IG Group Holdings Annual Report 2020

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FY2020 Annual Report · IG Group Holdings

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Leading
the field.
Thinking
bigger.

IG GROUP HOLDINGS PLC
ANNUAL REPORT 2020

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.

INTRODUCTION 01–17

Highlights 2020

Chairman’s Statement

Chief Executive Officer’s Statement

Strategic Progress

STRATEGIC REPORT 18–73

Strategic Update

Key Performance Indicators (KPIs)

Stakeholder Engagement

Section 172(1 ) Statement by the Board

Business Model and Risk Profile

Key Trends and Factors Likely to Affect Our Business 36

Overview of the 2020 Financial Year

Operating and Financial Review

Risk Management

ESG Report

Going Concern and Viability Statement

GOVERNANCE REPORT 74–151

Chairman’s Introduction to Corporate Governance 76

Corporate Governance Statement

The Board

Board Governance

Nomination Committee Report

Directors’ Remuneration Report and Policy

Audit Committee Report

Board Risk Committee Report

Directors’ Report

Statement of Directors’ Responsibilities

Independent Auditors’ Report

FINANCIAL STATEMENTS 152–206

129

137

140

143

144

THIS REPORT IS ONLINE AT
IGGROUP.COM

SHAREHOLDER AND COMPANY INFORMATION 207–209

Shareholder and Company Information

Glossary of Terms

207

209

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Highlights
2020

REVENUE1

£649.2m

(2019: £476.9m)

PROFIT BEFORE TAX

£295.9m

(2019: £194.3m)

NET OWN FUNDS GENERATED FROM OPERATIONS2

£287.9m

(2019: £159.7m)

BASIC EARNINGS PER SHARE

65.3p

(2019: 43.1p)

TOTAL DIVIDEND PER SHARE

43.2p

(2019: 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. For more detail, see our Key Performance Indicators on pages
22 and 23.

FOR MORE INFORMATION
PG. 41–49

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

InTRODuCTIOn

PG. 02–17

Chairman’s Statement

Chief Executive Officer’s Statement

Strategic Progress

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

INTRODUCTION

Achieving
our global
potential

MIKE McTIGHE
CHAIRMAN

Chairman’s
Statement

It was a great privilege to
become Chairman of the
Board in February 2020.
I’ve long admired IG and its
46-year history as an ethical,
high-integrity provider of
financial products and
services to clients – offering
them a platform to access
the global markets they
want to trade.

When I look back at the repositioning
of IG that has taken place over the
last 12 months, it’s been an incredible
period of both positive progress and
continued strategic development.
IG is now better placed than ever
for the opportunities in front of us.
We’ve learned some valuable lessons
while making significant changes
to the top team, and have and will
continue to enhance our governance.
We’ve also worked hard to build trust
with our key stakeholders – vital
steps that will make us stronger as a
Board and stronger as a company.

Significant and critical progress
against the new strategy
We’ve enjoyed fantastic performance
over the last four months of the
financial year in particular, and
demand from our clients has never
been greater. High levels of market
volatility gave existing and new clients
unprecedented opportunities to
trade our products, driving revenue
generation and, importantly, growing
our high-quality client base for the
future. Looking at the financial year
as a whole, we made significant and
critical progress against the new
strategy we outlined in May of last year.

Our strategy was predicated on new
products, new markets and combining
the benefits of our scalable platform
with local focus. During the year we
launched Spectrum, our European

multilateral trading facility, while in the
US we grew our US RFED and DailyFX
businesses. In the Asia region, we
saw excellent performance in Japan
thanks to a new, localised offering,
and our new Chief Executive Officer
for Greater China is poised to drive
and develop our business there, which
offers a tremendous opportunity.

The momentum we’ve built in each
of our Core Markets together
with our portfolio of Significant
Opportunities has been encouraging,
and further positions IG as a
global, diversified business.

Resilience of the Company
To be able to perform as strongly as
IG has done over the past year – even
prior to Covid-19 and the resulting
market volatility – is testament to
the resilience of the Company. IG
has always had relentless ambition
to keep innovating and improving
our platform, working to deliver new
functionality and capabilities for our
clients. This year we’ve experienced
incredible volumes, which demands
that we accelerate investment in our
technology and resilience. I’m sure
we’ll start to see the benefits of this
investment coming through, in an
improved experience for our clients.

What makes me most proud is
the evident commitment of our
people and the strong and enduring
relationship we have with our high-
quality, sophisticated client base.
It’s at the heart of everything we do
and underpins our business model.
Our employees set us apart, and
I’m delighted that during the 2020
financial year we’ve continued to
build out our strength in depth across
all levels within the business.

Invaluable to IG’s growth ambitions
Andy Green stepped down as Chairman
of the Board at the conclusion of
the AGM on 19 September 2019.
I would like to record the Board’s
appreciation for Andy’s contribution

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

We feel positive about the
talent we have on board
and the continued progress
we’re making on the
journey to realise our global
potential. IG is only one year
into our three-year strategy.
We know there’s more road
to be travelled, but we’re
confident that we’re picking
up momentum. The best
part of IG’s journey is yet
to come.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

INTRODUCTION

Chairman’s
Statement
CONTINUED

to IG over more than five years and
wish him well for the future. I would
also like to thank Jonathan Moulds for
all of his hard work when he stepped
in as Interim Chairman between
September 2019 and February 2020.

At the end of the financial year, Paul
Mainwaring retired as Chief Financial
Officer (CFO). Charlie Rozes took
over as an Executive Director and
CFO with effect from 1 June, after an
extensive independently facilitated
search. Charlie brings significant
international, UK plc and Executive
Director experience, which will be
invaluable to IG’s growth ambitions.
On behalf of the Board, I’d like to thank
Paul for his significant contribution in
supporting the business and helping
IG to successfully navigate a period
marked by significant regulatory
change. I wish him well for the future.

I’m very excited about the opportunity
to build a more coherent and
effective Board for IG. As part of our
continued focus on adding to the
depth and experience of the Board,
Andrew Didham and Helen Stevenson
were appointed as Non-Executive
Directors in September 2019 and
March 2020 respectively. In addition,
after the financial year-end, we’ve
further strengthened the diversity
of the Board with the appointment
of Rakesh Bhasin as a Non-Executive
Director. Rakesh brings significant
global experience, particularly of
the Asia-Pacific region. I’d also like
to thank Stephen Hill, who retired
from the Board in April 2020 after a
nine-year tenure, for his hard work.

I’m very excited about the
opportunity to build a more
coherent and effective
Board for IG.

Our clients are at the heart
of everything we do
We fully recognise our responsibilities
to all our stakeholders. IG will continue
to face outwards and communicate
regularly and effectively with all our
key audiences, mirroring the hands-on
approach we take with our employees
and our clients. Our clients are at the
heart of everything we do, and the
heightened market volatility we’ve
witnessed this year has been a fantastic
reminder of why so many sophisticated
traders choose to trade with IG.

As a responsible innovator, our
regulators are a key stakeholder for
our business. We’ll continue to listen
to and engage with them over our
shared goal of best-in-class investor
protection, so we can truly differentiate
ourselves in our industry. IG continues
to build on the proactive working
relationships and constructive dialogue
we have with our regulators in every
jurisdiction where we operate.

The best part of IG’s journey
is yet to come
We’ll deliver a 43.2 pence per share
dividend in the 2020 financial year.
We’re continuing to find ways to
reposition ourselves in the minds of all
our stakeholders, evolving to become a
truly global, diversified and responsible
financial services business. IG is only
one year into our three-year strategy
and, while we know there’s much more
to do, we’re confident that we’re picking
up strong momentum – and that the
best part of IG’s journey is yet to come.

MIKE McTIGHE
CHAIRMAN
23 July 2020

We’ll continue to broaden the skills,
experience and diversity of the Board by
recruiting an additional Non-Executive
Director, and we’re progressing well
with this search. In our strategy, we’ve
put a lot of emphasis on developing our
portfolio of Significant Opportunities in
the US, Japan, China, Emerging Markets
and Europe – through Spectrum, as
well as our newly launched IG Prime
institutional business. To support that,
we need to keep seeding the Board
and IG as a whole with additional,
relevant skill, talent and experience.
This will help us more fully understand
how to operate successfully and
sustainably in those markets. A natural
by-product of this will be a more
ethnically and culturally diverse Board.

Deliver a more global, diversified
and sustainable business
I look forward to developing my role
to help bring it all together, so that the
Board functions as a collaborative and
high-performing team – one that has
the strong governance expected of a
FTSE 250 company, and everything
we need to effectively oversee the
strategy laid down by June and her team
last year. This will position us to hit our
strategic growth targets and deliver a
more global, diversified and sustainable
business. The most important thing
now is to execute our strategy,
which I’m confident all levels of the
Company will successfully deliver on.

None of this would be possible
without IG’s values and culture.
The culture at IG revolves around
an entrepreneurial, high-energy
and collegial mentality, which is what
allows it to innovate and evolve so
successfully. During the pandemic
this has continued unabashed, with
colleagues finding clever and creative
ways of encouraging each other to
get involved, and to remain socially
connected while socially distancing.
It was a fantastic response to keep
engagement high, especially for those
colleagues working and living on their
own, and one that showed very clearly
the culture of thoughtfulness and
camaraderie that exists in this business.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Our purpose
We exist to empower informed,
decisive, adventurous people
to access opportunities in the
financial markets.

Our values

CHAMPION
THE CLIENT

LEAD
THE WAY

LOVE WHAT
WE DO

Our vision
To provide the world’s best
trading experience.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

INTRODUCTION

Strive to be
more for
everyone

JUNE FELIX
CHIEF EXECUTIVE OFFICER

Chief executive
Officer’s Statement

I’m delighted to update you on
the progress IG has made this
financial year.

Our primary focus is to provide a first-
class service to sophisticated individual
and institutional clients wanting to
trade complex products across a range
of financial markets. They choose IG
because of the strength of our brand
and our long-standing reputation as
a responsible partner and innovator.
We actively work to help our clients
achieve the best possible trading
experience through our strong client
service, expanding array of innovative
products, technology, tools and
educational content. Unlike many of
our competitors, our differentiated
business model is aligned with helping
our clients succeed, and we don’t
benefit from client losses. Put simply,
our clients make our business. During
the 2020 financial year, we experienced
record client growth thanks to our
investment in our platform, the trust in
our brand and the extraordinary macro-
economic backdrop. While the longer-
term behaviour of these new clients is
hard to predict once we return to more
normalised market conditions, we do
enjoy market-leading client loyalty.

I’m proud of the progress we’ve made
since our strategy launch in May
last year. The solid foundations and
underlying growth that we established
in Q1 to Q3, in combination with the
high market volatility in Q4, resulted in
a record-breaking performance for the
2020 financial year. While we recognise
that this period has been exceptional
because of the impact of Covid-19
on our business, the underlying
execution of our strategy shows that
our focus on achieving sustainable
growth and attractive shareholder
returns remains firmly on track.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Significant investment in our people,
communications and technology meant
that during lockdown our teams around
the world seamlessly transitioned to
home working and still felt connected
to IG’s vibrant global community. IG is a
fantastic company with talented people
at its heart. I’m incredibly proud of how
we’ve acted with agility and expertise,
both for the benefit of our clients and in
executing our strategy in a challenging
external environment. As a company,
we’ve always ensured our people and
their families had the support they
needed throughout the pandemic.

Covid-19 triggered extraordinary
trading volumes during months of
unprecedented market volatility. We
handled a sustained surge in trading
flows and onboarded a large number
of new clients – drawn to us by the
investment we’ve made in our platform
and our reputation for delivering the
best service in testing circumstances.
I commend all of our people for their
unwavering resilience, professionalism
and commitment to serving our clients
across this challenging period.

Key achievements
In May 2019, we announced our new
strategy and three-year growth plan.
We set out medium-term targets to
achieve an average annual growth
rate of 3–5% per annum in our well-
established Core Markets, and to
expand our business by an additional
£100 million of revenue through
a portfolio of growth initiatives –
described in our strategy as Significant
Opportunities – by the 2022 financial
year. We remain confident in achieving
these targets, and as previously set out,
we’re delivering a 43.2 pence per share
dividend in the 2020 financial year.

IG is a fantastic company
with talented people at its
heart. I’m incredibly proud
of how we’ve demonstrated
agility and expertise, both
for the benefit of our clients
and in executing our
strategy in a challenging
external environment.

Our strategy

OUR
STRATEGIC
CHOICES

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

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

INTRODUCTION

Chief executive
Officer’s Statement
CONTINUED

As part of this strategy, we identified
four growth levers to achieve our
targets. We’re at different stages
of execution across our portfolio of
Significant Opportunities but are seeing
progress in all areas.

Expanded distribution channels
Our intention is to create partnerships
that accelerate and expand our global
reach, supplementing our heritage of
organic growth in selected key markets.

We’ve made encouraging progress
across the year. We’ve strengthened
our Asia presence by recruiting key
people with strong local networks
and expertise gained from working
with banks, stockbrokers and hedge
funds. Advanced discussions are also
under way with potential corporate
partners who have large client bases
in Hong Kong and Japan. These large
distribution partnerships require
long lead times to negotiate, reach
agreement and to implement, and are
a critical component of our long-term
strategy. We are integrating the first
non-IG broker on Spectrum, which
will expand our reach in Europe.

Current and potential partners
recognise IG’s market-leading
technology, our expertise in delivering
innovative new products, and our
ability to seamlessly make markets that
can be traded 24 hours a day. We’re
excited by the initial response from
global institutions whose existing client
reach, when complemented by our
technological capabilities and product
suite, will enable us to attract, grow,
and retain a broader range of clients.

A global firm with more local focus
In the past year we recruited new
senior leaders in several markets
outside the UK, who have quickly
helped drive our overall progress
through their local expertise and
contacts. We’ve also adapted and
enhanced our global products and
marketing to better meet local needs.

For example, we’ve used local Japanese
consumer research to fundamentally
redesign our platform. It now looks and
operates in a way that best resonates
with potential new Japanese clients.

Our growth levers are:

Expanded distribution channels
¼¼ Creating corporate partnerships that
accelerate and expand our reach

A global firm with more local focus
¼¼ Broadening our global network,

tailoring products and marketing
to local needs

Segmented target markets
¼¼ Customising our offering for our

three client segments – high-value,
retail and institutional

Multi-product
¼¼ Continuing to expand the trading

opportunities for our clients through
new and innovative products

We’re excited about our
growth journey to become
an even bigger, broader
global trading platform for
sophisticated clients.

We’ve worked with a high-profile,
local brand ambassador to support
our localised marketing efforts and
reinforce our brand aspirations in Japan.
These efforts resulted in substantial
client growth in our Japanese business,
within a market of £1 billion in
revenues and over 2 million traders.

We’ve seen progress in our local
engagement and recruitment across
other geographies, too. The new
leveraged US FX trading capability we
launched in Q3 of the 2019 financial
year is adding clients at an accelerating
rate. Our DailyFX offering has grown
by 71% year on year and reached over
27 million unique global readers. In
Emerging Markets, across jurisdictions
where we don’t have a physical
presence, we’ve seen our year-on-
year revenues increase significantly.
In Hong Kong, we’ve opened a new
office to establish a presence in
Greater China, and are in advanced
discussions with corporate partners to
serve the professional investor market
in Hong Kong. We estimate that there
are 500,000 professional investors in
Hong Kong and a £1 billion market in
products similar to those we offer in
other parts of the world, and Greater
China has over 4 million individuals who
may qualify as professional investors.

Segmented target markets
We’ve continued to customise our
offering for our three key client
segments (high value, retail and
institutional) to ensure it effectively
meets the needs of each.

For our high-value segment, we
continually listen to their needs and
experiences by supplying new and
real-time content, tools and webinar
events with keynote speakers to
support their sophisticated trading
strategies. For retail clients, IG Academy
provides educational resources, both
on desktop and on the go via a mobile
app. Retail clients also have access to
an enhanced library of trading videos
and courses, with interactive tests so
they can check their understanding.

We identified the underserved small
hedge fund and family office segment
as a potential £500 million market
opportunity for IG. With this segment
in mind, and despite the Covid-19 crisis,
we continued with the launch of IG
Prime in March. As IG Prime develops
further, it will give institutional clients
access to an increasingly broad suite of
prime brokerage services, all supported
by our global client network. It’s early
days, but we’ve had a great response
from this new target segment – with
institutional active client growth of 59%
from the 2019 financial year to 2020.

Multi-product
Designing and launching innovative
trading products is a critical element
of our strategy, and we’ve continued
to expand our unique multi-product
range into broader markets. In
October 2019, we launched turbo24s
on Spectrum, IG’s pan-European
multilateral trading facility (MTF). These
products are unique in allowing clients
to trade turbo warrants 24 hours a
day, five days a week. The launch was
an important step in our strategy,
bringing a new, limited-risk product
into a well-regulated £1 billion market.

We’ve also strengthened our German
leadership team for Spectrum and
our German branch in order to
more fully exploit the potential of
our pan-European turbo24 product
throughout Europe. We’re already
attracting new clients to IG and have
seen positive and consistent growth
since Spectrum was launched.

We’re continually improving to meet
the needs of active turbo traders,
which make up a large proportion of
the European securitised derivatives
market. Spectrum is currently
onboarding its first third-party broker,
which will enable the exchange to
offer its expanding product set to a
wider array of potential clients and
will mark a significant moment in its

evolution. In addition, discussions are
ongoing with multiple large issuers
who have publicly expressed an
interest in working with Spectrum.

By evolving our product range we
deepen our relationships with clients
who trust our brand and are interested
in the innovative new services we
can provide. We’ve also refreshed
our stock trading offering to provide
a more compelling proposition and
a better trading experience. We’ve
had encouraging client feedback on
these initiatives, resulting in new client
growth and more cross-sell clients.

A responsible market leader
At IG, we’re mindful of the
responsibilities we have to all our
stakeholders – our people, our clients,
our shareholders, our regulators
and the communities of which we
are a part. As further evidence
of our continued commitment to
being a responsible market leader,
this year we’ve strengthened our
new environmental, social and
governance (ESG) programme.

Inspired by employees, we launched
the IG Brighter Future initiative –
a commitment to managing our
environmental impact and improving
educational equality and social mobility.

In focusing on these two themes, we’re
following the wishes of IG employees,
who, when asked to vote how they’d
like to see the business develop its
ESG agenda, overwhelmingly opted
for these choices. Importantly, this is
a global scheme, supporting all the
communities in which we operate –
and we’ve made significant progress.

To deliver on our theme of education
and empowerment, I’m incredibly
proud that we set aside £5 million
from this year’s earnings to improve
educational opportunities for the
least privileged young people in
the communities we belong to.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

ESTABLISHED THE

£5m

IG BRIGHTER FUTURE FUND

150m

SECURITISED DERIVATIVE
CONTRACTS TRADED
ON SPECTRUM IN THE LAST
EIGHT MONTHS OF FY20

Core Markets
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.

STRATEGIC PROGRESS
PG. 16–17

Significant
Opportunities
Significant Opportunities
represent geographies,
client segments and product
segments where we
currently have a presence,
but where there are
opportunities to build on
our strengths, serve more
clients and deliver significant
revenue growth.

STRATEGIC PROGRESS
PG. 14–15

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

INTRODUCTION

Chief executive
Officer’s Statement
CONTINUED

This is the biggest community
commitment in IG’s history, and in the
UK we’ve already used £2 million to
build even closer ties with Teach First
– a brilliant charity working to build a
fair education for all. This fund builds
on the partnership we established with
Teach First last year, and will tackle
Covid-19’s impact on the education of
the UK’s most vulnerable young people.

We’ve also formed a similar partnership
with Teach For All, which will enable
us to reach children in the other
countries where we operate, and
have set aside £2 million to work with
a range of their network partners
in the communities of which we are
a part. The remaining £1 million will
be used by IG teams to fund smaller
local-led initiatives to support their
own individual communities.

Following several years of carbon
emissions reductions relative to
headcount, in the 2020 financial year
we entered into a programme of
activities, including carbon offsetting,
to achieve full carbon neutrality. As
of July 2020, we are a carbon-neutral
company in line with PAS 2060.

To oversee all this activity – and
underlining our long-term commitment
to ESG – IG has also recently welcomed
our first-ever ESG Manager. This new
role will coordinate and build on our
approach, ensuring we deliver the
best impact possible.

Beyond this, our values – lead the way,
love what we do and champion the
client – guide us in our daily activities
and provide the foundation for IG’s
culture. These are powerful statements
and resonate loudly in IG. I see them
in action every day, evident in our
behaviours and decision-making.

We’ve a long-standing tradition
of innovation, as we address the
evolving needs and interests of our
sophisticated clients. As a responsible
company, we regularly engage with
regulators globally to stay aligned
as these authorities adapt to the

changing needs of their markets.
We’ve navigated well when regulations
have changed in the past, and believe
we have the depth and breadth to
continue to do so as markets evolve.

to deliver a consistent global brand for
IG across all markets. This will further
position IG as a global leader in online
trading and a trusted partner during
this year of record client acquisition.

I’m pleased by the way we’ve built
new products and client offerings,
while always placing appropriateness
and good client outcomes as our
top priority. Part of the reason that
nearly 240,000 clients choose IG
is that our own success is aligned
with theirs, thanks to our business
model that actively hedges client
positions. This is a key differentiator
that makes us more sustainable,
focused on long-term growth, and
able to put our values into action.

Expert at what we do
During our 46-year history, IG has
developed a set of core competencies
that sets us apart from the competition.
This year we’ve been able to leverage
these to aid us on our growth journey.

Our business model means that
our revenue is earned from client
transaction fees, driven by client
volumes, and not positively or negatively
impacted by client performance. This
approach has positioned us well during
recent market volatility.

We’ve continued to show our
innovation and deep-rooted technical
capabilities, having launched our new
MTF, turbo24s and options accounts
in Europe. We keep working to
apply new technologies to enhance
our clients’ trading experience
globally, across our products.

We’ve also continued to build and
expand our marketing capabilities.
We’ve reduced the cost of each newly-
acquired client, by capitalising on our
multi-year investment in search engine
optimisation and our application of
science to make marketing spend more
efficient. This has paid dividends, best
showcased by the consistent quality
of our newly acquired clients – even
during Covid-19 volatility. On top of this,
we’re successfully executing a rebrand

Throughout IG’s journey, we’ve
developed deep risk management
expertise, and have well-established
processes and technology to identify
and actively manage risk. During
periods of the highest volatility ever
seen in the financial markets, our robust
risk-management process was key
in responding to the risks that arose.
We’ve shown our many stakeholders
that we have the capability and capacity
to manage the risks we face, and can
continue to operate successfully under
extremely stressed market conditions.

Our people and culture
Our progress is testament to IG’s
people: their commitment, work ethic
and unfaltering drive to live our values
and do what’s best for this business
and our clients.

We employ loyal, dedicated, richly
talented individuals with a passion
to deliver. Our people remain our
greatest asset, allowing us to stand
apart from our competition both in
our capabilities and our conduct.

Covid-19 also highlighted the caring
and charitable side of our workforce,
with colleagues organising fundraising
activities, sourcing equipment for care
workers and donating food to the less
fortunate. In London, for example,
a matched-giving scheme saw our
people raise more than £70,000 for
the National Emergencies Trust; in
Krakow colleagues donated protective
medical kit to their local hospital; in
Paris teams provided meals for medical
staff; in Germany employees donated
supplies to food banks; and in the US,
India, Singapore and Australia our
teams delivered funding for a range
of local charities providing support
to those affected by the pandemic.

Such acts of kindness and social
responsibility are typical of the people

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

we have at IG, and I’m touched by
the way colleagues responded
to Covid-19 in their local areas,
but also how they supported and
looked out for one another.

Diversity and inclusion
I’ve always believed in meritocracy and
the transformative power of diversity
of thought at all levels throughout an
organisation. For any firm, such values
are important for success. For us – a
global business with a local focus, an
organisation that places innovation at
its core – they’re absolutely crucial, and
we have more to do to achieve them.

Our new employee-led IG Black
Network is helping us create a culture
that’s more inclusive, aware of bias
and rich in diversity. We’re working
on expanding our efforts to ensure
that our culture is attractive to
employees from all backgrounds so
that learning and growth can take
place in an open atmosphere.

The IG Black Network joins our existing
family of diversity networks that include
IG Open, our LGBTQ+ network, IG
Pact, our parent and carers network
and IG Inspire, our women’s network.

In this context, I’ve been especially
pleased to welcome a number of
senior women to executive roles. All
of them are bringing fresh thinking
to our business and enriching
our already wide talent pool.

In our international offices and other
business entities, I’ve also been
delighted to see us hire individuals
with deep local expertise – people
who understand the characteristics
of their markets and the requirements
of clients in their region. This idea is
central to our strategy of becoming
a global firm with more local focus.
Our recruitment approach is
clearly aligned to that ambition.

It’s not only in hiring new colleagues
that we’ve championed diversity and
encouraged fresh thinking. Internally,
too, many people have changed roles

and been promoted into jobs outside
of what could narrowly be deemed
their ’area of expertise‘. We like to
cultivate internal talent – it’s one of
the things I believe has made us such
an enduringly successful business
over more than four decades. By
exposing our people to different areas
of our business, we offer individuals a
chance to shine and to develop their
own careers, and allow for the cross-
fertilisation of ideas and approaches.

Looking forward
2020 is the first full financial year
since the European Securities and
Markets Authority (ESMA) implemented
new regulatory changes that impacted
a large part of our core business.
Our robust business model and
new strategy faced these changes
head on and adapted to a new
market landscape.

We’ve experienced record client
demand and results, driven in part by
the exceptional external forces, we’ve
dealt expertly with the human and
tactical implications of coronavirus
and, importantly, made strong progress
against our medium-term growth
targets. It’s been a successful first
year in our three-year growth journey,
and I’m pleased with the strategic
progress and results we’ve achieved.

We remain firmly on track to achieve
our medium-term targets of a 3–5%
annual growth rate in our core markets,
and to add an additional £100 million in
revenue from the £60 million delivered
in the 2019 financial year from our
portfolio of Significant Opportunities
by the end of the 2022 financial year.

Our strategy has gained great traction
and we enter the 2021 financial year as
a business with momentum, capability
and ambition. Given our innovative
mindset, we also evaluate the broader
opportunities open to IG as we consider
how best to serve our clients, and
we’ll continue to assess these as we
execute on our central strategy.

As we set out on the second year of our
three-year growth journey, we’ve every
reason to remain excited by the future
and confident in our ability to deliver
what we set out to achieve. Working
with our talented team, including our
new Chairman, Mike McTighe, and new
Chief Financial Officer, Charlie Rozes,
who both bring broad, international
experience and knowledge, I’m looking
forward to leading the business over
the coming years to deliver positive
results for all of our stakeholders.

JUNE FELIX
CHIEF EXECUTIVE OFFICER
23 July 2020

Key strengths

¼¼ Our business model and

risk management

¼¼ Our brand and reputation

¼¼ Our clients and client

experience

¼¼ Our technology and

innovation

¼¼ Our conduct and standing

with regulators

¼¼ Our people and culture

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

INTRODUCTION

Leading
the way
globally

Our aim is to empower sophisticated clients to
access unique opportunities in the financial
markets. Responsible innovation to meet our clients’
evolving needs and interests has helped drive our
growth throughout our history.

JUNE FELIX
CHIEF EXECUTIVE OFFICER

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Strategic
progress

Significant
Opportunities
We’re pleased with
our progress to
advance our platform
on a global basis.
We’ve achieved this
by developing new
partnerships and
new products in new
geographies, as well
as by tailoring our
offering in tune with
local needs.

OUR
STRATEGIC
CHOICES

Japan

Greater China

¼¼ More than doubled our client base

in a market with a £1 billion revenue
opportunity

¼¼ Moved forward with our plans to develop
and grow our Greater China business

¼¼ Appointed an experienced Chief

¼¼ Appointed a high-quality Japanese

Executive Officer

Chief Executive Officer

¼¼ Drove strong client acquisition through

multi-channel marketing and optimisation
of onboarding process

¼¼ Completed localisation of platform

and brand

¼¼ Made encouraging progress on

partnership discussions to expand
our product reach

¼¼ Continued developing a stream of
innovative new products, offering
real USPs for clients

¼¼ Opened a new Hong Kong office to
establish a presence in the region

¼¼ Held discussions with corporate partners
to serve the high-value investor market
in Hong Kong
– Hong Kong potentially has 500,000

professional investors

¼¼ Advanced partnership discussions with
major banks and securities firms in
Hong Kong

TRADERS IN JAPAN

POTENTIAL PROFESSIONAL
INVESTORS IN GREATER CHINA

europe

¼¼ Progression on our plans across our US
businesses, which offers a compelling
proposition

¼¼ Focused on integration of our three US
businesses (RFED, DailyFX and Nadex)
to amplify the IG brand and the US
opportunity

¼¼ Maintained leadership for a RFED’s service

and price in the US OTC FX market
– Received industry awards recognising
the quality of both our service and
technology

¼¼ Reached over 27 million unique visitors
globally for our DailyFX website in 2020

¼¼ Launched and operated Spectrum, IG’s

pan-European 24-hour multilateral trading
facility (MTF)

¼¼ Introduced the unique facility for clients to
trade turbo warrants 24 hours a day, five
days a week

¼¼ Saw over 150 million securitised derivative
contracts traded with IG Europe in the first
eight months

¼¼ Made progress on expanding Spectrum’s

distribution opportunities through
additional brokers

¼¼ Launched unique intraday securities

issuance capability

¼¼ Launched new capability for Nadex,

¼¼ Continued discussions with additional

and are seeing early signs of renewed
momentum

issuers who have expressed a firm interest
in issuing products on Spectrum

c.705,000

FUTURES AND OPTIONS TRADERS
IN THE US

24/5

TRADING FROM SPECTRUM

FOR MORE INFORMATION
PG. 39

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

INTRODUCTION

Building on our
success in our
Core Markets

We have a deep understanding of our clients’
needs, enabling us to provide a world-class trading
platform, together with deep liquidity and seamless
access to trade over 17,000 global markets.

JUNE FELIX
CHIEF EXECUTIVE OFFICER

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

ESMA REGION

-2%

Q1–Q3 REVENUE

EMEA EX EU

+14%

Q1–Q3 REVENUE

SINGAPORE

+8%

Q1–Q3 REVENUE

AUSTRALIA

+10%

Q1–Q3 REVENUE

¼¼ Our overall performance in this financial
year is built on the growth established in
Q1 to Q3 period prior to the exceptional
increase in trading seen in Q4

¼¼ We focus on continuing to customise

our offering for our high-value, retail and
institutional client segments

¼¼ The resilience shown by our business
throughout Covid-19 built on our
significant investment in people,
communications, technology and our
core platform expertise

¼¼ Our successful navigation of the ESMA

product intervention in the 2019
financial year was followed by proactive
engagement with regulators

Strategic
progress
CONTINUED

Core
Markets
Our core business
includes our largest
established markets
where we already had
a prominent presence
and a significant share
in OTC leveraged
trading. Our core gives
us a strong foundation.
However, the strength
of our core also means
we can evolve to
become a broader
and more diversified
global trading platform
through growing
our Significant
Opportunities
portfolio.

OUR
STRATEGIC
CHOICES

FOR MORE INFORMATION
PG. 39

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

STRATeGIC
RepORT

PG. 18–73

Strategic Update

Key Performance Indicators (KPIs)

Stakeholder Engagement

Section 172(1 ) Statement by the Board

Business Model and Risk Profile

Key Trends and Factors Likely to Affect our Business

Overview of the 2020 Financial Year

Operating and Financial Review

Risk Management

ESG Report

Going Concern and Viability Statement

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Strategic
update

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

Our six strategic
choices underpin
how we operate
and are the guiding
principles we choose
to follow in pursuing
our vision.

Operate a sustainable
business model

extend our
geographic reach

OUR
STRATEGIC
CHOICES

provide the best
client experience

Broaden our
product range

Win with our
technology

Tailor client
propositions

Our values
define our culture and are
embedded by our employees
to enable us to succeed and
deliver against our strategy.

CHAMPION
THE CLIENT

LEAD
THE WAY

LOVE WHAT
WE DO

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Medium-term financial targets

REVENUE GROWTH

3–5%pa

IN THE CORE MARKETS

REVENUE

+£100m

BY FY22 (FROM FY19) TO £160M

Growth
levers

performance
in 2019/20

priorities
for 2020/21

expanded
distribution
channels

A global firm
with local
focus

Segmented
target markets

Multi-product

¼¼ Robust pipeline
under way in
Greater China,
Japan and
Europe

¼¼ Discussions

well advanced
in Hong Kong
and Taiwan
with major
banks and
stockbrokers

¼¼ Integration

of third-party
broker in
Germany

¼¼ Expand

partnership
opportunities
in Japan, Hong
Kong and
Taiwan

¼¼ Expand

partnerships
to additional
broker-dealers
in Italy, France
and other
European
markets

¼¼ Expand new

white-labelling
capabilities to
new markets

¼¼ Tailored global
product to
local tastes in
Japan

¼¼ Use of

well-known
local brand
ambassadors,
for instance,
in Japan

¼¼ Active dialogue
with a major
Japanese
securities firm

¼¼ More than

doubled our
client base in
Japan – FY20
vs FY19

¼¼ Capitalise and
tailor our US
product set for
the US market

¼¼ Develop our

search engine
optimisation,
social media
and local
content in
every market

¼¼ Continue

new array of
marketing
approaches
and
distribution
partnerships
already under
way

¼¼ Launched IG
Prime brand
for hedge fund
and family
office clients

¼¼ IG Prime

benefited
from new
management
hires with
strong prime
brokerage
expertise

¼¼ Augmented

IG Prime sales
force

¼¼ Further build
out IG Prime
and expand
suite of
capabilities for
institutional
segment

¼¼ Continue to
drive new
enhancements
and customised
products for
our professional
clients

¼¼ Position

IG for the
transitioning
of Australian
clients to
wholesale

¼¼ Launched

Spectrum, IG’s
pan-European
multilateral
trading facility
(MTF)

¼¼ Achieved

around 40%
out-of-hours
trades in Q4
on Spectrum,
showing key
USP for clients

¼¼ 150 million
securitised
derivative
contracts
traded in the
last eight
months of FY20

¼¼ Introduce
exchange-
traded equities
to Spectrum

¼¼ Introduce new
products into
Japan

¼¼ Meet specific
regulatory
requirements
through
innovative new
products

¼¼ Capitalise

on our stock
trading
capabilities in
new markets

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Key performance
Indicators (KpIs)

Financial metrics
We use ten key metrics for our financial and non-financial performance.1
These also measure our ability to deliver shareholder returns through
revenue, profit and cash generation.

Revenue metrics
Client income represents the gross
revenue generated from our products
and services, before hedging activity,
which is an important aspect of our
business model. Net trading revenue
reflects the impact of hedging, and
our ability to monetise client trading
flows. Our target is to: (i) increase
the revenue generated in our Core
Markets businesses by 3–5% per
annum over the medium term;
and (ii) increase revenue from our
portfolio of Significant Opportunities
by £100 million to £160 million in the
2022 financial year.

CLIENT INCOME (£m)

CONVERSION OF CLIENT INCOME
TO NET TRADING REVENUE (%)

5
4
4
6

4
9
5
9

0
4
7

7
7
6

FY19

FY20

+49%

FY19

FY20

(6.3)% pts

NET TRADING REVENUE (£m)

NET TRADING REVENUE
FROM CORE MARKETS (£m)

NET TRADING REVENUE FROM
SIGNIFICANT OPPORTUNITIES (£m)

9
6
7
4

2
9
4
6

2
8
1
4

8
0
4
5

7
8
5

4
8
0
1

m
0
0
1
£
+

%
5
+

%
3
+

FY19

FY20

+36%

FY19

FY20

FY22
TARGET

+29%

FY19

FY20

FY22
TARGET

+85%

1 Definitions for the individual metrics can be found in the glossary of terms, on page 209.
2 Over-the-counter (OTC) leveraged activity remains the primary source of revenue for IG, reflecting 95% of total revenue in the 2020 financial year. For this reason, it’s appropriate

that this segment remains an area of focus within these KPIs. As we look to deliver on our strategy by moving into new product lines and geographies, we may in the future choose to
introduce different metrics that focus on new business segments.

OPERATING PROFIT
MARGIN (%)

4
0
4

6
5
4

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

non-financial metrics
Our two non-financial KPIs focus on client metrics,
which help to underline the longer-term health of
IG. Please also refer to the environmental, social
and governance (ESG) KPIs on pages 60 and 61 for
information on our progress in our commitment to
our stakeholders, environment and community. These
client and ESG metrics help to provide context for our
broader progress, beyond our financial KPIs.

ESG METRICS
PG. 60–61

FY19

FY20

5.2% pts

Client metrics
Our client metrics reflect our continued focus on
growing the size and quality of our client base.
We work to retain and grow a high-quality, loyal
client base.

profitability
metric
Our profitability measure
indicates the extent to which
we’re able to convert our
revenue into profit by well-
controlled cost management,
as we work to maximise value
for shareholders while
investing in appropriate
growth initiatives.

Our operating profit margin
indicates our effectiveness in
managing revenue and costs
simultaneously.

TOTAL DIVIDEND
PER SHARE (p)

2
3
4

Shareholder
return metric
IG’s shareholder return
metric indicates the total
return, including dividends.
We expect to maintain our
full-year dividend at the
level of the 2019 financial
year, which is 43.2 pence
per share.

FY19

FY20

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

7
9
5
1

9
7
8
2

Balance sheet
strength
metric
Our balance sheet metric
measures the cash we
generate. It indicates our
ability to keep meeting our
financial obligations as they
fall due, including broker
margin requirements and
dividend payments.

FY19

FY20

+80%

TOTAL NUMBER OF ACTIVE OTC
LEVERAGED CLIENTS (000)
This is a measure of
client trading activity.
We use OTC leveraged
clients rather than total
active clients, as these
represent the majority
of our revenues.2

6
4
4
1

7
9
2
1

6
6
7
1

FY18

FY19

FY20

+36%

PERCENTAGE OF OTC LEVERAGED REVENUE
GENERATED BY CLIENTS THAT HAVE TRADED
WITH IG FOR AT LEAST THREE YEARS (%)
This measures the value
of client retention, an
important aspect of
a high-quality, loyal
client base.

5
5

2
5

FY18

FY19

FY20

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Stakeholder
engagement

Section 172(1) statement
by the Board

As a Board we continue to uphold the highest
standards of conduct and make decisions for
the long-term success of the business. We’re
aware that our business can only grow and
prosper if we understand and respect the
views and needs of our stakeholders.

Under the Companies Act 2006, the Directors must act in a
way that they consider, in good faith, would be most likely to
promote the success of the Company for the benefit of its
members as a whole. In doing this, the Directors must take
into account, among other factors:

¼¼ The likely consequences of any decision in the long term
¼¼ The interests of the Company’s employees
¼¼ The need to foster our business relationships with

suppliers, customers and others

¼¼ The impact of our operations on the community and the

environment

¼¼ The desirability of the Company maintaining a reputation

for high standards of business conduct

¼¼ The need to act fairly between members of the Company

Our key stakeholders
The Directors have identified certain key stakeholders who
are essential to the success of our business – see pages 26
to 28.

