRATEGY

NEW BUSINESS

M&A

INNOVATION

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

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CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED

Q&A

REFLECTIONS ON IG

WITH

JUNE FELIX

CHIEF EXECUTIVE OFFICER

Q What attracted you to IG?
A During my career I’ve had

the privilege of building technology-
intensive businesses for more than 25
years, as an executive at well-known
companies including Citi, Chase, IBM
and Verifone. This has taught me
that the most important elements for
a company are its people, its focus
on clients, its technology and its
culture. At IG I see all these things,
and I’m excited by the opportunity.

on the Company?

Q First impressions
A I was initially struck by the

people we have at IG. I have had the
pleasure of getting to know this business
and a number of the executives over the
last four years as both a Non-Executive
and Executive Director of the Board.
What has really impressed me is the
quality and attitude of the people we
have. Not only are they knowledgeable
in our core business – the OTC
leveraged business – but also I have
seen a great attitude toward continuous
personal and team improvement.
It’s certainly a high-performance
team where people support each
other and strive for success.

Q Views on the Company culture?
A I believe that the client-centric

values at IG have been one of the key
reasons for its success to date. IG has
done this really well. Having spoken to
some IG clients, they value the breadth
of products, the excellent execution,
great service, 24/7 access, the pricing
and the great user interface that
makes the overall experience relatively
flawless. IG’s values – ‘champion the
client’, ‘lead the way’, and ‘love what
we do’ – really are at the heart of
IG. These values act as our guiding
star and underpin every decision we
make at every level of the business.

clients, where does that come from?

Q You’re clearly passionate about
A My interest in client-focused

businesses started very early on in my
career. Although a chemical engineer by
education, my first job after university
was at Proctor and Gamble in brand
management and marketing where
I learned that the consumer is your
absolute priority. This was reinforced
when I was at IBM.

IBM became too inwardly focused
and almost went out of business.
Lou Gerstner saved the company by
pushing executives no matter how
senior to spend 40% of their time with
clients. For a business to be successful
you must know, understand and
deliver something that the consumer
really wants. For me clients are key.

previous experience will help IG?

Q How do you think your
A As the President of Verifone,

I saw first-hand how vital it is to have a
superior technical foundation. Because
we had the right technical platform, an
awesome technical team and deep client
understanding we were able to expand
our business and grow the market by
double digits for four years in a row
despite having a 90% market share in
some of our most competitive markets
against very wealthy competitors. From
what I have seen so far IG has also
created an excellent platform and I
believe this will be a major asset that we
can leverage in new ways and markets.

IG’s core strengths are?

Q What do you think
A

1. Business model and risk

management – we focus on building
long-term relationships. Unlike others
in the OTC derivatives business,
our business model is based on
aligning our interests with our clients;
we execute the prices our clients
request ahead of our own, and if
prices improve in the intervening
milliseconds we give our clients
the better price. This is possible
because of the expertise we have
developed over 45 years in business.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEW
IG is fundamentally different in that we
operate a business model that aligns our
interests with that of our clients.

We have been and continue to be the
natural home for the sophisticated
trader. We take appropriateness
incredibly seriously, and if we do not
think our products are for you then
quite simply we do not allow an account
to be opened.

As we have seen in a number of
jurisdictions, when proportionate
regulation is applied consistently,
compliant firms like IG stand
to benefit.

2. Brand and reputation – we have a

3. Focus on family offices and

leadership position in all of our core
markets. When regulators intervene
to raise standards in an industry, our
evidence shows that leaders can
grow not only share but also revenue.

small hedge funds.

4. Create effective partnerships
in Asia to reach new clients
with our capability.

landscape and recent changes?

Q How do you view the regulatory
A Regulators have a vitally

important and complex task
of protecting vulnerable retail
clients from bad outcomes. We
understand and support this. Recent
regulations have been imposed
as a reaction to the behaviour of
other players in our industry.

3. Clients and client experience – we

have a very high-quality set of loyal,
sophisticated self-directed clients.

4. Technology and innovation – we
can create new products quickly,
we have unique ability to face, price
and manage market risk across
a broad set of asset classes, and
offer 24-hour trading even when
the underlying market is closed.

5. Conduct and standing with

regulators – we have constructive
relationships with our regulators
around the world. We operate
not only to the letter but also
to the spirit of regulation.

6. People and culture – our

agile, entrepreneurial team
works relentlessly to deliver an
outstanding client experience.

for next year?

Q What are your priorities
A My strategic priorities are to:

1. Grow our business in the core
markets by taking share with a
particular focus on higher-value,
highly sophisticated retail clients.

2. Capitalise on the investments already
made in the US with our retail foreign
exchange dealer, our multilateral
trading facility Spectrum in Europe,
and knock-out options for Japan.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO

COMPANY OVERVIEW

INTRODUCING IG
IG exists to empower informed,
decisive, adventurous people
to access opportunities in the
financial markets. A technology-
driven global leader in
online trading and an
established member of the
FTSE 250, we have a 45-year
history of providing trading
opportunities to clients around
the globe.

We are the world’s No.1 provider of OTC
leveraged derivatives to retail clients(1),
with sales offices located in 14 countries
and operations in a further two, and
operate globally under the IG brand. We
also operate as the Nadex derivatives
exchange in the US. We are the trusted
platform provider for over 178,500
active clients.

Our suite of products provides efficient,
flexible access to more than 16,000
financial markets for a broad spectrum
of financially sophisticated consumers,
ranging from institutions to active traders
to retail investors. Using our cutting-edge
platforms and apps, our clients place on
average around 7.7 million transactions
a month with us. This translates to an
average of around 350,000 transactions
per day.(2)

(1) Based on revenue excluding FX (from published half

yearly financial statements, June 2019).

(2) Average for the 2019 financial year.

OVERVIEW OF OUR PRODUCT SUITE

OTC LEVERAGED DERIVATIVES
Including contracts for difference
(CFDs) and options

OTC LEVERAGED REVENUE IN FY19

£454.2m

ACTIVE CLIENTS IN FY19

129,700

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FRANKFURT

LONDON HQ

CHICAGO

MADRID

PARIS

GENEVA

OUR GLOBAL OPERATIONS
SALES OFFICES AND OPERATIONAL
HUBS MAP

We have sales offices across Europe, the
Middle East, Africa, Australia, Asia and the
US, and our expertise in online marketing,
search engine optimisation and multi-
language client service enables us to attract
clients with a service tailored to their locale.
With a marketing strategy that combines
global expertise and local knowledge,
we connect with clients around the world
efficiently and cost-effectively.

Our UK headquarters in the City of London
is supported by two major operational
hubs in Krakow and Bangalore. These are
positioned to take advantage of local pools
of talent in a variety of disciplines.

EXCHANGE TRADED
DERIVATIVES
Includes on-venue derivatives, offered
under the Nadex brand

REVENUE IN FY19

£16.8m

ACTIVE TRADERS IN FY19

17,500

OUR BUSINESSTOTAL ACTIVE CLIENTS

178,500

TOTAL EMPLOYEES

1,788

BANGALORE

TOKYO

STOCKHOLM

KRAKOW

ZURICH

MILAN

DUBAI

JOHANNESBURG

SINGAPORE

MELBOURNE

SALES OFFICES

OPERATIONAL HUBS

STOCK TRADING
AND INVESTMENTS
Includes a suite of non-leveraged
investment products

REVENUE IN FY19

£5.9m

ACTIVE CLIENTS IN FY19

37,900

UK HQ &
OPERATIONAL HUBS

EMEA

ASIA PACIFIC

1,360

Employees

174

Employees

173

Employees

£200.0m

Revenue

£111.9m

Revenue

£148.0m

Revenue

£17.0m

Revenue

50,600

Active OTC clients
trading

37,000

Active OTC clients
trading

41,200

Active OTC clients
trading

18,300

Active clients
trading

27,100(1)

Active stock trading and
investment clients

1,000(1)

Active stock trading
clients

9,800(1)

Active stock trading
clients

(1) The number of clients trading individual products is higher than the total 178,500 active clients because

some clients are active across multiple product sets.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
OUR PRODUCT SUITE

Our product range is designed to provide
solutions across the spectrum of our clients’
trading and investment needs.

Our core offering remains OTC leveraged derivatives. We
aim to offer our clients the product that is most suitable
for their local markets, and therefore we offer a variety of
OTC leveraged derivatives to our clients, with our specific
product set depending on the local market and regulatory
environment in each country.

Our OTC leveraged derivatives offering is complemented
by exchange traded derivatives offered on Nadex, and
soon to be offered on our EU MTF (Spectrum). We also
offer a suite of non-leveraged stock trading and
investment products, suiting a broad range of risk
appetites and investment objectives.

OTC LEVERAGED DERIVATIVES

While our leveraged and exchange traded derivatives are
designed for sophisticated, active traders, our stock
trading and investment products extend our reach to
self-directed individuals looking for a cost-effective,
longer-term way to trade and invest.

IG clients are able to access over 16,000 global financial
markets – including shares, forex, indices, commodities
and other instruments – via market-leading platforms and
apps that provide efficient, secure execution.

OTC leveraged derivatives enable clients to take
advantage of changes in an asset’s price, without owning
the asset itself.

Clients can use OTC leveraged derivatives to take a
position in a financial instrument, either buying or selling,
while only putting down a percentage of the value of
their trade as security – known as margin. This is an
extremely efficient way of trading financial markets over
the short term.

We believe in supporting our clients and providing them
with the tools they need to trade successfully. This includes
access to a range of risk-mitigation measures, including
limited-risk products and accounts, as well as stops and
limits. In the UK and EU we provide no-negative protection
at an account level to all our Retail clients, meaning that

should a Retail client’s account dip below zero, we will
bring it back to zero at no cost to them. In other regions we
offer limited-risk accounts. These allow clients to control
their exposure, in line with their risk appetite.

Clients can limit their maximum risk per position by
attaching a guaranteed stop to a CFD position, or if trading
options by purchasing the option. Options enable similar
market access to other OTC derivatives, but when bought
require a full payment up front in the form of a premium.
How the premium is calculated, however, means that this
payment is also usually a fraction of the full value of the
underlying market. This enables clients buying options
to take advantage of market upside, while retaining full
control over their risk. Options are available to our
European clients in two forms – barrier and vanilla options.

WE ARE THE WORLD’S

CFD provider(1)

No.1
>90%of our clients are satisfied with our service(2)

WE HOLD A

37%share of relationships amongst UK

professional traders(3)

(1) Based on revenue excluding FX (published half yearly financial statements,

June 2019).

(2) Client satisfaction surveys.
(3) Investment Trends UK Trading Behaviour Report, May 2019.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEW
STOCK TRADING AND INVESTMENTS

EXCHANGE TRADED DERIVATIVES

Our online, execution-only stock trading service is
powered by the same market-leading technology as our
leveraged OTC offering. It enables self-directed clients
to buy and sell over 12,000 global shares and exchange
traded funds (ETFs), with extremely competitive and
transparent transaction fees. UK clients can choose to
trade within a tax-efficient ISA or SIPP wrapper.

Launched in the UK in 2014, our stock trading offering
has built on our pedigree in the online leveraged trading
sector. Our stock trading service is also available to
clients in Austria, France, Germany, Ireland, Australia
and the Netherlands.

As well as providing our current OTC derivative clients
with facilities to place their non-leveraged portfolio with
us, helping us retain our existing clients, we’re now
attracting a broader audience to IG; around 80% of
clients opening stock trading accounts are new to IG.

IG Smart Portfolios is a discretionary managed
investment service, launched in partnership with
BlackRock in April 2017. It offers a range of portfolios
designed to suit different risk appetites, each
constructed from iShares ETFs that include a blend
of commodities, equities and fixed-income assets
designed to match the risk appetite and investment
objectives of the client.

Nadex is our US derivatives exchange. Nadex’s unique,
retail-sized contracts are designed to give US and
overseas traders short-term opportunities in their
favourite global financial markets. Nadex offers a range of
different products, including exotic options, which allow
clients to trade a variety of market conditions while
limiting their downside exposure. Nadex was the first, and
remains the largest, US-based retail-oriented exchange.(4)

In the year we also completed the build of our European
MTF, Spectrum, and received regulatory authorisation
from BaFin. We will be fully launching the MTF in
September 2019. Our offering will provide clients with a
superior user experience, 24-hour trading, and liquidity
focused on the needs of retail clients. These products
are limited-risk and are targeted at retail clients in
continental Europe, where there is already a sizeable,
well-established market for the product.

(4) Based on volume data for non-intermediated designated

contract markets.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
A HISTORY OF INNOVATION

Key dates

First UK company to
allow OTC leveraged
derivatives on
individual shares.

IG Markets Australia
becomes the country’s
first CFD provider.

Nadex.com
launches
in the US.
IG Markets
introduces
PureDMA.
Office opened
in Sweden.

IG Index founded,
becoming the UK’s
first OTC leveraged
derivatives company.

Launch of browser-
based trading platform.
New offices open in the
US, Spain and France.

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First company in the UK
to offer OTC leveraged
derivatives on the FT30.

New offices
open in Germany
and Singapore.

First company to launch
an online dealing
platform for OTC
leveraged derivatives.

New office opens in
Italy. UK’s first dedicated
OTC leveraged
derivatives iPhone
app launches.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWFor more information | iggroup.com

Execution-only stock
trading introduced as a
complement to our
leveraged trading
offering. IG Bank
opened in Switzerland.

New online trading
platform successfully
rolled out across our
global operations.

Mobile web platform
launched, allowing
seamless use
from desktop to
mobile devices.

IG expands its stock
trading offering into
ISAs and SIPPs. Stock
trading launched in
Australia. Limited risk
accounts rolled out
across the globe.

Launch of our
insight, news and
analysis centre.

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IG Index and IG Markets
offerings brought
together under IG.com.
Introduction of forex
trading via MetaTrader 4
platform.

All-new online trading
platform introduced. IG
Smart Portfolios
launched in partnership
with BlackRock.

Acquisition of the Ideal
CFDs business in South
Africa. CFD iPhone
app launches.

Sunday trading
launched. IG designs
the first trading app for
Apple Watch. New
office opens in Dubai.

Three new
strategic
initiatives are
launched: IG
Europe (client-
facing subsidiary
for EU clients);
Spectrum
(multilateral
trading facility);
and IG US
(US subsidiary
operating
as a retail
forex dealer).

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
OUR CLIENTS

IG has built its name on innovation, fairness
and outstanding client service. It’s a
reputation we have gained over a span of
four decades and are extremely proud of.
We believe it sets us apart from most
companies in our industry. In achieving our
market-leading status, we’ve constantly put
clients at the heart of our business.

A HISTORY OF INNOVATION

Innovation has been central to our business since our
inception in 1974. As a provider of retail OTC derivatives, we
introduced a completely new, accessible way for people to
trade on the price of gold – by defining it as an index.

Over the years, we’ve evolved and broadened our product
offering to meet the changing needs of traders and
investors. From teaching essential trading skills and risk-
management strategies, to providing market news and
analysis, our extensive range of tools and resources is
specifically geared towards empowering our clients to trade
and invest effectively.

Technology has enabled us to continually refine our
marketing techniques. We produce highly targeted
advertising campaigns that introduce our products to the
right audience. A sophisticated application and onboarding
process then ensures that only appropriate clients proceed.
Ultimately, we enable sophisticated clients to access
products that match their trading objectives.

A STRATEGY FOCUSED ON THE CLIENT

Our strategy puts our clients first in all our planning and
decision-making. Supporting our clients is something we
invest in heavily, and we believe it makes good business
sense. The way we choose to operate in pursuit of our vision
aligns with this core value of championing the client (see
page 26 for further information on our vision and strategy).

Our business model is dependent on trading volumes, and
we want our clients to be successful. We therefore provide
extensive educational resources to help our clients identify
opportunities. We also deliver news and analysis that
traders can use to make informed investment decisions,
and we develop technology to help clients trade more
effectively, equipped with the tools they need to seize
opportunities rapidly.

We strive to constantly improve and evolve, always driven by
the feedback from our clients and our understanding of their
changing needs. This has led to enhancements ranging from
developing the first mobile trading app for OTC leveraged
derivatives in the UK in 2008, to the introduction of limited
risk accounts in 2016, and the launch and global rollout of
our new web trading platform during 2017 and 2018. In 2019
we announced an exclusive partnership with Real Vision,
delivering content normally reserved for institutional
investors to our premium and professional clients.

This client-centric approach is central for our people, too,
and everyone at IG lives by a set of values that guide how
we do business.

A culture of regulatory compliance
Compliance is not just a team of people at IG, it’s a concept
central to our culture. We have closely tracked and informed
the development of regulation, and are well-placed to deal
with regulatory change given our sophisticated client base
and scale. Awareness and respect for the regulatory
framework is embedded throughout the organisation, and is
taken into account from the very beginning of a product’s
design through the entire client journey. At every stage of
the client experience we describe here, compliance is key.

Comprehensive early client support
We work to provide the best client experience in the
industry, whichever stage of the journey a client may be at.
When a client first joins us, we understand they may
sometimes feel a little daunted. Even the most experienced
trader needs time to adjust to a new platform. To ensure
clients are properly supported in those early days, we
employ a professional new business team to introduce
them to IG and to explain exactly what they can do with
our platforms.

Our new business teams are there to support new clients.
They do this by gaining an understanding of what the client
wants to achieve, and are well-equipped to explain how our
products and services can help realise those aims.

Importantly, the new business team also provides another
layer of client-appropriateness assessment. Our people are
trained to evaluate, during their conversations, whether the
client has a realistic expectation of IG and our products.

During this fledgling stage of our relationship, we actively
encourage clients to use our range of educational materials,
and we build their awareness of the up-to-the-minute
trading news and research we provide via channels such as
DailyFX and IGTV.

Consistent and continued access to expertise
Once clients have become acquainted with IG, we offer
them ongoing support and assistance via our trading
services teams. Available 24 hours a day from 8am Saturday
to 10pm Friday, members of this team are experts in our
products, and are responsive and entirely customer-focused.
If clients have questions about our products, want to know
how our platforms work or have any other type of enquiry,
they can get help from our trading services team around the
clock. And with native speakers from every territory in which
we are present – all available via phone, email or web chat
– we make it as easy as possible for clients to get the
information they need, quickly and in the way they want it.

We manage and capture all of our interactions with clients
using sophisticated technology. This ensures we can
understand the whole relationship we have with each client,
and have people available to meet their requirements
on demand.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWOUR PURPOSE

IG exists to empower informed, decisive, adventurous
people to access opportunities in the financial markets.

OUR VALUES

CHAMPION
THE CLIENT

Understand them. Be part of their whole experience.
Think big, think long-term. Make every moment count
and stick with them all the way. Do what matters most.

LEAD
THE WAY

Be brave. Back yourself. Innovate and adapt to win.
Challenge assumptions, ideas, decisions.
Ask why. Stand up and speak your mind.
Achieve. Do the right thing.

LOVE WHAT
WE DO

Make it personal. Care, be passionate, have fun.
Respect our diversity and learn from each other. Share
your enthusiasm. Take pride in each other’s
achievements. Work as a team.

OUR VISION

To provide the world’s best trading experience.

In recognition of our commitment to clients, and to ensure
we’re delivering ‘best practice’ service, we continue to be
members of the Institute of Customer Service. This enables
us to have our service standards independently appraised
and verified according to nationally recognised standards.

MARKET-LEADING TECHNOLOGY

We recognise that our technology is central to the customer
experience, and we seek to get it just right. We invest
heavily in IT development, and are continually looking at
ways in which we can improve the tools clients use to
engage, invest and trade with us.

Our flexible and scalable technology estate – comprising
front-end platforms, support systems and execution systems
– is designed around a modular build concept, easily
allowing us to recombine and reuse components.

We believe clients should be empowered by the technology
we offer and not restricted by it, so in the past few years we
have introduced significant advancements to help our clients
trade more effectively.

In the 2019 financial year, we’ve delivered a breadth of client
projects thanks to our proprietary technology capability.
Clients can now trade a range of new products including
turbos, options and knock-outs, and we have brought our
exceptional service to US margin forex clients by launching a
US retail foreign exchange dealer (RFED).

EXTENSIVE LEARNING RESOURCES

For all our clients, we provide access to a myriad of
educational resources, prepared using our long-standing
expertise in the key knowledge areas required for successful
trading. This includes materials to help people learn
common trading techniques, as well as instructional content
that demystifies industry jargon and guides clients through
every part of our product suite and platforms.

Our investment in education and training is extensive,
and has a single purpose – to help people become more
successful traders. Through our free IG Academy app
and website, for example, clients can learn via interactive,
step-by-step trading courses and webinars aimed at all
experience levels. Likewise, our extensive collection of online
how-to videos is accessible at any time to help clients
enhance their knowledge. For premium and professional
clients, we also offer a free subscription to Real Vision. This
financial media service gives our highest-value clients access
to a wide range of expert-led trading-related online television
shows, providing insight from hard-to-access guests who
won’t often appear on mainstream financial channels.

It’s our strong belief that by using appropriate educational
materials and having reliable information at their fingertips,
our clients can make better trading decisions.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
I

S
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R
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P
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Vision and Strategy

Business Model and Risk Profile

Main Trends and Factors Likely to Affect the Future
Development, Performance and Position of the
Company’s Business

Overview of the 2019 Financial Year

Operating and Financial Review

Key Performance Indicators (KPIs)

Risk Management

Corporate Social Responsibility

Going Concern and Viability Statement

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

24-71
IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
VISION AND STRATEGY

On 22 May 2019 IG provided an update on its strategy and
medium-term financial targets. The Group’s purpose – to
empower informed, decisive, adventurous people to access
opportunities in financial markets – has not changed. The
Group’s values – to champion the client, lead the way, and
love what we do – are also unchanged. These values are
clear, they match the culture of the people at IG, they are
authentic, and they are what defines the Company.

E R A T E A S U S TAINABLE BUSINESS M

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TAILOR CLIENT PRO P O S I T I O N S

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORT

For the purposes of developing and presenting its strategy,
IG categorised its existing businesses into two groups: core
markets and significant opportunities. The core markets
consist of the UK, EU (CFDs), Australia, Singapore and EMEA
non-EU. These are large and established markets in which
the Group already has a significant presence, with strong
market shares, particularly amongst the highest-value
traders. The significant opportunities represent
geographies, client segments and product segments where
the business currently has a presence, but where there are
opportunities to build on its existing strengths to serve
more clients and to deliver significant revenue growth.

The Group’s vision is to provide the world’s best
trading experience.

In pursuit of that vision the Group has made six strategic
choices that underpin how the Group operates, and
how it intends to continue to deliver value for clients
and stakeholders.

Operate a sustainable business model
IG’s business model is based on giving clients the
opportunity to trade the world’s financial markets, in
exchange for fair and proportionate transaction fees; in
doing so the Company seeks to develop long-term
relationships based on mutually aligned interests.

IG’s business model (see Business Model and Risk
Profile, p30) negates the potential conflicts that can
arise in an OTC business, as IG internalises client flow
and hedges residual exposure when it exceeds IG’s
Board-Approved Limits. This approach, which is enabled
via IG’s scale, aligns the Company’s interests with
those of its clients and reduces the cost of hedging,
as well as reducing the variability of its revenue.

It also allows IG’s clients to benefit from the Company’s
exceptional execution and deep liquidity, which combines
market liquidity and the Company’s internal liquidity
to maximise the likelihood of execution while minimising
price impact.

Provide the best client experience
IG has an established culture of championing the client, and
a part of that is providing low-friction, seamless and
engaging client experiences. The design of the Company’s
front-end onboarding and administrative processes – for
example, electronic ID verification allowing swift and easy
account opening – is focused on minimising effort (and
maximising delight) on the part of its clients.

IG ensures that thread continues through the operation of
client-facing teams, where clients can contact a trading
services team 24 hours a day from 8am Saturday to 10pm
Friday, and 75% of calls are picked up in under 15 seconds(1).
High-value clients receive dedicated support from premium
client management teams, as well as access to exclusive
content and events. This support underpins IG’s long-term
relationships with its clients.

Further into their journey, IG wants clients to have access to
all the support they need – whether through free analysis

(1) Based on internal data, April-June 2019.

and market commentary, end-to-end education in the form
of IG Academy or, for premium clients, exclusive content
from financial media company Real Vision.

Win with our technology
The size and skill of IG’s internal development team (38% of
employees work in technology) allows the Company to
deliver a broad, flexible system that comprises IG’s own
proprietary technology, as well as third-party solutions
purchased off the shelf for commoditised applications.

The modular nature of this system allows IG to re-use and
re-deploy existing technology across front-end and
execution platforms, as well as support systems, to quickly
and cost-effectively react to new opportunities.

Tailor client propositions
IG segments its client base to be able to deliver tailored
content and services. The three key segments are high-
value, retail, and institutional. The offering each segment
receives is individual, providing clients with engaging
products to access the markets they want, how they want.

Broaden our product range
Markets vary in their consumer preferences, commercial
opportunities and regulatory environment. Therefore, while
IG provides products that enable clients to cost-effectively
access financial markets in a leveraged manner, it does
vary the products offered in any given region to suit the
local environment.

Extend our geographic reach
IG wants to enter new, exciting markets where it sees real
opportunity that can be sustained over the longer term. In
doing so, the Company combines the scale and depth of
expertise of a global business with the regional knowledge
and awareness of a local business.

THE BUSINESS TODAY

IG has experienced significant change over its 45-year
history and will continue to do so – driven by an evolving
regulatory environment, shifting patterns of wealth, and the
continued evolution of financial markets around the world.
The Group operates in a regulated environment, and
changes in regulations, such as the European Securities and
Markets Authority (ESMA) product intervention measures
which came into effect during the 2019 financial year, can
have a significant impact in the short term on the Group’s
business. In IG’s experience, when proportionate regulation
has been applied consistently and appropriately, client
outcomes have improved, and compliant providers have
benefited over the longer term. The Company adheres to
the highest regulatory standards, differentiates itself within
the industry through its good conduct, and believes it is
well-positioned to continue to adapt to regulatory change
and to thrive in an evolving market.

The Group benefits from the increasing demand for
leveraged trading as a result of increasing wealth, growing
self-direction and growing interest in international assets,
which act as strong tailwinds for the Group.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
VISION AND STRATEGY CONTINUED

The Group believes that its leadership position across many
markets around the world, and its strategy, positions it to
maximise the opportunities presented by these tailwinds.

GROWTH LEVERS

CORE MARKETS

The Group generated revenue in its core markets of the UK,
EU (CFDs), Australia, Singapore and EMEA non-EU of
£417.4m in the 2019 financial year.

The business has identified four growth levers that will be
deployed as the Company seeks to grow in its core markets,
and to expand into new products and geographies. How the
levers are deployed, and the number of levers deployed
varies depending on the individual requirements of each
geography and market.

The demand for OTC leveraged derivatives in these markets
is expected to continue to grow. The Group expects to
benefit from this underlying market growth and to gain
market share through better client segmentation and
localisation, focusing on the high-value and institutional
client segments.

Expanded distribution channels
The majority of IG’s business today is based on a direct
relationship with its clients, although it does work with a
range of partners across its geographic footprint. As the
Company moves into new markets it will seek to accelerate
its growth by expanding the range of partners it works with,
allowing the Company to scale its distribution and reach
new clients quickly.

A global firm with more local focus
IG is seeking to enter new, exciting markets where it has
identified significant opportunities that can deliver
sustainable growth over the longer term. How IG chooses to
enter these markets will depend on local characteristics. IG
will draw on its proven centralised expertise, combined with
deep understanding of the local market, to tailor products
for individual markets and client segments, delivering
engaging experiences for all of its clients.

Segmented target markets
IG serves a wide range of client segments including
high-value, retail and institutional. Each segment has
different needs and objectives, and IG customises its
offering for each. High-value clients receive preferential fees
and exclusive content through relationships with partners
such as Real Vision. Retail clients have access to IG’s broad
product range and easy-to-use risk-management features,
receiving tailored experiences powered by machine
learning. IG’s institutional clients benefit from its global,
multi-asset product range, exceptional liquidity and access,
via IG, to its tier one prime brokers. IG will continue to
evolve its offering for each segment.

Multi-product
IG recognises that markets differ in the preferences of their
consumers and in their regulatory environment. By focusing
on delivering products that enable clients to cost effectively
access financial markets, IG is able to adapt the product
offering in any given region to suit the local environment.
IG’s products can be categorised in three groups:

• OTC leveraged derivatives

• Exchange traded derivatives

• Non-leveraged products, including cash equities and a

managed investment service

The business regards itself as the natural home for the
highest-value clients, and aims to further develop the size
and quality of its client base in these markets – the long-
term driver of growth for the business.

SIGNIFICANT OPPORTUNITIES

The significant opportunities represent areas where IG sees
itself as well-placed to capitalise on its existing strengths to
gain significant revenue growth. In the 2019 financial year,
the Group generated £59.5m of revenue in these markets.

EU (new products)
The Group believes that the opportunity to launch new
leveraged trading products in the EU is substantial. Through
the launch of IG’s multilateral trading facility (MTF),
Spectrum, the Group is seeking to take a meaningful share
of the on-venue turbo market which it has not previously
addressed. Spectrum will launch with turbos on equity
indices, currencies and commodities, and the aim is to
expand that product set to include single-name equities in
the future. The Group expects to attract other brokers to the
Spectrum offering.

US
The combination of the Group’s long-established retail
derivatives exchange, Nadex, with its recently launched
OTC forex business provides IG with a unique product
set to promote to the market. The Group believes that as
one of four providers, it will capture a significant share
of the OTC forex market, through its compelling pricing
and client service offer. The Group will also be able to
take full advantage of the US leads generated from its
DailyFX website.

Japan
The size of the leveraged derivatives market in Japan is
significant and IG’s share, although improved in the 2019
financial year through the launch of new products, remains
small. The Group is targeting significant further uplift in
market share and revenue through localisation of the
product set and an increase in marketing activity. The Group
has also invested in new leadership and will seek to develop
partnerships with local providers who benefit from a large
existing client base.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTEmerging markets
The Group is seeking to achieve a step change in its scale,
predominantly in Asian markets, where it does not currently
have a physical presence, by establishing partnerships with
licensed entities. The quality of the product set and
technology and the scale of the business make IG an
attractive partner in this region. The Group is establishing a
local business development presence in this region to
facilitate partner relationships, and to investigate
opportunities in the leveraged securities market.

Institutional
The Group is bringing a new focus to its institutional offering
by targeting family offices and small hedge funds, utilising
the Group’s platform capability, range of markets and depth
of liquidity to gain market share in this segment. The Group
will address these clients with a proposition and product
offer tailored around their specific needs.

MEDIUM-TERM FINANCIAL TARGETS

Through the successful implementation of the Group’s
strategic plan, IG is targeting:

• Revenue growth in its core markets at around 3-5%

per annum over the medium term

• An increase in revenue from its significant

opportunities markets of £100m, to around £160m
in the 2022 financial year

Assuming these targets are achieved, the Group’s revenue in
the 2022 financial year will be around 30% higher than the
2019 financial year.

Delivery of this targeted revenue growth will require
additional investment. Operating expenses, excluding
variable remuneration, were £259.6m in the 2019 financial
year, and are expected to increase by around £30m in the
2020 financial year. This is primarily due to additional
investment in prospect acquisition to continue to promote
the IG brand, to grow the size and quality of the client base,
and to establish the new businesses in the EU and the US. In
subsequent years the Group expects its operating
expenses, excluding variable remuneration, to increase at a
lower rate than revenue.

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COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
BUSINESS MODEL AND RISK PROFILE

IG exists to empower informed, decisive, adventurous
people to access opportunities in the financial markets.

The Business offers its clients opportunities to trade in a
wide range of markets, including equity indices, individual
equities, forex, interest rates and commodities, through
online dealing platforms.

The Business also offers its clients a stock trading platform,
as well as an innovative portfolio-based product for
longer-term investment purposes, in partnership with
BlackRock, one of the world’s leading asset managers.

RISK PROFILE

IG’s business model is based on generating a return from its
services through transaction fees (spread, commission and
funding charges) charged to clients. The level of revenue in
any period is predominantly driven by the number of active
clients the Business serves in that period and the level of
activity undertaken by each client.

The Business does not seek to generate returns from
actively taking market risk; it does not take proprietary
trading positions, and its revenue is not dependent on the
direction of market movements.

Under its business model, the Group accepts some
exposure to market risk in order to optimise the efficiency
and effectiveness of its services to clients. The Business
manages the market risk it faces in providing its services to
clients by internalising client flow (allowing individual client
trades to offset one another) and hedging when the residual
exposures reach pre-defined limits. As a result of its
business model, the Group’s revenue is driven by transaction
fees charged to clients and is not significantly affected by
movements in market prices.

As a result of its business model the Group also faces client
credit risk, counterparty credit risk, liquidity risk and capital
adequacy risk.

The Group also faces operational risks, including those
arising through technology, people, process and
external events.

The Group faces conduct risk relating to how it deals with its
clients and with the markets.

IG operates in a dynamic competitive environment, and its
revenue is dependent on the number of active customers and
the level of their activity. The Business therefore faces risks
relating to market conditions and its competitive position.

The Business operates in a number of geographic markets
and is regulated by various different financial services
regulators in those markets. These regulations affect how
the Business is able to market and provide its services to
clients. The regulations relating to the products and markets
in which the Business operates are continually evolving. IG
supports the objectives of national regulators to improve
client outcomes, but the Business faces risks arising from
changes in its regulatory environments that may adversely
impact its activities or its competitive position.

The business model allows the Group to serve its clients
effectively and to generate good returns for shareholders
whilst maintaining a low appetite for those risks it can
manage directly. This is reflected in the Board’s Risk
Appetite Statement and the Key Risk Indicators (KRIs) used
to monitor these risks. Refer to pages 56 to 62 for more
detail on IG’s Risk Management Framework.

CLIENTS

IG’s clients are knowledgeable and demanding. They
expect a broad product range, outstanding execution,
and highly sophisticated technology, which they use to
trade frequently.

The majority of IG’s clients are individuals, not corporates.
IG also provides services to corporates and institutions,
including asset managers, hedge funds, broker-dealers
and competitors.

Regulators require firms to segment clients using
classification regimes which allow regulators to provide
protection to clients according to their needs. Most regimes
have three categories – licensed firms, corporates and
wealthy and sophisticated individuals, and all other
individuals. In the UK and EU these groups are called Eligible
Counterparties, Professionals and Retail, respectively.

IG offers clients in the UK and EU the opportunity to apply
to be classified as Professional, and clients in other
jurisdictions where similar client categorisation regimes exist
can apply for the relevant categorisation. Clients who apply
are required to demonstrate compliance with a set of
rigorous eligibility criteria to ensure that they are suitably
qualified for their designation.

A Professional client in the UK and EU loses some of the
regulatory protections offered to Retail clients, and
Professional clients are not subject to the product
intervention measures implemented by the European
Securities and Markets Authority (ESMA) which are now
being adopted by regulators in the UK and across the EU.

IG ensures that commitment to its customers is embedded
in Company culture and strategic initiatives, and regularly
seeks and reviews feedback from clients. This enables the
Company to develop products and services specifically to
meet the needs of active traders and investors globally.

Central to the Company’s commitment to its customers
is the quality of its order execution. IG processes 100%
of active client trades automatically and never requotes
prices. Should a significantly better price become available
for customers during the dealing process, IG’s innovative
price-improvement technology enables customers to
receive that better price during trade execution.

Client investment requirements and appetite for risk
changes over time, affected by factors such as family or
financial commitments or the need to plan for retirement,
and this has offered IG the opportunity to broaden its
product set to appeal to sophisticated investors.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTThe Company’s range of products includes stock trading
and investment portfolios, and clients are able to hold their
investments in ISAs and SIPPs. Offering these services allows
the Company to deepen and lengthen its relationship with
clients by catering for their evolving needs.

In addition to dealing directly with clients, IG services clients
introduced through third parties who do not have their own
platform, and who want to take advantage of our award-
winning dealing technology and expertise. These third
parties introduce their clients to us, and IG handles all
trading activity and provides back-office support. The
introducer manages the client relationship. IG carefully
assesses the risk and potential returns from introducers, and
only partners with reputable institutions that are committed
to the same rigorous standards of regulatory compliance as
the Company, and that fits its risk profile.

Appropriateness
Leveraged derivative products are not appropriate for
everyone, and good conduct is particularly vital in relation
to marketing and client recruitment to prevent poor
consumer outcomes. When designing products, IG has a
very clear target audience in mind. The Company works hard
to ensure that advertising is reaching its target audience,
and that its clients appreciate the risks involved with its
products and understand how its services work.

IG also conducts rigorous checks to ensure that all
promotions are clear, fair and not misleading, and that
risks are not downplayed compared to the benefits of
our products.

Before IG allows a prospective client to open an account, it
carries out an assessment to determine whether its products
are appropriate for them. The Company actively questions
applicants to assess whether they have the necessary
knowledge and experience to understand the risks involved.
IG asks clients for details of their income and savings, both
at account opening and in regular rolling reviews. In addition
to providing clear warnings about the appropriateness
of the product and depending on the results of this
assessment, IG may decline to open an account, or provide
an applicant with a type of account where risk is limited. IG
may also close an open account if a client’s circumstances
change and the Company believes the account is no longer
appropriate for the client.

Client outcomes
To consistently deliver fair outcomes and positive
experiences, IG puts its clients at the heart of everything it
does. The Company strives to ensure that it understands
their needs. IG has a very low tolerance for poor consumer
outcomes, and is committed to continued investment in
process, training and culture to prevent unsatisfactory
customer experiences and outcomes and to address root
causes where any practice falls short.

IG’s clients are knowledgeable traders who gain utility out of
their trading experience, and enjoy the intellectual challenge
of speculating on the direction of market movements. They
accept that they may lose money as part of their trading

experience. IG makes it clear that its trading products are
not investment products and as such, does not believe that
client losses are the sole indicator on which to judge client
outcomes. Instead, the Company looks across a broad range
of metrics, including satisfaction, appropriateness trends,
complaints statistics, trade to query ratios, customer pain
points and financial outcomes to ensure that it provides
good consumer outcomes.

Client acquisition and education
IG has a strong brand, built up over 45 years. The Group
seeks to acquire new clients through client referrals, word of
mouth, natural search and premium client manager
relationships, all supported by a targeted global marketing
effort, with online marketing managed centrally and offline
activity managed by country offices. IG’s sophisticated
online marketing uses an algorithmic approach, which
enables it to reach larger numbers of the right prospects
more efficiently. The Company is able to react immediately
to world events, creating campaigns rapidly and rolling them
out to relevant regions, with appropriate local adjustments.

As well as marketing its products directly, IG provides a
number of education, news and analysis services, which
encourage people to engage with the Group and to learn
about its products and how to trade effectively and
responsibly. These include online courses, webinars and
seminars via IG Academy, a suite of YouTube videos and the
DailyFX news and analysis website. These assets reinforce
IG’s commitment to transparency, ensuring that new and
existing clients are well-informed about IG’s services and the
economics of trading the financial markets. The Company’s
high-value UK and EU clients are additionally able to access
exclusive content provided by Real Vision, a premium
provider of innovative financial markets content.

IG’s extensive educational resources include an introduction
programme that promotes responsible trading. Clients can
access expert tutorials, which cover everything from
fundamental trading concepts to risk management. IG seeks
to ensure that this content is engaging and is targeted
towards client needs.

IG also provides an extensive range of trading tools, such as
regular free news, commentary and analysis both in-platform
and on our website. The Company offers charting packages
and various technical analysis tools that enables clients to
screen markets for trading opportunities, and to receive
alerts when trading signals appear.

Client risk management tools
IG takes its responsibility to help clients understand the risks
associated with trading very seriously and provides them
with tools to manage these risks. Given its business model, it
is in IG’s interest to develop lasting relationships with clients,
as clients who are more successful stay with the Company
over the long term and become more valuable.

IG has a number of services designed to help clients limit
any losses they may make.

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BUSINESS MODEL AND RISK PROFILE CONTINUED

IG’s close-out monitor (COM) liquidates clients’ positions
when their margin has been significantly eroded, and helps
protect clients by closing positions automatically. At 31 May
2019, 99.99% of all client accounts were subject to the
COM procedure.

IG’s clients can choose to attach guaranteed stops to their
positions, so that they know their maximum possible loss at
the outset of a trade. The Company’s innovative charging
system encourages clients to use guaranteed stops; no
premium is payable for attaching a guaranteed stop unless it
is triggered. IG was the first provider to offer guaranteed
stops on this basis.

Since 1 August 2018, all Retail clients in the UK and EU have
benefited from negative balance protection. This gives these
clients the guarantee that they cannot lose more capital than
they have on their account.

In jurisdictions where negative balance protection is
not mandatory for retail clients IG offers a limited-risk
account through which every trade has a guaranteed stop,
providing protection on both an individual trade and overall
account basis.

REVENUE GENERATION

The Group’s business is conducted through four revenue-
generation models: OTC leveraged derivatives, exchange
traded derivatives, stock trading and investments.

OTC leveraged derivatives
The vast majority of the Group’s revenue is derived from OTC
leveraged derivatives. Clients enter into derivative
instruments: contracts for difference, financial spread bets
and options. These enable them to take long or short
positions, for varied durations, in a wide range of financial and
other markets, gaining exposure to price movements in those
markets without needing to buy or sell the underlying asset.

The Group’s OTC leveraged derivatives are priced by
reference to prices in the underlying markets. When markets
are open, the prices of the derivative contracts are updated
in real time, reflecting the prices in the underlying markets.
For the majority of derivatives, the price includes a spread
around the underlying market price. For some derivatives on
single equities, clients are charged a commission instead,
and the contract does not include a spread. Clients are
charged funding when long positions are held overnight,
and receive funding when short positions are held overnight.

The Business faces market risk as IG is the counterparty to
the OTC leveraged derivatives that clients enter into. The
Group accepts this market risk in order to allow instant
execution of client orders. The Business manages the market
risk it faces through internalisation – allowing individual
client trades to offset against each other – and by hedging
the residual risk in each market at pre-defined limits, by
entering into derivative contracts with its hedging brokers.
The Group seeks to hedge its residual market exposures in
an efficient manner by grouping its correlated exposures
into asset classes, and therefore does not hedge its
exposures exactly, which gives rise to basis risk.

Through the process of internalisation and hedging, the
Group limits the market risk it faces, so that its trading
revenue from OTC leveraged derivatives predominantly
reflects the charges paid by clients through spread,
commission and funding, less the costs incurred in hedging,
results in consistently low variability of revenue.
Internalisation is key to the Group’s business model and
profitability, as it reduces the cost of hedging market risk in
the underlying markets.

The majority of the OTC derivatives offered by the Group
are ‘leveraged’. Clients trade contracts for difference or
financial spread bets on ‘margin’. Clients only need to have
sufficient funds in their account to cover the margin required
to enter into a derivative contract, not its full value.

Margin is usually expressed as a percentage of the notional
value of the trade, and margin trading allows a client to use
leverage to take a position in a market with a notional value
that is significantly in excess of the funds they are required
to deposit. Leveraged derivative contracts therefore
magnify the gains or losses a client can make relative to the
funds deposited.

The Group faces client credit risk, as leveraged contracts
can result in a client making losses in excess of the funds in
their account, and they may be unable to fund those losses.
The level of margin for each contract is set according to any
relevant regulatory requirements and the volatility of prices
in the underlying market, which reduces the client credit risk
faced by the Group.

The Group’s OTC leveraged derivatives activities give rise to
liquidity risk. The Business trades its hedging contracts on
margin, and IG is required to deposit initial margin with its
brokers, reflecting a percentage of the gross amount of
open positions with each broker. As the gross amounts of
open positions change, as market prices move and as the
nature of the open positions change, the amount of margin
the Group has to deposit also alters, and the Group is
required to deposit margin with its brokers on demand. The
Business therefore faces liquidity risk through its hedging
activities, and counterparty credit risk through the amounts
it holds on deposit with its brokers.

The Group sets its own limits against each hedging
counterparty, with the Group’s exposure to any one hedging
counterparty also restricted by regulation-defined large
exposure rules. The Group therefore needs to maintain a
number of different hedging relationships to provide it with
sufficient capacity for its hedging requirements.

Exchange traded derivatives
The Group’s revenue from exchange traded derivatives is
principally derived from its ownership of Nadex, a US-based
regulated derivatives exchange, on which clients can trade
options contracts on a wide range of underlying markets,
with various strike prices and expirations. Clients become
members of the exchange, and pay a trading fee on each
side of the trade: once to open, and once to close. Under
this model, clients do not trade on margin, and therefore
these contracts do not involve leverage, and the exchange
does not face either market or client credit risk.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTIn the 2020 financial year IG will deliver a full marketing launch
for its Frankfurt-based multilateral trading facility (MTF),
Spectrum, which offers retail clients in the EU, except the UK,
the opportunity to trade transferrable securities in the form of
turbo warrants. Spectrum offers these securities on a wide
range of underlying markets. Clients can trade on Spectrum
through a broker or bank that has a standard membership of
the exchange. All members must fulfil the eligibility criteria
set out in the rulebook as required by the regulator.

Prices for contracts listed on Nadex are provided by market
makers, who are also members of the exchange and pay
fees for trading. Liquidity is provided to the MTF by market
makers who must be categorised as a market making
member of the exchange. IG operates as one of the market
makers to Nadex, and intends to operate as a market maker
to the MTF, and will face market risk as a result of this activity.

Stock trading
The Group operates an execution-only stock trading
platform, through which clients can buy and sell individual
equities listed on exchanges around the world.

The Group charges a transaction fee for each purchase
and sale transaction, and there is a custody fee which is
returned as a rebate to clients who undertake a minimum
level of transactions in the period. IG’s trading revenue from
this service is net of the execution fees the Group pays in
the market.

Clients fund the purchase of equities in full at the time of
placing the order. This activity does not give rise to any
market risk or client credit risk for the Group.

Investments
The Group offers a portfolio-based investment service.
From the results of an online questionnaire, clients are
advised which of five portfolios comprising a basket of
exchange traded funds (ETFs) is best suited to their needs.
These portfolios rebalance periodically. Alternatively, clients
can choose their own portfolio of ETFs to reflect their
investment profile.

The Group charges a percentage fee on the value of the
assets under management, and its revenue from this
segment reflects these fees less the amount paid to the
provider of the ETFs.

Clients fund the purchase of the investments in full at the
time of placing the order. This activity does not give rise to
any market risk or client credit risk for the Group.

DIFFERENTIATION AND CORE STRENGTHS

Business model and risk management
IG’s business model ensures that the interests of the
Company are aligned with those of its clients. As a result of
the internalisation of client positions and its hedging policy,
revenue is earned from client transaction fees, and it is the
volume of client trading that drives revenue, not client
losses. The Business benefits when clients trade well, as they
are then more likely to continue to trade. This underpins IG’s
culture of championing the client.

IG has operated for 45 years and has well-established
processes for identifying and managing risks. IG focuses on
the long term, and on doing things properly to support a
sustainable, growing business.

As a result, the Company’s shareholders and IG’s many
stakeholders, including clients, regulators and suppliers,
can have confidence that the Business has the capacity to
manage the risks it faces, and that it will be able to continue
to operate normally under stressed conditions and through
financial market volatility and operational risk events.

Brand and reputation
IG is a global leader in online trading and the trusted
partner for more than 178,500 active clients. A FTSE 250
company with market capitalisation of £1.98 billion on
31 May 2019, the Group has a long history of profitability
and financial strength.

IG was created in 1974 as the UK’s original OTC leveraged
derivatives provider, introducing a completely new,
accessible way for people to trade on the price of gold, by
defining it as an index. Since then, the Group’s innovative,
client-focused approach has enabled the Business to grow,
expand internationally and broaden its product range, and
today IG is the world’s No.1 CFD provider(1) as well as
maintaining its considerable UK market leadership in OTC
leveraged derivatives.

The unified global IG brand was established in 2013 through
the acquisition of the IG.com domain. This pivotal event
gave the Group the framework to consolidate its global web
traffic through a single route in order to focus on online
leadership – something that is increasingly important for
acquiring, educating and providing a high level of service
for clients.

Clients and client experience
IG’s clients are of the highest quality. They are informed,
self-directed, sophisticated traders who are loyal to the
Company and its services. The Business has the best client
tenure statistics in the industry.

Providing clients with the best service is at the heart of the
corporate culture at IG. The operating model and offices
around the world allow the Business to provide an
uninterrupted service to clients. In addition to the global
network of offices, the Business has operations and
development centres in Krakow, Bangalore and
Johannesburg that allow the Group to access the skills
needed to support clients.

The Business offers a range of free seminars and online
tutorials for clients and provides dedicated 24-hour support
from our client services team. This team is fully trained to
understand our products and how they are best suited to
individual clients. Clients can contact IG client services
through email, telephone and web chat. The Business seeks
to ensure that correspondence with clients is always clear
and fair, and is never misleading.

(1)

Based on revenue excluding FX (published half yearly financial statements,
June 2019).

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BUSINESS MODEL AND RISK PROFILE CONTINUED

People and culture
IG has an experienced, long-serving team that understand
its clients, what they need and what drives them, facilitating
the delivery of an outstanding platform and client service.
IG’s people also understand the obligations that come with
being the market leader in a highly regulated industry,
operating with integrity and with respect for clients,
regulators and other stakeholders. IG’s culture is expressed
through its values – ‘champion the client‘, ‘lead the way‘, and
‘love what we do’.

To ensure that clients are at the heart of the Business,
feedback is encouraged and IG offers clear channels for
comments and complaints. The Business closely monitors its
service standards through key performance and risk
indicators tracked in real time.

Technology and innovation
The Group’s success has been founded on developing
technology that is market-leading and empowering for
clients. IG was the first company in the sector to launch an
online dealing platform, in 1998, and the first to launch a
mobile app with live price streaming, in 2003. The Company
first offered a CFD on bitcoin in 2013. The Business invests
in developing new tools and features for its client-facing
platforms – a continuous process that is directed by detailed
research into clients’ evolving needs.

The Group provides clients with trading platforms that meet
their requirements, whether they access them from home or
on the move, via a web-based platform, smartphone apps
for a range of operating systems or a progressive web app
(PWA). The speed, customisation facilities and integrated
news and analysis feeds of the platform are at the cutting
edge of trading technology. Designed to provide an
intuitive, personalised experience for traders of all styles and
knowledge levels, IG’s trading platform is at the core of the
suite of trading tools and resources offered to clients.

For more advanced and institutional clients, the Business
provides a range of professional technology, including a
Direct Market Access (DMA) platform, sophisticated
technical analysis tools and web application programming
interface (API) solutions.

Conduct and standing with regulators
IG always seeks to operate in the client’s best interests.
The Business targets its marketing and advertising to an
appropriate audience and seeks to ensure that it opens
leveraged trading accounts only for clients for whom the
product is appropriate. The Business seeks to ensure that all
clients are treated fairly. It provides educational and training
materials to clients to help them understand our products
and services well, so that they gain utility from trading. The
Group believes that this approach results in a high level of
trust in the Business by clients and is an important
contributor to lasting client relationships.

IG adheres to the highest regulatory standards. Employees
around the world are responsible for maintaining an open
and constructive dialogue with local regulators, informing
them of business plans and ensuring that IG’s actions are
consistent with regulatory expectations. As a result, IG has
strong working relationships with its regulators around the
world, which is fundamental to the sustainability and growth
of the Business.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTMAIN TRENDS AND FACTORS LIKELY TO AFFECT
THE FUTURE DEVELOPMENT, PERFORMANCE
AND POSITION OF THE COMPANY’S BUSINESS

THE IMPACT OF CHANGES IN THE REGULATORY
ENVIRONMENT

IG operates in a highly regulated environment which
continues to evolve. During the first quarter of the 2019
financial year the temporary product intervention measures
introduced by the European Securities and Markets
Authority (ESMA) came into effect in the UK and the rest of
the EU. These measures restrict the marketing and sale of
CFDs, and include leverage restrictions, loss protections and
risk warnings. National competent authorities in most EU
member states have confirmed they will introduce
permanent measures that are similar to the ESMA measures,
including the UK’s Financial Conduct Authority (FCA).

These measures have had a significant impact on the
Group’s revenue in the financial year, and it remains difficult
to estimate accurately the long-term impact on clients and
the Group’s revenue under new regulations. Three quarters
of the Company’s revenue is now generated from clients in
jurisdictions where restrictions on the sale and marketing of
CFDs have been implemented. It is expected that
restrictions will be introduced in other jurisdictions over time
which may reduce or limit the Group’s revenue from clients
in those jurisdictions.

The Company has been developing a number of
contingencies to mitigate the impact of regulatory change
and retain choice for clients. IG has a history of innovation
and flexibility, and a proven track record of deploying
technology and skills to adapt its business in response to
regulatory and market changes. In the Company’s
experience, when tighter regulation has been applied
appropriately, client outcomes have improved; the industry
has become more sustainable and high-quality providers,
like IG, have benefited over the longer term.

financial year the number of active OTC clients fell, primarily
due to the introduction of the ESMA product intervention
measures which made CFDs less attractive to Retail clients,
and the number of clients who have ceased to trade
exceeded the number of new and returning clients.

The Group continues to focus on the effectiveness of its
targeted marketing, and manages the level of marketing
spend to maintain an attractive payback on the investment.
The level of marketing spend in any period varies according
to the perceived opportunity to spend effectively.

Changes in the level of marketing spend, in the
effectiveness of that spend, or in the rate of client attrition
and reactivation could have a significant effect on the
Group’s future performance.

THE LEVEL OF INVESTMENT IN, AND SUCCESS OF,
NEW INITIATIVES

The Group continues to identify opportunities to invest in
new initiatives, to further broaden its range of products and
services and its geographic coverage.

In the 2019 financial year, the Group launched a major new
initiative in the US. The US retail foreign exchange dealer
(RFED) offers forex trading to clients in what the Group
perceives to be an underserved market. The Group’s
technology experience and competitive pricing position it
well to succeed in this market.

The Group has also started the operation of its multilateral
trading facility (MTF), Spectrum, in Europe. Spectrum is a
fully regulated exchange based in Germany that will enable
European clients to trade a range of turbo warrant products
on exchange.

Over the last 45 years, IG’s strategy has been one of
differentiation within the industry, through its adherence to
the highest regulatory standards and its focus on fair
outcomes for clients. IG believes in robust, proportionate
and consistently applied regulatory oversight of the CFD
sector, and as such fully supports the regulatory objective to
improve consumer outcomes across the industry.

The Company announced its updated strategy and medium-
term financial targets on 22 May 2019, which included a
number of new initiatives. Investment in new initiatives,
broadening the product range and diversifying into more
geographical markets, are key to the Group’s growth
strategy. Future performance will be affected by the success
of such initiatives.

THE LEVEL OF MARKETING SPEND, THE
EFFECTIVENESS OF MARKETING IN ATTRACTING NEW
CLIENTS AND THE RATE OF CLIENT ATTRITION

IG’s business model is based on generating a return from its
services through transaction fees charged to clients. The
level of revenue in any period is predominantly driven by the
number of active clients the business serves in that period
and the level of activity undertaken by each client.

The Group invests in marketing each year to attract new
OTC clients, and seeks to retain clients through the
provision of quality services and products. The number of
unique active OTC clients increased each year from the 2015
financial year through to the 2018 financial year, with the
number of new clients trading for the first time each year,
together with the number of clients who returned to trading,
exceeding the number who stopped trading. This trend was
a key driver of revenue growth in that period. In the 2019

THE LEVEL OF VOLATILITY IN FINANCIAL MARKETS

One factor affecting the Group’s ability to attract new
clients, and the willingness of clients to trade, is the volume
of opportunities clients perceive are available to them in the
markets. Higher levels of volatility in financial markets tend
to generate trading opportunities, which support the
Group’s efforts to attract new clients and the level of
individual client trading activity. Measures of financial market
volatility, such as the VIX index, have been at historically low
levels during the 2019 financial year which has reduced the
level of revenue generated by the Group’s businesses. It is
expected that an increase in the general level of financial
market volatility would be beneficial to the Group’s revenue,
which is therefore partly dependent upon market conditions.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
MAIN TRENDS AND FACTORS LIKELY TO AFFECT
THE FUTURE DEVELOPMENT, PERFORMANCE
AND POSITION OF THE COMPANY’S BUSINESS CONTINUED

THE UK’S EXIT FROM THE EUROPEAN UNION

During the 2019 financial year the Group started the
operation of its new client-facing subsidiary, IG Europe,
which is domiciled in Germany, and has transferred the
majority of its EU-resident client base to contract with this
entity. The terms and nature of the arrangements under
which the UK will leave the EU remain unclear, but the Group
now operates through a structure that provides certainty
that it will be able to offer its regulated financial products in
all EU member states following the UK’s exit from the EU.