The Board will sometimes engage directly with certain
stakeholders on specific issues. This stakeholder
engagement often takes place at an operational level.
We consider key stakeholders when we discuss and
make decisions relating to strategic matters, financial and
operational performance, risk management, and legal and
regulatory compliance. Information in relation to these areas
is provided to the Board through reports sent in advance of
each Board meeting, and through presentations to the Board.

As a result of these activities, the Board has an overview of
engagement with stakeholders and other relevant factors,
which enables the Directors to comply with their legal duties
under Section 172 of the Companies Act 2006.

In May 2019, the Board agreed that its future meetings
should specifically reference certain key stakeholder
interests. We’ve now incorporated this requirement into the
Board cycle. As part of the preparation procedure for Board
meetings, we use template Board papers that require us to
identify relevant stakeholders who should be considered in
each proposed decision.

Board decision-making and stakeholder
considerations
IG, its Directors and management are fully committed to
effectively engaging with all key stakeholders. Below we
set out some examples of how the Directors have taken
into account the matters set out in Sections 172(1)(a)-(f)
when discharging their Section 172 duties, and how this has
affected certain principal decisions taken by them. We define
’principal decisions‘ as those that are material to IG and are
significant to any one or more of our key stakeholder groups
– as set out on pages 26 to 28.

In making the following principal decisions, the Board
considered the outcome from our stakeholder engagement,
as well as the need to maintain a reputation for high
standards of business conduct and the need to act fairly
between IG’s shareholders.

Principal decision 1: four-year plan and budget
The Board approved an updated financial plan (the 2020 plan)
to underpin the delivery of medium-term revenue targets
set as part of our original four-year plan – agreed in 2019
for the financial years 2020/23 inclusive (the original plan) –
and achieve our specific profit and earnings per share (EPS)
targets and dividend payment for the 2022 financial year.

In agreeing the 2020 plan, the Board considered the potential
impact that each element might have on its key stakeholders.
In particular, the Board took into account:

¼¼ Our relationship with and the views of regulators in the

countries where IG holds regulatory licences to conduct
its business. We referred to the latest applicable legislation
and regulations, held ongoing dialogue with relevant
regulators and ensured that the business initiatives in the
updated plan were in line with IG’s regulatory risk appetite

¼¼ The interests of employees, through IG’s continued

support for the People Forum. This provides a helpful
feedback channel to hear the views of employees, so
we can address matters raised. Also relevant are our
employee health and wellness programmes and diversity
and inclusion policies, and our investment in software and
equipment, as well as our implementation of a working
style that enables employees to work effectively outside
of the office. This has ensured that our people have
been able to work from home seamlessly during the
Covid-19 pandemic

¼¼ The needs of clients, through our decision to enhance

IT infrastructure to ensure that our systems are resilient
and better able to support our clients’ demands. We
considered the number of clients, the demand to access
our services during periods of increased client activity, and
the requests we’ve received to provide more advanced
features on our desktop and mobile platforms for clients
who use sophisticated trading strategies

¼¼ Our existing relationships with suppliers, in particular

related to our IT infrastructure, as a result of the changing
needs of IG and its stakeholders. These changes were
driven by the expectations of regulators, the needs
of employees and the demand from clients, as well as
shareholders’ interests in our decisions on overseeing
costs and the nature and focus of future investment

¼¼ The views and interests of shareholders, by ensuring that
our updated plan supported the sustainable growth of
the business, along with the delivery of our strategy and
shareholder value

Principal decision 2: commitment of £5 million to the
IG Brighter Future Fund
The Board approved a commitment of £5 million from our
profit before tax for the 2020 financial year to the IG Brighter
Future Fund. This fund will be used to improve educational
opportunities for the least privileged young people in our
global communities, and to offer immediate assistance to
those that have been hardest hit by the Covid-19 pandemic.

The Board took into account the fact that many businesses
and individuals in the communities where we operate are
facing considerable hardship as a result of the Covid-19
pandemic. We also recognised that IG has been fortunate,
in that our business has performed well during this period of
increased volatility in the financial markets. More information
about how the fund will be used can be found on page 61.

In deciding to create the IG Brighter Future Fund and
choosing where our investments should be made, the Board
took into account the views of our employees. We aligned
the fund with the priorities of the IG Brighter Future initiative
– priorities that the Board had set after consulting with our
People Forum and reviewing the results of our employee
engagement survey. We also took into account the views
of IG employees in setting aside a £1 million portion of the
Brighter Future Fund to respond to immediate crises linked
to the Covid-19 pandemic. This money was divided between
each of IG’s global offices, whose employees have proposed
the initiatives that it will support. The Board also approved the
formation of a Board ESG Committee, and an ESG Manager
was recruited.

More information about the Brighter Future initiative and
IG’s other local-led charitable engagement can be found
on pages 60 and 61.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Principal decision 3: Covid-19 – people considerations
We successfully implemented our comprehensive business
continuity plan in response to the Covid-19 pandemic. Thanks
to our significant long-term investment in communications
and technology infrastructure, our people have been able to
work from home safely and seamlessly during the pandemic.

The Executive Directors have been in regular communication
with employees to ensure their safety, and that of their
families, during this challenging time. We set up a Covid-19
Steering Group, including Executive Directors and senior
members of staff, to oversee our employees’ transition to
working from home, monitoring their health and safety,
and their ability to work effectively there. The Group
also considered the steps needed to alter the working
environment in preparation for employees returning to the
office, and how and when employees should return, on a
location-by-location basis. Our priority has been the health
and safety of our people, and we continuously monitor best
practice and government advice. We provide regular updates
to our people and to the Board.

The Board agreed to a phased return-to-work approach for
all employees, taking into account our people’s safety when
commuting to work and adjustments to be made at the
workplace as a result of Covid-19.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Stakeholder
engagement
CONTINUED

At IG we rely on building strong and
meaningful relationships with our
key stakeholders. The premise of
these relationships is openness and
trust, to facilitate participation and
open dialogue. It is only by attentively
listening to our stakeholders and
truly understanding them that we can
confidently factor them into Board
discussions and make decisions that
are considerate of their needs and
potential concerns. We understand
that each stakeholder needs to be
approached differently to achieve this,
and the table opposite highlights our
key stakeholders and sets out how we
engage with them.

Further information on how the
business has responded to
stakeholders’ key issues is set out in
the section on Board decision-making
and stakeholder considerations on
pages 24 and 25.

LINKS TO GOVERNANCE SECTION
FOR DETAIL ON PRINCIPAL DECISIONS
PG. 24–25

Our stakeholders

Why we engage

How we engage

What matters most

Clients

IG empowers informed, decisive, adventurous people to
access opportunities in financial markets. Our clients have
high expectations of their trading provider. If we fail to meet
those expectations, our clients will go elsewhere. There are
many companies operating in our industry, and we need to
engage with our clients to ensure that we continue to stay
ahead of the competition.

Our clients use our trading platforms for hours every day, and
that makes them the most valuable source of feedback for us
– helping us to provide the best experience we can.

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.

Our people

Regulators

Regulations affect how we’re able to market and provide
services to our clients. It’s essential that we engage with
our regulators to ensure they understand our products and
business model, so we can remain active in multiple regions
and keep growing into new markets.

By maintaining relationships with our key regulators and
actively engaging on both a local and global scale, we position
ourselves to be well informed about impending developments
in the regulatory environment.

Day to day, we engage with our clients through our

We provide access to the financial markets that enables our

customer support teams, who are multilingual, highly

clients to take advantage of opportunities. We can only do

trained and available 24 hours a day, 6.5 days a week,

this if our platform is stable, secure and reliable, and trade

365 days a year. Our goal is to offer best-in-class customer

execution is seamless. So the reliability of our technology

service to all our clients, and provide a variety of channels

is paramount.

for them to get in touch with us.

We also provide clients with a range of tools and features

a range of educational tools and materials, alongside demo

to help them with their trading, including a wide education

accounts where clients can educate themselves about our

offering, plus breaking financial news and live analysis of

leveraged products in a risk-free environment. We also offer

the markets. These are available for all clients to use in a

a range of risk management solutions that our clients value

way that best suits them.

as part of their educational journey.

Education is also of high importance to our clients. We offer

To ensure that we’re meeting our clients’ expectations,

Our clients need us to be ‘always on’, as opportunities can

we conduct regular research to get their feedback on

arise around the clock. Our 24-hour trading coverage

our products and services. This feedback directly helps

is a unique selling point and a key feature of the service

to shape our prioritisation roadmaps and improvement

we provide.

programmes.

Clients also expect us to be there when they need

assistance, have an issue, or simply want to ask a question.

Access to IG’s highly trained customer service team is

important for clients who rely on our expertise.

We have a variety of means to engage with our people.

We hear consistently that our people want to be kept

These include two surveys per year, functionality in our

informed about our business strategy and changes to our

employee communication portal that we can use to collect

industry. They want the chance to be involved in planning

feedback and comments at any time, and town halls and

changes that will impact them and their teams. They

small group meetings that allow our senior managers to

also expect the organisation to provide opportunities

meet and understand our people’s views. Our employee

for development.

network groups also offer an important channel to better

understand the experience of our employees that are

currently underrepresented.

In response to the changes to the UK Corporate

Governance Code, we established a single body to act as a

conduit for more formal feedback and interactions with our

Board. The resulting People Forum is chaired by our Chief

Operating Officer, supported by the Chief People Officer,

and attended by a Non-Executive Director on a rolling basis.

Employees are democratically elected by our people and

serve two-year terms.

We maintain constructive relationships with our regulators,

Regulators focus on protecting consumers from bad

communicating in an open and transparent manner, and

outcomes, safeguarding our clients’ best interests and

ensuring that our actions are consistent with regulatory

ensuring that all clients are treated fairly. They also take an

expectations.

interest in capital and liquidity issues. Regulators value firms

that respect and follow both the letter and the spirit of the

We work with our regulators in multiple ways – from

regulations and guidelines they set out.

proactive engagement on new business proposals to

assisting in their investigations and regulatory requests.

Our employees around the world are responsible for

maintaining an open and constructive dialogue with local

regulators, to facilitate strong relationships and understand

the expectations that are critical to our business.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Our stakeholders

Why we engage

How we engage

What matters most

Clients

IG empowers informed, decisive, adventurous people to

access opportunities in financial markets. Our clients have

high expectations of their trading provider. If we fail to meet

those expectations, our clients will go elsewhere. There are

many companies operating in our industry, and we need to

engage with our clients to ensure that we continue to stay

ahead of the competition.

Our clients use our trading platforms for hours every day, and

that makes them the most valuable source of feedback for us

– helping us to provide the best experience we can.

Day to day, we engage with our clients through our
customer support teams, who are multilingual, highly
trained and available 24 hours a day, 6.5 days a week,
365 days a year. Our goal is to offer best-in-class customer
service to all our clients, and provide a variety of channels
for them to get in touch with us.

We also provide clients with a range of tools and features
to help them with their trading, including a wide education
offering, plus breaking financial news and live analysis of
the markets. These are available for all clients to use in a
way that best suits them.

We provide access to the financial markets that enables our
clients to take advantage of opportunities. We can only do
this if our platform is stable, secure and reliable, and trade
execution is seamless. So the reliability of our technology
is paramount.

Education is also of high importance to our clients. We offer
a range of educational tools and materials, alongside demo
accounts where clients can educate themselves about our
leveraged products in a risk-free environment. We also offer
a range of risk management solutions that our clients value
as part of their educational journey.

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.

Our people

Regulators

Regulations affect how we’re able to market and provide

services to our clients. It’s essential that we engage with

our regulators to ensure they understand our products and

business model, so we can remain active in multiple regions

and keep growing into new markets.

By maintaining relationships with our key regulators and

actively engaging on both a local and global scale, we position

ourselves to be well informed about impending developments

in the regulatory environment.

To ensure that we’re meeting our clients’ expectations,
we conduct regular research to get their feedback on
our products and services. This feedback directly helps
to shape our prioritisation roadmaps and improvement
programmes.

We have a variety of means to engage with our people.
These include two surveys per year, functionality in our
employee communication portal that we can use to collect
feedback and comments at any time, and town halls and
small group meetings that allow our senior managers to
meet and understand our people’s views. Our employee
network groups also offer an important channel to better
understand the experience of our employees that are
currently underrepresented.

In response to the changes to the UK Corporate
Governance Code, we established a single body to act as a
conduit for more formal feedback and interactions with our
Board. The resulting People Forum is chaired by our Chief
Operating Officer, supported by the Chief People Officer,
and attended by a Non-Executive Director on a rolling basis.
Employees are democratically elected by our people and
serve two-year terms.

We maintain constructive relationships with our regulators,
communicating in an open and transparent manner, and
ensuring that our actions are consistent with regulatory
expectations.

We work with our regulators in multiple ways – from
proactive engagement on new business proposals to
assisting in their investigations and regulatory requests.

Our employees around the world are responsible for
maintaining an open and constructive dialogue with local
regulators, to facilitate strong relationships and understand
the expectations that are critical to our business.

Our clients need us to be ‘always on’, as opportunities can
arise around the clock. Our 24-hour trading coverage
is a unique selling point and a key feature of the service
we provide.

Clients also expect us to be there when they need
assistance, have an issue, or simply want to ask a question.
Access to IG’s highly trained customer service team is
important for clients who rely on our expertise.

We hear consistently that our people want to be kept
informed about our business strategy and changes to our
industry. They want the chance to be involved in planning
changes that will impact them and their teams. They
also expect the organisation to provide opportunities
for development.

Regulators focus on protecting consumers from bad
outcomes, safeguarding our clients’ best interests and
ensuring that all clients are treated fairly. They also take an
interest in capital and liquidity issues. Regulators value firms
that respect and follow both the letter and the spirit of the
regulations and guidelines they set out.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Stakeholder
engagement
CONTINUED

Our stakeholders

Why we engage

How we engage

What matters most

Sustainability and social awareness are firmly embedded
into our purpose and values, and are integral components of
IG’s culture. We also recognise that community engagement
is vital to our ability to deliver long-term returns for our
stakeholders. These factors mean that we carefully consider
our impact on the communities in which we operate and
on the environment. Our commitment is embodied by
the Brighter Future initiative – explained in more detail
on page 60.

Communities

The support of our shareholders is critical to IG. Staying
abreast of their views gives us insight into the considerations
that drive their priorities when assessing us as an organisation.
And by delivering for our shareholders, we help to ensure that
our business continues to be successful in the long term.

Shareholders

We engage with suppliers to develop mutually beneficial and
lasting partnerships. Suppliers play an important role in the
quality of the service we provide, supporting us to meet the
high expectations of our sophisticated client base.

Suppliers

Through the Brighter Future framework, we partner with

Our communities value sustained and long-term support.

local charities that support the communities in which we

This is achieved through a combination of continual

operate, and we also have partnerships at national and

dialogue, financial donations and meaningful employee

global levels.

engagement. To date, our Brighter Future initiative has

committed over £5 million to our charity partners and to

All of IG’s people have opportunities to engage with our

critically important causes and campaigns. It also matters

partners – from our Chief Executive Officer’s membership

to our communities that we’re conscious of our impact on

of Teach First’s Business Leaders Council through to

the environment.

employee volunteering and fundraising. This work is now

coordinated by our dedicated ESG Manager and a team

of regional champions spread across our global network.

IG’s environmental, social and governance (ESG) strategy is

overseen by our recently formed ESG Board Committee.

We maintain an open dialogue with our shareholders –

Shareholder discussions cover a wide range of topics,

through one-to-one and group meetings, results webcasts

including financial performance, leadership, strategy,

and roadshows, conference attendance, capital markets

regulation and competitive position, as well as ESG

days and the Annual General Meeting.

practices. Shareholders look to identify what will drive

sustainable improvement in our returns over the longer

Shareholder feedback, along with details of major

term, with a particular focus on delivery against our

movements in our shareholder base, is reported to and

stated strategy.

discussed by the Board regularly. We consider shareholder

views as part of our decision-making process.

Our major shareholders have direct correspondence

investor trust.

The openness of management and the Board to the

views of shareholders is critical to the development of

with the Chairman, Senior Independent Director and

Committee chairs on significant matters as they arise.

One circumstance, for example, that would warrant

engagement with a major shareholder would be proposed

changes to the Remuneration Policy.

We frequently engage with our supplier base to ensure

We’ve found that our suppliers value clarity on our

that all parties are getting the desired value from our

expectations of the relationship and the services they

relationship. Typically we do this through a series of

provide, along with timely and reliable payment. Our

engagements, ranging from informal conversations for

suppliers also appreciate fair, open and honest two-way

exchanging information and discussing priorities to formal

communication and value the feedback we can give them.

interactions. The latter might focus on contractual terms

or involve reviewing the performance of the supplier, to

ensure we’re getting value for the service being provided.

LINKS TO GOVERNANCE SECTION
FOR DETAIL ON PRINCIPAL DECISIONS
PG. 24–25

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Our stakeholders

Why we engage

How we engage

What matters most

Sustainability and social awareness are firmly embedded

into our purpose and values, and are integral components of

IG’s culture. We also recognise that community engagement

is vital to our ability to deliver long-term returns for our

stakeholders. These factors mean that we carefully consider

our impact on the communities in which we operate and

on the environment. Our commitment is embodied by

the Brighter Future initiative – explained in more detail

on page 60.

Communities

The support of our shareholders is critical to IG. Staying

abreast of their views gives us insight into the considerations

that drive their priorities when assessing us as an organisation.

And by delivering for our shareholders, we help to ensure that

our business continues to be successful in the long term.

Shareholders

We engage with suppliers to develop mutually beneficial and

lasting partnerships. Suppliers play an important role in the

quality of the service we provide, supporting us to meet the

high expectations of our sophisticated client base.

Suppliers

Through the Brighter Future framework, we partner with
local charities that support the communities in which we
operate, and we also have partnerships at national and
global levels.

All of IG’s people have opportunities to engage with our
partners – from our Chief Executive Officer’s membership
of Teach First’s Business Leaders Council through to
employee volunteering and fundraising. This work is now
coordinated by our dedicated ESG Manager and a team
of regional champions spread across our global network.
IG’s environmental, social and governance (ESG) strategy is
overseen by our recently formed ESG Board Committee.

We maintain an open dialogue with our shareholders –
through one-to-one and group meetings, results webcasts
and roadshows, conference attendance, capital markets
days and the Annual General Meeting.

Shareholder feedback, along with details of major
movements in our shareholder base, is reported to and
discussed by the Board regularly. We consider shareholder
views as part of our decision-making process.

Our major shareholders have direct correspondence
with the Chairman, Senior Independent Director and
Committee chairs on significant matters as they arise.
One circumstance, for example, that would warrant
engagement with a major shareholder would be proposed
changes to the Remuneration Policy.

We frequently engage with our supplier base to ensure
that all parties are getting the desired value from our
relationship. Typically we do this through a series of
engagements, ranging from informal conversations for
exchanging information and discussing priorities to formal
interactions. The latter might focus on contractual terms
or involve reviewing the performance of the supplier, to
ensure we’re getting value for the service being provided.

Our communities value sustained and long-term support.
This is achieved through a combination of continual
dialogue, financial donations and meaningful employee
engagement. To date, our Brighter Future initiative has
committed over £5 million to our charity partners and to
critically important causes and campaigns. It also matters
to our communities that we’re conscious of our impact on
the environment.

Shareholder discussions cover a wide range of topics,
including financial performance, leadership, strategy,
regulation and competitive position, as well as ESG
practices. Shareholders look to identify what will drive
sustainable improvement in our returns over the longer
term, with a particular focus on delivery against our
stated strategy.

The openness of management and the Board to the
views of shareholders is critical to the development of
investor trust.

We’ve found that our suppliers value clarity on our
expectations of the relationship and the services they
provide, along with timely and reliable payment. Our
suppliers also appreciate fair, open and honest two-way
communication and value the feedback we can give them.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Business Model
and Risk profile

IG enables clients to access trading
opportunities in a wide range of markets –
including stock indices, individual shares, forex,
interest rates and commodities – through
online dealing platforms and exchanges.

Clients can also access our stock trading platform, as well
as an innovative portfolio-based product for longer-term
investment purposes. We offer the latter in partnership with
BlackRock, one of the world’s leading asset managers.

Risk profile
Our business model is based on generating a return from our
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 we serve in that period and the level of trading activity
undertaken by each client.

IG does not seek to generate returns from actively taking
market risk. We don’t take proprietary trading positions, and
our revenue is not dependent on the direction of market
movements.

Under our business model, we accept some exposure
to market risk in order to optimise the efficiency and
effectiveness of our services to clients. We manage
the market risk we face in providing these services by
internalising client flow (allowing individual client trades to
offset one another) and hedging externally when the residual
exposures reach predefined limits. As a result, our revenue
is driven by transaction fees charged to clients and the level
of their trading activity, and isn’t significantly affected by
movements in market prices.

Our business model also means that we’re subject to client
credit risk, counterparty credit risk, liquidity risk and capital
adequacy risk. We also face operational risks, including those
arising through technology, people, process and external
events. In addition, we’re subject to conduct risk relating to
the way we deal with our clients and with the markets.

IG operates in a dynamic competitive environment, and our
revenue is dependent on the number of active customers
and their level of activity – which is influenced by the degree
of volatility present in the financial markets. This means that
our business faces risks relating to market conditions and its
competitive position.

We operate in a number of geographic markets and are
regulated by different financial services authorities in those
regions. Their regulations affect how our business is able to
market and provide its services to clients. The regulations
relating to the products and markets in which we operate

are continually evolving. IG supports the objectives of national
regulators to improve client outcomes, however our business
faces risks arising from potential changes in its regulatory
environments that may adversely impact its activities or its
competitive position.

The launch of new products and business initiatives may
introduce new risks. We ensure that these risks are clearly
identified and managed through our well-established
control environment, which evolves in response to business
developments. This means that while our risk profile may
change at a micro level, at a macro level the risks we face
remain fundamentally the same.

Our business model enables us to serve our clients
effectively and to generate good returns for shareholders,
while maintaining a low appetite for those risks that we can
manage directly, such as market and credit risk. The Group
has no appetite for liquidity or regulatory capital risk as per
requirements and regulation. This is reflected in the Board’s
Risk Appetite Statement and the Key Risk Indicators (KRIs)
used to monitor these risks. For more detail on how the
Group manages various risks through employee training
and operational controls, please see an overview of IG's Risk
Management Framework on pages 50 to 59.

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

The majority of our clients are individual traders and
investors. However, we also provide services to corporate
clients and institutions, including asset managers, hedge
funds, family offices and broker-dealers.

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

A key part of IG’s culture is to place our customers at
the heart of everything we do, which in turn embeds this
commitment at the centre of our strategic initiatives. We
regularly seek and review feedback from clients, and this
enables us to develop products and services specifically to
meet the needs of active traders and investors globally.

Central to our commitment to our customers is the quality
of our order execution. IG processes 100% of active
client trades automatically and never re-quotes prices.
Should a significantly better price become available for

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

customers during the dealing process, our innovative price-
improvement technology enables customers to receive that
better price during trade execution.

As well as interacting directly with clients, we also work with
a range of partners to provide IG services to an expanded
distribution network, under our newly launched brand, IG
Prime. These partners are organisations that want to take
advantage of our award-winning dealing technology and
expertise. We’re already offering a broad suite of partner
models under the IG Prime brand, and we’re working on
developing these further.

Clients’ investment requirements and appetite for risk may
change 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 our
product set to appeal to sophisticated investors who may
have evolving needs.

In 2014, we expanded our product range to include stock
trading, followed by the launch of investment portfolios
in 2017. Through these products clients can hold their
investments in individual savings accounts (ISAs) and self-
invested personal pensions (SIPPs). Offering these services
allows us to deepen and lengthen our relationship with clients
by catering for their evolving needs.

Early in 2019, we created an options account for European
clients to trade vanilla and barrier options over-the-counter
(OTC). Later in the year we also launched IG’s on-exchange
turbo24 product, which offers EU retail clients the
opportunity to trade transferable securities in the form
of turbo warrants.

Appropriateness
Leveraged derivative products are not appropriate for
everyone, and good conduct by IG is particularly vital in
relation to marketing and client recruitment, to prevent poor
consumer outcomes. When designing our products, we have
a clear and specific target audience in mind. We work hard
to ensure that our advertising reaches this target audience,
and that our clients comprehend the risks involved with IG’s
trading and investing products, and understand how our
services work.

We also conduct rigorous checks to ensure that all our
marketing promotions are clear, fair and not misleading, and
that we’re not downplaying risks compared to the benefits of
our products.

savings, both on account opening and at regular intervals
afterwards. As well as providing clear disclosures about
the features and risks of the product, and depending on
the results of this assessment, we may decline to open an
account. Alternatively, we may provide an applicant with a
type of account where risk is limited, such as a stock trading
account. We may also close an open account if a client’s
circumstances change and we believe the account is no
longer appropriate for them.

Client outcomes
To consistently deliver fair outcomes and positive
experiences, we put our clients at the heart of everything
we do. We strive to ensure that we understand their needs,
and we have a very low tolerance for poor client experiences
and outcomes. We’re committed to continuing investment in
process, training, and culture to improve client experiences
and outcomes, and to address root causes wherever we
fall short.

Our clients are knowledgeable investors and traders who
gain utility out of their trading experience. They appreciate
the intellectual challenge of speculating on market
movements, and accept that this may involve losing money.
Our disclosures make clear that many of our trading products
are not long-term investment products, and as such we don’t
see client gains or losses as the sole indicator on which to
judge client outcomes. Instead, we look across a broad range
of metrics – including overall satisfaction, appropriateness
trends, complaint statistics, trade-to-query ratios, specific
causes of customer dissatisfaction, and financial outcomes
– to ensure that we’re doing the right thing for our clients.
We also focus on providing our clients with the best possible
service by continuing our investment in our platform to
maximise its availability and performance.

Client acquisition and education
IG has a strong brand, built up over 46 years. We aim to
acquire new clients through client referrals, word of mouth,
natural search and client manager relationships. This is all
supported by a targeted global marketing effort, with online
marketing managed centrally and local activity run by country
offices, though subject to central standards and oversight.
Our sophisticated online marketing uses an algorithmic
approach, enabling us to reach larger numbers of the right
prospects more efficiently and effectively, and to pursue
opportunity as it presents itself. We aim to react immediately
to global and local events, creating campaigns rapidly
and rolling them out to relevant regions, with appropriate
local adjustments.

Before allowing a prospective client to open an account,
we carry out a detailed assessment to determine whether
our products are appropriate for them. We question
applicants extensively so we can assess whether they have
the necessary knowledge and experience to understand the
risks involved. We ask clients for details of their income and

As well as marketing our products directly, we provide a
number of education, news and analysis services. These
encourage people to engage with IG and to learn about our
products and how to trade effectively and responsibly. Our
offerings include online courses, webinars and seminars
via IG Academy, a suite of YouTube videos, and the DailyFX

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Business Model
and Risk profile
CONTINUED

news and analysis website. These resources reinforce
our commitment to transparency, ensuring that new and
existing clients are well-informed about IG’s services and
the economics of trading the financial markets.

Revenue generation
We conduct our business through four revenue-generation
models: OTC leveraged derivatives, exchange traded
derivatives, stock trading and investments.

Our 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.

We also provide an extensive range of trading aids, such as
news, commentary and analysis – both in-platform and on our
website. We offer charting packages and various technical
analysis tools that help clients to screen markets for trading
opportunities, and they can choose to receive alerts when
their trading signals are triggered.

Client risk management tools
We take our responsibility to help clients understand the
risks associated with trading very seriously, and provide them
with tools to manage these risks. Given our business model,
it’s in IG’s interest to develop lasting relationships with clients
– those who are more successful stay with us over the long
term and become more valuable.

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

Our close-out monitor (COM) liquidates client positions when
their margin has been significantly eroded, and helps protect
clients by closing positions automatically. As at 31 May 2020,
99.99% of all client accounts were subject to the COM
procedure.

Clients can choose to attach guaranteed stops to their
positions, so that they know their maximum possible loss
at the outset of a trade. Our innovative charging system
encourages clients to use guaranteed stops: no premium is
payable for attaching a guaranteed stop unless it’s 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, we offer a limited-risk account
through which every trade has a guaranteed stop, providing
protection on both an individual trade and overall account
basis. Our turbo warrant and knock-out option products also
give clients a way to trade with capped risk.

OTC leveraged derivatives
The majority of our revenue is derived from OTC leveraged
derivatives, where clients trade different types of derivative
instruments, including 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. They gain exposure to price
movements in those markets without needing to buy or
sell the underlying asset.

Our OTC leveraged derivatives are priced by reference to
prices in the underlying markets. When markets are open,
the prices of the derivative contracts are continually updated,
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
shares, 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.

Our business faces market risk, as IG is the counterparty
to the OTC leveraged derivatives that clients enter into. We
accept this market risk in order to allow instant execution
of client orders. We manage our market risk through
internalisation – allowing individual client trades to offset
against each other – and by hedging the residual risk above
predefined limits, by entering into derivative contracts with
third-party hedging brokers. We look to hedge our residual
market exposures in an efficient manner by grouping our
correlated exposures into asset classes. However, we are not
able to hedge our precise exposures perfectly, which gives
rise to basis risk.

Since we limit our market risk through internalisation and
hedging, our trading revenue from OTC leveraged derivatives
predominantly reflects the charges paid by clients through
spread, commission and funding, less the costs incurred
in hedging, and our revenue consistently has reduced
variability. Internalisation is key to our business model and
profitability, as it reduces the cost of hedging market risk in
the underlying markets.

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

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Prices for contracts listed on Nadex are provided by market
makers, who are also members of the exchange and pay
fees for trading. For Spectrum, we intend for liquidity to be
provided by market makers, who must be categorised as
market-making members of the exchange. At the moment,
IG provides baseline liquidity to Spectrum and operates as
one of the market makers to Nadex. We face market risk as a
result of this activity, and hedge this via third-party partners.

Stock trading
We operate an execution-only stock trading platform,
through which clients can buy and sell individual shares listed
on exchanges around the world.

We charge a transaction fee for each purchase and sale
transaction, and a currency conversion fee for transactions
that involve different currencies. There is also a custody fee,
which may be rebated to clients who undertake a minimum
level of transactions in a set period. IG’s trading revenue from
this service is reported net of the execution fees we pay in
the market.

Clients fund the purchase of shares in full at the time of
placing an order. This activity doesn’t give rise to any market
risk or client credit risk for IG.

Investments
IG 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) may be best suited to their needs. These portfolios
rebalance periodically. Alternatively, clients can choose their
own portfolio of ETFs to reflect their investment profile.

We charge a percentage fee on the value of the assets under
management, and our revenue from this activity reflects
these fees less the amount paid to the ETF provider.

Clients fund the purchase of their investments in full at the
outset. This activity doesn’t give rise to any market risk or
client credit risk for IG.

Margin is usually expressed as a percentage of the notional
value of the trade, and margin trading lets a client use
leverage to take a position in a market with a notional value
that is significantly greater than the funds they must deposit.
This means that leveraged derivative contracts magnify
the gains or losses a client can make relative to the
funds deposited.

IG faces client credit risk, as leveraged contracts can result
in a client incurring losses that exceed the funds in their
account, and they may be unable to fund those losses.
When setting the level of margin for each contract, we take
into account any relevant regulatory requirements and the
volatility of prices in the underlying market, which reduces
our exposure to client credit risk.

Our OTC leveraged derivatives activity also gives rise to
liquidity risk. We trade our hedging contracts on margin, and
are required to deposit initial margin with our brokers – a
percentage of the gross amount of open positions with each
broker. As this gross amount changes due to market price
movements, and as the nature of our open positions changes,
the consequent amount of margin we have to deposit also
alters, as we’re required to deposit margin with our brokers
on demand. This means that our business faces liquidity risk
through our hedging activities, and counterparty credit risk
through the amounts we hold on deposit with our brokers.

IG sets its own exposure limits against each hedging
counterparty, and large exposure rules defined by regulation
mean that our exposure to any one hedging counterparty is
also restricted. For this reason we need to maintain a number
of different hedging relationships to provide us with sufficient
capacity and diversification for our hedging requirements.

Exchange traded derivatives
Our revenue from exchange traded derivatives is principally
derived from our ownership of Nadex, a US-based, regulated
derivatives exchange. Nadex 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 don’t trade on margin, so these contracts don’t involve
leverage. As a result, the exchange faces neither market nor
client credit risk.

In the 2020 financial year we launched Spectrum, our
Germany-based multilateral trading facility (MTF), which
offers EU retail clients the opportunity to trade transferable
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.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Business Model
and Risk profile
CONTINUED

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

IG has operated for 46 years, and we have well-established
processes for identifying and managing risks. We focus on
the long term, and on doing things properly to support a
sustainable, growing business.

As a result, our shareholders and IG’s many stakeholders,
including clients, regulators and suppliers, can have
confidence that our business has the capacity to manage
the risks it faces, and that it will be able to keep operating
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 around 239,600 active clients. As a FTSE 250 company
with a market capitalisation of £2.8 billion on 31 May 2020,
we have a long history of profitability and financial strength.

IG was created in 1974 as the UK’s original OTC leveraged
derivatives provider. We introduced a completely new,
accessible way for people to trade on the price of gold, by
defining it as an index. Since then, our innovative, client-
focused approach has enabled our business to grow, expand
internationally and broaden its product range, and today
IG is the world’s No.1 CFD provider1 as well as maintaining
its considerable UK market leadership in OTC leveraged
derivatives.

The unified global IG brand was established in 2013
through our acquisition of the IG.com domain. This pivotal
event gave us the framework to consolidate our global
web traffic through a single route, so as to focus on online
leadership – something that is increasingly important for
acquiring, educating and providing a high level of service for
clients. Our recent introduction of our new brand identity
is another milestone for the IG brand, and is a reflection of
our progressive growth strategy and commitment to keep
pioneering the way forward in the industry.

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

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

We offer a range of free seminars and online tutorials for
clients, and our client services team provides dedicated
24-hour support. This team is fully trained to understand our
products and how they are best suited to individual clients.
They’re available through email, telephone and web chat.
We aim to ensure that correspondence with clients is always
clear and fair, and is never misleading.

To ensure that clients are at the heart of our business, we
encourage feedback and offer clear channels for comments
and complaints. We monitor our service standards closely by
regular tracking of Key Performance and Risk Indicators.

Technology and innovation
IG’s success is predicated on investing in and developing
technology and innovative products that are market-leading
and empowering for clients. We were the first company in our
sector to launch an online dealing platform, in 1998, and the
first to launch a mobile app with live price streaming, in 2003.
We first offered a CFD on bitcoin in 2013, and we launched
our own exchange traded derivatives platform, Spectrum,
in 2019.

We regularly invest in developing new tools and features for
our client-facing platforms – a continuous process that is
directed by detailed research into clients’ evolving needs.
IG stands out in its industry by giving clients round-the-clock
access to trade, even when the underlying market is closed
or when prices go negative. For example, in April 2020, IG
continued to offer pricing on crude oil futures despite the
price going negative. We were able to do this due to our long-
standing investment in technology and our relentless focus
on client experience.

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

1 Based on revenue excluding forex (from published financial statements, June 2020).

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

Conduct and standing with regulators
IG always seeks to operate in the client’s best interests. First,
we target our marketing and advertising to an appropriate,
specific audience, aiming to ensure that we open leveraged
trading accounts only for clients for whom the product
is suitable.

Second, we do our best to ensure that all clients are treated
fairly. We provide educational and training materials to clients
to help them understand our products and services, so that
they can become more skilful and effective as traders. We
believe that this approach builds a high level of trust in us
from our clients, and nurtures lasting client relationships.

Third, IG adheres to the highest regulatory standards. Our
Compliance Officers around the world are responsible
for maintaining an open and constructive dialogue with
local regulators, sharing our business plans with them and
ensuring that our actions are consistent with regulatory
expectations. As a result, we have strong working
relationships with our regulators around the world, which is
fundamental to the sustainability and growth of our business.

People and culture
IG has an experienced, long-serving team of people who
understand its clients, what they need and what drives
them. It’s our team’s expertise that enables us to deliver
our outstanding platform and client service. Our 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’.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

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SHAREHOLDER AND COMPANY
INFORMATION

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Key trends and factors likely
to affect our business

Covid-19
Through the resilience of our market-leading technology
infrastructure, IG has demonstrated its ability to perform
strongly throughout the period of unprecedented market
volatility triggered by the Covid-19 pandemic. We’ve followed
the letter and spirit of government guidance in countries
where the virus has been present, as they work to contain
and defeat it. Our significant long-term investment in
communications and technology infrastructure has enabled
all employees to work safely from home, and we continue to
provide the best possible service for our clients when they
choose to trade the financial markets. We’ve maintained
regular communication with our staff members to ensure
their safety, and that of their families, during this challenging
time. The pandemic has shown that companies need to be
even more digitally adept and focused if they’re to succeed.
Efficiently adapting to digital ways of working has been key for
IG. Our business is well-positioned to continue successfully
navigating the global impacts of the Covid-19 pandemic.

As a business that places a high degree of importance on
technological readiness and client service, we’re exposed to
factors that may influence our platform’s availability to clients.
Throughout the Covid-19 pandemic, our employees had to
adjust to significant changes in their working environment,
while also handling exceptional levels of client trading activity.
The sheer quantum of these trading volumes, combined with
the influx of applications for new accounts, demands that
we accelerate investment in our technology and resilience.
This will ensure that we continue to deliver the best trading
experience for our clients, now and in the years to come.
However, any further sustained periods of volatility combined
with the challenges of remote working do have the potential
to impact our delivery of the technology that underpins our
client experience. We’ll continue to review our processes so
we can minimise risks to service levels.

The level of volatility in financial markets
Our ability to attract new clients, and the willingness of
clients to trade, are driven substantially by the numbers of
clients who are seeing opportunities to trade in the financial
markets. Higher levels of volatility tend to generate more
trading opportunities, and these in turn attract new clients
and increase the level of individual client trading activity.
Measures of financial market volatility, such as the VIX index,
reached unprecedented levels during the 2020 financial year.
This surge was triggered primarily by the Covid-19 pandemic,
and has resulted in exceptional revenue performance for IG in
the final quarter of the financial year. However, these levels of
volatility aren’t expected to continue over the medium term.
Any future reduction in the general level of volatility is likely to
have a detrimental effect on IG’s revenue, since this is driven
by overall numbers of active clients and the level of each
client’s activity – both of which depend on market conditions.

The level of volatility in financial markets also affects our
ability to convert client income into net trading revenue.

Periods of exceptionally high volatility can sometimes cause
the percentage of client income we convert into net trading
revenue to fall. We continue to work on maximising our
hedging efficiency, while remaining within our risk appetite
and maintaining our commitment to offer clients the best
trading and execution experience.

The impact of changes in the regulatory environment
IG operates in a highly regulated environment that continues
to evolve. We’ve seen regulatory intervention made
permanent in the UK and across the EU in the past financial
year, introducing a range of measures that apply to our retail
client base. These broadly restrict the marketing and sale
of contracts for difference (CFDs), and include leverage
restrictions, negative balance protections and risk warnings.

These measures have had a significant impact on IG’s
revenue over the last two financial years. Over 70% of our
over-the-counter (OTC) leveraged revenue is now generated
from clients in jurisdictions where restrictions on the sale and
marketing of CFDs have been implemented. It’s expected that
restrictions will be introduced in other jurisdictions over time,
which may reduce or limit our revenue from clients in those
regions. However, through our stated strategy to deliver
growth via expanded distribution channels, geographical
expansion, segmented target markets, and a multi-product
offering, we aim to mitigate the potential impact of individual
regulatory interventions.