ACTIONS OF COMPETITORS

The Group operates in a highly competitive environment,
which includes some unregulated and illegal operators at
one end, and some highly regulated operators offering
similar products to IG at the other. The actions of the
Company’s competitors in response to regulatory change in
the EU, and the extent to which its competitors comply with
both the letter and spirit of the new regulations, may affect
IG’s competitive position within the industry, and may affect
the reputation of the industry as a whole. IG and its
regulated competitors may innovate in the leveraged
trading sector, which could lead to firms other than IG
establishing competitive first-mover advantages in new
product lines.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTOVERVIEW OF THE 2019 FINANCIAL YEAR

The Company made good strategic and operational
progress during the 2019 financial year, taking action to
ensure that the Business successfully navigated the impact
of regulatory change, and positioning the Business so that it
will continue to deliver for its clients, shareholders and other
stakeholders under a more restrictive regulatory
environment in the UK and EU.

The Company appointed June Felix as its new CEO on
30 October 2018.

The European Securities and Markets Authority (ESMA)
product intervention measures came into effect during the
first quarter of the Group’s financial year (Q1 FY19). The
prohibition on offering binary options to Retail clients
became effective from 2 July 2018, and the restrictions
relating to the provision of CFDs to Retail clients were
effective from 1 August 2018. The actions taken by the
Group in preparation for these regulatory changes,
particularly the launch of the online process to enable its
sophisticated clients who meet the required criteria to apply
to become categorised as a Professional client, have
resulted in the Company successfully navigating the
introduction of the ESMA measures.

In the last three quarters of the 2019 financial year, when the
ESMA measures were in effect throughout, 66% of the
Group’s OTC leveraged revenue in the ESMA region was
generated from Professional clients. The average revenue
generated from Retail clients in the ESMA region has fallen
by over 40% since the measures were introduced.

The Group’s net trading revenue in the 2019 financial year
was £476.9m, 16% lower than the £569.0m in the 2018
financial year. OTC leveraged revenue generated from
clients in the ESMA region in the 2019 financial year was 26%
lower than in the 2018 financial year, with 2% growth in
revenue from clients in the Group’s businesses in the rest of
the world. Both these figures are underlying changes,
adjusting for the 1,600 clients who previously contracted
with a UK entity who are now trading with an entity outside
the ESMA region.

IG’s track record of sustainable revenue growth over the
medium and long term has been delivered through growth in
the size and quality of its active client base. Revenue in any
period is impacted by the level of financial market volatility,
and the extent to which clients identify opportunities to
trade. Market conditions throughout the 2019 financial year,
and particularly in the second half of the financial year, were
much less favourable overall than in the 2018 financial year,
which was a record year for the Group. In the periods in the
2019 financial year when market conditions were more
favourable and when the Group’s high-quality and loyal client
base identified and took advantage of the increased
opportunities to trade, the Group’s revenue, which is driven
by client transaction fees, responded favourably.

Operating costs excluding variable remuneration were
£259.6m, 2% higher than in the prior year, with total
operating costs of £284.3m, 2% lower than in the prior year
due to the lower level of variable remuneration. Operating

profit of £192.9m was 31% lower than in the prior year, with
the operating profit margin at 40.4%. Basic earnings per
share for the year were 43.1 pence, 30% lower than the prior
year. The Board is recommending a final dividend of 30.24
pence per share, taking the full-year dividend to 43.2 pence
per share. The Board reiterates that the Company expects to
maintain the annual dividend at 43.2 pence per share until
the Group’s earnings allow the Company to resume
progressive dividends.

BUSINESS DEVELOPMENTS

OTC leveraged derivatives
IG’s business model ensures that its interests as a business
are aligned with the interests of its clients, which sets it
apart from most other companies in the industry. The
Company believes that its culture of acting in the client’s
best interests, providing excellent client service, offering risk
management tools, education and training resources, its
innovative platform, and the quality of trade execution, are
key differentiators. This creates a sustainable business, with
industry-leading client tenure and client value metrics.

The Group’s OTC leveraged derivatives business served
129,700 unique clients in the 2019 financial year, with an
average revenue per client of £3,503. 55% of the Group’s
OTC leveraged revenue was generated from clients who
have been trading with the Company for more than three
years, and 85% of the revenue was generated from clients
who have been trading with the business for more than a
year. The average tenure of the Group’s highest value clients
in the 2019 financial year, defined as those clients generating
80% of the Group’s revenue, was four years and nine months.

IG has continued to attract new, high-quality OTC leveraged
clients, with 31,510 clients making their first trade in the 2019
financial year, contributing £66.8m of revenue. Each client
cohort that the Company recruits has an enduring value for
IG, generating revenue for many years. The Group estimates
that the lifetime revenue value of the 2019 financial year
client cohort will be around £300m.

To reinforce the Group’s position as the natural home for the
highest-value clients, further enhancements to the product
and service offer for these clients were made during the
second half of the financial year. Our high-value clients are
now able to access Real Vision, a premium content video
service which provides exclusive insight and analysis from a
range of world-leading experts in finance. The business also
introduced a volume-based rebate scheme to facilitate
retention and to incentivise clients to transition a greater
share of their trading to IG.

During the first half of the 2019 financial year IG Europe
(IGE), the Group’s client-facing subsidiary in Germany,
received its licence from BaFin and has been operational
since January 2019. The vast majority of the EU (excluding
the UK) resident client base has been migrated to this entity,
which provides certainty that IG will be able to offer its
regulated financial products in all EU member states
following the UK’s exit from the EU.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
OVERVIEW OF THE 2019 FINANCIAL YEAR CONTINUED

In addition to offering a range of OTC trading products to
retail and professional clients, IGE will also act as a broker to
clients trading turbo warrants on Spectrum, the Group’s
EU-based multilateral trading facility (MTF). IG US, the
Group’s new US subsidiary, received approval during the
first half of the 2019 financial year to become a member of
the National Futures Association (NFA), and to operate as a
retail foreign exchange dealer (RFED). The business
launched in January 2019, and the Company believes that its
retail forex offer in the US will be able to compete
successfully in what is currently a limited competitive market
with only three other providers. IG has the added benefit of
the lead generation provided by the DailyFX website, which
has over 1.5m unique visitors each month.

The Business has continued to develop innovative new OTC
products. In October 2018, IG launched its knock-out option
product in Japan, which has been very popular, generating
record account opening levels for IG in Japan and creating
significant internet search volumes. A new, limited-risk
options product was introduced in the EU market in the 2019
financial year, broadening the range of OTC products that
European clients can trade.

Exchange traded derivatives
The Group’s exchange traded derivatives (ETD) businesses
serve clients in those markets where there is a significant
demand for ETD instruments in addition to, or instead of,
OTC derivatives.

The on-exchange derivatives trading market in Europe is
considerably larger than the OTC market, and the Group is
seeking to provide clients who prefer trading in this way with
access to a better product and service than is currently
available. Spectrum has started operations, and the Group
will commence its marketing campaign for Spectrum in
September 2019 following the traditionally quiet European
summer period. The Group will offer its own leveraged
securities on Spectrum in the form of turbo warrants. These
products are limited-risk by nature, making the offering
suitable for less-experienced clients.

The Group acquired 13,500 new stock trading clients during
the year, taking the total number of active stock trading
clients to 37,925. Multi-product clients (who trade both OTC
leveraged products and also hold stocks in a stock trading
or investment account) at the end of the year was 6,555.
Multi-product clients are more valuable and trade for longer
than the average single product client.

REGULATORY DEVELOPMENTS

The CFD industry needs to be regulated to reduce the risk
of poor conduct by firms and poor client outcomes. IG is the
world’s leading provider of CFDs, and the Company adheres
to the highest regulatory standards. Leveraged derivative
instruments are not appropriate for everyone, and through
its focus on ensuring that its marketing and advertising
targets an appropriate audience, IG seeks to only accept
clients who understand our products and the risks involved.
The Company’s long-held view is that robust supervision
around who the product is marketed to, and which
applicants are accepted as clients, remains the most
significant measure to drive improved client outcomes.

Over three quarters of the Group’s revenue is generated in
jurisdictions where regulators have taken action to protect
retail clients through, amongst other measures, restrictions
on the leverage that can be offered. Leverage restrictions
are not new to the industry. IG has operated successfully for
many years in jurisdictions, such as Singapore, where
leverage restrictions are in place. The decision by ESMA to
impose product intervention measures in the UK and EU to
address concerns around poor conduct and to improve
client outcomes has introduced leverage restrictions into
IG’s biggest markets.

The Australian regulator, ASIC, is expected to open a
consultation process regarding potential measures they may
seek to apply to the CFD industry. The Group expects that
any measures ASIC chooses to implement, which are
expected to include leverage restrictions, will apply to Retail
clients only and will exclude clients who elect to be
categorised as a Wholesale client.

The Group is confident that it can make further inroads into
the US ETD market, where the Company has been
established for several years with its Nadex offering. Nadex
provides its members with an accessible alternative to
futures and options trading, on a wide range of underlying
markets. In the 2019 financial year the Nadex business has
continued its evolution with a significant increase in average
revenue per client, reflecting the move towards a more
sophisticated client base.

In April 2019 following a request from the Chinese State
Administration of Foreign Exchange, ASIC asked all its
licensed providers of CFDs to prevent Chinese nationals
from trading through their platforms. IG ceased accepting
new trades from Chinese resident clients in June 2019 and
all accounts of Chinese resident clients in Australia will be
closed by the end of July 2019. Chinese resident clients
contracted to IG’s Australian entity generated revenue of
£2.7m in the 2019 financial year.

Stock trading and investments
The Group’s stock trading offering is focused on serving the
needs of active equity traders and helps to retain existing
OTC leveraged clients, as well as providing an acquisition
channel to attract new active traders to the Group for whom
leveraged trading products may be appropriate. During the
2019 financial year the Company introduced a custody fee
on its stock trading accounts.

The leverage restrictions currently in place for forex for
Retail clients in Singapore will, with effect from 8 October
2019, tighten from 50:1 to 20:1. The forex margin for
accredited, expert and institutional investors will remain at
2%. This change is not expected to materially impact the
Group’s revenue.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTThe Group’s focus on serving sophisticated and
knowledgeable clients means that the business is well-
placed to adapt and thrive in a stricter regulatory
environment. In IG’s experience, when proportionate
regulation has been applied consistently and appropriately,
client outcomes have improved, and compliant providers
have benefited over the longer term.

OUTLOOK

As previously disclosed, the Company expects to return to
revenue growth in the 2020 financial year. The revenue
growth of the 2020 financial year is expected to be delivered
in the second half of the year, as the first quarter of the 2019
financial year was only partly impacted by the implementation
of the ESMA product intervention measures.

The ESMA product intervention measures came into force
during the first quarter of the Company’s financial year. The
prohibition on offering binary options to Retail clients
became effective from 2 July 2018, and the restrictions
relating to the provision of CFDs to Retail clients were
effective from 1 August 2018. The restrictions relating to
CFDs are outlined below:

As set out in the strategy update, the Group’s operating
expenses, excluding variable remuneration, are expected to
increase by around £30 million in the 2020 financial year.
This is primarily due to additional investment in prospect
acquisition to continue to promote the IG brand, to grow the
size and quality of the client base, and to establish the new
businesses in the EU and the US.

IG will continue to lead the way in the industry. The
Company has delivered a profitable and sustainable
business for more than 40 years by placing good client
outcomes at the heart of everything it does. The Group has
articulated its strategy to position the business so that it will
continue to deliver for its clients, its shareholders and its
other stakeholders, with clear medium-term financial targets.

The Board reiterates that it expects to maintain the 43.2
pence per share annual dividend until the Group’s earnings
allow the Company to resume progressive dividends.

• Leverage limits on the opening of a position by a Retail
client from 30:1 to 2:1, which vary according to the
volatility of the underlying asset:
– 30:1 for major currency pairs
– 20:1 for non-major currency pairs, gold and major

equity indices

– 10:1 for commodities other than gold and non-major

equity indices

– 5:1 for individual equities and other reference values
– 2:1 for cryptocurrencies

• A margin close-out rule on a per account basis

• Negative balance protection on a per account basis

• A restriction on the incentives offered to trade CFDs

• A standardised risk warning

ESMA does not currently have the power to make these
measures permanent and it is the responsibility of each
National Competent Authority (NCA) to supervise and
create policies within their own jurisdiction. To date, 24
NCAs across the EU have implemented the same or
equivalent ban on binary options to Retail clients, and 17
have implemented measures relating to CFDs which are
entirely or very closely aligned with the temporary ESMA
measures. This includes BaFin in Germany, CNMV in Spain,
Consob in Italy, AMF in France, and most recently the FCA
in the UK published its policy statement on 1 July 2019
setting out its final measures restricting how CFDs are sold
to Retail clients.

On 3 July 2019 the FCA issued its consultation on the sale,
marketing and distribution to Retail clients of derivatives
that reference unregulated transferable cryptoassets by
firms acting in, or from, the UK. Revenue from UK Retail
clients trading cryptocurrency derivatives was £2.6m in the
2019 financial year.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
OPERATING AND FINANCIAL REVIEW

SUMMARY GROUP INCOME STATEMENT

Net trading revenue
Net interest on client money
Betting duty and FTT
Other operating income

Net operating income

Operating expenses
Variable remuneration

Total operating costs

Operating profit
Net finance income/(cost)

Profit before taxation
Taxation

Profit for the period

Basic earnings per share

NET TRADING REVENUE BY GEOGRAPHY

UK
EU
EMEA non-EU
Australia
Singapore
Japan
Emerging markets
USA

Group

OVERVIEW

FY19
£m

476.9
6.3
(7.9)
1.9

477.2

(259.6)
(24.7)

(284.3)

192.9
1.4

194.3
(36.0)

158.3

43.1p

FY19
£m

200.0
68.2
43.7
70.0
41.0
19.4
17.6
17.0

476.9

FY18
£m

569.0
4.5
(5.1)
2.8

571.2

(254.2)
(35.9)

(290.1)

281.1
(0.3)

280.8
(54.4)

226.4

61.7p

FY18
£m

260.8
117.3
36.8
69.5
40.1
15.0
12.9
16.6

569.0

Change %

(16%)

(2%)

(31%)

(30%)

Change %

(23%)
(42%)
19%
1%
2%
29%
36%
2%

(16%)

The Group’s net trading revenue in the 2019 financial year was £476.9 million, 16% lower than in the 2018 financial year,
reflecting the impact in the UK and EU segments of the introduction of the European Securities and Markets Authority
(ESMA) product intervention measures during the first quarter of the financial year, and the lower levels of volatility and
financial market activity through much of the 2019 financial year compared with the previous year, particularly in the second
half, which impacted the revenue across all geographic segments.

Net operating income in the 2019 financial year of £477.2 million was 16% lower than in the 2018 financial year, in line with
the reduction in net trading revenue.

Operating expenses (excluding variable remuneration) increased by 2% to £259.6 million. Variable remuneration reduced by
over 31%, and total operating costs of £284.3 million were 2% lower than in the 2018 financial year.

Operating profit in the year was £192.9 million, 31% lower than in the 2018 financial year, with an operating profit margin of
40.4% (FY18: 49.4%).

The Group’s effective tax rate for the 2019 financial year is 18.5%, 0.9% lower than in the 2018 financial year, and profit after
tax of £158.3 million, and earnings per share of 43.1 pence were both 30% lower than in the 2018 financial year.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTNET TRADING REVENUE

Net trading revenue by product

OTC leveraged
Exchange traded derivatives
Stock trading and investments

Group

Revenue drivers by product

OTC leveraged
Exchange traded derivatives
Stock trading and investments

Multi-product clients

Group

Revenue (£m)

FY19

454.2
16.8
5.9

476.9

FY18

Change %

548.4
16.6
4.0

569.0

(17%)
1%
48%

(16%)

Active clients (’000s)

Revenue per client (£)

FY19

129.7
17.5
37.9

(6.6)

178.5

FY18

Change %

144.6
22.0
35.5

(6.9)

195.2

(10%)
(20%)
7%

(4%)

(9%)

FY19

3,503
958
155

FY18

Change %

3,794
756
113

(8%)
27%
37%

The Group’s net trading revenue reflects the transaction fees (spread, commission and funding) paid by clients for the
trading service offered by the business (‘client income’), net of the Group’s external hedging costs, and net of client trading
profits and losses and hedging profits and losses.

The Group’s business model is designed to give clients the best trading and execution experience available, and under the
model clients receive more favourable execution than the business is able to achieve in external hedging.

As a result, the Group’s net trading revenue will always be lower than the client income. In the 2019 financial year, net trading
revenue was equal to 74% of client income (FY18: 73%).

In the 2019 financial year the Group generated 95% of its revenue from OTC leveraged derivatives. OTC leveraged revenue
in the year was £454.2 million, 17% lower than in the prior year, with the number of active OTC leveraged clients 10% lower
and with the average revenue per client down by 8%. The previous year, the 2018 financial year, was a record for IG. The
reduction in revenue in the 2019 financial year reflects the less favourable market conditions during the year, particularly in
the second half, and the impact of the ESMA product intervention measures which have restricted the revenue generated
from retail clients in the UK and EU.

The £454.2 million of OTC leveraged revenue includes £66.8m (15%) generated from the 31,510 clients who traded with IG
for the first time in the 2019 financial year. This is in line with the 15% of OTC leveraged revenue generated by the 39,179
new clients in the 2018 financial year. The 2019 financial year new client cohort generated, on average, £2,120 of revenue,
compared with the £2,140 of average revenue from new clients in the 2018 financial year, demonstrating that the Group has
maintained the quality of its new clients.

Each client cohort generates revenue for the Group for many years. In the 2019 financial year, 55% of the OTC leveraged
revenue was generated from clients who have been trading with IG for more than three years (FY18: 52%). The average
tenure of the Group’s highest value clients in the 2019 financial year, defined as those who generated 80% of the Group’s
revenue, was four years and nine months. The Group expects the average revenue value of a new OTC client to be around
£8,000 during the first five years of trading with IG, with an estimated lifetime client value of around £10,000. The Group
estimates the lifetime value of the 2019 financial year client cohort to be around £300m.

Average OTC leveraged revenue per client was £3,503 in the 2019 financial year, 8% lower than in the 2018 financial year,
due to the less favourable market conditions, which resulted in clients trading less frequently, and the impact of the ESMA
product intervention measures, which resulted in a reduction in the average trade size by retail clients in the UK and EU.
Average revenue per client in the 2019 financial year was 9% higher than in the 2017 and 2016 financial years, reflecting the
Group’s progress in developing the overall quality of its client base.

The Group’s exchange traded derivatives revenue in the 2019 financial year of £16.8m came entirely from Nadex, the
Group’s retail-focused exchange in the USA. Revenue was in line with the prior year. The number of active clients reduced by
20% reflecting the decision to reduce marketing spend which has resulted in lower new client recruitment. This has been
offset by the improvement in the retention rate, and by the 27% increase in the average revenue per client, as the business
seeks to develop the overall quality of its client base.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
OPERATING AND FINANCIAL REVIEW CONTINUED

Revenue from stock trading and investments increased by 48% to £5.9 million. The Group’s stock trading offering is focused
on serving the needs of active equity traders. The Group introduced a custody fee on its stock trading accounts in the 2019
financial year which is waived for clients who trade frequently, and which accounts for the majority of the increase in revenue.

OTC LEVERAGED REVENUE BY GEOGRAPHY

UK
EU

ESMA region

EMEA non-EU
Australia
Singapore
Japan
Emerging markets
USA

Outside ESMA region

Total OTC leveraged

Revenue (£m)

FY19

195.3
68.1

263.4

43.7
68.9
41.0
19.4
17.6
0.2

190.8

454.2

FY18

257.6
117.2

374.8

36.8
68.8
40.1
15.0
12.9
–

173.6

548.4

Reported
change %

Underlying
change %

(24%)
(42%)

(30%)

19%
–
2%
29%
36%
–

10%

(17%)

(21%)
(36%)

(26%)

2%
(10%)

The Group’s OTC leveraged revenue in the 2019 financial year from clients contracted to entities in the UK and the EU (the
ESMA region) was 30% lower than in the 2018 financial year, reflecting the impact in these regions of the introduction of the
ESMA product intervention measures during the first quarter of the year. During the 2019 financial year around 1,600 clients
previously contracting with an entity in the ESMA region elected to open an IG account in Switzerland or Australia which are
not subject to the ESMA product intervention measures. The underlying change in revenue shown in the tables above and
below adjusts for the revenue generated by those clients in the 2019 financial year which is reported in EMEA non-EU and
Australia, by adding it back to the UK and EU as appropriate. The underlying reduction in OTC leveraged revenue in the
ESMA region was 26%.

The Group’s reported OTC leveraged revenue in the 2019 financial year from its operations other than in the ESMA region
was, in aggregate, 10% higher than in the 2018 financial year, with an underlying increase of 2%.

ESMA region

ESMA Professional
ESMA Retail

Total ESMA region

ESMA Professional
ESMA Retail

Total ESMA region

ESMA Professional
ESMA Retail

ESMA region

Revenue (£m)

FY19

161.0
102.4

263.4

FY18

Reported
change %

Underlying
change %

374.8

(30%)

(26%)

Active clients (‘000s)

Revenue per client (£)

FY19

6.0
74.8

80.8

FY18

YOY%

99.4

(19%)

FY19

26,918
1,369

3,260

FY18

YOY%

3,769

(14%)

Revenue (£m)

38.4
40.0

78.4

Q2-Q4

122.6
62.4

185.0

%
Q2-Q4

66%
34%

OTC leveraged revenue in the ESMA region was £263.4 million, 30% lower than in the 2018 financial year as reported, and
26% lower on an underlying basis. The number of active clients was down by 19% at 80,800 with average revenue per client
of £3,260, down 14%.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTThe ESMA product intervention measures apply only to clients categorised as Retail under MiFID. Trading by clients who
are categorised as Professional is not restricted by the measures. Since November 2017 the Group has provided an online
process that allows clients to elect to be categorised as Professional. Up to the end of May 2019 the Group had received
approximately 25,000 applications from clients requesting to be categorised as an elective Professional. The Group
operates a rigorous and robust assessment process in compliance with the regulations, and has accepted 6,000 (24%) of
the applications.

During the 2019 financial year the Group served 6,000 unique clients who are categorised as Professional. The ESMA
measures do not apply to these clients and their trading has not been restricted. The average revenue per ESMA-region
Professional client in the 2019 financial year was nearly £27,000.

In the three quarters of the financial year during which the ESMA measures were in place throughout, 66% of ESMA region
revenue was generated from Professional clients.

The ESMA measures have impacted the activity of Retail clients, primarily through a reduction in the size of their trades,
and in the number of clients who trade. The restrictions on leverage introduced by ESMA have reduced the attractiveness of
OTC trading, both in absolute terms and relative to the other forms of trading available to Retail clients. Since the
introduction of the measures we have seen a reduction in the number of active Retail clients and the revenue generated
per client.

The impact of the ESMA measures has been more significant in the EU, where OTC leveraged revenue was 36% lower, than
in the UK, where OTC leveraged revenue was 21% lower. This is due to the UK’s client base including a higher proportion of
Professional clients than in the EU, and because there are readily available alternative trading products for Retail clients in
the EU.

UK and EU by quarter
In order to provide clarity on the activity and revenue generated from Professional and Retail clients in the period since
the introduction of the ESMA measures, the tables below set out, for the UK and the EU separately, the metrics for each
client group by quarter during the 2019 financial year, and the averages for the three quarters, Q2 through Q4, when the
measures were in place throughout.

UK Professional
UK Retail

Total UK

UK Professional
UK Retail

Total UK

UK Professional
UK Retail

Total UK

Revenue (£m)

Q1 FY19

Q2 FY19

Q3 FY19

Q4 FY19

29.9
25.6

55.5

37.8
13.5

51.3

30.1
13.1

43.2

31.4
13.9

45.3

Active clients (’000s)

Q1 FY19

Q2 FY19

Q3 FY19

Q4 FY19

3.7
31.8

35.5

4.0
28.6

32.6

4.0
28.8

32.8

3.9
28.7

32.6

Revenue per client (£)

Q1 FY19

Q2 FY19

Q3 FY19

Q4 FY19

8,018
808

1,567

9,498
471

1,576

7,540
454

1,313

8,009
483

1,389

Q2–Q4
Average

33.1
13.5

46.6

Q2–Q4
Average

4.0
28.7

32.7

Q2–Q4
Average

8,351
469

1,426

More than 70% of the revenue in the three quarters of the financial year when the ESMA measures were in place throughout
was generated from Professional clients.

The number of active Retail clients reduced by 10% in Q2 compared with Q1 and has remained stable in the subsequent
quarters. Average revenue per Retail client reduced by over 40% in Q2 compared with Q1, and it remained fairly stable in
the subsequent quarters, in contrast to the average revenue per Professional client which is more sensitive to financial
market volatility. This leads us to conclude that trading by UK Retail clients is being constrained by the leverage restrictions,
and as a result, although lower than in the periods prior to the ESMA measures being introduced, revenue generated from
UK Retail clients is more stable quarter on quarter.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO

OPERATING AND FINANCIAL REVIEW CONTINUED

EU Professional
EU Retail

Total EU

EU Professional
EU Retail

Total EU

EU Professional
EU Retail

Total EU

Revenue (£m)

Q1 FY19

Q2 FY19

Q3 FY19

Q4 FY19

8.5
14.4

22.9

8.4
7.3

15.7

7.1
6.7

13.8

7.8
7.9

15.7

Active clients (’000s)

Q1 FY19

Q2 FY19

Q3 FY19

Q4 FY19

1.2
20.2

21.4

1.3
17.3

18.6

1.2
17.8

19.0

1.1
18.1

19.2

Revenue per client (£)

Q1 FY19

Q2 FY19

Q3 FY19

Q4 FY19

7,273
713

1,070

6,704
422

846

5,931
378

726

6,870
436

818

Q2–Q4
Average

7.8
7.3

15.1

Q2–Q4
Average

1.2
17.7

18.9

Q2–Q4
Average

6,500
412

796

More than 50% of the revenue in the three quarters of the financial year when the ESMA measures were in place throughout
was generated from Professional clients. The average revenue per Professional client in the EU is around 25% lower than in
the UK, where the Group has its longest-standing and highest-value client base.

The number of active Retail clients in the EU reduced by 14% in Q2 compared with Q1, however the number of active Retail
clients in the EU has increased in subsequent quarters. The number of active Retail clients in Q4 was 10% lower than in Q1.
Average revenue per Retail client reduced by 41% in Q2 compared with Q1, and it has remained fairly stable in the
subsequent quarters.

Other core markets

EMEA non-EU
Australia
Singapore

Revenue (£m)

FY19

43.7
68.9
41.0

FY18

36.8
68.8
40.1

Reported
YOY%

Underlying
YOY%

19%
–
2%

2%
(10%)
2%

YOY%

13%
–
4%

Active clients

Revenue per client (£)

FY19

6,815
18,797
9,202

FY18

YOY%

6,507
18,658
9,313

5%
1%
(1%)

FY19

6,406
3,669
4,461

FY18

5,655
3,687
4,305

Reported revenue in EMEA non-EU, which includes Switzerland, Dubai and South Africa, of £43.7 million was 19% higher
than in the 2018 financial year, with an underlying increase of 2%. Our offices in Switzerland and Dubai are relatively recent
additions to our global footprint and each of these businesses has continued to develop their presence in their market
during the 2019 financial year. The average revenue per client of £6,406 is significantly higher than the Group average,
reflecting the quality of the client base in these countries.

Revenue in Australia was £68.9 million, in line with the 2018 financial year as reported and 10% lower on an underlying basis.
Australia is a well-established market for IG and our underlying performance reflects the less favourable market conditions in
the 2019 financial year compared with the 2018 financial year.

Revenue in Singapore was £41.0 million in the 2019 financial year, 2% higher than in the 2018 financial year, driven by a 4%
increase in revenue per client.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTSignificant opportunities

Japan
Emerging markets
USA

Revenue (£m)

Active clients

Revenue per client (£)

FY19

19.4
17.6
0.2

FY18

15.0
12.9

YOY%

29%
36%

FY19

8,121
5,128
822

FY18

YOY%

7,042
3,599

15%
42%

FY19

2,386
3,432

FY18

YOY%

2,129
3,592

12%
(4%)

Revenue in Japan was £19.4 million, 29% higher than in the 2018 financial year. During the 2019 financial year we launched
our new knock-outs product which has been well-received by the local market, and we have seen a 12% increase in average
revenue per client, and an 84% increase in the number of first trades in Japan compared with the prior year, driving a 15%
increase in the number of active clients.

Our ‘emerging markets’ segment includes revenue from clients resident in jurisdictions, predominantly in Asia, where we do
not have a physical presence. These clients have identified IG through their own search and not in response to advertising
and marketing, which is not undertaken in jurisdictions where the Group does not have the regulatory permissions to do so.
The increase in revenue from these markets reflects the increase in the number of active clients.

Our retail foreign exchange dealer (RFED) in the USA launched in January 2019. The rate of client acquisition has been
encouraging although the number and size of trades has, in this initial period of operation, been lower than we had anticipated.

In the 2019 financial year the Group managed its institutional client segment (family offices and small hedge funds) within the
‘core markets’. The Group served 173 institutional clients during the year (FY18: 148) generating revenue of £5.5 million
(FY18: £5.1 million). The average revenue per client in the Institutional segment was £32,005 in the 2019 financial year
(FY18: £34,371).

OTC LEVERAGED REVENUE BY ASSET CLASS

Indices
Equities
Foreign exchange
Commodities
Options
Cryptocurrencies

OTC Leveraged

FY19
£m

213.8
85.7
82.4
41.8
20.3
10.2

454.2

FY18
£m

224.2
95.4
94.3
55.0
43.1
36.4

548.4

Change
%

(5%)
(10%)
(13%)
(24%)
(53%)
(72%)

(17%)

Changes in revenue by asset class are driven by the overall level of revenue, and the level of volatility in each asset class
which impacts the extent to which clients identify trading opportunities.

Revenue from clients trading equity indices and single-name equities accounted for 66% of the Group’s OTC leveraged
revenue in the 2019 financial year, compared with 58% in the 2018 financial year. The revenue from these asset classes, which
are particularly popular amongst our highest-value clients, was 5% and 10% lower respectively than in the 2018 financial
year. The revenue from clients trading foreign exchange was 13% lower than in the prior year, and represents 18% of the
Group’s OTC leveraged revenue in the year. The level of client trading in cryptocurrencies has reduced significantly, with
revenue down by 72%.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
OPERATING AND FINANCIAL REVIEW CONTINUED

STOCK TRADING AND INVESTMENTS, BY COUNTRY

Revenue (£m)

Active clients (‘000s)

Revenue per client (£)

FY19

FY18

YOY%

47%
–
57%

FY19

27.1
1.0
9.8

FY18

25.5
0.8
9.2

YOY%

6%
25%
7%

FY19

172
146
110

FY18

125
118
80

YOY%

38%
24%
38%

UK
EU
Australia

Stock trading and

investments

4.7
0.1
1.1

5.9

3.2
0.1
0.7

4.0

OPERATING EXPENSES

Operating expenses by cost type

Fixed remuneration
Advertising and marketing
Regulatory fees
Irrecoverable VAT and other sales taxes
Depreciation and amortisation
Other

Operating expenses

Headcount at end of period

48%

37.9

35.5

155

113

37%

FY19
£m

106.3
51.7
3.6
12.2
17.3
68.5

259.6

1,788

FY18
£m

96.0
58.7
7.1
13.1
17.6
61.7

254.2

1,677

Change
%

11%
(12%)
(48%)
(7%)
(2%)
11%

Operating expenses in the 2019 financial year were £259.6 million, 2% higher than in the 2018 financial year.

Fixed remuneration costs increased by 11% to £106.3 million reflecting the 7% increase in headcount, and the salary
increases which were made at the start of the financial year. The increase in headcount reflects the investment in client
service and client operations staff to maintain our market leadership in client service, and in technology development staff
as we have expanded the scale of our development activities.

External advertising and marketing expenditure was 12% lower, at £51.7 million, due to lower spend as marketing plans were
adjusted for the post-ESMA marketing landscape.

Regulatory fees, which includes the Group’s contribution to the Financial Services Compensation Scheme (FSCS) in the UK,
were £3.6m, 49% lower than the charge recognised in the 2018 financial year, reflecting downward adjustments to our
estimates of the contribution required for historic periods. The expected annual charge for regulatory fees, based on the
most recent FSCS levy charge, is £4.5m.

The reduction in the charge for irrecoverable VAT and other sales taxes primarily reflects the lower external advertising and
marketing spend.

Other costs (including premises, computer and software maintenance, telephone and data lines, market data, and legal and
professional fees) were £68.5m, £6.6m higher than in the 2018 financial year, largely due to increased legal and professional
fees supporting the investment in new initiatives and the development of the Group’s strategy.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTOperating expenses by activity category

Prospect acquisition
Sales and client management
Technology
Operations
Business administration

Cash operating expenses

Capitalised salary costs
Depreciation and amortisation

Total operating expenses

FY19
£m

72.5
22.2
52.9
40.5
59.8

247.9

(5.6)
17.3

259.6

FY18
£m

78.7
21.0
46.0
39.2
55.6

240.5

(3.9)
17.6

254.2

Change
%

(8%)
6%
15%
3%
8%

44%
(2%)

The analysis of operating expenses by activity category reflects our changed operational design and organisation structure.
The key areas of activity in the business are prospect acquisition, sales and client management, technology, operations and
business administration. The analysis of operating expenses by activity category provides additional information on the
drivers of operating expenses.

Prospect acquisition expenditure is targeted at attracting suitable prospects for conversion into new clients, and has
reduced by 8% on the prior year, reflecting the reduction in external advertising and marketing spend.

Sales and client management includes the cost of converting prospects into active trading clients and retaining our existing
valuable client base. Staff costs are the largest component of this category. Costs increased by 6% on the prior year,
reflecting increased headcount.

Technology expenditure includes the resources and external costs incurred to provide and develop our platforms and
products. This expenditure increased by 15% to £52.9 million due to increased headcount costs to deliver and support the
growing development project portfolio.

The Group’s operations activities encompass the teams involved in managing our client onboarding, client service, client
credit management, dealing activities, our market data costs, and the costs of running our offices. Operations costs were
£40.5 million, increasing 3% on the prior year, due to higher premises costs and salary inflation.

Business administration includes our finance, risk and compliance, human resources, and legal and governance functions,
and the legal, professional and regulatory fees we incur in administering and managing the Group. Business administration
costs increased 8% to £59.8 million due to headcount growth and increased legal and professional fees to supporting our
investment in new initiatives and strategic planning, partially offset by lower regulatory fees due to the lower charge for the
FSCS levy.

VARIABLE REMUNERATION

Share-based compensation
Sales bonuses
General bonuses

Variable remuneration

FY19
£m

6.6
5.4
12.7

24.7

FY18
£m

8.8
4.5
22.6

35.9

Change
%

(25%)
20%
(44%)

(31%)

Share-based compensation costs relate to the long-term incentive plans for senior management. The costs reflect the
size of the awards and the extent to which they are expected to vest, which is driven predominantly by earnings per share
(EPS) and relative total shareholder return (TSR) performance.

Sales bonuses increased by 20% reflecting higher commission payments to sales staff for the onboarding and management
of their own sourced high value clients.

The general bonus pool decreased by 44% reflecting the Group’s annual performance against its internal financial and
non-financial targets.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
OPERATING AND FINANCIAL REVIEW CONTINUED

NET FINANCE (COSTS)/INCOME

The Group earns interest income on its cash balances and on its holdings of gilts for its liquid assets buffer and as collateral
at hedging brokers. The interest income of £4.2 million in the 2019 financial year was £2.7 million higher than in the prior
year (FY18: £1.5 million) reflecting the larger average balances held during the year and higher interest rates.

The Group pays fees and interest relating to debt facilities. On 21 June 2018 the Group entered into a new Facilities
Agreement which provides a £200 million credit facility comprising a £100 million sterling term loan, which is fully drawn,
and a £100 million committed revolving credit facility (RCF), which is undrawn. The cost of these facilities totalled £3.2
million for the year, £1.8m higher than last year (FY18: £1.4 million).

The Group also earns and pays interest on its cash balances with its hedging brokers. The Group earned £0.7 million net
interest income on its balances with hedging brokers during the year (FY18: £nil).

TAXATION

The effective tax rate (ETR) for the year is 18.5%, 0.9% lower than the 19.4% ETR for the 2018 financial year.

The majority of the Group’s taxable profit arises in the UK. The reduction in the ETR reflects the benefit of the UK ‘patent
box’ incentive that the Group benefits from as a result of UK and European patents held by the Group relating to the
technology and processes supporting the platform, and the recognition of an increase in the deferred tax asset in respect of
previously unrecognised tax losses in the USA.

The Group’s ETR is dependent on a mix of factors including taxable profit by geography, the tax rates levied in those
geographies and the availability and use of taxable losses. The Group’s future ETR may also be impacted by changes in the
Group’s business activities, client composition and regulatory status, as these changes could impact the Group’s ability to
benefit from an exemption from the UK Bank Corporation Tax Surcharge. The Group’s current estimate of the ETR for the
2020 financial year is 18.5%.

DIVIDEND

The Board is recommending a final dividend of 30.24 pence per share, giving a full-year dividend for the 2019 financial year
of 43.2 pence per share (FY18: 43.2 pence per share).

If approved at the Company’s AGM, the final dividend will be paid on 24 October 2019 to those members on the register at
the close of business on 27 September 2019.

OWN FUNDS FLOW

Operating profit
Depreciation and amortisation
Share-based compensation
Change in working capital

Own funds generated from operations

as % of operating profit
Taxes paid

Net own funds generated from operations

FY19
£m

192.9
17.3
7.2
(19.3)

198.1

103%
(38.4)

159.7

FY18
£m

281.1
17.6
7.0
15.2

320.9

114%
(48.9)

272.0

The Group uses own funds generated from operations, net own funds generated from operations, and net own funds
generated after investments as its key measures of cash generation.

Cash generation remains strong, with own funds generated from operations of £198.1 million (FY18: £320.9 million),
compared with operating profit of £192.9 million (FY18: £281.1 million), with a cash conversion rate, calculated as own funds
generated from operations divided by operating profit, of 103% (FY18: 114%). The working capital outflow in the 2019
financial year reflects the lower level of bonus accrual at the end of the 2019 financial year compared with the end of the
2018 financial year.

Tax payments of £38.4 million reflect the payment of the £22.7 million balance of the UK corporation tax liability for the 2018
financial year which was outstanding at the start of the financial year, a refund of £7.7 million in relation to earlier periods, the
payment of £19.0 million representing around half of the estimated UK corporation tax liability for the 2019 financial year,
and the payment of £4.4 million of overseas tax.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTMovement in own funds

Net own funds generated from operations
Net financing (cost)/income
Purchase of DailyFX
Capital expenditure
Purchase of own shares

Net own funds generated after investments
Dividends
Term loan

Increase in own funds
Own funds at start of the year
Impact of movement in exchange rates

Own funds at the end of period

FY19
£m

159.7
0.5
–
(14.3)
(2.0)

143.9
(171.1)
100.0

72.8
746.1
1.9

820.8

FY18
£m

272.0
(0.6)
(3.0)
(11.0)
(4.3)

253.1
(119.6)
–

133.5
614.3
(1.7)

746.1

Capital expenditure in the 2019 financial year of £14.3 million relates to internally developed software (including the
MTF platform and development work undertaken in respect of the US RFED), and the purchase of third-party software
and IT equipment.

Dividend payments during the year reflect the final dividend for the 2018 financial year of £123.3 million and the interim
dividend for the 2019 financial year of £47.8 million.

In June 2018 the Group received the funds under the £100 million term loan included in the Facilities Agreement.

SUMMARY GROUP BALANCE SHEET

Goodwill
Intangible assets
Property, plant and equipment

Fixed assets

Liquid asset buffer
Amounts at brokers
Cash in IG bank accounts
Own funds in client money

Liquid assets
Client deposits IG Bank SA
Title transfer funds

Own funds

Working capital
Tax payable
Deferred tax assets

Capital employed

Shareholders’ funds
Long-term bank borrowings

Capital employed

31 May 2019
£m

31 May 2018
£m

108.1
43.4
14.4

165.9

84.4
419.3
373.3
51.1

928.1
(31.6)
(75.7)

820.8

(43.1)
(10.4)
8.6

941.8

841.8
100.0

941.8

108.0
43.4
15.5

166.9

83.1
450.0
289.7
49.5

872.3
(37.0)
(89.2)

746.1

(62.4)
(17.6)
9.1

842.1

842.1
–

842.1

The Group’s Capital employed at 31 May 2019 of £941.8 million (31 May 2018: £842.1 million) is provided by £841.8 million of
shareholders’ funds, and the Group’s £100.0 million term loan.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
OPERATING AND FINANCIAL REVIEW CONTINUED

AVAILABLE LIQUIDITY

Liquid assets
Broker margin requirement
Non-UK cash balances
Own funds in client money

Available liquidity at end of period

of which:
Held as liquid asset buffer
Final dividend due

31 May 2019
£m

31 May 2018
£m

928.1
(314.0)
(187.5)
(51.1)

375.5

84.4
111.3

872.3
(386.8)
(154.1)
(49.5)

281.9

83.1
123.1

The Group’s liquidity is provided by shareholders’ funds supplemented by the £100 million bank term loan, client deposits at
IG Bank in Switzerland, and client funds which have been transferred to the Group under title transfer arrangements. The
Group has access to additional liquidity through a £100 million committed revolving credit facility.

The Group’s total liquid assets at the end of year were £928.1 million (31 May 2018: £872.3 million).

The Group requires liquidity to fund its day-to-day operations, primarily to fund the margin that its hedging brokers require
to support the Group’s hedging positions, the capital and liquidity that its subsidiaries are required to maintain, and to fund
the requirement to maintain adequate buffers in client money accounts.

The average broker margin requirement in the 2019 financial year was £332 million, £40 million lower than the average
requirement in the 2018 financial year, with a new peak broker margin requirement during the 2019 financial year of £456
million in July 2018. At 31 May 2019, the actual broker margin requirement was £314 million.

The Group treats the cash that is held by subsidiaries outside the UK as not being immediately available. The amount of cash
held in entities outside the UK was £187.5 million at the end of the year, reflecting the investments made to meet the capital
and liquidity requirements of legal entities outside the UK including the newly established IG Europe and IG US entities.

In accordance with the regulations relating to client money and assets in the various jurisdictions in which it operates, the
Group holds some of its own funds in client money bank accounts as prudent segregation balances.

GROUP CONSOLIDATED CAPITAL RESOURCES AND REQUIREMENTS

Shareholders’ funds

Less foreseeable declared dividends
Less acquisition intangibles
Less intangible assets
Less deferred tax assets
Less value adjustment for prudent valuation

Capital resources

Pillar 1 risk exposure amounts (REA)

Total Pillar 1 REA

Capital ratio

Required capital ratio

Pillar 1 minimum
Individual capital guidance (ICG)

ICG requirement
plus combined buffer requirement

Total requirement %

Total requirement – £m
Capital headroom – £m

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

31 May 2019
£m

31 May 2018
£m

841.8

(111.3)
(108.1)
(43.4)
(9.0)
(1.1)

568.9

842.1

(123.1)
(108.0)
(43.4)
(9.1)
–

558.5

1,875.9

30.3%

2,037.7

27.4%

8.0%
9.4%

17.4%
3.1%

20.5%

385.0
183.8

8.0%
9.4%

17.4%
2.2%

19.6%

399.4
159.1

STRATEGIC REPORTThe Group’s total capital ratio using the balance sheet of the Group as at 31 May 2019 including the profit for the financial
year, was 30.3% (31 May 2018: 27.4%).

The Group is required to hold a minimum amount of regulatory capital in accordance with the individual capital guidance
(ICG) periodically determined by the Financial Conduct Authority (FCA) based on their supervisory review and evaluation
process (SREP) of the Group, plus an amount equal to the higher of the internally calculated capital planning buffer and the
combination of the conservation and countercyclical buffers. The FCA determine the ICG following review of the Group’s
Internal Capital Adequacy Assessment Process through which the Group calculates the amount of capital that should be
held against specific firm risks, in addition to the Pillar 1 requirements.

The FCA last undertook a SREP of IG Group in the first half of calendar year 2016, and advised the Board of the level of
capital the Group is required to hold in August 2016. The ICG advised in August 2016 replaced the ICG advised to the Board
in May 2013. The FCA plan to carry out their next SREP towards the end of 2019.

The ICG advised by the FCA in August 2016 requires the Group to hold capital in addition to the Pillar 1 minimum equal to
9.4% of the Pillar 1 risk exposure amounts.

The required minimum capital ratio at 31 May 2019 was 20.5%, including the effect of the combined buffers, being the
capital conservation buffer, which the Bank of England raised on 1 January 2019 to 2.5% in line with the transitional
provisions laid out by the FCA in IFPRU TP 7, and the countercyclical buffer.

In June 2019, the EU published into law the banking reform package made up of four separate instruments: ‘CRDV’, ‘CRR2’,
‘BRRD2’ and ‘SRMR2’. These rules implement in EU law the latest tranche of the Basel Committee on Banking Supervisions’
international regulatory framework for banks – known as ‘Basel III’. In parallel, the EU is preparing to publish into law in the
Autumn its prudential and remuneration regime for investment firms – through a new directive and regulation known as ‘IFD’
& ‘IFR’. This framework will alter the licensing basis, capital and remuneration requirements and governance and
transparency provisions for a wide range of non-bank financial institutions. These rules are expected to be implemented in
the UK post-Brexit.

The Company’s expectation, at this stage, is that the Group and its subsidiaries will fall into scope of the IFD/IFR regime,
ending the firm’s requirement to comply with the existing and incoming CRD/CRR rules in favour of the new regime.

IG has reviewed the draft IFD/IFR regime framework and planning has begun to implement the new requirements. Internal
initial modelling indicates that the IFD/IFR regime will not have a material impact on the Group’s capital requirements, its
principal governance arrangements or its relationship with its regulators.

Segregated client funds
At 31 May 2019 the Group held £1,349.2 million (31 May 2018: £1,386.9 million) of client money in segregated bank accounts,
and £1,096.8 million (31 May 2018: £945.0 million) of client assets in third party custodian accounts. These amounts are
segregated client money and assets, and are therefore excluded from the balance sheet.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
KEY PERFORMANCE INDICATORS (KPIs)

The Group uses seven key financial and seven key operational performance metrics to
measure IG’s performance and progress against the short-term and long-term goals of
the business. These measures seek to illustrate the financial health of the Group, and IG’s
ability to continue to maximise and sustain shareholder returns both via revenue and
profit generation. The depth and quality of IG’s client base is central to its business model,
and this importance is reflected in the number of client-focused KPIs.

FINANCIAL KPIs

BASIS OF CALCULATION

NET TRADING REVENUE (£m)

FY19
FY18
FY17
FY16
FY15

OPERATING PROFIT (£m)

FY19
FY18
FY17
FY16
FY15

OPERATING PROFIT MARGIN (%)

FY19
FY18
FY17
FY16
FY15

BASIC EARNINGS PER SHARE (pence)

FY19
FY18
FY17
FY16
FY15

Net trading revenue represents trading revenue after
deducting introducing partner commissions. Trading
revenue includes revenue arising from each of the
Group’s four revenue-generation models: over-the-
counter (OTC) leveraged derivatives, exchange traded
derivatives (ETDs), stock trading and investments.

Operating profit represents the profit
generated by the Group from ongoing
business operations before any deductions
for tax and before finance income or cost.

Operating profit margin measures the
operating profit generated by the Group
as a percentage of net trading revenue.

Basic earnings per share measures the amount
of profit after tax, divided by the number of
outstanding shares in issue.

476.9
569.0
491.1
456.3
400.2(1)

192.9
281.1
213.4
207.6
193.3(1)

40
49
43
45
48(1)

43.1
61.7
46.2
44.9
41.3(1)

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTFINANCIAL KPIs

BASIS OF CALCULATION

TOTAL DIVIDEND PER SHARE (pence)

FY19
FY18
FY17
FY16
FY15

43.2
43.2
32.3
31.4
28.15

Dividend per share is the total value of the
full-year dividend.

OWN FUNDS GENERATED FROM OPERATIONS AS
% OF OPERATING PROFIT(2) (%)

FY19
FY18
FY17
FY16
FY15

103
114
107
95
82(1)

This metric measures the level of funds (cash)
the Group generated from its ongoing
operations in the period, as a proportion of
the Group’s operating profit.

NET OWN FUNDS GENERATED FROM OPERATIONS
AFTER INVESTMENTS(2) (£m)

FY19
FY18
FY17
FY16
FY15

159.7
272.0
183.9
197.9
136.8(1)

This metric measures the level of net
own funds (cash) generated by the Group
from its operations after deductions for
investment activity.

(1) Numbers for the 2015 financial year are shown on an underlying basis.
(2) Our alternative performance measures (APMs) and KPIs are aligned to our strategy and are used to measure the performance of our business in financial and

operational terms.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
KEY PERFORMANCE INDICATORS (KPIs) CONTINUED

OPERATIONAL KPIs

BASIS OF CALCULATION

TOTAL NUMBER OF ACTIVE
OTC LEVERAGED CLIENTS

FY19
FY18
FY17
FY16
FY15

129,664
144,559
148,020
137,870
130,070

REVENUE PER ACTIVE OTC LEVERAGED CLIENT (£)

FY19
FY18
FY17
FY16
FY15

NUMBER OF OTC LEVERAGED FIRST TRADES

FY19
FY18
FY17
FY16
FY15

3,503
3,794
3,207
3,223
3,035(1)

31,510
39,179
45,727
39,842
32,506

The total number of clients who have
generated revenue in the relevant financial
year by trading our leveraged OTC products.

The average revenue generated by each of our
active OTC leveraged clients, including new
OTC leveraged clients.

The total number of OTC leveraged clients
who have placed a first trade in the relevant
financial year.

REVENUE FROM NEW OTC LEVERAGED CLIENTS (£m)

FY19
FY18
FY17
FY16

66.8
83.9
87.8
77.0

The amount of revenue generated by new
OTC leveraged clients in the relevant financial
year. A new client is defined as a client who
placed their first trade in the period.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTOPERATIONAL KPIs

BASIS OF CALCULATION

% OF OTC LEVERAGED REVENUE GENERATED BY
CLIENTS THAT HAVE TRADED WITH IG FOR AT
LEAST 3 YEARS (%)

FY19
FY18
FY17
FY16

NUMBER OF MULTI-PRODUCT CLIENTS

FY19
FY18
FY17
FY16
FY15

PLATFORM UPTIME (%)

FY19
FY18
FY17
FY16
FY15

55
52
51
54

6,555
6,930
4,991
2,400
1,500

99.99
99.98
99.98
99.99
99.95

(1) Numbers for the 2015 financial year are shown on an underlying basis.

The proportion of OTC leveraged revenue
generated by clients that have traded with the
company for three or more years. This is used
as an indicator of the value of longer-term
client relationships.

The number of IG clients who have both an
OTC leveraged account and a non-leveraged
account, for example a stock trading account.

The percentage of time that IG’s platforms
have been available to its clients for trading.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
RISK MANAGEMENT

Effective risk management is essential to the achievement of
the Group’s strategy and business objectives, and to
preserve its financial strength and resilience. The Board is
responsible for ensuring that the Group maintains an
appropriate risk management culture, supported by a robust
Risk Management Framework.

RISK MANAGEMENT FRAMEWORK

IG has an established Risk Management Framework to
identify, measure, manage and monitor the risks faced by
the business, and to manage the risk that the Group’s
conduct may pose to the achievement of fair outcomes for
consumers or to the sound, stable, resilient and transparent
operation of the financial markets. This framework provides
the Board with assurance that IG’s risks, including the risks
relating to the achievement of Group’s strategic objectives,
are understood and managed in accordance with the
appetite and tolerance levels set. It provides the basis for
enabling the Group’s ongoing assessment, control,
monitoring and reporting of risk management.

The framework is established around the following elements:

• Risk Culture and Principles

• Risk Taxonomy

• Risk Appetite Statement

• Risk Management Governance

• Risk Assessment, Control, Monitoring and Reporting

RISK CULTURE AND PRINCIPLES

The Board recognises that embedding a sound risk culture is
fundamental to the effective operation of the Group’s risk
management framework, and sets the tone for broader
conduct in all business activities and for promoting a
common set of IG values and expected behaviours.

The Group’s culture is defined by the shared values,
attitudes, competencies and behaviours present throughout
the business. A poor culture will inevitably lead to an
increase in certain areas of risk.

The Group seeks to achieve the implementation of its
desired risk management culture through principles, policies
and consistent practices.

The IG Risk Management Framework is driven by a set of
core principles that set the context for risk management
activities across the Group:

• Strategic
Risk management should be clearly focused on

enhancing shareholder value and supporting the
achievement of the Group’s strategic objectives.

• Stakeholder expectations
The approach to risk management should address the
requirements and expectations of the Group’s key
stakeholders (including clients, employees
and regulators).

• Consistent and embedded
Risk management should be fully embedded into all

departments and business processes of the Group and
managed as an integral part of day-to-day management.
A consistent approach should be taken, and consistent
practices followed by employees globally.
Independent oversight

•
Risk and control oversight functions should be

independent of business functions and supported by
adequate resources.

• Appropriate level
Risk management activities should be appropriate for the
level and complexity of the Group’s business activities
and associated risks.
• Continual assessment
Risk management should be subject to continual review

and enhancement to ensure that the Group’s Risk
Management Framework remains effective and aligned to
shareholder and stakeholder expectations.

RISK TAXONOMY

IG has developed a Risk Taxonomy to ensure that the Group
considers the full spectrum of risks faced by the business,
and to create a consensus for classification of all risk
management activities. The taxonomy categorises the
principal risks faced by the Group into five areas: the risks
inherent in the regulatory environment, the risks inherent in
the commercial environment, business model risk,
operational risk and conduct risk. Each of these risk areas is
considered from page 58.

RISK APPETITE STATEMENT

The purpose of the IG Risk Appetite Statement (RAS) is to
detail the acceptable levels of risk to which the Group is
willing to be exposed, so as to allow for a profitable business
while operating within the Group’s risk appetite.

The RAS is based around a set of statements for each risk
within the Taxonomy. Qualitative statements of risk appetite
for each risk are supported by Key Risk Indicators (KRIs) that
are used to identify instances which require investigation
and escalation. Thresholds and limits are set which raise
awareness of increased risk and provide early warning
indicators (Amber level) so management actions can be
undertaken prior to a breach of the assigned risk appetite
(Red level). KRIs are embedded in IG’s risk monitoring
and reporting.

KRIs are broken down into two distinct categories: ‘Board-
Approved Limits’ and ‘Monitoring KRIs’:

• Board-Approved Limits (BAL)

In the event of a Red breach, action must be taken,
without discretion, which ensures we come back inside
the BAL (Red level). It is the responsibility of the risk
owner to manage and explain what actions have been
taken once an Amber threshold (if present) has been
breached. All efforts must be made to avoid a Red
breach. An explanation must be provided to the Board as
to why the matter escalated such that the Group
breached a BAL.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORT
• Monitoring KRIs
A breach of a defined KRI triggers escalation to

management, which should result in consideration being
given as to what appropriate responsive actions, if any,
are taken. Red levels, along with actions taken (if any), are
reported to the Group Board on a monthly basis.

RISK MANAGEMENT GOVERNANCE
The Group’s Risk Management Governance Structure is
summarised below.

The Board
The Board has overall responsibility for the management of
risk within the Group. This includes determining the Group’s
risk appetite, which sets out the nature and extent of the
principal risks it is willing to take in achieving its objectives,
and defining the standards and expectations that drive the
Group’s risk culture. It also involves ensuring that the Group
maintains an appropriate and effective Risk Management
Framework, and monitoring performance and risk indicators
to ensure that the Group remains within its risk appetite. The
Board delegates certain risk governance responsibilities to
Board Committees.

Board Risk Committee
The Board Risk Committee provides the principal forum for
the ongoing review and evaluation of specific elements of
the Risk Management Framework, and for making
recommendations to the Board when appropriate.
Biannually the risk function provide to this Committee an
assessment of key and emerging risks which may impact
the Group. The Committee then makes recommendations to
the Board where appropriate. Details of the Committee can
be found in the Board Risk Committee section set out on
pages 120-122.

Audit Committee
The Audit Committee’s responsibilities include reviewing an
assessment of the control environment through Internal Audit
reports and monitoring progress on the implementation
of audit recommendations. The Audit Committee also
has specific responsibilities to assess the accuracy and
appropriateness of financial reporting and narrative
disclosures, to review the Group’s tax risk management
framework, and to receive reports on legal entity governance
and the control environment for client money and assets, and
to monitor whistleblowing arrangements.

Remuneration Committee
The Remuneration Committee’s primary responsibility in
relation to risk management is to ensure that remuneration
policies are consistent with effective risk management
across the Group, and to consider the implications of those
elements of the policies on risk and risk management. The
Committee reviews the design and operation of
performance-related pay schemes to ensure their efficacy
and, with the assistance of the Board Risk Committee, to
ensure that the risks implicit within the schemes are
adequately monitored and controlled.

Disclosure Committee
The Disclosure Committee is responsible for identification of
Inside Information, and makes recommendations to the
Board about how and when the company should disclose
this information.

Risk management within the business
The Group has a number of operational and executive
committees which provide advice and support to
management in the day-to-day execution and proper
performance of their duties, including those relating to
implementation of the Board strategy and management of
the Risk Management Framework. Details of this can be
found in the Overview of Corporate Governance Framework
set out on page 76.

IG operates a ‘three lines of defence’ Risk Governance Model.

First line of defence
The first line of defence has primary responsibility for risk
management, including the day-to-day responsibility for
ensuring that the business operates within risk appetite.
Management is responsible for the identification,
assessment and management of risks facing the business, in
compliance with the Group’s risk management policies.

Second line of defence
The second line of defence, with an objective of independent
risk oversight, is provided by the risk and compliance teams.
The risk and compliance teams are housed within a single
control ‘pillar’, led by the Chief Risk Officer.

These teams are independent from operational
management in the first line and are responsible for
overseeing and challenging the business in managing its
risks day-to-day. This includes maintaining the Group’s risk
management and control policies, providing independent
analysis, control of the Group’s risks and keeping abreast of
industry and regulatory developments that might require
enhancements to the Group’s Risk Management Framework.

Third line of defence
The third line of defence, independent assurance, is
provided by Internal Audit. The primary role of Internal
Audit is to help the Board and executive management to
protect the assets, reputation and sustainability of the
organisation by providing independent, objective assurance
reviews designed to add value and improve our operations.
The scope of the annual audit plan includes reviews of the
Group’s Risk Management Framework and the management
of the Group’s principal risks. These will include assessments
of the design and operating effectiveness of the internal
governance structures and processes, the setting of and
adherence to risk appetite and the risk and control culture of
the organisation.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
RISK MANAGEMENT CONTINUED

RISK ASSESSMENT, MONITORING, CONTROL
AND REPORTING

Risk assessment, control and monitoring are the
responsibility of operational management in each area. Risk
and control assessments are undertaken with support from
the second and third lines of defence, with key controls
identified and documented.

The Risk Taxonomy is used to identify all risks faced by IG.
The Risk Appetite Statement identifies KRIs, and maximum
limits and thresholds, to manage and monitor each risk.
These KRIs are the basis of reporting and are conveyed to
the Board on a monthly basis, or escalated immediately
depending on significance, with more granular metrics
reported to relevant operational committees where
appropriate. Relevant stakeholders and risk owners
manage their respective risks, taking appropriate actions
to avoid breaches.

Risk reporting takes place across numerous reports,
covering key market, credit, liquidity, capital adequacy,
operational and conduct risk KRIs. Frequency of reporting
can range from live to hourly, monthly, quarterly or annually,
depending on the requirements. Dashboards, emails and
written reports, along with automated alerts, are utilised to
notify relevant stakeholders of the risk profile status.

IG has adopted a common risk taxonomy that breaks the
principal risks faced by the Group into five broad risk

categories: the risks inherent in the regulatory environment,
the risks inherent in the commercial environment, business
model risks, operational risk and conduct risk.

Regulatory environment risk
Regulatory change
IG operates in a highly regulated environment which is
continually evolving.

The Group faces the risk of regulators introducing new
regulations or requirements, in any of the jurisdictions in
which the Group currently operates, which result in an
adverse effect on the Group’s business or operations,
through reduction in revenue, increases in costs or increases
in capital and liquidity requirements. The Group operates to
the highest regulatory standards and leads the industry in
the way in which it deals with its clients. The Group
maintains relationships with its key regulators and actively
seeks to converse with them in an effort to keep abreast of
impending regulatory developments.

Tax risk change
Within regulatory environment risk, the Group also includes
the risk of significant adverse changes in the manner in
which the Group itself, or the Group’s businesses, are taxed.
Examples of the tax risk faced by the business include the
risk of the imposition of a financial transactions tax, which
could severely impact the economics of trading, and the risk
that the basis under which the Group is taxed, in any of the
jurisdictions in which it operates, is adversely affected.

PRINCIPAL RISKS

PRINCIPAL RISKS/TAXONOMY LEVEL 1

REGULATORY ENVIRONMENT RISK
The risk that the regulatory environment in any of the jurisdictions in which the Group
currently operates, or may wish to operate, changes in a way that has an adverse
effect on the Group’s business or operations, through reduction in revenue, increases
in costs, or increases in capital and liquidity requirements.

COMMERCIAL RISK
The risk that the Group’s performance is affected by client sensitivity of adverse
market conditions, failure to adopt or implement an effective business strategy, new
or existing competitors offering more attractive products or services, or as a result of
a third-party supplier on which the Group depends deciding to cease providing
services to the business.

BUSINESS MODEL RISK
The risk faced by the Group arising from the nature of its business and its
business model.

TAXONOMY LEVEL 2

Regulatory change
Tax risk change

Strategic management risk
Market conditions risk
Competitor risk
Supplier restriction risk

Market risk
Credit risk
Liquidity risk
Capital adequacy risk

OPERATIONAL RISK
The risk of loss resulting from inadequate or failed internal processes, people,
systems or external events. Includes the risk that the Group is unable to attract
and retain the staff it requires to operate its business successfully.

Technology risk
People risk
Process risk
External risk

CONDUCT RISK
The risk that the Group’s conduct poses to the achievement of fair outcomes for
consumers or to the sound, stable, resilient and transparent operation of the
financial markets.

Client outcomes
Markets and financial crime
Culture and our people

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTCommercial risk
The Group defines commercial risk as the risk that the
Group’s performance is affected by client sensitivity to
adverse market conditions, failure to adopt or implement an
effective business strategy, by new or existing competitors
offering more attractive products or services, or as a result
of a third-party supplier on which the Group depends
deciding to cease providing services to the business.

Strategic management risk
The Group seeks to mitigate its strategic management risk
through the Board’s regular and thorough review and
challenge of the Group’s strategy and the performance of
current strategic initiatives. The Board holds an annual
Strategy Day to consider and agree the strategic priorities
for the business. Planning processes are extensive, with
stakeholders across the business being involved, and may
include external assistance. External consultation and
extensive market research are undertaken in advance of
committing to any strategy, in order to test and validate a
concept. Projects are managed via a phased investment
process, with regular review periods, in order to assess
performance and determine if further investment is justified.
The Board also considers specific strategic actions and
initiatives during its normal schedule of Board meetings.

Market conditions risk
The Group’s trading revenue reflects the transaction fees
paid by clients less the transaction costs incurred in hedging
market exposures. The extent of client trading activity and
the number of active clients in any period are the key
determinants of revenue in that period. The ability to attract
new clients, and the willingness of clients to trade, depends
on the level of trading opportunity that clients perceive to
be available to them in the markets. The Group’s revenue is
therefore partly dependent upon market conditions.

The Group seeks to mitigate the impact of adverse market
conditions and client sensitivity towards those conditions
through detailed review of daily revenue analysis, monthly
financial information, Key Performance Indicators (KPIs) and
regular reforecasts of its expected financial performance,
reflecting the latest and expected market conditions. The
Group uses these forecasts to determine actions necessary
to manage performance, with consideration given to
changes in market conditions.

The Group regularly updates its investors and market
analysts on its revenue performance, including quarterly
updates and pre-close statements, and engages with
investors and market analysts to manage the risk that
the impact of market conditions is not reflected in
performance expectations.

Competitor risk
The Group operates in a highly competitive environment,
which includes some unregulated and illegal operators. The
Group seeks to mitigate competitor risk by maintaining a
clear distinction in the market in terms of product, service
and ethics, and by closely monitoring the activity and
performance of its competitors, including detailed
comparison of the terms of product offers.

IG regards itself as the leader in its market and, given its
strong ethical values, the Group does not deploy
questionable practices, regardless of whether they would
prove to be commercially attractive to clients. The Group
does, however, seek to ensure that its product offering
remains attractive, taking into account the other benefits
that the Group offers its clients, including brand, strength of
technology and client service quality. This allows the
business to provide a competitive offering overall and
manage competitor risk without compromising the
Group’s values.

Supplier dependency risk
The Group is also dependent on services from third parties.
These range from the banking industry to key technology
firms, and cover matters such as the provision of corporate
and client money bank accounts, client payment services,
hedging and custodial services, to advertising and
marketing channels.

The Group performs regular reviews and seeks to ensure
that it has suitable engagement terms with each provider, so
as to identify any issues which may arise and gain an
understanding of any new upcoming requirements.

Business model risk
IG defines business model risk as the risks faced by the
Group arising from the nature of its business and its
business model, including market risk, credit risk, liquidity
risk and capital adequacy risk.

Market risk
IG takes market risk for the purpose of facilitating instant
execution of client trades. The business manages this market
risk by internalising client flow (netting the exposure created
through clients’ trades so as to offset) and hedging when
the residual exposures reach defined limits. The Group’s
real-time market position-monitoring system allows it to
constantly manage its market exposures against its market
risk limits. If exposures exceed pre-determined limits,
hedging is undertaken to bring the exposure back within
the limits.

IG has a market risk policy which sets out how the business
manages its market risk exposures. The market risk policy
incorporates a methodology for setting market risk limits,
consistent with the Group’s risk appetite, for each financial
market in which the Group’s clients can trade, as well as
certain groups of markets or assets which the business
considers to be correlated. These limits are determined with
reference to the expected liquidity and volatility of the
underlying financial product or asset class, and represent
the maximum (long or short) net exposure the Group will
hold without hedging.

The Group sets its market risk limits with the objective of
achieving the optimal efficiency between allowing client
trades to be internalised, the cost of hedging and the
variability of daily revenue. The Group seeks to manage its
market risk so that its trading revenue predominantly reflects
client transaction fees net of hedging costs, and is not
driven by market risk gains or losses.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
RISK MANAGEMENT CONTINUED

The residual market risk the Group faces can crystallise if a
market ‘gaps’, which occurs when a price changes suddenly
in a single large movement, often at the opening of a
trading day, rather than in small incremental steps. This can
result in the Group being unable to adjust its hedging in a
timely manner, which can result in a potential loss.

The Group monitors its market risk exposures through
regular scenario-based stress tests to analyse the impact
of potential stress and market gap events, and takes
appropriate action to reduce its risk exposures and those
of its clients.

Credit risk
IG faces the risk that either a client or a financial
counterparty fails to meet their obligations to IG, resulting
in a financial loss.

As a result of offering leveraged trading products, IG
accepts that client credit losses can arise as a cost of its
business model. Client credit risk principally arises when a
client’s total funds deposited with the Group are insufficient
to cover any trading losses incurred. In addition, a small
number of clients are granted credit limits to cover running
losses on open trades and margin requirements.

Client credit risk is managed through the application of the
Group’s Client Credit Risk Policy.

The business sets client margin requirements that reflect
the market price risk for each instrument, and uses
tiered margining so that larger positions are subject to
proportionately higher margin requirements. The business
offers training and education to clients covering all aspects
of trading and risk management, which encourages them
to collateralise their accounts at an appropriate level in
excess of the minimum requirement. In addition to cash,
the Group also accepts collateral in the form of shares from
professional clients held in their IG stock trading account.

The business further mitigates client credit risk through the
real-time monitoring of client positions via the close-out
monitor (COM), and by giving clients the ability to set a level
at which an individual deal will be closed (the ‘stop’ level or
‘guaranteed stop’ level).

The COM automatically identifies accounts that have
breached their liquidation thresholds and triggers an
automated liquidation process of positions on those
accounts. Where client losses are such that their total equity
falls below the specified liquidation level, positions will be
liquidated to bring the account back on-side, resulting in
reduced credit risk exposure for the Group.

In some jurisdictions, IG provides negative balance
protection for retail clients, which is a guarantee that clients
cannot lose more than the total amount of equity held on
their account. This, together with COM and client-initiated
‘stops’, results in the transfer of an element of the market risk
from the client to the Group. This market risk arises following
the closure of a client position, as the Group may hold a
corresponding hedging position that will, assuming
sufficient market liquidity, be unwound.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

IG has significant financial exposure to a number of financial
institutions, owing to the placement of financial assets at
banks and the hedging of market risk in the wholesale
markets, which requires the Group to place margin with its
hedging brokers.

Financial institution credit risk is managed through the
application of the Group’s counterparty credit risk policy.

Financial institutional counterparties are subject to a credit
review when a new relationship is entered into, and this is
updated semi-annually (or more frequently as required,
for example upon changes to the financial institution’s
corporate structure or credit rating). Proposed maximum
exposure limits for these financial institutions, reflecting their
credit rating and systemic position, are reviewed and
approved by the Executive Risk Committee.

The Group actively manages the credit exposure to each of
its broking counterparties, settling or recalling balances at
each broker on a daily basis in line with the collateral
requirements. As part of its management of concentration
risk, the Group is also committed to maintaining multiple
brokers for each asset class.

The Group is responsible, under various regulatory
regimes, for the stewardship of client money and assets.
These responsibilities include the appointment and
periodic review of institutions with which client money
is deposited. The Group’s general policy is that all
financial institution counterparties holding client money
accounts must have a minimum long-term rating of
BBB-, with limits set depending on strength of credit
rating. In some operating jurisdictions where accounts are
maintained to provide local banking facilities for clients,
it can be problematic to find a banking counterparty
satisfying these minimum rating requirements. In such
cases, the Group may use a locally systemically important
institution. These criteria also apply to the Group’s
own bank accounts held with financial institutions.

In addition, the majority of deposits are made on an
overnight or breakable term basis, which enables the Group
to react immediately to any deterioration in credit quality,
and deposits of an unbreakable nature or requiring notice
are only held with a subset of counterparties which have
been approved by the Executive Risk Committee.

Liquidity risk
Liquidity risk is the risk that the Group is unable to meet
its financial obligations as they fall due. It is managed
through the application of the Group’s Liquidity Risk
Management Policy.

The Group’s approach to managing liquidity is to ensure
that it has sufficient liquidity to meet its broker margin
requirements and other financial liabilities when due,
under both normal circumstances and stressed conditions.
These liquidity requirements must be met from the Group’s
own liquidity resources, as client money cannot be used for
its operations.

STRATEGIC REPORTThe Group holds liquid assets to: i) enable the funding of
broker margin requirements, ii) place appropriate prudent
margins and buffers in segregated client money accounts, iii)
support the growth of the business and its need for capital,
and iv) maintain a liquid assets buffer.

The Group manages its liquidity centrally, and key liquidity
decisions are discussed by the Executive Committee and
Executive Risk Committee.

The Group carries out an Individual Liquidity Adequacy
Assessment (ILAA) each year, and while this applies
specifically to the Group’s Financial Conduct Authority
(FCA)-regulated entities (as liquidity is centrally managed
through these entities), this process provides the context
for determining the mitigating actions that would be
taken in the event of stressed liquidity conditions for the
whole Group.

The Group uses a number of measures for managing
day-to-day liquidity risk, including the level of total liquid
assets of broker margin requirement and of same-day
available cash.

The Group is required to fund margin payments to brokers
on demand. Broker margin requirements are driven by the
gross hedging positions held by the Group, at rates set by
the brokers. The value of these positions and the margin
requirements are in turn driven by the number of active
clients, the level of client activity, the make-up of the total
client exposure, exchange rates, interest rates and the value
of instruments.

In addition to its liquid assets, the Group mitigates its
liquidity risk through maintained access to committed
unsecured bank facilities. The Group regularly stress-tests
its liquidity forecasts to validate the appropriate level of
facilities it holds, and draws down on the facility at least
once during each year to test the process for accessing
that liquidity.

The Group produces detailed short-term liquidity forecasts
and stress tests, so that appropriate management actions or
liquidity facility draw-down can occur prior to a period of
expected liquidity demands.

IG is exposed to interest rate risk on all interest rate sensitive
instruments in the non-trading book (‘Banking Book’),
including balance sheet assets, liabilities and off-balance-
sheet items. Examples of such instruments are the UK
government gilt securities held within the Liquid Asset
Buffer and as collateral at hedging brokers. The liquidity risk
related to these instruments is considered within the
Liquidity Risk Management Policy.

Capital adequacy risk
IG operates authorised and regulated businesses worldwide,
supervised by the FCA in the UK and regulators across other
jurisdictions. As a result of this supervision, the Group is
required to hold sufficient regulatory capital at both Group
and individual entity level to cover its risk exposures, valued
according to applicable rules, and any additional regulatory
financial obligations imposed.

The Group is supervised on a consolidated basis by the
FCA. In addition to its two UK FCA-regulated entities, the
Group’s operations in Australia, New Zealand, Japan,
Singapore, South Africa, the United States of America,
Germany, Switzerland and United Arab Emirates (Dubai
International Financial Centre) are directly authorised by the
respective local regulators. Individual capital requirements
in each regulated entity are taken into account, among other
factors, when managing the global distribution and level of
the Group’s capital resources, as part of the Group Capital
Management Framework.

IG manages capital adequacy risk through its regulatory
capital policy, and seeks to ensure that at all times it holds
sufficient capital to operate its business successfully and to
meet regulatory requirements. The Group manages its
capital resources with the objectives of facilitating business
growth, maintaining its dividend policy and complying with
the regulatory capital resources requirement set by its
regulators around the world.

The Group undertakes an annual Internal Capital Adequacy
Assessment Process (ICAAP) through which it assesses its
capital requirements, including the application of a series
of stress-testing scenarios, to its base financial projections.
The ICAAP document is reviewed and challenged by
the ICAAP and ILAA Committee and the Board Risk
Committee, which recommends the result to the Board
for review and approval.

The Group operates a monitoring framework over its
capital resources and minimum capital requirements daily,
calculating the credit and market risk requirements arising
on the exposures at the end of each business day. The
Group additionally monitors internal warning indicators
as a component of its Board Risk Dashboard, and any
breaches are escalated to the Board as they occur, with a
recommendation for appropriate remedial action.

Entity-level capital requirements monitoring and
management is carried out locally according to each
jurisdiction’s requirements.

Operational risk
Operational risk is defined as the risk of loss resulting from
inadequate or failed internal processes, people activities,
technology adoption and innovation, systems or external
events. The Group also recognises the risk that it is unable
to attract and retain the staff it requires to operate its
business successfully as an operational risk.

Operational risk is managed through the application of the
Group’s operational risk management framework. The Group
continuously develops this framework to ensure visibility
of risks and controls. It focuses on clear accountability
for controls and escalation and reporting mechanisms,
through which risk events are identified and managed
and appropriate action is taken to improve controls.

IG recognises that operational risk arises in the execution of
all activities undertaken by the Group, and identifies and
manages operational risk in four categories: technology,
people, process and risk arising from external events.

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RISK MANAGEMENT CONTINUED

Technology risk
Technology risk is the risk of loss caused by breakdown or
other disruption to technology performance and service
availability, or by information security incidents. It also
includes new technology and technology that fails to meet
business requirements.

The Group manages its technology risk through its
Technology Risk Framework, which is overseen by the
Technology Risk Committee. Key performance indicators,
incidents and outages are raised to this forum, comprising of
IT and risk experts. To manage cyber risk and external threats
to our systems and data, the Group has a specific Information
Security Forum, through which senior management is made
aware of ongoing and potential threats, with policies and
processes continuously being refreshed to ensure their
validity within the evolving landscape.

People risk
People risk is considered as the risk of a loss intentionally or
unintentionally caused by an employee, such as employee
error or misdeeds, or involving employees, such as in the
area of employment disputes. It includes risks relating to
employment law, health and safety, and HR practices.
People risk includes the risk that the Group is unable to
attract and retain the staff it requires to operate its business
successfully. In addition, employee strain is monitored
ensuring sufficient staffing levels are in place for key
business teams, so that processes are run effectively with
controls maintained.

Process risk
Process risk relates to the design, execution and
maintenance of key processes, including process
governance, clarity of roles, process design and execution. It
also covers record-keeping, regulatory compliance failures
and reporting failures.

External risk
External risk is the risk of loss due to third-party
relationships and outsourcing, damage to physical and
non-physical property or assets from natural or non-natural
external causes and external fraud.

The Group continues to develop its Operational Risk
Framework to ensure visibility of risks and controls. It
focuses on clear accountability for controls and escalation
and reporting mechanisms, through which risk events are
identified and managed and appropriate action is taken to
improve controls.

The Group’s Risk and Control Self-Assessment (RCSA)
methodology focuses on areas of the business identified as
a priority. The Group uses an operational risk event self-
reporting process which provides increased visibility over
events and control actions to be taken. These are monitored
through a consolidated Control Action List.

Conduct risk
IG recognises and manages the risk that the Group’s
conduct may pose to the achievement of fair outcomes for
consumers, and to the sound, stable, resilient and

transparent operation of the financial markets. The Group
has a conduct risk framework, and has implemented a
conduct risk strategy that aims to analyse the conduct risks
that may arise, and sets out how those risks are managed
and mitigated. It also sets out specific controls used to
manage conduct risk. The Group seeks to promote a
positive, company-wide culture of good conduct as a
competitive advantage and a means to differentiate itself
clearly from those companies conducting themselves poorly.
It also seeks to ensure that all employees are aware of the
importance of managing conduct risk through programme
conduct risk training and awareness.

Client outcomes
The Group manages and monitors the risk of clients failing
to understand the functionality of our products and
suffering poor outcomes. The Group recognises that some
of its products are not appropriate for certain consumers,
and operates a process to identify potential new clients for
whom the product may not be suitable. The Group supports
clients with education and training, and offers account types
that limit a customer’s risk. Client outcomes are monitored
and reported to the Board.

At a global level IG adopts a vulnerable client policy, which
places responsibility on first-line client-facing staff to monitor
for signs of vulnerability in clients eg the type of language
used by clients in their communications to the Company. If a
client is deemed vulnerable their account will be closed. The
number of clients who have closed accounts due to deemed
vulnerability is tracked and monitored by the compliance
team as part of a Product Governance management
information suite. Compliance monitoring helps to identify
lack of policy adherence, as well as any sudden increases in
closures which may point to an issue with the way our
products are being designed, marketed and sold.

In addition, the client team monitor the funding of client
accounts in tandem with information held on clients
regarding their financial position. This is done with the
intention of identifying scenarios where affordability of
losses may be called into question.

Markets and financial crime
The Group recognises the risk of causing poor market
outcomes if proper controls are not in place, for example, to
detect instances of market abuse which must then be
reported on. Clients may also attempt to use IG to commit
fraud or launder money, and the Group has designed its
systems, controls and monitoring programmes to mitigate
and detect such issues.

Culture and our people
The Group recognises the risk that the actions of its staff or
the Group’s culture can result in poor outcomes for clients,
or for the financial markets. The Group seeks to ensure that
its staff are appropriately trained, managed and incentivised
to ensure that their behaviour and activities do not
inadvertently result in poor outcomes for clients or the
markets. The Group also reviews remuneration policies and
incentive schemes to ensure that they are appropriate and
conducive to good conduct by staff.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTCORPORATE SOCIAL RESPONSIBILITY

At IG we understand that sustainable long-
term returns stem from good stakeholder
management and conduct – whether that be
in the way we treat our clients and our
employees, or the way we interact with the
markets, our regulators and wider society.

Communication and involvement
To continue to align our people with our business and
values, communication has been an area that we have
focused on during the year. We have continued to develop
our approach to ensure that our employees have several
avenues available to them in which to learn more about our
business and our performance, and to connect with our
senior management and the Board.

In all our relationships we seek to act with integrity and
transparency, maintaining a reputation for professionalism
and ethical practice along with a constant determination to
do things better.

Underpinning this approach are the shared values that
shape all our attitudes and behaviours:

Champion the client

Lead the way

Love what we do

Our values provide the foundation for our future growth and
success, and they give us an ongoing focus in our day-to-day
work. We recognise the importance of defining and
communicating these values to all of our people, especially
in times of change. As well as helping our employees to
realise our overall vision, this helps ensure that good
conduct remains at the core of our culture. We continue to
benefit from the work started in 2017 to embed the values
within the performance management, recognition and
reward processes, encouraging our people to behave in
alignment with our goals.

During the year, the Executive Committee reviewed our
values in the context of the new strategy, testing each
against our goals and ambitions. Following the review, the
Executive Committee confirmed that our values are as
important and as relevant now as when they were launched
in 2017. At the beginning of the 2020 financial year we will
conduct strategy engagement sessions for our people, to
complement the communication of the new strategy.

The following sections set out how IG has been able
to demonstrate its commitment to our values, attitudes
and behaviours.

SUPPORTING OUR PEOPLE

Nurturing a team of talented and dedicated people is central
to our strategy, enabling us to deliver the exceptional
products and services that keep us at the forefront of our
industry. By cultivating an inclusive and enabling environment,
we ensure that our people can thrive and achieve their full
potential. This, in turn, empowers them to drive our business
forward – thinking creatively, working collaboratively and
building rewarding relationships with our clients.

We ensure that new employees attend values workshops to
understand the meaning and importance of the values to
our business.

Our intranet, the Hub, is well-used by employees. There were
1.08 million views on the site during the year, up from 1.06
million views in the previous year. The Hub is the first place
that our people go to for information, with the announcement
of June Felix as our CEO, and the day that our new strategy
was announced ranking as the intranet’s most popular days.
We published 315 news articles through the year, many
generated by our people themselves. In addition, we
launched IG 101 during the year – a one-stop educational
area on the Hub, for employees who want to learn about the
business with on-demand material and videos.

In July 2018 we held our first ‘IG World Cup of Trading’, an
internal competition to increase employee engagement with
our products and the wider business, gain feedback for our
platforms and service, and drive inclusivity. This competition
was open to all employees, and we saw over 270 people join
in from across our organisation. We plan to repeat the
competition each year.

On starting with IG, our CEO made it a priority to personally
meet as many of our people as possible. Communication
through our intranet supported June Felix’s introduction to
the business and enabled our people to hear her speak on
important topics. Supporting the CEO in engaging the
wider organisation was a newly formed Global Leadership
Team. This group is made up of senior managers and the
Executive Committee, and has a key responsibility for
embedding organisation culture, engagement and
communication throughout the Business.

This approach to introducing our new CEO complemented
the work that has been done over the last few years, to
ensure that our employees have a number of avenues
available for them to connect with our senior management
and the Board. This includes fortnightly meetings with the
global management team, informal events and our intranet-
hosted content including blogs and articles.

We provide specific forums for the Board to meet with our
employees, to discuss the strategic issues facing the
business, and the Chief People Officer reports quarterly to
the Board on people-related metrics and activity. Over the
last 12 months we have given the Board access to key
people in our organisation, focusing on giving those from
outside the UK this opportunity. We consistently get positive
feedback from our people on these events. They appreciate
the chance to learn more about the role of the Board and
discuss the strategic direction of the business.

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We have also sought to involve our people with the recent
work to define the new strategy. This comprehensive
process involved most of our senior managers, many of our
key contributors and our subject matter experts. This
resulted in a highly collaborative development experience
for those involved, and a strategy that was well-received by
our people and the market.

In May 2019 the Board approved IG’s approach to ensuring
a deeper engagement with our workforce through the
establishment of a People Forum. One of the purposes of
the Forum is to ensure that the views of the workforce are
considered in Board discussions and decisions. It will be
chaired by the Chief Operating Officer and attended by
Non-Executive Directors.

Employee engagement
We are proud to have been certified as one of Britain’s Top
Employers by the Corporate Research Foundation for over ten
years, and are committed to making IG a great place to work.

To understand our employees’ perceptions of the business,
we carry out two engagement surveys each year. By
collecting their feedback in this way, we give our people
another direct channel of communication to the Executive
Committee and the Board. We consider the insights we
receive when making decisions that are likely to affect
employees’ interests.

We have invested in raising employee engagement over the
last few years and we have seen a significant improvement in
engagement since 2016. Over the last 12 months we saw a
7% jump, driven by increases in employee satisfaction and
advocacy. These results are particularly important for us in
the current challenging market conditions. We continue to
use the results to inform new initiatives and decisions
relating to our people.

In response to the feedback we have gathered from these
surveys, we launched two global employee-focused
programmes in 2017. Our global recognition awards
programme is based on our values, and allows our people to
nominate their peers in recognition of their achievements.
Now at the end of its second year, engagement with this
programme is high – with nominations breaking previous
records and almost 100 winners in the last 12 months
representing all our regions. This year we introduced a special
CEO award for collaboration, aimed at teams across IG that
worked together across geographical and business areas to
deliver projects that would benefit our business and clients.

A diverse and fair workplace
We believe that a well-managed and diverse workforce
brings creative energy to our business. We are committed to
developing a team of individuals with the best skills to help
us realise our vision and strategy – regardless of their age,
ethnicity, faith, gender identity, sexual orientation or physical
capacity. We welcome applications from candidates with a
passion for our business, irrespective of their educational and
professional background. To do this we agreed our diversity
and inclusion strategy in July 2018, setting out our strategic
framework and a two-year plan of action.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

A positive
outcome for
everyone and
our business

Inclusive culture
is a journey

Everyone’s
responsibility

Our people shape
our journey

Inclusive culture is what you can expect at IG

IG DIVERSITY AND INCLUSION STRATEGIC FRAMEWORK

We have made significant progress in understanding our
employee profile through the collection of data. In the 2019
financial year we anonymously collected demographic
information on employees through our annual employee
survey. We asked our people about ethnicity, disability,
sexual orientation and caring responsibilities. This was
combined with existing data on gender and age and
provides a global data set on these six characteristics to
better understand our people.

We used this information to set One IG Goals. These goals
are our senior managers’ commitment to making positive
change happen. All goals were collaboratively created and
have a clear action plan.

Our aim is to create an inclusive culture where diverse points
of view are welcome and encouraged, and that supports the
provision of opportunities to a broad range of people. Our
two-year goals represent our commitment to achieve
sustainable change, and we expect to reset the goals every
two years.

We have extensive people policies in place to ensure that
we recruit the right people and enable them to develop
without experiencing discrimination or harassment. We
continuously reinforce the need to treat all employees fairly,
creating an environment free from bullying, where people of
all grades and positions enjoy dignity and respect.

We fully consider applications for employment from
disabled persons with aptitudes and abilities in line with our
requirements. Where existing employees become disabled,
temporarily or permanently, it is our policy to provide
continuing employment wherever practicable in the same or
an alternative position. Appropriate training and/or
graduated back-to-work programmes, in conjunction with
occupational health professionals, help achieve this aim.

STRATEGIC REPORT

We seek to accelerate change in our employee profile with
several innovative programmes. Two examples from our
business in India are our recruitment drive for women IT
developers, and our intern programme.

To drive female recruitment in our IT development teams we
held a recruitment event: a series of presentations about IG
from our CEO, office head and female developers. The
event attracted 55 female developers, and the resulting
recruitment improved female representation in the India IT
development team by 5%. We launched an internship
programme to provide training for women returning to work
after a break, to update their skills – including interview skills
– and provide work experience. We had a very successful
programme and hired one person to join our team
permanently. These pilot initiatives have a positive impact
on the women involved, our teams and our employer brand.
We are seeking to run future programmes in India in the
next 12 months, and we are considering extending the
approaches to other markets.

We continue to use our early careers programmes to strive
for better representation, and continue to support Code
First: Girls to attract more women to technology careers.

We also continue to support our two employee networks –
IG Open for LGBT+ people and allies, and IG Inspire, our
women’s network. Each group has had a busy year of
internal and external events organised with funding from IG.

IG Open used the FIFA Football World Cup in 2018 to
engage large numbers of people in the conversation about
inclusion and diversity. This was received well and drove an
increase in their members and registered allies. IG Open
continues to support Red Run, the British Film Institute Flare
Film Festival and the London Pride parade in the UK.

Our Krakow office has established relationships with other
organisations, and following the change in law to
decriminalise homosexuality in India we have begun to work
with the Pride Circle, a local network for the LGBT+
community. We led several awareness exercises in our
Bangalore office, increasing support for the network from
0.3% to 20%.

We have benefited from Stonewall membership, initiated in
2018, and they continue to be a key advisor in improving our
processes and policies. We have recently created a global
policy to support those who plan to transition while working
with us, and updated our Parental Leave Policy in line with
Stonewall guidance. We also ask key suppliers for
information on their approach to diversity and inclusion in
our vendor management approach. IG Open support has
significantly increased in the year ended 31 May 2019.

IG Inspire, our women’s network, was launched on
International Women’s Day in 2018. In its first year, the team
has focused on making career development opportunities
and external events available to our women. The network
also sponsored internal presentations and panels by our
own people, including a compelling presentation on
imposter syndrome. One of the key achievements of the

network this year was the launch of the IG Inspire women’s
mentoring programme, where women were given the
opportunity to be mentored by our senior leaders. The aim
was to support the career development of women in IG and
in the first year 18 women took part. The feedback was very
positive, and participants said that they developed their
confidence, thinking skills and career plans.

In order to raise awareness further we encourage our people
to share their personal stories through our blogs on the IG
intranet. The stories shared about disability, mental health
and caring for elderly relatives have been an important way
to encourage our workforce to consider the impact of
personal challenges on life at work.

We published our ‘Gender Pay Gap’ figures for the UK for
the second time in March this year. This publication can be
found on the IG Group website. Our gender pay gap exists
because we have more men than women in senior roles. We
aspire to eliminate this anomaly over time.

The initiatives described here illustrate the various
approaches we are using to help close the gender pay gap
at IG. We are also targeting high-performing women for
progression, through a range of career and personal
development tools and learning programmes.

Human rights
We conduct our business in an ethical manner, following
policies that embody key human rights principles. To ensure
the rights of our employees are respected, we have an
Equality, Diversity and Inclusion Policy and corresponding
complaints procedures. Any employee with concerns about
how IG respects the rights of employees or clients can also
raise these to senior management through the
Whistleblowing Policy. We expect our suppliers to uphold
human rights in their own organisations, and we will not
tolerate modern slavery or human trafficking. More
information can be found in our Slavery and Human
Trafficking Statement on iggroup.com.

Wellbeing
We are fully committed to the health and wellbeing of our
people. Our employees receive appropriate protection
benefits and discounted gym access. In the UK, our people
can access our flexible benefits portal, which provides
the opportunity for individuals to personalise benefits to
their lifestyle requirements. These benefits include access
to private healthcare, the cycle to work scheme and
health assessments.

We provide a global employee assistance programme (EAP).
The programme offers 24/7 telephone counselling services
and other wellbeing resources to all our people. The service
is delivered in local languages for each location, and all calls
made to the helpline are completely confidential.

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OUR WORKFORCE(1)

In terms of gender, our workforce is
made up as follows at 31 May 2019:

BOARD

3 | 30%

7 | 70%

3 | 38%

5 | 63%

SENIOR EXECUTIVE TEAM

GLOBAL LEADERSHIP TEAM

EMPLOYEES

TOTAL

8 | 33%

16 | 67%

532 | 31%

1,200 | 69%

541 | 31%

1,221 | 69%

FEMALE

MALE

(1) Excluding contractors. The data groups above share

common members.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

Rewarding high performance
We continue to use our performance check-in process to
provide regular opportunities for feedback, recognition and
evaluation. Moderation meetings are embedded in our
performance review process, to support fair and consistent
performance evaluation. This helps to encourage healthy
debate amongst our managers to identify the top
performers across the organisation. Where employees are
identified as underperforming either within moderation
meetings or during the year, these employees are placed
on performance improvement plans.

We offer a competitive reward package and a market-related
salary structure that is regularly benchmarked. We also
include the majority of our employees in a Group bonus
scheme. Bonus levels are linked to the financial and
operational performance of IG, including client satisfaction.
We also ensure that our employees’ individual performance
is reflected in any bonus payments by reviewing the
correlation of employee performance against bonus
outcomes. This allows us to be confident that our people
receive bonuses which reflect their individual performance
relative to their peers. We actively check bonus and pay
proposals for fair outcomes across diverse groups. By
reviewing our remuneration risk, we also ensure that our
bonus scheme does not incentivise poor outcomes for the
Company. Bonuses from the Group scheme are distributed
following the end of each financial year.

The remainder of our employees are included in specific
sales-related bonus plans. A Sales Governance Committee
with representatives from risk, compliance, HR and legal
meet regularly to ensure that our sales plans are achieving
their purpose and are encouraging the right behaviours.
We also reward our high-potential employees through a
long-term incentive plan, and we offer our employees in the
UK, Australia and the US the chance to share in our success
through our tax-advantaged share-purchase schemes. An
average of 32% of eligible employees took part in our share
plans in the 2019 financial year.

Developing talent
We take the development of our people seriously,
recognising that the recruitment and retention of our
high-performing and high-potential employees and the
development of their skills is vital to our continued success.
We are constantly improving the quality of the learning
opportunities our people can access, and we encourage
employees to progress within the business, supporting them
in their personal and professional growth.

All our employees are able to benefit from a variety of
learning and development resources, ranging from on-the-
job coaching and mentoring to webinars, internal training
events, secondments and Board exposure programmes.
We encourage attendance at relevant external events and,
where appropriate, sponsor our people to undertake
formal, industry-recognised training courses and achieve
professional qualifications. We also support our people
to attend and speak at conferences. For instance, we
sponsored the Great Indian Developer conference in the
2019 financial year, and had several of our experts and

STRATEGIC REPORT

senior managers speak and share experience on a variety
of topics.

We acknowledge the important role our managers and
leaders have in the success of our business, and have
management development programmes in London, Krakow
and Bangalore. These have developed almost 100 people
managers in the last 12 months. We also train our managers
on key people management processes, and these training
programmes regularly exceed 200 attendees. We have also
trained 34 qualified coaches across our business, and
provide coaching and mentoring for our people.

In the UK, we use the apprentice levy to support a variety of
apprenticeships. We support early careers, management
and leadership, and advanced-level qualifications.

We believe our focus and investment in management and
leadership development has helped us achieve strong
results in our engagement survey.

To build a strong succession pipeline, we operate an annual
process to assess potential across our organisation. This
involves using an externally recognised model of potential,
and moderation meetings with senior managers to examine
talent deep into the organisation. The purpose of this
process is to identify individuals who exhibit the leadership
attributes we require, and to monitor the progress of those
previously identified. We nurture these individuals through
personalised development plans, 360-degree feedback
processes, and using a variety of experiences to accelerate
their development and progression. The outputs of the
process are succession plans for senior critical roles.

We continue to match our high-potential people to critical
roles, as we believe that development is most effective when
delivered through the work people do. An example of this
has been the recent strategy work, where many of our
people were exposed to experiences to build their strategic
thinking and analysis skills. In addition, in the last 12 months
we were able to provide over 50% of our high-potential
people with new and expanded roles. We also conducted a
detailed risk assessment for all senior successors, and
segmented high-potential individuals’ responses in the
employee survey to look at likelihood of leaving. This has
driven targeted actions to support departments and
business units facing a higher level of risk.

Community involvement and social matters
In 2017, we launched the IG Community Fund. The fund
has a significant budget to support our people to help
the causes and communities they care most about. The
purpose of the fund is to support the communities we
operate in, and to help engage and retain our people.
We match the fundraising efforts of our people and
provide funding to enable our people to complete bigger
challenges for charities.

This year we were able to spend 99% of the fund, and we
continue to see a rise in applications to the fund from across
our global workforce. Typical projects we supported were
individuals completing sporting and other challenges for

charities, our teams in Krakow working with Helping Hands
to build artificial hands for amputees worldwide, our team in
Bangalore working with a school for disadvantaged children,
and our Melbourne team cooking meals for the homeless.

To make the most of charitable donations, we continue
to work with the Charities Aid Foundation, allowing our
employees to make contributions to selected charities
from gross earnings, directly from their monthly pay.
Not only do we support charities with gifts of money, but
also by providing time and resources. Our Time-off Policy
offers the opportunity for our people to take up voluntary
work, for which we grant additional leave on a like-for-like
basis up to a maximum of five matched days per annual
leave year.

We support our people to be involved in these initiatives
and projects because it is good for their engagement with
IG, and for the communities in which we operate.

ANTI-CORRUPTION AND BRIBERY

We are fully committed to preventing, detecting and deterring
fraud, bribery and all other corrupt business practices.

We conduct all of our business activities with honesty,
integrity and to the highest ethical standards. As a UK-
incorporated company, we abide by the UK Bribery Act
2010, and we have established a Share Dealing Code of
Conduct, a Disclosure Committee and a relevant policy, to
ensure we continue to meet the requirements of the Market
Abuse Regulations.

We have designed and implemented global policies to
comply with anti-bribery and anti-corruption laws, and
this includes employees wishing to give or receive gifts
or hospitality. Employees do not make or accept
facilitation payments.

Every year all employees receive anti-bribery and corruption
training through an e-learning module, which includes a
knowledge assessment.

The Group makes charitable donations that are legal and
ethical under local laws and practices, but does not make
contributions to political parties.

TAXATION

We aim to make a positive contribution to the societies in
which we operate, and one of the most sustainable ways
to achieve this is to be a responsible taxpayer. We align
our approach to tax with our core values, by leading the
way and doing the right thing.

Tax contribution
In the 2019 financial year, we paid £67.9m (FY18: £76.6m)
to tax authorities globally in corporate income taxes,
employment taxes, irrecoverable VAT and betting duty.
Taxation is one of the most significant expenses for
the business.

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Tax strategy
We align our payment of tax with our commercial objectives,
making sure that we’re compliant with the tax laws in
jurisdictions where we operate. We create most of our value
in the UK, where the majority of our staff are based. We
benefit from the UK corporation tax rate, which is already
low in comparison with many other countries.

OUR ENVIRONMENTAL IMPACT

As a business that conducts nearly all of its client trades
online and undertakes no industrial activities, we do not see
ourselves as a significant emitter of environmentally harmful
substances. However, we still take any necessary actions
to ensure that we minimise the impact of our operations on
the environment.

Our Chief Financial Officer is responsible for the
management of tax risk. We rely on our in-house tax team
and the support of external tax advisors to ensure that we’re
operating in line with local tax laws and meeting our
statutory compliance obligations.

We have a Tax Strategy, which sets out our approach to
paying taxes, and a Tax Risk Management Policy, which
governs the tax decisions that are made by employees on
behalf of the Group. These are both reviewed by the Audit
Committee and approved by the Board on an annual basis.

Our tax team works with the wider business to ensure that
the implementation of the Group Strategy is supported by
timely and accurate tax advice. While considering tax
advice, we take into account the needs of all stakeholders,
ensuring that the outcome is fully aligned to the commercial
transaction and remains within the spirit of the law and
IG’s values.

We have a transparent relationship with tax authorities, and
will approach them when the application of tax laws requires
clarification. The tax team meets with HMRC on a regular
basis, to discuss the status of ongoing tax matters and to
update HMRC on changes to the business.

Effective tax rate
The effective tax rate (ETR) for the 2019 financial year is
18.5% (2018: 19.4%). This is lower than the main UK
corporation tax rate as a result of the benefit that the Group
receives from the UK patent box regime, and the recognition
of previous years’ losses for tax purposes. Further details
can be found in note 8 to the Financial Statements.

Cash tax rate
The Group paid £38.4 million in corporate tax during the
2019 financial year (FY18: £48.9 million). The effective cash
tax rate is 19.8% (FY18: 17.4%).

The effective cash tax rate can differ from the ETR because
tax payments made during a particular financial year may
relate to other financial years, or may be based on estimated
current year profits, depending on local tax laws. Also, the
ETR includes the effects of deferred tax movements, which
are not included when calculating tax payments.

Future effective tax rate
The Group’s estimate of the ETR for the year to 31 May 2020
is 18.5%. The Group’s ETR remains dependent on the mix of
taxable profit by geography, the availability and use of
taxable losses and changes to statutory tax rates.

Our greatest environmental impact comes from running and
maintaining our IT infrastructure. This technology supports
our award-winning platform and ensures we are consistently
able to maintain our high level of platform uptime. Powering
and cooling our datacentres results in the majority of our
energy usage – as well as our energy costs. As such, we
update our hardware and software as appropriate to save
money and energy. The cooling systems in our largest
datacentre have recently undergone a four-month
refurbishment; the latest electronically commutated fans
and new logic controls have been introduced to ensure
lower electrical consumption and operating costs.
Furthermore, transportation of equipment between our UK
datacentres is now carried out by a new zero-emission
electric vehicle.

Our offices are the second largest consumer of energy.
We apply a number of energy-saving processes and have
a far-reaching Recycling Policy. This not only encompasses
a proportion of our daily office waste, but also extends to
our IT equipment when we replace hardware. We try to
use any desktop equipment for its maximum functional life,
and this year we recycled 7,864kg of redundant IT and
electrical equipment.

Our head office building, where around half of our
employees are based, is ISO 14001 certified and has sensor
lighting. We operate a ‘hot-desk’ working model and
provide all employees with laptops, enabling our people to
work from home regularly. This minimises the workspace
required in our premises and optimises our efficiency.

As and when our global offices become due for
refurbishment, we continue to roll out the sustainable
initiatives already implemented in our head office. This year
we have made further progress in introducing laptops and
the hot-desk working model to our sites around the world
where this is practical, as well as installing environment-
friendly, state-of-the-art video conferencing and
collaboration technology – provided by Skype for Business.
This continues to reduce the need for work-related travel
between our global locations.

We make every effort to source our office services from
providers that are committed to sustainable principles. For
example, in the UK our fruit supplier plants one fruit tree in
Malawi, Africa, for every basket purchased. During the past
year, 7,105 trees were planted thanks to IG.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTEmissions data
We provide emissions data in respect of the 2019 financial
year in the Mandatory Greenhouse Gas Emissions Report
and Greenhouse Gas Emissions Intensity Ratio tables below.
In the tables, Scope 1 emissions are those incurred in air
conditioning our offices and running back-up generators for
our servers, while Scope 2 emissions are purchased energy
such as electricity. For the most significant sources of energy
consumption discussed above, we purchase electricity via
our landlords.

Basis of preparation
Greenhouse gas emissions are calculated on the basis of
financial control, with the emissions data included for the
companies consolidated in the Financial Statements, noting
the Statement of Exclusions given below:

• Our methodology has been based on the principles of

the Greenhouse Gas Protocol, taking account of the 2015
amendment which sets out a ‘dual reporting’
methodology for the reporting of Scope 2 emissions

• We have reported on all the measured emissions sources

required under The Companies Act 2006 (Strategic
Report and Directors’ Report) Regulations 2013, except
where stated

• This includes emissions under Scope 1 and 2, except

where stated, but excludes any emissions from Scope 3

• The period of our report is 1 June 2018 – 31 May 2019

inclusive

• Conversion factors for UK electricity (location-based
methodology), gas and fugitive emissions are those
published by the Department for Environment, Food and
Rural Affairs for 2018-19

• Conversion factors for UK electricity (market-based
methodology) are published by electricityinfo.org

Statement of exclusions
• Global diesel use (for vehicles) has been excluded from
the report on the basis that it is not material to our
carbon footprint

• Our fugitive emissions have only been reported for
regions where the data has been made available

MANDATORY GREENHOUSE GAS EMISSIONS REPORT

Emission type

Scope 1: Operation of facilities

Scope 1: Combustion

Total Scope 1 emissions

Scope 2: Purchased energy

Total Scope 2 emissions

Total emissions

2017/18
CO2e tonnes

2018/19
CO2e tonnes

Location-based

2017/18
CO2e tonnes
Market-based

2018/19
CO2e tonnes
Market-based

3,139

3,228

107

331

438

2,711

3,149

2,581

2,670

107

331

438

2,681

3,119

GREENHOUSE GAS EMISSIONS INTENSITY
Total footprint (Scope 1 and Scope 2) CO2e.

Net trading revenue (£)

Intensity ratio, location-based method (tCO2e/£100,000)

Intensity ratio, market-based method (tCO2e/£100,000)

Previous year
(2017/18)

Current year
(2018/19)

Year-on-year
variance

569.0m

476.9m

5.67

4.69

6.60

6.54

-92.1m

+0.93%

+1.85%

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
CORPORATE SOCIAL RESPONSIBILITY CONTINUED

NON-FINANCIAL INFORMATION STATEMENT

Section 414CA of the Companies Act 2006 (the Act) requires the Company to include within its Strategic Report a non-
financial information statement setting out such information as is required by section 414CB of the Act. The table below and
the information it refers to is intended to help stakeholders understand IG’s position on key non-financial matters.

Reporting requirement

Policies which govern our approach

Risk management and other

Environmental matters

Employees

Human rights

Social matters

Anti-bribery and corruption

CSR report, pages 68 to 69

CSR report, pages 63 to 67

CSR report, page 65

CSR report, page 67

IG Health and Safety Policy statement
ISO 14001
Greenhouse Gas Protocol
Recycling Policy

Equality, Diversity and Inclusion Policy
Recruitment Policy
Time-off Policy
Anti-discrimination and Harassment Policy

Equality, Diversity and Inclusion Policy
Modern Slavery and Human
Trafficking Statement

Equality, Diversity and Inclusion Policy
Time-off Policy

IG Group Anti-Bribery Policy
IG Group Gifts and Hospitality Policy
PEPs and Sanctions Policy
Client Risk Categorisation Policy
Group Global Anti Money-
Laundering (AML) and Counter
Terrorist Financing (CTF) Policy

Description of principal risks and impact on business activity

Description of business model

Business Model and Risk Profile, pages
30 to 34
Main Trends and Factors Likely to
Affect the Future Development,
Performance and Position of the
Company, pages 35 to 36
Risk Management, pages 56 to 62

Business Model and Risk Profile, pages
30 to 34

Non-financial key performance indicators

KPIs, pages 54 to 55

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

STRATEGIC REPORTGOING CONCERN AND VIABILITY STATEMENT

GOING CONCERN

The Group meets its day-to-day working capital requirements
through its available liquid assets and committed banking
facilities. The Group’s liquid assets comprise cash balances
available to the Group for its own purposes, and exclude all
monies held in segregated client money accounts. An
element of the Group’s liquidity is considered not to be
available as it is held in overseas businesses for purposes of
local regulatory and working capital requirements. In
addition, some of the Group’s liquidity is utilised for the
buffers required to be held in client money.

In assessing whether it is appropriate to adopt the going
concern basis in preparing the Financial Statements, the
Directors have considered the resilience of the Group,
taking account of its liquidity position and cash generation,
the adequacy of capital resources, the availability of external
credit facilities and the associated financial covenants, and
stress-testing of liquidity and capital adequacy taking into
account the principal risks faced by the Business. Further
details of these principal risks and how they are managed
is documented in the 2019 Group Annual Report from
page 56.

The Directors’ assessment has considered future
performance, solvency and liquidity over a period of at least
12 months from the date of approval of the Financial
Statements. The Board, following the review by the Audit
Committee, has a reasonable expectation that the Group
has adequate resources for that period, and confirm that
they consider it appropriate to adopt the going concern
basis in preparing the Financial Statements.

VIABILITY STATEMENT

The UK Corporate Governance Code requires the Directors to
make a statement regarding the viability of the Group, including
explaining how they have assessed the prospects of the Group,
the period of time over which they have made the assessment
and why they consider that period to be appropriate.

The Group has a forecasting and planning cycle consisting
of a strategic plan, an annual budget for the current year and
financial projections for a further three years. The output
from this business planning process is used in the Group’s
capital and liquidity planning, and the most recent forecasts
are for the four-year period ending May 2023.

The four-year forecasting period is the length of time over
which the Board strategically assesses the business; the
period of time the Board would typically look to pay back
investments; and is the period over which the Group reviews
its regulatory capital resources and requirements. The
Group has assumed that there will be no material adverse
change to the Group’s regulatory capital or regulatory
capital requirements during this period.

The first year of the planning period has a greater degree of
certainty and is, therefore, used to set detailed financial
targets across the Group. It is also used by the
Remuneration Committee to set targets for the annual
incentive scheme. Caution about the degree of certainty
needs to be exercised, as in the short term, the performance
of the Group’s business is impacted by influences such as
market conditions that it cannot control.

The further three-year period provides less certainty of
outcome, but provides a robust planning tool against which
strategic decisions can be made. These forecasts are also
considered when setting targets for the executive and senior
management share plans.

The Group undertakes stress testing on these forecasts and
through the ILAA, ICAAP and Recovery Plan, providing the
Board with a robust assessment of the possible
consequences of principal risks facing the Group, including
those that would threaten its business model, future
performance, solvency and liquidity.

The types of scenarios used include the impact of major
regulatory changes; the collapse of a major financial services
firm; major currency appreciation; and cyber-attacks.
Additionally, the Group has undertaken reverse stress-
testing to understand the circumstances under which the
Group’s business model is no longer viable. With
appropriate management actions, the results of these
stresses showed that the Group was resilient to all severe,
but plausible, scenarios and would be able to withstand
the impact.

The Group is planning investments in new countries and in
new products that may be less successful than assumed by
the financial forecasts. The Directors are satisfied that these
and other uncertainties have been assessed, and that the
financial forecasts reflect an appropriate balance of the
potential outcomes.

Overall the Directors consider the Group is well-placed to
manage its business risks successfully, having taken into
account the current economic outlook, the possible
consequences of principal risks facing the business in severe
but plausible scenarios, and the effectiveness of any
mitigating actions on the Group’s profitability and liquidity.

The Group’s business model provides the Directors with
comfort that the business is being run in a sustainable way,
acting in the interest of its clients and acting responsibly in
managing relationships with other stakeholders. The Board
regularly assesses the principal risks facing the Group and
receives reports on these and new emerging risks through
the Risk Management Framework. On the basis of these and
other matters considered and reviewed by the Board during
the year, the Directors have reasonable expectations that
the Group will be able to continue in operation and meet its
liabilities as they fall due over the four-year period ending
31 May 2023.

STRATEGY AND PERFORMANCE REPORTING

The Strategic Report up to and including page 71 was
approved for issue by the Board on 23 July 2019 and signed
on its behalf by:

Paul Mainwaring, Chief Financial Officer

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
G
O
V
E
R
N
A
N
C
E
R
E
P
O
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Chairman’s Introduction to Corporate Governance

Corporate Governance Statement

The Board

Board Governance

Nomination Committee

Directors’ Remuneration Report and Policy

Audit Committee

Board Risk Committee

Directors’ Report

Statement of Directors’ Responsibilities

Independent Auditors’ Report

112

120

123

126

127

72 -133
IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
CHAIRMAN’S INTRODUCTION
TO CORPORATE GOVERNANCE

As confirmed in the Chairman’s Statement set out on pages
4 to 6, during what has been a pivotal year for IG
encompassing significant change for the business and in
Board membership, IG’s core values have continued to be a
constant, underpinning our decision-making and helping
create the optimal environment for future growth,
management development and the development of
our strategy.

Good-quality corporate governance underpins IG’s ability to
deliver sustainable future growth and create long-term value
for shareholders. I would once again like to thank Board
colleagues for their continued support in promoting the
highest standards of integrity, probity and corporate
governance throughout the Company and particularly at
Board level.

The year has been pivotal for IG in ensuring we have the right
level of skills at Board level and a diverse pipeline for
succession, amongst executive and non-executive colleagues,
and at management level to ensure we are able to develop
and will be able to deliver our new strategy, post-
implementation of ESMA product intervention measures.