We continue to drive new initiatives as part of our strategy,
mitigating the impact of regulatory change by diversifying
our product offering and providing choice for clients. IG
has a history of innovation and flexibility, and a proven track
record of deploying technology and skills to adapt our
business in response to regulatory and market changes. In
our 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.

Over the last 46 years, IG’s strategy has been one of
differentiation within our industry. We’ve kept to the highest
regulatory standards and focused on fair outcomes for our
clients. We believe in robust, proportionate and consistently
applied regulatory oversight of the CFD sector, so we fully
support the regulatory objective to improve consumer
outcomes across the industry.

The level of marketing spend and the effectiveness
of marketing in attracting new clients
Our business model is based on generating a return from
our services through transaction fees charged to clients.
Our revenue for a given period is predominantly driven by
the number of active clients we serve in that period and
each client’s level of activity.

Our marketing approach focuses on three key stages of the
consumer life cycle funnel – awareness and consideration
generation, demand activation, and onboarding and retention

INTRODUCTION

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SHAREHOLDER AND COMPANY
INFORMATION

all combine in order to secure the forecasted number of
active clients and levels of client activity.

First, our awareness and consideration marketing activity
takes our brand and product message to our defined broader
core target audience, from whom we expect short-term
returns, as well as our defined broader future target audience,
from whom we expect return in the medium-to-long term.
This creates a continuous stream of interested prospects,
who become the focus of our second funnel stage. Here we
use highly targeted demand-activation marketing activities,
designed to convert these informed prospects into valuable,
active clients. Our data-powered demand-activation marketing
operates on defined investment targets to guarantee an
attractive payback on this investment. Finally, the third stage of
our funnel approach, our onboarding and retention-marketing
activity, ensures that all clients receive a customer experience
– in the form of tailored content and service – that enables
and empowers them to engage as informed, decisive, active
traders over a long lifetime with IG.

Across all stages of the consumer life cycle funnel, we
operate an integrated cross-channel marketing approach.
We orchestrate each channel to work in unity, to deliver
a seamless, multi-touchpoint customer experience – and
with that, the best return on investment. Our cross-funnel
and cross-channel approach is enabled and powered by
technology, data and continuous optimisation.

We’re continuing to focus on the effectiveness of our
targeted marketing, and managing the level of marketing
spend to maintain an attractive payback on the investment.
We vary the level of marketing spend in line with the
opportunities we see to spend effectively.

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

The level of investment in, and success of,
new initiatives
We’re continuing to identify opportunities to invest in new
initiatives, to further broaden our range of products and
services, and our geographic coverage.

Our European clients now have access to trade a range
of turbo warrants on exchange, through Spectrum, our
multilateral trading facility. Spectrum represents an important
diversification of our product range. It gives European Retail
clients the opportunity to trade securitised derivatives in the
form of turbo warrants. Spectrum has launched successfully,
initially offering turbo24s on stock indices, currencies and
commodities, and plans to expand its product set to include
single-name equities in the 2021 financial year.

In the 2020 financial year, we invested in localising our
offering for the Japanese market. Our history of product
innovation and strong focus on client experience mean that
we’re well-positioned to deliver long-term success in this

market. To support our growth ambitions, we’ll continue
investing in local marketing strategies and conducting
research to correctly identify the needs of local consumers
throughout the 2021 financial year.

We continued to develop our US retail foreign exchange
dealer business throughout the 2020 financial year. IG US
offers forex trading to clients in a market that’s currently
underserved. Our technology experience, excellent customer
service and competitive pricing mean we should be well-
positioned to succeed in this market.

We’ve also continued to pursue a range of partnership
opportunities during the 2020 financial year. Our technology
expertise and strong brand proposition make IG an attractive
partner. The relative success of these initiatives will be
impacted by the attributes of the partner and the speed at
which the product offering can be taken to market.

We’re continuing to work on our strategy and medium-term
financial targets, announced on 22 May 2019, which included
a number of new initiatives. The level of our investment in
broadening our product range and diversifying into more
geographical markets is key to delivering our growth strategy.
Our future performance will be affected by the success of
such initiatives.

The UK’s exit from the European Union
During the 2020 financial year, IG Europe, our new client-facing
subsidiary domiciled in Germany, became fully operational.
We’ve successfully transferred the majority of our EU-resident
client base to contract with IG Europe. Although the exact
ramifications of the future trading relationship between the UK
and EU remain unclear, IG now has an operating structure that
should enable us to offer our regulated financial products in
all EU member states once the transition period has ended.

Actions of competitors
Within our core OTC product set, we operate in a highly
competitive environment. This includes some unregulated and
unethical operators at one end, and some highly regulated,
established companies offering similar products to IG at the
other. The way our competitors act in response to regulatory
changes, whether in the EU or elsewhere, and the extent of their
compliance with both the letter and spirit of the regulations,
may affect IG’s competitive position in the industry. It may
also affect the reputation of the industry as a whole. This risk
extends to other jurisdictions in which we operate, which have
either already implemented regulations to control the trading of
leveraged derivatives, or are looking to do so in the near future.

We are also exposed to new entrant risk across our global
markets and closely monitor any changes in the local
competitive landscape in order identify and respond to the
threat of new entrants.

We regularly monitor the financial results and actions of our
identified competitors, at an executive and a Board level.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Overview of the
2020 Financial Year

We’re a global financial technology and trading
business, with a clear purpose to enable our
clients to access unique opportunities in the
financial markets.

In FY20, we delivered record revenues and profits, with
growth across all regions and products. We also built
momentum and achieved significant progress towards
our medium-term financial targets, and the broader
diversification of our business.

Net trading revenue was £649.2 million, 36% higher than
the prior year. This performance was underpinned by good
growth in the first three quarters of the financial year, prior
to the heightened market volatility in Q4. In the first three
quarters, net trading revenue of £389.7 million was up 9%
on the prior year period (Q1–Q3: £359.0 million). In Q4, net
trading revenue accelerated to £259.5 million. This reflected
the unprecedented level of client trading activity from the
sustained period of volatility across global financial markets
triggered by the Covid-19 pandemic and other macro events.

Our track record of revenue growth over time has been
driven by steady increases in both the size and quality of
our client base. We maintained our strict standards and
policies throughout the year for new client recruitment and
screening, and in total recruited 96,900 new clients in FY20,
up over 100% on the prior year. We also continue to benefit
from the loyalty and tenure of our established client base,
with 55% of revenue in the financial year generated from
clients who have traded with us for more than three years. In
the final quarter of the financial year we onboarded 51,200
new clients across our product offering, with 35,300 new
over-the-counter (OTC) leveraged clients placing a first trade
in the period.

Total operating expenses, excluding variable remuneration,
were £308.6 million, 19% higher than the prior year (FY19:
£259.6 million). This included investments of £35 million in
prospect acquisition and development of the IG brand, and
the launch of our new businesses in the US and Europe.
In addition, there was an increase in certain revenue-
related costs, and a £5 million charitable donation. Variable
remuneration was £44.3 million, 79% higher than the
prior year, reflecting the exceptional performance against
internal targets.

Profit before tax increased to £295.9 million (FY19:
£194.3 million), with an operating profit margin of 45.6%.
Conversion of operating profit into cash was strong, with
own funds generated from operations of £345.0 million
(FY19: £198.1 million).

Underpinning a strong set of financial and operating results,
we also progressed a number of activities as part of a
renewed focus around environmental, social and governance
matters. Following several years of carbon emissions
reductions (relative to headcount), in FY20 we commenced
a programme of activities, including carbon offsetting, to
achieve full carbon neutrality. As of July 2020, we’re a carbon-
neutral company in line with PAS 2060. The role we play in
the communities we live and work in around the world led us
to make a substantial charitable donation to those directly
affected by the pandemic.

In terms of governance, IG appointed Mike McTighe to the
role of Chairman of the Board from 3 February 2020 and
Charlie Rozes to the role of Chief Financial Officer from
1 June 2020, alongside other important changes to the plc
Board of Directors announced previously.

Q4 FY20 trading
While we delivered good progress and results in the
first three quarters of the year, the fourth quarter saw
extraordinary market conditions driven by the Covid-19
pandemic and other macro events. During Q4, record
levels of client onboarding saw 35,300 new OTC leveraged
clients, 17,900 new stock trading clients and 3,200 new
on-exchange clients placing a first trade in the period. New
clients onboarded in Q4 FY20 generated 14% of the total
OTC leveraged revenue in the quarter. The demographics of
this Q4 client cohort are similar to that of our existing high-
quality client base, however it’s too early to assess how their
longer-term trading patterns and behaviours will develop.
Attrition has been slightly higher compared to historical
cohorts, but the Group expects to see longer-term value
over time from an expanded client base. We continued to
follow a multi-channel marketing approach throughout Q4,
with organic search delivering a near threefold increase in
applications compared to the Q1–Q3 quarterly average,
a benefit of prior investment in brand and search engine
optimisation. Further improvements to our digital marketing
capability are targeted for FY21, with additional investment in
the IG brand following the a new brand launch in June 2020,
and an expansion in digital solutions to drive cost efficiency
and improve scalability.

Our differentiated business model of internalising, or netting,
client flows and hedging the residual risk in each market
remained unchanged during this period, as did the Board-
approved market risk limits. Our revenue doesn’t benefit from
client trading losses, nor is it exposed to client trading profits.
This model has been an essential part of IG since we were
founded almost 50 years ago, and demonstrated its value
throughout the unprecedented activity levels in Q4 FY20.
Market and credit risk were closely managed, and clients
were able to continue to trade, for example, when the market
experienced a 30% gap in the oil price in March, as well as

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SHAREHOLDER AND COMPANY
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the brief move to negative oil price futures in April 2020.
We haven’t experienced any loss-making days since 2015.

In response to the Covid-19 pandemic, we successfully
implemented our comprehensive business continuity
plans, enabling all of our 1,921 global employees to quickly
transition to home-based working. Despite the closure of
our offices around the world, we nonetheless conducted
all of our operations successfully through the Q4 period
of unprecedented client trading volumes. This highlighted
the outstanding efforts of our people and the resilience,
scalability and agility of our communications and technology.
In Q4, for example, the number of new client applications
tripled from February to March, while client interactions
doubled to approximately 190,000 for the same period. We
intend to continue, and in FY21 increase, investment in this
infrastructure as part of the continual improvement of our
clients’ experience trading with us.

Regulatory update
As a global company, we operate in many regulatory
jurisdictions. We differentiate ourselves in the industry
through a track record of good conduct, and maintaining
open and transparent relationships with all our regulators.

The compliance requirements across our sector's products
and services have continued to evolve and may change over
time, including in areas where we are expanding and growing,
such as Asia, and where we design and launch new products.
We have worked constructively with regulators and have
adapted our products and businesses, and will continue to
anticipate the pace and direction of new regulation, and
our adaptation to those changes is a key long-term success
factor. This adaptability can be evidenced by the return to
growth in FY20 in the ESMA region Retail client base following
a significant regulatory shift in FY19. In the ESMA region,
revenue increased 26% to £328.5 million year-on-year,
accompanied by growth in the number of active clients and
a small increase in the revenue per client. In addition, during
the period we successfully implemented new regulations in
Singapore – an important Asian regional market for us.

As previously indicated, further changes are possible in FY21
in some markets where we operate, including Australia. The
Australian Securities and Investments Commission has not
yet confirmed its final proposals or timelines to implement
new regulations for leveraged OTC products, although this is
expected within the next financial year.

Delivering on our strategy
Core Markets
We delivered good underlying OTC leveraged revenue
growth of 3% to £319.1 million in Q1–Q3 FY20 (Q1–Q3 FY19:
£310.9 million), prior to the sharp increase in Q4. Highlights in
the Core Markets included:

¼¼ A significant recovery in the ESMA region (EU and
UK) OTC leveraged Retail client base. The FY19
comparison included two months of trading prior to
the implementation of the ESMA product intervention
measures. Comparing the Q1–Q3 quarterly average with
the FY19 Q2-Q4 quarterly average shows the two periods
on a more consistent basis, with Q1–Q3 quarterly average
revenue up 26%, driven by an 8% increase in the number
of active clients. During the same period, revenue from
our Professional client base in the ESMA region remained
steady, with this group of clients contributing average
quarterly revenue of £39.8 million in Q1–Q3 FY20 (Q2–Q4
FY19: £40.3 million)

¼¼ In Singapore, where increased margin requirements for

retail forex traders were introduced in October 2019, the
business continued to perform well with an 8% growth
in Q1–Q3 FY20 versus Q1–Q3 FY19. In Australia, revenue
increased 10%, driven by an 8% growth in the number of
active clients¹

In Q4, revenue growth in the Core Markets from our OTC
leveraged business accelerated to deliver revenue of £208.1
million, an 83% quarter-on-quarter increase. The number
of active clients was exceptionally high, with strong levels
of reactivation in addition to record levels of acquisition
leading to a 41% increase in the number of Core Markets
OTC leveraged active clients quarter-on-quarter. This was
supported by a 30% quarter-on-quarter increase in the
revenue per client, with clients identifying more opportunities
to trade the financial markets.

Our stock trading and investment products also performed
strongly, with an improved product offering and increased
marketing spend coinciding with the higher levels of volatility
seen in Q4. New client acquisition was almost double the
prior year, with 26,000 clients placing a first trade (FY19:
13,500), of which 69% were in Q4. Stock trading and
investments continue to serve as a retention tool for existing
OTC leveraged clients, as well as providing an acquisition
channel to attract new active traders to IG for whom
leveraged trading products may be appropriate.

Significant Opportunities
As previously set out in the May 2019 strategy launch, we
are targeting an increase in revenue of £100 million from
our portfolio of Significant Opportunities, from £60 million
in FY19 to around £160 million in FY22. Revenue from this
portfolio in FY20 was £108.4 million (FY19: £58.7 million), an
increase of 85%, reflecting tangible progress of the initiatives
and boosted by Q4 FY20 market volatility. We have now
completed the first year of the three-year implementation
programme designed to diversify the business and better
position it for the long term. Noting that each initiative is

1 Average quarterly revenues in this paragraph are based on the Q1–Q3 FY20 quarterly

average versus the Q2–Q4 FY19 quarterly average.

offering to meet the needs of active turbo warrant traders,
and to facilitate further growth in this opportunity. Spectrum
is currently integrating an additional broker, which will enable
the exchange to offer its expanding product set to a wider
array of potential clients and will mark further progress.
Discussions are ongoing with additional issuers who have
publicly expressed a firm interest in issuing products on
Spectrum.

Reflecting our growing focus on the Institutional client
segment, IG Prime was launched in March 2020. FY20
revenue growth from this segment was encouraging, and a
further build-out of IG Prime’s product offering is planned in
FY21 to provide additional opportunities for client acquisition.
We grew the number of active clients by 59% in this client
segment in FY20.

While at an earlier stage, in Greater China we recruited a new
CEO with a strong network in Hong Kong and established a
local office presence. We’re advancing discussions with a
number of banks and securities brokerage firms to distribute
our suite of products. These partners, who recognise our
differentiated product and service capabilities, would
provide more immediate market access for us than a
direct-to-consumer approach. Following completion, these
partnerships would enable us to begin gaining access to a
market of more than 500,000 professional investors in Hong
Kong, and better position us well to reach the estimated
4 million high-net-worth individuals in Greater China.

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STRATEGIC REPORT

Overview of the
2020 Financial Year
CONTINUED

at a different stage of development, there has been good
progress made across all of the Significant Opportunities.

Growth in revenue and the number of active clients has
been strong in both the Japan and the Emerging Markets
businesses, resulting from a number of actions completed
during the year.

In Japan, new leadership introduced a more localised product
offering which has been well received, with the investment
in marketing through an extensive brand campaign,
supported by a high-profile brand ambassador, driving
further success. We continue to innovate new products for
this important market. Good progress has been made in
partnership discussions, and we’ll continue to focus on these
opportunities in the year ahead to better reach the 2 million
active forex traders who drive a £1 billion revenue pool in
this market.

During the period, we opened a new client-facing subsidiary,
IG International. This better enables us to onboard new
clients from many different parts of the world, and simplifies
our arrangements with existing international clients. Revenue
growth was driven by an increase in the number of active
clients who were onboarded via reverse enquiry.

In the US, the OTC forex business added new clients at
a steady rate. The business provides clients with award-
winning service and leading technology. Nadex, our US
retail exchange, has also continued to refine its product
proposition, growing its revenues year on year. DailyFX,
our US-based content provider, expanded its global reach
through greater multi-lingual capability. Given the lead
generation potential of the DailyFX brand, with over 27 million
new readers (of which 5.1 million are in the US), the website
is becoming a more important marketing and acquisition
engine for IG as it looks to expand its content beyond forex.
We will continue to focus on the integration and alignment of
our three US businesses to amplify the IG brand and increase
the overall revenue opportunity.

The successful launch of Spectrum, our multilateral trading
facility, was a key milestone in the diversification of our
product range. Spectrum’s differentiated offering has been
well received by the market, and volumes have grown steadily
since the marketing launch in 2019. Around 40% of trades
on Spectrum in Q4 FY20 were made out of normal trading
hours, showing the value of Spectrum’s unique 24/5 trading
capability. We are continuously improving our product

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 costs1

Gain/loss on sale of subsidiaries

Operating profit
Net finance (expense)/income

profit before taxation
Taxation

profit for the period

Basic earnings per share

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

Change
%

36%

476.9
6.3
(7.9)
1.9

477.2

(259.6)
(24.7)

(284.3)

24%

–

192.9
1.4

194.3
(36.0)

158.3

43.1p

53%

52%

649.2
5.0
(7.4)
1.4

648.2

(308.6)
(44.3)

(352.9)

0.7

296.0
(0.1)

295.9
(55.5)

240.4

65.3p

1 Operating costs include net credit losses on financial assets of £11.0 million (FY19: £1.8 million) which are presented separately on the Consolidated Income Statement in the Group

Financial Statements.

Our net trading revenue in FY20 increased by 36% to £649.2 million, compared with £476.9 million in FY19, driven by a period
of sustained high market volatility in Q4, related to the Covid-19 pandemic and other macro events.

Net trading revenue reflects the transaction fees (ie spread, commission and overnight funding charges) paid by clients net of
our external hedging costs and clients’ trading profits and losses, offset by our hedging profits and losses.

Operating expenses of £308.6 million increased by 19%. This included investment of £35 million in prospect acquisition and
development of the IG brand, in the launch of our new businesses in the US and Europe, and an increase in certain costs
directly related to the significant increase in revenue and active client numbers. Operating expenses also included a £5 million
charitable donation. Variable remuneration of £44.3 million reflected a higher level of headcount and the outperformance of
the Group against its internal targets.

We sold six entities, recognising a gain on sale of £0.7 million. These entities owned generic top-level domains, which we
acquired in FY15.

Operating profit in the period was £296.0 million, 53% higher than FY19. After net finance costs of £0.1 million, profit before
taxation was £295.9 million. The effective tax rate for the year was 18.8% (FY19: 18.5%), with profit after tax of £240.4 million.
Basic earnings per share of 65.3 pence was 52% higher than in FY19.

Revenue performance by product

OTC leveraged
Exchange traded derivatives
Stock trading and investments

Group

Net trading revenue (£m)

Year ended
31 May 2020

Year ended
31 May 2019

Change
%

617.2
18.4
13.6

649.2

451.4
16.8
8.7

476.9

37%
9%
57%

36%

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Operating and
Financial Review
CONTINUED

Revenue drivers

OTC leveraged
Exchange traded derivatives
Stock trading and investments

Group1

Active clients (000)¹

Revenue per client (£)

Year ended
31 May 2020

Year ended
31 May 2019

Change
%

Year ended
31 May 2020

Year ended
31 May 2019

176.6
19.8
54.9

239.6

129.7
17.5
37.9

178.5

36%
13%
45%

34%

3,496
927
248

3,481
958
229

Change
%

–
(3%)
8%

1 Total active clients have been adjusted to remove the clients who are active in more than one product category (multi-product clients) to give a unique client count. In FY20,

there were 11,700 multi-product clients, compared with 6,600 in FY19.

OTC leveraged derivatives
In FY20, OTC leveraged revenue in the year was £617.2 million, an increase of 37% on FY19. We served 36% more OTC leveraged
active clients in FY20, whilst revenue per client was consistent with prior year. The increase in OTC leveraged revenue was
primarily driven by market conditions in Q4 where high levels of market volatility were observed throughout the period.

Asset class

Indices
Equities
Foreign exchange
Commodities
Options
Cryptocurrencies

OTC leveraged

OTC leveraged revenue (£m)

Year ended
31 May 2020

Year ended
31 May 2019

287.2
88.6
113.3
86.2
24.4
17.5

617.2

213.8
85.7
79.6
41.8
20.3
10.2

451.4

Change
%

34%
3%
42%
106%
20%
72%

37%

Changes in the composition of our OTC leveraged revenue by asset class reflects the differing levels of volatility in each asset
class, which impacts the extent to which clients can identify trading opportunities.

The impact of elevated levels of market volatility was reflected in all asset classes. Revenue generated from clients trading on
commodities showed the largest asset class increase of 106% on FY19, driven by the highly volatile price of oil during Q4.

Exchange traded derivatives
In FY20, we generated £18.4 million of revenue from exchange traded derivatives, traded on the two exchanges that we
operate: Nadex, the US retail focused exchange, and Spectrum, the European multilateral trading facility, which was launched
in October 2019. Active clients in FY20 increased 13%, reflecting the acquisition of new clients trading on Spectrum. This also
resulted in a 3% reduction in the average revenue per client, as driven by new Spectrum clients, who were of a lower average
value than the Nadex clients.

Stock trading and investments
For FY20 stock trading and investments revenue now includes the income derived from foreign exchange conversions, which
was previously reported within the OTC leveraged revenue; the comparative for FY19 has been restated. On this basis our
stock trading and investments revenue was 57% higher in FY20, driven by a 45% increase in the number of clients served and
an 8% increase in revenue per client.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Revenue performance by market
Consistent with the presentation of our strategy and financial targets, revenue performance has been segmented into Core
Markets and Significant Opportunities.

ESMA region – OTC leveraged
Other Core Markets – OTC leveraged
Stock trading and investments

Total Core Markets

Significant Opportunities – OTC leveraged
Significant Opportunities – ETDs

Total Significant Opportunities

Group

Net trading revenue (£m)

Year ended
31 May 2020

Year ended
31 May 2019

Change
%

328.5
198.7
13.6

540.9

90.0
18.4

108.4

649.2

260.4
149.1
8.7

418.2

41.9
16.8

58.7

476.9

26%
33%
57%

29%

115%
9%

85%

36%

Net trading revenue in the Core Markets was 29% higher in FY20 than the same period in the prior year, with all areas of the
business benefiting significantly from increased client activity as a result of the high levels of market volatility in Q4.

ESMA region revenue increased 26% to £328.5 million, with a 49% increase in Retail client revenue and a 12% increase in
Professional client revenue. The number of active Retail clients and revenue per Retail client increased throughout the year,
and was further boosted by 34,000 new clients onboarded and increased activity of our existing clients. The number of active
Professional clients trading and the revenue per Professional client remained steady in the Q1–Q3 period, with an increase in
activity and revenue per client in Q4.

Our Other Core Markets comprise our businesses in Australia, Singapore, Switzerland, Dubai and South Africa. Other Core
Markets revenue increased 33% to £198.7 million, driven by a 30% increase in the number of active clients. Stock trading and
investments revenue was 57% higher than FY19, to £13.6 million, driven by a 45% increase in the number of clients served and
an 8% increase in revenue per client.

Revenue from the portfolio of Significant Opportunities was £108.4 million in FY20, £49.7 million higher than in FY19,
with a 115% increase in OTC leveraged revenue and a 9% increase in exchange traded derivatives revenue. Similar to the
Core Markets, these revenues benefited from the extraordinary trading conditions experienced across the Group in the
fourth quarter.

Q4 performance
Client activity and revenue in Q4 was exceptional, driven by the sustained levels of high volatility as a result of the Covid-19
global pandemic and other macro events.

In Q4, Group revenue was 86% higher than in Q3 FY20 and 120% higher than Q4 FY19. This sharp increase in revenue was
driven by a significant rise in the number of active clients trading in the period with a higher average revenue per client, as the
volatile markets provided more opportunities for clients to trade. Average OTC leveraged revenue per client was 31% higher in
Q4 than Q3.

Group active clients in Q4 reached 199,300 (Q4 FY19: 128,100), driven by more existing clients trading and a significant
increase in the number of new clients onboarded in the period. In Q4 there were 51,200 new clients trading, 204% higher
than Q3.

While our revenue was significantly boosted by the exceptional client activity in Q4, we don’t expect this level of activity to
be sustained as we anticipate market volatility returning to more normalised levels in the course of FY21. However, we do
anticipate some ongoing benefit from the record number of new active clients acquired in Q4. While preliminary indications
are that these clients are of a similar profile to previous new client cohorts, it’s too early to conclude how they will trade
over time.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Operating and
Financial Review
CONTINUED

Q1–Q3 performance
Prior to Q4, the Group delivered good performance across all businesses and products. Q1–Q3 FY20 net trading revenue was
£389.7 million, 9% higher than Q1–Q3 FY19 which was £359.0 million. The Q1–Q3 FY20 Core Markets net trading revenue was
3% higher and the Significant Opportunities net trading revenue was 50% higher than Q1–Q3 FY19.

OTC leveraged products continue to generate the majority of the Group’s net trading revenue and represented 95% of the
Q1–Q3 FY20 revenue.

OTC leveraged revenue (£m)

Active clients ('000)

Revenue drivers

ESMA region
Other Core Markets

Core Markets

Significant Opportunities

Group OTC leveraged

Q1–Q3
FY20

197.0
122.1

319.1

52.5

371.6

Q1–Q3
FY19

Change
%

200.3
110.6

310.9

30.5

341.4

(2%)
10%

72%

Q1–Q3
FY20

73.1
34.0

107.1

23.1

130.2

Q1–Q3
FY19

74.1
31.6

105.7

11.2

116.9

Change
%

(1%)
7%

106%

11%

ESMA region OTC leveraged revenue and active clients in Q1–Q3 FY20 were slightly lower than Q1–Q3 FY19. The FY19
comparison includes two months of trading in Q1 FY19 prior to the implementation of the ESMA product intervention
measures. Comparing the Q1–Q3 FY20 quarterly average with the FY19 Q2-Q4 quarterly average shows the two periods on a
more consistent basis, with an 8% increase in the average quarterly revenue, driven by a 7% increase in the average quarterly
active clients. The recovery in the Retail client base was strong, with 26% higher revenue and an 8% increase in the number
of active clients within the Retail client segment. The number of active Retail clients has increased each quarter since the
implementation of the ESMA product intervention measures in August 2018 (Q1 FY19).

Average quarterly active Professional clients and revenue per Professional client remained largely unchanged across the two
comparative periods.

The proportion of the ESMA region revenue generated by Professional clients in the Q1–Q3 FY20 period reduced to 61%,
compared with 66% in the Q2–Q4 FY19 period, due to the increase in Retail client revenue.

Other Core Markets
OTC leveraged revenue in Q1–Q3 FY20 was £122.1 million, 10% higher than Q1–Q3 FY19. The number of active clients in the
period increased by 7% on Q1–Q3 FY19, with a 3% increase in the revenue per client.

Australia and Singapore were the largest contributors to our Other Core Markets, representing 72% of the revenue in the Q1–
Q3 FY20 period. Australia’s Q1–Q3 FY20 net trading revenue increased by 10% on Q1–Q3 FY19. In Singapore, where increased
margin requirements for forex trading came into effect in October 2019, revenue increased by 8%.

The OTC leveraged revenue in Q1–Q3 FY20 from the Significant Opportunities increased by £22.0 million to £52.5 million,
72% higher than Q1–Q3 FY19, with each of the businesses within the Significant Opportunities portfolio reporting growth
in revenue in this period. The increased revenue is driven by growth in the client base, with the Q1–Q3 FY20 active clients
increasing 106% on Q1–Q3 FY19. The average revenue per client in the Significant Opportunities reduced by 16% due to
changes in the mix of the revenue. For example, clients of IG US, our OTC forex business, which went live in January 2019,
have a lower revenue per client than the more established business units in the portfolio.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

£m

Year ended
31 May 2020

Year ended
31 May 2019

116.4
61.8
11.0
7.3
6.8
79.7
25.6

308.6

1,921

106.3
51.7
1.8
13.1
3.6
65.8
17.3

259.6

1,788

Change
%

9%
20%
n/m%
(45%)
88%
21%
48%

19%

Operating expenses (excluding variable remuneration) by cost type

Fixed remuneration
Advertising and marketing
Bad debts
Premises
Regulatory fees
Other structural costs
Depreciation and amortisation

Operating expenses

Headcount at end of period

Operating expenses were £308.6 million, £49.0 million higher than FY19. The increase reflects the planned investment to
support growth in the Significant Opportunities portfolio, and an increase in certain costs directly related to the increased
revenue and trading activity in Q4, including a higher bad debt provision, and increased credit card charges. The FY20
operating expenses also included a £5 million charitable donation.

Fixed remuneration increased by 9% in FY20 to £116.4 million, driven by the planned growth in headcount during the year.
Included in fixed remuneration was an increase of £1.6 million for holiday accrual, as the employee holiday balance carried
into the next financial year was significantly higher due to the Covid-19 pandemic.

Advertising and marketing spend increased by 20% in FY20 to £61.8 million (FY19: £51.7 million). The mix of external
advertising and marketing spend changed compared with the prior year, with a reduction in centrally managed online spend
reflecting improved efficiency, investment in our search engine optimisation capability, and an increase in locally managed
and brand related spend, to enable a more localised marketing approach.

The bad and doubtful debt provisions in the year were £11.0 million (FY19: £1.8 million), the majority of which relates to
provisions for client debts which arose during the highly volatile markets in Q4.

Premises costs were £7.3 million (FY19: £13.1 million). The decrease of £5.8 million was due to the majority of building rent now
being recognised as depreciation, following the adoption of the IFRS16 Leases accounting standard; this also contributed to
the £8.3 million increase in depreciation and amortisation. The remaining increase in depreciation and amortisation reflects
the increase in the amortisation of internally developed assets, following high levels of capitalisation in FY19, and higher lease
costs due to new premises.

We are charged fees by the various regulators in the jurisdictions in which we operate, and in addition are required to make
a contribution to the Financial Services Compensation Scheme in the UK. The charge for this depends on the size of the
compensation fund required by the FCA for the scheme. This requirement increased from FY19, which drove the increase
of £3.2 million in regulatory fees.

Other structural costs were £79.7 million, an increase of 21% on FY19. The increase reflects higher credit card charges, linked
to an increase in the number of payment transactions in Q4, and the £5 million charitable donation.

Variable remuneration

Share-based compensation
Sales bonuses
General bonuses

Variable remuneration

£m

Year ended
31 May 2020

Year ended
31 May 2019

Change
%

11.3
8.2
24.8

44.3

6.6
5.4
12.7

24.7

72%
50%
95%

79%

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Operating and
Financial Review
CONTINUED

Variable remuneration rose 79% to £44.3 million; this was 15% of operating profit, versus 13% in the prior year. Average
monthly headcount in the Group increased to 1,887 at the end of FY20, from 1,780 at the end of FY19.

Share-based compensation costs relate to the long-term incentive plans for key employees, and reflect the size of the awards
and the extent to which they are expected to vest, which is driven predominantly by earnings per share and relative Total
Shareholder Return performance. The increase of 72% to £11.3 million reflects the higher accounting charge as a result
of the outperformance in FY20 against internal targets, as well as a higher level of headcount.

Sales bonuses increased by 50%, reflecting higher commission payments to sales employees for the onboarding and
management of their own-sourced high-value clients.

The charge for the general bonus pool was £24.8 million, an increase over the prior year period, reflecting our
outperformance against internal targets as well as a higher headcount.

Net finance costs
We recognised net finance costs of £0.1 million during FY20, comprising finance income of £5.8 million (FY19: £5.4 million)
and finance costs of £5.9 million (FY19: £4.0 million). The increase in finance costs is attributable to higher fees and interest
relating to debt facilities and the adoption of IFRS16 Leases from 1 June 2019, which resulted in a £0.6 million interest charge
for the financing element of operating leases.

Taxation
The effective tax rate (ETR) for the year was 18.8% (FY19: 18.5%).

The majority of our taxable profit arises in the UK. The ETR is lower than the 19% statutory rate of UK Corporation Tax due
to the benefit of the UK ‘Patent Box’ incentive as a result of UK and European patents held, and the recognition of previously
unrecognised tax losses for deferred tax purposes relating to the US and Japan.

Our ETR is dependent on a mix of factors including taxable profit by geography, tax rates levied in those geographies and
the availability and use of taxable losses. Our future ETR may also be impacted by changes in our business activities, client
composition and regulatory status, which could affect our exemption from the UK Bank Corporation Tax surcharge. Our
current estimate of the ETR for FY21 is 19%.

Dividend
The Board recommends a final dividend of 30.24 pence per share, taking the full-year dividend for FY20 to 43.2 pence per
share (FY19: 43.2 pence per share), in line with previous guidance.

The final dividend, if approved by shareholders at our Annual General Meeting (AGM), will be paid on 22 October 2020 to
members on the register at the close of business on 25 September 2020.

Distributable reserves
As a result of an internal Group review of historical distributable reserves, three dividends were identified where the
determination of distributable reserves was incorrect. The relevant dividends were interim FY18, final FY17, and interim FY10.
While sufficient distributable reserves existed in the Group at the times of all the payments, the Company itself did not have
sufficient distributable reserves.

At the September AGM, resolutions will be proposed to rectify the historical positions.

The Group’s current and historical capital positions are unaffected.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Year ended
31 May 2020

Year ended
31 May 2019

296.0
18.9
6.7
(7.3)
9.7
(0.7)
21.7

345.0

117%
(57.1)

287.9

192.9
17.3
–
–
7.2
–
(19.3)

198.1

103%
(38.4)

159.7

Own funds flow

£m

Operating profit
Depreciation and amortisation – other
Lease asset depreciation
Lease liability payments
Share-based compensation
Gain on sale of subsidiaries
Change in working capital

Own funds generated from operations

As % of operating profit
Taxes paid

net own funds generated from operations

We use own funds, and net own funds generated from operations, as key measures of cash generation. Cash generation
remained strong in FY20, with own funds generated from operations of £345.0 million (FY19: £198.1 million). The cash
conversion rate, calculated as own funds generated from operations divided by operating profit, increased to 117% (FY19:
103%). The high level of conversion of profit into cash reflects the non-cash charges in operating profit and the movement
in working capital due to the higher level of the bonus accrual at the end of FY20, compared with the prior year.

Cash tax payments of £57.1 million consisted of £13.8 million in respect of the UK Corporation Tax liability for FY19, £41.2
million of tax in respect of the UK FY20 liability, and the payment of £4.6 million of overseas taxes, partly offset by the receipt
of £2.5 million of UK tax overpaid in earlier periods.

Tax payments in FY20 were significantly higher than in FY19 due to increased profits during the year and the acceleration of
UK Corporation Tax quarterly instalment payments. We were required to make six instalment payments in FY20, versus four
payments previously required in a 12-month period, due to a change in UK tax legislation. This is expected to normalise back
to four instalment payments in FY21.

Movement in own funds

£m

Net own funds generated from operations
Net financing (costs)/receipts
Capital expenditure
Proceeds from sale of subsidiaries
Purchase of own shares

pre-dividend increase in own funds
Dividends paid

Increase/(decrease) in own funds
Own funds at start of the year
Impact of movement in exchange rates

Own funds at the end of year

Year ended
31 May 2020

Year ended
31 May 2019

287.9
(0.8)
(16.3)
0.6
(1.5)

269.9
(159.2)

110.7
720.8
1.0

832.5

159.7
0.5
(14.3)

(2.0)

143.9
(171.1)

(27.2)
746.1
1.9

720.8

Capital expenditure in the year of £16.3 million primarily related to internally developed software, and the purchase of third-
party software and IT equipment.

Dividend payments during the year reflect the final dividend for FY19 of £111.4 million and the interim dividend for FY20 of
£47.8 million.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Operating and
Financial Review
CONTINUED

Summary Group Balance Sheet

£m

Goodwill
Intangible assets
Property, plant and equipment
Operating lease net asset

Fixed assets

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

Liquid assets
Long-term bank borrowings
Client deposits at IG Bank S.A.
Title transfer funds

Own funds

Working capital
Tax payable
Deferred tax net asset

net assets

31 May
2020

31 May
2019

108.1
39.1
17.0
0.1

164.3

83.8
437.4
486.2
66.5

1,073.9
(100.0)
(58.9)
(82.5)

832.5

(61.8)
(9.9)
10.8

108.1
43.4
14.4
–

165.9

84.4
419.3
373.3
51.1

928.1
(100.0)
(31.6)
(75.7)

720.8

(43.1)
(10.4)
8.6

935.9

841.8

The operating lease net asset of £0.1 million at 31 May 2020 reflected the adoption of IFRS 16 Leases with effect from
1 June 2019. The balance comprised a £29.3 million right-of-use asset offset by a £29.2 million lease liability.

Our liquid assets have increased by £145.8 million to £1,073.9 million during the year. This was driven by an increase in the
Group's cash, after taking into account dividends of £159.2 million (FY19: £171.1 million) and tax payments of £57.1 million
during the year, and an increase in amounts held at brokers. The increase in amounts at brokers reflected increased margin
requirements at 31 May 2020 relative to 31 May 2019. Own funds in client money represents our cash which is in segregated
client money pools.

Own funds are our liquid assets, reduced by borrowings and client money held on the Balance Sheet. Client deposits and title
transfer funds increased relative to the prior year, reflecting high levels of account funding by clients.

The change in our working capital requirement reflected the relative size of the bonus pool accrual and other accruals which
relate to variable costs.

Available liquidity

£m

Liquid assets
Broker margin requirement
Cash balances in non-UK subsidiaries
Own funds in client money

Available liquidity at end of year

Of which:
Held as liquid asset buffer
Dividend due

31 May
2020

1,073.9
(326.0)
(177.4)
(66.5)

504.0

83.8
111.7

31 May
2019

928.1
(314.0)
(187.5)
(51.1)

375.5

84.4
111.3

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Our total liquid assets at the end of year were £1,073.9 million (31 May 2019: £928.1 million). Liquidity is provided by
shareholders’ funds, supplemented by a £100 million bank term loan, client deposits at IG Bank in Switzerland, and client
funds which have been transferred to us under title transfer arrangements. We have access to additional liquidity through
a £100 million committed revolving credit facility.

We require liquidity to fund our day-to-day operations, primarily to fund the margin that our hedging brokers require to
support our hedging positions, the regulatory and working capital of our subsidiaries, and to fund adequate buffers in
client money accounts. Despite the unprecedented levels of financial market volatility, no issues were encountered with the
management of liquidity during the period, reflecting our resilient business model and prudent financial and risk management.

The level of broker margin is driven by the notional value of our open hedging positions, which vary with client trading activity,
and the extent to which client trades can be offset against each other. At 31 May 2020, the broker margin requirement was
£326.0 million (31 May 2019: £314.0 million). The peak broker margin during FY20 was £380.8 million.