Now that we have announced our updated strategy, the
Board will focus on monitoring performance against that
strategy and the development of its identified significant
opportunities, as well as ensuring we continue to have
the talent to succeed in the achievement of our objectives
and targets.

Succession planning has continued to be a focus for the
Board. In last year’s report I welcomed Bridget Messer and
Jon Noble to the Board as additional Executive Directors,
effective 1 June 2018. The Board has continued to benefit
from their wealth of IG experience, further enhancing the
quality of debate around the Board table.

In September 2018, and in the interest of ensuring Board
membership continues to be regularly refreshed, we added
two experienced Non-Executive Directors. Sally-Ann
Hibberd’s wealth of Main Market-listed experience has
proved invaluable during a period of significant corporate
governance change. As well as significant financial services
experience, Jonathan Moulds brings with him a deep
understanding of IG’s products. Jonathan has since been
appointed as Chairman of the Board Risk Committee,
following the decision of Sam Tymms to stand down from
the Board in March to pursue other opportunities.

At the end of September 2018, Peter Hetherington stepped
down as CEO following a long and distinguished career at
IG, spanning more than 24 years. My thanks go to Peter and
to our CFO Paul Mainwaring for stepping in as interim CEO
whilst the Board completed our search for Peter’s successor.

ANDY GREEN
CHAIRMAN

Andy Green, Chairman,
gives his introduction to
corporate governance in
respect of the financial year.

As your Chairman it has been my
responsibility to lead the Board, creating
the right conditions to ensure the Board’s
effectiveness in all aspects of its role and,
in doing so, ensure the Board is regularly
refreshed and takes into account the views
of all relevant stakeholders.

ANDY GREEN
CHAIRMAN

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTOn 30 October 2018, following the culmination of our
externally facilitated search and succession planning efforts,
we announced June Felix as our new CEO, at which point
June stood down as a Non-Executive Director. As I said at
the time of her appointment, June has a strong track record
in strategy and product innovation and has successfully
developed businesses of varying scales in the US, Asia and
Europe. Her broad experience makes her ideally suited to
take IG forward.

On 15 April 2019, the Group announced that I had decided
to step down as Chairman at the AGM on 19 September
2019. With the completion of the CEO succession and the
subsequent announcement of our new strategy, this feels
like the right moment to hand over the reins. Malcolm Le
May, as IG’s Senior Independent Director, is leading the
search for my successor.

The Board continues to search for Non-Executive Directors
to bring fresh perspective to Board discussions and
complement the skill sets of the current Board.

The success of the Board is dependent on a shared purpose,
vision and values, and the relationship between the
Chairman and the Chief Executive Officer is central to this.
June has throughout her time at IG continued to be an
advocate for our values, which have remained unchanged
following her appointment. We continue to share views on
culture, values, ethics and inclusion, which help drive our
approach to strategic development.

The manner in which the Group has applied all aspects of
the 2016 UK Corporate Governance Code is set out in the
following Corporate Governance Report. In addition, the
Board has agreed its approach to the implementation of
initiatives in support of the 2018 UK Corporate Governance
Code and evolving stakeholder expectations, which we will
describe more fully in next year’s report. These include:

• How the interests of key stakeholders and the matters set
out in S172 Companies Act 2006 have been considered in
Board discussions and decision-making

• Alignment of IG’s purpose, values and strategy with our

corporate culture

• Engagement with the wider workforce where IG has

established a People Forum

• Updates to Committee Terms of Reference partly to

ensure succession planning processes are designed to
promote diversity and inclusion

Andy Green, Chairman
23 July 2019

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
CORPORATE GOVERNANCE STATEMENT

STATEMENT OF COMPLIANCE

The Chief Executive Officer (CEO) has delegated authority for:

The UK Corporate Governance Code (‘the Code’) sets out
the standards of good practice in relation to how a company
should be directed and governed. IG has a Premium Listing
on the London Stock Exchange and, as such, the Company
reports in accordance with the Code published in April
2016. The Code is published by the Financial Reporting
Council (FRC) and further information can be found on its
website at frc.org.uk. The Board considers that the Company
has been compliant with the provisions of the Code for the
year ended 31 May 2019. Brief details of the Board’s
preparations for compliance with the 2018 UK Corporate
Governance Code are set out in the Chairman’s Introduction
to Corporate Governance on page 75.

OVERVIEW OF CORPORATE GOVERNANCE
FRAMEWORK

IG recognises that its overall structure is subject to the
direction of its shareholders, who agree the Articles of
Association, approve transactions mandated through the
Listing Rules, consider the appointment and re-appointment
of Auditors and Directors, approve the final dividend and
provide for the Directors to delegate any of their powers
or discretions.

The Board of Directors is responsible for appointing
Directors to the Board, for agreeing the Group’s strategy
and for monitoring progress with the execution of the
Group’s strategy against agreed targets. The Board has
overall responsibility for promoting the long-term
sustainable success of the Company for the benefit of its
members as a whole, having regard, among other matters,
to those matters set out in Section 172 of the Companies
Act 2006, providing leadership and direction, including in
relation to culture, ethics and values, and ensuring effective
engagement with and encouraging participation from
shareholders and other stakeholders. The Board has
adopted a schedule of matters reserved to it for decision.

Certain governance responsibilities have been delegated
by the Board to Committees of the Board, to ensure
independent oversight over financial reporting, internal
controls, risk management, remuneration and reward,
Board-level recruitment and generally to assist the Board
with carrying out its responsibilities. Further information
on the role of the Board and of the Audit, Remuneration,
Risk and Nomination Committees is set out in the following
pages. In addition, the Board has a Standing Committee
which deals with Board-reserved matters required to
be considered at short notice and where there are
administrative matters requiring approval and evidencing
that do not warrant a full Board. The Board also has a
Disclosure Committee to assist and inform the decisions
of the Board concerning the identification of Inside
Information and to make recommendations about how
and when the Company should disclose that information.

• The development and execution of strategy

• Leadership and development of the Group’s executive

management team below Board level

• Day-to-day decision-making relating to, and management

of, the affairs of the Group

• Delivering financial performance in line with the Group’s

agreed budget

• Organisational design of the Group’s operations

The Chief Financial Officer (CFO) has delegated authority
including in relation to financial management of the Group,
the stewardship of Group assets, the safeguarding of client
money and assets, financial reporting and investor relations.
The Chief Commercial Officer (CCO) has delegated
authority for global client management, marketing and
global sales and conversion. The Chief Operating Officer
(formerly Chief Information Officer) has delegated authority
in respect of trading and operations and business change.

In order to support the delivery of IG’s strategy announced
to the market on 22 May 2019, led by the CEO, IG has
now completed an organisational review which has
led to a number of changes to the management
committee structure.

Below Board level, IG currently operates a number of
executive management committees.

The CEO is supported by the Group Executive Committee
which is IG’s most senior executive management committee,
comprising the CEO, CFO, CCO, COO and other senior
executives. It supports the CEO in the proper performance
of her duties, including to optimise the execution of the
Group’s strategy agreed by the Board, and provides advice
and support to executive management in the day-to-day
running of the Group’s operations.

The CFO, in the proper performance of his duties, is
supported by the Client Money and Assets Committee
relating to oversight arrangements and operations in
respect of the holding and safeguarding of client money
and assets across the whole of the business. The CFO also
leads the Control Functions Oversight Committee, which
oversees the work of control function heads in the execution
of their responsibilities relating to the Group’s system of
internal controls, and compliance by the Group’s legal
entities and their Directors with their statutory obligations.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTThe Group Executive Committee is also supported by the
Core Business Committee, chaired by the CCO, which
Committee has responsibility for the delivery and
monitoring of performance against the Group’s four-year
plan and Budget for the core business units. Furthermore it
is supported by the Growth Accelerator Projects Committee,
whose purpose is to deliver upon and monitor performance
against the significant opportunities agreed as part of the
Strategy approved by the Board.

The Executive Risk Committee (ERC), provides advice to
operational management in the day-to-day operation of risk
governance, applying the principles of sound corporate
governance to the identification, assessment, management,
monitoring and reporting of risks within the Risk Appetite
agreed by the Board.

The ERC in turn is supported by the Technology Risk
Committee, Information Security Committee, Vendor Risk
Management Committee, Best Execution Committee,
the ICAAP and ILAA Committee, the Pricing Committee,
the Investment Committee and the Sales Governance
Committee, which allow for detailed review of matters
forming part of the responsibilities of relevant management,
and from where significant matters are escalated, often
through the ERC to the Group Executive Committee.

The Group has also established a Transaction Reporting
Committee whose activities are reported to the Board Risk
Committee, and a People Forum to further enhance Board
engagement with the wider workforce.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
THE BOARD

The Board is responsible for determining the Group’s
strategy and for promoting our long-term success, through
creating and delivering long-term value for shareholders.

ANDY GREEN
CHAIRMAN

JUNE FELIX
CHIEF EXECUTIVE
OFFICER

PAUL MAINWARING
CHIEF FINANCIAL
OFFICER

BRIDGET MESSER
CHIEF COMMERCIAL
OFFICER

Age: 63

Age: 62

Age: 56

Age: 40

JON NOBLE
CHIEF OPERATING
OFFICER FROM 14 JUNE
2019 (PREVIOUSLY CHIEF
INFORMATION OFFICER)
Age: 42

MALCOLM

LE MAY

SENIOR INDEPENDENT

NON-EXECUTIVE

DIRECTOR

Age: 61

STEPHEN HILL, OBE

NON-EXECUTIVE

DIRECTOR

JIM NEWMAN

NON-EXECUTIVE

DIRECTOR

SALLY-ANN HIBBERD

JONATHAN MOULDS

NON-EXECUTIVE

DIRECTOR

NON-EXECUTIVE

DIRECTOR

Age: 58

Age: 53

Age: 60

Age: 54

Time on Board: 3 years
(Appointed 20 July 2016)

Time on Board: 1 year
(Appointed 1 June 2018)

Time on Board: 4 years

Time on Board: 8 years

Time on Board: 6 years

Time on Board: 8 months

(Appointed 10 September 2015)

(Appointed 28 April 2011)

(Appointed 1 October 2013)

(Appointed 20 September 2018)

Committee membership:

Remuneration Committee

(Chair)

Audit Committee

Nomination Committee

Committee membership:

Board Risk Committee

Remuneration Committee

Nomination Committee

Committee membership:

Audit Committee (Chair)

Board Risk Committee

Remuneration Committee

Nomination Committee

Committee membership:

Audit Committee

Remuneration Committee

Nomination Committee

(since 4 December 2018)

Committee membership:

Board Risk Committee

(Chair since 20 March 2019)

Remuneration Committee

Nomination Committee

(since 15 May 2019)

Paul brings in-depth knowledge
of financial services and Board-
level experience in several
public companies, providing IG
with a wide perspective in the
consideration of operational
and strategic development
discussions at Board and
management level. Paul served
as Interim Chief Executive
Officer from 27 September
2018 to 30 October 2018.

Paul joined IG from Tullett
Prebon plc, where he served as
Finance Director from 2006 to
2016. Prior to this, he was Group
Finance Director of Mowlem plc
and of TDG plc. Between 1993-
2000, he held various financial
roles at Caradon plc, including
three years as Finance Director
of MK Electric. He qualified as
a chartered accountant with
Price Waterhouse in 1987, and
obtained an MBA from Cranfield
School of Management in 1991.

Paul has no other current
appointments.

Bridget’s extensive knowledge
of corporate, commercial and IG
product matters, along with her
excellent understanding of IG’s
various regulatory environments,
helps the Board set its strategy
for client acquisition, client
management, and growth in
IG’s offices around the world.

Bridget joined IG as Legal
Counsel in May 2005. Bridget
then held a number of roles
within the legal function
leading to her appointment
as General Counsel and
Head of Compliance in
April 2010. She was also
appointed Group Company
Secretary in March 2011.

In September 2015, Bridget was
appointed to her current role
as Chief Commercial Officer,
reporting directly to the Chief
Executive. Bridget is a member
of IG’s Executive Committee.

Prior to joining IG, Bridget
held a position as a solicitor
within Deutsche Bank and
as a corporate solicitor at
Corrs Chambers Westgarth
Lawyers in Australia.

Bridget graduated from
Queensland University of
Technology with a Bachelor
of Laws, first class honours,
and a Bachelor of Business
(Dean’s List) in 2001, and was
admitted to the roll of solicitors
for Queensland in 2003, and
England & Wales in 2006.

Jon Noble was appointed Chief
Operating Officer on 14 June
2019 with responsibility for
Trading and Operations. Jon
also leads the business change
office and chairs a number of
the Company’s management
committees, including the
workforce-related People
Forum and the committee
established to deliver upon,
and monitor performance
against, the significant
opportunities agreed as part
of the Board strategic review.

Jon first joined IG in 2000
as a trainee dealer, rising to
Dealing Director in 2007. In
2010, Jon became Dealing
& Operations Director and
in 2012 was appointed Chief
Information Officer. In 2015, Jon
was appointed as head of IG’s
Delivery Pillar. He was appointed
to the Board as Chief Information
Officer on 1 June 2018.

As Chief Information Officer
Jon had responsibility for
setting and delivering the
Group’s IT strategy, delivery
of all programmes of work and
for keeping the production
environment stable and
secure. He was responsible
for IG’s IT systems, including
its client interface systems.

Jon graduated from Durham
University with a degree
in Economics, obtained an
Executive MBA from London
Business School in 2007 and has
been a member of IG’s Executive
Committee since 2012.

Time on Board: 5 years
(Appointed Deputy Chairman
on 9 June 2014; and Chairman
on 16 October 2014)

Committee membership:
Nomination Committee (Chair)
Remuneration Committee

Time on Board: 4 years
(Appointed Non-Executive
Director on 4 September
2015; and Chief Executive
Officer on 30 October 2018)

Andy has significant board
experience, including within
major listed companies. During
the year Andy was appointed
Senior Independent Director of
Airtel Africa PLC, which was
admitted to listing on the
London Stock Exchange on
3 July 2019 and to the Nigerian
Stock Exchange on 9 July 2019.
He is also a Non-Executive
Director of Link Administration
Holdings Ltd, quoted on the
Australian Securities Exchange.

Andy holds a number of
other roles in not-for-profit
organisations across the
infrastructure, space and
charitable sectors. He is
president of UK Space
and Chair of the Space
Leadership Council, and is a
Commissioner at the UK National
Infrastructure Commission.

In addition, Andy is Vice-
Chairman of the Disaster
Emergency Committee, which
focuses on emergency aid relief,
and is a Trustee of the World
Wildlife Fund UK.

Andy’s other current roles have
enabled him to bring to the Board
a wide perspective on technology
and digital development, whilst
also allowing him to devote
sufficient time to his role as
Chairman of IG.

Andy has previously served
as Group Chief Executive of
Logica plc, as CEO of Group
Strategy and Operations at BT
Group, as a board member of
the CBI, as Senior Independent
Non-Executive Director of
ARM Holdings plc and as
Senior Independent Non-
Executive Director of Avanti
Communications Group plc
and Chair of Digital Catapult.

As announced to the market
on 15 April 2019, Andy will not
be standing for re-election
as Chairman at the Annual
General Meeting.

June was appointed as Chief
Executive Officer on 30 October
2018, having previously served
as a Non-Executive Director of
the Company since 5 September
2015. June has a strong track
record in strategy and product
innovation, has successfully
grown and managed businesses
of varying scales in the USA, Asia
and Europe, and brings to the
role over 25 years’ experience
in both the finance and digital
technology sectors. June also
sits on the Board of Advisors of
The London Technology Club.

Until the recent sale of Verifone
Inc., June was President of
Verifone Europe and Russia with
responsibility for over 2,000
employees and the operation
of the business throughout
those territories. Prior to her
role at Verifone, June held
various executive management
positions at a number of large
multi-national businesses.
These include Citibank where
she was Managing Director
of Global Healthcare, Citi
Enterprise Payments, IBM
Corporation where she was
Global General Manager for the
Global Banking and Financial
Markets industry sector, and
Chase Manhattan Bank where
she was APAC Region Head of
GPTS. June has also worked as
a strategy consultant at Booz,
Allen & Hamilton, in strategy
roles at Chase Manhattan
Bank, and as CEO of Certco, a
risk management technology
firm for global broker dealers.
June graduated from the
University of Pittsburgh with a
summa cum laude (first class
honours) degree in Chemical
Engineering and Pre-Med.

June was selected as CEO
following an extensive
succession planning process that
assessed external and internal
candidates supported by Russell
Reynolds and Korn Ferry.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTANDY GREEN

CHAIRMAN

JUNE FELIX

CHIEF EXECUTIVE

OFFICER

PAUL MAINWARING

CHIEF FINANCIAL

BRIDGET MESSER

CHIEF COMMERCIAL

OFFICER

JON NOBLE

CHIEF OPERATING

OFFICER FROM 14 JUNE

2019 (PREVIOUSLY CHIEF

INFORMATION OFFICER)

MALCOLM
LE MAY
SENIOR INDEPENDENT
NON-EXECUTIVE
DIRECTOR

STEPHEN HILL, OBE
NON-EXECUTIVE
DIRECTOR

JIM NEWMAN
NON-EXECUTIVE
DIRECTOR

SALLY-ANN HIBBERD
NON-EXECUTIVE
DIRECTOR

JONATHAN MOULDS
NON-EXECUTIVE
DIRECTOR

Age: 63

Age: 62

Age: 56

Age: 40

Age: 42

Age: 61

Age: 58

Age: 53

Age: 60

Age: 54

Time on Board: 3 years

(Appointed 20 July 2016)

Time on Board: 1 year

(Appointed 1 June 2018)

Time on Board: 1 year

(Appointed 1 June 2018)

Time on Board: 4 years
(Appointed 10 September 2015)

Time on Board: 8 years
(Appointed 28 April 2011)

Time on Board: 6 years
(Appointed 1 October 2013)

Time on Board: 8 months
(Appointed 20 September 2018)

Committee membership:
Remuneration Committee
(Chair)
Audit Committee
Nomination Committee

Committee membership:
Board Risk Committee
Remuneration Committee
Nomination Committee

Committee membership:
Audit Committee (Chair)
Board Risk Committee
Remuneration Committee
Nomination Committee

Committee membership:
Audit Committee
Remuneration Committee
Nomination Committee
(since 4 December 2018)

Committee membership:
Board Risk Committee
(Chair since 20 March 2019)
Remuneration Committee
Nomination Committee
(since 15 May 2019)

Time on Board: 5 years

(Appointed Deputy Chairman

on 9 June 2014; and Chairman

on 16 October 2014)

Committee membership:

Nomination Committee (Chair)

Remuneration Committee

Time on Board: 4 years

(Appointed Non-Executive

Director on 4 September

2015; and Chief Executive

Officer on 30 October 2018)

Malcolm has broad experience
and knowledge of the financial
services and investment
sectors, along with extensive
experience on the boards of
publicly listed companies.

Stephen brings significant and
extensive quoted company
board experience. He is currently
a Non-Executive Director of
Applerigg Ltd and Chairman
of the Alzheimer’s Society.

Jim has in-depth knowledge
and experience of the financial
services sector, as well as
considerable experience both as
a CFO and in the implementation
of transformation programmes.

Stephen has previously served
as the CEO of Betfair plc,
and has held roles at Pearson
plc where, among other
positions, he was CEO of the
Financial Times Group.

Stephen was Chairman of
Interactive Data Corporation in
the US and the Royal National
Institute for Deaf People. He
has served as a Director on
the boards of RSA Insurance
Group plc, Psion plc, Channel
4, Ofcom, Aztec Limited
and Cambridge University
Judge Business School.

A qualified chartered
accountant, Jim was Finance
Director for Resolution plc,
having joined the Company
as Group Financial Controller.
He spent ten years at Aviva,
where he was Group Integration
Director for the CGU/Norwich
Union merger and Finance
Director of Norwich Union
Life, Aviva’s UK life insurance
business. He was formerly
the Corporate Development
Director for Friends Life Group,
where his responsibilities
included overseeing the final
separation and integration of
the UK life business acquired
by Resolution plc, as well as the
delivery of the overall group
change portfolio and strategic
corporate development.

Jim has no other current
appointments.

Malcolm was appointed as Chief
Executive Officer of Provident
Financial plc in February 2018,
having previously been its Senior
Independent Director until
November 2017 and, following
the death of its Chairman,
Interim Executive Director.

Malcolm served as a Non-
Executive Director and Chairman
of the Remuneration Committee
of Hastings Group Holdings
plc prior to his resignation in
April 2018. He also served as
Senior Independent Director
of Pendragon plc, and was a
Non-Executive Director and
Chairman of the Investment
Committee at RSA Insurance
Group plc. Prior to this, he
held various executive roles at
Morgan Grenfell plc, Drexel
Burnham Lambert, Barclays de
Zoete Wedd Holdings, UBS AG,
ING Barings Ltd, Morley Fund
Managers (now Aviva Investors),
JER Partners Ltd, where he
was European President, and
Matrix Securities Limited.

Sally-Ann has a broad
background in financial
services and technology. She
previously served as COO of
the International Division, and
latterly as Group Operations
and Technology Director, of
Willis Group, held a number of
senior executive roles at Lloyds
TSB and was a Non-Executive
Director of Shawbrook Group
plc until January 2019.

Sally-Ann is a Non-Executive
Director of Equiniti Group plc,
Chair of its Risk Committee
and a member of the
Audit, Nomination and
Remuneration Committees.

In addition, Sally-Ann is a
non-executive member
of the governing body of
Loughborough University and
an advisory board member
of OEE Consulting.

Jonathan is the Chairman of
Litigation Capital Management
Limited, an AIM-listed
litigation finance company.

Jonathan has extensive
experience in financial markets
and has worked in the US, Asia
and UK during his career. He
has most recently served as the
Group Chief Operating Officer
of Barclays plc. Prior to Barclays,
Jonathan had a 20-year career
with Bank of America and was
Chief Executive Officer of Merrill
Lynch International following the
merger of the two institutions
in 2008 with responsibility for
Bank of America’s European
businesses. He was a member
of Bank of America’s Global
Operating Committee.

Jonathan has served widely
on key industry associations
including as Chairman of
the International Swaps and
Derivatives Association (ISDA)
from 2004 until 2008, and as a
director of the Association for
Financial Markets in Europe
(AFME). He remains a member
of AFME’s Advisory Board.
Jonathan was a member of
the Capital Markets Senior
Practitioners of the UK
Financial Services Authority,
and the Global Financial
Markets Association.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
The Board operates a clear written division of
responsibilities between the Chairman and the Chief
Executive Officer which was last updated in March 2019.

Chairman
The Chairman, Andy Green, is responsible for leading the
Board and creating the right conditions to ensure the
Board’s effectiveness in all aspects of its role, including
promotion of the long-term sustainable success of the
Group and generating value for shareholders.

He is responsible for ensuring that the Board takes an active
and constructive part in supporting and challenging
management on development of the Group’s strategy, and
in Board succession planning, promoting the highest
standards of integrity, probity and corporate governance
throughout the Company.

The Chairman sets the Board’s agenda, in consultation with
the Chief Executive Officer and Company Secretary, taking
full account of the need to allow time for robust and
constructive discussion and challenge on all relevant
matters. He is responsible for promoting effective
communication between the Board and its directors in and
outside of Board meetings, and for seeking engagement
with major shareholders to understand their views on
governance and performance against the strategy agreed
by the Board.

The Chairman has a close working relationship with the
Chief Executive Officer and the Company Secretary, who
work together to monitor the effective implementation of
the strategies and actions agreed by the Board.

Chief Executive Officer
The Chief Executive Officer (CEO), June Felix, has specific
responsibility for developing and executing the Group’s
strategy. In undertaking such responsibilities, the CEO takes
advice from, and is provided with support by, her senior
management team and all Board colleagues.

Additional specific authority includes day-to-day decision-
making relating to the management of the affairs of the
Group, for delivering financial performance in line with the
agreed budget, and for organisational design of the Group’s
operations. The CEO is also responsible for recruitment,
leadership and development of the Group’s executive
management team and on proposing to the Board the
Group’s approach to vision, values, culture, diversity
and inclusion.

BOARD GOVERNANCE

LEADERSHIP

The role of the Board
The Board provides leadership of the Company by setting
the strategic direction of the Group and overseeing
management’s execution of the strategy. It is responsible
for establishing the Company’s purpose and values, and for
ensuring these and the strategy are aligned to its culture.
It provides robust challenge, within a framework of prudent
and effective risk management and internal controls.
The Board is provided with timely and comprehensive
information to enable it to discharge its responsibilities,
to encourage strategic debate and to facilitate robust,
informed and timely decision-making.

The Board is collectively responsible for promoting the
long-term sustainable success of the Group for the benefit
of its members as a whole, through the creation of long-term
sustainable shareholder value and contribution to wider
society. In exercising this responsibility, the Board takes into
account the needs of, and ensures effective engagement
with, all relevant stakeholders – including shareholders,
clients, regulators, the workforce, suppliers and the wider
community in which it operates – and the effect of the
activities of the Company on the environment.

The Board is responsible for ensuring that, as a collective
body, it has the appropriate skills, knowledge, diversity
and experience to perform its role effectively.

The Board has a comprehensive schedule of matters
reserved to it for decision-making. These include agreeing
the Group’s strategy, approval of major transactions,
annual budgets, and changes to the Group’s capital and
governance structure. The matters reserved to the Board are
supplemented by an annual Board calendar which provides
for, among other things, regular reviews of operational and
financial performance; reviews of succession-planning for
the Board and senior management; setting the Risk Appetite
of the Group; and approving any changes to the Group’s
Risk Management and Internal Control Framework.

Specific matters for approval and recommendation to
the Board have been formally delegated to certain Board
Committees. The matters reserved to the Board and
Committee Terms of Reference are available on the
Company’s website, iggroup.com

Board composition
As at 31 May 2019, the Board comprised a Non-Executive
Chairman who was independent on appointment, four
Executive Directors and five Independent Non-Executive
Directors, supported by the Company Secretary and senior
management. Details of changes to the composition of the
Board can be found in the Chairman’s Introduction to
Corporate Governance on pages 74 to 75, in the Nomination
Committee Report on pages 90 to 92 and in the Directors’
Report on pages 123 to 125.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTThe Company Secretary also advises the Board on corporate
governance matters and Board procedures, and is
responsible for administering IG’s Share Dealing Code of
Conduct and the Annual General Meeting.

How the Board operates
The Board meets regularly, at least seven times a year, and
this year has met nine times to accommodate additional
consideration of IG’s evolving strategy following the
appointment of June Felix as CEO. In addition, the Board
has a Standing Committee whose responsibility is to
consider Board-reserved matters at short notice, or where
there are administrative matters requiring evidencing that
does not warrant a full Board.

Senior executives below Board level are invited to attend
meetings as required to present and discuss matters relating
to their business areas and functions.

The full Board also meets when necessary to discuss
important ad-hoc emerging issues that require
consideration between scheduled Board meetings. There
were eight such meetings held during the year, convened
principally to consider matters relating to Board
appointments and succession, and the Company’s
preparedness and responses to the European Securities and
Markets Authority (ESMA) product intervention measures.
The Chairman and the Executive Directors also met, as the
Board, to consider Non-Executive Director fees.

Each Director commits an appropriate amount of time to
their duties during the financial year. The Non-Executive
Directors met the time commitment reasonably expected of
them, including pursuant to their letters of appointment.

Where Directors are unable to attend meetings, they are
encouraged to give the Chairman their views in advance,
on the matters to be discussed.

The Chairman and Non-Executive Directors meet in the
absence of the Executive Directors at least twice a year.
There were five such meetings during the year, which took
place immediately following Board meetings to discuss
matters relating to Board discussions.

During the year, Non-Executive Directors, led by the Senior
Independent Director, met without the presence of the
Chairman, including to evaluate the Chairman’s performance.

Chief Financial Officer
The Chief Financial Officer (CFO), Paul Mainwaring, is
responsible for the financial management of the Group and
its financial reporting, for monitoring the Group’s operating
and financial results and for management of the Group’s
internal financial control systems. The CFO also has
responsibility for oversight of capital and liquidity
management and the management and safeguarding of
client money and assets. He supports the CEO in
implementing the Group’s strategy and in relation to the
financial, risk management and operational performance of
the Group. The CFO chairs the Control Function Oversight
Committee, further details of which are set out on page 76.

Other Executive Directors
The Chief Commercial Officer (CCO), Bridget Messer,
has delegated authority for global client management,
marketing and global sales and conversion. The Chief
Operating Officer (formerly Chief Information Officer),
Jon Noble, has delegated authority in respect of
trading and operations and business change.

Senior Independent Director
Malcolm Le May is the Senior Independent Non-Executive
Director and, in this capacity, he acts as a sounding board
for the Chairman. He serves as an intermediary for the
other Directors when necessary. He is also available to
shareholders if they have concerns which communication
via the normal channels of Chairman, Chief Executive
Officer or other Executive Directors has failed to resolve,
or when shareholders prefer to speak directly to him. He is
responsible for evaluating the performance of the Chairman
on behalf of the other Directors.

Non-Executive Directors
The Non-Executive Directors are independent of
management and are considered by the Board to be
free from any business or other relationships that could
compromise their independence. Their role is to effectively
advise and constructively challenge management, along
with monitoring management’s success in delivering the
agreed strategy within the Risk Appetite and control
framework agreed by the Board. They are also responsible,
through the Remuneration Committee, for determining
appropriate levels of remuneration and reward for the
Executive Directors. In addition, the Chairman of the Audit
Committee has responsibility for Internal Audit, including
ensuring the independence of the function.

Company Secretary
The Company Secretary, Tony Lee, supports and works
closely with the Chairman, the Chief Executive Officer,
the Chief Financial Officer and the Board Committee
Chairs in setting agendas for meetings of the Board and
its Committees. He supports the accurate, timely and
clear information flow to and from the Board and the
Board Committees, and between Directors and senior
management. In addition, he supports the Chairman in
designing and delivering Directors’ induction programmes
and the Board and Committee performance evaluations.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
BOARD GOVERNANCE CONTINUED

Attendance at Board meetings
The number of full scheduled Board meetings attended by
each Director during the year, including the Board Strategy
Day, is set out below:

SCHEDULED
MEETINGS
ELIGIBLE TO
ATTEND

SCHEDULED
MEETINGS
ATTENDED

BOARD MEMBER

Chairman

Andy Green

Independent Non-Executive Directors

Sally-Ann Hibberd(1)

Stephen Hill

Malcolm Le May(2)

Jonathan Moulds(1)

Jim Newman

Sam Tymms(3)

Executive Directors

June Felix(4)

Peter Hetherington(5)

Paul Mainwaring(6)

Bridget Messer

Jon Noble

BOARD ACTIVITIES DURING THE YEAR

The Board meeting agendas during the year included
consideration across the key areas of strategy, governance,
risk and financial performance, pursuant to the schedule of
matters reserved to the Board and the agreed annual
forward calendar.

Strategy
• Held three Board meetings focusing on the strategic
development of the business at which the Board,
supported by advisors, analysed the then-current
strategic business initiatives; reviewed the four-year plan;
considered changes in technology infrastructure; and
examined fintech sector themes and trends that could be
used to help inform strategic development. The Board
also reviewed the competitive environment, identified
and developed strategic options and opportunities
through internal teams, and agreed strategic
development priorities which were announced to the
market on 22 May 2019

Business, operational highlights and current trading
• Regularly received business performance updates on

business progress and the issues and challenges faced by
management, through the CEO report, Financial Review
and quarterly reports from the Chief Commercial Officer
and the Chief Operating Officer (formerly the Chief
Information Officer), as well as from the Chief Risk Officer
on Risk and Compliance matters, and from the Chief
People Officer

• Received reports on matters of interest such as location

strategy, people management and governance,
technology risk, regulatory change and competitor
analysis, and the launch of new strategic initiatives
including the multilateral trading facility and US retail
foreign exchange dealer

• Considered IG’s response to the imposition of ESMA

product intervention measures

(1) Sally-Ann Hibberd and Jonathan Moulds attended all Board meetings following

their appointment on 20 September 2018.

(2) Malcolm Le May was unable to attend one meeting due to short-notice

Quarterly forecast and budget
• Received updates on performance against the prior year,

unforeseen events.

(3) Sam Tymms attended all Board meetings up to and including the date of her

resignation on 20 March 2019.

(4) June Felix attended two Boards as a Non-Executive Director prior to her

appointment as CEO on 30 October 2018.

(5) Peter Hetherington attended all Board meetings prior to his resignation on

26 September 2018.

(6) Paul Mainwaring did not attend one Board meeting due to illness.

budget and market analyst consensus

• Discussed the risks and opportunities for the 2019

financial year budget and approved the 2020 budget and
four-year plan

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTCulture, people, governance, risk and regulation
• Evaluated the effectiveness of the Group’s risk

Other
• Considered feedback following shareholder engagement

management and internal control systems, reviewed and
approved the Group’s Risk Appetite Statement and key
regulatory documents, including the Individual Capital
Adequacy Assessment Process (ICAAP), the Individual
Liquidity Adequacy Assessment (ILAA) documents and
the Group’s Recovery Plan (RP)

• Considered and approved proposals on improvements to
workforce representation at the Board, and updates to
the diversity and inclusion strategy

• Considered IG’s emerging strategy relating to talent

and succession

• Discussed the results of the employee engagement survey

• Received the health and safety annual report and an

annual information security update

• Received regular updates on corporate governance
developments, including the 2018 UK Corporate
Governance Code and the introduction of the Senior
Managers & Certification Regime

• Analysed the impact of emerging political and legal risk,

including that relating to Brexit

Financial performance
• Reviewed the financial performance of the Group and
approved all financial results announcements and the
Annual Report with the respective Financial Statements

• Reviewed and approved a four-year forecast

• Reviewed IG’s capital plan and assessment

Dividends
• Reviewed the dividend policy

• Received regular reports from Board Committee Chairs

• Agreed the amendment and renewal of the Group’s

banking facilities

• Agreed IG’s corporate insurance programme

• Undertook an internal evaluation of its effectiveness and

the effectiveness of each Board Committee and
individual Directors

BOARD COMMITTEES

Certain governance responsibilities have been delegated by
the Board to Board Committees, to ensure that there is
independent oversight of internal control and risk
management and to assist the Board with carrying out its
responsibilities. Other than in respect of the Disclosure
Committee, which is staffed by the CEO, CFO and
Company Secretary, these Board Committees comprise
Independent Non-Executive Directors and, in some cases,
the Chairman. Each Committee has agreed Terms of
Reference, approved by the Board, which are available
on IG’s corporate website, iggroup.com

A brief description of the roles of each Committee is set out
on the following page.

The Chairman of each Board Committee reports to the
Board on the matters discussed at Committee meetings.
The minutes of each Committee meeting are made available
to all Directors. Reports from the Chairman of each of the
principal Board Committees, including information on the
Committee’s composition and activities in the year, can be
found in the sections relating to each Committee within this
Annual Report.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
BOARD GOVERNANCE CONTINUED

AUDIT COMMITTEE

• Responsible for the integrity of the Group’s Financial
Statements, including its annual and interim reports

• Reviews and recommends to the Board the effectiveness of
the Group’s Internal Audit function and risk management
system, annual Internal Audit plan, appointment,
reappointment and removal of the External Auditors

• Responsible for monitoring the effectiveness of the control
environment relating to the management and safeguarding
of client money and assets

• Reviews the management and control framework for the
governance, operation and maintenance of the Group’s
legal entities

BOARD RISK COMMITTEE

• Responsible for providing oversight and advice to the Board
in relation to current and future risk exposures of the Group
and promoting a risk-awareness culture within the Group

• Recommends to the Board the design and implementation of
risk management policy and measurement strategies across
the Group, the Group’s risk profile, risk appetite and key risk
indicators for the current and future strategy

• Reviews and recommends to the Board the adoption of key
risk-related documents, including the ILAA, ICAAP and RP

• Commissions thematic risk reviews relating to key risks

• Receives a twice-annual report on the risks associated

with the Group’s corporate culture and periodic reports
on risks relating to Product Governance

• Receives reports from Internal Audit on advisory work
conducted by the function on the state of the Risk
Management Framework and current and potential risk
exposures of the Group

NOMINATION COMMITTEE

DISCLOSURE COMMITTEE

• Responsible for reviewing the composition of the Board and
Board Committees to ensure that they are appropriately
balanced in terms of diversity, knowledge, skills and experience

• Reviews and recommends appointments to the Board and to

other senior management positions

• Conducts succession-planning reviews at Board level for

recommendation to the Board

• Assists and informs the decisions of the Board concerning

identification of Inside Information

• Makes recommendations to the Board about how and
when the Company should disclose Inside Information,
having regard, in particular, to information previously
disclosed by the Company

REMUNERATION COMMITTEE

• Responsible for making recommendations to the Board on

the Group’s senior executive Remuneration Policy

• Reviews and recommends to the Board the Group’s

Remuneration Policy, which is consistent with effective risk
management, the framework for the remuneration of the
Company’s Chairman and Executive Directors and share-
based awards under the Group’s Employee Incentive Scheme

• Monitors developments in remuneration and reward practice
to ensure the Group’s policies take account of reasonable
stakeholder expectation

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTEFFECTIVENESS

Board composition
The Board’s size and the skills and experience of its
members have a significant impact on its effectiveness. It
aims to maintain a balance in terms of experience and skills
of individual Board members. These factors are regularly
reviewed to ensure that the Board has the right mix of skills
and experience for constructive discussion and, ultimately,
effective Board decisions.

The breadth of skills and experience currently on the Board
includes experience in key areas such as existing Non-
Executive Director experience in a listed environment,
international financial services, finance and accountancy,
strategy, information technology, people, financial services
regulation, marketing, risk management, investor relations,
technology and digital and law. Certain Non-Executive
Directors currently undertake executive roles outside of IG.

There is an appropriate combination of Executive Directors
and Non-Executive Directors, such that no individual or
small group of individuals can dominate the Board’s
decision-making.

Director independence
The Company is, and continues to be, fully compliant with
the 2016 UK Corporate Governance Code, which requires
that at least half of the Board, excluding the Chairman,
should comprise Non-Executive Directors who are
determined by the Board to be independent.

The independence of the Non-Executive Directors is
considered by the Board and reviewed on an annual basis,
as part of the Board effectiveness review. The Board
considers factors such as length of tenure and relationships
or circumstances that are likely to affect or appear to affect
the Director’s judgement in determining whether they
remain independent.

Following this year’s review, the Board concluded that all the
Non-Executive Directors continue to remain independent in
character and judgement and are free from any business or
other relationships that could materially affect the exercise
of their judgement.

Conflicts of interest
Directors have a statutory duty to avoid situations in which
they may have interests that conflict with those of the
Company, unless that conflict is first authorised by the
Board. Directors are required to disclose both the nature
and extent of any potential or actual conflicts with the
interests of the Company.

In accordance with the Companies Act 2006, the Company’s
Articles of Association allow the Board to authorise potential
conflicts that may arise, and to impose such conditions or
limitations as it sees fit. During the year, potential conflicts
were considered and assessed by the Board and approved
where appropriate.

Succession planning and appointments to the Board
The Board uses succession planning to ensure that
executives with the necessary skills, knowledge and
expertise are in place to develop and deliver IG’s strategy,
and that it has the right balance of individuals to be able to
discharge its responsibilities. The Board regularly reviews its
composition to keep it constantly refreshed. Any searches
for Board candidates, and appointments made, are based
on merit against objective criteria, including the use of a
Board skills matrix which was last updated in January 2019.

The Nomination Committee has specific responsibility for
considering the appointment of Non-Executive and
Executive Directors and recommending new appointments
to the Board. It regularly reviews the structure, size and
composition required of the Board and makes
recommendations to the Board as appropriate. More
information on the work of the Nomination Committee can
be found in the report of the Nomination Committee on
pages 90 to 92. The Board as a whole is also involved in
overseeing the development of management resources
across the Group.

Board tenure (as at the date of this report)

NON-
EXECUTIVE
DIRECTORS
(INCLUDING
THE
CHAIRMAN)

EXECUTIVE
DIRECTORS

TENURE

0 to 3 years

3 to 6 years

Over 6 years

Induction
Following appointment, each Director receives a
comprehensive and formal induction, linked to their
individual experience, to familiarise them with their
duties and the Company’s business operations, risk and
governance arrangements. The induction programme, which
is coordinated with the help of the Company Secretary, may
include briefings on industry and regulatory matters relating
to the Company, strategy and business model, the history
of the Group, risk management and risk appetite, as well
as meetings with senior management in key areas of the
business. These are supplemented by induction materials
such as recent Board papers and minutes, organisation
structure charts, governance matters and relevant Company
policies. Newly appointed Directors may also meet the
Company’s External Auditor, Brokers and advisers, and
attend a presentation led by Linklaters on the roles and
responsibilities of a UK-listed company director.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
BOARD GOVERNANCE CONTINUED

Ongoing professional development
In order to facilitate greater awareness and understanding
of the Group’s business and the environment in which it
operates, all Directors are given regular updates on changes
and developments in the business.

Training opportunities are provided through internal
meetings, workshops, presentations and briefings by
internal advisers and business heads, as well as external
advisers. The Company Secretary updates the Board on any
relevant legislative and regulatory corporate governance
related changes on a regular basis.

The Directors meet with executives to receive further
insights into the operations of the business in the
jurisdictions where the Group operates. In addition, IG has
continued its series of Breakfast with the Board sessions
attended by Non-Executive Directors, to enable staff across
the business to meet and ask questions on defined topics.

During the year, the Directors attended briefing sessions
on location strategy, people management and governance,
technology risk, regulatory change and competitor analysis,
and the launch of new strategic initiatives including
the multilateral trading facility and US retail foreign
exchange dealer.

The Chairman ensures that the Directors continually update
and refresh their skills and knowledge, and independent
professional advice is provided, when required, at the
Company’s expense.

Information provided to the Board
The Chairman, with support from the CEO and Company
Secretary, is responsible for ensuring that the Board receives
accurate, timely and clear information to enable it to make
appropriate challenges, to encourage debate and to ensure
its decisions are fully informed.

All Directors have access to the advice and services of
the Company Secretary, who is responsible to the Board
for ensuring that Board procedures are followed and
compliance with applicable laws and regulations
is observed.

The Company Secretary supports the Chairman in setting
the Board agenda, and Board papers are distributed to all
Directors in advance of Board meetings via a secure
electronic system. The Company Secretary is also
responsible for advising the Board, through the Chairman,
on corporate governance matters.

Directors receive briefings from the Chief Executive
Officer and other executive officers in the periods
between meetings.

Election and re-election of Directors
The UK Corporate Governance Code requires that all
directors of FTSE 350 companies should be subject to
annual election by shareholders. Each Director and the
Board as a whole underwent a performance evaluation

during the course of the year. Following this, all Directors,
other than the Chairman who has announced his intention
to stand down at the AGM, will stand for re-election or
election at the AGM.

Board evaluation
Each year, an evaluation of the effectiveness of the Board is
conducted. The evaluation includes an assessment of the
effectiveness of Board Committees. Individual directors
are also assessed with feedback provided to and from
the Chairman.

Last year the Board agreed areas of development, in respect
of which there has been significant progress.

• The Board continued to progress succession planning at

Board and senior management level and has made
several Board changes

• The people strategy has continued to evolve with the
identification of Group Executive Committee-level
succession candidates, of critical roles and talent pools,
and the methodology employed to establish a framework
to identify and develop IG’s high potentials. IG now has
an embedded recognition programme through Spotlight
awards, has continued to develop its approach to
diversity and inclusion, and has expanded its graduate
scheme. The Board has now established a People Forum,
whose responsibilities extend to ensuring that the
opinions of the workforce are taken into consideration as
part of Board discussions and decision-making

• There is now an embedded programme for Board

interaction with management below Group Executive
Committee level, including through Breakfast with
the Board

• The quality and timeliness of materials provided to the
Board have continued to improve, as the Company
Secretariat continues to educate staff and standardise the
documents presented to the Board. IG has modified
Board packs to remove certain detailed management-level
information and, in its place, introduced quarterly reports
from each Executive Director, the Chief Risk Officer and
Chief People Officer. There is a recognised need to
continue to reinforce the benefits of preparing focused,
succinct, consistent and timely information to allow the
Board to make fully informed and timely decisions

• The Board has revisited its strategy in detail which was

announced to the market on 22 May 2019

• The Board Risk Committee is now increasingly discussing
the current and emerging risks facing the business as
well as business-critical individual, strategic and
operational risks

In 2019, the Company carried out a questionnaire-based
internal evaluation, led by the Company Secretary. The
questionnaire was based on the questions used in previous
years to enable the Board to establish a relative statistical
analysis on relevant themes.

The first stage of the review involved the Chairman and
the Company Secretary setting the context for the
evaluation to ensure the survey would respond to the

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTspecific circumstances of the Group, while ensuring
consistent questioning to facilitate ongoing analysis of
performance improvement.

All Board members and the Company Secretary completed
web-based surveys addressing the performance of the
Board and its Committees, the Chairman and individual
Directors. The Company Secretary subsequently produced a
report of its findings, which were reviewed by the Chairman
and subsequently discussed with the Board.

Overall, the results indicate that the Board is operating
effectively, with a number of areas rated positively and
progress made with all development areas identified in
2018, as set out above.

The main areas agreed by the Board for development in the
coming year are:

• Continuing to focus on Board dynamics following Board
changes during the 2019 financial year, evaluating and
responding to the need to ensure the right balance of
skills needed on the Board

• Focusing on the needs of and interaction with key
stakeholders including shareholders, regulators,
clients and employees

• Monitoring the performance of management in the
stewardship of the Company’s assets in support of
the delivery of the new strategy

• Continuing to develop the senior management

pipeline and capabilities whilst retaining key talent

•

Increased focus at Board on Culture and
Conduct-related themes

We will report on actions taken and progress made in next
year’s Annual Report.

Led by Malcolm Le May, the Senior Independent Director, a
review of the Chairman’s performance was carried out by the
Board. The performance of the Chairman was discussed
without the Chairman present, following which the Senior
Independent Director and Chairman met to discuss the
review findings.

The evaluation of the performance and contribution of
each Director was conducted with reference to a self-
performance review questionnaire completed by each
Director. This was then discussed at sessions between
each Director and the Chairman.

The reviews concluded that each Director continues to perform
effectively and to demonstrate commitment to the role.

Time commitment
Following the Board evaluation process detailed above, the
Board is satisfied that each of the Directors continues to be
able to allocate sufficient time to the Company to discharge

their responsibilities effectively, notwithstanding changes to
the external commitments of certain directors.

ACCOUNTABILITY

Financial and business reporting
The Strategic Report on pages 26 to 34 describes the Vision
and Strategy and the Business Model, whereby the
Company generates and preserves value over the long term
and delivers the objectives of the Company.

A Statement of the Directors’ Responsibilities in respect of
the Financial Statements is set out on page 126, and a
statement regarding the use of the going concern basis in
preparing these Financial Statements is provided in the
Going Concern and Viability Statement on page 71.

Risk management and internal control
The Group is exposed to a number of business risks in
providing products and services to its clients. The Board is
responsible for establishing the overall appetite for these
risks, which is detailed and approved in the Risk Appetite
Statement. The Board has responsibility for ensuring the
maintenance of the Group’s risk management and internal
control systems and for annually reviewing them.

The framework under which risk is managed in the business
is supported by a system of internal controls, designed to
embed within the business the effective management of
the Group’s key business risks. The risk management and
internal controls systems are designed to manage rather
than eliminate the risk of failure to achieve business
objectives, and can only provide reasonable and not
absolute assurance against material misstatement or loss.

Through reports from the Board Risk Committee and the
Audit Committee, consideration of the ICAAP, ILAA and RP,
the Board regularly reviews and monitors the Group’s risk
management and internal controls systems and the
effectiveness with which it manages the principal risks
faced by the Group.

The Directors confirm that the Board has carried out a
robust assessment of the principal risks facing the Group,
including those that would threaten its business model,
future performance, solvency and liquidity. We outline the
risks to which the Group is exposed and the framework
under which risk is managed, including a description of the
system of internal controls, in the Business Model and Risk
Profile section on pages 30 to 34 and in the Risk
Management and the Going Concern and Viability
Statement sections on pages 56 to 62 and page 71.

An annual formal review of the effectiveness of the Group’s
system of risk management and internal controls has been
carried out for the Board, to support the statements
included in the Annual Report and Financial Statements. The
review focused on the overall Risk Governance Framework
and the setting of IG’s risk appetite. It considered the key
risk assessment and monitoring activities across the Group,
as well as the processes and controls in place to manage the
Group’s principal risks and for escalating exceptions
highlighted by risk management processes.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
BOARD GOVERNANCE CONTINUED

There are risk management and internal controls systems in
place for identifying, evaluating and managing the principal
risks facing the Group, in accordance with the Guidance on
Risk Management, Internal Control and Related Financial
and Business Reporting published by the Financial
Reporting Council.

Throughout the year and up to the date of this report,
the Group has operated a system of internal controls that
provides reasonable assurance of effective operations
covering all controls, including financial and operational
controls and compliance with laws and regulations.

Internal controls over financial reporting
The Group’s financial reporting process has been designed
to provide reasonable assurance regarding the reliability
of the financial reporting and preparation of financial
statements, including consolidated financial statements,
for external purposes in accordance with IFRSs. The annual
review of the effectiveness of the Group’s system of internal
controls included reviews of systems and controls relating to
the financial reporting process.

Internal controls over financial reporting include procedures
and policies that:

• Pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
disposals of the Group’s assets

• Provide reasonable assurance that transactions are
recorded as necessary to permit the preparation of
financial statements, and that receipts and expenditures
are being made only in accordance with authorisations of
management and respective Directors

• Provide reasonable assurance regarding prevention or
timely detection of unauthorised acquisition, use or
disposal of Group assets that could have a material effect
on the Group’s financial statements

REMUNERATION

The responsibility for determining remuneration
arrangements for the Chairman and Executive Directors has
been delegated to the Remuneration Committee.
Information on the Remuneration Committee and the
Directors’ Remuneration Report and Policy can be found on
pages 93 to 111.

ENGAGEMENT WITH SHAREHOLDERS AND OTHER
STAKEHOLDERS

The Board recognises the importance of maintaining good
and constructive communication with the Company’s
stakeholders including shareholders, and has in place a
comprehensive programme to facilitate this each year.

Our Annual Report is an important medium for
communicating with shareholders, setting out detailed
reviews of the business and its future developments in the
Chairman’s Statement, the Chief Executive Officer’s
Statement and Q&A and the Strategic Report.

In order to ensure that the members of the Board develop
an understanding of the views of major shareholders,
there is regular dialogue with institutional investors and
shareholders, presentations by management and Investor
Roadshows around the time of the Group’s year-end and
half-year results announcements. IG’s Investor Relations
team coordinates these. These presentations are available
on the Group’s website at iggroup.com, which also provides
a wide range of other information to shareholders and
prospective shareholders. The Company also responds to
ad-hoc requests from shareholders on a regular basis.

The Chairman, the Senior Independent Director,
(including in his capacity as Chairman of the Remuneration
Committee), and the Executive Directors hold meetings
with the Company’s largest institutional shareholders
and market analysts to discuss governance developments
(including in respect of external and internal remuneration
policy), business strategy, Board succession and
financial performance.

Following all investor presentations and meetings, feedback
is passed to the Board on any opinions or concerns
expressed by shareholders. The Directors receive regular
updates on shareholder views, roadshow feedback as well
as analysts’ reports on market perception of the Group’s
performance and strategy and are made aware of the
financial expectations of the Group from the outside market.
This year the Group conducted a Strategy and Business
Update attended by shareholders and analysts setting out
the key strategic choices the Group has made in pursuit
of its vision, the four growth levers that are being deployed
to drive growth, and the market-specific action the Group
is now taking to implement those levers to deliver
sustainable growth.

The Chairman and the Senior Independent Non-Executive
Director are available to meet shareholders on request and
ensure that the Board is aware of shareholder concerns not
resolved through other communication mechanisms. The
Chairman and the Senior Independent Non-Executive
Director provide feedback to the Board on any views or
concerns expressed to them by shareholders.

In addition to its shareholders, the Board recognises that the
success of the business depends on its ability to engage
effectively and work constructively with a variety of other
key stakeholder groups, in order that their views may be
taken into consideration in Board discussions and decisions.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTThe Board has identified a number of stakeholder groups
other than shareholders. Details of the approach of the
business to dealing with the various groups are set out
through these report and accounts as set out below:

Principal
Stakeholders

Clients

Regulators

Where principally reported

Pages

Our Clients, Strategic Report,
Business Model

22 to 70

Strategic Report, Main Trends
and Factors Likely to Affect
the Future Development,
Performance and Position of the
Company’s Business

Workforce

Corporate Social Responsibility

Community Corporate Social Responsibility

Environment Corporate Social Responsibility

22 to 70

63 to 70

Auditors

Audit Committee Report

112 to 119

AGM
The AGM provides the Board with the opportunity to
communicate with private and institutional investors, and we
welcome and encourage their participation at the meeting.
The Chairman aims to ensure that all the Directors, including
the Chairs of the Board Committees, are available at the
AGM to answer questions. The 2018 AGM was a successful
event attended by all the Directors. All the proposed
resolutions were passed on a poll, with the percentage of
votes in favour of each resolution ranging from 90.32% to
99.88%, and the percentage of votes cast was always
above 80%.

The 2019 AGM will be held on 19 September 2019. The
Notice of the AGM sets out the resolutions to be proposed
at the meeting. A copy of the Notice is available on the
Group’s website, iggroup.com. IG sends its Annual Report
and Notice to shareholders, or makes them available on the
Group’s website, at least 20 working days before the date of
the meeting. The Notice sets out a clear explanation of each
resolution to be proposed at the meeting. Shareholders
have the opportunity to ask questions and, if they are unable
to attend, can submit written queries in advance of the
meeting. After the meeting, IG will make available to
shareholders full details of the votes, including proxy votes,
received on each resolution, and will publish these on the
Company’s website on the same day.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
CHAIRMAN’S OVERVIEW

The Nomination Committee undertakes an important role in
leading the process for appointments, ensuring plans are in
place for orderly succession to the Board and senior
management positions, and overseeing the development of
a diverse pipeline for succession. The Committee is
responsible for ensuring the Board has a combination of
skills, experience and knowledge needed to lead the Group
at and immediately below Board level, and in supporting the
development and delivery of our strategy.

It is responsible for identifying, and recommending to the
Board, suitable candidates for appointment to the Board,
and ensures the Board’s composition meets the Company’s
needs using external search consultancies to help source
suitable candidates based upon objective criteria.

This year, and as set out in my Introduction to Corporate
Governance on pages 74 and 75, the Committee completed
its CEO succession planning review following an extensive
process involving external search firms, including Korn Ferry
and Russell Reynolds. The review culminated in Peter
Hetherington leaving the Board following long and
distinguished service with IG, and the appointment of June
Felix as CEO. In order to avoid any potential conflict of
interest, as soon as June Felix was identified as a potential
candidate she recused herself from all further discussion or
decision-making in respect of the CEO succession, and as
such has not been included in the ‘eligible to attend’ column
for those Committee meetings held during the search.

The Committee has also overseen the independent search
and appointment of Sally-Ann Hibberd and Jonathan
Moulds as additional Non-Executive Directors, which search
was also facilitated by Russell Reynolds following the
relevant selection process. Sally-Ann Hibberd was
appointed as a Committee member on 4 December 2018,
and Jonathan Moulds was appointed as a Committee
member on 15 May 2019.

In the interests of continuing to ensure that the Board is
regularly refreshed, the Committee selected Heidrick &
Struggles to search for additional Non-Executive Directors.

NOMINATION COMMITTEE

ANDY GREEN
CHAIRMAN

Andy Green, Chairman
of the Nomination
Committee, gives his
review of the Committee’s
activities during the
financial year.

ANDY GREEN
CHAIRMAN OF THE NOMINATION COMMITTEE

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTThe make-up of the Board and the additional searches also
reflect the change in role of June Felix, the decision of Sam
Tymms to leave the Board in April 2019 to pursue other
opportunities, and the fact that IG now has four Executive
Directors following the appointment of Bridget Messer and
Jon Noble to the Board on 1 June 2018.