For liquidity management and planning purposes, we conservatively treat cash held by subsidiaries outside the UK as not
immediately available. The amount of cash held in entities outside the UK was £177.4 million at 31 May 2020 (31 May 2019:
£187.5 million). Balances in excess of capital and operating requirements are regularly repatriated to the UK by these entities
to ensure efficient management of liquidity.

Regulatory capital resources

£m

Shareholders’ funds

Less interim profit/declared dividends
Less goodwill
Less intangible assets
Less deferred tax assets1
Less value adjustment for prudent valuation

Regulatory capital resources

31 May
2020

935.9

(111.7)
(108.1)
(39.0)
–
(1.6)

675.5

31 May
2019

841.8

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

568.9

1 For FY20, in line with the EU Capital Requirements Regulation Article 48, the deferred tax assets meet the threshold requirements to allow them to be risk weighted as part of the

credit risk requirement and are not deducted in full from regulatory capital resources.

Pillar 1 risk exposure amounts (REA)

£m

Total Pillar 1 REA

Capital ratio

Required capital ratio
Pillar 1 minimum
Individual capital guidance (ICG)

ICG requirement
Combined buffer requirement

Total requirement %

Total requirement – £m
Capital headroom – £m

31 May
2020

31 May
2019

2,018.6

1,875.9

33.5%

30.3%

8.0%
9.4%

17.4%
2.5%

19.9%

401.7
273.8

8.0%
9.4%

17.4%
3.1%

20.5%

385.0
183.8

Our capital ratio at 31 May 2020 was 33.5% (31 May 2019: 30.3%), well above the required minimum capital ratio, including the
combined buffer requirement, of 19.9% (31 May 2019: 20.5%), demonstrating our solid capital base.

Segregated client funds
At 31 May 2020, we held £1,964.1 million (31 May 2019: £1,349.2 million) of client money in segregated bank accounts, and
£1,509.8 million (31 May 2019: £1,096.8 million) of client assets in third-party custodian accounts. These amounts are
classified as segregated client money and assets, and therefore excluded from our balance sheet.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Risk Management

Effective risk management is essential to the
achievement of IG’s strategy and business
objectives, and to preserve its financial
strength and resilience. The Board is
responsible for ensuring that we maintain
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, including the achievement of fair outcomes
for clients as a result of our conduct or to the sound, stable,
resilient and transparent operation of financial markets. This
framework provides the Board with assurance that the range
of IG’s risks, whether strategic or operational in nature, are
understood and managed in accordance with the appetite
and tolerance levels set by the Board. It provides the basis for
enabling our ongoing assessment, control, monitoring and
reporting of risk management.

The framework is established around the following elements:

¼¼ Risk culture
¼¼ Risk Taxonomy
¼¼ Risk Appetite Statement (RAS)
¼¼ Risk Management Governance
¼¼ Risk assessment, control, monitoring and reporting

Risk culture
The Board recognises that embedding a culture of risk
management and compliance across all areas of the
Company is fundamental to the effective operation of
our 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.

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

We work to achieve the implementation of our desired
risk management culture through principles, policies and
consistent practices.

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

First line of defence
The first line of defence has primary accountability for risk
management, including the day-to-day responsibility for

ensuring that the business operates within risk appetites.
Management is responsible for identifying, assessing, and
managing risks facing the business, in compliance with IG’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.
These are part of a single control team, led by the Group’s
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 IG’s risk management and
control policies, providing independent analysis, control of
IG’s risks, and keeping abreast of industry and regulatory
developments that might require enhancements to our Risk
Management Framework.

Third line of defence
The third line of defence, independent assurance, is provided
by Group 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 our
Risk Management Framework and managing IG’s principal
risks. These will include assessing the design and operating
effectiveness of our internal governance structures and
processes, setting and adhering to risk appetite, and the risk
and control culture of the organisation.

The Group Internal Audit function reports to the Audit
and Board Risk Committees on a quarterly basis. External
Auditors also support assurance, directly reporting into the
Audit Committee.

Roles and responsibilities
Across IG’s businesses each employee should understand
clearly how they may encounter risk while performing their
duties. Risk means the probability of loss or negative impact
to IG, due to an event or outcome.

Some teams will have exposure to specific risk types, while
others experience more general risks. Examples of specific
exposures are market risk for our trading desk, liquidity risk
for our treasury operations and credit risk for the credit
operations team. A more general example would be the
exposure all our employees have to operational risk. Each
employee should be aware of the risks they are exposed to
and know their responsibilities relating to that risk, to keep
within IG’s risk appetite.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

We make employees aware of their responsibilities through:

¼¼ Training
IG uses the IGnite system to ensure that all employees receive
and complete mandatory periodic training. The second line
of defence teams provide training on risk management tools,
as well as targeting specific areas for education when there
are changes to the risk landscape or risk exposure in that
business area

¼¼ Top-down dissemination
Our senior management team stresses the importance of
risk awareness through regular town halls, blogs and emails,
reminding staff of their responsibilities and advising of
changes to business or practices

¼¼ Subject matter experts and risk associates
Throughout the business, specific individuals are given
training on risk practices. Their role is to help promote
an understanding of the expectations of the first-line
requirements

Our approach
We take the view that our processes should be developed to
mitigate risk through a strong control environment, with an
understanding and acceptance of the residual risk. Wherever
possible, employees should have clear paths of escalation
and planned response for any events outside of risk appetite.
Risk practices should have the following attributes:

¼¼ Consistent and embedded
Risk management should be fully embedded into all of
our departments and business processes, as an integral
part of day-to-day management. A consistent approach
should be taken and consistent practices followed
by employees globally

¼¼ Appropriate level
Risk management activities should be appropriate for
the level and complexity of our business activities and
associated risks

¼¼ Continual assessment
Risk management should be reviewed and enhanced
continually, to ensure that our Risk Management Framework
remains effective and aligned to shareholder and stakeholder
expectations

Risk Taxonomy
IG has developed a Risk Taxonomy to ensure that we consider
the full range of risks faced by the business, and to create a
consensus for classifying all risk management activities. The
taxonomy categorises the principal risks faced by IG 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. We look at each
of these risk areas from page 53.

Risk Appetite Statement
The purpose of the IG RAS is to detail the acceptable levels of
risk to which we’re willing to be exposed, so as to allow for a
profitable business while operating within our risk tolerances.

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 escalation
and investigation. 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 our risk monitoring
and reporting.

KRIs consist of two distinct categories: ‘Board-Approved
Limits’ and ‘Monitoring KRIs’:

¼¼ Board-Approved Limits (BALs)
In the event of a Red breach, action must be taken, without
discretion, which ensures we come back inside the BAL. 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 we breached
a BAL

¼¼ Monitoring KRIs
A breach of a defined KRI triggers escalation to management,
which results in consideration being given as to what
appropriate responsive actions are taken. Red levels,
along with actions taken, are reported to the Board on
a monthly basis

Risk Management Governance
Our Risk Management Governance Structure is summarised
below.

Senior managers and certification regime
IG Group consists of several legal entities, two of which
– IG Markets Limited (IGM) and IG Index Limited (IGI) – are
regulated by the UK’s Financial Conduct Authority. IGM
and IGI are classified as significant IFPRU firms, and also as
enhanced firms under the Senior Managers and Certification
Regime. These entities employ staff who provide services
for themselves and all other entities in the Group. The only
exception to this are the Executive Directors of IGI, who are
employed directly by IG Group Limited.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Risk Management
CONTINUED

We provide details of the assigned Senior Management
Function (SMF) below.

Senior Management Function

IG member assigned

SMF 1:
Chief Executive
SMF 2:
Chief Finance Function
SMF 3:
Executive Director

SMF 4:
Chief Risk Function
SMF 5:
Head of Internal Audit
SMF 10:
Chair of the Risk Committee
SMF 11:
Chair of the Audit Committee
SMF 12:
Chair of the Remuneration
Committee
SMF 13:
Chair of the Nomination
Committee
SMF 16:
Compliance Oversight
SMF 17:
Money Laundering
Reporting Officer
SMF 18:
Other Overall Responsibility

SMF 24:
Chief Operations Function

Chief Executive Officer

Chief Financial Officer

Chief Executive Officer,
Chief Financial Officer,
Chief Operating Officer,
Chief Commercial Officer
Chief Risk Officer

Global Head of Internal Audit

Chair of the Board
Risk Committee
Chair of the Audit Committee

Chair of the Remuneration
Committee

Chair of the Nomination
Committee

Chief Compliance Officer

Chief Legal and Governance
Officer, Chief People Officer,
Chief Product Officer,
Chief Strategy Officer
Chief Operating Officer,
IT Director

In addition to the assigned SMF, prescribed and overall
responsibilities are allocated to the relevant SMF. In fulfilling
their prescribed and overall responsibilities, the SMFs are
supported by governance committees and direct reports,
to whom responsibilities may be delegated.

The Board
The Board has overall accountability for the management of
risk at IG. This includes determining our risk appetite, which
sets out the nature and extent of the principal risks we’re
willing to take in achieving our objectives, and defining the
standards and expectations that drive our risk culture. It
also involves ensuring that we maintain an appropriate and
effective Risk Management Framework, and monitoring
performance and risk indicators to ensure that we remain
within our 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 provides to this Committee an
assessment of key and emerging risks that may impact IG.
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 137–139.

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
IG’s tax Risk Management Framework, to receive reports
on legal entity governance and the control environment
for client money and assets, and to monitor whistleblowing
arrangements. The Group Internal Audit function and
External Auditors both report directly to the Audit
Committee. Details of the Committee can be found in the
Audit Committee section set out on pages 129–136.

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 our business, 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. Details of the
Committee can be found in the Remuneration Committee
section set out on pages 99–128.

Disclosure Committee
The Disclosure Committee is responsible for identifying
Inside Information, and makes decisions about how and
when the Company should disclose this information. Details
of the Committee can be found in the Disclosure Committee
section set out on page 88.

Environmental, Social and Governance Committee
The Environmental, Social and Governance Committee
was formed in the 2020 financial year to oversee the
environmental, social and governance considerations
for IG, to adequately assess and manage obligations and
expectations of these areas. Details of the Committee can
be found in the Environmental, Social and Governance
Committee section set out on page 88.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Nomination Committee
The Nomination Committee oversees the selection and
appointment of Board members and senior management
staff, and the risks inherent in this process. Details of the
Committee can be found in the Nomination Committee
section set out on pages 94-98.

Principal risks

Risk management within the business
We have 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 pages 78-79.

principal risks/Taxonomy level 1

Taxonomy level 2

Outlook

Regulatory environment risk
The risk that the regulatory environment in
any of the jurisdictions in which we currently
operate, or may wish to operate, changes in a
way that has an adverse effect on our business
or operations, through reduction in revenue,
increases in costs, or increases in capital and
liquidity requirements.

¼¼ Legislative and

regulatory change

¼¼ Tax change

Commercial risk
The risk that our performance is affected
by client sensitivity to adverse market
conditions, failure to adopt or implement an
effective business strategy, failure to provide
the expected levels of client service, new or
existing competitors offering more attractive
products or services, risk to third-party supply
of services or client dissatisfaction.

Business model risk
The risk we face arising from the nature of our
business and our business model.

¼¼ Strategic delivery risk
¼¼ Market conditions risk
¼¼ Competitor risk
¼¼ Supplier restriction risk
¼¼ Client service risk

¼¼ Market risk
¼¼ Credit risk
¼¼ Liquidity risk
¼¼ 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 we’re
unable to attract and retain the staff we need
to operate our business successfully.

¼¼ Technology risk
¼¼ People risk
¼¼ Process risk
¼¼ External risk

Conduct risk
The risk that our conduct poses to the
achievement of fair outcomes for consumers,
or to the sound, stable, resilient and
transparent operation of the financial markets.

¼¼ Our clients
¼¼ The markets and
financial crime

¼¼ Culture and our people

We actively monitor and manage the outlook
for regulatory environment risk across all
countries and territories where IG operates.
Changes resulting from the 2019 European
Securities and Markets Authority (ESMA) and
Financial Conduct Authority (FCA) product
intervention measures are now well embedded
at IG. As regulation of all forms continues to
evolve, further changes are anticipated in the
normal course of business. When changes
occur, we will have plans in place to ensure a
smooth transition to meet new requirements.

Market volatility increased sharply in Q4 2020
and remained at elevated levels into June
2020, leading to strong business performance.
We’ve also made significant progress on our
strategic initiatives, despite the circumstances
related to the Covid-19 pandemic.

Heightened volatility in Q4 resulted in
significant trading volumes as existing and new
clients looked to benefit from opportunities
in the financial markets. Our mature and
embedded systems and controls enabled us to
manage the increased business model risk we
faced during this extraordinary period.

Increased trading volumes, particularly in Q4,
inevitably led to additional stress across all
areas of operational risk. While our systems,
people and processes handled this well, we’ve
prioritised several projects to strengthen
our technological and operational control
environment for the years ahead.

IG continues to invest in systems, people
and training to ensure our management of
conduct risk meets the very highest standards.
This includes ensuring we further embed our
client-first culture, while continuing to work
closely with all our regulators to protect the
integrity of the financial markets.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

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 RAS identifies KRIs, and maximum limits and thresholds,
to manage and monitor each risk. These KRIs are the basis
of reporting and are distributed to the Board on a monthly
basis, or escalated immediately depending on significance,
with more detailed 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 we face 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
Legislative and regulatory change
IG operates in a highly regulated environment that is
continually evolving.

Governments or regulators may introduce legislation or new
regulations and requirements in any of the jurisdictions in
which we currently operate. We face the risk that this could
result in an adverse effect on our business or operations,
reducing our revenue, raising costs or increasing our capital
and liquidity requirements. We operate to the highest
regulatory standards and believe that we lead the industry
in the way in which we deal with our clients. We maintain
constructive relationships with our key regulators and actively
seek to converse with them in an effort to keep abreast of
emerging regulatory trends or developments.

Tax change
Within regulatory environment risk, we also include the risk
of significant adverse changes in the way that the Group as
a whole, or our individual businesses, are taxed. Examples
of the tax risk we face include the risk that a financial
transactions tax is imposed, which could severely impact the
economics of trading, and the risk that the basis under which
we’re taxed, in any of the jurisdictions in which we operate, is
adversely affected.

Commercial risk
We define commercial risk as the risk that our performance
is affected by client sensitivity to adverse market conditions,
failure to adopt or implement an effective business strategy,
failure to provide the expected levels of client service, new
or existing competitors offering more attractive products
or services, risk to third-party supply of services or client
dissatisfaction.

Strategic delivery risk
We work to mitigate our strategic delivery risk through the
Board’s regular and thorough review and challenge of our
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 our
business being involved, and may include external assistance.
We undertake external consultation and extensive market
research before 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
IG’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. Our revenue is therefore
partly dependent on market conditions.

We seek 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 our expected financial performance, reflecting
the latest and expected market conditions. We use these
forecasts to determine actions necessary to manage
performance, with consideration given to changes in
market conditions.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

We regularly update our investors and market analysts on
our revenue performance, including quarterly updates
and pre-close statements, and engage with investors and
market analysts to mitigate the risk that the impact of market
conditions is not reflected in performance expectations.

Competitor risk
IG operates in a highly competitive environment, which
includes some unregulated and unethical operators. We work
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 our
competitors, including detailed comparison of the terms of
product offers.

We consider IG to be the leader in our market and, given
our strong ethical values, we never deploy questionable
practices, regardless of whether they would prove to be
commercially attractive to clients. We do, however, aim to
ensure that our product offering remains attractive, taking
into account the other benefits that we offer our clients,
including brand, strength of technology and client service
quality. This allows our business to provide a competitive
offering overall and manage competitor risk without
compromising our values.

Supplier restriction risk
IG is 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.

We perform regular reviews and work to ensure that we
have suitable engagement terms with each provider,
so as to identify any issues which may arise and gain an
understanding of any new upcoming requirements.

We aim to avoid concentration risk in our range of business
partners, whether in IT or other services, and we consider this
potential risk as part of our partner selection process. We’re
exposed to the risk that a key supplier could fail, and this is
represented as one of the operational risk scenarios when
we calculate our operational risk capital requirement

Client service risk
The risk of client dissatisfaction arising from the expected
service level not being met resulting in reduced trading and
account closures. This risk may stem from business stretch
in times of high volatility and increased client contact.

The service IG provides its clients is supported by client-
facing teams which interact with clients directly and specific
operational teams that support client account activity.

Business model risk
We define business model risk as the risks we face that arise
from the nature of our business and our business model,
including market risk, credit risk, liquidity risk and capital
adequacy risk.

Market risk
We accept some market risk to facilitate instant execution
of client trades. We manage this market risk by internalising
client flow through netting the exposure created through
clients’ trades so as to offset, and external hedging when the
residual exposures reach defined limits. Our real-time market
position-monitoring system allows us to constantly manage
our market exposures against our market risk limits. If
exposures exceed predetermined limits, we execute hedges
to bring the exposure back within the limits.

IG has a market risk policy which sets out how our business
manages its market risk exposures. The market risk policy
incorporates a methodology for setting market risk limits,
consistent with our risk appetite, for each financial market
in which our clients can trade, as well as certain groups
of markets or assets which we consider to be correlated.
We determine these limits 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 IG will hold without hedging.

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

Residual market risk can crystallise if a market ‘gaps’ or
fluctuates sharply, which occurs when a price changes
suddenly in a single large movement, sometimes at the
opening of a trading day, rather than in small incremental
steps. This can mean we’re unable to execute or adjust our
hedging in a timely manner, resulting in potential market risk
exposure. This may create a gain or a loss.

We monitor our market risk exposures through regular
scenario-based stress tests to analyse the impact of potential
stress and market gap events, and take appropriate action to
reduce our risk exposures and those of our clients.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Risk Management
CONTINUED

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

We manage financial institution credit risk by applying IG’s
Financial Institution Counterparty Credit Risk Policy.

As a result of offering leveraged trading products, we accept
that client credit losses can arise as a cost of our business
model. Client credit risk principally arises when a client’s total
funds deposited with IG 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.

We manage client credit risk through the application of our
Client Credit Risk Policy.

We set client margin requirements that reflect the market
price risk for each instrument, and use tiered margining so
that larger positions are subject to proportionately higher
margin requirements. We offer 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 funding by clients, we may also accept
collateral in the form of shares from professional clients held
in their IG stock trading account.

We further mitigate client credit risk by monitoring client
positions in real time 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
insufficient margin and triggers an automated process
to close 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 to within margin requirements, resulting
in reduced credit risk exposure for IG.

In some jurisdictions, IG provides negative balance protection
for retail clients, which is a guarantee that clients can’t 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 IG. This market risk arises following the closure of a client
position, as IG may hold a corresponding hedging position
that will, assuming sufficient market liquidity, be unwound.

We have significant financial exposure to a number of
financial institutions, owing to our placement of financial
assets at banks and our hedging of market risk in the
wholesale markets, which requires us to place margin
with our hedging brokers.

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

We actively manage our credit exposure to each of our
broking counterparties, settling or recalling balances at each
broker on a daily basis in line with the collateral requirements.
As part of our management of concentration risk, we’re
also committed to maintaining multiple brokers for each
asset class.

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

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

Liquidity risk
Liquidity risk is the risk that IG is unable to meet its financial
obligations as they fall due. We manage this by applying our
Liquidity Risk Management Policy.

Our approach to managing liquidity is to ensure that we have
sufficient liquidity to meet our broker margin requirements
and other financial liabilities when due, under both normal
circumstances and stressed conditions. These liquidity
requirements must be met from our own liquidity resources,
as IG does not use client money to fund our operations.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

We hold liquid assets to: (i) enable the funding of broker
margin requirements, (ii) ensure sufficient funds are held in
non-UK entities, (iii) place appropriate prudent margins and
buffers in segregated client money accounts, (iv) maintain
a liquid assets buffer, (v) make dividend payments to
shareholders, (vi) cover profits and losses on client trading
and hedging positions, and (vii) make tax and other payments.

We manage liquidity within the UK Defined Liquidity Group
(UK DLG) comprising IGM and IGI. The UK DLG includes
IGM, IG’s primary market risk management vehicle, which
internalises and hedges market risk on behalf of the other
entities in the Group. Key liquidity decisions are discussed
at the Executive Risk Committee and then the Executive
Committee, as necessary.

The UK DLG carries out an Individual Liquidity Adequacy
Assessment (ILAA) each year. This assesses the key drivers of
liquidity for the UK DLG and whether it has sufficient liquidity
to continue in operation, including under liquidity stress. The
Contingency Funding Plan (CFP), contained within the ILAA,
identifies mitigation options and steps to improve the liquidity
position in a stress scenario, through the implementation of
management actions.

We use a number of KRIs for managing liquidity risk,
including cash held in UK DLG bank accounts, forecasted
UK DLG available liquidity and UK DLG stressed liquidity after
management actions.

We’re required to fund initial margin payments to brokers on
demand. Broker initial margin requirements are dependent
on client trading positions, the level of internalisation IG can
achieve from client trading, the product mix in our hedging
positions and any natural offset in correlated products within
our hedging positions.

In addition to our liquid assets, we mitigate liquidity risk
through access to committed, unsecured bank facilities.
We reassess annually the appropriate level of committed
facilities we have available, and draw down on the facility at
least once during each year to test the process for accessing
that liquidity.

The Group successfully managed its liquidity needs
throughout the increased levels of client trading activity that
was driven by the heightened and sustained levels of market
volatility triggered by the Covid-19 pandemic. Liquidity is
anticipated to remain strong.

We produce short-term liquidity forecasts and stress tests,
so that appropriate management actions, including facility
draw-down, can be taken ahead of a period of expected
liquidity demands.

IG is exposed to interest rate risk through our debt and our
holdings of cash and investments. The interest costs incurred
on debt and interest income received through cash and
investments are not material in respect of our overall costs
and income. We consider the liquidity risk related to these
instruments in the Group Liquidity Risk Management Policy.

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

We’re supervised on a consolidated basis by the FCA. In
addition to our two UK FCA-regulated entities, our operations
in Australia, Japan, Singapore, South Africa, Bermuda, the
United States of America, Cyprus, 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 our capital resources, as part
of the Group Capital Management Framework.

IG manages capital adequacy risk through our Regulatory
Capital Policy, and we work to ensure that at all times we
hold sufficient capital to operate our business successfully
and to satisfy all regulatory requirements. We manage our
capital resources with the objectives of facilitating business
growth, maintaining our dividend policy, and complying with
the regulatory capital resources requirements set by our
regulators around the world.

We undertake an annual Internal Capital Adequacy
Assessment Process (ICAAP) through which we assess
our capital requirements, by applying a series of stress-
testing scenarios to our baseline financial projections. This
assessment is reviewed and challenged by the ICAAP and
ILAA Committee as well as the Board Risk Committee, which
recommends the result to the Board for review and approval.

We operate a monitoring framework over our 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. We also
monitor internal warning indicators as a component of our
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.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Risk Management
CONTINUED

Operational risk
Operational risk is defined as the risk of loss resulting from
inadequate or failed internal processes, people activities,
technology or other operations, or external events.

Operational risk is managed by applying our operational
Risk Management Framework. We continuously develop
this framework to ensure visibility of risks and controls. We
focus 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.

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 IG is unable to attract
and retain the staff it requires to operate its business
successfully. In addition, we monitor for any strain on
resources, ensuring sufficient staffing levels are in place for
key business teams, so that processes are run effectively
with controls maintained.

We recognise that operational risk arises in the execution
of all activities we undertake, and identify and manage
operational risk in four categories: technology, people,
process and external events.

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.

We manage our technology risk through our Technology
Risk Framework, which is overseen by the Technology Risk
Committee. KPIs, incidents and outages are raised to this
forum, comprising of IT and risk specialists. To manage
cyber risk and external threats to our systems and data, we
have the 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. We
have a 24/7 Security Operations Centre to review and
triage information security incidents, and employ mitigation
services for threats such as denial-of-service (DOS) attacks.

We undertake regular performance and stress-testing to
ensure our platforms have sufficient headroom and resilience
to perform in times of heightened volatility and increased
demand. We also test our disaster recovery capability
regularly to ensure that standby services are effective and
minimise the impact to our services.

process risk
Process risk relates to the design, execution and
maintenance of key processes – such as client onboarding,
trade execution or financial reporting – 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.

We continue to develop our Operational Risk Framework
to ensure visibility of risks and controls. We focus 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.

Our Risk and Control Self-Assessment (RCSA) methodology
focuses on areas of the business identified as a priority. We
use 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.

The Group Business Continuity Policy, and the framework to
that document, provide a clear statement of our commitment
to ensure that critical IG business activities can be maintained
during a disruption.

Conduct risk
IG recognises and manages the risk that our conduct may
pose to the achievement of fair outcomes for clients, and
to the sound, stable, resilient, and transparent operation of
the financial markets. We have a conduct risk framework,
and have 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. We work to
promote a positive, company-wide culture of good conduct
as a competitive advantage and a means to differentiate
our business clearly from those companies conducting
themselves poorly or unethically. We also aim to ensure that
all employees are aware of the importance of managing
conduct risk through programme conduct risk training
and awareness.

Our clients
We manage and monitor the risk of clients failing to
understand the functionality of our products and suffering
poor outcomes. We recognise that some of our products are
not appropriate for certain clients, and operate a process to
identify potential new clients for whom the product may not
be suitable. We support clients with education and training,
and offer account types that limit a customer’s risk. Client
outcomes are monitored and reported to the Board.

Across the Group, IG employs 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 us). 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 monitors 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.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Markets and financial crime
We recognise 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 we’ve designed our systems, controls
and monitoring programmes with the aim of preventing
and detecting such issues.

Culture and our people
We recognise the risk that the actions of our staff or IG’s
culture can result in poor outcomes for clients, or for the
financial markets. We work to ensure that our staff are
appropriately trained, managed and incentivised to ensure
that their behaviour and activities don’t inadvertently result
in poor outcomes for clients or the markets. We also review
remuneration policies and incentive schemes to ensure that
they are appropriate and conducive to good conduct by staff.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

eSG
Report

Introduction
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.

We aim to act with integrity and
transparency, maintaining a reputation
for professionalism and ethical practice
along with a constant determination
to do things better. This means we
are committed to understanding
and balancing our impact relating to
environmental, social and governance
(ESG) issues in line with the UN’s
Sustainable Development Goals,
and underpinned by our own well-
established purpose and values.

It’s through our shared values that our
attitudes and behaviours are shaped:

¼¼ 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

¼¼ 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

¼¼ 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 values provide the foundation for
our future growth and success, and give
us an ongoing focus in our day-to-day
work. We recognise the importance
of defining and communicating these
values to all our people, especially in
times of change and uncertainty.

The following sections set out how
we’ve been able to demonstrate
our commitment to our values,
behaviours and goals to create
good client outcomes and fairer
societies in the cities we operate in.

Brighter
Future

In January 2020 we launched
Brighter Future. This is a
pioneering ESG initiative that
brings together the strands
of our ESG work around the
globe, and is an expression
of our long-term commitment
to sustainability and social
responsibility.

Brighter Future provides a framework
that focuses our ESG activities to
maximise the positive outcomes
that we can achieve. To identify key
themes, we polled our people. The
overwhelming response was that
we should focus on: (i) improving
our environmental credentials, and
(ii) empowering members of our
communities through equal access
to education and social mobility. This
process enabled all of our people to
feel ownership of the initiative. Our
approach is well aligned with the UN’s
Sustainability Development Goals.

In this section we outline some of the
early achievements of the Brighter
Future initiative. We’ve started to
build long-term strategic partnerships
and integrated the Brighter Future
ethos into our operations and
ways of working. There are already
examples of IG colleagues donating
time, money and expertise to
excellent causes and projects.

environment

The first theme of the Brighter
Future initiative asserts a
commitment to managing our
environmental impact.

We’ve been conscientiously managing
elements of our environmental impact for a
number of years and monitoring our Scope
1 and 2 emissions. However, to illustrate
our renewed commitment, we entered a
programme of activities, including carbon
offsetting, to achieve full carbon neutrality.
As of July 2020, the Group is a carbon
neutral company in line with PAS 2060.

An important step in this process was to
expand our data collection and analysis
in order to review our Scope 3 emissions.
This enabled us to identify where we could
make improvements and has provided
a framework for monitoring our impact
going forward.

We’ve taken steps to reduce our waste and
energy consumption. In addition to space
consolidation, uninterruptable power supply
(UPS) upgrades and new IT equipment
for our teams, we’ve recently completed
the LED upgrade of lighting in our central
London data centre. We’ve also increased
our engagement with providers that have
strong renewable credentials and improved
our recycling. For example, all coffee
grounds from our UK office are delivered by
Paper Round to Bio Bean, an organisation
that recycles them into biomass fuel pellets.

In the 2020 financial year we offset
all carbon emissions by supporting a
range of projects promoting sustainable
economic livelihoods and clean technology
development. This formal offsetting has
been complemented by our continued
commitment to Fruitful Office. Our
partnership has also facilitated the planting
of 5,896 trees in Malawi.

By rebalancing our carbon footprint
through investments in sustainability
projects and taking steps to reduce our
emissions, we have contributed to UN
Sustainable Development Goals 7 and
13 respectively.

MEASURING IMPACT – ESG KPI 11

SCOPE 1–3 GREENHOUSE
GAS EMISSIONS PER
EMPLOYEE

10.983

ALIGNMENT
WITH
SUSTAINABLE
DEVELOPMENT
GOALS

1 For more detail on our ESG KPIs, please refer to the

glossary of terms on page 209.

empowerment

The second theme of the Brighter
Future initiative asserts our
commitment to promoting social
mobility and addressing educational
inequality. Here are some examples of
how we’ve engaged with this theme.

In October 2019 we entered a strategic
partnership with Teach First, a UK-based
charity whose mission is to build a fair
education for all. Teach First supports
schools serving the UK’s economically
challenged communities, by helping them
source high-calibre teachers and providing
vital leadership training programmes. So
far, our partnership has enabled Teach
First to recruit and train eight teachers that
have been placed in the schools that need
them the most. In the UK we also welcomed
a group of students from two Teach First
partner schools for an office visit. This gave
the students the type of invaluable insight
into the world of work that their wealthier
peers may have taken for granted.

In October, schools from different areas
were invited to our Krakow office as part
of the 'big sister' project – helping young
women to think about their professional
interest and inspire them by showing a
variety of jobs they could do in their future
career. Through these initiatives we have
contributed to UN Sustainable Development
Goals 4 and 10.

IG teams in Krakow and London have
continued to engage with the charity
Helping Hands. Volunteers worked with
charity delegates to learn more about
the challenges faced by amputees, and
to build prosthetic hands that have been
provided to those in need in a number of
third world countries.

This year IG colleagues in Singapore have
collaborated with the Singapore Association
of the Visually Handicapped and the KK
Women's and Children’s Hospital. This
has included running fundraisers and
participating in charity events.

At IG we’re very proud at what we’ve
achieved with our Brighter Future initiative,
and are excited about further embedding
it into our decision-making and company
culture in the next financial year and beyond.

MEASURING IMPACT – ESG KPI 2

NUMBER OF YOUNG
LIVES POSITIVELY
IMPACTED

3,819

ALIGNMENT
WITH
SUSTAINABLE
DEVELOPMENT
GOALS

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Case study

Brighter
Future Fund

The Covid-19 global
pandemic is having a
devastating impact on
a global scale. As so
often is the case in times
of crisis, it is the most
vulnerable members of our
communities that suffer
disproportionately.

FUND VALUE

£5.0m

THIS IS BEING USED TO
SUPPORT THOSE THAT HAVE
BEEN HARDEST HIT BY THE
COVID-19 PANDEMIC

Driven by a strong desire to support
our communities in their time of need,
IG took swift action and committed
£5 million from our profit before tax
for the 2020 financial year to the IG
Brighter Future Fund. This fund aligns
with the priorities of the IG Brighter
Future initiative and is being invested
in three different ways.

¼¼ First, £2 million was allocated to
expand our existing partnership
with the UK education charity
Teach First. Building on the
foundations set with our existing
partnership, we’re now working
together to support schools serving
deprived communities where
young people’s education has been
severely interrupted by the crisis

¼¼ Second, £2 million has been

dedicated to a global response.
Recognising that the Covid-19
pandemic has forced tens of
millions of children out of school,
we’ll be working with the global
organisation Teach for All and its
network members to support these
young people in the communities in
which we operate

¼¼ Third, £1 million of the Brighter
Future Fund has enabled us to
maintain and extend our range of
local-led employee initiatives across
the globe to help fight the virus

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

eSG
Report
CONTINUED

Environment
At IG we recognise the impact climate
change has on the environment
and society. We’re committed to
measuring and managing the carbon
emissions associated with our business
operations. We strive to lead by
example, and are actively working
with all members to raise awareness
on climate change risks, carbon
emissions and energy efficiency.

Carbon neutrality
In the 2020 financial year, IG became
a carbon-neutral company in line
with PAS 2060, committing to zero
emissions by offsetting our entire
carbon footprint. By measuring and
offsetting our carbon footprint, we aim
to do our part in tackling global climate
change, while supporting sustainable
development in local communities.

We offset all carbon emissions by
supporting a range of projects that
promote sustainable economic
livelihoods and clean technology
development. All of our offsets are
verified by either the Gold Standard
or UN CDM. We recognise that
offsetting is one way to reduce our
environmental impact. However, we’re
also committed to implementing
measures that mean we deliver an
ongoing and long-term reduction in
our overall footprint. We’ve addressed
these in our carbon management plan.

Our carbon footprint
Our carbon footprint for the 2020
financial year has been prepared
by an external consultant, Energise,
and includes our Scope 1, 2 and
3 emissions. In relation to our
Scope 1 and 2 emissions, our total

carbon footprint for the year was
3,324.12 tCO2e. This equates to
1.73 tonnes per employee.

The increase in our scope 1 emissions
associated with operating our
facilities related to a recharge of the
refrigerant in a UK data centre. The
decrease in our scope 1 emissions
associated with combustion relates
to a reduction in our use of diesel for
backup generators and a year on year
reduction in our use of natural gas.

Overall, the majority of our emissions
relate to Scope 3, and we’re developing
new initiatives to produce long-
term emissions reductions. We’re
also actively managing our energy
efficiency and we engage our people
in sustainable initiatives as part of
our Brighter Future initiative.

CARBON EMISSIONS BY SCOPE

Scope 1 | 2.8%
Scope 2 | 13.0%
Scope 3 | 84.2%

CARBON EMISSIONS BY SOURCE

INTRODUCTION

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FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Carbon footprint

GHG protocol scope

Sub-category

Year ended 31 May 2020
tCO2e

Year ended 31 May 2019
tCO2e

Scope 1
Scope 1

Scope 1
Scope 2

Scope 2

Operation of facilities
Combustion

Purchased energy

Scope 1 and 2 emissions
employees

performance indicator

Scope 1 and 2 emissions

Relevant change

Global energy use
uK energy use
Overseas energy use

Scope 3

Grand total

employees

Business travel
Employee commuting
Fuel and energy-related activities
Purchased goods and services
Waste generated in operations

107.00
331.00

438.00
2,711.00

2,711.00

3,149.00
1,788

1.761

469.91
110.93

580.84
2,743.28

2,743.28

3,324.12
1,921

1.730

-1.75%

8,439,477 kWh
6,772,615 kWh
1,666,862 kWh

1,427.38
862.40
709.40
14,718.20
56.72

Not calculated
Not calculated
Not calculated
Not calculated
Not calculated

17,774.08

Not calculated

21,098.20

Not calculated

1,921

Not calculated

performance indicator

All three scopes

10.983

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Supporting
and nurturing
our people

eSG
Report
CONTINUED

Social
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.
To support the Company strategy
announced in May 2019, we approved
a revised people strategy in November
2019. Building on the foundations
of the IG people experience, we
now focus on three key themes:

¼¼ One IG: Harnessing the power of a
diverse, inclusive and collaborative
organisation

¼¼ In great shape: A scalable, fit and

healthy organisation

¼¼ Always learning: An organisation

and employee experience focused
on learning and growth expectations
and opportunities

The following sections outline our
achievements in each area and
signal our focus in the year ahead.

One IG
Culture
Our employee surveys continue
to reveal strong performance on
cultural indicators such as the
treatment of colleagues, commitment
to ethical decision-making and
conduct, and leaders’ behaviour.

We held workshops in May 2019 to
align our people with the strategy
and to reinforce our values, asking
them to set individual and team
goals with this strategy in mind.

¼¼ Over 80% of employees attended
and feedback was positive. This
framework created the foundation
for ongoing engagement throughout
the year

¼¼ Our annual engagement survey

showed that over the last 12 months
belief in IG’s future increased by
seven points, with support for the
statement ‘the executive team
has communicated a vision that
motivates our people’ increasing by
12 points

¼¼ 70% of our people agree that IG
is making changes necessary to
compete effectively

Keeping employees informed,
updated and excited about our
business and strategy is a key
ambition of our leadership team.
We communicate regularly and
extensively, and ensure that new
employees attend workshops on our
values to understand their meaning
and importance to our business.

Supporting the Chief Executive Officer
in engaging the wider organisation is
the Global Leadership Team (GLT). This
group is made up of senior managers
and the Executive Committee, and
has a key responsibility for embedding
organisational culture, engagement
and communication throughout the
business. The GLT meets regularly, and
this year we held two conferences to
improve collaboration, share strategic
plans and develop our leaders.

IG hub – our employee communication
portal – is used by our people to find
out what’s going on in the business.
This year we published an array of
news articles, features and videos –
from leadership blogs and strategic
updates to mental health advice
and career guidance. Much of this
content was user-generated, and all
of it allowed for two-way dialogue,
enabling employees to share their
thoughts or to find further information.

Throughout the coronavirus lockdown
the IG hub has been an essential tool
in providing employees with regular
updates on our Covid-19 plans, and
day-to-day activities. We also created
a dedicated working from home
microsite so our people could stay
connected, talk about their experiences
and arrange fun activities. In the early
weeks of the pandemic, we ran a
series of global video calls with the
Chief Executive Officer, June Felix,
and members of the executive team.
These sessions were attended by most
of our people, with record numbers
dialling in to the UK and UAE meetings.

INTRODUCTION

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GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

perceptions
of our
culture

In the IG People Survey we ask
questions to understand the
perceptions and experiences of our
people. Here are the percentages of
positive responses for 2020:

¼ I would recommend IG as a great

place to work

74%

(2019: 80%)

¼ Employees are treated with

respect regardless of age, race,
gender physical capabilities, sexual
orientation and gender identity

90%

(2019: 91%)

¼ This organisation is committed to

ethical business decisions

82%

(2019: 91%)

¼ I work in an open-minded,
compassionate and safe
environment

81%

(new question)

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

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CONTINUED

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 goals,
regardless of their age, ethnicity, faith,
gender identity, sexual orientation,
physical capacity or background.

In July 2018 we adopted a diversity
and inclusion strategy, supported
by a two-year plan of action.