As also set out in my Introduction to Corporate Governance,
Malcolm Le May is leading the search for my successor as
Chairman, supported by Russell Reynolds.

COMMITTEE MEMBERSHIP AND ATTENDANCE

The Committee consists of Independent Non-Executive
Directors, and meets as necessary to discuss appointments
to the Board. The Chairman of the Board is also the
Chairman of the Committee, and the Company Secretary
acts as the Secretary of the Committee. On invitation, the
Chief Executive Officer also attends, but is not involved in
decisions relating to her own succession. The Chief People
Officer also attends on invitation.

During the year, the Committee met nine times, sometimes
at short notice, principally to consider Board composition,
succession planning and Executive Director development.

ROLE OF THE NOMINATION COMMITTEE

The principal roles and responsibilities of the
Committee include:

• Reviewing the structure, size and composition of the
Board and Board Committees to ensure that they are
appropriately balanced in terms of skills, knowledge,
diversity and experience and making appropriate
recommendations to the Board relating to succession
planning at Board level

• Ensuring that there is a formal, rigorous and transparent
procedure for the appointment of new Directors to
the Board

•

Identifying and nominating, for approval by the Board,
suitable candidates to fill Board vacancies as and when
they arise

• Keeping under review the leadership needs of the Group,
with a view to ensuring the continued ability of the Group
to compete effectively in its marketplace

• Keeping up to date about strategic issues and

commercial changes affecting the Group and the market
in which it operates

The Terms of Reference of the Committee are available on
the Group’s website, iggroup.com

COMMITTEE
MEMBER

ELIGIBLE
TO ATTEND

ATTENDED

MAIN ACTIVITIES DURING THE FINANCIAL YEAR

Andy Green

Malcolm Le May

Stephen Hill(1)

Jim Newman(2)

Sam Tymms(3)

June Felix (4)

Sally-Ann Hibberd(5)

(1) Stephen Hill was unable to attend two meetings called at short notice due to

other commitments.

(2) Jim Newman was unable to attend one meeting called at short notice due to

other commitments.

(3) Sam Tymms was unable to attend one meeting called at short notice due to

other commitments and served as a Committee member until her resignation
from the Board on 20 March 2019.

(4) June Felix did not participate in meetings following her identification as a potential
CEO candidate and left the Committee on becoming CEO on 30 October 2018.

(5) Sally-Ann Hibberd was appointed to the Committee on 4 December 2018

following her appointment to the Board on 20 September 2018.

The Committee’s main focus has been on Board-level
succession planning, and ensuring plans are in place to
regularly review and refresh Board membership.

As reported last year, following an extensive process
supported by external consultants Korn Ferry, a leadership
and talent consulting executive search firm with no other
connections with the Company, and partly undertaken as
part of IG’s long-term CEO succession planning, Bridget
Messer and Jon Noble were appointed as Executive
Directors on 1 June 2018.

Following discussions with the then-CEO, Peter
Hetherington, the Committee agreed to conduct a search
for a CEO with support from Russell Reynolds. A detailed
brief was prepared, focusing on the skills needed to help
guide IG through the next stage of its development.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
NOMINATION COMMITTEE CONTINUED

DIVERSITY STATEMENT

As a business, we are committed to maintaining a diverse
workforce at all levels across the Company, and more
information on how we do this, including a description of the
policies relating to diversity and how they have been
implemented, can be found in the Corporate Social
Responsibility section on pages 64 and 65.

At the year-end, and following the departure of Sam Tymms
from the Board in March 2019, the Board had a 30% female
representation. IG has an aspirational target to increase this
to one-third by 2020, as recommended by the Hampton-
Alexander Review on women in leadership positions.

The Directors recognise the importance of diversity, in all of
its forms, on the Board and understand the significant
benefits that come with having a diverse Board. The Board
believes that diversity is a wider issue than gender and
includes variations in experience, skills, personal attributes
and background.

The Board will continue to appoint on merit, based on the
skills and experience required for membership of the Board,
while giving consideration to all forms of diversity when
the Committee reviews the Board’s composition. For
appointments to the Board, IG uses executive search firms
who have signed up to the voluntary code of conduct setting
out the key principles of best practice in the recruitment
process. These principles include a recommendation that
search firms should consider gender diversity, and IG insists
on having both male and female candidates when drawing
up longlists and shortlists of candidates.

Andy Green, Chairman of the Nomination Committee
23 July 2019

The process involved the establishment of an externally
facilitated success profile for relevant candidates, followed
by an external assessment of each candidate against the
profile agreed by the Committee. June Felix had recused
herself from the process as soon as her candidature had
been confirmed.

Peter Hetherington left the Board on 26 September 2018, at
which point the Committee proposed the appointment of
Paul Mainwaring as interim CEO whilst the search for a
successor was finalised.

Following panel interviews, June Felix was identified as the
preferred candidate and was appointed on 30 October
2018. It was recognised that as well as knowledge of IG’s
business, June also had wide international finance and
technology experience and a proven ability to evolve
internationally focused businesses through strategic change.

Recognising the importance of developing a Board with the
appropriate balance of skills, knowledge, diversity and
experience, the Committee has also focused on the
recruitment of additional Non-Executive Directors with
technology, financial services and IG industry and product
knowledge, as well as extensive Non-Executive Director
experience in the listed environment. This search culminated
in the appointment of Sally-Ann Hibberd and Jonathan
Moulds to the Board in September 2018.

As announced to the market on 14 June 2019 June Felix,
Chief Executive Officer, has undertaken an enterprise-wide
organisational review to support the delivery of IG’s strategy
which was announced to the market on 22 May 2019, and
has made changes to the organisation’s structure and the
Group’s Executive Committee.

As part of these changes, Jon Noble, previously Chief
Information Officer, was appointed as Chief Operating
Officer of the Company with effect from 14 June 2019,
with responsibility for trading and operations, and
business change.

At the date of this report, I am informed that the search for
my successor as Group Board Chairman is progressing well.

COMMITTEE EVALUATION

During the year, an evaluation of the performance of the
Committee and its members was undertaken in line with the
Committee’s Terms of Reference. The evaluation process
was internally facilitated by the Company Secretary as part
of the overall annual Board effectiveness review, details of
which can be found on pages 86 and 87. The performance of
the Committee was highly rated overall as was the
management of meetings and the quality of information
received. The review stressed the need to continue to focus
on diversity when considering the structure, size and
composition of the Board and its Committees, and the
Committee will continue to develop succession planning at
Board and senior management level. The evaluation
concluded that the Committee operates effectively.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTDIRECTORS’ REMUNERATION REPORT AND POLICY

MALCOLM LE MAY
CHAIRMAN

Malcolm Le May, Chairman
of the Remuneration
Committee, gives his
review of the Committee’s
activities during the
financial year.

The Committee has this year focused on
preparing the groundwork for a review of
the remuneration and reward structure at
Board level, in light of changes in the
corporate governance landscape.

MALCOLM LE MAY
CHAIRMAN OF THE REMUNERATION COMMITTEE

CHAIRMAN’S OVERVIEW

On behalf of the Board, I am pleased to present the Directors’
Remuneration Report for the year to 31 May 2019. This report
provides a summary of our Directors’ Remuneration Policy
which was approved by shareholders at the 2017 AGM, details
of remuneration arrangements in respect of the year to
31 May 2019 and a summary of how we intend to apply the
Policy during the year to 31 May 2020.

CONTENTS

Chairman’s Overview

Summary of Directors’ Remuneration Policy

Annual Report on Remuneration

PAGE

93 to 95

102

MEMBERSHIP AND ATTENDANCE OF
REMUNERATION COMMITTEE

The Remuneration Committee is composed of three
independent Non-Executive Directors and the Chairman
who was independent on appointment. The current
members of the Committee are set out below, together with
their attendance at meetings:

COMMITTEE
MEMBER

ELIGIBLE
TO ATTEND

ATTENDED

Malcolm Le May(1)

Andy Green

Stephen Hill

Jim Newman

Sally-Ann Hibberd(2)

Jonathan Moulds(2)

(1) Malcolm Le May did not attend one meeting called at short notice due to prior
commitments. His comments were represented at the meeting by Andy Green
who chaired the relevant meeting.

(2) Sally-Ann Hibberd and Jonathan Moulds joined the Board on 20 September

2018 and attended all Committee meetings following their date of appointment.

The Chief Executive Officer and Chief Financial Officer
attend the Committee meetings by invitation. The Chairman
and Executive Directors do not attend or take part when
matters relating to their own remuneration are discussed.
The Chief People Officer and representatives from other
areas of the business attend the Committee meetings by
invitation as appropriate to the matter under consideration.
The Company Secretary is secretary to the Committee.

Following each Committee meeting, a formal report is made
to the Board in which the Chairman of the Committee
describes the proceedings of the Committee meeting and
makes recommendations to the Board as appropriate.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
DIRECTORS’ REMUNERATION REPORT AND POLICY CONTINUED

The financial year to 31 May 2019 has been a year of change
for the Group. This sector had come under significant
regulatory scrutiny in recent years, and over the last 12
months we have seen the regulatory landscape, particularly
in Europe, stabilise. Our performance was impacted by the
imposition of ESMA product intervention measures, and
despite increasing client numbers our revenue performance
is down year on year, reflecting these restrictions and lower
levels of market volatility. June Felix joined the Board as
CEO in October 2018 following the departure of Peter
Hetherington in September 2018, and in May 2019 the
Group announced its new strategy focusing on four
growth levers.

APPROACH TO REMUNERATION FOR 2019/20

At IG, Executive Directors only participate in one incentive
plan – the Sustained Performance Plan (the ‘SPP’). Under the
SPP participants may receive ‘plan contributions’ in the form
of shares to their ‘plan account’ each year depending on
performance. These contributions are based on diluted
earnings per share (‘DEPS’) performance and the delivery
against non-financial measures (‘NFM’) for the preceding
financial year, and Total Shareholder Return (TSR)
performance over the preceding three financial years. One
third of the shares in the plan account are released each
year, with the balance being deferred to future years.

The operation of the SPP is illustrated below:

Y-2

Y-1

DEPS
(45%)
NFM
(20%)

TSR (35%)

Amount allocated to the participants plan account

Plan
account

One-third of the plan account is distributed each
year to participants

The SPP will continue to operate unchanged in line with
our approved Policy for 2019/20. During the year, the
Committee will, however, be undertaking a thorough review
of Remuneration Policy in advance of submitting a new
policy to shareholders at the 2020 AGM. This review will
focus on the following areas:

• Ensuring that the remuneration and reward structure,

including relevant performance measures, are consistent
with and encourage the delivery of our strategy

• Whether the SPP continues to remain an appropriate

incentive plan as our strategy evolves

• The changes to the UK Corporate Governance Code, in
particular share awards being subject to a total vesting
and holding period of five years or more, and post-
employment shareholding guidelines applying for
executive directors

• Whether to increase the minimum shareholding

requirements under the Executive Directors share
ownership policy

Our existing Remuneration Policy already complies with the
2018 Code in many areas. The pension and benefits
allowance for Executive Directors appointed during 2018
was set at 12% of base salary, which is in line with the
pension and benefits opportunity available for the wider
workforce. Our policy includes provisions which allow for the
exercise of discretion, and malus and clawback, to be
applied in certain circumstances.

The Committee plans to consult with shareholders regarding
the outcome of the review early in 2020.

As noted above, June Felix was appointed as CEO on
30 October 2018. Her salary was set at £600,000 per annum.
She is entitled to an annual SPP award of 500% of base
salary and she receives a flexible pension and benefits
allowance of 12% of base salary. No buy-outs were awarded
to Ms Felix. It was agreed by Remuneration Committee that
relocation costs (including any applicable tax costs) of up to
£85,000 incurred in her first year of her appointment would
be met.

Salaries for Executive Directors were not increased with
effect from 1 June 2019, in line with the approach for other
senior executives in the business. For 2019/20 the non-
financial measures used for the SPP have been simplified to
ensure that they focus on our core priorities following the
announcement of the new strategy. Goals have been set in
three areas: strategic delivery, operational effectiveness,
and culture, conduct and people. There are no other
changes planned to the operation of remuneration
for 2019/20.

INCENTIVE OUTCOMES FOR 2018/19

As in prior years, the 2019 SPP award is based on three
metrics: DEPS (45%), relative TSR (35%) and non-financial
measures (20%). DEPS performance for the 2019 financial
year was below threshold and our TSR over the period
1 June 2016 to 31 May 2019 was below median compared
to the FTSE 350 (excluding investment trusts), and therefore
no portion of these elements was awarded.

During the year operational performance was very strong,
highlights including outstanding systems uptime and
reliability, good relationships with the regulators,
significantly improved employee engagement, performance
management implementation and scores on our culture as
well as reduced voluntary attrition. In addition, we also met
a number of significant strategic milestones during the year
including the launch of IG Europe GmbH and our retail
foreign exchange dealer (RFED) in the US.

In light of this progress during the year, which the Board
believes helps to position the Group strongly to execute the
strategy and deliver future sustained value creation for
shareholders, the Committee determined that a payout of
93.2% of this portion of the SPP should be awarded. The
total SPP award in respect of 2019 is therefore 18.64% of
maximum. Whilst it recognised that financial performance
has been challenging, the Committee considered that the
operational and strategic progress supported this level
of payout.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTLEAVING ARRANGEMENTS FOR
PETER HETHERINGTON

Peter Hetherington stepped down from the Board and as
CEO on 26 September 2018. Mr Hetherington continued to
be employed by the Company until 31 May 2019 to ensure
a smooth transition to his successor. During this period
Mr Hetherington continued to receive his normal salary and
benefits and remained eligible for an SPP award in respect
of 2019. Following his termination, Mr Hetherington
received a payment in lieu of his remaining notice, payable
in monthly instalments. Mr Hetherington was treated as a
good leaver for the purpose of the SPP. Further details of
Mr Hetherington’s leaving arrangements are provided on
page 108.

This report has been prepared in accordance with the
Companies Act 2006, Schedule 8 of the Large and Medium-
sized Companies and Groups (Accounts and Reports)
Regulations 2008 (as amended in 2013) and the UKLA’s
Listed Rules. This report will be subject to an advisory
shareholder vote at the AGM on 19 September 2019.

SUMMARY OF DIRECTORS’ REMUNERATION POLICY

The Directors’ Remuneration Policy sets out the framework,
principles and structures that guide the Remuneration
Committee’s decision-making process in relation to
Directors’ remuneration. The current Directors’ Remuneration
Policy was approved by over 96% of shareholders who voted
at the 2017 Annual General Meeting.

CONCLUSION

I look forward to receiving your support for the Directors’
Remuneration Report at the AGM on 19 September 2019.

A summary of this Policy is provided below and the full
Policy can be found on pages 64-72 of the 2017 Annual
Report and Accounts.

Malcolm Le May, Chairman of the Remuneration Committee
23 July 2019

OBJECTIVES OF THE DIRECTORS’
REMUNERATION POLICY

The Group’s Directors’ Remuneration Policy has been
designed to incentivise executives to deliver long-term
sustainable success for our shareholders and other
stakeholders, without encouraging excessive risk-taking,
and to recognise and reward excellent performance
achieved. The policy is set to ensure that remuneration has
the ability to attract and retain senior executives of a high
calibre while being consistent with regulatory and corporate
governance requirements.

The total remuneration package is structured so that a
significant proportion is linked to performance conditions
and delivered in shares to ensure on-going alignment with
shareholder interests.

The table following summarises each element of the
Remuneration Policy for the Executive Directors, and
provides an overview of how Remuneration Policy will be
implemented for 2019/20.

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PURPOSE
AND LINK TO
STRATEGY

Base salary

OPERATION

OPPORTUNITY

PERFORMANCE
METRICS

IMPLEMENTATION
FOR 2019/20

Provides a sound basis
on which to recruit
and retain key
employees of
appropriate calibre
to deliver the
strategic objectives
of the Company.

Base salaries are normally reviewed by
the Committee annually, and are
usually fixed for 12 months
commencing 1 June. Any salary
increase may be influenced by:

– Scale, scope and responsibility of

the role

– Experience of the individual and

his or her performance

– Average change in wider

workforce pay

– Business performance and

prevailing market conditions

– Commercial need

– Periodic benchmarking of similar
roles at comparable companies
selected on the basis of comparable
size, complexity, geographic spread
and business focus

Pensions and benefits

Competitive,
cost-effective flexible
pension benefits
allowance to help
recruit and retain
Executive Directors.

Executive Directors are eligible to
participate in the Company’s flexible
pension and benefits plan, from which
the executive can receive a range of
benefits, Company pension
contribution or cash allowance.

Relocation and related benefits may
be offered where a Director is required
to relocate.

The general policy is to pay
around mid-market levels, with
annual increases typically in line
with the wider workforce.

Increases beyond the
percentage increases granted
to the wider workforce may be
awarded in exceptional
circumstances, such as:

– Where there is a change in

the individual’s responsibility

– Where the salary set at initial
appointment was below the
level expected once the
individual gains further
experience and a track
record of performance in the
role

An above-market positioning
may be appropriate in
exceptional circumstances, to
reflect the criticality of the role
and the individual’s experience
and performance.

Executive Directors receive a
flexible pension and benefits
allowance. For Executive
Directors hired from 1 June
2018, the allowance was limited
to 12% of salary which is in-line
with the wider workforce.

For Executive Directors
appointed prior to this date the
allowance is capped at 17% of
base salary.

No performance metrics
apply to base salary.

No performance metrics
apply to pensions
and benefits.

The Remuneration
Committee agreed that
salaries for Executive
Directors will not be
increased this year.
Salaries from 1 June
2019 are therefore:

– Chief Executive

Officer – £600,000
(0% increase)

– Chief Financial

Officer – £411,000
(0% increase)

– Chief Commercial
Officer – £370,000
(0% increase)

– Chief Information
Officer – £370,000
(0% increase)

Pension and benefits
allowances for
Executive Directors are
unchanged for 2019/20
and are as follows:

– Chief Executive
Officer – 12% of
salary

– Chief Financial

Officer – 17% of
salary

– Chief Commercial
Officer – 12% of
salary

– Chief Information
Officer – 12% of
salary

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTPURPOSE
AND LINK TO
STRATEGY

OPERATION

OPPORTUNITY

PERFORMANCE
METRICS

IMPLEMENTATION
FOR 2019/20

All-employee share schemes

All employees,
including Executive
Directors, are
encouraged to
become shareholders
through the operation
of an HMRC-approved
Share Incentive Plan
(SIP) and/or such other
all-employee share
plans as the Company
may adopt in
the future.

The SIP is a flexible, tax-efficient,
all-employee plan. Partnership, free,
dividend and matching shares may be
granted under the SIP.

HMRC or non-UK plan
equivalent limits will apply to
any all-employee schemes that
may be introduced.

No performance metrics
apply to all-employee
share schemes.

No changes.

If other HMRC-approved all-employee
plans are introduced, they will operate
in accordance with HMRC guidance
and limits.

Similar non-UK plans may be operated
to enable non-UK employees and
Directors to participate.

This currently constitutes a
small proportion of Executive
Directors’ total remuneration.

Share ownership policy

This aligns the
interests of
management and
shareholders and
promotes a long-term
approach to
performance and
risk management.

The Chief Executive Officer is expected
to build shareholding of at least 200%
of base salary. Other Executive
Directors are expected to build
a shareholding of at least 150% of
base salary.

Only vested shares forming part of the
Director’s share interests, and shares
purchased by the Director out of their
own funds are included in the
guideline. Unless there are exceptional
circumstances approved by the
Committee, these guidelines are
expected to be achieved within five
years from the date of appointment.

The Committee will review progress
annually, with an expectation that
Executive Directors will make progress
towards achieving the shareholding
policy each year.

No changes.

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PURPOSE
AND LINK TO
STRATEGY

OPERATION

OPPORTUNITY

PERFORMANCE
METRICS

IMPLEMENTATION
FOR 2019/20

Sustained Performance Plan (SPP)

The maximum plan contribution
in respect of a plan year is an
award of shares with a market
value of:

– 500% of salary for the Chief

Executive Officer

– 400% of salary for other
Executive Directors

The level of plan
contribution is dependent
on performance against
the targets set by the
Committee for each
relevant financial year.

Where possible, a sliding
scale of targets will be set.
For the DEPS and relative
TSR measures, no more
than 25% will be payable
for achieving threshold
performance, rising to full
pay-out for achieving a
more challenging target.

The scorecard of financial,
share price and non-
financial metrics may
vary from year to year
in accordance with
strategic priorities and the
regulatory environment.

The Committee retains the
discretion to scale back the
level of award in relation to
any TSR element if it feels
the Company’s underlying
financial performance does
not warrant the level of
award resulting from TSR
performance alone.

At the time of determining
the contribution for the
final year of the plan, in the
event that the Committee
feels the Company’s
underlying financial
performance since the
plan’s adoption has not
been satisfactory, the
Committee may scale back
the final balance of the
plan account. The
Committee has not
currently decided to
scale back any plan
account balances.

For 2019/20 the
maximum plan
contribution will
continue to be 500% of
salary for the Chief
Executive Officer and
400% of salary for
other directors.

For 2019/20 the level
of plan contribution will
be based:

– 45% on diluted

earnings per share
performance

– 35% on relative total
shareholder return
compared to the
FTSE 350 (excluding
investment trusts)

– 20% on non-financial

measures

Performance for DEPS
and non-financial
measures will be
assessed over the
financial year to
31 May 2020.

TSR performance will be
assessed over the
three-year period from
1 June 2017 to
31 May 2020.

DEPS targets and
non-financial measures
are considered to be
commercially sensitive
and therefore have not
been disclosed at this
time. The Committee’s
intention is that these
targets will be disclosed
in next year’s annual
remuneration report.

Further details on
performance measures
are provided on the
following pages.

The SPP provides a
single incentive plan
for Executive Directors
rather than having
separate annual and
long-term plans.

It provides a simple
and competitive
incentive mechanism
that encourages and
rewards both annual
and sustained
long-term
performance, linked to
the Company’s
strategic objectives.

The SPP encapsulates
traditional annual
bonus and long-term
incentive plans. It is
entirely share-based,
encouraging
executives to build up
a substantial stake in
the Company, thereby
aligning the interests
of management
with shareholders.

The SPP operates by reference to ‘plan
years’. The first plan year was the
financial year which ended 31 May 2014.

Awards of shares (either in the form of
par value options, nil cost options or
conditional awards), known as ‘plan
contributions’ are made after the
announcement of results relating to
each plan year.

Plan contributions are granted by
reference to achievement against
applicable performance targets and
accumulate within a participant’s
‘plan account’.

Each year, one third of the accumulated
balance in the plan account is released
to participants (ie options or awards are
released to participants).

A participant’s plan account therefore
comprises the sum of the plan
contribution (if any) being made in
relation to the relevant plan year, plus
the accumulated awards registered
in the plan account from previous
plan years.

If the SPP is terminated early, or reaches
its tenth anniversary, unvested awards
remaining in the plan account will vest in
three final tranches of 50%, 25% and
25% on the first, second and third
anniversaries of the SPP’s closure. The
same principles will apply on a later
termination of the plan.

Participants may receive a payment at
the time of delivery of vested shares of
an amount equivalent to the dividends
that would have been paid on those
shares while in the plan account
(adopting a first-in, first-out basis). This
amount may assume dividend
reinvestment. Dividends will not accrue
on vested but unexercised awards.

The Committee may decide within three
years of a plan contribution that the
underlying award will be subject to
clawback. This may happen where there
has been a material misstatement in the
Company’s financial results or an error in
assessing any applicable performance
condition. It may also be triggered if
there has been substantial failure of risk
management, or if the participant’s
employment is terminated for serious
misconduct. The clawback may be
satisfied by a reduction in the amount of
any subsisting plan account, a reduction
in the vesting of any subsisting vested
awards or future share awards and/or a
requirement to make cash payment.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTFURTHER DETAILS ON PERFORMANCE MEASURES

The performance measures that are used in the Sustained Performance Plan (SPP) are a subset of the Company’s Key
Performance Indicators (KPIs)

METRIC

RATIONALE AND LINK TO THE STRATEGIC KPIS

FURTHER DETAILS

Total Shareholder Return (TSR)
relative to the FTSE 350
(excluding investment trusts)

TSR measures the total return to IG Group’s shareholders,
both through share price growth and dividends paid, and as
such it is aligned to shareholder interests.

(35% weighting)

TSR is influenced by how well IG Group performs on a range
of other metrics, including financial indicators such as
revenue, profit, cash generation and dividends, and
non-financial indicators such as client satisfaction and
operational performance.

TSR is assessed against the FTSE 350 excluding investment
trusts as this is a broad market index of which IG Group
is a constituent.

Diluted earnings per share (DEPS)

(45% weighting)

DEPS is a key indicator of the profits generated for
shareholders, and a reflection of both revenue growth and
cost control.

TSR will be assessed over the period 1 June 2017 to
31 May 2020.

25% of this portion will be awarded for median
performance with 100% of this portion being awarded
for upper quartile performance (straight-line
assessment in-between).

DEPS targets will be assessed based on performance
for the year ending 31 May 2020.

The Committee has set DEPS taking into account
relevant factors including Board-approved budget,
market consensus expectations and historical targets.

Pay-outs start to accrue for reaching threshold levels of
performance with 100% of this portion being awarded
for the achievement of maximum performance.

Non-financial delivery metrics (20% weighting)

The non-financial metrics are specifically designed to measure factors important to the IG Group in continuing to operate on a profitable and sustainable
basis for the long term. Our approach for 2019/20 has been simplified to ensure these metrics focus on our core priorities following the announcement of the
new strategy. They are grouped into four categories: client experience, strategic delivery; operational effectiveness; and culture, conduct and people.

When assessing the non-financial metrics the Committee deliberately separates the assessment from any review of financial performance, viewing them both
as important, but recognising they are assessed and rewarded separately to ensure management are incentivised to deliver in-year non-financial milestones
which are important to delivering profit and shareholder value in the future.

Client experience

Strategic delivery

Operational effectiveness

Providing clients with a compelling, rewarding and
engaging experience is central to IG’s ability to attract
and retain clients.

IG has a sophisticated, high-quality and loyal client base and
in order to maintain and grow this, the Group focuses on all
aspects of customer experience. Performance is tracked and
measured via reference to a variety of metrics which provide
insight into either specific elements of the customer
experience, or the overall experience.

Performance against these measures will be assessed
over the financial year ending 31 May 2020.

Following the end of the year, the Committee assesses
performance relative to prior years, internal targets and
sector averages.

This metric is assessed across three areas: customer
satisfaction; rating of and satisfaction with trading
platforms; and client retention.

The delivery of the Group’s strategic initiatives is key to IG’s
future financial performance and growth.

Strategic delivery targets are set for both the core markets
and significant opportunities, with clear owners for each
target. The targets reflect key deliverables or milestones
for the financial year which will position IG for growth in
future years.

The metrics selected for the 2020 financial year are
based on the Board-approved strategy, which has been
communicated publicly, and covers core markets,
EU (new products), USA, Japan, Other Asia
and institutional.

As an example, in Japan delivery of improved UX is a
key element of the strategy and hence has been
selected as a strategic delivery target.

Performance against these targets will be assessed by
the Remuneration Committee, based on items
delivered over the financial year ending 31 May 2020.

The Committee considered it important that management
are incentivised and rewarded for attaining stretching
operational KPIs, to ensure the Group’s ability to deliver
future sustained shareholder value.

These metrics include items such as system reliability,
resilience to cyber-attack and attainment of demanding
client service standards.

This category also incorporates the delivery of operational
improvements and internal systems which will improve IG’s
effectiveness, efficiency and controls.

Performance against these measures will be assessed
over the financial year ending 31 May 2020.

Following the end of the year, the Committee assesses
performance relative to prior years, internal targets and
sector averages. Assessment takes account of activities
and achievements during the year.

For example, for system reliability, 12-month rolling
platform uptime is assessed against pre-agreed
internal service levels, performance over preceding
years and the performance of firms within the sector.

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METRIC

RATIONALE AND LINK TO THE STRATEGIC KPIS

FURTHER DETAILS

Culture, conduct and people

IG believes having a strong, compliant culture which
embodies IG’s values and excellent conduct is an important
differentiator and helps to contribute to business success and
risk management.

Having appropriate talent available and engaged is a
prerequisite for successful delivery of IG’s strategy.

Performance against these measures will be assessed
over the financial year ending 31 May 2020.

The Committee assesses performance based on the
outcome of annual engagement and culture surveys,
which are administered by a third party, and IG’s
performance against the Board-approved conduct
risk key risk indicators (KRIs).

REMUNERATION POLICY ACROSS THE GROUP

In determining the Remuneration Policy, the Executive Directors, senior management and the Committee takes into account
workforce remuneration and related policies, and the alignment of incentives and rewards with culture. The Committee is
kept updated through the year on general employment conditions, basic salary increase budgets, the level of bonus pools
and pay-outs and participation in share plans.

The Committee is therefore aware of how total remuneration at the Executive Director level compares to the total
remuneration of the general population of employees. Common approaches to Remuneration Policy which apply across the
Company include:

• Consistency in ‘pay for performance’, with annual bonus schemes being offered to the majority of employees

• Offering pension, medical, life assurance and other flexible benefits for all employees, where practical, given

geographical location

• Ensuring that salary increases for each category of employee are considered, taking into account the overall rate of

increase across the Company, benchmarking, and both Company and individual performance

• Encouraging broad-based share ownership through the use of all-employee share plans, where practical

EXECUTIVE DIRECTORS’ SERVICE CONTRACTS

Executive Directors are employed under a service contract with IG Group Limited (a wholly owned intermediate holding
company) for the benefit of the Company and the Group.

The dates on which service contracts are entered into and notice periods are as follows:

June Felix – 30 October 2018 (12 months’ notice from either party)

Paul Mainwaring – 7 July 2016 (12 months’ notice from either party)

Jon Noble – 22 May 2018 (six months’ notice from either party)

Bridget Messer – 22 May 2018 (six months’ notice from either party)

On a Director’s departure, the Company may, at its sole discretion, pay base salary and the value of any benefits (including
pension) that would have been receivable in lieu of any unexpired period of notice.

100 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTCHAIRMAN AND NON-EXECUTIVE DIRECTORS

The table below summarises each element of the Remuneration Policy applicable to the Chairman and the Non-Executive
Directors.

PURPOSE AND LINK
TO STRATEGY

OPERATION

OPPORTUNITY

PERFORMANCE
METRICS

IMPLEMENTATION FOR
2019/20

To attract and retain
Non-Executive Directors
of appropriate calibre
and experience.

The Remuneration Committee
determines the fee for the
Chairman (without the
Chairman present).

The Board is responsible for
setting Non-Executive Directors’
fees. The Non-Executive
Directors are not involved in
any discussions or decisions
by the Board about their
own remuneration.

Fees are within the limits set by
the Articles of Association and
take account of the commitment
and responsibilities of the
relevant role.

No performance
metrics apply.

The Chairman receives a
single fee to cover all his
Board duties.

Non-Executive Directors
receive a fee for carrying out
their duties. They may receive
additional fees if they chair a
primary Board Committee,
and for holding the post of
Senior Independent Director.
Additional fees may
be paid for additional
time commitments in
exceptional circumstances.

Committee membership
fees may be paid. Details
of current fee levels are set
out in the Annual Report
on Remuneration.

The Board reviewed Non-
Executive Director fees and
agreed that no changes would
be made for 2019/20.

Fees from 1 June 2019 are
therefore as follows:

– Non-Executive Director Base

fee – £65,000

– Committee chairs (other than
the Nominations Committee)
– £25,000

– Senior Independent Director

– £10,000

– Committee membership fees
(excluding the Nomination
Committee and the Group
Board Chairman) – £3,000

The fees for the current
Chairman remain unchanged
at £300,000 per annum.

Non-Executive Directors do not have service contracts; they are engaged by letters of appointment. Each Non-Executive
Director is appointed for an initial term of three years subject to re-election, but the appointment can be terminated on
three months’ notice. Non-Executive Directors may receive reimbursement for business expenses incurred in the course of
their duties, including tax therein if applicable.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 101

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DIRECTORS’ REMUNERATION REPORT AND POLICY CONTINUED

ANNUAL REPORT ON REMUNERATION

This part of the report includes a summary of how we implemented the policy in the financial year ended 31 May 2019.

The parts of the report that are subject to audit have been marked.

IMPLEMENTATION OF REMUNERATION POLICY IN THE FINANCIAL YEAR ENDING 31 MAY 2019 (AUDITED)

Total Single Figure of Remuneration – Executive Directors

Contribution to SPP plan account(5)

Fees/basic
salary
£000

Benefits
allowance/

Benefits(4)
£000

Vested
element
£000

Deferred
element
£000

Pension

Name of Director

J Felix(1)

P Mainwaring

J Noble(2)

B Messer(2)

Former Directors
P G Hetherington(3)

Year

2019
2018

377
65

411
400

370
–

192
575

76
–

70
68

35
–

34
98

–

–
–

10
–

109
–

102
427

92
–

95
767

Total
£000

327
–

306
1,281

276
–

Total
£000

780
65

787
1,749

691
–

218
–

204
854

184
–

367
1,534

551
2,301

777
2,974

(1) J Felix was a non-executive director of the Company until her appointment as CEO on 30 October 2018. During 2018/19 she received £23,000 in relation to her role as

non-executive director which is included in fees/base salary above.

(2) J Noble and B Messer joined the Board on 1 June 2018.
(3) P J Hetherington stepped down from the Board on 26 September 2018. Salary, benefits and allowances are shown to this date. The full value of his SPP contribution in

respect of 2019 is shown.

(4) Benefits can include critical illness cover, dental cover, health assessments, income protection cover, life assurance and private medical cover. It was agreed by the

Remuneration Committee that relocation costs (including any applicable tax costs) of up to £85k would be met for J Felix in respect of her first year of appointment
as CEO. Costs for FY19 were £76,000. J Felix, J Noble and B Messer receive a flexible benefits and pension allowance of 12% of base salary less any benefits taken.
P Mainwaring receives a flexible benefits and pension allowance of 17% of base salary. Executives have the option to receive part, or all, of their pension entitlement
in cash.

(5) Figures provided are the cash values of the SPP contributions in respect of performance for the periods ending 31 May 2019 and 31 May 2018 (ie plan years 6 and 5). The
vested element is the proportion of the plan year contribution for the relevant period that vests shortly following the end of the financial year (one third of the total). The
deferred element is the proportion that remains deferred in the plan account (two thirds of the total) which are released in future years. Details of SPP awards held in the
plan account are provided in the Other Share Awards Outstanding table on page 107.

102 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTTOTAL SINGLE FIGURE OF REMUNERATION – NON-EXECUTIVE DIRECTORS (AUDITED)

Name of Director

A Green

S G Hill

J Newman

M Le May

S A Hibberd(1)

J Moulds(1)

Former directors
S J Tymms(2)

Year

2019
2018

Fees(3)
£000

300
255

71
65

96
80

103
90

45
–

51
–

75
80

Benefits(4)
£000

–
–

22
11

–
–

–
1

–
–

3
5

Total
£000

300
255

93
76

96
80

103
91

45
–

51
–

78
85

(1) S A Hibberd and J Moulds joined the Board on 20 September 2018. Remuneration is shown from this date.
(2) S J Tymms stepped down from the Board on 20 March 2019. Remuneration is shown to this date.
(3) Other than in respect for the Chairman, basic Non-Executive Director fees were £65,000 per annum with an additional £25,000 paid for chairing a Board Committee

(other than the Nomination Committee) and £10,000 for the Senior Independent Director and £3,000 for membership of a committee (excluding the
Nomination Committee).

(4) Certain Non-Executive Directors’ expenses relating to the performance of a Director’s duties, such as travel to and from Company meetings and related accommodation,
have been classified as taxable benefits. In such cases, the Company will ensure that the Director is kept whole by settling the expense and any related tax. The figures
shown include the cost of the taxable benefit plus the related personal tax charge.

SUSTAINED PERFORMANCE PLAN (SPP) (AUDITED)

Determination of SPP contribution for the financial year ending 31 May 2019
Performance targets for plan year 6 (financial year ending 31 May 2019) comprised diluted earnings per share (DEPS) targets,
Total Shareholder Return (TSR) and non-financial measures. TSR performance was measured over the three-year period from
1 June 2016 to 31 May 2019 and DEPS and non-financial measures over the financial year ending 31 May 2019.

Performance
measure

DEPS

TSR

Non-financial

Total

Weighting

Threshold
(25% payout for TSR
and 0% for DEPS)

Maximum
(100% payout)

Actual performance

Percentage of maximum
award to Directors

45%

44.2 pence

54.0 pence

35%

Median ranking

Upper quartile
ranking

20%

100%

42.8 pence
(0% awarded)
211 of 271
companies
(0% awarded)
93.2% awarded

18.64%

The maximum award for the CEO role is 500% of basic salary with all other Executive Directors being eligible for a maximum
award of 400% of basic salary. The award to June Felix was pro-rated to take account of the period of her employment
during the year.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 103

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
DIRECTORS’ REMUNERATION REPORT AND POLICY CONTINUED

PERFORMANCE MEASURES – HOW THESE ARE SET AND REVIEW OF PERFORMANCE FOR THE
YEAR ENDED 31 MAY 2019

Diluted earnings per share (45% weighting)
At the start of the financial year, the Committee established a DEPS range in order to measure the performance and
determine the payouts under the SPP. In doing this, the Committee took into account a number of relevant factors, including
Board-approved budget, market consensus expectations and historical targets.

Financial performance for the year to 31 May 2019 was significantly impacted by the lower volatility in the market which was
not anticipated when the targets were set. The Committee considered whether it would be appropriate to amend the DEPS
targets in light of the significant change in the external environment since the time the targets were set. However, following
careful debate, the Committee concluded that changing the targets would not be appropriate as it would not align with the
shareholder experience over the period.

The stretching DEPS targets were not met and therefore no portion of this element will be awarded.

Total Shareholder Return (35% weighting)
TSR performance is assessed against the FTSE 350 (excluding Investment Trusts). 25% of this element is awarded for
median performance with the full portion being awarded for upper quartile performance or above with straight-line
vesting in between.

For the award to be granted in respect of the year to 31 May 2019, TSR was measured over the three-year period from
1 June 2016 to 31 May 2019. Actual TSR performance for the Group for the three-year period was -19.6% (2018: 27.1%).
TSR was positioned below median of the comparator group and therefore no portion of this element will be awarded.

Actual TSR performance for the Group over the period was -7%. TSR was positioned below median of the comparator group
and therefore no portion of this element will be awarded.

Non-financial measures (20% weighting)
The Committee approved a series of non-financial measures comprising strategic delivery, operational effectiveness, and
culture, conduct and people strategic goals as well as operational and client satisfaction measures, indicative of the
performance during the year ended 31 May 2019. These measures are also used for determining a portion of the staff
general bonus pool.

An average of the performance under the specific operational measures combined with performance under the strategic
delivery measures resulted in an overall assessment of 93.2% (2017: 85.9%) of the potential payout under this element. The
Committee carefully considered this outcome in the context of the performance against financial metrics. Whilst it
recognised that financial performance has been challenging, the Committee concluded that exceptional progress has been
achieved against the non-financial measures set at the start of the year.

Performance highlights include outstanding systems uptime and reliability, improved relationships with the regulators,
significantly improved employee engagement, performance management implementation and scores on our culture as well
as reduced voluntary attrition. In addition, we also met a number of significant strategic milestones during the year including
the launch of IG Europe GmbH and IG’s retail foreign exchange dealer (RFED) in the US. In light of this excellent progress,
which the Board believes helps to position the Group strongly to execute the strategy and deliver future sustained value
creation for shareholders, the Committee agreed that the outcome was appropriate.

The table over the page provides details of the individual measures considered and their performance assessment for the
year ended 31 May 2019.

104 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTCOMPONENT

DETAIL

System uptime
and reliability

The primary measures used to assess the performance against this metric and the parameters IG strives to
achieve are:

Core dealing availability per month – minimum 99.8%.

Maximum percentage downtime in any one day – maximum 4.0%.

IG achieved 99.99% rolling cumulative 12-month uptime and experienced four outages totalling 38 minutes
over the financial year. This compares to a record 99.98% rolling cumulative 12-month uptime in the 2018
financial year with a total outage time of 86 minutes.

FY19
OUTCOME

95.0%

(FY18: 95.0%)

Maintaining good
standings with regulators

This metric is included within the non-financial measures as IG operates in a regulated industry and failure
to maintain good standings with IG’s regulators could materially impact IG’s ability to operate in existing
jurisdictions, expand into new geographies and ultimately IG’s financial performance.

90.0%

(FY18: 60.0%)

Over the prior two years IG has scored 60% on this metric, which is significantly below the historic average
for this measure. However, the regulatory landscape has become more certain over the last 12 months
providing increased regulatory certainty and IG does not expect significant further changes within the EU.

While the measures have impacted IG’s business, IG has strong working relationships with its regulators
globally and has continued to have positive interactions across all regions during the year; this has included
receiving regulatory authorisation for the US RFED. In the EU, IG continues to engage proactively and
positively with the FCA, and IG Europe GmbH and Spectrum GmbH have received regulatory approval
from BaFin.

Customer satisfaction

The Remuneration Committee uses a number of indicators to measure performance against this metric. In
the 2018 financial year, IG scored 95% based on improved measures of client satisfaction. In the 2019
financial year client service has remained a key strength and focus of IG, as reflected in IG’s strategic
choices.

95.0%

(FY18: 95.0%)

In determining a score the Remuneration Committee has reviewed client satisfaction data for IG and other
firms in the sector, as well as performance against internal targets.

IG sets challenging internal targets, designed to ensure IG responds promptly to client queries. IG’s client
service teams performed strongly against these challenging targets.

IG also achieved high client satisfaction with >90% of clients rating IG positively. This is higher than
the industry average and IG is one of the top three brokers for client satisfaction across the markets
we monitor.

Reputation and PR

In the past year IG has continued to engage proactively with media globally in order to provide
commentary, add context, showcase expertise and build trust.

95.0%

(FY18: 95.0%)

This has included coverage of key events for IG during the year, as well as a continued presence for
IG’s analysts in the media.

Coverage of key events has also been positive and we continue to build relationships with
top-tier publications.

Risk management

The 2019 financial year has seen IG continue its history of strong risk management, despite periods of
regulatory change and adverse market conditions. The risk team has assisted with the deployment of new
products and launch of entities over the course of the year.

95.0%

(FY18: 90.0%)

Additional controls have been automated, improving IG’s ability to monitor risk against its appetite
statement and reduce response times when applicable. Business model processes have also been
developed to assist with stressing and testing exposures; assisting management to make more
informed decisions.

People

This measure is assessed against five metrics: voluntary attrition, employee engagement, succession
planning, performance and culture.

100%

(FY18: 85.0%)

Voluntary attrition has remained below the target set by IG for the year.

Employee engagement is assessed via an anonymous survey administered by an external provider.
Engagement has responded very positively to measures taken by IG’s management rising 7%. This is a very
significant change and was considered by the Board to be exceptional performance.

Succession planning has progressed well and IG has also successfully implemented a mentoring programme.

IG exceeded the pre-set target for the percentage reviews that were successfully completed.

The culture aspect of the engagement survey showed a 2% increase on the prior year, exceeding the target
set at the start of the period.

Strategic delivery
measures

As part of the Board’s strategic planning, there is a clear plan relating to strategic projects provided to the
Remuneration Committee at the start of the year. This details the underlying projects set for delivery in the
short-to-medium term.

87.7%

(FY18: 83.6%)

The Remuneration Committee uses this plan to judge performance, and management’s execution and
delivery of the key strategic initiatives. There were a number of key strategic projects delivered during the
year. Examples of the projects include: launching IG Europe GmbH and the US RFED, completing a
relaunch of Nadex, and updating the Group’s governance framework; including reaching pre-set targets
for the implementation of the Senior Managers and Certification Regime, which will apply to IG’s UK
regulated entities from 9 December 2019.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 105

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
DIRECTORS’ REMUNERATION REPORT AND POLICY CONTINUED

OVERALL SUMMARY
Based on the performance for the financial year ending 31 May 2019, we will grant awards under the SPP at 18.64% of the
maximum potential pay-out to the Executive Directors after the announcement of the results. The actual number of shares
that will be contributed to the Director’s plan account will be based on the ten-day average share price immediately prior
to grant.

Since its introduction six years ago the average pay-out under the SPP is 52% of the maximum. The Committee considers
that the outcomes under the SPP are a fair reflection of performance delivered, and that they are aligned with value achieved
for shareholders over this period.

Financial year:

SPP plan contribution (% maximum):

2014

54%

2015

41%

2016

90%

2017

27%

2018

80%

2019

6-year
average

18.64%

52%

AWARDS GRANTED DURING THE YEAR ENDED 31 MAY 2019 (AUDITED)

The SPP awards granted during the financial year ended 31 May 2019 in respect of performance to 31 May 2018 (plan year 5)
are as follows:

Contribution

% of
salary

Value of
options awarded

320%
218%
218%

£1,280,424
£655,335
£655,335

Number of
options in the
plan account
after plan year 5
contribution(2)

Number of
options vested
and exercised
during the year

189,609
191,217
173,706

63,203
39,551
33,713

Number of
options
awarded(1)

141,780
72,565
72,565

400%

£2,300,762

254,762

515,362

171,787

Number of
options in the
plan account at
the end of the
year

126,406
151,666
139,993

343,575

Number of
options lapsed

–
–
–

–

P Mainwaring
J Noble(3)
B Messer (3)

Former Directors
P G Hetherington

(1) The number of options contributed to the plan account was based on the ten-day average share price immediately post the announcement date of the Group’s results for
the year ended 31 May 2018 of 903.1 pence per share. Awards were granted in the form of nil cost options and are subject to continued employment. The release of
shares is subject to the satisfaction of the underlying financial performance to be tested in the final year of the plan.

(2) In addition to the awards made in respect of plan year 5, this also includes the brought forward number of options in the plan account from plan years 1, 2, 3 and 4 with

its respective accrued dividend shares.

(3) SPP awards granted to J Noble and B Messer are based on their roles before appointment to the Board on 1 June 2018.

Full details of performance targets applied to the 2018 SPP awards and the assessment of performance against targets are
set on out pages 72 and 73 of the 2018 Directors’ Remuneration Report.

Details of the outstanding SPP share awards, using an estimate of the options to be granted in respect of plan year 6
(ie performance to 31 May 2019) are set out below:

Options awarded
as dividend
equivalents
accruing on
unvested options
after the year-
end

Plan contribution
in respect of
period ended
31 May 2019
(estimated
number of
options)(2)

Plan account
brought forward
(number of
shares)(1)

–
126,406
151,666
139,993

–
10,524
12,626
11,654

59,799
56,001
50,415
50,415

Plan account
following
contribution for
the year

59,799
192,931
214,707
202,062

Event

Plan year 6
Plan year 6
Plan year 6
Plan year 6

Estimated
cumulative
number
of options
remaining in the
plan account
at the end
of the year

39,866
128,621
143,138
134,708

Estimated
number of
options
vesting

19,933
64,310
71,569
67,354

Plan year 6

343,575

28,603

100,626

472,804

157,601

315,203

J Felix(3)
P Mainwaring
J Noble
B Messer

Former directors
P G Hetherington

(1) Executive Directors and the former CEO will be granted awards in respect of plan year 6 following the announcement of results for the year ended 31 May 2019 on 23

July 2019. The share price used to calculate the number of awards to be granted will be the ten-day average share price to this date. As the actual average share price is
not known at the time of signing of the Annual Report, the above number of awards has been estimated using a share price of 547.2 pence, being the share price on 31
May 2019. Share awards have an exercise price of 0.005 pence.

(2) In accordance with the scheme rules 33.3% of the cumulative awards in the plan account (after the contributions in respect of plan year 6) will vest in August 2019 with the
vesting of the remaining options deferred. The August 2019 vesting will include additional dividend shares accrued as follows in respect of plan year 1, 2, 3, 4 and 5
awards held in the plan account – P Mainwaring (10,524), J Noble (12,626) and B Messer (11,654) based on reinvestment at the dividend payment date.

(3) Plan year 6 is the first year in which J Felix participated in the SPP following her appointment to the role of CEO on 30 October 2018. The award to June Felix was

pro-rated to take account of the period of her employment during the year.

106 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTOTHER SHARE AWARDS OUTSTANDING (AUDITED)

P G Hetherington
SIP: matching shares
SIP: matching shares
SIP: matching shares

Total

P Mainwaring
SIP: matching shares
SIP: matching shares

Total

J Noble
SIP: matching shares
SIP: matching shares

Total

Award date

Share price at
award date

Number as at
31 May 2018

Number
awarded
during the year

Number lapsed
during the year

Number
exercised during
the year

Number
outstanding at
31 May 2019

2 Aug 16
1 Aug 17
7 Aug 18

879.50p
626.50p
894.50p

408
574
0

982

0
0
402

402

(408)
(574)
(402)

(1,384)

0
0
0

Award date

Share price at
award date

Number as at
31 May 2018

Number
awarded
during the year

Number lapsed
during the year

Number
exercised during
the year

Number
outstanding at
31 May 2019

1 Aug 17
7 Aug 18

626.50p
894.50p

572
0

572

0
402

402

0
0

572
402

974

Award date

Share price at
award date

Number as at
31 May 2018

Number
awarded
during the year

Number lapsed
during the year

Number
exercised during
the year

Number
outstanding at
31 May 2019

2 Aug 16
1 Aug 17

879.50p
626.50p

408
574

982

0
0

408
574

982

TABLE OF DIRECTORS’ SHARE INTERESTS (AUDITED)

Legally owned(8)

SIP(9)

SPP awards(2)

Total

% of salary held
under shareholding
policy(1)

31 May 2018

31 May 2019

Awards held in
plan account

Vested but
unexercised

31 May 2019

% salary

Executive Directors
J Felix(3)
P Mainwaring
J Noble(4)
B Messer(4)

Former directors
P G Hetherington(5)

Non-Executive
Directors
A Green
S G Hill
M Le May
J A Newman
S A Hibberd(6)
J Moulds(6)

Former directors
S J Tymms(7)

–
53,139
42,774
18,670

43,700
86,900
64,187
36,506

386,493

386,694

6,881
15,966
–
–
–
–

15,055
15,966
–
–
–
–

–

–
974
982
–

–

–
–
–
–
–
–

–

–
126,406
151,666
139,993

343,575

–
–
–
–
–
–

–

–
–
–
–

–

–
–
–
–
–
–

–

43,700
214,280
216,835
176,499

40%
117%
96%
54%

730,269

358%

15,055
15,966
–
–
–
–

–

–
–
–
–
–
–

–

(1) Calculated as shares owned on 31 May 2019 at the closing mid-market share price of 547.2p.
(2) This figure excludes awards under the SPP scheme for performance year ending 31 May 2019, which will be granted following the announcement of the Group’s results on

23 July 2019. The awards held in the plan account include those in respect of plan years 1, 2, 3, 4 and 5 as at 31 May 2019.
(3) J Felix was appointed to the role of CEO on 30 October 2018. Prior to this she was a Non-Executive Director of the Company.
(4) J Noble and B Messer joined the Board on 1 June 2018.
(5) P G Hetherington stepped down from the board on 26 September 2018. His shareholding is shown at this date. At this date and at 31 May 2018 P G Hetherington also

held 10,000 preference shares.

(6) SA Hibberd and J Moulds joined the Board on 20 September 2018.
(7) S Tymms stepped down from the Board on 20 March 2019.
(8) This figure includes partnership shares that are purchased as part of the Group’s Share Incentive Plan (SIP) which are not subject to vesting conditions.
(9) This figure shows the number of matching shares held at 31 May 2019 as part of the Group’s SIP, which will vest after three years from the respective award date, as long

as employees remain employed by the Group.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 107

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
DIRECTORS’ REMUNERATION REPORT AND POLICY CONTINUED

Under the share ownership policy, the Chief Executive Officer is expected to hold shares to the value of a minimum of 200%
of base salary, and other Executive Directors are expected to hold shares with a value of 150% of base salary. Only shares
forming part of the directors’ share interests are included in the calculation, which must be achieved within five years of the
date of appointment. J Felix was appointed during the year and has already built a significant shareholding purchased from
her own funds.

There have been no changes to any of the directors’ share interests in the period since 31 May 2019.

The awards to be made under the Company’s SPP in respect of the performance period ending on 31 May 2019 are not
included in this table (see page 106 for details).

Leaving arrangements for Peter Hetherington
Mr Hetherington stepped down from the Board and his role of CEO on 26 September 2018. Mr Hetherington continued to
work for the business until 31 May 2019 to ensure a smooth transition to the new CEO. During this period he continued to
receive his salary, and flexible pension and benefits allowance. Following his termination Mr Hetherington received
payments totalling £311,574 in lieu of notice and in settlement of potential claims. The portion related to notice was paid in
four equal instalments and subject to mitigation. A sum of up to £22,700 (plus VAT) was paid as a contribution in relation to
legal services (paid directly to the third-party service providers).

Mr Hetherington remained eligible to participate in the SPP for the year ending 31 May 2019 as he remained with the
business for the full financial year. His award under the SPP remained subject to the same performance measures as those
outlined above. The Committee determined that 18.64% of the SPP shares in respect of the year to 31 May 2019 should be
awarded. Shares with a value of £550,626 will therefore be contributed to Mr Hetherington’s plan account on 6 August 2019
in line with the normal operation of the plan.

Mr Hetherington has been treated as a good leaver for the purpose of the SPP. One third of his total plan account will be
released on 23 July 2019, one third on 21 July 2020 and one third on 20 July 2021. Under the terms of the Group’s Share
Incentive Plan (SIP) Mr Hetherington retained accrued matching shares held for three years or more with any matching shares
held for less than three years lapsing.

To enable IG to continue to benefit from Mr Hetherington’s significant experience and deep expertise in the industry, from
26 September 2019 to 25 September 2021, Mr Hetherington will act as a consultant to the Company providing strategic
business, advisory and client/customer relationship management advice to the Company. Consultant’s fees are expected to
be around £600,000 over the two-year period.

Payments to past Directors (audited)
No payments were made to past Directors in the year.

CHANGE IN REMUNERATION OF THE CHIEF EXECUTIVE OFFICER (CEO)

Base salary(1)

Taxable benefits

Performance-based remuneration

% change
(FY19/FY18)

% change
(FY18/FY17)

% change
(FY17/FY16)

% change
(FY19/FY18)

% change
(FY18/FY17)

% change
(FY17/FY16)

% change
(FY19/FY18)

% change
(FY18/FY17)

% change
(FY17/FY16)

CEO
Group employees

-4.2%
3.2%

0%
-2.1%

-3.2%
8.8%

20.2%
8.8%

0%
16.2%

0%
14.1%

-61.8%
-33.2%

195.4%
66.8%

-63.7%
-27.6%

(1) June Felix was appointed as CEO on 30 October 2018 taking over from Peter Hetherington, who stepped down as CEO on 26 September 2018. Their combined base

salary for the year is compared to the Peter Hetherington salary for the FY18. For the CEO, the 2016/2015 base salary change reflects the change in CEO during 2015/16.
Remuneration is included in the financial year in which performance is measured against. In respect of FY17/FY18, the percentage change in respect of the average base
salaries of Group employees reflects the change in the mix of our staff resulting from our location strategy, rather than the change in the level of actual base salary of
existing employees.

EXECUTIVE DIRECTORS’ OUTSIDE APPOINTMENTS

None of the current Executive Directors hold any outside appointments.

RELATIVE IMPORTANCE OF SPEND ON PAY

The following table sets out the profit, dividends and overall spend on pay over the past five financial years:

Profit after tax
Dividends
Employee remuneration costs
Average number of employees

2019
£m

158.3
159.1
131.0
1,780

2018
£m

226.4
158.9
131.6
1,597

2017
£m

169.2
118.5
119.1
1,522

2016
£m

164.3
114.9
113.5
1,412

2015
£m

131.9
102.7
94.3
1,287

108 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTSTATEMENT OF SHAREHOLDER VOTING

The Directors’ Remuneration Policy was approved at the 2017 AGM. The Directors’ Remuneration Report for the financial
year ended 31 May 2018 was approved at the 2018 AGM. The following votes were received:

For(1)
Against
Total
Withheld

2017 Remuneration Policy

Total number of
votes

289,325,839
10,631,334
299,957,173
7,223,131

% of votes cast

96.5%
3.5%
100%
–

2018 Annual Report on Remuneration

Total number
of votes

282,359,113
13,935,001
296,294,114
5,971

% of votes cast

95.30%
4.70%

(1) For includes votes at the Chairman’s discretion.