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

Progress against our plans
¼¼ Significant improvement in

understanding our people profile
through the collection of survey data

¼¼ Data was used to track progress
against our diversity goals, one
of which is to improve female
representation by 5% in two years
¼¼ Improved female representation by

around 2% after one year

¼¼ Trained a number of hiring managers
to adopt good recruitment practices,
including the avoidance of bias and
the importance of diversity

¼¼ Introduced a minimum standard of
parental leave across all locations,
with primary carers now receiving 16
weeks of guaranteed leave

¼¼ Continued to use our early careers
programmes to strive for better
representation

¼¼ Partnered with the following

organisations to attract more women
to careers in finance and technology:
Code First Girls, Women in Finance,
Women in Risk, and Women
Who Code

¼¼ 40% of our graduate programme

intake is female

¼¼ Appointed female leaders to a

number of key roles, including the
Group’s Chief Legal and Governance
Officer, the CEO of Greater China
and the CEO of Germany

We now have four employee networks
that are funded and sponsored by the
executive team:

¼¼ IG Open supports our LGBTQ+

people and allies. This year IG Open
backed the BFI Flare Film Festival,
Red Run in London, Stonewall and
LGBT Film Festival in Krakow, and
joined Global for Small Businesses
in Melbourne. We continue to
support Pride celebrations across
our locations. Importantly, our
Bangalore office was one of the
first to join Pride Circle after the
decriminalisation of homosexuality in
India. Further initiatives in Bangalore
include gender neutral toilets and
office engagement activities. IG
Open also championed the extension
of employee insurance cover to

Our workforce
In terms of gender, our
workforce is made up
as follows at 31 May 2020:

BOARD

7 | 64%

4 | 36%

SENIOR EXECUTIVE TEAM

4 | 40%

6 | 60%

SENIOR LEADERSHIP TEAM

11 | 42%

582 | 31%

595 | 31%

15 | 58 %

TEAM MEMBERS

1,285 | 69%

TOTAL

1,305 | 69%

FEMALE

MALE

INTRODUCTION

STRATEGIC REPORT

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SHAREHOLDER AND COMPANY
INFORMATION

include partners of our LGBTQ+
community

¼¼ IG Inspire, our women’s network,
had another active year across all
our offices. The network sponsored
internal presentations and panel
discussions, and hosted the London
Power Women network. Other
activities included the second year of
the women’s mentoring scheme, and
the launch of Power Hour sessions to
learn more about our business

¼¼ IG Black Network, our new network

launched this year, is driving
forward our efforts to create a
culture that’s attractive to potential
employees of all backgrounds, to
educate colleagues on cultural
bias, to provide a platform for
cultural celebration and an open
atmosphere for learning, inclusivity
and growth. This vitally important
network will help us to improve our
understanding and to boost diversity
at IG

¼¼ IG Parent and Carers Together
(IG PACT) is a new network
concentrating on our parental
leave policies and flexible working
arrangements. Through this
network a staggered return-to-
work programme for parents
was established, and access
to breastfeeding facilities was
improved. During the coronavirus
lockdown it supported our working
parents with virtual events and
online help

We published our UK gender pay
gap figures in March this year, and
they appear on the Group website.
While a pay gap exists because
we have more men than women in
senior roles, we aspire to eliminate
this difference over time.

Case study

Workforce
voice

Our people have a number
of avenues, both formal and
informal, to connect with
our senior management
and the Board.

However, in response to changes
to the UK Corporate Governance
Code, there was a need to provide a
single body that can act as a conduit
for more formal feedback to senior
leaders and the Non-Executive
Board, resulting in the formation
of a People Forum.

Our People Forum is chaired by the
Chief Operating Officer, supported
by the Chief People Officer, and
Non-Executive Directors also attend
on a rolling basis. The first People
Forum meeting took place on
15 July 2019, and four more followed.
Non-Executive Director attendees
have included Jonathan Moulds,
Malcolm Le May, Jim Newman and
Sally-Ann Hibberd.

11 employees from a range of
different departments and locations
were democratically elected by their
peers to serve a two-year term on
the forum.

Key items that were discussed
include employee reaction to our
business strategy, our ESG approach,
pay and bonuses, and our Covid-19
response. This has resulted in actions
to increase employee engagement,
such as the use of video calls to
explain IG’s strategy in more detail.

MEASURING IMPACT – ESG KPI 3

PROPORTION OF EMPLOYEES
WHO WOULD RECOMMEND
WORKING FOR IG

74%

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In great shape
We strive to bring people with the right
skills, experience and behaviours into
the organisation. Simply put, ‘in great
shape’ means:

¼¼ Scalable: People-solutions providing
the business with cost-effective and
flexible options to support growth

¼¼ Fit: Strong and sustainable

leadership with the skills and
expertise to deliver

¼¼ Healthy: Resilient and engaged
employees operating in an
organisation that promotes
accountability, growth and
performance

Scalable
We regularly review our business
to ensure that the organisation’s
structures and ways of working are
scalable and suitable to support our
business plans. For example, this
year we partnered with a leading
consultancy to redesign our marketing
function, and undertook strategic
reviews of a number of other areas.

Fit and healthy
To build a strong succession
pipeline, we initiate a process every
year 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 within the organisation.
We nurture identified individuals
through personalised development
plans, 360-degree feedback and a
variety of experiences to accelerate
their development and progression.

We continue to assign our high-
potential people to critical roles,
since development is most effective
when delivered through the work
people do. Over the last 12 months
we created significant role changes
for over 55% of our successors.

We’re 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, allowing them to
personalise benefits to their lifestyle
requirements. We also provide a global
employee assistance programme (EAP),
offering 24/7 telephone counselling
services and other wellbeing resources.

Employee engagement
We’re proud to have been certified as
one of Britain’s Top Employers by the
Corporate Research Foundation for
over ten years, and remain 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.

We offer competitive remuneration
packages that are industry-
benchmarked and fairly structured
across diverse groups. The majority of
our employees are included in a bonus
scheme, distributed at the end of each
financial year. We’ve put measures in
place to ensure that our people receive
bonuses which reflect their individual
performance relative to that of their
peers. The remainder of our employees
are part of sales-related bonus plans.

We also reward our high-potential
employees through a long-term
incentive plan, and we offer our staff
in the UK, Australia and the US the
chance to share in our success through
our tax-advantaged share-purchase
schemes. An average of 28% of eligible
employees took part in our share
plans in the 2020 financial year.

¼¼ Over 80% of employees participate

in our surveys

¼¼ Engagement results have improved

significantly since 2016

¼¼ Although engagement results have
declined slightly over the last 12
months, improvements were seen
in how our people view our strategy
and future – particularly important
for us in light of challenging market
conditions

Our global, values-based awards
programme allows our people to
nominate their peers in recognition
of their achievements. Over
the last 12 months, more than
100 employees from across the
business received awards.

Rewarding high performance
We continue to use our performance
check-in process to provide
regular opportunities for feedback,
recognition and evaluation. Moderation
meetings are held to allow for
fair and consistent performance
evaluation, and to identify the top
performers across the organisation.

Always learning
We recognise that retaining our
people – and developing their skills
– is vital to our continued success.
We are constantly improving access
to quality learning opportunities,
and encouraging our people to
progress within the business.

Our employees can access on-the-
job coaching, webinars and internal
training events, with secondments
and Board exposure programmes
also available. We recently upgraded
our e-learning platform to LinkedIn
Learning and are already seeing high
participation rates. We encourage
attendance at relevant external events
and, where appropriate, sponsor
our people to undertake industry-
recognised training courses and to
achieve professional qualifications.

We acknowledge the important role
our managers play in the success of
our business, and have management
development programmes in London,
Krakow and Bangalore. We support our

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managers with access to the Gartner
Manager Success portal, and internally
with online workshops. We continue to
offer managers and aspiring managers
the opportunity to obtain a qualification
in coaching from the Institute of
Leadership and Management (ILM).

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. So far, we’ve
supported over 35 staff to gain ILM
qualifications, while four others are
currently studying towards an MBA.

Governance
We’ve taken steps to further embed
the principles of being a responsible
business into our decision-making
and business practices. As a clear
statement of this commitment, we’ve
established an ESG Board Committee
to oversee and report to the Board
on ESG matters. The ESG Committee
will work closely with our Executive
Committee and our newly appointed
ESG Manager to see that we have
an ambitious ESG strategy that is
underpinned by the necessary values,
behaviours and policies. These link into
our newly established Brighter Future
initiative and Brighter Future Fund
(see pages 60 and 61, and our well-
established people strategy (see pages
65 to 69). Furthermore, we consider
the long-term consequences of our
decisions on key stakeholders so that
we are better able to manage risks and
generate value. For more on this, refer
to our Section 172(1) on pages 24 to 25.

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.

Case study

Community
involvement

We’ve been operating the IG
Community Fund since 2017.
This consists of a matched-
giving scheme that deepens
the impact of employee
fundraising efforts, plus a
dedicated budget enabling
employees to respond to
the causes that they feel
passionately about.

In the 2020 financial year, the
Community Fund was integrated into
our Brighter Future initiative, further
aligning our charitable activities with
the themes of the environment and
empowerment.

This year, we’ve continued to see
a rise in the amount of fundraising
activity being undertaken by
our people, and we’re pleased to
have spent 100% of the dedicated
Community Fund budget.

IG EMPLOYEE VOLUNTEERING
ALLOWANCE

2 days

For example, IG Australia donated
AU$50,000 to the Red Cross in aid
of its support for firefighters, wildlife
and communities impacted by the
Australian bushfires in 2019. This
donation was supplemented by
employee donations and associated
IG matched-giving. On top of this,
through a combination of the
Community Fund, employee donations
and associated matched-giving, IG UK
donated over £70,000 to the National
Emergencies Trust (NET). This was
in aid of the NET’s support for those
most affected by the Covid-19 crisis.

In addition to the Community Fund
we work with the Charities Aid
Foundation, which enables employees
to make contributions to selected
charities directly from their monthly
pay. Plus, our time-off policy gives
our people the opportunity to take
part in voluntary work. We grant
each employee up to two paid days
of volunteering leave to support
causes that link to our Brighter Future
themes of the environment and
empowerment.

Enabling our people to give back to
their communities aligns with our
well-established purpose and values,
and continues to be a pillar of IG
culture. From all areas of IG’s global
network, we’ve seen incredible levels
of commitment. This commitment
has inspired us and given us the
confidence to scale up our ESG
strategy significantly with the Brighter
Future initiative.

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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 take
active steps to prevent suppliers,
agents, consultants and contractors
throughout our supply chain from
engaging in modern slavery. This is
achieved through a comprehensive
vendor management framework
and ensuring that contract owners
are trained on these principles.
More information can be found in
our Slavery and Human Trafficking
Statement on iggroup.com.

Anti-bribery and corruption
We’re 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’ve
established a Stock Trading Code of
Conduct, a Disclosure Committee
and a relevant policy, to ensure we
continue to meet the requirements
of the Market Abuse Regulations.

We’ve 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.
IG does not make or endorse
facilitation or introducer payments.

Every year all employees receive
anti-bribery and corruption, and
market abuse training through an
e-learning module, which includes a
knowledge assessment. This training
is mandatory for all IG staff.

At IG we make charitable donations
that are legal and ethical under local
laws and practices, but we don’t 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
Taxation is one of the most significant
costs for the business. In the 2020
financial year, we paid £83.4 million
(2019: £67.9 million) to tax authorities
globally in corporate income taxes,
employment taxes, irrecoverable
VAT and betting duty. During the
coronavirus pandemic we did not
accept any government support and we
continued to make payments on time.

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 a significant number of our staff
are based. We benefit from the UK
Corporation Tax rate, which is low in
comparison with many other countries.

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
advisers to ensure that we operate in
line with local tax laws and meet 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 approved by the
Audit Committee 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 stakeholders to ensure that the
outcome is 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
2020 financial year is 18.8% (2019:
18.5%). This is lower than the main UK
Corporation Tax rate as a result of the
benefit that IG 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 of the Financial Statements.

Cash tax rate
IG paid £57.1 million in corporate
income taxes during the 2020
financial year (2019: £38.4 million).
This is significantly higher than in the
2019 financial year due to higher
profits in the 2020 financial year
and changes in the UK Corporation
Tax quarterly instalment payment
regime. These required us to make
six instalment payments, versus
four payments previously.

The effective cash tax rate is 19.3%
(2019: 19.8%). 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
Our estimate of the ETR for the year
to 31 May 2021 is 19%. The Group’s
ETR remains dependent on the
locations where we make our profits,
the tax rates applied to those profits
and the availability of tax reliefs.

INTRODUCTION

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SHAREHOLDER AND COMPANY
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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 are intended to help stakeholders understand IG’s position on key non-financial matters.

Reporting requirement

policies governing our approach

Risk management and other

Environmental matters

Employees

Human rights

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

Equality, Diversity and Inclusion Policy
Recruitment Policy
Absence Management Policy
Annual Leave Policy
Parental Leave Policy
Group Whistleblowing Policy
Anti-Discrimination and Harassment Policy
Transitioning at Work Policy

Equality, Diversity and Inclusion Policy
Slavery and Human Trafficking Statement

ESG Report, pages 62 to 63

ESG Report, pages 65 to 70

ESG Report, page 70

Social matters

Equality, Diversity and Inclusion Policy

ESG Report, page 66

Anti-bribery and corruption

ESG Report, page 70

IG Group Anti-Bribery Policy
IG Group Gifts and Hospitality Policy
IG Group Stock Trading Code
Group Market Abuse 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

Non-financial key performance indicators

Business Model and Risk Profile,
pages 30 to 35
Key trends and factors likely to affect
our business, pages 36 and 37
Risk Management, pages 50 to 59

Business Model and Risk Profile,
pages 30 to 35

KPIs, pages 22 and 23

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

STRATEGIC REPORT

Going 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 exclude all monies held in
segregated client money accounts.

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 mitigated and
managed is documented in the Risk Management section in
the 2020 Group Annual Report on page 50.

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 2024. The Group’s
revenue, which is driven by client transaction fees, has
benefited from the sustained increase in financial market
volatility since the last week of February 2020 as a result
of the Covid-19 pandemic. Projections of the Group’s
revenue have conservatively considered financial market
volatility returning to normal levels in the first year of the
four-year period.

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 and liquidity resources and
requirements. The Group has assumed that there will be no
significant changes to the Group’s regulatory capital and
liquidity 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 a major
political shock; the collapse of a major financial services firm;
major currency appreciation; and cyber-attacks. The stress
tests evaluate the impact of the scenarios on the relevant
principal risks captured by the Group’s Risk Management
Framework. 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 of these. As the Covid-19 pandemic continues to
evolve, stress scenarios will be refined taking into account a
stress of a similar severity, with these being incorporated into
the ILAA, ICAAP and Recovery Plan.

The Group has undertaken extensive modelling and analysis
for potential changes in the regulatory landscape, for
example Australia, in order to prepare the financial forecasts,
and there are a range of potential outcomes.

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.

In response to the Covid-19 pandemic, the Group
successfully implemented its comprehensive business
continuity plan. The Group’s significant long-term investment
in communications and technology infrastructure has
enabled all employees to work safely from home, and IG
continues to provide the best possible service for its clients
when they choose to trade the financial markets. The
Group is in regular communication with its staff members
to ensure their safety, and that of their families, during this
challenging time. Due to the Group’s successful management
of the heightened levels of client trading as a result of the
sustained increase in financial market volatility triggered
by the pandemic, the Group’s relationship with key
stakeholders, such as regulators and hedging brokers,
has not been impacted.

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. These
risks include regulatory, legislative, or tax changes which
may detrimentally impact our business in the jurisdictions
we operate or seek to operate in. In particular, a change that
impacts the Group’s ability to sell or trade OTC leveraged
products may have a fundamental effect on the viability
of the Group and its businesses. Further details of these
principal risks and how they are mitigated and managed is
documented in the Risk Management section on page 53.
The Board 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 2024.

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The Strategic Report up to and including page 73 was
approved for issue by the Board on 23 July 2020 and signed
on its behalf by:

CHARLES A. ROZES
CHIEF FINANCIAL OFFICER
23 July 2020

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

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SHAREHOLDER AND COMPANY
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GOVeRnAnCe
RepORT

PG. 74–151

Chairman’s Introduction to Corporate Governance

Corporate Governance Statement

The Board

Board Governance

Nomination Committee Report

Directors’ Remuneration Report and Policy

Audit Committee Report

Board Risk Committee Report

Directors’ Report

Statement of Directors’ Responsibilities

Independent Auditors’ Report

129

137

140

143

144

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GOVERNANCE REPORT

Chairman’s Introduction
to Corporate Governance

Mike
McTighe

Mike McTighe, Chairman, gives his
introduction to corporate governance
in respect of the financial year.

Good-quality corporate governance
underpins our ability to deliver sustainable
future growth and create long-term value
for shareholders.

MIKE McTIGHE
CHAIRMAN

As your new Chairman, I’m excited about the opportunity
ahead to build a more coherent and effective Board.

The last 12 months has been a period of significant change
for IG. We’ve learned some valuable lessons, have deepened
our understanding of the role of governance, and are
rebuilding trust with our key stakeholders that will only make
us stronger as a Board and a Company. We’ve done a lot of
work in the last year to strengthen the membership of the
Board. In addition to my appointment as your Independent
Non-Executive Chairman, we added two talented new
Non-Executive Directors to complement the existing Board.
We further strengthened the Board in July through the
appointment of Rakesh Bhasin as a Non-Executive Director.
Rakesh joined the Board on 6 July 2020.

My role now is to help bring it all together to ensure that the
Board functions as a collaborative and high-performing team,
and that we continue to effectively oversee IG’s strategy in
achieving our growth targets and delivering a more global,
diversified and sustainable business.

I became Chairman of the Board in February. Andrew Didham
was appointed last September following the AGM, and Helen
Stevenson was appointed in March 2020 – both as Non-
Executive Directors. Andrew has relevant financial services
skills and is an experienced Non-Executive Director. Helen
brings extensive marketing and digital experience from a
range of industries, together with strong customer focus.
Stephen Hill retired in April 2020 after a nine-year tenure.
Our most recently appointed Non-Executive Director, Rakesh,
has significant experience in global markets, with particular
reference to the Asia-Pacific region.

We’re looking to broaden the skills, experience and diversity
of the Board through the recruitment of an additional Non-
Executive Director, and are progressing well with this search.
I anticipate that alongside these three appointments, we’ll
further refine our Committees’ membership, and our focus
will then switch to enhancing the Board’s effectiveness so
that we operate well as a team. We recently conducted a
Board effectiveness review to assist us with this, and you’ll
hear more of this later. Furthermore, as part of our drive to
broaden the experience of the Board, our Executive Directors
will be encouraged to take on one external Non-Executive
Directorship.

At the end of the financial year, Paul Mainwaring retired as
Chief Financial Officer (CFO), stepping down as a Director
on 1 June 2020. The Board would like to express its deep
appreciation for his significant contribution to IG. I’m
delighted to say that Charlie Rozes took over as an Executive
Director and CFO with effect from the same date after an
extensive, independently-facilitated search.

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Finally, as part of our review of governance, we’ve embarked
on a restructuring of the boards of the UK regulated
companies within the Group: IG Index Limited and IG Markets
Limited, to add Non-Executive Directors to those boards
during the next financial year. This will ensure appropriate,
enhanced oversight of the regulated entity boards, as well as
clarity of accountability and decision-making. We also plan to
review the board structures of our other regulated entities,
wherever they may be located, for compliance with best-in-
class practice.

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. We share common views on culture, values, ethics
and inclusion, which help drive our approach to strategic
development.

MIKE McTIGHE
CHAIRMAN
23 July 2020

The Board currently consists of eight Non-Executive Directors
and four Executive Directors. While the Executive Directors
run the operational aspects of the business on a day-to-
day basis, the Non-Executive Directors provide appropriate
guidance, challenge and support.

We’ve now achieved our target of increasing female
representation on the Board to one third by 2020. I recognise
the importance of diversity, in all of its forms, including social,
ethnic and cultural. This will continue to be an area of focus
for the Board.

Good-quality corporate governance underpins our ability to
deliver sustainable future growth and create long-term value
for shareholders. When I assumed my role as Chairman, I
started by meeting with stakeholders such as shareholders,
staff and regulators. We’re on a journey when it comes to our
corporate governance, and it’s my intention to work closely
with management to continue to strengthen our governance
arrangements.

We’ve made some changes to the composition of Board
Committees recently, so that the most appropriate members
sit on these Committees – taking their requisite skills,
experience, knowledge, diversity and personal strengths into
account. We’ll now look to review the Terms of Reference
of those Committees so that they’re empowered in so far as
it’s practicable and sensible to support the Board. This will
enable the Board to spend the majority of its time on the
growth and development of IG.

We’ve recently set up an Environmental, Social and
Governance (ESG) Committee chaired by Non-Executive
Director Sally-Ann Hibberd. This is an area of growing
importance for all businesses, and I’m grateful to Sally-Ann
for taking this on. I’m particularly excited about the work the
ESG Committee will do to continually engage our employees,
attract new talent and formally recognise our obligations to
the communities in which we are based. This starts with the
£5 million commitment to the IG Brighter Future Fund that will
improve the educational opportunities available to the least
privileged young people in the communities we operate in,
many of whom have been disproportionately impacted by
the Covid-19 pandemic.

As I mentioned earlier, a review of the effectiveness of the
Board and Committees was undertaken. The evaluation
process was externally facilitated by independent
consultancy firm Boardroom Review Limited, as part of the
overall annual Board and Committee effectiveness review.
The evaluation process consisted of briefing meetings with
the Board, a review of IG’s Board and Committee information,
one-to-one confidential interviews with all Board members
and other selected participants. The facilitator also observed
Board and Committee meetings in May. Discussions on the
review took place at the July Board and Committee meetings,
and next steps were agreed.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

Corporate Governance Statement

Statement of compliance
The UK Corporate Governance Code (the Code), published in
July 2018, 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. The
Code is published by the Financial Reporting Council (FRC),
with additional information to 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 2020.

Overview of Corporate Governance Framework
We recognise that our overall structure is subject to the
direction of our shareholders. They agree the Articles of
Association, approve transactions mandated through the
Listing Rules, consider the appointment and reappointment
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 monitoring its execution against agreed targets. The
Board has overall responsibility for promoting the long-
term sustainable success of the Company for the benefit
of its shareholders as a whole. This means having regard
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 environmental, social and governance
(ESG) matters, 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, Nomination and
ESG Committees are set out in the following pages.

Additionally, 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 identify
Inside Information and to decide on how, and when, the
Company should disclose that information in accordance
with the Disclosure Policy.

The ESG Committee was formed in 2020, and its Terms
of Reference were approved by the Board in July 2020.
Our ESG team is responsible for creating, developing
and implementing our ESG strategy, and reporting on
performance. Its work is governed and overseen by the
ESG Committee which provides formal updates directly
to the Board.

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

¼¼ The development and execution of strategy
¼¼ Leadership and development of IG’s executive

management team below Board level

¼¼ Day-to-day decision-making relating to, and management

of, the affairs of IG

¼¼ Delivering financial performance in line with our agreed

budget

¼¼ Organisational design of our 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 (COO) has
delegated authority in respect of trading and operations,
and business change.

Below Board level, we currently have a number of executive
management Committees in place.

The CEO is supported by the Group Executive Committee
– our 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 our strategy
agreed by the Board. It also provides advice and support to
the executive management in the day-to-day running of
our operations.

The CFO, in the proper performance of his duties, is
supported by the Client Money and Assets Committee in
providing 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
Cost Committee that oversees the management of costs
across all business functions against agreed four-year-plan
cost targets.

The Group Executive Committee is also supported by
the Core Business Committee, chaired by the CCO. It’s
responsible for the delivery and monitoring of performance
against the Group’s four-year plan and budget for the core
business units. Furthermore, it’s 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, Conduct and Operational Risk
Committee and Transaction Reporting Committee. This
allows for the 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 Board Risk Committee.

The Technology Steering Committee provides assurance of
strategic direction, delivery performance, and quality levels
for all technology services across IG, and is chaired by the
Chief Information Officer. It ensures that the technology
investment decisions taken by us are fit for future purpose,
and the technology estate quality is maintained in an efficient
and sustainable manner. It’s also responsible for delivering
and monitoring performance against the technology
improvement initiatives needed to ensure our technology
remains available, secure, performant and scalable.

The Legal Entity and Policy Governance Committee is chaired
by the Chief Legal and Governance Officer. Its function is to
exercise oversight over the governance of our subsidiaries,
and in particular, their adherence to the Group Legal Entity
Governance Policy and the Group Policy Governance
Framework.

The IG People Forum was established to further enhance
Board engagement with the wider workforce. The principal
duty of the People Forum is to shape and coordinate key
people initiatives, and to provide a forum to allow employees’
views and opinions to be heard on issues that will impact
the employee experience prior to submitting any relevant
proposals to the Group Board.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

The Board
as at the date of this Report

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.

Mike McTighe
Chairman

June Felix
Chief executive Officer

Charlie Rozes
Chief Financial Officer

Bridget Messer
Chief Commercial Officer

Age: 66

Age: 63

Time on Board: 5 months

Time on Board: 5 years

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

Age: 52

Time on Board: 2 months

(Appointed 1 June 2020)

Age: 41

Time on Board: 2 years

(Appointed 1 June 2018)

Committee membership:
Disclosure Committee

Committee membership:

Remuneration Committee (Chair)

Committee membership:

Audit Committee (Chair)

Committee membership:

ESG Committee (Chair)

Charlie was appointed as Chief
Financial Officer on 1 June 2020.

Charlie has a proven track record
of, and accountability for, financial
control and reporting, accounting,
tax, M&A, investor relations, risk
and compliance, and audit. He’s a
highly experienced finance leader
having held a number of executive
director roles in the financial
services sector prior to joining IG,
and having driven a number of
substantial change programmes
both in the UK and internationally.

Charlie began his professional career
with PricewaterhouseCoopers LLP,
and became a Partner in 2001 in
the US management consulting
practice. Following that he held
senior executive roles at IBM and
Bank of America. In 2007, he joined
Barclays plc where he was the Chief
Financial Officer of Barclays UK Retail
and Business Bank, and became the
Global Head of Investor Relations in
September 2011 until August 2015.

He was the Group Finance Director
at Jardine Lloyd Thompson plc from
September 2015 until April 2019
when it was acquired by Marsh
& McLennan Companies Inc.

Charlie has an undergraduate
degree from Tufts University
and an MBA from the Southern
Methodist University.

June was appointed as Chief Executive
Officer on 30 October 2018, having
previously served as a Non-Executive
Director of the Company since
4 September 2015. June has had a
successful career, growing and leading
global financial services and tech
companies, and living and working in
Hong Kong, London and New York.

June 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. June has no
other current external appointments.

Until the sale of Verifone Inc, June
was President of Verifone Europe
and Russia with responsibility for
over 2,000 employees with 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 included 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 Chief Executive Officer 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.

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, 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
Officer. Bridget is a member of
IG’s Executive Committee.

Prior to joining IG, Bridget
held solicitor positions within
Deutsche Bank in London and
at Corrs Chambers Westgarth
Lawyers in Australia. Bridget is
currently appointed as Chair of
the Trustee Board of the African
Commercial Law Foundation.

Bridget has no other current
external appointments.

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 and Wales in 2006.

Jon Noble

Chief Operating Officer

Age: 43

Time on Board: 2 years

(Appointed 1 June 2018)

Malcolm Le May

Senior Independent

non-executive Director

Jim Newman

non-executive Director

Sally-Ann Hibberd

non-executive Director

Age: 62

Age: 55

Age: 61

Time on Board: 5 years

Time on Board: 7 years

Time on Board: 2 years

(Appointed 10 September 2015)

(Appointed 1 October 2013)

(Appointed 20 September 2018)

Board Risk Committee

Remuneration Committee

Audit Committee

Board Risk Committee

(since 18 March 2020)

Nomination Committee

Jon was appointed Chief Operating

Officer on 14 June 2019 with

responsibility for Trading and

Malcolm has broad experience and

knowledge of the financial services

and investment sectors, along with

Jim has in-depth knowledge and

Sally-Ann has a broad background

experience of the financial services

in financial services and

sector, as well as considerable

technology. She previously served

Operations, and is a member of IG’s

extensive experience on the boards

experience both as a Chief Financial

as Chief Operating Officer of the

Executive Committee. Jon also leads

of publicly listed companies.

Officer and in the implementation

of transformation programmes.

International Division, and latterly as

Group Operations and Technology

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.

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 our IT strategy,

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 Chairman. He is a Partner

at Opus Corporate Finance LLP

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

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.

Insurance Group plc. Prior to this, he

Jim has no other current

held various executive roles at Morgan

appointments.

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.

Sally-Ann also serves as a Non-

Executive Director of The Co-

operative Bank plc where she is a

member of its Audit, Remuneration

and Risk Committees.

In addition, Sally-Ann is a non-

executive member of the governing

body of Loughborough University

and a member of the advisory

panel of Gobeyond Partners.

Jon first joined IG in 2000 as a trainee

and Juno Capital Partners LLP.

delivery of all programmes of work

Grenfell plc, Drexel Burnham Lambert,

and for keeping the production

environment stable and secure. He

was responsible for IG’s IT systems,

Barclays de Zoete Wedd Holdings,

UBS AG, ING Barings Limited,

Morley Fund Managers (now Aviva

including its client interface systems.

Investors) and JER Partners Limited,

where he was European President.

Jon graduated from Durham

University with a degree in Economics

and obtained an Executive MBA from

London Business School in 2007.

Jon has no current external

appointments.

(Appointed 3 February 2020)

Committee membership:
Nomination Committee (Chair)
(since 3 February 2020)

Disclosure Committee
(since 18 March 2020)

Mike has a wealth of leadership, board
and regulatory experience from
both public and private companies.
Mike is the Chairman of Openreach
Limited, Together Financial Services
Limited and Arran Isle Limited.

For over 20 years he has held various
non-executive director roles in a
range of regulated and unregulated
industries whilst also spending eight
years on the board of Ofcom and one
year on the board of Postcomm.

Mike has held many chairmanships
over the years, including
chairing several UK and US
public company boards.

Mike spent most of his executive
career at Cable and Wireless,
Philips, Motorola and GE.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Mike McTighe

Chairman

June Felix

Chief executive Officer

Charlie Rozes

Chief Financial Officer

Bridget Messer

Chief Commercial Officer

Age: 66

Age: 63

Age: 52

Time on Board: 5 months

Time on Board: 5 years

Time on Board: 2 months

(Appointed 3 February 2020)

(Appointed Non-Executive Director

(Appointed 1 June 2020)

Age: 41

Time on Board: 2 years

(Appointed 1 June 2018)

Jon Noble
Chief Operating Officer

Age: 43

Time on Board: 2 years

(Appointed 1 June 2018)

Malcolm Le May
Senior Independent
non-executive Director

Jim Newman
non-executive Director

Sally-Ann Hibberd
non-executive Director

Age: 62

Age: 55

Age: 61

Time on Board: 5 years

Time on Board: 7 years

Time on Board: 2 years

(Appointed 10 September 2015)

(Appointed 1 October 2013)

(Appointed 20 September 2018)

on 4 September 2015; and Chief

Executive Officer on 30 October 2018)

Committee membership:

Disclosure Committee

Committee membership:

Disclosure Committee

Committee membership:
Remuneration Committee (Chair)

Committee membership:
Audit Committee (Chair)

Committee membership:
ESG Committee (Chair)

Board Risk Committee

Remuneration Committee

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

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.

Audit Committee

Board Risk Committee
(since 18 March 2020)

Nomination Committee

Sally-Ann has a broad background
in financial services and
technology. She previously served
as Chief Operating Officer 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.

Sally-Ann also serves as a Non-
Executive Director of The Co-
operative Bank plc where she is a
member of its Audit, Remuneration
and Risk Committees.

In addition, Sally-Ann is a non-
executive member of the governing
body of Loughborough University
and a member of the advisory
panel of Gobeyond Partners.

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

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 Chairman. He is a Partner
at Opus Corporate Finance LLP
and Juno Capital Partners LLP.

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 Limited,
Morley Fund Managers (now Aviva
Investors) and JER Partners Limited,
where he was European President.

Jon was appointed Chief Operating
Officer on 14 June 2019 with
responsibility for Trading and
Operations, and is a member of IG’s
Executive Committee. 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 our 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
and obtained an Executive MBA from
London Business School in 2007.

Jon has no current external
appointments.

Committee membership:

Nomination Committee (Chair)

(since 3 February 2020)

Disclosure Committee

(since 18 March 2020)

For over 20 years he has held various

non-executive director roles in a

range of regulated and unregulated

industries whilst also spending eight

years on the board of Ofcom and one

year on the board of Postcomm.

Mike has held many chairmanships

over the years, including

chairing several UK and US

public company boards.

Mike spent most of his executive

career at Cable and Wireless,

Philips, Motorola and GE.

Mike has a wealth of leadership, board

June was appointed as Chief Executive

Charlie was appointed as Chief

and regulatory experience from

both public and private companies.

Mike is the Chairman of Openreach

Officer on 30 October 2018, having

previously served as a Non-Executive

Director of the Company since

Limited, Together Financial Services

4 September 2015. June has had a

Limited and Arran Isle Limited.

successful career, growing and leading

Financial Officer on 1 June 2020.

Charlie has a proven track record

of, and accountability for, financial

control and reporting, accounting,

tax, M&A, investor relations, risk

and compliance, and audit. He’s a

highly experienced finance leader

having held a number of executive

director roles in the financial

services sector prior to joining IG,

and having driven a number of

substantial change programmes

both in the UK and internationally.

Charlie began his professional career

with PricewaterhouseCoopers LLP,

and became a Partner in 2001 in

the US management consulting

practice. Following that he held

senior executive roles at IBM and

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, 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

Bank of America. In 2007, he joined

Barclays plc where he was the Chief

directly to the Chief Executive

Officer. Bridget is a member of

Financial Officer of Barclays UK Retail

IG’s Executive Committee.

and Business Bank, and became the

Global Head of Investor Relations in

September 2011 until August 2015.

He was the Group Finance Director

at Jardine Lloyd Thompson plc from

September 2015 until April 2019

when it was acquired by Marsh

& McLennan Companies Inc.

Charlie has an undergraduate

degree from Tufts University

and an MBA from the Southern

Methodist University.

Prior to joining IG, Bridget

held solicitor positions within

Deutsche Bank in London and

at Corrs Chambers Westgarth

Lawyers in Australia. Bridget is

currently appointed as Chair of

the Trustee Board of the African

Commercial Law Foundation.

Bridget has no other current

external appointments.

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 and Wales in 2006.

global financial services and tech

companies, and living and working in

Hong Kong, London and New York.

June 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. June has no

other current external appointments.

Until the sale of Verifone Inc, June

was President of Verifone Europe

and Russia with responsibility for

over 2,000 employees with 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 included 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 Chief Executive Officer 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.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

The Board
as at the date of this Report
CONTINUED

Jonathan Moulds
non-executive Director

Andrew Didham
non-executive Director

Helen Stevenson
non-executive Director

Rakesh Bhasin
non-executive Director

Age: 55

Age: 64

Age: 59

Age: 58

Time on Board: 2 years

Time on Board: 10 months

Time on Board: 4 months

Time on Board: 1 month

(Appointed 20 September 2018)

(Appointed 19 September 2019)

(Appointed 18 March 2020)

(Appointed 6 July 2020)

Committee membership:
Board Risk Committee (Chair)

Nomination Committee

Committee membership:
Audit Committee
(since 19 September 2019)

Jonathan is the Chairman of Litigation
Capital Management Limited, an AIM-
listed litigation finance company. He
has extensive experience in financial
markets and has worked in the US,
Asia and UK during his career. He
served as the Group Chief Operating
Officer of Barclays plc until 2016.

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.

Andrew is currently a Director of
N.M. Rothschild & Sons Limited
and is also Chairman of the N.M.
Rothschild Pension Trust. Since
2015 he has been a Non-Executive
Director and, since 2017, Senior
Independent Director of Charles
Stanley Group plc where he also
serves as Non-Executive Chairman
of its principal operating company
Charles Stanley & Co. Limited. In
2017 Andrew was appointed to the
Board of Shawbrook Group plc where
he is a Non-Executive Director and
Chairman of its Audit Committee.

From 2017 to 2019 Andrew served as
Non-Executive Director and Chairman
of the Audit and Risk Committees of
Jardine Lloyd Thompson Group plc.

Andrew was a partner of KPMG from
1990 to 1997 and is a Fellow of the
Institute of Chartered Accountants
in England and Wales. Upon leaving
KPMG, Andrew served as Group
Finance Director of the worldwide
Rothschild group for 16 years
from 1997 to 2012. From 2012 he
has served as an Executive Vice
Chairman in the Rothschild group.

Committee membership:
Remuneration Committee
(since 18 March 2020)

ESG Committee

Helen brings extensive marketing
and digital experience from a
range of industries, together with
strong customer focus. Helen is an
experienced Non-Executive Director
with particular experience regarding
remuneration matters. Helen is
currently the Senior Independent
Director of Reach plc and Kin and
Carta plc, and a Non-Executive
Director of Skipton Building Society.

Helen served as Chief Marketing
Officer UK at Yell Group plc from
2006 to 2012 and, prior to this,
served as Lloyds TSB Group
Marketing Director. Helen started
her career with Mars Inc where
she spent 19 years, culminating
in her role as European Marketing
Director, leading category strategy
development across Europe.

Helen is a member of the Henley
Business School Strategy
Board, and serves as a Governor
of Wellington College.

Former Directors who served during the year

Andy Green
Andy stepped down from the Board and the role
of Chairman on 19 September 2019.

Stephen Hill
Stephen retired from the Board on 27 April 2020.

Paul Mainwaring
Paul stepped down from the Board on 1 June 2020.

Committee membership:
ESG Committee

Rakesh brings extensive technology
and global markets experience,
specifically in Asia-Pacific. He is
a Non-Executive Director for a
portfolio of companies in multiple
sectors and is also Chairman of
CMC Networks, a Carlyle Group
investment company based in
Africa, focused on providing
telecommunications services
across Africa and the Middle East.

In his executive career, Rakesh
was the Chief Executive Officer
and a member of the Board of Colt
Technology Services, a Fidelity-
owned company providing network,
voice, and data centre services
globally. Rakesh was appointed
into the role of Chief Executive
Officer in December 2006 and
completed his tenure at the end of
2015, concluding his secondment
from Fidelity. Concurrently, he
was Non-Executive Chairman of
KVH, an Asian-based technology
company with headquarters in
Tokyo and operations in Hong
Kong, Seoul and Singapore,
and Non-Executive Chairman of
Market Prizm, a financial-services-
focused technology company.

Rakesh has also previously held
senior positions within AT&T,
including Head of AT&T Asia-
Pacific’s managed network services
business and President, AT&T
Japan Limited. He was also formerly
Senior Managing Director of Japan
Telecom Company Limited.

Rakesh has a BSc in Electrical
Engineering from George
Washington University.

Board Governance

Leadership
The role of the Board
The Board provides leadership by setting the Group’s
strategic direction and overseeing management’s execution
of the strategy. It is responsible for establishing our purpose
and values, and for ensuring these and the strategy are
aligned to our 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 our
activities on the environment.

The Stakeholder Engagement section of the Strategic Report
on pages 24 to 29 sets out the stakeholder engagement
mechanisms that are currently in place. This includes who
the key stakeholders are, why they are important to us, how
engagement is being conducted, the principal issues that
matter to each stakeholder group, our governance activities
and the actions and outcomes from these engagements
when the Board makes principal decisions. The Board
considers ‘principal decisions’ to be those decisions which
entail significant long-term implications and consequences
for the Company and/or its stakeholders and distinguishes
these from the normal, ordinary course decision-making
processes that the Board engages in.

The Board has agreed to identify points for discussion
at future Board meetings, which should include specific
documented consideration of Section 172 stakeholder
interests when they are discussed. This requirement is
incorporated into the procedure for preparing Board
meetings, and there is a template identifying the relevant
stakeholder considerations for inclusion in the Board papers
that accompany such discussions.