TOTAL SHAREHOLDER RETURN CHART

This graph shows the value, by 31 May 2019, of £100 invested in IG Group on 31 May 2009 compared with the value of £100
invested in the FTSE 250 Index and the FTSE 350 Financial Services Index. As IG Group is a member of both of these
indices, the Committee believes it is appropriate to compare the Group’s performance against them.

d
e
s
a
b
e
r

)
£
(

e
u
a
V

600

500

400

300

200

100

May-09 May-10 May-11 May-12 May-13 May-14 May-15 May-16 May-17 May-18 May-19

IG Group

FTSE 250 Index

FTSE 350 Financial Services Index

Source: FactSet

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 109

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO

DIRECTORS’ REMUNERATION REPORT AND POLICY CONTINUED

CHIEF EXECUTIVE OFFICER EARNINGS HISTORY

The earnings history of the Chief Executive Officer is shown in the table below:

Financial year

2010

2011

2012

2013

2014

2015

2016(2)

2017

2018

2019(3)

Single figure remuneration
(£’000)
Annual bonus outcome
(% maximum)
LTIP vesting outcome
(% maximum)
VSP vesting outcome
(% maximum)
SPP plan contribution
(% maximum)(1)

1,628

1,141

2,201

1,103

1,970

1,519

2,745

1,452

2,974

1,166

100%

99%

47%

48%

40%

61%

–

54%

41%

90%

27.1%

80% 18.64%

(1) The SPP replaced the annual bonus and VSP schemes from the financial year ending 31 May 2014.
(2) Includes the base salaries paid to both T A Howkins and P G Hetherington for their respective tenures as CEO during the year, and the SPP awards applying to

P G Hetherington in the year.

(3) J Felix was appointed as CEO on 30 October 2018, taking over from P J Hetherington who stepped down as CEO on 26 September 2018. The single figure shown is the

aggregate amount earned during the year. P Mainwaring performed the role of acting CEO for the period between 26 September 2018 and 30 October 2018 but
received no additional remuneration for this period.

REMUNERATION COMMITTEE’S ROLE

The Committee’s principal roles are summarised below:

• Make recommendations to the Board on the Group’s senior executive Remuneration Policy

• Determine an overall remuneration package for the Executive Directors in order to attract and retain high-quality

Directors capable of achieving the Group’s objectives

• Set and agree with the Board a competitive and transparent remuneration framework which is aligned to the Group’s

strategy and is in the interest of both the Company and its shareholders

• Determine the contractual terms, remuneration and other benefits for the Executive Directors

• Determine and review the Group’s Remuneration Policy, ensuring it is consistent with effective risk management across

the Group, and consider the implications of this Remuneration Policy for risk and risk management

• Determine and agree the policy for the remuneration of the Board Chairman and the Executive Directors

• Review pay, benefits and employment conditions and the remuneration trends across the Group

• Approve the structure of share-based awards under the Group’s employee incentive schemes, to determine each year
whether awards will be made and, if awards are made, to monitor their operation, the size of such awards and the
performance targets to be used

• Monitor regulatory developments, including those affecting UK-listed companies and financial services firms, to ensure

the Company’s Remuneration Policy is consistent with these

• Establish the selection criteria, appoint and set the Terms of Reference for any remuneration consultants who advise

the Committee

The full Terms of Reference for the Committee can be found on the Group’s website, iggroup.com. These were reviewed
during the year to ensure they were aligned with the 2018 UK Corporate Governance Code. To ensure the Committee
discharges its responsibilities appropriately, an annual forward calendar, linked to the Committee’s Terms of Reference, is
approved by the Committee.

110 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTACTIVITY DURING THE FINANCIAL YEAR

During the year, the Committee’s key activities included the
review of:

• The Director’s Remuneration Report published in the
2018 Annual Report and Accounts and the Directors’
Remuneration Policy

• Recommending to the Board the leaving arrangements
for the former CEO and the remuneration arrangements
for the new CEO

• The fee for the Company Chairman and Executive
Directors’ remuneration for the 2020 financial year

• Performance against targets for the 2019 SPP award, the
vesting of LTIP awards based on performance in the 2019
financial year and for the determination of the bonus pool

• The remuneration and bonus awards, including for

senior management

• Proposed targets for the 2020 financial year Sustained
Performance Plan and the Long-Term Incentive Plan

• The performance of the Group’s Sales Incentive Plans
to gain assurance that their design helps promote
good conduct

• A review of remuneration-related risks, Remuneration

Code Staff and Gender Pay Gap reporting

• Review of Remuneration Committee advisors

• Review of developments in market practice and corporate

governance relating to remuneration

• Agree the scope of a review of the Directors

Deloitte and AH are both founding members of the
Remuneration Consulting Group and are signatories to its
Code of Conduct, which requires its advice to be objective
and impartial. During the year Deloitte also provided
unrelated advisory services in respect of regulatory and tax
advice and Internal Audit services.

It is the view of the Committee that the engagement teams
at Deloitte and AH that provided remuneration advice to the
Committee during the year do not have connections with IG
Group that may impair their independence. The Committee
reviewed the potential for conflicts of interest and judged
that there were appropriate safeguards against such
conflicts. The Committee consider that the advice received
from the advisors is independent, straightforward, relevant
and appropriate and that it has an appropriate level of
access to them and has confidence in their advice.

COMMITTEE EVALUATION

During the year, the Committee undertook a questionnaire-
based review of its own effectiveness. The evaluation
process was internally facilitated by the Company Secretary
as part of the overall annual Board effectiveness review.
Overall, the Committee’s performance was rated highly, as
was the management of its meetings and the quality of
information received. It was agreed that the focus for the
2020 financial year was the review of executive director
remuneration and reward structures and the Remuneration
Policy, and communicating effectively to shareholders, partly
in light of changes to the UK Corporate Governance Code.

Remuneration Policy for the 2021 financial year following
shareholder engagement

This report was approved by the Board of Directors on
23 July 2019 and signed on its behalf by:

Malcolm Le May, Chairman of the Remuneration Committee
23 July 2019

ADVICE TO THE COMMITTEE

During the financial year ended 31 May 2019, the Committee
consulted the Chief Executive Officer about remuneration
matters relating to individuals other than themselves. The
Chief People Officer and the Employment Tax and Reward
Manager provide support to the Committee. The Company
Secretary is secretary to the Committee and also provided
advice and support as required.

External advisers attend Committee meetings at the
invitation of the Chairman.

During the year, the Remuneration Committee undertook a
review of their advisors and, following a competitive tender,
appointed Deloitte LLP as advisors to the Committee in
April 2019. Prior to this the Remuneration Committee was
advised by Aon Hewitt (AH; formerly New Bridge Street).

Deloitte’s fees for advice provided to the Remuneration
Committee during the financial year ending 31 May 2019
were £48,000 (excluding VAT). AH’s fees during the same
period were £94,000 (excluding VAT). Both firms charge fees
on a time and material basis.

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CHAIRMAN’S OVERVIEW

I set out in this report the role of the Committee and how it
has discharged its responsibilities during the year. The
Committee has continued to work closely with other Board
Committees in respect of relevant issues affecting more
than one Committee.

I am pleased to report that this year the Committee
continued to see improvements in the quality of materials
provided and presented. It has overseen and supported the
development of significant improvements in the systems and
controls infrastructure including the financial control systems
infrastructure, processes and systems relating to the
management of client money and assets and improvements
to access management control systems where there remains
work to do.

The Committee has also overseen developments in IG’s
Corporate Governance environment ahead of the
introduction of the Senior Managers and Certification
Regime (SMCR) in December 2019.

I can also report that latterly the Committee has seen
improvements in the level and quality of materials provided
in respect of training on accounting, audit and reporting
developments. The Committee also received reports on
general developments in Internal Audit Practice and
commissioned an external Internal Audit Quality assessment
review, the results of which were encouraging.

The Board has agreed amended Terms of Reference (ToR) to
reflect changes introduced in the 2018 UK Corporate
Governance Code, including widening the scope of
responsibilities concerning financial reporting,
whistleblowing and management of External Auditors.

We remain mindful of the ongoing review of the Audit
Industry by the Competition and Markets Authority (CMA)
which is considering, amongst other things, the merits of
separating audit and non-audit services, mandatory joint
audits and methods of holding Audit Committees to
account. We are also aware of the most recent BEIS report
into the future of audit which report complements Sir Jon
Kingman’s review and Sir Donald Brydon’s review on the
quality and effectiveness of audit, and we will continue to
closely monitor further developments in this regard.

As the current auditor is in their tenth year of engagement
and in line with the External Auditor Tender Policy the
Committee has commenced an audit tender process which
includes the current incumbent.

AUDIT COMMITTEE

JIM NEWMAN
CHAIRMAN OF THE AUDIT COMMITTEE

Jim Newman, Chairman
of the Audit Committee,
gives his review of the
Committee’s activities
during the financial year.

I am pleased to report that this year
the Committee has overseen and
supported the development of
significant improvements in the systems
and controls infrastructure.

JIM NEWMAN
CHAIRMAN OF THE AUDIT COMMITTEE

112 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTMEMBERSHIP AND ATTENDANCE

ROLE OF THE AUDIT COMMITTEE

All Audit Committee members are Independent Non-
Executive Directors who draw on considerable and broad
business and financial services experience. Sally-Ann Hibberd
joined the Committee on 20 September 2018 following
her appointment to the Board. Sam Tymms left
the Committee on her resignation from the Board on
20 March 2019.

The Corporate Governance Code requires the inclusion
in the Committee of at least one member determined
by the Board as having recent and relevant financial
experience. The Committee Chairman is considered
to fulfil this requirement.

The Chief Financial Officer, Global Head of Internal Audit,
Company Secretary and representatives from
PricewaterhouseCoopers LLP (PwC), the External Auditor,
attend the Committee meetings by standing invitation.
Members of senior management from various areas of the
business attend the Committee meetings by invitation
when necessary.

The principal roles and responsibilities of the Committee are
set out in its Terms of Reference, and include, but are not
limited to:

• Reviewing the financial statements and announcements
relating to the financial performance and governance of
the Group

• Reviewing the control environment through several

means including via Internal Audit reports, the progress
on implementation of audit recommendations and
through consideration of a summary of the Internal
Audit-generated Control Action List

• Monitoring and reviewing the effectiveness of the

Group’s Internal Audit function in the overall context of
the Group’s internal controls and risk management

• Recommending the appointment of the External Auditors

and reviewing their effectiveness, fees, Terms of
Reference and independence

• Monitoring the availability of distributable profits for the

purpose of considering dividend payments

The Committee has four scheduled meetings a year and will
additionally meet if and when required. The table below
details meetings scheduled and attended during the year.

The Audit Committee’s full Terms of Reference are revised
on an annual basis and can be found on the corporate
website, iggroup.com.

COMMITTEE
MEMBER

ELIGIBLE
TO ATTEND

ATTENDED

Jim Newman

Sam Tymms(1)

Sally-Ann Hibberd(2)

Malcolm Le May(3)

The Chairman, Andy Green, was invited to, and attended, all
the meetings.

(1) Sam Tymms attended all Committee meetings prior to her resignation on

20 March 2019.

(2) Sally-Ann Hibberd attended all Committee meetings held following her

appointment on 20 September 2018.

(3) Malcolm Le May was unable to attend one Committee meeting due to

short-notice unforeseen events.

HOW THE COMMITTEE OPERATES

To ensure the Committee discharges its responsibilities
appropriately, an annual forward calendar, linked to the
Committee’s Terms of Reference and covering key events in
the financial reporting cycle, is approved by the Committee.

The Company Secretary, with input from the Chairman of
the Committee, drafts the agenda before each meeting,
ensuring that each of the items under the Committee’s
Terms of Reference and responsibilities are covered at least
once in the financial year, and more frequently if required.

Following each Committee meeting, a formal report is made
to the Board in which the Chairman of the Audit Committee
describes the proceedings of the Committee meeting and
makes recommendations to the Board as appropriate.

Members of the Committee also meet separately with the
Global Head of Internal Audit and the External Auditors to
focus on their respective areas of responsibility and to
discuss any potential requirements for support from the
Committee to address any issues arising.

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To aid this review process, the Committee has considered
reports from the Chief Financial Officer and his team,
Internal and External Auditors.

The Committee considered and discussed with
management and the External Auditors the primary areas of
judgement and disclosure in relation to the financial
statements for the year ended 31 May 2019, details of which
are set out overleaf.

AUDIT COMMITTEE CONTINUED

MAIN ACTIVITIES DURING THE FINANCIAL YEAR

Financial reporting
In relation to financial reporting, the primary role of the
Committee is to work with management and the External
Auditors in reviewing the appropriateness of the half-year
and annual financial statements. The Committee discharged
its responsibilities in this area through focusing on the
following, among other matters:

• Assessing the quality and acceptability of accounting

policies and practices

• Ensuring disclosures are clear and compliant with financial

reporting standards and relevant financial and
governance reporting requirements

• Considering material areas in which significant

judgements and estimates have been applied or there
has been discussion with the External Auditors

• Reviewing announcements and financial statements prior
to issuance including preliminary and half-year results
announcements and recommending these to the Board
for approval

• Reviewing the processes to support the assessment and

determination of the Group’s principal risks that may have
an impact on the Group’s solvency and liquidity before
recommending and approving the Going Concern and
Viability Statement to the Board

• Evaluating on behalf of the Board whether the Annual

Report and Accounts, taken as a whole, are fair, balanced
and understandable and provide the information
necessary for shareholders to assess the Group’s
performance, business model and strategy

• Receiving a paper summarising all statements and

assurances required of Directors in the Annual Report
and Financial Statements together with evidence to
support the Directors’ views and required statements

• Overseeing IG’s approach to tax management

and control

• Reviewing the inherent risks in the financial reporting

process and systems

114 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTROLE OF THE COMMITTEE

DISCHARGE OF RESPONSIBILITIES

CONCLUSION/ACTION TAKEN

Going concern and long-term viability

The Directors are required to make a statement in
the Annual Report as to the going concern and
longer-term viability of the Group.

The Committee evaluated various reports from
management that set out the view of the Group’s
going concern and longer-term viability. These
reports detailed the impact of outcomes of stress
tests after applying multiple scenarios to
determine how the Group is able to cope with
deterioration in liquidity profile or capital position.

Taking into account the assessment by
management of stress-testing results and risk
appetite, the Committee agreed to recommend
the Going Concern and Viability Statement to
the Board for approval.

Carrying value of goodwill and other intangible assets

In accordance with accounting standards, the
Group is required to review any goodwill balances
for impairment and to consider the underlying
assumptions used in determining the carrying
value of these assets.

In addition, the Group is required to assess
whether there is any indication the other intangible
assets may be impaired.

Accounting for cryptocurrencies

The Group has reviewed the way in which it
accounts for cryptocurrencies to reflect recent
practice and guidance. This has resulted in no
change in the Group’s accounting policy.

Impact of new accounting standards

The Group reviewed the expected impact of new
accounting standards on the financial statements
to assess their likely impact on reporting.

Tax provisions

Calculating the Group’s corporation tax charge
involves a degree of estimation and judgement, as
the tax treatment of certain items cannot be finally
determined until resolution has been reached with
the relevant tax authority. The Group holds tax
provisions in respect of the potential tax liability
that may arise on these unresolved items. The
Group has generated tax losses in certain
jurisdictions where IG operates.

The Group has recognised deferred tax assets in
respect of these losses to the extent that future
profits have been forecast.

The Committee reviewed a paper from
management setting out the key assumptions used
in the impairment review of the goodwill balance
and an associated sensitivity analysis.

Based on the assessment performed, the
Committee concluded that there should be no
change to the recorded carrying value of the
goodwill and other intangible assets.

The Committee reviewed the impairment review of
the DailyFX intangible asset.

The Committee reviewed a paper from
management setting out the accounting policy for
cryptocurrency assets and related disclosures.

The Audit Committee concluded the
accounting policy and proposed disclosures
were appropriate.

The Committee reviewed the assessment
prepared by management detailing the expected
impact of the following new accounting standards
on the 2019 and 2020 reporting periods.

IFRS 9 – Financial instruments

IFRS 15 – Revenue from contracts with customers

IFRS 16 – Leases

Based on management’s report, the Committee
concluded the expected impact of the new
accounting standards had been appropriately
evaluated and disclosed and that the Group
was prepared for the introduction of the
relevant standards.

The Committee reviewed a report from
management that detailed the assumptions made
in calculating the Group’s corporation tax charge
and provisions. The Group’s External Auditors also
provided commentary on this matter to the
Committee. The Committee has also reviewed
the Group’s Tax Risk Management Policy and
Tax Strategy.

The Committee concluded that the corporation
tax charge and provisions recorded by the Group
were appropriate and complete.

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AUDIT COMMITTEE CONTINUED

CONTROL ENVIRONMENT

Other matters addressed by the Committee focused on the effectiveness of the Group’s control environment and
performance of the Group’s IT systems, and the Internal Audit function, including the objectivity and independence of
Internal Audit personnel.

ROLE OF THE COMMITTEE

DISCHARGE OF RESPONSIBILITIES

CONCLUSION/ACTION TAKEN

Risk management and internal control

The Committee is required to assist the
Board in the annual review of the
effectiveness of the Group’s Risk
Management Framework and internal
control systems.

Internal Audit

The Committee is required to oversee the
performance, resourcing and effectiveness
of the Internal Audit function.

The Committee received a report from the Board
Risk Committee including an assessment of those
risks that might threaten the Group’s business
model, future performance, solvency or liquidity.

The Committee agreed to recommend to the Board
the Annual Report statements relating to the
effectiveness of the Risk Management Framework
and internal control systems.

It considered and challenged management on the
overall effectiveness of the Risk Management
Framework and internal control systems.

It also received regular reports on the Finance
Change programme, which programme has now
reverted to business as usual.

The Committee received regular reports on a
project to further improve controls over Identity
Access Management.

The Committee reviewed the relevant disclosures
within the Accountability section of the Corporate
Governance Report within the Annual Report.

The Committee monitored and reviewed the
effectiveness of the Group’s Internal Audit function
in the overall context of the Group’s internal
controls and risk management systems.

It reviewed and assessed the risk-based Internal
Audit plan.

It reviewed and monitored management’s
responsiveness to the findings and
recommendations of the Internal Audit function.

It monitored the consolidated Control Action List,
noting themes arising, reviewing the effectiveness
of the function.

The Committee received all Internal Audit reports
and, in addition, received summary reports on the
results of the work of the Internal Audit function on
a periodic basis.

The Committee reviewed additional Internal Audit
Reports, not forming part of the annual plan,
requested by management or Directors
in preparedness for new or changing
product offerings.

It reviewed the performance of the Internal Audit
function against the plan and an assessment of the
effectiveness of the Internal Audit function.

It reviewed the results of an external Internal Audit
quality assessment.

The Committee reviewed the resourcing and
effectiveness of the Internal Audit function and
approved the risk-based audit plan.

The Committee supports the work of the Internal Audit
function in the areas of advisory and consulting work and
predominantly reports to the Board Risk Committee.

An External Quality Assessment was completed during
the year. The overall conclusion was that Internal Audit
is a mature function that is in conformance with the
Institute of Internal Auditors’ standards and is aligned
to the Chartered Institute of Internal Auditors UK
Financial Services Code.

The Internal Audit function remains effective and has
implemented the appropriate policies to ensure this.
The function has sufficient resources to deliver the
proposed plan.

The function continues to be efficient, with the
processes being robust and strong governance
being evidenced.

116 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTROLE OF THE COMMITTEE

DISCHARGE OF RESPONSIBILITIES

CONCLUSION/ACTION TAKEN

Whistleblowing

The Committee considers the adequacy of
the Group’s arrangements by which
employees may in confidence raise
concerns about improprieties in matters of
financial reporting or other matters.

Client money and assets

The Committee has a responsibility for
overseeing the Group’s systems and
controls relating to the holding and
management of client money and assets.

Corporate governance

The Committee is responsible for the review
of the role of the Control Functions
Oversight Committee which itself provides
oversight over the risk-based system for the
governance, operation and maintenance of
the Group’s legal entities.

The Committee reviewed the Group’s
Whistleblowing Policy to ensure that it remained fit
for the needs of the Group.

The Committee reviewed the Whistleblowing Policy
and decided it remained fit for purpose.

The Committee concluded that whistleblowing
processes were operating effectively during the period
under review. It did however recommend that in due
course management report on all areas of workforce-
related dissatisfaction, whilst noting the encouraging
Employee Engagement results.

The Committee monitored the effectiveness of the
control environment relating to client money and
assets and received an annual report from the
Chief Financial Officer on the operation of the
Client Money and Assets Committee.

The Committee reviewed improvements made to
the control environment and the steps being taken
to further enhance controls at both Group and
entity level.

The Committee considered that these were
appropriate to the circumstances of the Group.

The Committee received updates from the Control
Functions Oversight Committee and management
to gain comfort that decisions are made and
evidenced at the appropriate legal entity level and
that appropriate mechanisms are in place for
monitoring, control and oversight of legal entity
decision-making at Group level.

The Committee noted the continued development
of appropriate procedures and policies, including
those relating to implementation of the Senior
Managers and Certification Regime (SMCR) in the
UK during 2019.

The Committee was satisfied as to the progress made in
improving the overall framework, although recognised
that more work was needed in this area.

Management have established Governance
development workstreams including those relating to
Board Governance where, amongst other things, the
Board has agreed its approach to the evidencing of
stakeholder engagement and workforce engagement
partly to meet 2018 UK Corporate Governance
Code requirements.

Other workstreams include Legal Entity Governance
where we are in the process of developing a legal entity
governance policy to bring together recent initiatives
designed to provide more detailed oversight of the work
of our regulated entities from around the globe. Our
Business Governance workstream is looking to
standardise our management committee terms of
reference in advance of the introduction of the SMCR,
and the SMCR workstream is finalising preparations for
the launch of SMCR in December 2019.

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AUDIT COMMITTEE CONTINUED

EXTERNAL AUDITOR

The Committee is responsible for making recommendations on the appointment, reappointment and removal of External
Auditors, and for assessing and agreeing the fees payable to the Group’s External Auditor (both audit and non-audit fees).
The Committee is also responsible for reviewing the audit plans and reports from the External Auditors. The main activities
undertaken in relation to the external audit are summarised below:

ROLE OF THE COMMITTEE

DISCHARGE OF RESPONSIBILITIES

CONCLUSION/ACTION TAKEN

Oversight of external audit

The Committee is required to oversee the
work and performance of
PricewaterhouseCoopers (PwC) as External
Auditor, including the maintenance of audit
quality during the period.

Audit and audit-related fees

Audit-related fees include those related to
the statutory audit of the Group and its
subsidiaries, as well as audits required due
to the regulated nature of our business.
Also included therein are fees associated
with the ISAE 3000 controls opinion relating
to the Group’s processes and controls over
client money segregation.

Non-audit services & fees

To safeguard the objectivity and
independence of the External Auditors from
becoming compromised, the Committee has
a formal policy governing the engagement of
the External Auditors to provide non-audit
services. The policy is reviewed on an annual
basis. The Committee reviewed the Group’s
policy governing non-audit work against
details of regulations on the statutory audit
of public interest entities.

The Group has updated its internal process
on engagement of Auditors and review of
non-audit services to ensure that its policy is
in line with the regulations.

The Committee met with the key members of the
PwC audit team to discuss the 2019 audit plan and
agree areas of focus.

It assessed regular reports from PwC on the
progress of the 2019 audit and any material
issues identified.

It debated the draft audit opinion ahead of the 2019
year-end. The Committee was also briefed by PwC
on critical accounting estimates, where significant
judgement is needed.

The Committee approved the audit plan and the
main areas of focus, including revenue recognition,
management override of controls and uncertain
tax positions.

More on the Committee’s role in assessing the
performance, effectiveness and independence of the
External Auditor and the quality of the external audit
can be found on page 119.

As the current auditor is in their tenth year of
engagement, and in line with the External Auditor
Tender Policy, the Committee has commenced an audit
tender process which includes the current incumbent.

During the year, the Committee reviewed and
approved a recommendation from management on
the Company’s audit and audit-related fees.

The Committee considers the 2019 audit and
audit-related fees to be appropriate given the change
in complexity of the Group structure.

During the year, non-audit fees of £0.2 million
were paid to PwC, as discussed in note 4 to the
Financial Statements. These principally related to
software services.

The Committee continues to seek to reduce the
reliance on the External Auditors for non-audit work.

The Committee approved the rationalisation of
non-audit work among service providers by the Group.
The Group continues to engage Ernst & Young (EY) for
global tax compliance.

The Committee reviewed and approved all
arrangements for non-audit fees. Fees in relation to
permitted services below £0.05 million are deemed
pre-approved by the Committee and are subject to
the approval of the Chief Financial Officer. Fees
above £0.05 million must be approved by the
Committee, through the Committee Chairman.

The Committee ensured that firms other than the
External Auditors have been considered, following a
competitive tender process, for the provision of a
wide range of services, including tax advisory
services, changes to regulation, tax compliance
services, risk and regulatory advice.

The Committee also requested and received an
explanation from PwC of its own in-house
independence process.

The Committee ensured there were no exceptions to
fee limits and approval process, per the policy, during
the year.

118 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTTHE STATUTORY AUDIT SERVICES FOR LARGE
COMPANIES MARKET INVESTIGATION (MANDATORY
USE OF COMPETITIVE TENDER PROCESSES AND AUDIT
COMMITTEE RESPONSIBILITIES) ORDER 2014

Following a tender process, PwC has been the Group’s
External Auditor since October 2010 and has been
reappointed at each subsequent AGM. The Group is in
compliance with the requirements of The Statutory Audit
Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014, which relates to the
frequency and governance of tenders for the appointment
of the External Auditor, and the setting of a policy on the
provision of non-audit services. The Auditor is required to
rotate the audit partner responsible for the Group audit
every five years, with this being the fourth year for the
current incumbent.

It is the intention of the Committee that the Company will
tender the External Auditor appointment at least every 10
years, and so whilst the Company is satisfied that the
auditors remain independent, it has commenced a tender
process, which includes PwC. Such process will be
conducted by the Committee who will then make a
recommendation to the Board, and following the decision
an announcement will be made.

In the meantime, and as set out in the Effectiveness of
External Auditors section of this report, the Company will
be proposing their re-appointment at the 2019 Annual
General Meeting.

Jim Newman, Chairman of the Audit Committee
23 July 2019

EFFECTIVENESS OF EXTERNAL AUDITORS

In assessing the effectiveness and independence of the
External Auditors, the Committee considered relevant
professional and regulatory requirements and the
relationship with the External Auditors as a whole. The
Committee monitored the External Auditors’ compliance
with relevant regulatory, ethical and professional guidance
on the rotation of partners, and assessed their qualifications,
expertise, resources as well as the effectiveness of the audit
process, including a report from the External Auditor on its
own internal quality procedures and independence.

The Committee was made aware by the External Auditor of
an independence breach in respect of the provision of
non-permitted services. The services were provided to the
IG Markets Limited French branch from October 2016 and
have been disclosed in the audit opinion. The Committee
received comfort from the External Auditors as to their
ongoing independence and that the persons performing the
services had no role in relation to the performance of the
audit. The Committee agreed that the breach did not affect
the independence of the External Auditors.

As part of the assessment, a questionnaire was completed
by the key stakeholders in the Group. The questionnaire
addressed matters including the External Auditors’ integrity,
objectivity, skills and technical knowledge, the quality of
planning and execution of the audit, the level of challenge
applied, the External Auditors’ understanding of the Group’s
business, insights and added value and general support and
communication to the Committee and management. The
results were analysed, and a report was presented to the
Committee. Following the review of the effectiveness of
the External Auditor, the external audit process and an
assessment of the External Auditor’s independence and
objectivity, the Committee recommended the re-
appointment of PwC to the Board for recommendation
to and approval by shareholders at the Company’s 2019
Annual General Meeting.

There are no contractual obligations restricting the
Company’s choice of an External Auditor.

AUDIT COMMITTEE EFFECTIVENESS

The review this year highlighted the need for the Committee
to continue to be kept up to date with accounting and audit
developments especially in light of proposed changes to
the oversight of the audit industry in the UK. Overall, the
Committee was seen to be operating effectively.

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CHAIRMAN’S OVERVIEW

The Committee has continued to focus on providing
oversight and advice to the Board in relation to current and
potential future risk exposures of the Group, including risks
to the achievement of our strategy, and the Committee’s
agenda has been rebalanced towards review of the actual
and emerging risks faced by the business.

I am pleased to report that the Committee has continued
to embed its role in ensuring a holistic approach to risk
management across the Group, including through clear
linking of risk reporting to the key risks facing the business,
through the further development of the Risk Taxonomy and
the linking of Key Risk Indicators to the Risk Taxonomy.

The risk function, headed by the Group Chief Risk Officer
(CRO), has supported this development while continuing to
focus on risk-related material such as the Risk Appetite
Statement and Risk Management Framework. Under the
leadership of the previous Chair, Sam Tymms, operational
risk management systems have continued to be developed
and embedded into the business, and operational risk
reports are now regularly provided to control related
management Committees such as the Client Money
and Assets Committee, and the Control Function
Oversight Committee.

This year’s annual Non-Executive Director Risk Workshop
once again provided active oversight of and input to our
regulatory capital calculations set out in the Group’s Internal
Capital Adequacy Assessment Process (ICAAP), the
stress-testing of our risks, and our capital and liquidity held
against those, as well as our Reverse Stress Test and
Recovery Plans (RP).

Internal Audit have embedded their new style of reporting
to the Committee, focusing on advisory work conducted
by the function on the state of the Risk Management
Framework, and current and potential risk exposures of
the Group.

I would like to thank Sam Tymms for moving the
Committee’s agenda on during her time as its Chairman,
until her resignation from the Board on 20 March 2019,
and for handing over the Chairmanship with the
Committee well-placed to respond to the next phase of the
Group’s development.

BOARD RISK COMMITTEE

JONATHAN MOULDS
CHAIRMAN OF THE BOARD RISK COMMITTEE

Jonathan Moulds,
Chairman of the Board
Risk Committee, gives his
review of the Committee’s
activities during the
financial year.

JONATHAN MOULDS
CHAIRMAN OF THE BOARD RISK COMMITTEE

120 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTROLE OF THE BOARD RISK COMMITTEE

The Committee refreshed its Terms of Reference (ToR)
during the year to reflect the 2018 Corporate Governance
Code requirement for the Company to carry out a robust
assessment of emerging and principal risks, and to report on
the same to the Board.

The Committee provides oversight and advice to the Board
in relation to current and potential future risk exposures and
future risk strategy of the Group. This includes
determination of overall risk appetite and tolerance,
considering the current and prospective macroeconomic
and financial environment. Key responsibilities of the
Committee, in addition to those noted above, include:

• Reviewing the Group’s major risk exposures, identifying
risk trends, concentrations and exposures and material
regulatory changes, and overseeing the mitigation of
those, consistent with our risk appetite

• Considering, and recommending for approval by the

Board, the Risk Appetite Statement and Key Risk Indicators

• Reviewing the scope and nature of the work undertaken

by the control functions, particularly in relation to
business, regulatory, compliance, anti-money-laundering,
conduct and culture risks

• Conducting an annual review of the Group’s

remuneration framework in support of the Committee’s
responsibility to consider the alignment of the
Remuneration Policy to risk performance

• Ensuring rigorous stress-testing and scenario-testing of

the Group’s business and receiving reports which explain
the impact of identified risks and threats

• Monitoring, reviewing and challenging key regulatory

documents – the Individual Liquidity Adequacy
Assessment (ILAA), ICAAP and the RP

• Reviewing and recommending the statements to be

included in the Annual Report concerning controls and
risk management, for approval by the Board

• Considering whether any changes in the Group’s

Risk profile warrant a change in proposed
insurance arrangements

• Continuing to work closely with other Board Committees

where risk-related input is required

The Terms of Reference (ToR) for the Committee are on the
Company’s website, iggroup.com

BOARD RISK COMMITTEE MEMBERSHIP
AND ATTENDANCE

The Board Risk Committee is composed of Independent
Non-Executive Directors. The following table shows the
Committee members during the year and their attendance
at Committee meetings.

COMMITTEE
MEMBER

ELIGIBLE
TO ATTEND

ATTENDED

Sam Tymms(1)

Jonathan Moulds(2)

Stephen Hill(3)

Jim Newman

June Felix(4)

(1) Sam Tymms resigned as a Director on 20 March 2019 and attended all

Committee meetings up to the date of her resignation.

(2) Jonathan Moulds was appointed a Member of the Committee on 20 September

2019 and became Committee Chair on 20 March 2019.

(3) Stephen Hill did not attend one scheduled meeting due to short-notice

unforeseen circumstances.

(4) June Felix resigned as a Committee Member on her appointment as CEO

effective 30 October 2018, and attended all meetings up to the date of her
appointment as CEO.

The Committee is scheduled to meet four times a year
and additionally when required. The Committee met
five times during the financial year. The Committee
makes recommendations to the Board and, where
relevant, to other Board Committees (for example,
to the Remuneration Committee on remuneration-
related risks) and the business of the Committee
is reported to the following Board meeting.

Other than the Company Secretary, who attends all
Committee meetings, Executive Directors, the CRO and
the Global Head of Internal Audit attend Committee
meetings by invitation. Representatives from other areas of
the business attend the Committee meetings by invitation
as appropriate to the matter under consideration.

During the year the membership of the Committee
changed. Jonathan Moulds became a member of the
Committee on 20 September 2019 following his
appointment to the Board, and on 20 March 2019
succeeded Sam Tymms as Committee Chairman following
her resignation from the Board.

June Felix stepped down as a Committee member on
30 October 2018, following her appointment as Chief
Executive Officer.

The Board Chairman, Andy Green, attended all of
the meetings.

To ensure the Committee discharges its responsibilities
appropriately, an annual forward calendar, linked to the
Committee’s ToR, is approved by the Committee. The
Company Secretary assists the Chairman of the Committee
in drafting the agenda for each Committee meeting.

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BOARD RISK COMMITTEE CONTINUED

ACTIVITY DURING THE FINANCIAL YEAR

During the year, the Committee’s key activities included:

• Reviewing developments to the Risk Appetite Statement,
Risk Taxonomy and Risk Management Framework, and
alignment of business and risk management strategy with
the risk appetite

• Considering current and emerging risks facing the

business, including the risk associated with leadership
change, Brexit and a change of government

• Requesting and/or reviewing a number of specific
reports, including in relation to financial crime risk,
AML controls, and Product Governance

• Reviewing and challenging of Operational

Risk development

• Reviewing IT and cyber security in the context of the

annual technology risk review

• Annual review of regulatory waivers applying to legal

entities across the Group

• Formal annual compliance assessment of material breaches

• Annual Policy Governance Framework review

• Reviewing enhancements to IG’s approach to

Transaction Reporting

• Reviewing a culture risk dashboard and report covering
client outcomes, technology, regulatory outcomes,
people outcomes and conduct more broadly

• Reviewing the capital and liquidity position of the Group

including through the ICAAP, ILAA and the RP

• Reviewing its own performance and considering steps to

enhance Committee effectiveness and making
appropriate recommendations to the Board

COMMITTEE EVALUATION AND FUTURE PRIORITIES

During 2019, the Committee undertook an internally
facilitated assessment of its own effectiveness conducted
by the Company Secretary. The Committee’s performance
was highly rated, as was the management of its meetings,
and the quality of information received.

The Committee had increased its focus on consideration
of high rated risks and mitigation plans and on new and
emerging risks.

The evaluation suggested a small number of areas for
development including additional training on risks relating
to the expansion of the business into new jurisdictions and
products, and further development of the oversight of
the Operational Risk Management Framework. It was
recognised that the timeliness of delivery of papers could
be improved further.

Jonathan Moulds, Chairman of the Board Risk Committee
23 July 2019

122 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTDIRECTORS’ REPORT

DIRECTORS’ REPORT

The Directors present their report, together with the Group
Financial Statements, for the year ended 31 May 2019. The
Directors’ Report comprises pages 123 to 125 of this report,
together with the sections of the Annual Report
incorporated by reference as set out below:

DISCLOSURES REQUIRED PURSUANT TO
LISTING RULE 9.8.4R

In compliance with the UK Financial Conduct Authority’s
Listing Rules, the information in Listing Rule 9.8.4R to be
included in the Annual Report and Accounts, where
applicable, can be found on the following pages:

CONTENTS

PAGE

DETAIL

Corporate Governance Report

74 to 89

Waiver of dividends

Directors’ Responsibilities Statement

126

PAGE

123

Financial instruments

Greenhouse gas emissions

Employee involvement and social
matters

Policy concerning the employment
of disabled persons

Going concern and viability
statement

Directors’ Remuneration Policy,
service contracts and details of
Directors’ interest in shares

Likely future developments

Risk management and internal
control

155 to 158

68 and 69

64 to 67

64 and 65

93 to 111

8 to 70

56 to 62

Anti-bribery and corruption

Section 414A of the Companies Act 2006 (the Act) requires
the Directors to present a Strategic Report in the Annual
Report and Financial Statements. The information can be
found on pages 24 to 71.

The Company has chosen, in accordance with Section 414C
(11) of the Act and as noted in this Directors’ Report, to
include certain matters in its Strategic Report that would
otherwise be disclosed in this Directors’ Report, including
the Non-Financial Information Statement required by
Section 414A of the Act, which can be found in the
Corporate Social Responsibility section on page 70.

In line with the requirements under Capital Requirements
Capital Directive IV, requiring credit institutions and
investment firms to publish annually certain tax and financial
data for each country where they operate, the Group’s UK
regulated subsidiaries will make available their country-by-
country reporting on the Group’s website, iggroup.com

CORPORATE GOVERNANCE STATEMENT

In compliance with the UK Financial Conduct Authority’s
Disclosure Guidance and Transparency Rules (DTR) 7.2.1, the
disclosures required by the DTR are set out in this Directors’
Report and in the Corporate Governance Report.

PROFIT AND DIVIDENDS

The Group’s statutory profit for the year after taxation
amounted to £158.3 million (2018: £226.4 million), all of which
is attributable to the equity members of the Company.

The Directors recommend a final ordinary dividend of 30.24
pence per share, amounting to £111.3 million, making a total
of 43.2 pence per share and £159.1 million for the year.
Dividends are recognised in the Financial Statements for the
year in which they are paid or, in the case of a final dividend,
when approved by the shareholders. The amount recognised
in the Financial Statements, as described in note 10, includes
this financial year’s interim dividend and the final dividend
from the previous year, both of which were paid.

The final ordinary dividend, if approved, will be paid on
24 October 2019 to those shareholders on the register as
at 26 September 2019.

Certain nominee companies representing our Employee
Benefit Trusts hold shares in the Company, in connection
with the operation of the Company’s share plans. Evergreen
dividend waivers remain in place on shares held by them
that have not been allocated to employees.

ARTICLES OF ASSOCIATION

The Company’s Articles of Association (the Articles) are
available from the Group’s website, iggroup.com, or by
writing to the Company Secretary at the Group’s registered
office. The Articles can also be obtained from the UK
Registrar of Companies. The Articles were last amended
by the shareholders by means of a special resolution on
21 September 2016.

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DIRECTORS’ REPORT CONTINUED

BOARD OF DIRECTORS AND THEIR INTERESTS

Details of the Directors who held office at the end of the
year are set out on pages 78 and 79 and are incorporated
into this report by reference. Details of Directors’ beneficial
and non-beneficial interests in the shares of the Company
are shown on page 107. Details of changes to the Board
during the financial year are set out below:

NAME

ROLE

Bridget
Messer

Executive
Director

Jon Noble

Sally-Ann
Hibberd

Jonathan
Moulds

Peter
Hetherington

June Felix

Samantha
Tymms

Executive
Director

Non-
Executive
Director

Chief
Executive
Officer
(CEO)

Non-
Executive
Director

EFFECTIVE
DATE OF
APPOINTMENT/
RESIGNATION

Appointment on
1 June 2018 –
Chief Commercial
Officer

Appointment on 1
June 2018 – Chief
Operating Officer

Appointment on
20 September
2018

Resignation on
26 September
2018

Appointment on
30 October 2018
at which date
June ceased to be
a Non-Executive
Director

Resignation on
20 March 2019

Our Chairman, Andy Green announced on 15 April 2019 his
intention to step down as Chairman and a Director of the
Company at the AGM to be held on 19 September 2019.

APPOINTMENT AND RETIREMENT OF DIRECTORS

The appointment and retirement of Directors is governed by
the Articles, the UK Corporate Governance Code (the
Code), the Act and related legislation. The Board has the
power to appoint any person as a Director to fill a casual
vacancy or as an additional Director, provided the total
number of Directors does not exceed the maximum
prescribed in the Articles. Any such Director holds office
only until the next AGM, and is then eligible to offer himself
or herself for election.

124 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

The Articles also require that all those Directors who have
been in office at the time of the two previous AGMs, and
who did not retire at either of them, must retire as Directors
by rotation. Such Directors are eligible to stand for re-
election. However, in line with the Code’s recommendation
that all Directors of FTSE 350 companies should be subject
to annual election, all Directors other than the Chairman will
stand for election or re-election at the 2019 AGM.

DIRECTORS’ CONFLICTS OF INTEREST

In accordance with the Act, all Directors must disclose both
the nature and extent of any potential or actual conflicts with
the interests of the Company. We explain the procedure for
this on page 85.

INSURANCE AND INDEMNITIES

The Group has Directors’ and Officers’ liability insurance
in place, providing appropriate cover for any legal action
brought against its Directors. Qualifying third-party
indemnity provisions (as defined by Section 234 of the Act)
were in force during the year ended 31 May 2019. These
provisions remain in force for the benefit of the Directors, in
relation to certain losses and liabilities which they may incur
(or have incurred) to third parties in the course of acting as
Directors of the Company.

RESEARCH AND DEVELOPMENT

In the ordinary course of business, the Company regularly
develops new products and services.

POLITICAL DONATIONS

The Company made no political donations to political
organisations or independent election candidates and
incurred no political expenditure in the year (2018: £nil).

SHARE CAPITAL

The Company has three classes of shares: ordinary shares,
deferred redeemable shares and preference shares. As at
31 May 2019, the Company’s issued shares comprised
368,844,455 ordinary shares of 0.005p each (representing
99.97% of the total issued share capital), 65,000 deferred
redeemable shares of 0.001p each (representing 0.02% of
the total issued share capital) and 40,000 preference shares
of £1.00 each (representing 0.01% of the total issued share
capital). Details of movement in the Company’s share capital
and rights attached to the issued shares are given in note 21
to the Financial Statements. Information about the rights
attached to the Company’s shares can also be found in the
Articles. Details of the Group’s required regulatory capital are
disclosed in the Operating and Financial Review on page 51.

VARIATION OF RIGHTS

Subject to the provisions of applicable statutes, the rights
attached to any class of shares may be varied, either with
the consent in writing of the holders of at least three-
quarters in nominal value of the issued shares of that class,
or with the sanction of a Special Resolution passed at a
separate meeting of the holders of the shares of that class.

GOVERNANCE REPORTRESTRICTIONS ON TRANSFER OF SECURITIES

MAJOR INTEREST IN SHARES

There are no specific restrictions on the transfer of securities
in the Company, other than as contained in the Articles and
certain laws or regulations, such as those related to insider
trading, which may be imposed from time to time. The
Directors and certain employees of the Company are
required to obtain the Company’s approval prior to dealing
in the Company’s securities. The Company is not aware of
any agreements between holders of securities that may result
in restrictions on the transfer of securities or on voting rights.

EXERCISE OF RIGHTS OF SHARES IN EMPLOYEE
SHARE SCHEMES

The trustees of the IG Group Employee Benefit Trusts
do not seek to exercise voting rights on shares held
in the employee trusts, other than on the direction
of the underlying beneficiaries. No voting rights are
exercised in relation to shares unallocated to individual
beneficiaries. The trustees have a dividend waiver in
place in respect of unallocated shares held in the trust.

POWERS OF THE DIRECTORS TO ISSUE OR PURCHASE
THE COMPANY’S SHARES

The Articles permit the Directors to issue or repurchase the
Company’s own shares, subject to obtaining shareholders’
prior approval. The shareholders gave this approval at the
2018 AGM. The authority to issue or buy back shares will
expire at the 2019 AGM, and it will be proposed at the
meeting that the Directors be granted new authorities to
issue or buy back shares. The Directors currently have
authority to purchase up to 36,884,445 of the Company’s
ordinary shares. However, the Company did not repurchase
any of its ordinary shares during the year.

During the year, the Company instructed the trustee of the
Employee Benefit Trusts to purchase shares in order to satisfy
awards under the Group’s share-incentive plan schemes. The
Company also issued shares in respect of the Sustained
Performance Plan Details of the shares held by the Group’s
Employee Benefit Trusts and the amounts paid during the
year are disclosed in note 23 to the Financial Statements.

Major Interest in Shares

BlackRock Inc
Sun Life Financial Group
Standard Life Aberdeen
Artemis Investment Management LLP
Marathon Asset Management
The Vanguard Group, Inc
Royal London Mutual Assurance Society

Information provided to the Company by major shareholders
pursuant to the Financial Conduct Authority (FCA) and
Disclosure Guidance and Transparency Rules (DTR) is
published via a Regulatory Information Service and is
available on the Company’s website. The information in
the table below has been received in accordance with
information made available to the company and in
accordance with DTR5, from holders of notifiable interests in
the Company’s issued share capital as at 31 May 2019 and as
at 15 July 2019. Holders are not required to notify the
Company of any change until the next applicable threshold
is reached or crossed.

CHANGE OF CONTROL

Following any future change of control of the Company,
participating lenders in the Group’s bank facility agreement
have the option to cancel their commitment. Upon such
cancellation, any outstanding loans, including accrued
interests and other amounts due to lenders will become
immediately due and payable. Further details may be found
in note 17 to the Financial Statements.

There are no agreements between the Company and its
Directors or employees providing for compensation on any
loss of office or employment that occurs because of a
takeover bid. However, options and awards granted to
employees under the Company’s share schemes and plans
may vest on a takeover, under the schemes’ provisions.

ANNUAL GENERAL MEETING

The Company’s AGM will be held on 19 September 2019.
Details of the resolutions to be proposed at the AGM will
be provided in a separate circular sent to all shareholders.

INDEPENDENT AUDITORS

Resolutions to reappoint PricewaterhouseCoopers LLP as
the Company’s Auditors and to authorise the Directors to
determine their remuneration will be put to shareholders
at the AGM on 19 September 2019.

SUBSEQUENT EVENTS

Please refer to note 29 of the Financial Statements.

31 May 2019

15 July 2019

No. of shares

Percentage

No. of shares

Percentage

26,761,091
25,061,924
21,482,147
18,356,072
15,992,152
13,262,722
13,162,585

7.26
6.79
5.82
4.98
4.34
3.60
3.57

26,654,639
24,625,614
21,077,428
19,364,378
15,637,916
13,181,102
13,213,838

7.23
6.68
5.71
5.25
4.24
3.57
3.58

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STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN
RESPECT OF THE FINANCIAL STATEMENTS

The Directors are responsible for preparing
the Annual Report and the Financial
Statements in accordance with applicable
law and regulation.

Directors’ confirmations
The Directors consider that the Annual Report and
Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group and Company’s position
and performance, business model and strategy.

Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law, the
Directors have prepared the Group and Company Financial
Statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the
European Union.

Under company law, the Directors must not approve the
Financial Statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
the Company, and of the profit or loss of the Group and
Company for that period. In preparing the Financial
Statements, the Directors are required to:

• Select suitable accounting policies and apply

them consistently

• State whether applicable IFRSs as adopted by the

European Union have been followed, subject to any
material departures disclosed and explained in the
Financial Statements

• Make judgements and accounting estimates that are

reasonable and prudent

• Prepare the Financial Statements on the going-concern
basis, unless it is inappropriate to presume that the
Group and the Company will continue in business

The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group and Company’s transactions, and disclose with
reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the
Financial Statements and the Directors’ Remuneration
Report comply with the Companies Act 2006 and, as
regards the Group Financial Statements, Article 4 of the
IAS Regulation.

The Directors are also responsible for safeguarding the
assets of the Group and Company, and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.

The Directors are responsible for the maintenance and
integrity of the Company’s website. Legislation in the
United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.

Each of the Directors, whose names and functions are
listed in the Directors’ Report confirm that, to the best
of their knowledge:

• The Group and Company Financial Statements, which

have been prepared in accordance with IFRSs as adopted
by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit of the
Group and profit of the Company

• The Directors’ Report includes a fair review of the

development and performance of the business and the
position of the Group and Company, together with a
description of the principal risks and uncertainties that
it faces

In the case of each Director in office at the date the
Directors’ Report is approved:

• So far as the Director is aware, there is no relevant audit
information of which the Group and Company’s Auditors
are unaware

• They have taken all the steps that they ought to have

taken as a Director in order to make themselves aware
of any relevant audit information and to establish that
the Group and Company’s Auditors are aware of
that information

On behalf of the Board

June Felix, Chief Executive Officer
23 July 2019

126 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTINDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF IG GROUP HOLDINGS PLC

REPORT ON THE FINANCIAL STATEMENTS
OPINION

In our opinion, IG Group Holdings plc’s group financial statements and company financial statements (the “financial statements”):

• give a true and fair view of the state of the group’s and of the company’s affairs as at 31 May 2019 and of the group’s

profit and the group’s and the company’s cash flows for the year then ended;

• have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the
European Union and, as regards the company’s financial statements, as applied in accordance with the provisions of the
Companies Act 2006; and

• have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial

statements, Article 4 of the IAS Regulation.

We have audited the financial statements, included within the Annual Report, which comprise: the Consolidated and
Company Statements of Financial Position as at 31 May 2019; the Consolidated and Company Statements of Changes in
Equity, the Consolidated and Company Cash Flow Statements, the Consolidated Statement of Comprehensive Income,
and the Consolidated Income Statement for the year then ended; and the notes to the financial statements, which include a
description of the significant accounting policies.

Our opinion is consistent with our reporting to the Audit Committee.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and
we have fulfilled our other ethical responsibilities in accordance with these requirements.

During the year, we identified that PwC Societe D’Avocats, a law firm associated with PwC in France had provided litigation
services to the French branch of IG Markets Limited, a subsidiary of the Company, which is in breach of paragraph 5.167 (g)
of the FRC Ethical Standard. These services were provided between October 2016 and August 2018. The matters addressed
were not material to the consolidated or company financial statements, the work was performed by individuals who had no
role in relation to the performance of the audit, and our audit did not place any reliance on the work performed by PwC
Societe D’Avocats in providing the services. Accordingly, we confirm, based on the assessment of this breach, and having
considered the nature of these services, that we have not, in our view compromised general principles of independence,
and, therefore, that we remain independent of the group.

To the best of our knowledge and belief, we declare that other than as disclosed above, no non-audit services prohibited by
the FRC Ethical Standard were provided to the Group or the Company in the period from 1 June 2018 to 31 May 2019.

Other than those disclosed in note 4 to the financial statements, we have provided no non-audit services to the group or the
company in the period from 1 June 2018 to 31 May 2019.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 127

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INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF IG GROUP HOLDINGS PLC CONTINUED

OUR AUDIT APPROACH

Overview

• Overall group materiality: £9.7 million (2018: £14 million), based on 5% of profit

before tax

• Overall company materiality: £6.4 million (2018: £6.2 million), based on 1% of

total assets

• Group: We determined the appropriate work to perform based on the

consolidated balances of the Group. As a result, the majority of our audit work
was performed by the group audit team in London supported by a PwC
member firm in Poland, reflecting the centralised nature of the groups’ business
activities. Additional testing was performed for group audit purposes by a PwC
member firm in the United States in relation to the Group’s US subsidiary Nadex

• This approach gave us sufficient coverage over group’s total assets and

consolidated profit before tax

• Company: The parent company balance sheet consists primarily of investment in
subsidiaries, receivables, and payables. The audit work was performed by the
group audit team in London

Key audit
matters

• Revenue recognition (Group)

• Management override of control, including privileged access management

(Group and company)

The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain.

Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the group and its industry, we identified that the principal risks of non-compliance with laws
and regulations related to the Listing Rules of the Financial Conduct Authority, the Financial Conduct Authority’s Handbook,
and corporation tax legislation, and we considered the extent to which non-compliance might have a material effect on the
financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the
financial statements such as the Companies Act 2006.

We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including
the risk of override of controls), and determined that the principal risks were related to the recording of journals, and
potential bias in the determination of material estimates. Audit procedures performed by the group engagement team
included identifying and, where relevant, testing journal entries posted by senior management or with unusual account
combinations, evaluation and testing of the operating effectiveness of management’s controls designed to prevent and
detect irregularities, review of correspondence with regulators, review of correspondence with legal advisors, enquiries of
management and review of internal audit reports in so far as they related to the financial statements.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws
and regulations is from the events and transactions reflected in the financial statements, the less likely we would become
aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,
or through collusion.

128 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTMaterialityAudit scopeKey audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This
is not a complete list of all risks identified by our audit.

Key audit matter

How our audit addressed the key audit matter

Revenue recognition - Group
The Group’s trading revenue is predominantly generated
from over the counter (OTC) leveraged derivatives placed
by clients, offset by net gains or losses from the hedging
trades that the Group places with external market
counterparties to manage its risk.

We focused firstly on testing the control environment in which
revenue is recorded. We evaluated, understood and tested
key controls in place over the relevant processes. In particular,
we tested controls directly associated with revenue
transaction capture, processing and reporting, and the
valuation of year-end positions held by the Group with clients
and with hedging counterparties. We also tested controls
associated with cash reconciliations and reconciliations with
external counterparties through the year. We tested the
valuation of client positions to third party pricing sources. We
agreed selected cash account balances to external third party
evidence at year-end through a combination of independent
confirmations and examination of bank statements, and
amounts and balances held with hedging counterparties
to independent confirmations and other external third
party evidence.

We re-performed a sample of revenue calculations performed
by the Group’s trading systems, and agreed these to the
underlying accounting records.

We evaluated the Group’s assessment and implementation of
the new reporting standard, IFRS 15 Revenue from Contracts
with Customers.

Finally, to address the risk that improper or inaccurate
adjustments or transactions had been entered into the trading
systems, we reviewed selected client activity reports and read
a sample of customer complaints.

We identified a number of exceptions in our testing of the
control environment, but have performed sufficient additional
procedures to conclude that they do not have a material
impact on revenue reported for the period.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 129

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF IG GROUP HOLDINGS PLC CONTINUED

Key audit matter

How our audit addressed the key audit matter

Management override of control, including privileged
access management - Group and Company
International Standards on Auditing (UK) (ISAs UK) require
that we consider management override of control as a
significant audit risk as management is in a unique
position to perpetrate fraud because of their ability to
manipulate accounting records and prepare fraudulent
financial statements by overriding controls that otherwise
appear to be operating effectively.

Although management is responsible for safeguarding the
assets of the business, we planned our audit so that we
had a reasonable expectation of detecting material
misstatements to the financial statements and
accounting records.

Specifically in relation to information technology, the risk
relates to privileged access provided for the Group’s
technology function to certain IT systems relevant to the
Group’s revenue and financial reporting processes. While
mitigating controls operate, the privileged access could
result in unauthorised changes being made to system
functionality or data, either in error or intentionally.

We evaluated and tested key controls in place over the
relevant processes. Specifically, in relation to information
technology, we performed testing of the IT general controls
related to IT systems relevant to financial reporting, including
testing of access rights and privileged access. These included:
validating that the most recent change to the systems had
been recorded in the IT change management system for
approval; tested the control operated by the Group to identify
where production code differs from the latest approved
version, and performed testing over key automated controls
(including report configuration) to validate that no
unapproved changes to those controls had been made during
the period. We also performed substantive procedures to
mitigate the risks. These included the testing of
reconciliations of key financial reports to external third party
sources, including period end market prices, and hedging
counterparty and bank reconciliations.

We assessed the assumptions underlying key accounting
estimates used in the preparation of the financial statements
and considered whether there was any evidence of bias.