As a collective body, the Board is responsible for ensuring
that 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, approving major transactions, annual
budgets and changes to our capital and governance
structure. The matters reserved to the Board are
supplemented by an annual Board calendar that provides
for, among other things, regular reviews of operational and

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

financial performance; reviews of succession planning for
the Board and senior management; setting the Group’s risk
appetite and approving any changes to our 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 2020, the Board comprised a Non-Executive
Chairman who was independent on appointment, four
Executive Directors and six 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 page 76, in the Nomination
Committee Report on pages 94 to 98 and in the Directors’
Report on pages 140 to 142.

The Board operates a clear written division of responsibilities
between the Chairman and the Chief Executive Officer (CEO),
which was last updated in 2019.

Chairman
The Chairman, Mike McTighe, was appointed to the Board
on 3 February 2020. He is responsible for leading the Board
and creating the right conditions to ensure its effectiveness
in all aspects of its role. This includes promoting the long-
term sustainability of the Group and generating value for
shareholders.

The Chairman is also responsible for ensuring that the Board
takes an active and constructive part in supporting and
challenging management in the development of our strategy.
This also includes Board succession planning, and promoting
the highest standards of integrity, probity and corporate
governance throughout the business.

The Chairman sets the Board’s agenda, in consultation with
the CEO and Company Secretary, taking full account of the
need to allow time for robust and constructive discussion
and challenge on all relevant matters. He’s 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 CEO
and the Company Secretary, who work together to monitor
the effective implementation of the strategies and actions
agreed by the Board.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

Board Governance
CONTINUED

At the last AGM, Andy Green did not seek re-election and
instead stepped down from the Board with effect from
that date (19 September 2019). In the period before
Mike McTighe assumed the role of Chairman, Jonathan
Moulds acted as Interim Chairman (from 19 September 2019
to 2 February 2020).

Chief executive Officer
The 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 IG, for
delivering financial performance in line with the agreed
budget, and for organisational design of our operations.
The CEO is also responsible for recruitment, leadership
and development of our executive management team and
for proposing to the Board our approach to vision, values,
culture, diversity and inclusion.

Chief Financial Officer
The Chief Financial Officer (CFO) is responsible for the
financial management of the Group and its financial
reporting, for monitoring our operating and financial
results and for management of our 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 our strategy and in relation to the
financial, risk management and operational performance of
the Group.

During 2019/20 the CFO was Paul Mainwaring. We
announced on 21 January 2020 Paul Mainwaring’s intention
to retire. On 4 May 2020 we further announced that Charlie
Rozes had been appointed to assume the role of CFO with
effect from 1 June 2020.

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
(COO), 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 (SID) and, in this capacity, 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, CEO or other Executive
Directors have failed to resolve, or when shareholders prefer
to speak directly to him. He’s 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, Joanna Nayler, supports and works
closely with the Chairman, the CEO, the CFO and the Board
Committee Chairs in setting agendas for meetings of the
Board and its Committees. She 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, she supports the Chairman in
designing and delivering Directors’ induction programmes,
and the Board and Committee performance evaluations.

The 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 AGM.

How the Board operates
The Board meets regularly, at least six times a year, and this
year held six scheduled meetings. 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 do 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 six such
meetings held during the year, convened principally to
consider matters relating to Board appointments and
succession, and our preparedness and responses to the
Australian Securities and Investments Commission (ASIC)
product intervention measures. The Chairman and the
Executive Directors also met, as the Board, to consider
Non-Executive Directors’ 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 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 two such meetings during the year that took
place immediately following Board meetings to discuss
matters relating to Board discussions.

During the year, Non-Executive Directors, led by the SID, met
without the presence of the Chairman, including to evaluate
the Chairman’s performance.

Attendance at Board meetings
The number of full scheduled Board meetings attended
by each Director during the year is set out opposite. Where
Board members weren’t able to attend unscheduled
meetings, they fed back any comments on the subject
matter at hand to the Chairman.

BOARD
MEMBER

Chairman

Mike McTighe1

Andy Green2

Independent non-
executive Directors

Andrew Didham3

Sally-Ann Hibberd

Stephen Hill4

Malcolm Le May

Jonathan Moulds

Jim Newman

Helen Stevenson5

executive Directors

June Felix

Paul Mainwaring

Bridget Messer

Jon Noble

1 Appointed on 3 February 2020.
2 Stepped down at conclusion of AGM on 19 September 2019.
3 Appointed at conclusion of AGM on 19 September 2019.
4 Retired on 27 April 2020.
5 Appointed on 18 March 2020.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

SCHEDULED
MEETINGS
ELIGIBLE TO
ATTEND

SCHEDULED
MEETINGS
ATTENDED

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

Board Governance
CONTINUED

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
¼¼ The Board held a strategy session focusing on the

strategic development of the business at which the
Board, supported by advisers, 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

Business, operational highlights and current trading
¼¼ 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 CCO and the COO, as well
as from the Chief Risk Officer on Risk and Compliance
matters and from the Chief People Officer

¼¼ Received reports on matters of interest such as location

strategy, people management and governance, technology
risk, regulatory change and competitor analysis
¼¼ Considered our response to the imposition of ASIC

product intervention measures

¼¼ Considered the impact of Covid-19 which resulted in
market volatility and an increase in clients and trading

Quarterly forecast and budget
¼¼ Received updates on performance against the prior year,

budget and market analyst consensus

¼¼ Discussed the risks and opportunities for the 2020

financial year budget, and approved the 2021 budget
and four-year plan

Culture, people, governance, risk and regulation
¼¼ Evaluated the effectiveness of our risk 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)

¼¼ Considered and approved proposals on improvements
to workforce representation at the Board, and updates
to the diversity and inclusion strategy

¼¼ Considered our emerging strategy relating to talent

and succession

¼¼ Discussed the results of the employee engagement survey
¼¼ Received the health and safety annual report, and an

annual information security update

¼¼ Received regular updates on corporate governance
developments, including the 2018 UK Corporate
Governance Code, and the introduction of the Senior
Managers and Certification Regime

¼¼ Analysed the impact of emerging political and legal risk,

including that relating to Brexit and Covid-19

¼¼ Considered the impact of Covid-19 on staff and how
best to assist them whilst working remotely during
the pandemic

¼¼ Launched IG Brighter Future Fund, a £5 million fund to
improve the educational opportunities available to the
least privileged young people

Financial performance
¼¼ Reviewed the Group’s financial performance and approved
all financial results announcements and the Annual Report
with the respective Financial Statements
¼¼ Reviewed and approved a four-year forecast
¼¼ Reviewed IG’s capital plan and assessment
¼¼ Received trading updates outside of the usual cycle due to

market volatility as a result of Covid-19

Dividends
¼¼ Reviewed the dividend policy

Other
¼¼ Considered feedback following shareholder engagement
¼¼ Received regular reports from Board Committee Chairs
¼¼ Agreed the extension of our banking facilities
¼¼ Agreed IG’s corporate insurance programme
¼¼ Undertook an external 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’s
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, whose members consist of the Chairman, 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 Chair of each Board Committee reports to the Board
on the matters discussed at Committee meetings. Reports
from the Chair 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.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

Board Governance
CONTINUED

Audit Committee
¼¼ Responsible for the integrity of the Group’s Financial
Statements, including its annual and interim reports

¼¼ Reviews and recommends to the Board the

effectiveness of our Internal Audit function and risk
management system, annual Internal Audit plan,
appointment, reappointment and removal of the
External Auditors

Board Risk Committee
¼¼ Responsible for providing oversight and advice

to the Board in relation to current and future risk
exposures, and promoting a risk-awareness culture
within the Group

¼¼ Recommends to the Board the design and

implementation of risk management policy and
measurement strategies across IG, our risk profile,
risk appetite and Key Risk Indicators for the current
and future strategy

¼¼ Reviews and recommends to the Board the

adoption of key risk-related documents, including
the ILAA, ICAAP and RP

nomination Committee
¼¼ 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

¼¼ Reviews and recommends appointments to the

Board and to other senior management positions
¼¼ Conducts succession-planning reviews at Board

level for recommendation to the Board

¼¼ Responsible for monitoring the effectiveness of the

control environment relating to the management and
safeguarding of client money and assets

¼¼ Reviews the management and control framework for
the governance, operation and maintenance of our
legal entities

¼¼ Commissions thematic risk reviews relating to key risks
¼¼ Receives a twice-annual report on the risks associated

with our corporate culture and periodic reports on risks
relating to product governance

¼¼ 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

eSG Committee
¼¼ Ensures that we have an ESG strategy and that it

remains fit for purpose

¼¼ Assists on such other matters related to ESG as may

be referred to it by the Board

Disclosure Committee
¼¼ Identification of Inside Information
¼¼ Decides on how and when we should disclose
Inside Information in accordance with the
Disclosure Policy and having regard, in particular, to
information previously disclosed by the Company

Standing Committee
¼¼ Meets as and when there may be a need to consider
Board reserved matters at short notice, where there
are administrative matters requiring evidencing that
do not warrant the need for a full Board or where full
attendance is not possible at short notice

¼¼ Monitors developments in remuneration and reward
practice to ensure that our policies take account of
reasonable stakeholder expectation

Remuneration Committee
¼¼ Responsible for making recommendations

to the Board on the Group’s senior executive
Remuneration Policy

¼¼ Oversees the Group’s Remuneration Schemes
¼¼ Reviews and recommends to the Board our

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
our Employee Incentive Scheme

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Effectiveness
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 listed environments,
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 fully compliant with the 2018 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 Directors’ judgment 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 judgment and are free from any business or
other relationships that could materially affect the exercise
of their judgment.

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.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

Board Governance
CONTINUED

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 our 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 March 2020.

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 Nomination
Committee Report on pages 94 to 98. 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)

TENURE

0 to 3 years

3 to 6 years

Over 6 years

EXECUTIVE
DIRECTORS

NON-EXECUTIVE
DIRECTORS
(INCLUDING
THE CHAIRMAN)

Induction
Following appointment, each Director receives a
comprehensive and formal induction, linked to their individual
experience, to familiarise them with their duties and our
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 us, strategy and business
model, our history, 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 IG
policies. Newly appointed Directors may also meet the
Company’s External Auditor, brokers and advisers, and attend
a presentation led by its external solicitors on the roles and
responsibilities of a UK-listed company Director.

Ongoing professional development
In order to facilitate greater awareness and understanding
of our business and operating environment, 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, we have continued our
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. However, these
sessions have had to be put on hold over the last few months
due to the Covid-19 pandemic. We’ll resume these as soon as
it’s safe to do so. Non-Executive Directors are also invited to
attend IG People Forum meetings.

During the year, the Directors attended briefing sessions
on defence and risk strategy, capital and liquidity, Pillar 2,
conflicts of interest management and new opportunities.

The Chairman ensures that the Directors continually update
and refresh their skills and knowledge, and independent
professional advice is provided, when required, at IG’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 CEO and other executive
officers in the periods between meetings.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

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 will stand
for re-election or election at the AGM.

Accountability
Financial and business reporting
The Strategic Report on pages 18 to 73 describes the vision,
strategy and the business model, whereby we generate and
preserve value over the long term and deliver the objectives
of IG.

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.

¼¼ Continuing to focus on Board dynamics following Board
changes during the year, evaluating and responding to
the need to ensure the right balance of skills needed on
the Board

¼¼ Focusing on the needs of, and interaction with, key

stakeholders including shareholders, regulators, clients
and employees

¼¼ Monitoring the performance of management in the

stewardship of IG’s assets in support of the delivery of the
new strategy

¼¼ Continuing to develop the senior management pipeline

and capabilities whilst retaining key talent

¼¼ Increased focus at Board on culture and conduct-related

themes

In 2020 an external evaluation was carried out by Boardroom
Review Limited.

The review involved the Chairman and the Company
Secretary setting the context for the evaluation, one-to-one
confidential interviews with all Board members and the
Company Secretary, and observation at the May Board and
Committee meetings. The initial output of the 2020 external
evaluation was considered at the July Board meeting and next
steps agreed.

We will report on the action plan, actions taken and progress
made in next year’s Annual Report.

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.

A Statement of the Directors’ Responsibilities in respect
of the Financial Statements is set out on page 143, 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 pages 72and 73.

Risk management and internal control
We are exposed to a number of business risks in providing
products and services to our 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
our 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 our
key business risks. The risk management and internal control
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, and consideration of the ICAAP, ILAA and RP, the
Board regularly reviews and monitors our risk management
and internal control systems and the effectiveness with which
we manage the principal risks we face.

The Directors confirm that the Board has carried out a robust
assessment of the principal risks facing the Group, including
those that would threaten our business model, future
performance, solvency and liquidity. We outline the risks to
which we’re 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 35, in the Risk Management section on pages 50
to 59, and in the Going Concern and Viability Statement on
pages 72 and 73.

An annual formal review of the effectiveness of our 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 our 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 our principal
risks and for escalating exceptions highlighted by the risk
management processes.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

Board Governance
CONTINUED

There are risk management and internal control systems
in place for identifying, evaluating and managing the
principal risks facing us 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
Our 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 IFRS. The assessment of the
overall effectiveness of the governance, and risk and control
framework included reviews of systems and controls relating
to the financial reporting process.

Internal controls over financial reporting include procedures
and policies that:

¼¼ Pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
disposals of our assets and liabilities

¼¼ 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

¼¼ Provide reasonable assurance regarding prevention

or timely detection of unauthorised acquisition, use or
disposal of Group assets that could have a material effect
on our 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
99 to 128.

Engagement with shareholders and
other stakeholders
The Board recognises the importance of maintaining good
and constructive communication with our 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 CEO’s Statement and Q&A, and
the Strategic Report.

To ensure that members of the Board develop an
understanding of the views of major shareholders, there’s
regular dialogue with institutional investors and shareholders,
presentations by management and Investor Roadshows
around the time of our year-end and half-year results
announcements. Our Investor Relations team coordinates
these. These presentations are available on our website,
iggroup.com, which also provides a wide range of other
information to shareholders and prospective shareholders.
We also respond to ad hoc requests from shareholders on
a regular basis.

The Chairman, the SID (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 and roadshow feedback,
as well as analysts’ reports on market perception of our
performance and strategy, and are made aware of the
financial expectations of the Group from the outside market.
This year, we conducted a Strategy and Business Update
attended by shareholders and analysts setting out the key
strategic choices we made in pursuit of our vision, the four
growth levers that are being deployed to drive growth, and
the market-specific action we’re now taking to implement
those levers to deliver sustainable growth.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

The Chairman and the SID 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 SID
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.

The 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 the reports and accounts below:

principal stakeholders Where principally reported

Clients

Regulators

Strategic Report,
Stakeholder Engagement,
Business Model

Strategic Report, Key trends
and factors likely to affect
our business

Workforce

ESG Report

Community

ESG Report

Environment

ESG Report

pages

18 to 73

18 to 37

60 to 71

Auditors

Audit Committee Report

129 to 136

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.1 The 2019 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 84.14% to 100%, and the
percentage of votes cast was always above 79%.

The 2020 AGM will be held on 17 September 2020. The
Notice of the AGM sets out the resolutions to be proposed
at the meeting. A copy of the Notice is available on the
iggroup.com website. We send our Annual Report and Notice
to shareholders, or make them available on our 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,
we will make available to shareholders full details of the votes,
including proxy votes, received on each resolution, and will
publish these on our website on the same day.

1 Due to the ongoing Covid-19 pandemic, we anticipate that the 2020 AGM may need to
be held as a closed meeting. Further information about our AGM arrangements will be
set out in the Notice of AGM.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

nomination Committee Report

Mike
McTighe

Mike McTighe, Chairman of the Nomination
Committee, gives his review of the
Committee’s activities during the
financial year.

The Board believes that diversity is a wider
issue than gender and includes variations
in experience, skills, personal attributes,
culture, ethnicity and background.

MIKE McTIGHE
CHAIRMAN OF THE NOMINATION COMMITTEE

The Nomination Committee has 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 the
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 on objective criteria.

On 15 April 2019, Andy Green announced his intention to
step down from the role of Chairman of the Board at the
conclusion of the AGM on 19 September 2019. At its meeting
on 14 May 2019, the Committee agreed that Malcolm Le May
should lead the search for the new Chairman of the Board in
his capacity as Senior Independent Director (SID), and that
Russell Reynolds be appointed to assist the Committee in the
search process.

At its meeting on 11 September 2019, the Committee agreed
to recommend the appointment of Malcolm Le May as
Interim Chairman of the Committee following the conclusion
of the AGM on 19 September 2019. At that meeting, the
Committee also agreed to recommend the appointment of
Jonathan Moulds as Interim Chairman of the Board, also with
effect from the conclusion of the AGM on 19 September
2019. These recommendations were agreed by the Board,
and Malcolm Le May was appointed as Interim Chairman of
the Committee on 19 September 2019. Jonathan Moulds
was appointed as Interim Chairman of the Board that
same day. Initially in his capacity as SID, and then as Interim
Chairman of the Committee, Malcolm Le May led the search
to select the new Chairman of the Board, and ultimately
the Nomination Committee’s recommendation to make an
appointment. After completion of a comprehensive search
and selection process, supported by Russell Reynolds, I was
appointed as Chairman of the Board and also as Chairman
of the Committee on 3 February 2020. Russell Reynolds is
independent of, and has no connection with, the Company
or its individual Directors, except in its role as a professional
recruitment consultant for the Company.

During the year, as well as succession planning for the role
of Chairman, the Committee concluded the independent
searches for and recommended the appointment of two
Non-Executive Directors (NEDs): Andrew Didham and Helen
Stevenson. These searches were facilitated by Heidrick &
Struggles. Heidrick & Struggles is independent of, and has
no other connection with, the Company or its individual
Directors, other than in its role as a professional recruitment
consultant for the Company. Following the relevant selection

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

processes, Andrew Didham was appointed to the Board
on 19 September 2019, and Helen Stevenson on 18 March
2020. Stephen Hill stepped down from the Committee on
18 March and retired from the Board on 27 April 2020, after
completing a nine-year tenure.

On 21 January 2020, Paul Mainwaring, the Company’s Chief
Financial Officer (CFO), indicated his intention to retire
from the Company. He had completed 20 years as a UK plc
Finance Director, and informed the Board that he felt it was
appropriate to announce his intention to step down from
executive roles as he approached this milestone.

The Committee oversaw an extensive independent search
for his successor, with the selection process facilitated
by Russell Reynolds. This resulted in the subsequently
approved recommendation to the Board that Charlie Rozes
be appointed as CFO with effect from 1 June 2020. Paul
Mainwaring stepped down from the Board and his role
as CFO on 1 June 2020, but stayed on for a one-month
handover period. He retired on 26 June 2020 – finishing
a long and distinguished service with the Company.

In January 2020, the Committee appointed external search
and selection firm Audeliss to support it in expanding
diversity succession-planning at Board and senior
management level beyond the male/female agenda.
This culminated in the appointment of Rakesh Bhasin on
6 July 2020 as a Non-Executive Director of the Board and
member of the Environmental, Social and Governance
(ESG) Committee.

Audeliss is currently assisting the Committee in the
recruitment of an additional NED to bring fresh perspective
to Board discussions and to further enhance the diversity
and skill set of the current Board. Further information on the
Committee’s key activities during the year is set out below.

Committee membership and attendance
The Committee consists of Independent NEDs, 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 CEO 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 eight times, sometimes
at short notice, principally to consider: the recruitment of
a new Group Chairman; CFO succession-planning; Board
composition and the refreshing of the Board; diversity;
succession planning at Board and senior management level;
Executive Director development and the composition of the
Committee and other Board Committees.

COMMITTEE
MEMBER

ELIGIBLE
TO ATTEND

ATTENDED

Andy Green1

Mike McTighe2

Sally-Ann Hibberd

Malcolm Le May3

Jonathan Moulds

Jim Newman4

Stephen Hill5

1 Andy Green stepped down as a member of the Committee on 19 September 2019.
2 Mike McTighe appointed as a member of the Committee on 3 February 2020.
3 Malcolm Le May stepped down as a member of the Committee on 18 March 2020.
4
Jim Newman stepped down as a member of the Committee on 18 March 2020.
5 Stephen Hill stepped down as a member of the Committee on 18 March 2020 ahead

of his retirement from the Board on 27 April 2020.

Role of the Nomination Committee
The principal roles and responsibilities of the Committee
include:

¼¼ 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

¼¼ Ensuring that there is a formal, rigorous and transparent
procedure for the appointment of new Directors to
the Board

¼¼ Identifying and nominating, for approval by the Board,
suitable candidates to fill Board vacancies as and when
they arise

¼¼ 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

¼¼ Keeping up to date about strategic issues and commercial
changes affecting the Group and the market in which
it operates

¼¼ Performance evaluation of the Board and its Committees

The Terms of Reference of the Committee, which were
last reviewed in January 2020, are available on the Group’s
website, iggroup.com.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

nomination Committee Report
CONTINUED

Main activities during the financial year
The Committee follows an annual rolling forward calendar
which reflects the duties and responsibilities set out in its
Terms of Reference.

During the year, the Committee undertook a number of
significant activities. These included the recruitment of
the new Chairman of the Board, CFO succession-planning,
additional NED recruitment to bring fresh perspective to
Board discussions and complement the skill set of the current
Board, and a number of other activities.

Chairman succession
Following the May 2019 meeting, the outgoing Chairman,
Andy Green, who was also Chairman of the Committee,
remained a member and Chairman of the Committee until
he stepped down at the AGM in September 2019. However,
he did not take part in any of the Committee’s discussions
concerning the appointment of his successor, and did not
attend any Committee meetings after July 2019.

The Committee, led by Malcolm Le May as SID and then
as Interim Chairman of the Committee, assisted by
Russell Reynolds, conducted an extensive process for
the recruitment of a new Chairman of the Board. The key
elements of the process followed in the search for the new
Chairman were as follows:

¼¼ In April 2019, a requirements matrix was developed

internally and completed by Board members

¼¼ After a competitive pitch process, Russell Reynolds
was appointed to lead the search for the next Chair
in May 2019

¼¼ Briefing calls were held with all Board members to gain
their input into the candidate specification, which was
then formally agreed

¼¼ Russell Reynolds’ research identified 42 potential

candidates who met the requirements of the candidate
specification, and who were then formally approached

¼¼ The longlist of candidates consisted of 17 individuals:

12 men and five women

¼¼ The shortlist of candidates consisted of five individuals.
There was also a sixth candidate who was from an
internal source

¼¼ Shortlist candidates were interviewed first by the SID,

Malcolm Le May

¼¼ Following these interviews, two candidates were removed
from the list, and the remaining three external candidates
were interviewed by members of the Committee and
the CEO

At the time of putting forward his name for consideration, the
internal candidate recused himself from having any further
involvement in the selection process run by the Committee.
The internal candidate withdrew from the process in August
2019. In September 2019, the Committee identified a
preferred candidate. References and final due diligence
meetings were then held with other executives before the

submission for regulatory approval was made. The selection
process culminated in my appointment as both Chairman of
the Board and of the Committee on 3 February 2020.

Early in the search process, the Committee agreed that
in light of the timetable for the appointment of the new
Chairman and the fact that Andy Green was stepping down
at the AGM in September, there was a need to appoint an
Interim Chairman of the Board. The Committee reviewed the
candidates for the role of Interim Chairman of the Board, and
it was determined that Jonathan Moulds should be appointed.
Jonathan Moulds had previously recused himself from all
Committee deliberations about the role of Interim Chairman.
Jonathan Moulds was appointed as Interim Chairman of the
Board on 19 September 2019 following the conclusion of the
Company’s AGM.

CFO succession
On 21 January 2020, Paul Mainwaring indicated his intention
to retire from the Board and, following his decision,
the Committee undertook an extensive search for his
replacement. The process was facilitated by Russell Reynolds.
A role profile was agreed by the Committee, and Russell
Reynolds carried out a market-mapping exercise. A longlist
of candidates was identified and subsequently reduced to a
shortlist of two candidates. In February 2020, the Committee
identified a preferred candidate for the role of CFO. The
recruitment process culminated in the announcement
in May of the appointment of Charlie Rozes as CFO and
as an Executive Director of the Company with effect from
1 June 2020.

non-executive Director recruitment
During the first part of the year, the Committee worked
with Heidrick & Struggles to complete the process, which
had started the previous year, for the recruitment of two
new NEDs.

An updated Board skills matrix and role profile had previously
been agreed by the Committee, with input from Heidrick &
Struggles. A longlist of potential candidates with the skills and
experience detailed in the role specification was produced
by Heidrick & Struggles. The longlisted candidates were
reviewed by Heidrick & Struggles and a shortlist of candidates
was then agreed by the Committee. The shortlisted
candidates were interviewed on a one-to-one basis by the
Chairman of the Committee and the Interim Chairman of the
Committee, as appropriate, and by the Committee members
and then by other members of the Board including the
Executive Directors. The selection process culminated with
Andrew Didham being appointed to the Board in September
2019, and Helen Stevenson in March 2020.

In line with the Group’s strategy of expanding into new
geographical territories, and the increasingly international
nature of its business operations, the Committee retained
Audeliss to assist. In January 2020 we asked them to help us
select two new NEDs with international and territory-specific

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

expertise, and at the same time to enhance our cultural
and ethnic diversity. The selection process has proceeded
well, and we welcomed Rakesh Bhasin as an additional NED
on 6 July. We anticipate that a further new NED will join the
Board in the next financial year. With these appointments, the
focus of the Committee will switch from Board recruitment
to Board team building. This is appropriate given the number
of changes to the composition of the Board which have taken
place over the last 18 months.

Other activities
A further focus of the Committee during the year has been
on putting in place structured development plans for the
Executive Directors. In this regard, the Committee is keen to
ensure that the Executive Directors on the Board have a good
understanding of the perspectives and pressures faced by
the NEDs. Accordingly, at its May meeting, the Committee
agreed that a policy should be developed on the holding of
outside directorships by the Executive Directors. The policy
was approved by the Board at its July meeting. This policy
will encourage the Executive Directors to hold one external
non-executive directorship to enable the Executive Directors
to broaden their perspective and understanding of the role
of NEDs.

A further activity undertaken during the year has been
consideration of the restructuring of the Boards of the
Group’s UK-regulated companies. Our intention is that our
UK-regulated subsidiaries will be restructured to include
NED membership. The restructuring of the Boards of the
UK-regulated companies was discussed in detail at the
Committee’s meeting in May 2020, and we anticipate that the
new Board structures will be implemented during the next
financial year.

During the year, the Committee also conducted a review of
its membership and that of the other Board Committees.
The Committee decided to streamline the composition
of the Committee and the other Board Committees, after
being satisfied in each case that the relevant Committee
would have the requisite skills, experience and knowledge,
and diversity of gender, social and ethnic backgrounds,
cognitive and personal strengths. As at 31 May 2020, the
members of the Committee are Mike McTighe (Chairman of
the Committee), Jonathan Moulds and Sally-Ann Hibberd. The
membership of the other Board Committees at the year-end
is detailed in the relevant Committee sections.

Board and 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 externally facilitated by independent consultancy firm
Boardroom Review Limited, as part of the overall annual
Board and Committee effectiveness review.

Boardroom Review Limited is independent of the Company
and has no connection with it or with any of the individual
Directors.

The Board and Committee review process consisted of the
following key elements:

¼¼ February/March – briefing meetings with the Board and

review of IG’s Board and Committee information
¼¼ April/May – one-to-one confidential interviews were
undertaken with all Board members and chosen
participants

¼¼ May – Board and Committee observation exercise
(included private sessions and strategy discussions)

¼¼ July – discussion document, including strengths,

challenges, areas of focus and recommendations,
distributed for review. This set out an independent view of
the current effectiveness of the Board and its Committees,
and preparation for the future, highlighting the strengths
and challenges over three years and providing specific
practical recommendations and opportunities for
improvement

¼¼ July – individual feedback to all Board members and

discussion of themes, priorities, recommendations and
personal development

¼¼ July – collective Board discussion at the July Board and
Committee meetings and agreement of next steps
¼¼ Next stage – agreement of the long-term development

roadmap

Further information on the outcome of the evaluation of
the Board and its Committees and of individual Directors is
given on page 91, together with a review of the progress on
actions arising from the internally run performance review
undertaken during 2019.

Diversity statement
As a business, we’re 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 ESG Report on pages
66 and 67.

At the year-end, and following the appointment of
Helen Stevenson in March 2020, the Board had a 36%
female representation. IG has therefore met its target of
increasing female representation to one-third by 2020, as
recommended by the Hampton-Alexander Review: FTSE
Women Leaders.

The Directors recognise the importance of diversity, in all
of its forms, for the Board, and understand the significant
benefits that come with having a truly diverse Board. The
Board believes that diversity is a wider issue than gender, and
includes variations in experience, skills, personal attributes,
culture, ethnicity, and background.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

nomination Committee Report
CONTINUED

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.

Senior management gender balance
The table below analyses the gender balance of the Executive Directors and their direct reports as of 31 May 2020.

Board

Senior Management Team

Senior Leadership Team

Total

Female
Male

31 May 2020

31 May 2019

Numbers

% Change

4
7

4
6

11
15

595
1,305

36%
64%

40%
60%

42%
58%

31%
69%

3
7

3
5

8
16

541
1,221

30%
70%

38%
63%

33%
67%

31%
69%

MIKE McTIGHE
CHAIRMAN OF THE NOMINATION COMMITTEE
23 July 2020

Directors’ Remuneration Report and policy

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Chairman’s overview
On behalf of the Board, I am pleased to present the
Directors’ Remuneration Report for the year to 31 May
2020. This report includes our Directors’ Remuneration
Policy which we will be submitting to shareholders for
approval at the 2020 AGM, details of remuneration
arrangements in respect of the year to 31 May 2020 and
a summary of how we intend to apply the Policy during
the year to 31 May 2021.

CONTENTS

Chairman’s overview

2020 Directors’ Remuneration Policy

2019/20 Annual Report on
Remuneration

PAGE

104

114

Membership and attendance of the Remuneration
Committee
The Remuneration Committee is composed of
Independent Non-Executive Directors. Following a review
of the structure of the Board, the number of members
of the Remuneration Committee has been reduced to
ensure that Board time is used effectively. The current
members of the Remuneration Committee are Malcolm
Le May (Chairman), Jim Newman and Helen Stevenson.
Sally-Ann Hibberd and Jonathan Moulds stepped down
from the Committee on 18 March 2020. The members of
the Committee during the year are set out below, together
with their attendance at meetings.

COMMITTEE
MEMBER

ELIGIBLE
TO ATTEND

ATTENDED

Malcolm Le May –
Chairman

Jim Newman

Helen Stevenson1

Former members

Sally-Ann Hibberd2

Mike McTighe3

Jonathan Moulds2

Andy Green4

Stephen Hill5

Malcolm
Le May

During the year the Committee has
undertaken a comprehensive review of our
Directors’ Remuneration policy as a result of
which it has modified the operation of the
sustained performance plan (Spp) and made
other changes to the policy to better reflect
shareholder expectations and to comply
with the uK Corporate Governance Code.

MALCOLM LE MAY
CHAIRMAN OF THE REMUNERATION COMMITTEE

1 Helen Stevenson joined the Board on 18 March 2020 and became a member of the

Committee from that date.

2 Sally-Ann Hibberd and Jonathan Moulds stepped down from the Committee on

18 March 2020.

3 Mike McTighe joined the Board on 3 February 2020 and became a member
of the Committee from that date. He stepped down from the Committee
on 18 March 2020 following reorganisation of all Board committees, but continues to
attend Committee meetings by invitation.

4 Andy Green stepped down from the Board and the Committee on

19 September 2019.

5 Stephen Hill stepped down from the Committee on 18 March and retired from the

Board on 27 April 2020.

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

Directors’ Remuneration Report and policy
CONTINUED

The Chief Executive Officer (CEO), Chief Financial Officer
(CFO) and the Company Chairman attend the Committee
meetings by invitation. The Company 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.

This strategy focuses on four growth levers – expanded
distribution channels, geographic expansion, segmented
target markets and a multi-product offering, that is being
deployed to deliver sustainable growth and attractive
shareholder returns. As part of this review the Committee
carefully considered whether the SPP continued to be
appropriate to support the execution of our strategy as
it evolves or whether an alternative structure such as
a traditional bonus plus LTIP structure would be more
appropriate.

Following each Committee meeting, a formal report is made
to the Board in which the Chair of the Committee describes
the proceedings of the Committee meeting and makes
recommendations to the Board as appropriate.

Performance in 2019/20
The Group has achieved exceptional performance in
exceptional circumstances this year, delivering record
financial performance for the financial year to 31 May 2020.
Since the last week of February 2020, following the Covid-19
outbreak, financial market volatility increased significantly
and has remained elevated. During this period the Group saw
high levels of client trading activity from both our existing
clients and an expanded client base. We have converted
this heightened activity into a significant increase in revenue
and profit for the year as a result of our efficient operations
as well as our effective management of market and credit
risk. During such a prolonged period of volatility, the high
volumes of clients choosing to trade markets with IG reflect
our business resilience, the strength of our systems and
our commitment to delivering the best possible trading
experience.

During the year the Company has also made strong progress
in implementing our strategy set out in May 2019. Further
details are provided in the Strategic Update on page 20.

Directors’ Remuneration Policy review
At IG Group, Executive Directors participate in one incentive
plan only – the SPP. Under the current approach, SPP
participants may receive ‘plan contributions’ in the form of
share options to their ‘plan account’ each year depending
on performance. These contributions are based on earnings
per share (EPS) performance and the delivery against
non-financial strategic and operational objectives 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 and released in future
years. The design of the SPP reflects its operation as a single
combined annual and long-term incentive scheme.

Over the last 18 months, the Committee has undertaken
a thorough review of our Policy to ensure that the
remuneration structure, including relevant performance
measures, continues to be consistent with and encourages
the delivery of the strategy we announced in May 2019.

100

The review also considered our approach to remuneration in
light of the changes contained within the 2018 UK Corporate
Governance Code and emerging corporate governance
best practice. The Committee consulted extensively with
shareholders and proxy advisers in the development of this
Policy and their views helped us to shape our final proposals.
The shareholders that we consulted with were supportive of
the proposed approach going forward.

The Committee believes that the SPP has supported
the business well over the past seven years since its
implementation and that the average payout delivered over
this period of 58% of maximum (including the payout due
in respect of 2019/20) is a fair reflection of our long-term
performance and the value delivered for shareholders. The
Committee continues to believe that the SPP is a suitable
framework for the Group. The SPP is a simple, dynamic
structure which creates alignment with shareholders,
incentivises executives to deliver progress against strategic
milestones, sustainable profit, as well as long-term market
outperformance.

The Committee has however proposed some changes to the
operation of the SPP to extend the vesting timeframe and
to make the performance measures more relevant for the
Group to support our strategy and to improve alignment
with shareholders over a longer period.

Changes to the SPP
The following outlines the changes that the Committee plans
to make to the SPP:

¼¼ Payout profile – From the 2021 financial year onwards,
plan contributions will be delivered on fixed dates over a
period of up to five years from the start of the relevant
plan year. Awards will normally be delivered as follows:
– 30% of the amount earned will be delivered in cash

shortly following the end of the plan year. For example,
for the 2021 financial year this amount would be paid in
July 2021

– 20% of the amount earned will be awarded in share

options which will be released to participants following
the end of the fourth financial year following the start of
the plan year. For example, for the 2021 financial year
these share options would vest in July 2024

– 50% of the amount earned will be awarded in share

options which will be released to participants following

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the end of the fifth financial year following the start of
the plan year. For example, for the 2021 financial year
these share options would vest in July 2025

Current Spp
Y-1

Y-2

Currently the full SPP award is delivered in share

options. However, the Committee considered that it was
appropriate to deliver the initial portion of the award
in cash to reflect market practice and to provide some
medium-term cash flow for the executives.

¼¼ Underpin – The Remuneration Committee retains

discretion to scale back the vesting of share options at the
end of years four and five if the underlying performance of
the participant or the Group does not justify the payout of
the award

¼¼ Performance measures – SPP awards will continue to
be based on EPS performance and the delivery against
non-financial strategic and operational objectives for
one financial year, and relative TSR performance over the
three prior financial years. The performance measures will,
however, be reweighted slightly by reducing the weighting
on TSR and increasing EPS. The Committee considers it
is important that TSR is still included as a performance
measure within the SPP to ensure alignment of outcomes
with shareholders and as a measure of our multi-year
performance and value creation. However, the Group
does not have many listed competitors, which makes
defining a peer group challenging. In order to improve
line-of-sight for executives the Committee is proposing
to reduce the weighting on relative TSR from 35% to 25%
with the weighting on EPS increased from 45% to 55%.
The TSR peer group will also be changed from the FTSE
350 excluding investment trusts to the FTSE 250 excluding
investment trusts, so that Group performance is being
compared to other similar-sized businesses to make the
performance comparison more relevant

¼¼ Award opportunities – There will be no changes to

SPP opportunities. The CEO’s maximum opportunity
will continue to be 500% of salary with other Executive
Directors having a maximum SPP opportunity of 400%
of salary

The unvested share options in the Executive Directors’
current SPP accounts, including share options due to be
awarded in respect of the 2020 financial year, will continue
to pay out in accordance with the SPP’s current operation
outlined in the 2017 Policy until the plan terminates following
the 2023 financial year.

DEPS
(45%)
Strategic
(20%)

TSR (35%)

Plan
account

Amount allocated to the participant’s
plan account

One-third of the plan account is
distributed each year to participants

Modified Spp
Y-1

Y-2

EPS
(55%)
Strategic
(20%)

TSR (25%)

30% awarded
in cash following
Y1 (eg July 2021
for FY21 awards)

20% awarded in
shares released
following Y4 (eg July
2024 for FY21 awards)

50%
awarded
in shares
released
following
Y5 (eg
July 2024
for FY21
awards)

Other changes to Directors’ Remuneration Policy
In addition to the changes outlined above, the Committee
is also planning the following changes to the Directors’
Remuneration Policy to align with the UK Corporate
Governance Code provisions:

¼¼ Pension and benefits allowance – The pension and
benefits allowance rate for Directors’ appointed to
the Board during 2018 was reduced to 12% of base
salary, which is in line with the rate available to the wider
workforce in the UK. Any future new hires to the Board,
including the new CFO who joined us on 1 June 2020, are
appointed on this rate

¼¼ Shareholding guideline – The shareholding guideline for
the CFO, COO and CCO will be increased from 150% of
base salary to 200% of base salary to reflect best practice
and evolving market practice in this area. The CEO’s
shareholding guideline will continue to be 200% of base
salary. Shares owned by the Executive Directors, as well as
unvested SPP share options (on a net of tax basis), count
towards this guideline

The Committee considers that the changes outlined
further simplify the SPP, more closely align it to the strategy,
extend its timeframe and create longer-term alignment
with shareholders. The Committee also considers that the
proposed operation of the SPP complies with the spirit of the
UK Corporate Governance Code. The following illustrates the
operation of the current SPP and the modified SPP:

¼¼ Post-employment shareholding guidelines – In light of

evolving market practice, the Committee has introduced
a post-employment shareholding guideline. Executive
Directors will be expected to maintain a minimum
shareholding of 200% of salary (or actual shareholding
if lower) for two years following stepping down as an
Executive Director. This guideline applies to shares that

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are released from the SPP on or after the adoption of the
new Policy at the 2020 AGM. Any shares purchased by the
Executive Directors will not be subject to the guideline.
The Committee believes that this approach encourages
Executive Directors to continue to retain an appropriate
level of shareholding in the Company following their
departure from the business to ensure that their interests
remain aligned with shareholders

¼¼ Malus and clawback – The circumstances in which
malus and clawback may apply under the SPP have
been extended to include serious reputational damage,
corporate failure and/or where the individual is not
considered to be fit and proper to align with evolving best
practice

Incentive outcomes for 2019/20
The SPP for 2019/20 operated in line with the 2017 Policy.
The SPP award for the 2020 financial year is based on three
metrics: diluted earnings per share (DEPS) (45%), relative TSR
(35%) and non-financial measures (20%). DEPS performance
for the 2020 financial year was 64.9 pence, which exceeded
the maximum target set, and our TSR over the period 1 June
2017 to 31 May 2020 was in the upper quartile compared to
the FTSE 350 (excluding investment trusts). As a result, these
elements paid out in full.

During the year non-financial performance was very strong,
reflected in an improved client experience and client attrition
profile (with high client satisfaction scores and platform
ratings), strong progress made across our significant
opportunities portfolio as well as good progress on
operational effectiveness. Some aspects of our operational
performance, including our systems uptime, were impacted
in the latter part of the year by the significant increase in
trading volumes. Overall, after careful consideration the
Committee judged that 86% of the total portion of the award
based on non-financial strategic operational objectives
should payout to reflect this strong overall performance.

Overall, the Committee determined that 97.2% of the SPP
award for FY19/20 should be awarded. This award will be
granted following the announcement of results for the year
and will vest in accordance with the 2017 Policy.

In determining the level of payout, the Committee carefully
considered whether pay outcomes were appropriate, a fair
reflection of the underlying performance of the business and
aligned with the experience of shareholders, employees and
other stakeholders, particularly in light of the current climate
and given that a significant contributor to our performance
has been increased transaction fees resulting from the
elevated levels of market volatility following the Covid-19
outbreak.

As part of this determination of the performance outcome
the Committee took into account the following:

¼¼ TSR performance over the past three years is +62% which
is in the upper decile compared to comparators. While
our TSR has been positively impacted by performance in
the last part of the year, when measured to the start of
March 2020 (prior to the significant increase in trading
volumes), TSR was also positioned in the upper quartile.
This performance represents a significant value increase
for shareholders

¼¼ Our revenue and EPS performance are the highest in our
history, representing increases of c.36% and c.52% on
prior year

¼¼ Nearly all of our employees participate in the Group annual
bonus plan and therefore they will also benefit from the
improvement in performance

¼¼ We continue to pay a dividend for FY19/20 of 43.2 pence

per share

¼¼ We have made strong progress on the delivery of our

strategy, strengthening the business and positioning it for
future growth

Overall, the Committee concluded that the level of the SPP
award for FY19/20 was a fair reflection of the shareholder
value delivered through the increase in share price as well
as the enhanced financial performance, and that it was
appropriate in the context of the experience of our other
stakeholders.

Board changes
Executive Directors
Earlier this year, we announced that Paul Mainwaring, CFO,
had indicated to the Board that he intended to retire, after
nearly 20 years as a UK plc Finance Director and four as
the CFO of the Group. Charlie Rozes was subsequently
appointed as the Group’s new CFO and he joined the
Board on 1 June 2020.

Paul Mainwaring gave notice of his retirement and stepped
down from the Board on 1 June 2020. He remained with
the business until 26 June 2020 providing a comprehensive
handover to Charlie. Paul will receive a payment of £444,440
in lieu of his salary and pension and benefits allowance for the
remaining approximately 11 months of his notice period. This
amount will be paid in instalments. Paul was treated as a good
leaver under the SPP. He remained eligible to receive an SPP
award in respect of the 2019 financial year as he was in role
for the full year in line with the performance outlined above.
He will also receive a pro rata SPP award in respect of the
2020 financial year for his period in employment to 26 June
2020, based on performance against targets. Unvested SPP
shares will be released on the normal dates in line with the
provisions of the SPP. Further details of the approach to Paul’s
remuneration are set out on pages 123 and 124.

102

Charlie Rozes brings a wealth of experience to the Group and
the Committee took into consideration his skills, experience,
and criticality in driving future Group performance when
determining a suitable remuneration package. The Company
carried out an extensive search for a new CFO and concluded
that a candidate of Charlie’s experience was crucial to
supporting the Group in the implementation of IG’s strategy.
Charlie’s salary has been set at £490,000 per annum, his
pension and benefits allowance is 12% of base salary in line
with the provision available for other employees in the UK.
He will be eligible for an annual SPP award of up to 400% of
base salary per annum. In setting his salary the Committee
considered Charlie’s extensive previous experience as a
Finance Director of a UK plc, including his international
experience, which is critical to support the implementation of
IG’s strategy, the level of his previous salary as CFO of Jardine
Lloyd Thompson (which was above the salary paid to Paul
Mainwaring) as well as market practice at other companies
of a similar size and complexity including other companies in
the financial services sector with whom the Group competes
for talent. Taking into account all of these reference points,
the Committee considered that this salary positioning was
appropriate. The Committee noted that the incumbent’s
salary has only increased by 2.74% since 2016. On leaving his
previous role, Charlie forfeited awards under share-based
incentives. The Company has bought these awards out on a
like-for-like basis. Further details are provided on page 124.

Non-Executive Directors
On 19 September 2019, Andy Green stepped down as
Chairman of the Company. He was paid his fees to this
date. Mike McTighe joined the Company as Chairman on
3 February 2020. His annual fee has been set at £300,000
per annum.

Stephen Hill stepped down as a Non-Executive Director on
27 April 2020 as he had completed nine years on the Board.
On 19 September 2019 we welcomed Andrew Didham as a
new Non-Executive Director, and on 18 March 2020 Helen
Stevenson joined as a new Non-Executive Director.

Wider workforce remuneration
During the course of the financial year, in addition to the
Remuneration Policy changes set out above, the Committee
has further developed its approach to considering and taking
into account wider workforce remuneration when setting
Executive Director pay. The CEO pay ratio has been disclosed
in this year’s report for the first time (further details are
provided on page 125) and we have also reported our latest
gender pay gap as part of the Gender Pay Gap Report, which
can be found on our website, iggroup.com.

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Conclusion
I look forward to receiving your support for the new Directors’
Remuneration Policy and the Directors’ Remuneration Report
at the AGM on 17 September 2020.

MALCOLM LE MAY
CHAIRMAN OF THE REMUNERATION COMMITTEE
23 July 2020

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2020 Directors’ Remuneration Policy
The Directors’ Remuneration Policy describes the framework, principles and structures that guide the Remuneration
Committee’s decision-making process in relation to Directors’ remuneration arrangements. During the year the Committee
has undertaken an extensive review of the Directors’ Remuneration Policy to ensure that it continues to support the execution
of our strategy and the generation of sustained shareholder value. A number of changes have been made to the Policy and to
the operation of the Company’s incentive plan, the sustained performance plan (SPP), to reflect shareholder expectations and
to comply with the UK Corporate Governance Code.

Objectives of the Remuneration Policy
The Remuneration Policy is set to ensure that remuneration is sufficiently competitive to attract and retain senior executives
of a high calibre and to provide a suitable incentive to drive performance, while remaining appropriate in the context of our
approach to pay throughout the organisation. Key objectives of the Policy are that remuneration of Group employees should:

¼¼ Align with the best interests of the Company’s shareholders and other stakeholders
¼¼ Recognise and reward performance of employees that supports the execution of strategy and helps drive sustainable

shareholder value growth

¼¼ Be consistent with regulatory and corporate governance requirements
¼¼ Be designed to achieve effective risk management through the choice of performance measures, shareholding

requirements, and malus and clawback provisions

¼¼ Be straightforward, easy for shareholders and employees to understand and be simple for the Group to monitor
¼¼ Not be used to reward behaviour that inappropriately increases the Group’s exposure to risk

The Committee considers that a successful Remuneration Policy needs to be sufficiently flexible to take account of future
changes in the Group’s business environment and in remuneration practice. There should be transparency and alignment to
the delivery of strategic objectives at both a Company and an individual level.

There should also be scope to reward for exceptional effort and achievement that delivers value both for the Company and
the shareholders. Likewise, failure to achieve, individually or at Company level, will not be rewarded.

The Committee is also mindful of ensuring that there is an appropriate balance between the level of risk and reward for the
individual, the Company and for shareholders. The maximum award that can be granted to individuals is set out in the Policy.

When setting levels of variable remuneration, the degree of stretch in performance conditions and the balance of equity
and cash within a package, consideration is given to providing the appropriate balance of each so as not to encourage
unnecessary risk-taking. As well as financial risk, the Committee also ensures that there is an appropriate focus on regulatory
and governance matters.

The total remuneration package is structured so that a significant proportion is linked to performance conditions, and it is
the Company’s policy to ensure that a suitable proportion of the potential remuneration package is provided via share-based
instruments. This ensures that Executive Directors have a strong ongoing alignment with shareholders through the Company’s
share price performance.

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Remuneration Policy table
The table below summarises each element of the Remuneration Policy for the Executive Directors, explaining how each
element operates and how each part links to the corporate strategy.

Key elements of remuneration

purpose and link to strategy

Operation

Opportunity

performance metrics

Base salary

To recruit and retain
key employees of an
appropriate calibre to
deliver the strategic
objectives of the
Company.

Base salaries are normally reviewed by the
Committee annually, with salary increases
effective from 1 June.

Base salaries are set taking into account:

¼¼ Scale, scope and responsibility of the

role

¼¼ Experience of the individual and his or

her performance

¼¼ Pay and workforce policies elsewhere in

the Group

¼¼ Business performance and prevailing

market conditions

¼¼ Salary levels at other companies of a
similar size, complexity, geographic
spread and business focus

Whilst there is no maximum salary,
increases will normally be in line with
the typical increases awarded to
other employees in the Group.

None

However, increases may be above
this level in certain circumstances
such as:

¼¼ Where an Executive Director has
been appointed to the Board at a
lower than typical market salary
to allow for growth in the role,
larger increases may be awarded
to move salary positioning
closer to typical market level
as the Executive Director gains
experience

¼¼ Where an Executive Director

has been promoted or has had a
change in responsibilities
¼¼ Where there has been a

significant change in market
practice

pensions and benefits

Competitive, cost-
effective flexible pension
and 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
Executive Directors can receive a range of
benefits, Company pension contribution or
cash allowance.

The maximum pension and benefits
allowance for Executive Directors
will be in line with the allowance
available to the wider workforce in
the UK. This rate is currently 12% of
salary.

None

Executive Directors may participate in a
share incentive plan (SIP) or savings related
share option scheme (SAYE) or any other all-
employee plans on the same basis as other
employees up to HMRC approved limits.

The Committee may introduce other
benefits if it is considered appropriate to
do so.

Where appropriate, the Company may
provide support to Executive Directors in
the preparation of their tax returns.

Executive Directors shall be reimbursed for
all reasonable expenses and the Company
may settle any tax incurred.

Where an Executive Director is required
to relocate to perform their role, the
appropriate one-off or ongoing benefits
may be provided (eg housing, schooling etc).

Where the Committee has
determined that it is appropriate
to provide additional benefits
(including in connection with the
relocation of an Executive Director),
benefits may be provided above this
level. The Committee will set the
level of benefit at an appropriate
level taking into account individual
circumstances and the policy in
place for other employees.

Executive Directors may participate
in a SIP, SAYE or other all-employee
plan up to the same maximum as
other employees.

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purpose and link to strategy

Operation

Opportunity

performance metrics

Sustained performance plan

Awards are made after the announcement
of results relating to each ‘plan year’.

For the FY21 onwards, plan contributions
payout as follows:

The maximum plan contribution
in respect of a plan year is 500%
of salary for the Chief Executive
Officer and 400% of salary for other
Executive Directors.

¼¼ 30% of the award is delivered in cash

shortly following the end of the plan year

¼¼ 20% of the amount earned will be

awarded in shares which will be released
to participants following the end of the
fourth financial year that follows the start
of the plan year

¼¼ 50% of the amount earned will be

awarded in shares which will be released
to participants following the end of the
fifth financial year that follows the start
of the plan year

The Remuneration Committee retains
discretion to scale back the vesting of
awards at the end of years four and five
if the underlying performance of the
participant and/or the Group does not
justify the payout of the award.

The Committee may determine that a
different payout schedule should apply for
future plan years.

Shares may be awarded either in the
form of par value options, nil cost options
or conditional awards. Shares held in a
participant’s plan account, including the
plan contribution awards in respect of the
FY20 will continue to pay out in accordance
with the previous vesting profile outlined in
the 2017 Policy.

For awards granted in relation to plan years
prior to FY21, one-third of the balance of
plan account will be released each year
following the end of the financial year. The
SPP reaches the end of its ten-year life
following the end of FY23. In accordance
with the plan rules 50% of the remaining
balance of the participants’ plan account
will be released following the end of
2023, with a further 25% of the remaining
balance of the participants’ plan account
being released following the end of 2024
and 2025 respectively. Awards granted in
relation to plan years from FY21 onwards will
continue to vest according to their normal
payout schedule following the termination
of the SPP.

Recovery provisions apply, see page 108 for
further details.

Awards are determined
based on performance
for the prior financial year
(financial and strategic
measures) and for up to
three financial years ending
with the plan year Total
Shareholder Return (TSR)
measures.

Performance measures
may comprise, for example,
earnings per share (EPS)
targets, TSR and strategic
non-financial measures.
The Committee may vary
performance measures
from year to year in
accordance with strategic
priorities and the regulatory
environment.

TSR performance will
normally be measured
against the performance
of a suitable comparator
group.

No more than 25% of the
award will normally be
payable for threshold levels
of performance.

The Committee may, in
its discretion, adjust SPP
awards, if it considers
that the outcome does
not reflect the underlying
financial or non-
financial performance
of the participant and/
or the Group over the
relevant period or that
such vesting level is not
appropriate in the context
of circumstances that were
unexpected or unforeseen
when the targets were
set. When making this
judgment the Committee
may take into account such
factors as the Committee
considers relevant.

The sustained
performance plan (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.

A significant portion of
the SPP award is in shares,
encouraging Executive
Directors to build up
a substantial stake in
the Company, thereby
aligning the interests
of management with
shareholders.

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purpose and link to strategy

Operation

Opportunity

performance metrics

Share ownership policy

This aligns the interests
of management and
shareholders both in- and
post-employment and
promotes a long-term
approach to performance
and risk management.

Executive Directors are expected to build a
holding of shares to the value of a minimum
of 200% of base salary.

It is normally expected that the shareholding
guideline would be met within five years
from the date of appointment (unless
exceptional circumstances apply).

The Committee will review progress
annually, with an expectation that Executive
Directors will make progress towards
achieving the shareholding policy each year.

Following ceasing to be an Executive
Director, Executive Directors will normally
be expected to maintain a minimum
shareholding of 200% of salary (or actual
shareholding if lower) for two years. This
guideline applies to shares that are released
from the SPP on or after the adoption of
the new Policy at the 2020 AGM. Any shares
purchased by the Executive Directors
will not be subject to the guideline. The
Committee retains discretion to waive
this guideline if it is not considered to be
appropriate in the specific circumstances.
This guideline shall apply if an individual
ceases to be an Executive Director following
the date of the adoption of this policy at the
2020 AGM.

Notes to the Policy table
Summary of decision-making process and changes to policy
The Policy has been updated to reflect feedback from shareholders, the new UK Corporate Governance Code, as well as recent
developments in best practice. In determining the new Remuneration Policy, the Committee followed a robust process which
included discussions on the content of the Policy at Remuneration Committee meetings during the year. The Committee
considered the input from management and our independent advisers, as well as considering best practice and guidance
from major shareholders. A summary of the changes to the new Policy compared to the 2017 Policy is set out below:

¼¼ Vesting profile for the SPP – Under the 2017 policy one third of the participants’ plan account paid out each year. Under
the new policy the approach to vesting has been simplified and extended. The award in respect of each plan year will vest
on a fixed schedule over a five-year period

¼¼ Pension and benefits allowance – The maximum pension and benefits allowance for Executive Directors has been reduced

to 12% of base salary, which is in line with the allowance available to the wider workforce in the UK

¼¼ Shareholding guidelines – The in-employment shareholding guideline for Executive Directors (other than the CEO)

has been increased from 150% of salary to 200% of salary to reflect best practice and shareholder expectations. The
shareholding guideline for the CEO continues to be 200% of salary. A post-employment shareholding guideline has been
introduced

Other changes have been made to the wording of the Policy to increase flexibility, to aid operation, to increase transparency
and to reflect typical market practice.

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Performance measures
For the 2021 financial year it is intended that SPP awards will be based on a combination of EPS, TSR and non-financial
strategic and operational performance measures.

Metrics

Rationale and link to the strategic KpIs

How performance measures are set

Total Shareholder Return (TSR) relative
to an appropriate comparator group

Earnings per share (EPS)

TSR measures the total return to the Group’s
shareholders, both through share price
growth and dividends paid, and as such it is
aligned to shareholder interests.

TSR is influenced by how well the 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.

EPS is a key indicator of the profits generated
for shareholders, and a reflection of both
revenue growth and cost control.

non-financial strategic and operational performance schemes

Non-financial strategic and
operational measures

Specific strategic and operational non-
financial measures may include targets
related to client experience, strategic delivery,
operational effectiveness and culture, people
and conduct.

Each of these targets has a direct impact on
a number of the Group’s KPIs. For example,
system reliability is a key measure of the
resilience of our trading platforms, which is an
essential element of revenue generation and
client satisfaction.

The basket of measures chosen is considered
to provide a broader assessment of executive
delivery than financial metrics alone.

The Committee determines appropriate
performance targets each year, taking
account of the annual and longer-term
business plans.

Targets are set at the start of the financial
year based on our strategic and operational
objectives for the year.

Following the end of the year, the Committee
assesses performance relative to prior
years, internal targets and sector averages.
Assessment is undertaken ‘in the round’,
taking account of activities and achievements
during the year.

Financial, strategic and operational non-financial measures are considered to be commercially sensitive and are therefore
not disclosed at the time of award. The intention is that targets will be disclosed retrospectively in the Annual Remuneration
Report, provided that they are no longer commercially sensitive.

Recovery provisions
The Committee may decide within four years of a plan contribution being awarded that the underlying award will be subject to
malus and/or clawback. This may happen in the following circumstances:

¼¼ There has been a material misstatement in the Company’s financial results
¼¼ The assessment of any condition was based on an error or on inaccurate or misleading information or assumptions
¼¼ Participant’s employment is terminated for serious misconduct
¼¼ Substantial failure of risk management
¼¼ Serious reputational damage (for plan contributions from FY21 onwards)
¼¼ Corporate failure (for plan contributions from FY21 onwards)
¼¼ Where the individual is not considered to be fit and proper (for plan contributions from FY21 onwards)

Share plan operations
The Committee will operate the SPP in accordance with the Rules of the plan (a copy of SPP rules is available on request from
the Company Secretary). Awards under the SPPs may:

¼¼ Have any performance conditions applicable to them amended or substituted by the Committee in circumstances where

the Committee determines an amended or substituted performance condition would be more appropriate and not
materially less difficult to satisfy

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¼¼ Incorporate the right to receive an amount equal to the value of dividends which would have been paid on the shares

under an award that vest up to the time of vesting. This amount may be calculated assuming that the dividends have been
reinvested in the Company’s shares on a cumulative basis

¼¼ Be settled in cash at the Committee’s discretion. For Executive Directors, this provision will only be used in exceptional

circumstances such as where for regulatory reasons it is not possible to settle awards in shares

¼¼ Be adjusted in the event of any variation of the Company’s share capital or any demerger, delisting, special dividend or

other event that may affect the Company’s share price

Remuneration Policy across the Company
We have designed the Remuneration Policy for the Executive Directors and senior management taking into account the Policy
for employees across the Company as a whole. The Committee is kept updated through the year on general employment
conditions, basic salary-increase budgets, the level of bonus pools and payouts 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:

¼¼ Consistency in ‘pay for performance’, with annual bonus schemes being offered to the vast majority of employees
¼¼ Offering pension, medical, life assurance and other flexible benefits for all employees, where practical given geographical

location

¼¼ 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

¼¼ Encouraging broad-based share ownership through the use of all-employee share plans, where practical

Approved payments
The Committee reserves the right to make any remuneration payments and/or payments for loss of office (including
exercising any discretions available to it in connection with such payments), notwithstanding that they are not in line with
the Policy set out above, where the terms of the payment were agreed: (i) before the Policy set out above came into effect,
provided that the terms of the payment were consistent with any applicable shareholder-approved Directors’ Remuneration
Policy in force at the time they were agreed or where otherwise approved by shareholders; or (ii) at a time when the relevant
individual was not a Director of the Company (or other person to whom the Policy set out above applies) and, in the opinion of
the Committee, the payment was not in consideration for the individual becoming a Director of the Company or such other
person. For these purposes ‘payments’ includes the Committee satisfying awards of variable remuneration and, in relation to
an award over shares, the terms of the payment are ‘agreed’ no later than the time the award is granted. This Policy applies
equally to any individual who is required to be treated as a Director under the applicable regulations.

Illustrating the application of Remuneration Policy
As a result of the Company’s Remuneration Policy, a significant proportion of the remuneration received by Executive
Directors depends on Company performance. The charts below show how total pay for Executive Directors varies under four
different performance scenarios: minimum, target, maximum and maximum plus 50% share price growth.

Minimum: This comprises the fixed elements of pay, being base salary and pension and benefits allowance. Base salary and
pension and benefits allowance are effective as at 1 June 2020.

Target: This comprises fixed pay and the target value of SPP (250% of salary for the CEO and 200% of salary other Executive
Directors respectively).

Maximum: This comprises fixed pay and the maximum value of SPP (500% of salary for the CEO and 400% of salary other
Executive Directors respectively).

Maximum + 50% share price growth: This comprises fixed pay and the maximum value of SPP (500% of salary for the CEO
and 400% of salary other Executive Directors respectively) with 50% share price growth applied to the portion of the SPP
(70% of total) which is delivered in shares.

No account has been taken of share price growth (other than share stated), or of dividend shares awarded.

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CONTINUED

)

0
0
0
£

(
n
o
i
t
a
r
e
n
u
m
e
R

)

0
0
0
£

(
n
o
i
t
a
r
e
n
u
m
e
R

£5,000

£4,500

£4,000

£3,500

£3,000

£2,500

£2,000

£1,500

£1,000

£500

£5,000

£4,500

£4,000

£3,500

£3,000

£2,500

£2,000

£1,500

£1,000

£500

£4,802k

22%

£3,734k

£2,209k

69%

82%

64%

£683k

100%

Minimum

32%

18%

14%

In line with
expectations

Maximum

Maximum +
share price
growth (50%)

June Felix – CEO

£3,195k

22%

£2,509k

£549k

100%

Minimum

£1,529k

64%

36%

78%

61%

22%

17%

In line with
expectations

Maximum

Maximum +
share price
growth (50%)

Charlie Rozes – CFO

■ Fixed pay ■ SPP ■ Share price growth

£1,174k

64%

36%

In line with
expectations

£421k

100%

Minimum

£2,453k

22%

£1,927k

78%

61%

22%

Maximum

17%

Maximum +
share price
growth (50%)

Bridget Messer – CCO

£2,453k

22%

£1,927k

£421k

100%

Minimum

£1,174k

64%

36%

78%

61%

22%

17%

In line with
expectations

Maximum

Maximum +
share price
growth (50%)

Jon Noble – COO

■ Fixed pay ■ SPP ■ Share price growth

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 period of notice for existing Executive Directors does not
exceed 12 months and, accordingly, Executive Directors’ employment contracts can be terminated on 12 months’ notice
by either party. Our intention is that the period of notice for any new Executive Director would not exceed 12 months.

In the event that the Company terminates an Executive Director’s service contract other than in accordance with the terms
of his or her contract, the Committee will act in the best interests of the Company and ensure there is no reward for failure.
All service contracts are continuous, and contractual termination payments relate to the unexpired notice period.

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On a Director’s departure, the Company may at its sole discretion pay base salary and the value of pension and benefits
allowance that would have been receivable in lieu of any unexpired period of notice. In the event of termination for gross
misconduct, the Company may give neither notice nor a payment in lieu of notice. Where the Company, acting reasonably,
believes it may have a right to terminate employment due to gross misconduct, it may suspend the Executive Director from
employment on full salary for up to 30 days to investigate the circumstances prevailing.

The Company may place an Executive Director on gardening leave for a period up to the duration of the notice period. During
this time, the Executive Director will be entitled to receive base salary and their pension and benefits allowance. At the end
of the gardening leave period, the Company may, at its discretion, pay the Executive Director base salary alone, in lieu of the
balance of any period of notice given by the Company or the Executive Director.

When considering payments in the event of termination, the Remuneration Committee takes into account individual
circumstances. Relevant factors include the reasons for termination, contractual obligations and the relevant incentive plan
rules. When determining any loss of office payment for a departing Director, the Committee will always seek to minimise the
cost to the Company while complying with the contractual terms and seeking to reflect the circumstances in place at the time.

The Committee reserves the right to make additional payments where such payments are made in good faith in discharge of
an existing legal obligation (or by way of damages for breach of such an obligation); or by way of settlement or compromise
of any claim arising in connection with the termination of an Executive Director’s office or employment (including payment of
reasonable fees for a departing Director to obtain independent legal advice in relation to their termination arrangements and
nominal consideration for any agreement to any contractual terms protecting the Company’s rights following termination).

Copies of the Executive Directors’ service contracts are available for inspection at the Company’s Registered Office.

Sustained performance plan awards
If a participant ceases to hold employment or be a Director within the Group, or gives notice of leaving, other than as a ‘good
leaver’ they forfeit any entitlement to receive further awards. All unvested awards will lapse.

‘Good leavers’ would normally continue to be eligible to receive an award for the year in which they ceased employment. Such
award would be pro-rated based on time in employment for the plan year and would remain subject to performance. ‘Good
leavers’ are participants who cease to hold employment or be a Director by reason of their retirement, injury or disability,
transfer of their employment outside the Group, or for any other reason at the Committee’s discretion.

Any unvested awards which relate to the 2021 financial year onwards would continue to vest on the normal dates, unless
the Committee determines that they will vest on an earlier or earlier dates. The Committee retains the discretion to pro-rate
unvested awards if this is considered appropriate.

For plan contributions which relate to periods up to and including the 2020 financial year, the participant’s plan account will
vest one-third following the end of the plan year of cessation of employment and thereafter the remaining balance in equal
parts on the first and second anniversary of such first payment, unless the Committee determines that they will vest on one
or more earlier dates.

Where awards are granted in the form of options, any vested awards already held at the time of cessation of employment will
remain exercisable for a period of 12 months. Awards that vest following cessation will be capable of being exercised for a
period of 12 months following vesting. The exception is when dismissal has been for misconduct, in which case such awards
lapse in full.

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Change of control
The Executive Directors’ contracts do not provide for any enhanced payments in the event of a change of control of the
Company nor for liquidated damages. Executive Directors may continue to receive an award for the financial year in which
the change of control occurs. Any award would normally be pro-rated based on the portion of the year prior to the change of
control. Any unvested awards will normally vest in the event of a change of control. Where awards are granted in the form of
options, participants will normally have one month following the change of control to exercise their options.

Recruitment Remuneration Policy
When determining the remuneration package for a newly appointed Executive Director, the Committee would seek to apply
the following principles:

¼¼ The package should be market competitive to facilitate the recruitment of individuals of sufficient calibre to lead the
business. At the same time, the Committee would intend to pay no more than it believes is necessary to secure the
required talent

¼¼ New Executive Directors will normally receive a base salary, pension and benefits in line with the Policy described on pages

105 to 107 and will also be eligible to join the incentive plans up to the limits set out in the Policy

¼¼ In addition, the Committee has discretion to include any other remuneration component or award which it feels is

appropriate taking into account the specific circumstances of the recruitment, subject to the limit on variable remuneration
set out below. The key terms and rationale for any such component would be disclosed as appropriate in the Directors’
Remuneration Report for the relevant year

¼¼ Where an individual forfeits outstanding variable pay opportunities or contractual rights at a previous employer as a result
of appointment, the Committee may offer compensatory payments or awards, in such form as the Committee considers
appropriate, taking into account all relevant factors including the form of awards, expected value and vesting timeframe of
forfeited opportunities. When determining any such ‘buyout’, the guiding principle would be that awards would generally
be on a ‘like-for-like’ basis unless this is considered by the Committee not to be practical or appropriate

¼¼ The maximum level of variable remuneration which may be awarded (excluding any ‘buyout’ awards referred to above) in

respect of recruitment is 500% of salary, which is in line with the current maximum limit under the SPP

¼¼ Where an Executive Director is required to relocate to take up their role, the Committee may provide assistance with

relocation (either via one-off or ongoing payments or benefits)

¼¼ In the event that an internal candidate is promoted to the Board, legacy terms and conditions would normally be honoured,

including any accrued pension entitlements and any outstanding incentive awards

¼¼ To facilitate any buyout awards outlined above, in the event of recruitment the Committee may grant awards to a new

Executive Director relying on the exemption in the Listing Rules which allows for the grant of awards to facilitate, in unusual
circumstances, the recruitment of an Executive Director, without seeking prior shareholder approval or under any other
appropriate Company incentive plan

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Chairman 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

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 set taking into account the time
commitment required to fulfil the role and
typical practice at other similar companies.

Fees are within the limits set by the Articles
of Association and take account of the
commitment and responsibilities of the
relevant role.

The Chairman receives a single fee to cover all of his or
her Board duties.

Non-Executive Directors receive a fee for carrying out
their duties. They may receive additional fees if they
chair the Board Committees, and for holding the post
of Senior Independent Director. Additional fees may
be paid for additional time commitments if considered
appropriate.

Committee membership fees may be paid.

Reasonable costs in relation to travel and
accommodation for business purposes are
reimbursed to the Chairman and Non-Executive
Directors. The Company may meet any tax liabilities
that may arise on such expenses.

The Chairman and Non-Executive Directors do
not receive a pension and benefits allowance or
participate in incentive schemes.

Non-significant benefits may be introduced if
considered appropriate.

Details of current fee levels are set out in the Annual
Report on Remuneration

Consideration of shareholder views
As part of its review of Remuneration Policy undertaken during the year the Committee consulted in detail with our top
20 shareholders and proxy agencies to explain the changes proposed and their rationale. The Committee was pleased
with the level of support received for the changes. The Committee will continue to engage with shareholders in relation
to remuneration arrangements.

Consideration of employment conditions elsewhere in the Company
In setting the remuneration of the Executive Directors, the Committee takes into account the overall approach to reward for
employees in the Company. The Group operates in a number of different environments, and has many employees who carry
out diverse roles across a number of countries. All employees, including Directors, are paid by reference to the market rate,
and base salary levels are reviewed regularly. When considering salary increases for Directors, the Company will be sensitive
to pay and employment conditions across the wider workforce. However, no remuneration comparison measurements have
been utilised to date. The Committee does not formally consult with employees on the executive of the Remuneration Policy.
The Committee is periodically updated on pay and conditions applying to employees across the Company.

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Annual Report on Remuneration
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 FCA’s Listing Rules.
This report will be subject to an advisory shareholder vote at the AGM on 17 September 2020.

This part of the report includes a summary of how we intend to implement the Remuneration Policy in the financial year
ended 31 May 2021 as well as how we implemented the Policy in the financial year ended 31 May 2020.

The parts of the report that are subject to audit have been marked.

Implementation of Remuneration Policy in the financial year ending 31 May 2021
The following sections provides details of how the Directors’ Remuneration Policy will be implemented for the financial year
ended 31 May 2021.

Component

Details of approach for 2020/21

Base salary

Base salaries for Chief Executive Officer (CEO), Chief Operating Officer (COO) and Chief Commercial Officer
(CCO) will be increased by 1.7% from 1 June 2020 in line with the average increase received across the wider
workforce.

Base salaries are as follows:
¼¼ CEO – £610,000 (1.7% increase)
¼¼ CCO – £376,500 (1.7% increase)
¼¼ COO – £376,500 (1.7% increase)

Pension and
benefits
allowance

Modified
sustained
performance
plan (SPP)

The salary for the incoming CFO was set at £490,000.

Pension and benefits allowances for Executive Directors are set at 12% of base salary which is in line with
allowances available to the wider workforce in the UK.

Executive Directors will be eligible to participate in any all employee share incentive plans on the same basis
as other employees.

For 2020/21 the maximum plan contribution will continue to be 500% of salary for the CEO and 400% of
salary for other Executive Directors.

For 2020/21 the level of plan contribution will be based:

¼¼ 55% on earnings per share (EPS) performance
¼¼ 25% on relative Total Shareholder Return (TSR) compared to the FTSE 250 (excluding investment trusts)
¼¼ 20% on non-financial strategic and operational measures

Performance for EPS and non-financial strategic and operational measures will be assessed over the
financial year to 31 May 2021.

Relative TSR performance will be assessed over the three-year period from 1 June 2018 to 31 May 2021.

EPS 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 below.

Any SPP award earned in respect of 2020/21 will be paid as follows:

¼¼ 30% in cash in July 2021
¼¼ 20% in shares awarded in July 2021 released in July 2024
¼¼ 50% in shares awarded in July 2021 released in July 2025

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Component

Details of approach for 2020/21

Shareholding
guidelines

Executive Directors are expected to build shareholdings of at least 200% of base salary.

Executive Directors will be expected to maintain a minimum shareholding to 200% of salary (or actual
shareholding if lower) for two years following stepping down as an Executive Director. This applies to
Executive Directors that step down from the Board following the implementation of this Policy at the 2020
AGM. This guideline applies to shares that are released from the SPP on or after the adoption of the Policy.
Any shares purchased by the executives will not be subject to the guideline.

Further details on performance measures
The performance measures that are used in the SPP are a subset of the Company’s Key Performance Indicators (KPIs).

Metric

Rationale and link to the strategic KpI

Further details

Total Shareholder Return
(TSR) relative to the FTSE 250
(excluding investment trusts)
(25% weighting)

TSR measures the total return to the Group’s
shareholders, both through share price
growth and dividends paid, and as such it is
aligned to shareholder interests.

TSR is influenced by how well the 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 250
excluding investment trusts as this is a
broad market index of which the Group
is a constituent.

TSR will be assessed over the period 1 June
2018 to 31 May 2021.

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).

Earnings per share (EPS)
(55% weighting)

EPS is a key indicator of the profits generated
for shareholders, and a reflection of both
revenue growth and cost control.

EPS targets will be assessed based on
performance for the year ending 31 May 2021.

The Committee has set EPS taking into
account relevant factors including Board-
approved budget, market consensus
expectations and historical targets.

Payouts start to accrue for reaching threshold
levels of performance with 100% of this
portion being awarded for the achievement
of maximum performance.

Non-financial strategic and operational metrics (20% weighting)
The non-financial strategic and operational metrics are specifically designed to measure factors important to the Group
in continuing to operate on a profitable and sustainable basis for the long term. These metrics focus on our core priorities
aligned with our new strategy and 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 strategic and operational milestones that are important to
delivering profit and shareholder value in the future.

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Metric

Rationale and link to the strategic KpI

Further details

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.

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 the significant
opportunities portfolio, 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 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 and processes which will improve
IG’s effectiveness, efficiency and controls.

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 2021.

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 conversion.

The metrics selected for the 2021 financial
year are based on the Board-approved
strategy, which has been communicated
publicly, and covers core markets, EU
(new products), US, Japan, Other Asia and
institutional.

As an example, in Asia, onboarding a
meaningful partner is a key element of our
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 2021.

Performance against these measures will
be assessed over the financial year ending
31 May 2021.

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 and
performance over preceding years.

Performance against these measures will
be assessed over the financial year ending
31 May 2021.

The Committee assesses performance based
on the outcome of the annual engagement
survey, which is administered by a third party,
and IG’s performance against its strict internal
conduct standards.

Client experience

Strategic delivery

Operational effectiveness

Culture, conduct and people

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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:

¼¼ June Felix – 30 October 2018 (12 months’ notice from either party)
¼¼ Charlie Rozes – 1 June 2020 (12 months’ notice from either party)
¼¼ Jon Noble – 22 May 2018 (six months’ notice from either party)
¼¼ Bridget Messer – 22 May 2018 (six months’ notice from either party)

Chair and Non-Executive Directors
The Board reviewed Non-Executive Director fees and agreed that no changes would be made to the base fee or Committee
fees for the 2021 financial year. The additional fee for the Senior Independent Director will be increased to £15,000 per
annum following the 2020 AGM on 17 September 2020.

Fees from 1 June 2020 are therefore as follows:

¼¼ Non-Executive Director base fee – £65,000
¼¼ Committee Chairs (other than the Nomination Committee) – £25,0001
¼¼ Senior Independent Director – £10,000 (to be increased to £15,000 following the AGM on 17 September 2020)
¼¼ Committee membership fees (excluding the Nomination Committee and the Group Board Chairman) – £3,0001

The fees for the Chairman were set at £300,000 per annum upon his appointment.

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.

Implementation of Remuneration Policy in the financial year ending 31 May 2020
Total single figure of remuneration – Executive Directors (audited)

Name of Director

J Felix2

P Mainwaring3

J Noble

B Messer

Fees/basic
salary
£000

Benefits
allowance/
benefits4
£000

600
377

411
411

370
370

124
76

70
70

35
35

Year

2020
2019

Contribution to SPP account5

Pension
£000

Vested
element
£000

–
–

9
10

972
109

533
102

480
92

Deferred
element
£000

1,944
218

1,065
204

959
184

Total
£000

2,916
327

1,598
306

1,439
276

Total
£000

3,640
780

2,079
787

1,853
691

1 No decision has yet been taken by the Board regarding the payment of fees to the Chair and members of the ESG Committee.
2

J Felix was a Non-Executive Director of the Company until her appointment as CEO on 30 October 2018. During FY19 she received £23,000 in relation to her role as Non-Executive
Director which is included in fees/base salary above.
3 P Mainwaring retired from the Board on 1 June 2020.
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 within the first year of her appointment as CEO. Costs for FY19 were £33k
(note in the 2018/19 Directors’ Remuneration Report costs were incorrectly stated as £70k), costs for the 2020 financial year were £52k. J Felix, J Noble and B Messer receive a
flexible benefits and pensions allowance of 12% of base salary less any benefits taken. P Mainwaring received a flexible benefits and pensions allowance of 17% of base salary less any
benefits taken. Executives have the option to receive part, or all, of their pension and benefits entitlement in cash.

5 Figures provided are the cash values of the SPP contributions in respect of performance for the periods ending 31 May 2020 (ie plan year 7). 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 is released in future years. Details of SPP awards held in the plan account are provided in the Other Share Awards
Outstanding table on page 122. No portion of the award disclosed is attributable to share price growth and the Committee did not exercise discretion in relation to share price.

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Total single figure of remuneration – Non-Executive Directors (audited)

Name of Director

M McTighe1

J Newman

M Le May

S-A Hibberd2

J Moulds2,3

A Didham4

H Stevenson5

Former Directors
A Green6

S G Hill7

Year

2020
2019

Fees8
£000

Benefits9
£000

100
–

96
96

102
103

71
45

167
51

47
–

14
–

90
300

63
71

–
–

2
–

–
–

8
22

Total
£000

100
–

96
96

102
103

73
45

167
51

47
–

14
–

90
300

71
93

J Moulds served as Interim Chair for the period from 20 September 2019 to 2 February 2020 and received an additional fee of £75,600 for this period.