We also tested the authorisation of selected journal entries
identified for testing using risk criteria independently tailored
by us for the Group. We also incorporated an element of
unpredictability into our testing approach.

No issues arose from this work.

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and
controls, and the industry in which they operate.

The Group consists of a UK holding company with a number of subsidiary entities and branches containing the operating
businesses of both the UK and overseas territories. The accounting records and related controls for both the UK and overseas
businesses are primarily maintained and operated by the Group’s finance teams in London and Krakow. The technology
controls that are relevant to our financial statement audits are operated by the Group in London, Krakow and Bangalore.

As a result, the majority of our audit work was performed by the group audit team in London, supported by a PwC member
firm in Poland, reflecting the centralised nature of the groups’ business activities. Additional testing was performed for
group audit purposes by a PwC member firm in the United States in relation to the Groups’ US subsidiary Nadex.

Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Group financial statements

Company financial statements

Overall materiality

£9.7 million (2018: £14 million).

£6.4 million (2018: £6.2 million).

How we determined it

5% of consolidated profit before tax

1% of total assets

Rationale for benchmark
applied

Consistent with last year, we
applied this benchmark, a generally
accepted auditing practice, as it is
the most relevant metric against
which the performance of the
Group is measured.

A benchmark of total assets has been used
as the company’s primary purpose is to act
as a holding company with investments in the
Group’s subsidiaries, not to generate operating
profits and therefore a profit based measure is
not relevant. The benchmark used is consistent
with last year.

130 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTWe agreed with the Audit Committee that we would report to them misstatements identified during our audit above £0.5
million (Group audit) (2018: £0.7 million) and £0.3 million (Company audit) (2018: £0.3 million) as well as misstatements below
those amounts that, in our view, warranted reporting for qualitative reasons.

Going Concern
In accordance with ISAs (UK) we report as follows:

Reporting obligation

We are required to report if we have anything material to add or draw attention to in
respect of the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting in
preparing the financial statements and the directors’ identification of any material
uncertainties to the group’s and the company’s ability to continue as a going
concern over a period of at least twelve months from the date of approval of the
financial statements.

We are required to report if the directors’ statement relating to Going Concern in
accordance with Listing Rule 9.8.6R (3) is materially inconsistent with our knowledge
obtained in the audit.

Outcome

We have nothing material to add
or to draw attention to.

However, because not all future
events or conditions can be
predicted, this statement is not a
guarantee as to the group’s and
company’s ability to continue as a
going concern. For example, the
terms on which the United
Kingdom may withdraw from the
European Union are not clear,
and it is difficult to evaluate all of
the potential implications on the
group’s trade, clients and
hedging counterparties,
suppliers and the wider economy.

We have nothing to report.

REPORTING ON OTHER INFORMATION

The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report
based on these responsibilities.

With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006
(CA06), ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions
and matters as described below (required by ISAs (UK) unless otherwise stated).

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 131

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF IG GROUP HOLDINGS PLC CONTINUED

Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and
Directors’ Report for the year ended 31 May 2019 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements. (CA06).

In light of the knowledge and understanding of the group and company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report. (CA06).

The directors’ assessment of the prospects of the group and of the principal risks that would threaten the solvency
or liquidity of the group
We have nothing material to add or draw attention to regarding:

• The directors’ confirmation on page 87 of the Annual Report that they have carried out a robust assessment of the

principal risks facing the group, including those that would threaten its business model, future performance, solvency
or liquidity.

• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.

• The directors’ explanation on page 71 of the Annual Report as to how they have assessed the prospects of the group,
over what period they have done so and why they consider that period to be appropriate, and their statement as to
whether they have a reasonable expectation that the group will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.

We have nothing to report having performed a review of the directors’ statement that they have carried out a robust
assessment of the principal risks facing the group and statement in relation to the longer-term viability of the group. Our
review was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’
process supporting their statements; checking that the statements are in alignment with the relevant provisions of the UK
Corporate Governance Code (the “Code”); and considering whether the statements are consistent with the knowledge
and understanding of the group and company and their environment obtained in the course of the audit. (Listing Rules).

Other Code Provisions
We have nothing to report in respect of our responsibility to report when:

• The statement given by the directors, on page 126, that they consider the Annual Report taken as a whole to be fair,
balanced and understandable, and provides the information necessary for the members to assess the group’s and
company’s position and performance, business model and strategy is materially inconsistent with our knowledge of the
group and company obtained in the course of performing our audit.

• The section of the Annual Report on page 112-119 describing the work of the Audit Committee does not appropriately

address matters communicated by us to the Audit Committee.

• The directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure

from a relevant provision of the Code specified, under the Listing Rules, for review by the auditors.

Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance
with the Companies Act 2006. (CA06)

132 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

GOVERNANCE REPORTRESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT

Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ Report set out on page 126, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no
realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent in writing.

OTHER REQUIRED REPORTING

COMPANIES ACT 2006 EXCEPTION REPORTING

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been

received from branches not visited by us; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• the company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement

with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

APPOINTMENT

Following the recommendation of the Audit Committee, we were appointed by the directors on 8 December 2010 to audit
the financial statements for the year ended 31 May 2011 and subsequent financial periods. The period of total uninterrupted
engagement is 9 years, covering the years ended 31 May 2011 to 31 May 2019.

Darren Meek (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
23 July 2019

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 133

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
I

F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

PRIMARY STATEMENTS

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

136

137

138

139

149

NOTES TO THE FINANCIAL STATEMENTS
1. General information, basis of

preparation and critical accounting
estimates and judgements

2. Net trading revenue

3. Operating expenses

4. Auditors’ remuneration

5. Staff costs

6. Finance income

7. Finance costs

8. Taxation

9. Earnings per ordinary share

10. Dividends paid and proposed

11. Property, plant and equipment

12. Intangible assets

13. Goodwill

14. Trade receivables

15. Other assets

140

141

142

143

144

146

147

148

149

16. Financial investments

17. Borrowings

18. Trade payables

19. Other payables

20. Contingent liabilities and provisions 150

21. Share capital and share premium

22. Other reserves

23. Employee share plans

24. Obligations under leases

25. Related party transactions

26. Financial instruments

27. Financial risk management

28. Cash generated from operations

29. Subsequent events

30. Significant accounting policies

31. List of investments in subsidiaries

150

151

152

155

158

162

173

134 -181
C
O
M
P
A
N
Y
O
V
E
R
V
E
W

S
T
R
A
T
E
G
C
R
E
P
O
R
T

G
O
V
E
R
N
A
N
C
E
R
E
P
O
R
T

F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S

S
H
A
R
E
H
O
L
D
E
R
A
N
D
C
O

N
F
O

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 135

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 MAY 2019

Trading revenue
Introducing partner commissions

Net trading revenue
Betting duty and financial transaction taxes
Interest income on segregated client funds
Interest expense on segregated client funds
Other operating income

Net operating income
Operating expenses

Operating profit
Finance income
Finance costs

Profit before taxation
Taxation

Profit for the year and attributable to owners of the parent

Earnings per ordinary share:
– basic
– diluted

CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MAY 2019

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

Note

488.0
(11.1)

476.9
(7.9)
6.9
(0.6)
1.9

477.2
(284.3)

192.9
5.4
(4.0)

194.3
(36.0)

158.3

590.2
(21.2)

569.0
(5.1)
5.2
(0.7)
2.8

571.2
(290.1)

281.1
2.9
(3.2)

280.8
(54.4)

226.4

43.1p
42.8p

61.7p
61.2p

6
7

9
9

Profit for the year attributable to owners of the parent
Other comprehensive income/(expense):
Items that may be subsequently reclassified to the

income statement:

Changes in the fair value of financial assets held at fair value

through other comprehensive income, net of tax

Change in value of available-for-sale assets, net of tax
Foreign currency translation gain/(loss)

Other comprehensive income/(expense) for the year

Total comprehensive income attributable to owners of

the parent

Year ended 31 May 2019

Year ended 31 May 2018

£m

0.6

6.2

£m

158.3

£m

226.4

(0.2)
(3.0)

6.8

165.1

(3.2)

223.2

136 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSCONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 MAY 2019

Assets
Non-current assets
Property, plant and equipment
Intangible assets
Financial investments
Deferred income tax assets

Current assets
Trade receivables
Other assets
Prepayments
Other receivables
Cash and cash equivalents
Financial investments

TOTAL ASSETS

Liabilities
Non-current liabilities
Borrowings
Deferred income tax liabilities

Current liabilities
Trade payables
Other payables
Income tax payable

TOTAL LIABILITIES

Equity
Share capital and share premium
Other reserves
Retained earnings

Total equity

TOTAL EQUITY AND LIABILITIES

Note

31 May 2019
£m

31 May 2018
£m

11
12
16
8

14
15

17
8

18
19

21
22

14.4
151.5
189.9
9.0

364.8

301.1
33.1
9.7
5.3
373.3
35.3

757.8

15.5
151.4
111.6
9.1

287.6

382.8
27.2
8.5
3.3
289.7
62.0

773.5

1,122.6

1,061.1

99.6
0.4

100.0

110.4
60.0
10.4

180.8

280.8

206.8
80.2
554.8

841.8

–
–

–

126.7
74.7
17.6

219.0

206.8
71.6
563.7

842.1

1,122.6

1,061.1

The Consolidated Financial Statements on pages 134 to 174 were approved by the Board of Directors on 23 July 2019 and
signed on its behalf by:

Paul Mainwaring
Chief Financial Officer

Registered Company number: 04677092

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 137

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MAY 2019

Note

Share
capital
£m

At 31 May 2017
Profit for the year and attributable to

owners of the parent

Other comprehensive expense for the year

Total comprehensive income for the year

Equity-settled employee share-based

payments

Tax recognised directly in equity on

share-based payments

Employee Benefit Trust purchase of shares
Equity dividends paid
Transfer of share based payment reserve

At 31 May 2018

Profit for the year and attributable to

owners of the parent

Other comprehensive expense for

the year

Total comprehensive income for the year

Transfer of transactions with non-

controlling interests reserve

Equity-settled employee share-based

payments

Tax recognised directly in equity on

share-based payments

Employee Benefit Trust purchase of shares
Equity dividends paid
Transfer of share based payment reserve

At 31 May 2019

8
22
10

–

–
–

–

–
–
–
–

–

–
–
–
–

–

Share
premium
£m

206.8

Other
reserves
£m

123.1

Retained
earnings
£m

405.4

–
–

–

–
–
–
–

206.8

–

–
–
–
–

206.8

–
(3.2)

(3.2)

7.0

–
(4.3)
–
(51.0)

71.6

–

6.8

2.1

7.2

–
(2.0)
–
(5.5)

80.2

226.4
–

226.4

–

0.5
–
(119.6)
51.0

563.7

158.3

–

158.3

(2.1)

–

0.5
–
(171.1)
5.5

554.8

Total
£m

735.3

226.4
(3.2)

223.2

7.0

0.5
(4.3)
(119.6)
–

842.1

158.3

6.8

165.1

–

7.2

0.5
(2.0)
(171.1)
–

841.8

138 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSCONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MAY 2019

Operating activities
Cash generated from operations
Income taxes paid

Net cash flow generated from operating activities

Investing activities
Interest received
Purchase of property, plant and equipment
Payments to acquire and develop intangible assets
Net cash flow from financial investments

Net cash flow used in investing activities

Financing activities
Interest paid
Equity dividends paid to owners of the parent
Employee Benefit Trust purchase of own shares
Drawdown of term loan net of fees

Net cash flow used in financing activities

Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Impact of movement in foreign exchange rates

Cash and cash equivalents at the end of the year

Note

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

256.8
(38.4)

218.4

4.2
(5.6)
(8.7)
(50.1)

(60.2)

(3.3)
(171.1)
(2.0)
99.5

(76.9)

81.3
289.7
2.3

373.3

276.6
(48.9)

227.7

2.6
(4.4)
(9.6)
(28.9)

(40.3)

(3.2)
(119.6)
(4.3)
–

(127.1)

60.3
230.9
(1.5)

289.7

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 139

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL INFORMATION, BASIS OF PREPARATION AND CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

General information
The financial statements of IG Group Holdings plc and its subsidiaries (together the Group) for the year ended 31 May 2019
were authorised for issue by the Board of Directors on 23 July 2019 and the Statement of Financial Position was signed on
the Board’s behalf by Paul Mainwaring. IG Group Holdings plc is a public limited company, which is listed on the London
Stock Exchange and incorporated and domiciled in England and Wales. The address of the registered office is
Cannon Bridge House, 25 Dowgate Hill, London, EC4R 2YA.

The Group’s financial statements have been prepared in accordance with EU-adopted International Financial Reporting
Standards (IFRS), interpretations issued by the IFRS Interpretations Committee (IFRS IC) and with the Companies Act 2006
applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost
convention, as modified by the revaluation of financial assets and liabilities (including derivative instruments) at fair value
through other comprehensive income.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
Consolidated Financial Statements are disclosed below.

Basis of preparation
The accounting policies which have been applied in preparing the financial statements for the year ended 31 May 2019 are
disclosed in note 30.

Critical accounting estimates and judgements
The preparation of financial statements requires the Group to make estimates and judgements that affect the amounts
reported for assets and liabilities as at the year-end, and the amounts reported for revenue and expenses during the year.
The nature of estimates means that actual outcomes could differ from those estimates.

In the Directors’ opinion, the accounting estimates or judgements that have the most significant impact on the presentation
or measurement of items recorded in the financial statements are the following:

(a) Carrying value of intangible assets (estimate) – the Group undertook an analysis as at 31 May 2019 in relation to the
DailyFX intangible asset, which has a carrying value of £23.8 million at 31 May 2019, to determine whether there were any
indicators of impairment. The Group considered the number of first trades generated by the asset, the attrition rate of
customers, the average net trading income generated by each active client and an assessment of the overall economic
environment to determine whether there were any indicators that would require a full impairment assessment to be
undertaken. The Group concluded that there were no indicators of impairment. The Group also considered the estimated
life of DailyFX and concluded that the useful life of 10 years remained appropriate.

The Group undertakes an impairment assessment of goodwill annually. The goodwill balance of £108.1 million as at
31 May 2019 primarily relates to the purchase of the UK business by IG Group Holdings plc. For impairment testing
purposes, this goodwill is assessed as part of the UK Cash Generating Unit, and so the Group does not consider there to be
a significant risk of a material adjustment arising within the next financial year. Information on the key assumptions relevant
to, and a sensitivity analysis of, the Group’s impairment assessment of goodwill is disclosed in note 13.

(b) Tax charge (estimate) – the calculation of the Group’s total tax charge involves a degree of estimation. In calculating the
tax charge, the Group makes assumptions about the availability of reliefs, such as the UK Patent Box, the availability of future
profits to support the recognition of deferred tax assets and assessments of the outcome of tax enquiries as the tax
treatment of some transactions and the application of tax legislation cannot be finally determined until formal resolution has
been reached with the relevant tax authority. The Group recognises a tax charge for open tax matters based on an
assessment of the taxes that may be due. Tax payable may ultimately be materially more or less than the amount already
accounted for. Further information is disclosed in Note 8.

(c) DailyFX asset acquisition (judgement) – determining whether the purchase of DailyFX during the year ended 31 May 2017
was a business combination or an asset purchase was a matter of critical accounting judgement which remains relevant for
the year ended 31 May 2019 given the size of the asset on the Group’s Statement of Financial Position at £23.8 million. The
purchase included the website together with its historical content and lead list. In order to enable lead capturing and to
re-establish the DailyFX Plus facility, which captures details on new subscribers, the infrastructure necessary for operating
and integrating the website needed to be rebuilt. A number of the DailyFX staff were offered and subsequently accepted
roles with IG. Therefore, whilst inputs had been acquired, the processes that IG would ultimately benefit from had to be
recreated and rebuilt or separately acquired. Accordingly, the Group accounted for the transaction as an asset purchase as
not all the requirements for a business combination were met.

140 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTS1. GENERAL INFORMATION, BASIS OF PREPARATION AND CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
CONTINUED

(d) Accounting for cryptocurrencies (judgement) – the Group has recognised £33.1 million of cryptocurrencies and rights to
cryptocurrencies on its Statement of Financial Position as at 31 May 2019 (31 May 2018: £27.2 million). During the year ended
31 May 2018 the Group changed the accounting policy it applies to these assets and reclassified these assets from ‘Trade
receivables’ into ‘Other assets’ which is considered to be a more appropriate presentation. The classification of
cryptocurrencies is considered to be a critical accounting judgement.

2. NET TRADING REVENUE

Net trading revenue represents trading revenue after deducting introducing partner commissions.

Net trading revenue by operating segment
The Executive Directors are the Group’s Chief Operating Decision Maker (CODM). Management has determined the
operating segments based on the information reviewed by the Executive Directors for the purposes of allocating resources
and assessing performance.

The Executive Directors consider business performance based on geographical location. This geographical split reflects the
location of the office that manages the underlying client relationship. Net trading revenue represents an allocation of the
total net trading revenue that the Group generates from clients’ trading activity.

The Executive Directors continue to consider business performance from a product perspective, split into OTC leveraged
derivatives, exchange traded derivatives and stock trading and investments.

The income from exchange traded derivatives derives wholly from the United States.

The income from stock trading and investments derives from the UK, EU and Australia.

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.

The segmental analysis shown below therefore does not include a measure of profitability, nor a segmented statement of
financial position, as this would not reflect the information which is received by the CODM on a regular basis. The segmental
breakdown of net trading revenue is as follows:

Net trading revenue by geography:
UK
EU
EMEA – Non EU
Australia
Singapore
Japan
Emerging markets
USA

Total net trading revenue

Net trading revenue by product:
OTC leveraged derivatives
Exchange traded derivatives
Stock trading and investments

Total net trading revenue

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

200.0
68.2
43.7
70.0
41.0
19.4
17.6
17.0

476.9

454.2
16.8
5.9

476.9

260.8
117.3
36.8
69.5
40.1
15.0
12.9
16.6

569.0

548.4
16.6
4.0

569.0

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 141

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
3. OPERATING EXPENSES

Employee related expenses:
Fixed remuneration
Variable remuneration

Advertising and marketing
Premises related costs
IT, market data and communications
Legal and professional costs
Regulatory fees
Depreciation and amortisation
Loss allowance
Other costs

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

106.3
24.7

131.0

51.7
13.1
23.7
13.8
3.6
17.3
1.8
28.3

96.0
35.9

131.9

58.7
12.6
23.0
8.8
7.1
17.6
0.8
29.6

284.3

290.1

Included in premises-related costs is operating lease rentals for office space £6.6 million (31 May 2018: £6.6 million).

4. AUDITORS’ REMUNERATION

Audit fees
Fees payable to the Company’s Auditors for the audit of the parent Company and

Consolidated Financial Statements

Fees payable to the Company’s Auditors and its associates for the statutory and non-statutory

audits of the accounts of subsidiaries and branches of the Company

Total audit fees

Audit related fees
Fees payable to the Company’s Auditors and its associates for audit-related assurance services:
– Other services supplied pursuant to legislation
– Other audit-related assurance services

Total audit-related fees

Non-audit fees
Other services

Total non-audit fees

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

0.5

0.6

1.1

0.6
0.1

0.7

0.2

0.5

0.3

0.8

0.4
0.1

0.5

0.3

Audit-related fees include services that are specifically required of the Group’s Auditors through legislative or contractual
requirements, controls assurance engagements required of the Auditors by the regulatory authorities in whose jurisdiction
the Group operates and other audit-related assurance services.

Other services primarily relate to the licensing of software used for the production of client stock trading statements.

142 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED5. STAFF COSTS

The staff costs for the year, including Directors, were as follows:

Wages and salaries, performance-related bonus and equity-settled share-based payment awards
Social security costs
Other pension costs

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

112.2
12.2
6.6

131.0

112.2
13.4
6.3

131.9

The Group does not operate any defined benefit pension schemes. Other pension costs includes employee nominated
payments to defined contribution schemes and company contributions.

The Directors’ remuneration for the years ended 31 May 2019 and 31 May 2018 is set out in the Directors’ Remuneration
Report on page 93.

The average monthly number of employees, including Directors, split into the key activity areas was as follows:

Prospect acquisition
Client sales and management
Technology
Operations and dealing
Business administration

6. FINANCE INCOME

Bank interest receivable
Interest receivable on cash held at brokers
Interest accretion on financial investments

7. FINANCE COSTS

Revolving credit facility interest and fees
Term loan interest and fees
Interest payable on cash held at brokers
Other interest

Year ended
31 May 2019
Number

Year ended
31 May 2018
Number

270
221
678
353
258

216
225
589
320
247

1,780

1,597

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

3.1
1.2
1.1

5.4

1.0
1.4
0.5

2.9

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

0.5
2.7
0.5
0.3

4.0

1.4
–
1.4
0.4

3.2

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 143

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
8. TAXATION

Tax on profit on ordinary activities
Tax charged in the income statement:

Current income tax:
UK corporation tax
Non-UK corporation tax
Adjustment in respect of prior years

Total current income tax

Deferred income tax:
Origination and reversal of temporary differences
Adjustment in respect of prior years
Impact of change in tax rates on deferred tax balances

Total deferred income tax

Tax expense in the income statement

Tax not charged to the income statement:

Tax recognised in other comprehensive income

Tax recognised directly in equity

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

32.6
4.1
(1.1)

35.6

(0.3)
0.7
–

0.4

36.0

0.1

(0.5)

48.4
4.3
1.3

54.0

(0.6)
(0.9)
1.9

0.4

54.4

–

(0.5)

Reconciliation of the total tax charge
The standard rate of corporation tax in the UK for the year ended 31 May 2019 is 19.0% (31 May 2018: 19.0%). Taxation
outside the UK is calculated at the rates prevailing in the relevant jurisdictions. The tax expense in the income statement for
the year can be reconciled as set out below:

Profit before taxation

Profit multiplied by the UK standard rate of corporation tax of 19.0%

(year ended 31 May 2018: 19.0%)
Higher taxes on overseas earnings
Adjustment in respect of prior years
Expenses not deductible for tax purposes
Patent Box deduction
Impact of change in tax rates on deferred tax balances
Recognition and utilisation of losses previously not recognised
Deferred tax not recognised

Total tax expense reported in the income statement

The effective tax rate for the year is 18.5% (year ended 31 May 2018: 19.4%).

Deferred income tax assets
The deferred income tax assets included in the Statement of Financial Position are as follows:

Tax losses available for offset against future tax
Temporary differences arising on share-based payments
Temporary differences arising on fixed assets
Other temporary differences

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

194.3

280.8

36.9
0.9
(0.4)
1.5
(1.1)
–
(3.3)
1.5

36.0

53.4
0.4
0.4
1.8
(3.5)
1.9
–
–

54.4

31 May 2019
£m

31 May 2018
£m

4.6
0.8
1.7
1.9

9.0

2.8
2.2
1.6
2.5

9.1

144 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED8. TAXATION CONTINUED
Deferred income tax liabilities
The deferred income tax liabilities included in the Statement of Financial Position are as follows:

Temporary differences arising on fixed assets

Deferred income tax recovery/settlement

Deferred tax assets to be recovered within 12 months
Deferred tax assets to be recovered after 12 months

Deferred tax liabilities to be settled within 12 months
Deferred tax liabilities to be settled after 12 months

31 May 2019
£m

31 May 2018
£m

(0.4)

–

31 May 2019
£m

31 May 2018
£m

2.3
6.7

9.0

–
(0.4)

(0.4)

4.2
4.9

9.1

–
–

–

The Finance Act 2016 was passed into legislation in September 2016 and reduced the main rate of UK corporation tax to
17.0% effective from 1 April 2020. 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.

The Group has an unrecognised deferred tax asset of £2.4 million (31 May 2018: £4.5 million) in respect of prior years’ losses
of the US businesses, the recoverability of which is dependent on sufficient taxable profits in those entities. 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. The Group also has an unrecognised deferred tax asset of £11.6 million (31 May 2018: 11.6 million)
in respect of UK capital losses, the recoverability of which is dependent on sufficient capital gains arising in the future.

Share-based payment awards have been charged to the income statement but are not allowable as a tax deduction until the
awards vest. 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.

The movement in the deferred income tax assets included in the Statement of Financial Position is as follows:

At the beginning of the year
– Income statement charge
– Tax credited to other comprehensive income
– Tax charged directly to equity
– Impact of movement in foreign exchange rates
At the end of the year

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

9.1
(0.1)
0.1
(0.2)
0.1
9.0

9.1
(0.4)
–
0.4
–
9.1

The movement in the deferred income tax liability included in the Statement of Financial Position is as follows:

At the beginning of the year
– Income statement (charge)
– Tax charged directly to equity
At the end of the year

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

–
(0.3)
(0.1)
(0.4)

–
–
–
–

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 145

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO

8. TAXATION CONTINUED
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 and the tax
rates in those locations, changes in tax legislation, the use of brought-forward 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 would impact the Group’s exemption from the UK Bank Corporation Tax Surcharge.

Recognition of deferred tax assets is dependent on the Group’s estimation of future profitable income and of certain items
whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority.

There are two historic UK tax schemes that are still under discussion with HMRC. The Group has made tax payments relating
to these schemes and if resolved in the Group’s favour, may result in a material cash inflow to the Group and a reduction in
the future tax charge as a result of a prior year adjustment. 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.

9. EARNINGS PER SHARE

Basic earnings per 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 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 and that vesting is satisfied by the issue of new ordinary shares.

Earnings attributable to owners of the parent

Weighted average number of shares:
Basic
Dilutive effect of share-based payments

Diluted

Basic earnings per share
Diluted earnings per share

10. DIVIDENDS PAID AND PROPOSED

Final dividend for FY18 at 33.51p per share (FY17: 22.88p)
Interim dividend for FY19 at 12.96p per share (FY18: 9.69p)

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

158.3

226.4

367,570,489
2,796,998

366,780,442
3,162,903

370,367,487

369,943,345

Year ended
31 May 2019

Year ended
31 May 2018

43.1p
42.8p

61.7p
61.2p

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

123.3
47.8

171.1

84.0
35.6

119.6

The final dividend for the year ended 31 May 2019 of 30.24p per share amounting to £111.3 million was proposed by the
Board on 23 July 2019 and has not been included as a liability at 31 May 2019. This dividend will be paid on 24 October
2019, following approval at the Company’s AGM, to those members on the register at the close of business on 27
September 2019.

146 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED11. PROPERTY, PLANT AND EQUIPMENT

Cost:
At 31 May 2017
Additions
Disposals/write-offs
Impact of movement in foreign exchange rates

At 31 May 2018
Additions
Disposals/write-offs
Impact of movement in foreign exchange rates

At 31 May 2019

Accumulated Depreciation:
At 31 May 2017
Provided during the year
Amounts derecognised upon disposal
Impact of movement in foreign exchange rates

At 31 May 2018
Provided during the year
Amounts derecognised upon disposal
Impact of movement in foreign exchange rates

At 31 May 2019

Net book value – 31 May 2019

Net book value – 31 May 2018

Net book value – 31 May 2017

12. INTANGIBLE ASSETS

Cost:
At 31 May 2017
Additions
Disposals
Impact of movement in foreign exchange rates

At 31 May 2018
Additions
Disposals
Impact of movement in foreign exchange rates

At 31 May 2019

Accumulated amortisation:
At 31 May 2017
Provided during the year
Amounts derecognised upon disposal
Impact of movement in foreign exchange rates

At 31 May 2018
Provided during the year
Amounts derecognised upon disposal
Impact of movement in foreign exchange rates

At 31 May 2019

Net book value – 31 May 2019

Net book value – 31 May 2018

Net book value – 31 May 2017

Leasehold
improvements
£m

Office
equipment,
fixtures and
fittings
£m

Computer
and other
equipment
£m

23.6
0.1
(0.3)
(0.3)

23.1
0.8
(2.1)
(0.2)

21.6

15.9
1.6
(0.2)
(0.3)

17.0
1.0
(2.1)
(0.2)

15.7

5.9

6.1

7.7

5.3
1.0
(0.1)
0.1

6.3
0.5
(0.4)
(0.1)

6.3

2.8
0.9
(0.1)
0.1

3.7
0.8
(0.4)
(0.1)

4.0

2.3

2.6

2.5

28.5
4.0
(1.3)
(0.3)

30.9
4.2
(1.0)
(0.2)

33.9

21.3
4.4
(1.2)
(0.4)

24.1
4.9
(1.0)
(0.3)

27.7

6.2

6.8

7.2

Goodwill
£m

108.1
–
–
(0.1)

108.0
–
–
0.1

108.1

–
–
–
–

–

108.1

108.0

108.1

Domain
names
£m

Internally
developed
software
£m

Software and
licences
£m

39.9
–
–
(1.0)

38.9
–
–
1.5

40.4

7.4
4.2
–
(0.2)

11.4
3.4
–
0.2

15.0

25.4

27.5

32.5

25.6
5.3
–
–

30.9
6.0
–
–

36.9

12.7
4.6
–
–

17.3
5.0
–
–

22.3

14.6

13.6

12.9

23.1
1.1
(1.2)
(0.1)

22.9
3.2
(0.1)
–

26.0

19.9
1.9
(1.2)
–

20.6
2.1
(0.1)
–

22.6

3.4

2.3

3.2

Total
£m

57.4
5.1
(1.7)
(0.5)

60.3
5.5
(3.5)
(0.5)

61.8

40.0
6.9
(1.5)
(0.6)

44.8
6.7
(3.5)
(0.6)

47.4

14.4

15.5

17.4

Total
£m

196.7
6.4
(1.2)
(1.2)

200.7
9.2
(0.1)
1.6

211.4

40.0
10.7
(1.2)
(0.2)

49.3
10.5
(0.1)
0.2

59.9

151.5

151.4

156.7

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 147

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
13. GOODWILL

Goodwill has been allocated for impairment testing purposes to cash-generating units (CGUs) as follows:

UK
US
Australia
South Africa

Goodwill arose as follows:

31 May 2019
£m

31 May 2018
£m

100.9
6.0
0.1
1.1

108.1

100.9
5.8
0.1
1.2

108.0

• UK – from the purchase of the UK business on 5 September 2003

• Australia – from the acquisition of the non-controlling interest in IG Australia Pty Limited in the year ended 31 May 2006

• US – from the acquisition of Nadex (formerly HedgeStreet Exchange) on 6 December 2007

• South Africa – from the acquisition of Ideal CFDs on 1 September 2010

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 year ended 31 May 2019 or 31 May 2018. 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. The carrying amount of a CGU includes only those assets that can be attributed directly, or
allocated on a reasonable and consistent basis.

The estimated recoverable amount for each CGU is based upon the value in use (‘VIU’) of each CGU. For all CGUs, the
estimate of the recoverable amount was higher than the carrying value.

Key assumptions used in the calculation of the recoverable amount of the CGUs
The key assumptions for the VIU calculations are those regarding expected future cash flows, regional growth rates and
discount rates. Future cash flow projections are based on the most recent financial budgets considered by the Board which
are used to project cash flows for each CGU over the next four years. After this period a terminal growth rate of 2.5% has
been applied to the cash flow to derive a terminal value for the CGUs. The resultant cash flows have been discounted at a
pre-tax discount rate of 10.0% for UK and South Africa, 12.0% for Australia and 18.0% for the US.

Sensitivity to changes in assumptions
These calculations have been subject to a sensitivity analysis reflecting reasonable changes in key assumptions. All VIU
calculations are not sensitive to reasonable changes in the discount rate or cash flow forecasts. In addition, the recoverable
amount of all CGUs remained higher than the carrying value with terminal growth rates reduced to zero. At this level the
recoverable amount for all CGUs exceeded the carrying values by a significant amount.

14. TRADE RECEIVABLES

Amounts due from brokers
Own funds in client money
Amounts due from clients

31 May 2019
£m

31 May 2018
£m

245.4
53.9
1.8

301.1

332.3
50.0
0.5

382.8

Amounts due from brokers represent balances with brokers where the combination of cash held on account and the
valuation of financial derivative open positions results in an amount due to the Group. In addition to Amounts due from
brokers, the Group held UK Government Securities as collateral at brokers, which are classified as financial investments in
the Group’s Statement of Financial Position.

Own funds in client money represents the Group’s own cash held in segregated client funds, in accordance with the UK’s
Financial Conduct Authority (FCA) ‘CASS’ rules and similar rules of other regulators in whose jurisdiction the Group operates
and includes £13.5 million (31 May 2018: £11.9 million) to be transferred to the Group on the following business day.

Amounts due from clients arise when client total funds deposited with the Group are insufficient to cover any trading losses
incurred or when a client utilises a trading credit limit, and is stated net of an allowance for impairment.

148 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED
15. OTHER ASSETS

Other assets are cryptocurrencies and rights to cryptocurrencies, which are owned and controlled by the Group for the
purpose of hedging the Group’s exposure to client cryptocurrency trading positions. The Group holds cryptocurrencies on
exchange and in vaults as follows:

Exchange
Vaults

31 May 2019
£m

31 May 2018
£m

14.2
18.9

33.1

16.0
11.2

27.2

Other assets are measured at fair value. The fair value hierarchy is set out in note 26. Other assets are all level 2 assets. Rights
to cryptocurrency assets held with exchanges are exposed to financial institution credit risk. All exchanges are unrated.

16. FINANCIAL INVESTMENTS

Financial investments are UK Government securities:

Held as:
Liquid asset buffer
Collateral at brokers

Of which:
Non-current portion
Current portion

31 May 2019
£m

31 May 2018
£m

84.4
140.8

225.2

189.9
35.3

225.2

83.1
90.5

173.6

111.6
62.0

173.6

The effective interest rates of securities held at the year-end range from 0.08% to 1.04% (31 May 2018: 0.08% to 0.87%).

17. BORROWINGS

In June 2018 the Group renewed its credit facility with four UK banks. The credit facility is for £200 million, of which £100
million is a three year term loan which is fully drawn and which is repayable on maturing of the facility in June 2021. The term
loan is stated net of £0.4 million of unamortised arrangement fees. The Group also has access to a £100 million Revolving
Credit Facility with a maturity date of June 2020 having been extended by one year in June 2019. The Revolving Credit
Facility was not drawn as at 31 May 2019.

18. TRADE PAYABLES

Client funds
Amounts due to clients

31 May 2019
£m

31 May 2018
£m

107.4
3.0

110.4

126.2
0.5

126.7

Client funds held on the Statement of Financial Position comprise title transfer funds and client deposits with the Group’s
Swiss banking subsidiary. These amounts are included within cash and cash equivalents on the Group’s Statement of
Financial Position.

Amounts due to clients represent balances that will be transferred from the Group’s own cash into segregated client funds
on the following business day in accordance with the UK’s Financial Conduct Authority (FCA) ‘CASS’ rules and similar rules of
other regulators in whose jurisdiction the Group operates.

19. OTHER PAYABLES

Accruals
Payroll taxes, social security and other taxes

31 May 2019
£m

31 May 2018
£m

53.9
6.1

60.0

68.5
6.2

74.7

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 149

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
20. CONTINGENT LIABILITIES AND PROVISIONS

There are no contingent liabilities that are expected to have a material adverse financial impact on the Group’s Consolidated
Financial Statements. The Group had no material provisions at 31 May 2019 (31 May 2018: £nil).

21. SHARE CAPITAL AND SHARE PREMIUM

Allotted and fully paid:
(i) Ordinary shares (0.005p)
At 31 May 2017
Issued during the year

At 31 May 2018
Issued during the year

At 31 May 2019

(ii) Deferred redeemable shares (0.001p)
At 31 May 2018

At 31 May 2019

(iii) Redeemable preference shares (£1.00)
At 31 May 2018

At 31 May 2019

Number of
shares

Share capital
£m

Share premium
account
£m

366,981,583
907,872

367,889,455
955,000

368,844,455

65,000

40,000

–
–

–

206.8
–

206.8

–

During the year ended 31 May 2019 955,000 (31 May 2018: 907,872) ordinary shares with an aggregate nominal value of
£47.75 (31 May 2018: £45.39) were issued to the Employee Benefit Trust in order to satisfy the exercise of Sustained
Performance Plan and Long Term Incentive Plan awards, for consideration of £47.75 (31 May 2018: £45.39).

Except as the ordinary shareholders have agreed or may otherwise agree, on a 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.

Deferred redeemable shares
These shares carry no entitlement to dividends and no voting rights.

Redeemable preference shares
The preference shares are entitled to a fixed non-cumulative dividend of 8.0% paid in preference to any other dividend.
Redemption is only permissible in accordance with capital distribution rules or on the winding up of the Company where
the holders are entitled to £1 per share plus, if the Company has sufficient distributable reserves, any accrued or unpaid
dividends. The preference shares have no voting rights, except that they are entitled to vote should the Company fail to
pay any amount due on redemption of the shares. The effective interest rate on these shares is 8.0% (31 May 2018: 8.0%).

150 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED22. OTHER RESERVES

Share-based
payments
reserve
£m

Foreign
currency
translation
reserve
£m

Own shares
held in
Employee
Benefit Trusts
£m

Transactions
with non-
controlling
interests
reserve
£m

Available-for-
sale reserve
£m

FVOCI
reserve
£m

Total other
reserves
£m

At 31 May 2017
Equity-settled employee share-based

payments

Foreign currency translation on overseas

subsidiaries

Exercise of UK share incentive plans
Employee Benefit Trust purchase of shares
Change in value of available-for-sale

financial assets

Transfer of share-based payment reserve

At 31 May 2018
Transfer of transactions with non-

controlling interests reserve

Equity-settled employee share-based

payments

Foreign currency translation on overseas

subsidiaries

Exercise of UK share incentive plans
Employee Benefit Trust purchase of shares
Reclassification on IFRS 9 adoption
Change in value of financial assets held at
fair value through other comprehensive
income

Transfer of share-based payment reserve

At 31 May 2019

59.9

7.0

–
(0.2)
–

–
(51.0)

15.7

–

7.2

–
(0.9)
–
–

–
(5.5)

16.5

68.5

(3.3)

(2.1)

0.1

–

(3.0)
–
–

–
–

–

–
0.2
(4.3)

–
–

65.5

(7.4)

–

6.2
–
–
–

–
–

–

–
0.9
(2.0)
–

–
–

71.7

(8.5)

–

–
–
–

–
–

(2.1)

2.1

–

–
–
–
–

–
–

–

–
–
–

(0.2)
–

(0.1)

–

–
–
–
0.1

–
–

–

–
–
–

–
–

–

–
–
–
(0.1)

0.6
–

0.5

123.1

7.0

(3.0)
–
(4.3)

(0.2)
(51.0)

71.6

2.1

7.2

6.2
–
(2.0)
–

0.6
(5.5)

80.2

The share-based payment reserve relates to the estimated cost of equity-settled employee share plans, net of tax, based on
a straight-line basis over the vesting period. The foreign currency translation reserve includes amounts in relation to the
translation of overseas subsidiaries. The available-for-sale reserve and the fair value through other comprehensive income
(FVOCI) reserve includes unrealised gains or losses in respect of financial investments, net of tax.

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:

At the beginning of the year
Subscribed for and purchased during the year
Exercise of own shares held in trust

At the end of the year

Year ended
31 May 2019
Number

1,022,024
1,181,079
(1,076,613)

Year ended
31 May 2018
Number

535,301
1,346,798
(860,075)

1,126,490

1,022,024

The Group has a UK-resident Employee Benefit Trust which holds shares in the Company to satisfy awards under the Group’s
HM Revenue and Customs approved Share Incentive Plan (SIP). At 31 May 2019 339,934 ordinary shares (31 May 2018:
407,172) were held in the trust. The market value of the shares at 31 May 2019 was £1.9 million (31 May 2018: £3.5 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 2019 the Trust held 745,694 ordinary shares (31 May
2018: 576,194). The market value of the shares at 31 May 2019 was £4.1 million (31 May 2018: £5.0 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 2019 40,862 ordinary shares (31 May 2018: 38,658) were held in the trust. The market value of the shares at
31 May 2019 was £0.2 million (31 May 2018: £0.3 million).

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 151

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
23. EMPLOYEE SHARE PLANS

The Company operates three employee share plans; a Sustained Performance Plan (SPP), a Long-Term Incentive Plan (LTIP)
and a Share Incentive Plan (SIP), all of which are equity-settled.

Sustained Performance Plan (SPP)
The SPP award was introduced in the year ended 31 May 2014 for the Group’s Executive Directors and other selected senior
employees. The Remuneration Committee approves any awards made under the plan and is responsible for setting the
policy for the operation of the SPP, agreeing performance targets and participation.

The legal grant of awards under the SPP occurs post the relevant performance period. At the outset of the financial year the
Remuneration Committee approves, and communicates to the participants, performance conditions and a pre-defined
maximum monetary award in terms of multiple of salary. The grant of awards, in the form of equity settled par value options,
is based upon three performance conditions: Relative Total Shareholder Return (TSR), diluted earnings per share (EPS) and
operational non-financial performance (NFP). Awards subsequently vest in tranches over the longer term, so the participant
retains an ongoing substantial stake in the share price performance of the Company.

The following table shows the number of options in the SPP for the year ended 31 May 2019:

Performance
period (year
ended)

31 May 2014
31 May 2015
31 May 2016
31 May 2017
31 May 2018

Share price
at award

Expected full
vesting date

609.90p 1 Aug 2025
742.55p 1 Aug 2025
868.65p 1 Aug 2025
626.50p 1 Aug 2025
893.00p 1 Aug 2025

At the start
of the year
Number

161,826
169,387
445,358
327,497
–

Awarded
during the
year
Number

–
–
–
–
879,737

Lapsed
during the
year
Number

(4,717)
(5,243)
(16,728)
(11,569)
(45,474)

Exercised
during the
year
Number

(100,679)
(103,840)
(148,581)
(109,165)
(132,180)

Dividend
equivalent
awarded
during the
year
Number

4,696
5,021
23,348
17,213
58,452

At the end of
the year
Number

61,126
65,325
303,397
223,976
760,535

1,104,068

879,737

(83,731)

(594,445)

108,730

1,414,359

Award date

4 Aug 2014
6 Aug 2015
2 Aug 2016
1 Aug 2017
7 Aug 2018

Total

The average share price at exercise of options during the year was 894.53p.

The exercise price of all SPP awards is 0.005p.

Further information on the Company’s SPP awards to Executive Directors is given in the Directors’ Remuneration Report.

The SPP awards for the year ended 31 May 2019 will be granted post year-end following the approval of actual performance
against targets set by the Remuneration Committee. A ten-day share price averaging period, that commences after the
Company’s closed period, is utilised to convert the notional value awarded into a number of options (refer to the Directors’
Remuneration Report for performance conditions).

The table below details the number of options expected to be awarded for the year ended 31 May 2019, based on the
year-end share price:

Expected award date

6 Aug 2019

Closing share
price at
31 May 2019

Awards expected
for the year ending
31 May 2019
Number

Expected full
vesting date

547.20p

6 Aug 2025

486,840

152 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED23. EMPLOYEE SHARE PLANS CONTINUED
Long Term Incentive Plan (LTIP)
The LTIP has been made available to senior management who are not invited to participate in the SPP.

Awards under the LTIP are nominal cost options, which vest after three years, conditional upon continued employment
at the vesting date. For each award made on 1 August 2017 and earlier a minimum performance target has to be achieved
before any options vest and the options vest fully if the maximum performance target is achieved. For awards made from
August 2018, there are no performance targets.

The maximum number of LTIP awards that can vest under the awards made are:

Award date

6 Aug 2015
12 Aug 2016
1 Aug 2017
7 Aug 2018

Total

Performance
period (3 year
period ended)

Share price
at award

Expected
vesting date

At the start of
the year
Number

Awarded during
the year
Number

Lapsed during
the year
Number

Exercised during
the year
Number

At the end
of the year
Number

31 May 2018
31 May 2019
31 May 2020
31 May 2021

6 Aug 2018
734.50p
898.45p 12 Aug 2019
1 Aug 2020
626.50p
5 Aug 2021
893.00p

362,308
258,075
494,037
–

1,114,420

–
–
–
310,040

310,040

–
(258,075)
(87,665)
(39,421)

(362,308)
–
–
–

–
–
406,372
270,619

(385,161)

(362,308)

676,991

The exercise price of all options awarded under the LTIP is 0.005p.

Share Incentive Plan (SIP)
SIP awards are made available to all UK, Australian and USA employees. The terms of the award are approved by the
Remuneration Committee.

The UK and Australian awards invite all employees to purchase up to £1,800/A$3,000 (31 May 2018: £1,800/A$3,000) of
partnership shares, with the Company matching on a two-for-one (31 May 2018: two-for-one) basis. All matching shares vest
after three years as long as the employee remains employed with the Group for the term of the award. Shares awarded
under the scheme are held in trust in accordance with local tax authority rules. Employees are entitled to receive dividends
on the partnership and matching shares held in trust for as long as they remain employees.

The USA award invites employees to invest a maximum of 5% of their salary semi-annually to the award. The award runs for a
six-month period and at the end of this period, the employees are invited to purchase shares in IG Group Holdings plc at a
discount of 15% to the scheme price, being the lower of the opening share price and the closing share price for the period.

The maximum number of matching shares that can vest based on the SIP awards made are:

Country of award

Award date

UK
Australia
UK
Australia
UK
Australia
UK
Australia

Total

6 Aug 2015
12 Oct 2015
2 Aug 2016
15 Jul 2016
1 Aug 2017
15 Jul 2017
7 Aug 2018
15 Jul 2018

Share price
at award

Expected
vesting date

739.50p
740.00p
879.50p
930.00p
626.50p
626.50p
893.00p
935.84p

6 Aug 2018
12 Oct 2018
2 Aug 2019
15 Jul 2019
1 Aug 2020
15 Jul 2020
2 Aug 2021
15 Jul 2021

At the start
of the year
Number

Awarded during
the year
Number

Lapsed during
the year
Number

Exercised during
the year
Number

At the end
of the year
Number

106,326
5,928
113,977
8,338
127,568
12,880
–
–

375,017

–
–
–
–
–
–
116,650
12,422

129,072

–
–
(12,785)
(1,104)
(11,764)
(798)
(7,346)
(1,266)

(106,326)
(5,928)
(3,017)
–
(2,868)
–
(2,010)
–

–
–
98,175
7,234
112,936
12,082
107,294
11,156

(35,063)

(120,149)

348,877

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 153

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
23. EMPLOYEE SHARE PLANS CONTINUED
Of the above SIP awards exercised during the year ending 31 May 2019, the average weighted share price at exercise was:

Country of award

UK
Australia
UK
Australia
UK
Australia
UK
Australia

Award date

6 Aug 2015
12 Oct 2015
2 Aug 2016
15 Jul 2016
1 Aug 2017
15 Jul 2017
7 Aug 2018
15 Jul 2018

Weighted
average share
price at exercise

767.09p
764.50p
668.25p
548.50p
626.50p
640.00p
871.26p
859.50p

The weighted average exercise price of the SIP awards exercised during the year ending 31 May 2019 is 870.22p.

Accounting for share schemes
The IFRS expense recognised in the income statement in respect of share-based payments was £7.2 million
(Year ended 31 May 2018: £7.0 million).

The fair value of the equity-settled share-based payments to employees is determined at the date at which a shared
understanding of the terms and conditions of the arrangement is reached between the Company and the participants.
The weighted average fair value of the equity-settled awards granted or deemed as such under IFRS2 during the year was
£7.8 million (Year ended 31 May 2018: £8.1 million).

For SIP awards the fair value is determined to be the share price at the grant date without making an adjustment for
expected future dividends, as award recipients are entitled to dividends over the vesting period.

For LTIP awards the fair value is determined to be the share price at grant date without making an adjustment for the
expected future dividends as dividend equivalents are awarded on options granted under the LTIP.

For potential SPP awards made under the TSR criteria, fair value is calculated using an option pricing model prepared by
advisers. For the SPP awards made under the EPS and NFP operational measures, the fair value is determined by taking the
share price at deemed grant date less the present value of expected future dividends for the duration of the performance
period. Dividend equivalents accrue under the SPP on awarded but not yet vested options post the performance period.
Dividend equivalents cease to accrue on unexercised options after the vesting date.

The inputs below were used to determine the fair value of the TSR element of the SPP awards granted on 7 August 2018:

Date of grant

Share price at grant date (pence)
Expected life of awards (years)
Risk-free sterling interest rate (%)
IG Group Holdings plc expected volatility (%)

7 August 2018

854.0p
3
0.62%
24.59%

Due to the small exercise price of 0.005p the risk-free rate has no impact on the fair value calculation.

IG Group Holdings plc’s expected volatility is based on historical TSR volatility of IG Group Holdings plc measured daily over
a period prior to the date of grant and commensurate with the remaining performance period.

The weighted average fair values for outstanding awards across all schemes are as follows:

Year ended 31 May 2019

Year ended 31 May 2018

At the beginning
of the year

Awarded during
the year

Lapsed during
the year

Exercised during
the year

At the end of the
year

749.83p

655.75p

845.11p

860.99p

873.98p

778.59p

736.38p

605.53p

751.23p

749.83p

154 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED24. OBLIGATIONS UNDER LEASES

Operating lease agreements
The Group has entered into leases on certain properties. Future minimum rentals payable under non-cancellable operating
leases are as follows:

Future minimum payments due:
Within one year
After one year but not more than five years
After more than five years

31 May 2019
£m

31 May 2018
£m

7.0
19.0
2.6

28.6

6.2
14.8
4.4

25.4

25. RELATED PARTY TRANSACTIONS

The Group had no transactions with its Directors other than those disclosed in the Directors’ Remuneration Report.

The Directors and other members of management classified as ‘persons discharging management responsibility’ in accordance
with the Market Abuse Regulation are considered to be the key management personnel of the Group in accordance with IAS
24. The Directors’ Remuneration Report discloses all benefits and share-based payments earned during the year and the
preceding year by the Executive Directors. The total compensation for key management personnel was as follows:

Short-term employee benefits
Share-based payments

Year ended 31
May 2019
£m

Year ended 31
May 2018
£m

6.0
6.5

12.5

4.3
5.8

10.1

The average number of key management personnel during the year was 10 (year ended 31 May 2018: 9).

26. FINANCIAL INSTRUMENTS

Accounting classifications and fair values
The table below sets out the classification of each class of financial assets and liabilities and their fair values. The Group
considers the carrying value of all financial assets and liabilities to be a reasonable approximation of fair value and
represents the Group’s maximum credit exposure as at the balance sheet date without taking account of any collateral held.

31 May 2019
Financial assets:
Cash and cash equivalents
Financial investments
Total trade receivables – due (to)/from brokers
Trade receivables – own funds in client money
Trade receivables – due from clients
Other receivables

Financial liabilities:
Trade payables – client funds
Trade payables – amounts due to clients
Borrowings

Note

FVTPL
£m

Amortised
cost
£m

FVOCI
£m

Total carrying
amount
£m

Fair value
£m

16
14
14
14

18
18
17

–
–
(28.6)
–
–
–

(28.6)

–
–
–

–

373.3
–
274.0
53.9
1.8
5.3

708.3

(107.4)
(3.0)
(99.6)

(210.0)

–
225.2
–
–
–
–

225.2

–
–
–

–

373.3
225.2
245.4
53.9
1.8
5.3

904.9

(107.4)
(3.0)
(99.6)

(210.0)

373.3
225.2
245.4
53.9
1.8
5.3

904.9

(107.4)
(3.0)
(99.6)

(210.0)

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 155

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
26. FINANCIAL INSTRUMENTS CONTINUED
Accounting classifications and fair values

31 May 2018
Financial assets:
Cash and cash equivalents
Financial investments
Total trade receivables – due (to)/from brokers
Trade receivables – own funds in client money
Trade receivables – due from clients
Other receivables

Financial liabilities:
Trade payables – client funds
Trade payables – amounts due to clients
Borrowings

FVTPL – held
for trading
£m

Loans and
receivables
£m

Amortised
cost
£m

Available
for Sale
£m

Total carrying
amount
£m

Note

Fair
value
£m

16
14
14
14

18
18
17

–
–
(17.4)
–
–
–

(17.4)

–
–
–

–

289.7
–
349.7
50.0
0.5
3.3

693.2

–
–
–
–
–
–

–

–
173.6
–
–
–
–

173.6

289.7
173.6
332.3
50.0
0.5
3.3

849.4

289.7
173.6
332.3
50.0
0.5
3.3

849.4

–
–
–

–

(126.2)
(0.5)
–

(126.7)

–
–
–

–

(126.2)
(0.5)
–

(126.7)

(126.2)
(0.5)
–

(126.7)

Financial instrument valuation hierarchy
The hierarchy of the Group’s financial instruments carried at fair value is as follows:

31 May 2019
Financial assets:
Financial investments
Trade receivables – due (to)/from brokers

Level 1
£m

Level 2
£m

Level 3
£m

Total
fair value
£m

225.2
6.0

–
(34.6)

–
–

225.2
(28.6)

The fair value hierarchy, valuation techniques, and accounting estimates have not changed as a result of new accounting
policies taking effect.

Fair value hierarchy levels 1 to 3 are based on the degree to which the fair value is observable:

Level 1 assets are valued using unadjusted quoted prices in active markets for identical financial instruments. This category
includes the Group’s open exchange-traded hedging positions. The quoted market price used for financial assets held by
the Group is the period end bid price.

Level 2 assets are valued using techniques where a price is derived based significantly on observable market data. For
example, where an active market for an identical financial instrument to the product used by the Group to hedge its market
risk does not exist. This category includes the Group’s open non-exchange-traded hedging positions. This comprises shares,
foreign currency and foreign currency options. The fair values used in the valuation of these products are sometimes
brokered values and may occur after the close of a market but before the measurement date. The effects of discounting are
generally insignificant for these Level 2 financial instruments.

Level 3 assets are valued using techniques that incorporate information other than observable market data that is significant
to the overall valuation.

There have been no changes in the valuation techniques for any of the Group’s financial instruments held at fair value in the
year (31 May 2018: none). There were no transfers between Level 1 and Level 2 fair value measurements, and no transfers
into or out of Level 3 fair value measurements for years ended 31 May 2019 and 31 May 2018.

31 May 2018
Financial assets:
Financial investments
Trade receivables – due (to)/from brokers

156 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

Level 1
£m

Level 2
£m

Level 3
£m

Total
fair value
£m

173.6
2.8

–
(20.2)

–
–

173.6
(17.4)

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED26. FINANCIAL INSTRUMENTS CONTINUED
Fair value of financial assets and liabilities measured at amortised cost
The hierarchy of the Group’s financial instruments not carried at fair value is as follows:

31 May 2019
Financial assets:
Cash and cash equivalents
Trade receivables – due from brokers
Trade receivables – due from clients
Trade receivables – own funds in client money
Other receivables
Financial liabilities:
Borrowings

31 May 2018
Financial assets:
Cash and cash equivalents
Trade receivables – due from brokers
Trade receivables – due from clients
Trade receivables – own funds in client money
Other receivables
Financial liabilities:
Borrowings

Level 1
£m

Level 2
£m

Level 3
£m

–
–
–
–
–

–

373.3
274.0
1.8
53.9
5.3

99.6

–
–
–
–
–

–

Level 1
£m

Level 2
£m

Level 3
£m

–
–
–
–
–

–

289.7
349.7
0.5
50.0
3.3

–

–
–
–
–
–

–

Total
fair value
£m

373.3
274.0
1.8
53.9
5.3

99.6

Total
fair value
£m

289.7
349.7
0.5
50.0
3.3

–

The fair value of the financial assets and liabilities measure at amortised cost approximate their carrying amount:

• Trade and other receivables (excluding the Group’s open financial derivative hedging positions with brokers above)

• Cash and cash equivalents

• Trade and other payables

• Borrowings

The fair value hierarchy, valuation techniques, and accounting estimates have not changed as a result of new accounting
policies taking effect.

Items of income, expense, gains or losses
All of the Group’s gains and losses arising from financial assets and liabilities classified as fair value through the profit and
loss are included in net trading revenue for the years ended 31 May 2019 and 31 May 2018.

Offsetting financial assets and liabilities
The following financial assets and liabilities have been offset in the Group’s Statement of Financial Position and are subject
to enforceable master netting agreements.

31 May 2019
Financial assets
Trade receivables – due from/(to) brokers

Gross amounts
of recognised
financial assets
£m

Gross amounts
of recognised
financial
liabilities set off
£m

Net amounts of
financial assets
£m

610.6

(365.2)

245.4

Note

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26. FINANCIAL INSTRUMENTS CONTINUED
Accounting classifications and fair values

31 May 2018
Financial assets
Trade receivables – due from/(to) brokers

Gross amounts
of recognised
financial assets
£m

Gross amounts
of recognised
financial liabilities
set off
£m

Net amounts of
financial assets
£m

643.3

(311.0)

332.3

Note

Trade receivables – due from/(to) brokers have been presented gross to present the impact of offsetting. The Group is
entitled to offset amounts due from/(to) brokers on a broker account level.

27. FINANCIAL RISK MANAGEMENT

Financial risks arising from financial instruments are analysed into market, credit, concentration and liquidity risks. Details of
how risks are managed are discussed in the risk management section on page 56.

Market risk
Market risk disclosures are analysed into these categories:

• non-trading interest rate; and

• price and foreign currency risk, which is further analysed between the impact on financial investments held at fair value
through other comprehensive income and the impact on the Group’s year end net trading book position. The Group’s
foreign currency exposure on its financial assets and liabilities denominated in currencies other than the reporting
currency is included in the trading book.

Where applicable, the quantified maximum exposures for the Group from each risk category are disclosed below:

Non-trading interest rate risk
The Group has interest rate risk relating to financial instruments on its Statement of Financial Position not held at fair value
through profit or loss. These exposures are not hedged.

The interest rate risk profile of the Group’s financial assets and liabilities at each year-end was as follows:

Fixed rate:
Financial investments
Floating rate:
Cash and cash equivalents
Trade receivables – due from

brokers

Trade payables – client funds
Borrowings

Within 1 year

Between 2 and 5 years

Total

31 May 2019
£m

31 May 2018
£m

31 May 2019
£m

31 May 2018
£m

31 May 2019
£m

31 May 2018
£m

35.3

373.3

245.4
(110.4)
–

543.6

62.0

289.7

332.3
(126.2)
–

557.8

189.9

111.6

–

–
–
(99.6)

90.3

–

–
–
–

111.6

225.2

373.3

245.4
(110.4)
(99.6)

633.9

173.6

289.7

332.3
(126.2)
–

669.4

There are no financial assets and liabilities which are held for a period over five years.

Non trading interest rate risk sensitivity analysis – fixed rate
Interest on financial instruments classified as fixed rate is fixed until the maturity of the instrument. The level of future
fixed interest receivable would be similar to that received in the year and is considered immaterial to the Group’s profit
for the year.

Non trading interest rate risk sensitivity analysis – floating rate
Interest on financial instruments classified as floating rate is re-priced at intervals of less than one year. Trade receivables
and payables include client and broker balances upon which interest is paid or received based upon market rates.

158 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED27. FINANCIAL RISK MANAGEMENT CONTINUED
Interest rate sensitivity has been performed on floating rate financial instruments by considering a 0.5% interest rate
decrease on the financial assets and a 0.5% increase on the financial liabilities held at Statement of Financial Position date.
The impact of such a movement on the Group’s profit for the year is shown below.

Impact:

Year ended 31 May 2019

Cash and cash
equivalents
£m

Trade
receivables
– due from
brokers
£m

Trade payables
– client funds
£m

Loans and
borrowings
£m

(1.9)

(1.2)

0.6

0.5

Year ended 31 May 2018

Cash and cash
equivalents
£m

Trade
receivables –
due from
brokers
£m

Trade payables
– client funds
£m

Loans and
borrowings
£m

(1.4)

(1.6)

0.6

–

The net impact of such a movement in interest rates is considered to be immaterial to the Group’s profit for the year.

Price risk
The Group is exposed to investment securities price risk because financial investments held by the Group and classified on
the Group’s Statement of Financial Position as fair value through other comprehensive income are priced based on closing
market prices published by the UK Debt Management Office.

The table below summarises the impact of decreases in the value of financial investments on the Group’s post-tax gain or
loss on equity. The analysis is based on the assumption that the value of financial investments has decreased by 1% with all
other variables held constant:

Impact on FVOCI reserve (equity)
Impact on available for sale reserve (equity)

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

(2.3)

(1.7)

The financial impact of such a movement in fair value is considered to be immaterial to the Group.

The Group is also exposed to price and foreign currency risk in relation to its net trading book position. The Group accepts
some exposure to market risk in order to optimise the efficiency and effectiveness of its services to clients. The Group
manages the market risk it faces in providing its services to clients by internalising client flow (allowing individual client
trades to offset one another) and hedging when the residual exposures reach pre-defined limits. The Group’s risk
management framework is set out on page 56 of the Annual Report.

The table below summarises the impact on the Group’s net trading revenue of a 5% adverse market movement on the
Group’s residual exposure at 31 May 2019. The analysis is based on the assumption that the value of each asset class has
decreased with all other variables held constant:

Indicies and equities
Foreign exchange
Commodities

31 May 2019

31 May 2018

Notional
exposure
£m

8.5
7.0
5.4

Impact
£m

(0.5)
(0.3)
(0.3)

Notional
exposure
£m

27.0
10.0
2.0

Impact
£m

(1.4)
(0.5)
(0.1)

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27. FINANCIAL RISK MANAGEMENT CONTINUED
Foreign currency risk
The table below illustrates the sensitivity of the Group’s net assets with regard to currency movements on financial assets
and liabilities included in the Balance Sheets of non GBP functional currency entities which are denominated in the
functional currency of that entity (and which are not held at fair value through profit and loss) as at the year-end.

Based on a 5% weakening in the following exchange rates, the effect on the Group’s net assets would be as follows:

Impact:

US Dollar
£m

(5.0)

US Dollar
£m

(3.6)

Year ended 31 May 2019

Yen
£m

0.7

South African
Rand
£m

(0.9)

Year ended 31 May 2018

Yen
£m

(0.3)

South African
Rand
£m

(0.7)

Euro
£m

1.0

Euro
£m

0.2

Swiss
franc
£m

(1.1)

Swiss
franc
£m

(1.1)

Other
£m

0.2

Other
£m

(0.9)

Credit risk
The principal sources of credit risk to the Group’s business are from financial institutions and individual clients.

Amounts due from financial institutions, which are stated net of an expected credit loss of £nil, are all less than 30 days due.
Amounts due from clients, which are stated net of an expected credit loss of £9.3 million at 31 May 2019 (31 May 2018:
impairment of £11.0 million), include both amounts less than and greater than 30 days past due.

The analysis in the following table shows credit exposures by credit rating.

Cash and cash equivalents

Trade receivables –
due from brokers

Trade receivables –
due from clients

Trade receivables –
own funds in client money

31 May 2019
£m

31 May 2018
£m

31 May 2019
£m

31 May 2018
£m

31 May 2019
£m

31 May 2018
£m

31 May 2019
£m

31 May 2018
£m

30.4
22.8
305.4
2.7
11.5
–
0.5

373.3

42.6
8.2
188.5
39.6
10.3
–
0.5

289.7

–
42.4
182.3
14.7
0.1
–
5.9

245.4

–
42.3
183.6
71.1
27.3
–
8.0

332.3

–
–
–
–
–
–
1.8

1.8

–
–
–
–
–
–
0.5

0.5

–
1.7
44.6
4.9
–
–
2.7

53.9

–
0.1
43.4
5.3
–
–
1.2

50.0

Credit rating:
AA+ & above
AA to AA-
A+ to A-
BBB+ to BBB-
BB+ to B
CCC
Unrated

Total carrying amount

Loss allowance
Below is a reconciliation of the total loss allowance:

At the beginning of the year
Loss allowance for the year:
– gross charge for the year
– recoveries
– debts written off
Foreign exchange

At the end of the year

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

11.0

2.2
(1.2)
(2.8)
0.1

9.3

13.9

2.5
(2.4)
(2.7)
(0.3)

11.0

The loss allowance has been calculated in accordance with the Group’s expected credit loss model. The following table
provides an overview of the Group’s credit risk by Stage and the associated loss allowance. The financial instruments that are
assessed in accordance with the Simplified Approach as permitted by IFRS 9 are trade receivables (excluding derivative
amounts due from brokers).

160 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED27. FINANCIAL RISK MANAGEMENT CONTINUED

Credit grade:
Investment grade
Non-investment grade

Gross carrying amount

Loss allowance

Total carrying amount

Stage 1
12-month ECL
£m

Stage 2
Lifetime ECL
£m

31 May 2019

Stage 3
Lifetime ECL
£m

Simplified
Approach
£m

586.5
12.0

598.5

–

598.5

–
–

–

–
–

–

319.2
15.8

335.0

(9.3)

325.7

31 May 2018

Total
£m

815.6
47.9

863.5

(11.0)

852.5

Total
£m

905.7
27.8

933.5

(9.3)

924.2

Concentration risk
The Group’s largest credit exposure to any one individual broker at 31 May 2019 was £58.6 million (A+ rated) (31 May 2018:
£67.4 million (A+ rated)). Included in cash and cash equivalents, the Group’s largest credit exposure to any bank at 31 May
2019 was £99.7 million (A rated) (31 May 2018: £86.4 million (A rated)). The Group has no significant credit exposure to any
one particular client or group of connected clients.

Liquidity risk
Amounts receivable and payable on demand:
The Group’s Financial instruments are all repayable on demand, with the exception of the Group’s term loan which is
repayable in full in June 2021.

The Group has non-derivative cash flows payable over 5 years in relation to the redeemable preference shares of £40,000 at
31 May 2019 (31 May 2018: £40,000).

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28. CASH GENERATED FROM OPERATIONS

Operating activities
Operating profit
Depreciation and amortisation
Share-based payments charge
(Increase)/decrease in trade and other receivables and other assets
Increase/(decrease) in trade and other payables

Cash generated from operations

29. SUBSEQUENT EVENTS

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

192.9
17.3
7.2
72.5
(33.1)

256.8

281.1
17.6
7.0
(52.1)
23.0

276.6

On 19 June 2019 the Group extended its £100 million revolving credit facility by one year.

30. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the
preparation of the Group’s Annual Report for the year ended 31 May 2018, except for the changes in accounting policies
related to the new accounting standards described below.

New accounting standards and interpretations - standards and amendments adopted during the year
(1) IFRS 9 – Financial instruments
Impact on the Financial Statements
The Group has applied IFRS 9 Financial Instruments (as revised in July 2014) and the related consequential amendments to
other IFRS Standards that are effective for periods that commence on or after 1 January 2018.

The Group’s balances that are within the scope of IFRS 9 are Financial investments, Cash and cash equivalents, Trade
receivables and Other receivables. IFRS 9 introduced new requirements for the classification and measurement of financial
assets, impairment of financial assets, and general hedge accounting.

Classification and measurement of financial assets: Financial assets that are within the scope of IFRS 9 are required to be
measured at amortised cost, fair value through profit and loss, or fair value through other comprehensive income.
Classification is based on the entity’s business model for managing the financial assets and the contractual cash flow
characteristics of the financial assets. Rules relating to the classification and measurement of financial liabilities, and for
derecognition of assets and liabilities in IFRS 9 are broadly unchanged from those in IAS 39.

Impairment: IFRS 9 replaces the ‘incurred loss’ approach of IAS 39 with an ‘expected credit loss’ approach. The Group is
required to recognise an expected credit loss on financial assets including financial investments and trade receivables
recorded at fair value through other comprehensive income and amortised cost. The expected credit loss approach requires
the Group to account for expected credit losses at initial recognition, and to account for changes in the expected credit
losses at each reporting date to reflect changes in credit risk since initial recognition. It is no longer necessary for a credit
loss event to have occurred before credit losses are recognised.

The Group does not undertake any hedge accounting so this change had no impact on the Consolidated Financial
Statements for the year ended 31 May 2019.

Impact of adoption
The Group adopted IFRS 9 with effect from 1 June 2018 and in accordance with the transition requirements of IFRS 9 the
Group has not restated comparative information for the year ended 31 May 2018. Adoption of IFRS 9 has had an impact on
the classification of financial instruments. It has not had an impact on impairment.

Reclassification: On transition to IFRS 9 the Group assessed its business model to determine the appropriate classifications.
The Group’s business model is primarily to hold and collect, except for financial investments which are held to collect and
sell, and certain amounts due from brokers relating to hedging positions which are held for trading. Adoption of IFRS has
resulted in the following reclassifications:

• Trade receivables (excluding amounts due from brokers), other receivables and cash and cash equivalents were classified

as loans and receivables under IAS 39. These financial assets have been reclassified as financial assets measured at
amortised cost.

• Trade receivables (amounts due from brokers) consisted of assets classified as held for trading and assets classified as
loans and receivables under IAS 39. These assets have been reclassified as assets held at fair value through profit and
loss, and financial assets held at amortised cost.

162 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED30. ACCOUNTING POLICIES CONTINUED
• Financial investments were categorised as available for sale under IAS 39. These assets have been reclassified as assets

held at fair value through other comprehensive income.

• There were no financial assets or financial liabilities which the Group had previously designated as held at fair value

through profit and loss under IAS 39 that were subject to reclassification or which the Group has elected to reclassify
upon the application of IFRS 9. There were no financial assets or financial liabilities which the Group has elected to
designate as held at fair value through profit and loss at the date of initial application of IFRS 9.

The reclassifications did not result in a change of measurement of the financial assets.

Impairment: there was no impact on the Group’s loss allowances arising from the adoption of IFRS 9.

(2) IFRS 15 Revenue from Contracts with Customers
The Group has adopted IFRS 15 Revenue from Contracts with Customers with effect from 1 June 2018. The Group has taken
into consideration the following matters when assessing whether, and to what extent, IFRS 15 adoption would have had an
impact on the Group’s accounting:

• Additional performance obligations recognised in contracts with customers

• Changes in timing of recognition of revenue

• Variable consideration

• Significant financing components

The Group has four revenue generating models; OTC leveraged derivatives, exchange traded derivatives, stock trading, and
investments. The Group has reviewed each of its revenue generating models for potential impact and concluded that for
each of these models the recognition policy is compliant with IFRS 15.

There is no change in the Group’s accounting policies from the adoption of IFRS 15, no impact on the timing and method of
revenue recognition, and no material impact on the financial statements of the Group.

Standards not yet adopted:
(1) IFRS 16 Leases
IFRS 16 was endorsed by the EU in November 2017 and is effective for periods beginning on or after 1 January 2019. The
Group had not adopted the standard early. Therefore, it will first be applicable to the Group’s accounting period starting
1 June 2019.

IFRS 16 introduces a fundamental change in the accounting by the lessee, including for subleases. For lessees, the ‘off
balance sheet’ operating lease accounting treatment is no longer available, with the exception of short-term leases (less than
12 months) or low value leases.

In terms of the transition to IFRS 16, the Group can choose to apply one of two transition methods:

• the full retrospective transition method, whereby IFRS 16 is applied to all its contracts as if it had always been applied; or

• the modified retrospective approach which includes optional practical expedients.

It is expected that the Group will choose to adopt the modified retrospective approach in order to benefit from the practical
expedients which are offered.

IFRS 16 requires all leases, except for short term or low value leases, to be recognised as an asset on the balance sheet, with
a corresponding lease liability recognised for the present value of the future lease payments. This has the effect of grossing
up the balance sheet by the value of future minimum rentals payable under operating leases. The depreciation of the asset
will then be recognised annually in the income statement. The impact on the income statement is not expected to be
material as the annual lease operating expense recognised under IAS 17 is likely to be broadly the same as the annual
depreciation charge recognised under IFRS 16.

IFRS 16 is expected to have a material impact on the Group’s balance sheet when it is adopted from 1 June 2019. The
opening balance sheet will be adjusted to create a right-of-use asset of approximately £23.3 million, a lease liability of
£22.6 million, and an increase in retained earnings of £0.7 million. This is not expected to have a significant impact on the
Group’s regulatory capital requirements.

Going concern
The Directors have prepared the financial statements on a going-concern basis which requires the Directors to have a
reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable
future. Further detail is contained in the Going Concern and Viability Statement included in the Strategic Report on page 71.

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30. ACCOUNTING POLICIES CONTINUED
Basis of consolidation
Subsidiaries
The Group financial statements consolidate the financial results of IG Group Holdings plc and the entities it controls (its
subsidiaries) as listed on page 173.

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and
operating policies of the investee so as to obtain benefit from its activities, and control is achieved through direct or indirect
ownership of voting rights; currently exercisable or convertible potential voting rights; or by way of contractual agreement.
The results, cash flows and final positions of the subsidiaries used in the preparation of the Consolidated Financial
Statements are prepared for the same reporting year as the parent company and are based on consistent accounting
policies. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies
used into line with those used by the Group. All inter-company balances and transactions between Group entities, including
unrealised profits arising from them, are eliminated on consolidation.

On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of
acquisition. The cost of an acquisition is measured at the fair value of consideration paid including an estimate of any
contingent or deferred consideration. Contingent or deferred consideration is re-measured at each statement of financial
position date with periodic changes to the estimated liability recognised in the Consolidated Income Statement. Acquisition
related costs are expensed as incurred. Any excess of the cost of acquisition over the fair values of the identifiable net assets
acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net
assets acquired (discount on acquisition) is credited to the income statement in the period of acquisition.

The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement from
the effective date of acquisition or up to the effective date of disposal, as appropriate.

Segmental information
The Group’s segmental information is disclosed in a manner consistent with the basis of internal reports regarding
components of the Group that are regularly reviewed by the Chief Operating Decision Maker (CODM), who for the Group
are the Executive Directors, in order to assess the performance and to allocate resources to those ‘operating segments’. The
Group has therefore determined its operating segments based on the management information received on a regular basis
by the Executive Directors of the IG Group Holdings plc Board as they are considered to be the CODM. Operating
segments that do not meet the quantitative thresholds required by IFRS 8 are aggregated.

Foreign currencies
The Group’s functional currency is Sterling. Transactions in other currencies are initially recorded in the functional currency
by applying spot exchange rates prevailing on the dates of the transactions. At each statement of financial position date,
monetary assets and liabilities denominated in foreign currencies are revalued at the functional currency rate of exchange
prevailing on the same date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on
revaluation are taken to the income statement.

The functional currency of each company in the Group is that of the country of incorporation (as disclosed in note 31) as this
is consistent with the primary economic environment in which the entity operates. The exception to this is entities located in
the United Arab Emirates, (IG Limited), and the Group’s Financial Domain entities, which have a functional currency of USD.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated into Sterling at exchange rates
prevailing on the statement of financial position date. Income and expense items are translated at the average exchange
rates for the period. Exchange differences arising, if any, are classified as equity and taken directly to a translation reserve.
Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.

Revenue recognition
Trading revenue includes revenue arising from each of the Group’s four revenue generation models: OTC leveraged
derivatives, exchange traded derivatives, stock trading, and investments.

OTC leveraged derivatives
Revenue from the OTC leveraged derivatives business represents:

i) fees paid by clients for spread, commission and funding charges in respect of the opening, holding and closing of

financial spread bets, contracts for difference or options contracts, together with gains and losses for the Group arising
on client trading activity; less.

164 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED30. ACCOUNTING POLICIES CONTINUED
ii) fees paid by the Group in spread, commissions and funding charges arising in respect of hedging the risk associated with

the client trading activity and the Group’s currency exposures, together with gains and losses incurred by the Group
arising on hedging activity.

Open client and hedging positions are fair valued on a daily basis and gains and losses arising on this valuation are
recognised in revenue as well as gains and losses realised on positions that have closed. The policies and methodologies
associated with the determination of fair value are disclosed in note 26, Financial Instruments.

(a) Exchange traded derivatives
Revenue from exchange traded derivatives represents fees paid by members of the Group’s regulated futures and options
exchange, with members of the exchange charged a fee per transaction undertaken, together with gains and losses incurred
by the Group arising on its market making activity on the exchange.

(b) Stock trading
Revenue from stock trading represents fees and commission earned from the stock trading service after deducting
contracting and trade settlement fees payable to third party brokers. Revenue is recognised in full on the date of trade
being placed or the fee being charged.

(c) Investments
Revenue from investments represents management fees, which are earned as a percentage of assets under management.
These are recognised over the period in which the service is provided.

Revenue is recognised when it is probable that economic benefits associated with the transaction will flow to the Group and
the revenue can be reliably measured. Revenue is shown net of sales taxes and excluding any inter-company transactions.

Trading revenue is reported before introducing partner commission, betting duties and financial transaction taxes, which are
disclosed as an expense in arriving at net operating income.

Net trading revenue, disclosed on the face of the Consolidated Income Statement and in the Notes to the Financial
Statements, represents trading revenue after taking account of introducing partner commission, as this is consistent with the
management information received by the CODM.

Income earned from clients for market data, such as chart fees, and income earned from charging clients for funding using
debit and credit cards, are netted within operating costs as the amounts involved are not considered material.

Finance income and costs on segregated client funds
Interest income and expense on segregated client funds is accrued on a time basis, by reference to the principal
outstanding and at the credit interest rate applicable. The credit interest rate is the rate client money banks pay on
client money.

Interest income and interest expense on segregated client funds are disclosed within operating profit, as this is consistent
with the nature of the Group’s operations.

Dividends
Dividend distributions to the Company’s shareholders are recognised as a liability in the Group’s financial statements in the
period in which the dividends are approved by the Company’s shareholders.

Employee benefits
(a) Pension obligations
The Group operates defined contribution schemes. Contributions are charged to the income statement as and when they
become payable according to the rules of the schemes. Once the contributions have been paid the Group has no legal or
constructive obligations to pay further contributions.

(b) Bonus schemes
The Group recognises an accrual and an expense for bonuses based on formulae that take into consideration specific
financial and non-financial measures.

(c) Termination benefits
Termination benefits are payable when an employment contract is terminated by the Group. The Group recognises
termination benefits when the Group can no longer withdraw the offer of those benefits.

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30. ACCOUNTING POLICIES CONTINUED
Operating leases
Leases are classified as operating leases where the lessor retains substantially all the risks and benefits of ownership of the
asset. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term
unless another systematic basis is more representative of the time pattern of the user’s benefit.

Taxation
The income tax expense represents the sum of tax currently payable and movements in deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense that are taxable or deductible in other years and items
that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates in the respective
jurisdictions that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax is accounted for on all temporary differences between the carrying amount of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit. In principle, deferred tax
liabilities are recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable
that taxable profits will be available, against which deductible temporary differences may be utilised. Such assets and
liabilities are not recognised if the temporary difference arises from goodwill (or negative goodwill) or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the
statement of financial position date. Deferred tax is charged or credited in the income statement, except when it relates to
items credited or charged directly to equity or other comprehensive income, in which case the deferred tax is also dealt with
in equity or other comprehensive income.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.

Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost
comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes
costs directly attributable to making the asset capable of operating as intended.

Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost, less estimated
residual value based upon estimated useful lives. Estimated residual value and useful lives are reviewed on an annual basis
and residual values are based on prices prevailing at the statement of financial position date. Depreciation is charged on a
straight-line basis over the expected useful lives as follows:

Leasehold improvements
Office equipment, fixtures and fittings
Computer and other equipment

–
–
–

over the lease term of up to 15 years
over 5 years
over 2, 3 or 5 years

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable, and are written down immediately to their recoverable amount.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
to arise from the continued use of the asset. The gain or loss arising on derecognition of an asset is determined as the
difference between the sale proceeds and the carrying amount of the asset and is included in the income statement in the
period of derecognition.

166 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED

30. ACCOUNTING POLICIES CONTINUED
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition (fair value of consideration paid) over the
Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a business at the date of
acquisition. Goodwill is recognised as an asset and is allocated to cash-generating units for purposes of impairment testing.
Cash-generating units represent the smallest identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of assets.

Business combinations are accounted for using the purchase method. Any excess of the cost of the business combination
over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the
statement of financial position as goodwill and is not amortised. To the extent that the net fair value of the acquired entity’s
identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised
immediately in the income statement. Any goodwill asset arising on the acquisition of equity accounted entities is included
within the cost of those entities.

After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being
reviewed for impairment, at least annually and whenever events or changes in circumstances indicate that the carrying value
may be impaired.

For the purpose of impairment testing, goodwill is allocated to the related cash-generating units monitored by
management. Where the recoverable amount of the cash-generating unit is less than its carrying amount, including
goodwill, an impairment loss is recognised in the income statement.

The carrying amount of goodwill allocated to a cash-generating unit is taken into account when determining the gain or loss
on disposal of the unit, or of an operation within it.

Intangible assets
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired separately from a business are carried initially at cost. An intangible asset acquired as part of a
business combination such as a trade name or customer relationship is recognised at fair value and identified separately
from goodwill if the asset is separable or arises from contractual or other legal rights and its fair value can be measured
reliably. Expenditure on internally developed intangible assets, excluding development costs, is taken to the income
statement in the year in which it is incurred. Development expenditure is recognised as an intangible asset only after all the
following criteria are met:

• the project’s technical feasibility and commercial viability can be demonstrated;

• the availability of adequate technical and financial resources and an intention to complete the project have been confirmed;

• probable future economic benefit has been established.

Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated
impairment losses.

Intangible assets with a finite life are amortised over their expected useful lives, as follows:

Internally developed software
Software and licences
Trade names
Client lists and customer relationships
Domain names and generic top-level domains

–
–
–
–
–

straight-line basis over 3 years
straight-line basis over the contract term of up to 5 years
straight-line basis over 2 years
straight line basis over 3 years
straight-line basis over 10 years

The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstances indicate the
carrying value may not be recoverable. In addition, the carrying value of capitalised development expenditure is reviewed
before being brought into use.

Impairment of non-financial assets
When impairment testing is required, the Directors review the carrying amounts of the Group’s property, plant and
equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment
loss. If any such indication exists (or at least annually for goodwill), the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent
from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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30. ACCOUNTING POLICIES CONTINUED
The recoverable amount is the higher of fair value less selling costs and value-in-use. In assessing value-in-use, the
estimated future cash flows are discounted to their present values using a pre-tax discount rate. This rate reflects current
market assessments of the time value of money as well as the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. Impairment losses are recognised as an expense immediately.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A
previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the
asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have
been determined, had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is
recognised as income immediately, although impairment losses relating to goodwill may not be reversed.

Financial instruments
From 1 June 2018 the Group applies the following accounting policies in respect of financial instruments.

Financial instruments – Classification, recognition and measurement
The Group determines the classification of its financial instruments at initial recognition in accordance with the categories
outlined below and re-evaluates this designation at each financial year-end. When financial instruments are recognised
initially, they are measured at fair value, being the transaction price plus, in the case of financial assets and financial liabilities
not at fair value through profit or loss, directly attributable transaction costs. Financial instruments are disclosed in note 26
to the financial statements.

(a) Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through profit and loss are financial assets that are not classified and measured at
amortised cost or as fair value through other comprehensive income. The financial assets included in this classification are
the financial derivative open positions included in trade receivables (due from brokers) as shown in the Consolidated
Statement of Financial Position and related notes. The Group uses derivative financial instruments, in order to hedge
derivative exposures arising from open client positions, which are also classified as fair value through profit and loss.

All financial instruments at fair value through profit or loss are carried in the Consolidated Statement of Financial Position at
fair value with gains or losses recognised in trading revenue in the Consolidated Income Statement.

(b) Financial assets measured at amortised cost
Financial assets measured at amortised cost are non-derivative financial assets which are held to collect the contractual cash
flows. The contractual terms of the financial assets give rise to payments on specified dates that are solely payments of
principal and interest on the principal amount outstanding. They are included in current assets, except for maturities greater
than 12 months after the end of the reporting period, which are classified as non-current assets. The Group’s financial assets
measured at amortised cost comprise ‘trade receivables’, ‘other receivables’ and ‘cash and cash equivalents’.

(c) Financial assets measured as fair value through other comprehensive income
Financial assets measured as fair value through other comprehensive income are assets that are held to collect the
contractual cash flows or to be sold. The contractual terms of these assets give rise to payments on specified dates that are
solely payments of principal and interest on the principal amount outstanding. They are included in non-current assets
unless the investment matures or management intend to dispose of them within 12 months of the end of the reporting
period. The Group’s fair value through other comprehensive income financial assets are ‘financial investments’.

(d) Financial liabilities
The Group’s financial liabilities include trade payables and borrowings. These are measured subsequently at amortised cost
using the effective interest method. The interest expense is calculated each reporting period by applying the effective
interest rate, and the resulting charge is reflected in finance costs on the Consolidated Income Statement.

168 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED30. ACCOUNTING POLICIES CONTINUED
(e) Determination of fair value
Financial instruments arising from open client positions and the Group’s hedging positions are stated at fair value and
disclosed according to the valuation hierarchy required by IFRS 7. Fair values are predominantly determined by reference
to third party market values (bid prices for long positions and offer prices for short positions) as detailed below:

• Level 1: Valued using unadjusted quoted prices in active markets for identical financial instruments.

• Level 2: Valued using techniques where a price is derived based significantly on observable market data. For example,

where an active market for an identical financial instrument to the product offered by the Group to its clients or used by
the Group to hedge its market risk does not exist.

• Level 3: Valued using techniques that incorporate information other than observable market data that is significant to the

overall valuation.

Financial instruments – Impairment of financial assets
The impairment charge in the Consolidated Income Statement includes the change in expected credit losses. Expected
credit losses are recognised for trade receivables (excluding amounts due from brokers held at fair value through profit and
loss), cash and cash equivalents, other receivables and financial investments. Expected credit losses are calculated as the
difference between the contractual cash flows that are due to the Group and the cash flows that the Group expects to
receive given the probability of default and loss given default, discounted at the original effective interest rate.

At initial recognition of financial assets, an allowance is made for expected credit losses resulting from default events that
are possible within the next 12 months. In the event of a significant increase in credit risk, an allowance is made for expected
credit losses resulting from possible default events over the expected life of the financial asset. Financial assets where
12-month expected credit losses are recognised are considered to be Stage 1; financial assets which are considered to have
experienced a significant increase in credit risk since initial recognition are considered to be Stage 2; and financial assets
which have defaulted or are otherwise considered to be credit impaired are allocated to Stage 3.

An assessment of whether credit risk has increased significantly considers changes in credit rating associated with the asset,
whether contractual payments are more than 30 days past due and other reasonable information demonstrating otherwise.
The Group considers a financial instrument to have low credit risk when it has an external credit rating of ‘investment grade’
or if no external credit rating is available, in accordance with the Group’s internal credit risk management definition. This
approach has not resulted in a material difference in the impairment allowance under an expected credit loss approach for
the Group.

Assets are transferred to stage 3 when an event of default, as defined in the Group’s credit risk management policy, occurs
or where the assets are credit impaired. IFRS 9 contains a rebuttable presumption that default occurs no later than when a
payment is 90 days past due. The Group uses this 90 day basis for all assets except for receivables from clients where it uses
180 days, as this aligns with the Group’s risk management practices.

All changes in expected credit losses subsequent to the assets’ initial recognition are recognised as an impairment loss or
gain. Financial assets are normally written off, either partially or in full, against the related allowance when the Group has no
reasonable expectations of partial or full recovery of the asset. Subsequent recoveries of amounts previously written off
decrease the amount of impairment losses recorded in the Consolidated Income Statement.

Financial instruments – Derecognition of financial assets and liabilities
A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled
or expired.

(a) Financial assets
A financial asset is derecognised where the rights to receive cash flows from the asset have expired; the Group retains the
right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third
party under a ‘pass-through’ arrangement; or the Group has transferred its rights to receive cash flows from the asset and
either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset. Where the Group has transferred
its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of
the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in
the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of
the original carrying amount of the asset and the maximum amount of consideration that the Group could be required
to repay.

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30. ACCOUNTING POLICIES CONTINUED
(b) Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability, such that the difference in the respective carrying amounts together with any
costs or fees incurred are recognised in profit or loss.

(c) Offsetting financial instruments
Assets or liabilities resulting from profit or losses on open positions are carried at fair value. Amounts due from or to clients
and brokers are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset
the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the
normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.

Trade payables and receivables
Trade receivables represent balances with counterparties and clients where the combination of cash held on account and
the valuation of financial derivative open positions result in an amount due to the Group.

Trade payables represent balances with counterparties and clients where the combination of cash held on account and the
valuation of financial derivative open positions results in an amount payable by the Group.

Trade receivables do not contain a significant financing element and so the Group has adopted the simplified approach
permitted by IFRS 9. This approach requires expected lifetime credit losses to be recognised at initial recognition of the
financial asset. The loss allowance is calculated by reference to an ageing debt profile, and trade receivables are written off
when there is objective evidence of non-collectability or when an event of default occurs.

Other assets
Other assets represent rights to cryptocurrencies and cryptocurrencies controlled by the Group. The Group offers various
cryptocurrency-related products that can be traded on its platform. The Group purchases and sells cryptocurrencies as part
of its hedging.

At present there is a lack of guidance available on how cryptocurrency assets should be accounted for and subsequently
disclosed in accordance with IFRS as adopted by the EU. The Group holds cryptocurrency assets for trading in the ordinary
course of its business, effectively acting as a commodity broker-dealer in respect of the underlying cryptocurrency asset
(because the salient features of these assets are, in economic terms, consistent with certain commodities) under IAS 2.3(b).

The assets are measured at fair value less costs to sell, with changes in valuation being recorded in the Consolidated Income
Statement in the period in which they arise. Cryptocurrency assets are not financial instruments and they are categorised as
non-financial assets.

Other receivables
Other receivables are financial assets which give rise to payments on specified dates that are solely payments of principal
and interest on the principal amount outstanding. They are assets that have not been designated as fair value through profit
or loss. Such assets are carried at amortised cost using the effective interest method if the time value of money is significant.

Other receivables do not contain a significant financing element and so the Group has adopted the simplified approach
permitted by IFRS 9. This approach requires expected lifetime credit losses to be recognised at initial recognition of the
financial asset. The loss allowance is calculated by reference to an ageing debt profile, and trade receivables are written off
when there is objective evidence of non-collectability or when an event of default occurs.

Prepayments
Prepayments are assets with fixed or determinable payments that are not quoted in an active market, do not qualify as
trading assets and have not been designated as fair value through profit or loss. Such assets are carried at amortised cost
using the effective interest method if the time value of money is significant. Gains and losses are recognised in income when
the receivables are derecognised or impaired, and when economic benefit is consumed. A provision for impairment is
established where there is objective evidence of non-collectability.

170 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED
30. ACCOUNTING POLICIES CONTINUED
Cash and cash equivalents
Cash and cash equivalents comprises cash on hand and demand deposits which may be accessed without penalty. Cash
equivalents comprise short-term highly liquid investments that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value. For the purposes of the Consolidated Cash Flow Statement, net cash
and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

The majority of the Group’s cash balances are held with investment grade banks. The Group considers the risk of default,
and how adverse changes in economic and business conditions might impact the ability of the banks to meet their
obligations. The Group assesses the expected credit losses on cash and cash equivalents on a forward-looking basis and the
impairment methodology depends on whether there has been a significant increase in credit risk since initial recognition.

The Group holds money on behalf of clients in accordance with the client money rules of the UK Financial Conduct Authority
(FCA) and other regulatory bodies. Such monies are classified as either ‘cash and cash equivalents’ or ‘segregated client
funds’ in accordance with the relevant regulatory requirements. Segregated client funds comprise individual client funds
held in segregated client money accounts. Segregated client money accounts restrict the Group’s ability to control the
monies and accordingly such amounts are not held on the Group’s Consolidated Statement of Financial Position.

The amount of segregated client funds held at year-end was £1,349.2 million (31 May 2018: £1,386.9 million) and the amount
of segregated client assets was £1,096.8 million (31 May 2018: £945.0 million). These amounts are held off-balance sheet.
The return received on managing segregated client funds is included within net operating income.

In addition, 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 2019, IG Bank S.A. was required to hold £20.0 million (31 May 2018: £15.4 million) in
satisfaction of this requirement. This amount, which represents restricted cash, is included in cash and cash equivalents on
the Consolidated Statement of Financial Position.

Title transfer funds are held by the Group under a Title Transfer Collateral Arrangement (TTCA) by which a client agrees that
full ownership of such monies is unconditionally transferred to the Group. Title transfers funds are accordingly held on the
Group’s Consolidated Statement of Financial Position with a corresponding liability to clients within trade payables.

Financial investments
Financial investments are held as fair value through other comprehensive income and are non-derivative financial assets.
Financial investments are recognised on a trade date basis. They are initially recognised at fair value plus directly related
transactions costs. They are subsequently carried at fair value. Fair value is the quoted market price of the specific
investments held.

Unrealised gains or losses, other than loss allowances for expected credit losses for investments measured at FVOCI, are
reported in equity (in the fair value through other comprehensive income reserve) and in other comprehensive income, until
such investments are sold, collected or otherwise disposed of.

On disposal of an investment, the accumulated unrealised gain or loss included in equity is recycled to the Consolidated
Income Statement for the period and reported in other income. Gains and losses on disposal are determined using the fair
value of the investment at the date of derecognition.

Interest on financial investments is included in finance income using the effective interest rate method. The effective interest
rate is either the rate that exactly discounts estimated future cash payments or receipts through the expected life of the
financial instrument, or, when appropriate, a shorter period to the net carrying amount of the financial asset. When
calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial
instrument (for example, prepayment, call and similar options) but shall not consider expected credit losses unless the asset
is credit impaired. The calculation includes all fees and points paid or received between parties to the contract that are an
integral part of the effective interest rate (see IFRS 15 Revenue from Contracts with Customers), transaction costs, and all
other premiums or discounts.

When an investment measured at FVOCI is derecognised, the cumulative gain or loss previously recognised in other
comprehensive income is reclassified from equity to the Consolidated Income Statement as a reclassification adjustment.

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30. ACCOUNTING POLICIES CONTINUED
Other payables
Non-trading financial liabilities are recognised initially at fair value and carried at amortised cost using the effective interest
rate method if the time value of money is significant.

Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated.

Borrowings
Borrowings are recognised initially at their issue proceeds less transaction costs incurred. Subsequently, taking into
consideration the term of the borrowings, an assessment is made whether to state at amortised cost, with any difference
between net proceeds and the redemption value being recognised in the Consolidated Income Statement over the period
of the borrowings using the effective interest rate method.

Share Capital
(a) Classification of shares as debt or equity
When shares are issued, any component that creates a financial liability of the Group is presented as a liability in the
statement of financial position; measured initially at fair value net of transaction costs and thereafter at amortised cost until
extinguished on conversion or redemption. The corresponding dividends relating to the liability component are charged as
interest expense in the income statement.

Equity instruments issued by the Company are recorded as the proceeds received, net of direct issue costs. Equity
instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

(b) Own shares held in Employee Benefit Trusts
Shares held in Employee Benefit Trusts for the purposes of employee share schemes are classified as a deduction from
shareholders’ equity and are recognised at cost. Consideration received for the sale of such shares is also recognised in
equity, with any difference between the proceeds from the sale and the original cost being taken to reserves. No gain or
loss is recognised in the income statement on the purchase, sale, issue or cancellation of equity shares.

(c) Share-based payments
The Company operates three employee share plans: a Share Incentive Plan, a Sustained Performance Plan and a Long Term
Incentive Plan.

For market-based vesting conditions, the cost of these awards is measured at fair value calculated using option pricing
models (refer to the share-based payment note for additional detail of the models and assumptions used for the various
award schemes) and are recognised as an expense in the income statement on a straight-line basis over the vesting period
based on the Company’s estimate of the number of shares that will eventually vest.

For non-market-based vesting conditions, at each statement of financial position date before vesting, the cumulative
expense is calculated representing the extent to which the vesting period has expired and management’s best estimate of
the achievement or otherwise of non-market conditions determining the number of equity instruments that will ultimately
vest. The movement in cumulative expense since the previous statement of financial position date is recognised in the
income statement as part of operating expenses, with a corresponding credit to equity.

The grant by the Company of options over its equity instruments to employees of the subsidiary undertakings in the Group
is treated as a capital contribution. The fair value of the employee services received is recognised over the vesting period as
an increase in the investment in subsidiary undertakings, with a corresponding credit to equity.

172 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED31. LIST OF INVESTMENTS IN SUBSIDIARIES

The following companies are all owned directly or indirectly by IG Group Holdings plc:

Name of Company

Subsidiary undertakings held directly:
IG Group Limited

Registered office and
country of incorporation

Holding

Voting
rights

Nature of business

Cannon Bridge House,
25 Dowgate Hill, London
EC4R 2YA United Kingdom

Ordinary shares

100% Holding company

Subsidiary undertakings held indirectly:
IG Index Limited

Cannon Bridge House,
25 Dowgate Hill, London
EC4R 2YA United Kingdom

Ordinary shares

100% Spread betting

IG Markets Limited

Ordinary shares

100% CFD trading, foreign

IG Markets South Africa Limited
Market Data Limited
IG Nominees Limited
IG Knowhow Limited
Extrabet Limited
IG Finance
IG Finance Two
IG Finance Three
IG Finance Four
IG Finance 5 Limited
IG Forex Limited
IG Spread Betting Limited
IG Finance 8 Limited
IG Finance 9 Limited
Financial Domaigns Limited
Financial Domaigns Registry Holdings
Limited
Financial Domaigns Registrar Limited
Financial Domaigns (Services) Limited
DotSpreadbetting Registry Limited
DotMarkets Registry Limited
DotTrading Registry Limited
DotCFD Registry Limited
DotBroker Registry Limited
DotForex Registry Limited
Deal City Limited
InvestYourWay Limited
IG Trading and Investments Limited

IG Australia Pty Limited

Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares

Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares

exchange and market risk
management
100% CFD trading
100% Data distribution
100% Nominee company
100% Software development
100% Non-trading
100% Financing
100% Financing
100% Financing
100% Financing
100% Financing
100% Financing
100% Financing
100% Financing
100% Financing
100% Holding company
100% Holding company

100% Domains registrar
100% Domains registry
100% Domains registry
100% Domains registry
100% Domains registry
100% Domains registry
100% Domains registry
100% Domains registry
100% ETF trading
100% Non-trading
100% Non-trading

Level 15, 55 Collins Street,
Melbourne VIC 3000
Australia

Ordinary shares

100% Sales and marketing office

IG Share Trading Australia Pty Limited

Ordinary shares

100% Non-trading

IG Asia Pte Limited

Kunxin Translation (Shenzhen) Co.
Limited

IG Securities Limited

9 Battery Road, 01-02 MYP
Centre, 049910 Singapore

Unit 04-L, Level 13, Tower 3,
Kerry Plaza, No.1 Zhong Xin
Si Road, Futian District,
Shenzhen 518048, P.R. China

Shiodome City Centre, 1-5-2
Higashi-Shinbashi,
Minato-ku, Tokyo, 105-7110
Japan

Ordinary shares

100% CFD trading and foreign

exchange

Ordinary shares

100% Translation services

Ordinary shares

100% CFD trading and foreign

exchange

FXOnline Japan Co. Limited

Ordinary shares

100% Non-trading

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31. LIST OF INVESTMENTS IN SUBSIDIARIES CONTINUED

Name of Company

IG Europe GmbH

IG Bank S.A.

IG Infotech (India) Private Limited

IG US Holdings Inc.

North American Derivatives
Exchange Inc.
Market Risk Management Inc.
FX Publications Inc
Nadex Domains Inc.

IG US LLC

Fox Sub Limited

Fox Sub Two Limited
Fox Japan Holdings

IG Limited

Brightpool Limited

IG Markets Kenya Limited

Registered office and
country of incorporation

Holding

Voting
rights

Nature of business

Berliner Allee 10, 40212
Düsseldorf, Germany

Ordinary shares

100% CFD trading and foreign

exchange

42 Rue du Rhone, Geneve,
1204 Switzerland

Ordinary shares

100% CFD trading and
foreign exchange

Infinity, 2nd Floor, Katha No
436, Survey No 13/1B, 12/2B,
Challagatta Village,
Bangalore, 560071 India

2711 Centreville Road,
Suite 400, Wilmington,
Delaware, 19808,
United States

57/63 Line Wall Road,
Gibraltar

Office 2&3, Level 27,
Currency House – Tower 2,
Dubai International Financial
Centre, P O Box – 506968
Dubai, United Arab Emirates

Christodoulou Chatzipavlou,
221 Helios Court, 3rd floor
3036, Limassol Cyprus

William House, Nairobi,
Nairobi West District,
PO Box 40111, Kenya, 00100

Ordinary shares

100% Software development

Ordinary shares

100% Holding company

Ordinary shares

100% Exchange

Ordinary shares
Ordinary shares
Ordinary shares

100% Market maker
100% Publications
100% Domains registry

Ordinary shares

100% Foreign exchange trading

Ordinary shares

100% Financing

Ordinary shares
Ordinary shares

100% Financing
100% Holding company

Ordinary shares

100% CFD trading and foreign

exchange

Ordinary shares

100% Market maker

Ordinary shares

100% Non-trading

Spectrum MTF Operator GmbH
Raydius GmbH

Westhafenplatz 1, 60327
Frankfurt am Main, Germany

Ordinary shares

100% MTF operator Issuer of
turbo warrants

The following UK entities, all of which are 100% owned by the Group, are not subject to an audit by virtue of s479A of the
Companies Act 2006 relating to subsidiary companies: IG Finance (05024562), IG Finance Two (05137194), IG Finance Three
(05297886), IG Finance 5 Limited (06752558), IG Finance 9 Limited (07306407), Financial Domaigns Limited (09233880),
Financial Domaigns Registry Holdings Limited (09235699), Financial Domaigns Registrar Limited (09235694), Financial
Domaigns (Services) Limited (09235591), DotMarkets Registry Limited (09237699), DotTrading Registry Limited (09237708),
DotCFD Registry Limited (09237733), DotBroker Registry Limited (09237714), DotForex Registry Limited (09237740),
DotSpreadbetting Registry Limited (09237702), InvestYourWay Limited (07081901), Deal City Limited (09635230) and
Extrabet Limited (04560348).

The following UK entities, all of which are 100% owned by the Group, are exempt from the requirement to prepare individual
financial statements by virtue of s394A of the Companies Act 2006 relating to the individual financial statements of dormant
subsidiaries: IG Nominees Limited (04371444), IG Finance Four (05312015), IG Spread Betting Limited (06806588),
IG Finance 8 Limited (06807656), IG Forex Limited (06808361) and IG Trading and Investments Limited (11628764).

Employee Benefit Trusts:
IG Group Holdings plc Inland Revenue Approved Share Incentive Plan (UK Trust)
IG Group Limited Employee Benefit Trust (Jersey Trust)
IG Group Employee Equity Plan Trust (Australian Trust)

174 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUEDIG GROUP HOLDINGS PLC FINANCIAL STATEMENTS

Primary Statements 176–178

Company Statement of Financial Position
Company Statement of Changes in Equity
Company Cash Flow Statement

176
177
178

Notes to the Financial Statements 179–181

1. Authorisation of financial statements

and statement of compliance with IFRS

2. Accounting policies
3. Auditors’ remuneration
4. Directors’ remuneration
5. Staff costs
6. Investment in subsidiaries
7. Cash generated from operations
8. Other payables
9. Other receivables
10. Share capital and share premium
11. Other reserves
12. Obligations under leases
13. Directors’ shareholdings
14. Risk management
15. Subsequent events
16. Distributable reserves
17. Dividends paid and proposed

179
179
179
179
179
179
180
180
180
180
181
181
181
181
181
181
181

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 175

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
COMPANY STATEMENT OF FINANCIAL POSITION

Assets
Non-current assets
Investment in subsidiaries

Current assets
Prepayments
Other receivables
Cash and cash equivalents

TOTAL ASSETS

Liabilities
Current liabilities
Other payables

Total liabilities

Equity
Share capital and share premium
Other reserves
Retained earnings

Total equity

TOTAL EQUITY AND LIABILITIES

Note

31 May 2019
£m

31 May 2018
£m

10
11

508.6

0.2
168.1
0.8

169.1

677.7

10.5

206.8
2.1
458.3

667.2

677.7

501.3

0.2
136.5
0.1

136.8

638.1

8.9

206.8
1.4
421.0

629.2

638.1

The financial statements of IG Group Holdings plc (registered number 04677092) were approved by the Board of Directors
on 23 July 2019 and signed on its behalf by:

Paul Mainwaring
Chief Financial Officer

176 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSCOMPANY STATEMENT OF CHANGES IN EQUITY

At 31 May 2017

Profit and total comprehensive income for the year

Equity-settled employee share-based payments
Employee Benefit Trust purchase of own shares
Equity dividends paid
Transfer of share-based payment reserve

At 31 May 2018

Profit and total comprehensive income for the year

Equity-settled employee share-based payments
Employee Benefit Trust purchase of own shares
Equity dividends paid
Transfer of share-based payment reserve

At 31 May 2019

Share
capital
£m

–

–
–
–
–

–

–
–
–
–

–

Share
premium
£m

206.8

–

–
–
–
–

206.8

–

–
–
–
–

206.8

Other
reserves
£m

Retained
earnings
£m

51.0

–

7.0
(4.3)
–
(52.3)

1.4

–

8.2
(2.0)
–
(5.5)

2.1

212.0

276.3

–
–
(119.6)
52.3

421.0

202.9

–
–
(171.1)
5.5

458.3

Total
equity
£m

469.8

276.3

7.0
(4.3)
(119.6)
–

629.2

202.9

8.2
(2.0)
(171.1)
–

667.2

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 177

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO
COMPANY CASH FLOW STATEMENT

Operating activities
Cash generated from operations
Income taxes paid

Net cash flow generated from operating activities

Investing activities
Interest received

Net cash flow used in investing activities

Financing activities
Interest paid
Equity dividends paid to owners of the parent
Employee Benefit Trust purchase of own shares

Net cash flow used in financing activities

Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Impact of movement in foreign exchange rates

Cash and cash equivalents at the end of the year

Note

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

173.8
–

173.8

–

–
(171.1)
(2.0)

(173.1)

0.7
0.1
–

0.8

125.5
–

125.5

–

(1.5)
(119.6)
(4.3)

(125.4)

0.1
–
–

0.1

178 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS

1. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS

The financial statements of IG Group Holdings plc (the Company) for the year ended 31 May 2019 were authorised for
issue by the Board of Directors on 23 July 2019 and Statement of Financial Position was signed on the Board’s behalf by
Paul Mainwaring. IG Group Holdings plc is a public limited company, which is listed on the London Stock Exchange and
incorporated and domiciled in England and Wales. The address of the registered office is Cannon Bridge House,
25 Dowgate Hill, London, EC4R 2YA.

The Company’s financial statements have been prepared in accordance with EU adopted International Financial Reporting
Standards (IFRS), interpretations issued by the IFRS Interpretations Committee (IFRS IC) and with the Companies Act 2006
applicable to companies reporting under IFRS. The financial statements have been prepared under the historical
cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the Company’s accounting policies. There
are no significant areas of judgement or complexity, or areas where assumptions and estimates are significant to the
Company financial statements.

2. ACCOUNTING POLICIES

The accounting policies applied are the same as those set out in note 30 of the Consolidated Financial Statements except
for the following:

Investments in subsidiaries are stated at cost less accumulated impairment losses.

The Company has share-based payment schemes involving employees of its subsidiaries. The costs of awards under these
schemes is recognised as an increase in the investment in the employing subsidiary.

Dividends receivable are recognised when the shareholder’s right to receive the payment is established.

As permitted by Section 408(1)(b), (4) of the Companies Act 2006, the individual income statement of IG Group Holdings plc
(the Company) has not been presented in these financial statements. The amount of profit for the year included within the
financial statements of IG Group Holdings plc is £202.9 million (31 May 2018: profit for the year of £276.3 million). A
statement of comprehensive income for IG Group Holdings plc has also not been presented in these financial statements.
No items of other comprehensive income arose in the year (31 May 2018: £nil).

3. AUDITORS’ REMUNERATION

Auditors’ remuneration is disclosed within note 4 of the Consolidated Financial Statements.

4. DIRECTORS’ REMUNERATION

Directors’ remuneration is disclosed within the Director’s Remuneration section of the Annual Report.

5. STAFF COSTS

The Company has no employees (31 May 2018: nil).

6. INVESTMENT IN SUBSIDIARIES

At cost:

At the beginning of the year
Additions in the year

31 May 2019
£m

31 May 2018
£m

501.3
7.3

508.6

494.5
6.8

501.3

Additions in the year relate to equity-settled share-based awards for employees of the subsidiaries.

A full list of the Group’s directly and indirectly owned subsidiaries is provided in note 31 of the Consolidated Financial
Statements.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 179

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO

7. CASH GENERATED FROM OPERATIONS

Operating activities
Operating loss
Dividends received
(Increase) in trade and other receivables
(Decrease)/Increase in trade and other payables

Cash generated from operations

Operating losses comprise of legal and professional fees and external audit fees.

8. OTHER PAYABLES

Accruals
Amounts due to Group companies

9. OTHER RECEIVABLES

Amounts due from Group companies:
– Market Data Limited
– IG Markets Limited
– Other Group companies
Other debtors

Year ended
31 May 2019
£m

Year ended
31 May 2018
£m

(7.0)
209.9
(32.0)
2.9

173.8

(2.0)
280.0
(3.3)
(149.2)

125.5

31 May 2019
£m

31 May 2018
£m

2.7
7.8

10.5

4.5
4.4

8.9

31 May 2019
£m

31 May 2018
£m

130.9
32.6
4.5
0.1

168.1

129.9
4.8
1.7
0.1

136.5

Under the Group’s cash management framework, entities holding cash that is surplus to short-term requirements lend the
money to another group entity. These amounts are repayable on demand and are non-interest bearing.

10. SHARE CAPITAL AND SHARE PREMIUM

Share capital and share premium is disclosed within Note 21 of the Consolidated Financial Statements.

180 IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019

FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED11. OTHER RESERVES

At 31 May 2017
Equity-settled employee share-based payments
Exercise of UK share incentive plans
Employee Benefit Trust purchase of shares
Transfer of share based payments reserve

At 31 May 2018
Equity-settled employee share-based payments
Exercise of UK share incentive plans
Employee Benefit Trust purchase of shares
Transfer of share based payments reserve

At 31 May 2019

12. OBLIGATIONS UNDER LEASES

Share-based
payments
£m

Own shares held
in Employee
Benefit Trusts
£m

Total other
reserves
£m

54.3
7.0
(0.2)
–
(52.3)

8.8
8.2
(0.9)
–
(5.5)

10.6

(3.3)
–
0.2
(4.3)
–

(7.4)
–
0.9
(2.0)
–

(8.5)

51.0
7.0
–
(4.3)
(52.3)

1.4
8.2
–
(2.0)
(5.5)

2.1

Operating lease agreements
The Company has entered into commercial leases on certain properties. Future minimum rentals payable under non-
cancellable operating leases are as follows:

Future minimum payments due:
Not later than one year
After one year but not more than five years
After more than five years

31 May 2019
£m

31 May 2018
£m

1.8
7.4
1.4

10.6

1.8
7.1
3.2

12.1

13. DIRECTORS’ SHAREHOLDINGS

The Directors of the Company hold shares as disclosed in the Group Annual Report.

14. RISK MANAGEMENT

Financial risks arising from financial instruments are managed at a Group-wide level and details are in the Risk Management
section of the Group Annual Report.

Credit risk
Held within other receivables in the Statement of Financial Position of the Company are amounts receivable by the Company
from related parties that are unrated. The Directors consider the Company’s receivables to be recoverable as they are with
Group companies and the Companies have adequate resource to ensure repayment in full. Therefore, credit risk is minimal.

Liquidity risk
The Company is able to obtain financial support from other Group companies if this is needed. Therefore, liquidity risk
is minimal.

15. SUBSEQUENT EVENTS

The subsequent events of the entity are the same as those disclosed in the notes to the Group Consolidated Financial
Statements in note 29.

16. DISTRIBUTABLE RESERVES

Of the £458.3 million of retained earnings as at 31 May 2019 (31 May 2018: £421.0 million), £327.8 million is considered
distributable (31 May 2018: £290.5 million).

17. DIVIDENDS PAID AND PROPOSED

The dividends paid and proposed by the entity are the same as those disclosed in the notes to the Group Consolidated
Financial Statements in note 10.

IG GROUP HOLDINGS PLC I ANNUAL REPORT 2019 181

COMPANY OVERVIEWSTRATEGIC REPORTGOVERNANCE REPORTFINANCIAL STATEMENTSSHAREHOLDER AND CO. INFO

SHAREHOLDER AND COMPANY INFORMATION

SHAREHOLDER INFORMATION