1 M McTighe joined the Board on 3 February 2020. Remuneration is shown from this date.
2 S-A Hibberd and J Moulds joined the Board on 20 September 2018. Remuneration is shown from this date.
3
4 A Didham joined the Board on 19 September 2019. Remuneration is shown from this date.
5 H Stevenson joined the Board on 18 March 2020. Remuneration is shown from this date.
6 A Green stepped down from the Board on 19 September 2019. Remuneration is shown to this date.
7 S G Hill stepped down from the Board on 27 April 2020. Remuneration is shown to this date.
8 Other than in respect of the Chair, 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). Payment of fees for
membership and the ESG Chair have not yet been decided by the Board.

9 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)
Determination of SPP contribution for the financial year ending 31 May 2020
Performance targets for plan year 7 (financial year ending 31 May 2020) 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 2017 to 31 May 2020, and DEPS and non-financial measures over the financial year ending 31 May 2020.

Performance measure

Weighting

Threshold (25% payout for
TSR and 0% for DEPS)

Maximum
(100% payout)

Actual performance

Percentage of maximum
award to Directors

DEPS
TSR

Non-financial

Total

45%
35%

20%

100%

35.4p
Median ranking

45.9p
Upper quartile
ranking
100%

64.9p (100% awarded)
Upper quartile – 19 of 265
companies (100% awarded)
86.1% awarded

100%
100%

86.1%

97.2%

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.

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Performance measures – how these are set and review of performance for the year ended 31 May 2020
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.

DEPS performance for the 2020 financial year was 64.9 pence representing c.52% increase in respect of the previous year
and around 19 pence (c.41%) ahead of the maximum target set, and therefore the full portion of this element will be awarded.
DEPS performance represented the highest performance delivered since the SPP was introduced.

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 2020, TSR was measured over the three-year period from
1 June 2017 to 31 May 2020. Actual TSR performance for the Group for the three-year period was 62.1% (2019: -19.6%).
TSR was positioned in the upper decile compared to the comparator group and therefore the full amount of this element
will be awarded.

Non-financial measures (20% weighting)
The Committee approved a series of non-financial measures comprising client experience, strategic delivery, operational
effectiveness, and culture, conduct and people during the year ended 31 May 2020. These measures are also used for
determining a portion of the staff general bonus pool.

An average of the performance under the specific objectives resulted in an overall assessment of 86.1% (2019: 93.2%) of the
potential payout under this element.

Performance highlights include client satisfaction achieving the highest year on record, improved client retention, and a
significant increase in the engagement the organisation has towards the new organisation strategy. Additionally, we met a
number of significant strategic milestones during the year including the launch of Spectrum, IG’s 24/5 multilateral trading
facility, the launch of IG Prime, IG’s institutional brand, and localising the trading experience for IG’s Japanese client base.
In light of this excellent progress, which the Board believes helps to position the Group strongly to execute upon its strategy
and deliver future sustained value creation for shareholders, the Committee agreed that the outcome was appropriate.

The table below provides details of the individual measures considered and their performance assessment for the year
ended 31 May 2020.

Component

Detail

Client experience

The Remuneration Committee uses a number of indicators to measure performance
against the client experience metric. In the 2019 financial year, IG scored 95% for client
satisfaction based on improved measure of client satisfaction.

FY20 outcome

90%

In determining a score the Remuneration Committee reviewed client satisfaction data
for IG and other firms in the sector, as well as performance against internal targets. This
year, IG’s external ratings have also been taken into consideration for this metric, namely
app store ratings and independent review scores. This is to ensure that IG maintains a
consistent standard across a variety of external and internal measures.

The Remuneration Committee has also taken client behaviour into consideration when
assessing this metric, specifically by looking at the client attrition rate during the 2020
financial year. 2020 financial year clients have shown their loyalty to be stronger to IG
during the year compared to both the 2018 and 2019 financial years.

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Component

Detail

Strategic delivery

As part of the Board’s strategic planning, there is a clear plan relating to strategic
delivery 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.

FY20 outcome

88%

The Remuneration Committee uses this plan to judge the performance, and
management’s execution and delivery of the key strategic initiatives. This plan is in line
with the strategic priorities outlined at the beginning of the 2020 financial year, and is
split between Core Markets and the portfolio of Significant Opportunities.

The Core Markets performed particularly strongly in its measure of the number of new
OTC clients acquired during the 2020 financial year.

There were a number of key projects with material development across the Significant
Opportunities portfolio. These include: launching Spectrum, IG’s 24/5 multilateral
trading facility and IG Prime, IG’s dedicated institutional brand, making key user
experience changes to localise the trading experience for IG’s Japanese client base,
hiring a CEO for Greater China and a Global Head of Institutional Sales, and increasing
the number of unique visitors to DailyFX by over 70% year on year.

Operational
effectiveness

IG achieved 99.935% rolling cumulative 12-month uptime with outages totalling 247
minutes. This compares to the 2019 financial year’s 99.99% uptime and outages
totalling 38 minutes, and the 2018 financial year’s 99.98% uptime and outages totalling
86 minutes.

76.5%

This metric also encompasses how IG responds to client queries received, compared to
challenging internal targets. IG sets these challenging targets to ensure that IG responds
promptly to client queries. When appraising performance against these internal targets,
the Remuneration Committee also considered the impact that the reduction in IT
uptime and increased trading volumes seen in Q4 had on performance against
these targets.

Another element of this metric includes how IG has progressed against its aim of
increasing the efficiency of its corporate actions and account opening functions. Good
progress has been made against this goal during the 2020 financial year, reflecting
process automation and the number of accounts opened without human interaction.

The Remuneration Committee made the decision at the beginning of the year that IT
systems and stability should represent 50% of the overall score given to the operational
effectiveness metric, reflecting its crucial importance to the Group. This ultimately
impacted the overall score achieved for the operational effectiveness metric.

Culture, conduct
and people

This measure is designed to ensure that IG has an engaged workforce with a strong
compliant culture that embodies IG’s values. This is to serve as a differentiator and
contribute to business success and risk management.

90%

This measure is assessed against five key metrics: employee engagement, organisation
culture index, and three Board-approved conduct Key Risk Indicators (KRIs).

Both employee engagement and culture index are assessed by an anonymous survey
administered by an external third party. Employee engagement was slightly down year
on year, falling 2% to 68%. There were however some strong increases in engagement
around the organisation strategy and the communicated vision of the future. IG’s
culture index score was 78% in the 2020 financial year, improving year on year. This
improvement was driven by IG demonstrating ethical business decisions and conduct.

Throughout the three Board-approved conduct KRIs, IG demonstrated a positive Group-
wide culture and conduct.

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In addition to considering the performance against the measures outlined above, the Committee may at its discretion decide
to reduce the level of SPP awards granted if it considers that the Company’s or individual’s performance for the relevant
measurement period does not warrant the level of award or to take account of such other factors as it considers appropriate.

Overall, the Committee determined that 97.2% of the SPP award for the 2020 financial year should be awarded. This award
will be granted following the announcement of results for the year and will vest in accordance with the 2017 Policy.

In determining the level of payout, the Committee carefully considered whether pay outcomes were appropriate, a fair
reflection of the underlying performance of the business and aligned with the experience of shareholders, employees and
other stakeholders, particularly in light of the current climate and given that a significant contributor to our performance has
been increased transaction fees resulting from the elevated levels of market volatility following the Covid-19 outbreak.

As part of this consideration the Committee took into account the following:

¼¼ The Group has achieved exceptional performance in exceptional circumstances this year. Our people have performed
strongly, rapidly making changes to the ways of working to ensure that the Group was able to convert increased client
trading volume to enhanced shareholder value

¼¼ Our revenue and EPS performance are the highest in our history, representing a c.36% and c.52% increase on prior year
¼¼ TSR performance over the past three years is +62.1% which is in the upper decile compared to comparators. While our TSR
has been positively impacted by performance in the last part of the year, when measured to the start of March 2020 (prior
to the significant increase in trading volumes), TSR was also positioned in the upper quartile. This performance represents
a significant value increase for shareholders

¼¼ Nearly all of our employees participate in the Group annual bonus plan and therefore they will also benefit from the

increase in performance

¼¼ We continue to pay a dividend for the 2020 financial year of 43.2 pence per share
¼¼ We have made good progress on the delivery of our strategy, strengthening the business and positioning it for future growth

Overall, the Committee concluded that the level of the SPP award for the 2020 financial year was a fair reflection of the
shareholder value delivered through the increase in share price, as well as the enhanced financial performance, and that it
was appropriate in the context of the experience of our other stakeholders.

Overall summary
Based on the performance for the financial year ending 31 May 2020, we will grant awards under the SPP at 97% of the
maximum potential payout 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 seven years ago, the average payout under the SPP is 58% 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 contribution (% maximum)

2014

54%

2015

41%

2016

90%

2017

27%

2018

2019

2020

7-year
average

80% 18.64%

97.2%

58%

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Awards granted during the year ended 31 May 2020 (audited)
The SPP awards granted during the financial year ended 31 May 2020 in respect of performance to 31 May 2019 (plan year 6)
are as follows:

Contribution

% of salary

Value of options
awarded

55%
75%
75%
75%

£327,224
£306,442
£275,872
£275,872

Number of
options in the
plan account
after plan year 6
contribution2

Number of
options vested
and exercised
during the year

57,341
190,629
212,634
199,989

19,113
63,543
70,877
66,663

Number of
options
awarded1

57,341
53,699
48,342
48,342

Number of
options in the
plan account at
the end of
the year

38,228
127,086
141,757
133,326

Number of
options lapsed

–
–
–
–

J Felix
P Mainwaring
J Noble
B Messer

1 The number of options contributed to the plan account was based on the ten-business-day average share price immediately post the announcement date of the Group’s results for
the year ended 31 May 2020 of 570.66 pence per share. Awards were granted in the form of nominal 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.
In addition to the awards made in respect of plan year 6, this also includes the brought forward number of options in the plan account from plan years 1–5 (where relevant) with its
respective accrued dividend shares.

Full details of performance targets applied to the 2019 SPP awards and the assessment of performance against targets are
set on out pages 103 to 106 of the 2019 Directors’ Remuneration Report.

Details of the outstanding SPP share awards, using an estimate of the options to be granted in respect of plan year 7
(ie performance to 31 May 2020) are set out below:

Plan account
brought forward
(number of
shares)1

38,288
127,086
141,757
133,326

Event

Plan year 7
Plan year 7
Plan year 7
Plan year 7

Options awarded
as dividend
equivalents
accruing on
unvested options
after the
year-end

Plan contribution
in respect of
period ended
31 May 2020
(estimated
number of
options)2

Plan account
following
contribution for
the year

Estimated
number of
options vesting

Estimated
cumulative
number of
options remaining
in the plan
account at the
end of the year

2,606
8,665
9,666
9,090

381,254
208,927
188,085
188,085

422,148
344,678
339,508
330,501

140,716
114,892
113,169
110,167

218,432
229,786
226,339
220,334

J Felix
P Mainwaring
J Noble
B Messer

1 Executive Directors will be granted awards in respect of plan year 7 following the announcement of results for the year ended 31 May 2020 on 23 July 2020. The share price used
to calculate the number of awards to be granted will be the ten-day average share price after 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 765 pence, being the share price on 31 May 2020. Share awards have an exercise price of
0.005 pence.
In accordance with the scheme rules 33.3% of the cumulative awards in the plan account (after the contributions in respect of plan year 7) will vest in August 2020 with the vesting
of the remaining options deferred. The August 2020 vesting will include additional dividend shares accrued as follows in respect of plan year 1–6 awards held in the plan account –
J Felix (2,606), P Mainwaring (8,665), J Noble (9,666) and B Messer (9,090) based on reinvestment at the dividend payment date.

Other share awards outstanding (audited)

Award date

Share price at
award date

Number as at
31 May 2019

Number awarded
during the year

Number lapsed
during the year

Number
exercised during
the year

Number
outstanding at
31 May 20

J noble
SIP: matching shares
SIP: matching shares

Total

1 Aug 17
6 Aug 19

626.50p
565.29p

574
0

574

0
318

318

0
0

574
318

892

Award date

Share price at
award date

Number as at
31 May 2019

Number awarded
during the year

Number lapsed
during the year

Number
exercised during
the year

Number
outstanding at
31 May 20

J Felix
SIP: matching shares

6 Aug 19

565.29p

Total

122

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Award date

Share price at
award date

Number as at
31 May 2019

Number awarded
during the year

Number lapsed
during the year

Number
exercised during
the year

Number
outstanding at
31 May 20

p Mainwaring
SIP: matching shares
SIP: matching shares
SIP: matching shares

Total

1 Aug 17
7 Aug 18
6 Aug 19

626.50p
894.43p
565.29p

574
402
0

976

0
0
319

319

0
0
0

Table of Directors’ share interests (audited)

Legally owned6

SIP7

SPP awards8

Total

0
0
0

572
402
319

1,293

% of salary held
under shareholding
policy9

31 May 2019

31 May 2020

Awards held in
plan account

Vested but
unexercised

31 May 2020

% salary

executive Directors
J Felix
P Mainwaring
J Noble
B Messer

non-executive Directors
M McTighe1
M Le May
J A Newman
S-A Hibberd
J Moulds
A Didham2
H Stevenson3

Former Directors
A Green4
S G Hill5

43,700
86,900
64,187
36,506

96,774
120,993
82,663
53,172

318
1,293
892
–

38,228
127,086
141,757
133,326

–
–
–
–
–
–
–

6,881
15,966

15,055
15,966

–
–
–
–
–
–
–

–
–

–
–
–
–
–
–
–

–
–

–
–
–
–

–
–
–
–
–
–
–

–
–

135,320
249,372
225,312
186,498

150%
353%
328%
256%

–
–
–
–
–
–
–

15,055
15,966

38%
188%

1 M McTighe joined the Board on 3 February 2020.
2 A Didham joined the Board on 19 September 2019.
3 H Stevenson joined the Board on 18 March 2020.
4 A Green stepped down from the Board on 19 September 2019.
5 S G Hill stepped down from the Board on 27 April 2020.
6 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.
7 This figure shows the number of matching shares held at 31 May 2020 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.

8 This figure excludes awards under the SPP scheme for performance year ending 31 May 2020, which will be granted following the announcement of the Group’s results on

22 July 2020. The awards held in the plan account include those in respect of plan years 1–6 as at 31 May 2020.

9 Calculated as shares owned on 31 May 2020 plus the unvested shares held within the SPP on a net of tax basis at the closing mid-market share price of 765 pence on 31 May 2020.

Under the share ownership policy, the Executive Directors are expected to hold shares to the value of a minimum of 200%
of base salary. Shares owned by the Executive Directors as well as unvested SPP share options (on a net of tax basis) count
towards this guideline. It is expected that this guideline is achieved within five years of the date of appointment. June Felix
was appointed in October 2018 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 2020.

The awards to be made under the Company’s SPP in respect of the performance period ending on 31 May 2020 are not
included in this table (see page 122 for details).

Leaving arrangements for Paul Mainwaring
Earlier this year, Paul Mainwaring, CFO, indicated to the Board that he intended to retire, after nearly 20 years as a UK plc
Finance Director and four as the CFO of IG Group. Paul Mainwaring gave notice of his retirement and stepped down from
the Board on 1 June 2020, the date on which his successor joined the business. He remained with the business until 26 June
2020 providing a comprehensive handover to the new CFO. Paul will receive a payment of £444,440 in lieu of his salary and
pension and benefits allowance for the remaining approximately 11 months of his notice period. This amount will be paid

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in instalments. Paul was treated as a good leaver under the SPP. He remained eligible to receive an SPP award in respect of
the 2020 financial year as he was in role for the full year in line with the performance. The details of his award for the 2020
financial year are provided on page 122. He will also receive a pro rata SPP award in respect of the 2021 financial year for his
period in employment to 26 June 2020. This will be based on performance targets set for the 2021 financial year.

The outstanding shares in Paul’s SPP on the date of his cessation of employment account in respect of the period up to
and including the 2020 financial year will be released to him in accordance with the plan rules and are subject to malus and
clawback provisions, with one-third being released in July 2021, one-third in July 2022 and one-third in July 2023. Any shares
awarded to Paul under the SPP in respect of the 2021 financial year will be released in line with the revised vesting schedule
set out on page 114.

Joining arrangements for Charlie Rozes
Charlie Rozes joined the Company as CFO on 1 June 2020. Charlie Rozes’ salary has been set at £490,000 per annum, his
pension and benefits allowance is 12% of base salary in line with the provision available for other employees in the UK. He will
be eligible for an annual SPP award of up to 400% of base salary.

Charlie Rozes brings a wealth of experience to the Group and the Committee took into consideration his skills, experience,
and criticality in driving future Group performance when determining a suitable remuneration package. The Company carried
out an extensive search for a new CFO and concluded that a candidate of Charlie’s experience was crucial to supporting
the Group in the implementation of IG’s strategy. In setting his salary level, the Committee considered Charlie’s extensive
previous experience as a Finance Director of a UK plc, including his international experience, which is critical to support
the implementation of IG’s strategy, the level of his previous salary as CFO of Jardine Lloyd Thompson (which was above
the salary paid to Paul Mainwaring) as well as market practice at other companies of a similar size and complexity, including
other companies in the financial services sector with whom the Group competes for talent. Taking into account all of these
reference points the Committee considered that this salary positioning was appropriate. The Committee noted that the
incumbent’s salary had only increased by 2.74% since 2016.

On leaving his previous role, Charlie forfeited the following share awards which the Company has bought out on a like-for-like
basis as summarised below:

¼¼ Restricted share award – A restricted share award with a value of c.£243,000. The award was due to vest 50% on 1 May
2021 and 50% on 1 May 2022 and was not subject to performance conditions. The Committee intends to grant an award
of equal value which vests on the same dates as the forfeited award. The vesting of this award will be subject to continued
employment, and malus and clawback provisions. The vesting of the buyout award will not be subject to the achievement
of performance conditions as the original award forfeited was not subject to performance conditions

¼¼ Performance share award – A performance share award with a maximum value of c.£243,000. The award was due to vest
on 1 May 2022 subject to the achievement of performance conditions. The Committee intends to grant an award of equal
value which vests on 30 June 2022. The proportion of the award that vests will be subject to performance to ensure it
operates on a like-for-like basis with the awards forfeited. The portion of the award that vests will be based on the average
award outcome for SPP awards for the financial years ending 31 May 2021 and 31 May 2022. The Committee considered
that it was appropriate to link the vesting of awards to IG’s performance, to ensure Charlie is aligned with our performance
and the shareholder experience from the outset. The vesting of this award will also be subject to continued employment,
and malus and clawback provisions

¼¼ Market value option award – On leaving his previous employer, Charlie forfeited market value options which were due to

vest and become exercisable one-third on each of the following dates 1 May 2021, 1 May 2022 and 1 May 2023. The gains
on these options based on the three-month average share price to the date of the announcement of his appointment was
£44,600. The Committee intends to grant a restricted share award with a value equal to the value of the gain on the options
which vest on the same dates as the forfeited award. The vesting of this award will be subject to continued employment,
and malus and clawback provisions. The vesting of the buyout award will not be subject to the achievement of performance
conditions, as the original award forfeited was not subject to performance conditions

Payments to past Directors (audited)
No payments were made to past Directors in the year.

Executive Directors’ outside appointments
None of the current Executive Directors hold any outside appointments.

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Change in remuneration of the Chief Executive Officer (CEO)

CEO
Group employees

Base salary1

Taxable benefits

Performance-based
remuneration

% change
(FY20/FY19)

% change
(FY19/FY18)

% change
(FY20/FY19)

% change
(FY19/FY18)

% change
(FY20/FY19)

% change
(FY19/FY18)

0%
1.6%

-4.2%
3.2%

0%
5.5%

20.2%
8.8%

420.0%
49.5%

-61.8%
-33.2%

J Felix was appointed as CEO on 30 October 2018 taking over from P G Hetherington, who stepped down as CEO on 26 September 2018. For FY19/FY18, their combined base salary
for the year is used in the calculations. Remuneration is included in the financial year in which performance is measured against.

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

2020
£m

240.4
159.5
160.7
1,887

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

CEO to all employees pay ratio
For the year ended 31 May 2020, the CEO’s total remuneration as a ratio against the full-time equivalent remuneration of UK
employees is detailed in the table below:

Year ended 31 May 2020
25th percentile
50th percentile
75th percentile

Base
salary

Total
remuneration

CEO
pay ratio

£600,000 £3,640,000
£55,790
£78,310
£106,750

£42,000
£63,000
£75,000

65 : 1
46 : 1
34 : 1

The Company has calculated the ratio in line with the reporting regulations using ‘method A’ (determine total full-time
equivalent remuneration for all UK employees for the relevant financial year; rank the data and identify employees whose
remuneration places them at the 25th, 50th and 75th percentile). We have used method A as we believe it provides the most
consistent and comparable outcome. Data used to determine the pay ratios was taken as at 31 May 2020 and any part-time
employees’ salary and bonus have been pro-rated to convert them into a full-time equivalent. Please note that the median
employees’ data was not used as they were not considered to be a representative of a typical employee, instead an employee
next to the median was used for the fiftieth percentile data.

The CEO pay ratio has been rounded to the nearest whole number.

The Board have confirmed that the ratio is consistent with the Company’s wider policies on employee pay, reward and
progression.

Statement of shareholder voting
The Directors’ Remuneration Policy was approved at the 2017 AGM. The Directors’ Remuneration Report for the financial
year ended 31 May 2019 was approved at the 2019 AGM. The following votes were received:

For1
Against

Total
Withheld

‘For’ includes votes at the Chairman’s discretion.

2017 Remuneration Policy

Total number of votes

% of votes cast

289,325,839
10,631,334

299,957,173
7,223,131

96.5%
3.5%

100%
–

125

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GOVERNANCE REPORT

Directors’ Remuneration Report and policy
CONTINUED

For1
Against

Total
Withheld

‘For’ includes votes at the Chairman’s discretion.

2019 Annual Report on Remuneration

Total number of votes

% of votes cast

252,044,345
39,872,908

291,917,253
12,194,069

86.34%
13.66%

100%
-

Total Shareholder Return chart
This graph shows the value, by 31 May 2020, of £100 invested in the Group on 31 May 2010 compared with the value of £100
invested in the FTSE 250 Index and the FTSE 350 Financial Services Index. As the 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

400

300

200

100

May-10 May-11 May-12 May-13 May-14 May-15 May-16 May-17 May-18 May-19 May-20

IG Group

FTSE 250 Index

FTSE 350 Financial Services Index

Source: FactSet

CEO earnings history
The earnings history of the CEO is shown in the table below:

Financial year

2011

2012

2013

2014

2015

20162

2017

2018

20193

2020

1,141

2,201

1,103

1,970

1,519

2,745

1,452

2,974

1,166

3,640

Single figure remuneration
(£000)
Annual bonus outcome
(% maximum)
LTIP vesting outcome
(% maximum)
VSP vesting outcome
(% maximum)
SPP contribution
(% maximum)1

99%

47%

40%

61%

–

54%

41%

90%

27.1%

80% 18.64% 97.2%

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.
J Felix was appointed as CEO on 30 October 2018, taking over from P G 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.

126

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Remuneration Committee’s role
The Committee’s principal roles are summarised below:

¼¼ Make recommendations to the Board on the Group’s senior executive Remuneration Policy
¼¼ 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

¼¼ 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

¼¼ Determine the contractual terms, remuneration and other benefits for the Executive Directors
¼¼ 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

¼¼ Determine and agree the policy for the remuneration of the Company Chairman and the Executive Directors
¼¼ Review pay, benefits and employment conditions and the remuneration trends across the Group
¼¼ 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

¼¼ Ensure that contractual terms on termination, and any payments made, are fair to the individual and the Group, that failure

is not rewarded and that the duty to mitigate loss is fully recognised

¼¼ Receive and review reports annually directly from the risk management function on the implications of the Group

Remuneration Policy for risk and risk management

¼¼ Monitor regulatory developments, including those affecting UK-listed companies and financial services firms, to ensure

the Company’s Remuneration Policy is consistent with these

¼¼ 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. 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.

Activity during the financial year
During the year, the Committee’s key activities included:

¼¼ Reviewing the Directors’ Remuneration Policy and the operation of the SPP
¼¼ Reviewing the Directors’ Remuneration Report published in the 2019 Annual Report and Accounts
¼¼ Recommending the Board the leaving arrangements for the outgoing CFO and the remuneration arrangements for

the new CFO

¼¼ Reviewing the fee for the Company Chairman and Executive Directors’ remuneration for the 2021 financial year
¼¼ Reviewing performance against targets for the 2020 SPP award, the vesting of LTIP awards and for the determination

of the bonus pool

¼¼ Reviewing the remuneration and bonus awards, including for senior management
¼¼ Reviewing the proposed targets for the 2021 financial year SPP
¼¼ Reviewing the performance of the Group’s sales incentive plans to gain assurance that their design helps promote

good conduct

¼¼ Reviewing remuneration-related risks, remuneration code staff and gender pay gap reporting
¼¼ Reviewing developments in market practice and corporate governance relating to remuneration

Advice to the Committee
During the financial year ended 31 May 2020, the Committee consulted the Chief Executive Officer about remuneration
matters relating to individuals other than herself. 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 Committee Chairman.

The Remuneration Committee appointed Deloitte LLP (Deloitte) as advisers to the Committee in April 2019, following a
competitive tender process.

Deloitte’s fees for advice provided to the Remuneration Committee during the financial year ending 31 May 2020 were
£174,950 (excluding VAT). Fees are charged on a time and material basis.

127

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Directors’ Remuneration Report and policy
CONTINUED

Deloitte are 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, risk management and tax advice,
Internal Audit services and agreed upon procedures-based
assurance services.

It is the view of the Committee that the engagement team at
Deloitte that provided remuneration advice to the Committee
during the year do not have connections with the Group
or its Directors 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 considers that the advice
received from the advisers 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, 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 externally facilitated by independent consultancy firm
Boardroom Review Limited as part of the overall annual
Board and Committee effectiveness review. Boardroom
Review Limited is independent of the Company, and has no
connection with it or with any of the individual Directors.

Further information of the evaluation of the Board and its
Committees and of individual Directors is given on page 91,
together with a review of the progress on actions arising
from the internally run performance review undertaken
during 2019.

This report was approved by the Board of Directors on
23 July 2020 and signed on its behalf by:

MALCOLM LE MAY
CHAIRMAN OF THE REMUNERATION COMMITTEE
23 July 2020

128

Audit Committee Report

Jim newman

Jim Newman, Chairman of the
Audit Committee, gives his review of
the Committee’s activities during the
financial year.

The Committee has continued to
oversee the delivery of improvements in
the systems and controls infrastructure,
in line with our strategic developments.
We have also focused on the implications
of Covid-19 for our reporting and
ongoing viability.

JIM NEWMAN
CHAIRMAN OF THE AUDIT COMMITTEE

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Chairman’s overview
In this report I set out 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. These included operational risk and control
developments, strategic developments and the assessment
of Covid-19 implications.

In this financial year, we carried out an audit tender
process in line with the External Auditor Policy, given that
PricewaterhouseCoopers (PwC) were in their tenth year of
engagement. Following the conclusion of a formal tender
process led by the Committee, we reappointed PwC as our
auditors for the year ending 31 May 2021. PwC will hold office
until the next AGM of the Company in September 2020, when
their appointment will be subject to shareholder approval.

The Committee further considered the implications of
Covid-19 on our reporting and going concern, and details
are provided below.

I’m pleased to report that this year the Committee continued
to see significant 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. This includes 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
implementation of additional controls is still in progress.
The development of controls over corporate actions has
also been a focus in the later part of the year. In addition, the
Committee instigated and oversaw a comprehensive review
by management, assisted by Deloitte, of all dividend income
received and paid by IG Group Holdings plc, to confirm its
distributable reserve position. As a result of that self-initiated
review, some matters relating to dividend payments have
come to the Board’s attention. These are set out in the
Operating and Financial Review on page 46.

We saw a change in the composition of the Committee.
I welcomed Andrew Didham – who has relevant financial
experience – to the Committee on 19 September 2019.
Long-standing member, Malcolm Le May, stepped down from
the Committee on 18 March 2020. I thank Malcolm for his
valuable contribution to the Committee.

The contribution of Paul Mainwaring, who retired as
Chief Financial Officer (CFO), was significant and greatly
appreciated by the Committee. He led the development
of major improvements in the financial management and
reporting capabilities of the Group, and was instrumental in
ensuring that the management of client money and assets
control was properly reported to the Committee. I’d like to
thank Paul for his input to the Committee, and also welcome
the appointment of his successor, Charlie Rozes, who I’m
already enjoying working with.

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Audit Committee Report
CONTINUED

The Committee has seen material improvement in our
Corporate Governance Framework in relation to legal
entity and policy governance of all subsidiaries within IG.
The Committee receives reports from the Management
Committee that has oversight of all subsidiary companies
within IG, ensuring compliance with the Group Legal Entity
and Governance Policy (GLEG). The newly implemented
GLEG provides a framework for the governance, operation
and maintenance of our regulated and non-regulated
entities with regard to their statutory and regulatory
duties and obligations, and those of their Directors. It
provides a structure to help facilitate decisions being
appropriately made and evidenced at entity level, and to act
as a mechanism to help monitor, control and oversee the
governance of legal entities at Group level.

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. The
last amendment to the ToR was made in January 2020, to
include specifically the Committee’s oversight of legal entity
governance of all IG companies.

Membership and attendance
All Audit Committee members are Independent Non-
Executive Directors who draw on considerable and broad
business and financial services experience. Andrew Didham
was appointed a member of the Committee on 19 September
2019 following his appointment to the Board.

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. Andrew
Didham and I, as Committee Chairman, are both considered
to fulfil this requirement.

The CFO, Global Head of Internal Audit, Company
Secretary (or her delegate) 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.

130

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.

COMMITTEE
MEMBER

ELIGIBLE
TO ATTEND

ATTENDED

Jim Newman

Andrew Didham1

Sally-Ann Hibberd

Malcolm Le May2

1 Andrew Didham attended all Committee meetings held following his appointment on

19 September 2019.

2 Malcolm Le May resigned from the Committee on 18 March 2020 further to a review

of composition of all Board Committees.

Role of the Audit Committee
The principal roles and responsibilities of the Committee are
set out in its ToR, and include, but are not limited to:

¼¼ Reviewing the financial statements and announcements
relating to the financial performance and governance of
the Group, including ongoing viability

¼¼ 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

¼¼ 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

¼¼ Recommending the appointment of the External

Auditors and reviewing their effectiveness, fees, ToR
and independence

¼¼ Monitoring the availability of distributable profits for the

purpose of considering dividend payments

¼¼ Reviewing and approving the Group’s arrangements and
Policy for its workforce to raise concerns, in confidence,
about possible wrongdoing in financial reporting or
other matters

The Committee’s full ToR are revised on an annual basis and
can be found on iggroup.com.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

How the Committee operates
To ensure the Committee discharges its responsibilities
appropriately, an annual forward calendar, linked to the
Committee’s ToR and covering key events in the financial
reporting cycle, is approved by the Committee.

The Company Secretary, with input from the Committee
as appropriate, drafts the agenda before each meeting,
ensuring that each of the items under the Committee’s ToR
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 I, as Chairman of the Committee,
describe the proceedings of the Committee meeting and
make 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.

¼¼ 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

¼¼ 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

¼¼ Overseeing the Group’s approach to tax management

and control

¼¼ Reviewing the inherent risks in the financial reporting

process and systems

To aid this review process, the Committee has considered
reports from the CFO and his team, Internal and External
Auditors.

The Committee considered and discussed with management
and the External Auditors the primary areas of judgment and
disclosure in relation to the financial statements for the year
ended 31 May 2020, details of which are set out overleaf.

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:

¼¼ Assessing the quality and acceptability of accounting

policies and practices

¼¼ Ensuring disclosures are clear and compliant with

financial reporting standards, and relevant financial and
governance reporting requirements

¼¼ Considering material areas in which significant judgments

and estimates have been applied or there has been
discussion with the External Auditors

¼¼ Reviewing announcements and financial statements prior
to issuance, including preliminary and half-year results
announcements and recommending these to the Board
for approval

¼¼ Reviewing the processes to support the assessment

and determination of the 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

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Audit Committee Report
CONTINUED

Role 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.

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.

The Committee reviewed the impairment review
of the DailyFX intangible asset.

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.

Impact of new accounting standards and interpretations

The Group reviewed the impact of new
accounting standards and interpretations on
the Financial Statements to assess their impact
on reporting.

The Committee reviewed the assessment
prepared by management detailing the
expected impact of the following new
accounting standards on the 2020
reporting periods.

Based on management’s report, the
Committee concluded the impact of
the new accounting standards and
interpretations had been appropriately
evaluated and disclosed.

IFRS 16 – Leases

IFRIC 23 – Uncertainty over income tax
treatments

Tax provisions

Calculating the Group’s Corporation Tax charge
involves a degree of estimation and judgment,
as the tax treatment of certain items cannot
be finally determined until resolution has been
reached with the relevant tax authority. The
Group hold tax provisions in respect of the
potential tax liability that may arise on these
unresolved items.

The Committee reviewed a report from
management that detailed the assumptions
made in calculating the Group’s Corporation Tax
charge and provisions. Our 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.

The Group has generated tax losses in
certain jurisdictions where we operate. We’ve
recognised deferred tax assets in respect of
these losses to the extent that future profits
have been forecast.

Impact of Covid-19

The Group considered the impact of Covid-19
on its ability to recover financial assets held.

132

The Committee reviewed a report from
management that detailed the assumptions
made in determining the expected credit
loss in accordance with IFRS 9, taking into
consideration the additional impact of Covid-19.

The Committee concluded that the
expected credit loss provisions and
disclosures recorded by the Group were
appropriate and complete.

The Committee has also reviewed changes
to the disclosures made in relation to
financial instruments.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Control environment
Other matters addressed by the Committee focused on the effectiveness of the Group’s control environment and
performance of our 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.

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.

The Committee received regular reports on a
project to further improve controls over Identity
Access Management and the development of
corporate actions controls and reporting.

The Committee reviewed the relevant
disclosures within the Accountability section of
the Corporate Governance Report within the
Annual Report.

Internal Audit

The Committee is required to oversee the
performance, resourcing and effectiveness of
the Internal Audit function.

The Committee monitored and reviewed the
effectiveness of the Group’s Internal Audit
function in the overall context of our internal
controls and risk management systems.

The Committee reviewed the resourcing
and effectiveness of the Internal Audit
function and approved the risk-based
audit plan.

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.

The Committee supports the work of
the Internal Audit function in the areas
of advisory and consulting work, where
it predominantly reports to the Board
Risk Committee.

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.

The priorities of the function in light of
the Covid-19 impact assessment were
evaluated and agreed.

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.

The priorities for the Internal Audit function and
approach to remote working in light of Covid-19
impacts were considered.

133

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GOVERNANCE REPORT

Audit Committee Report
CONTINUED

Role of the Committee

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 (and from April 2020, the Legal
Entity and Policy Governance Committee) which
itself provides oversight over the risk-based
system for the governance, operation and
maintenance of the Group’s legal entities.

Discharge of responsibilities

Conclusion/action taken

The Committee reviewed the Group’s
Whistleblowing Policy to ensure that it remained
fit for our needs.

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 CFO on the operation of the Client Money
and Assets Committee.

The Committee reviewed improvements
made to the control environment, which
had been stress-tested and the steps
being taken to further enhance controls
at both Group and entity level.

The Committee also considered the report
from the External Auditors on the client money
control environment and operations.

The Committee considered that these
were appropriate to the circumstances
of the Group.

The Committee was satisfied as to
the progress made in improving the
overall framework.

Legal Entity Governance has been
developed to provide more detailed
oversight of the work of our regulated
entities around the globe. Management
Committees’ ToR were standardised
in advance of the introduction of the
Senior Managers and Certification
Regime last December.

The Committee further received regular reports
on the control environment of corporate
actions, which focused on improvements to the
control environment.

The Committee received updates from the
Control Functions Oversight Committee and
an update from the Legal Entity and Policy
Governance Committee 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 the Group Legal
Entity Governance Policy and the Policy
Governance Framework.

A restructuring of the boards of the UK
regulated companies within the Group: IG Index
Limited and IG Markets Limited, to add Non-
Executive Directors to those boards is under
way and expected to be completed during the
next financial year. This will ensure appropriate,
enhanced oversight of the regulated entity
boards, as well as clarity of accountability and
decision-making.

External Auditors
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 them (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:

134

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Role of the Committee

Audit tender

The Committee considers and makes
recommendations to the Board (to be put
to shareholders for approval at the AGM) in
relation to the appointment of the Group’s
External Auditors. The Committee oversees
the selection process for new auditors.

Oversight of external audit

The Committee is required to oversee the
work and performance of PwC as External
Auditors, including the maintenance of audit
quality during the period.

Discharge of responsibilities

Conclusion/action taken

An audit tender process was carried out, where
three audit firms had shown interest in the
bid. Due to the breadth of IG’s business scope,
strategy and international outreach, smaller
firms declined to tender. A panel was set up
consisting of members of the Committee and
management. Management meetings with each
of the tendering teams were held with the Chair
of the Committee.

The audit tender panel received written
submissions from each of the tendering
firms, and each firm presented to the audit
tender panel.

Based on a thorough assessment process
and in-depth discussion and debate, the
audit tender panel recommended the
reappointment of PwC as Auditors for the
2021 financial year onwards, commencing
1 June 2020. This recommendation was
based on the strength and experience
of the lead partner and overall audit
team, PwC’s CASS expertise, the quality
of their audit work, the challenge that
they provided, their familiarity with the
Group and their commitment to continue
to work with the Group to improve the
service they provide.

The Committee recommended to the
Board the reappointment of PwC as
External Auditors for the 2021 financial
year onwards.

The Committee met with the key members of the
PwC audit team to discuss the 2020 audit plan
and agree areas of focus.

It assessed regular reports from PwC on the
progress of the 2020 audit and any material
issues identified.

It debated the draft audit opinion ahead of the
2020 year-end. The Committee was also briefed
by PwC on critical accounting estimates, where
significant judgment is needed.

The Committee approved the audit plan
and the main areas of focus, including
revenue recognition, the potential risk
of management override of controls and
uncertain tax positions.

More on the Committee’s role
in assessing the performance,
effectiveness and independence of the
External Auditors and the quality of the
external audit can be found on page 144.

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 are fees
associated with the ISAE 3000 controls opinion
relating to the Group’s processes and controls
over client money segregation.

non-audit services and fees

To prevent 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.

We have updated our internal process on
engagement of External Auditors and review
of non-audit services to ensure that its policy
is in line with the regulations.

During the year, the Committee reviewed and
approved a recommendation from management
on the Company’s audit and audit-related fees.

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 CFO. Fees
above £0.05 million must be approved by the
Committee, through the Committee Chairman.

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 processes,
per the policy, during the year.

The Committee considers the 2020 audit
and audit-related fees to be appropriate
given the change in complexity of the
Group structure. A breakdown of audit
and non-audit related fees is in note 4 to
the Financial Statements on page 162.

During the year, non-audit fees of £0.1
million were paid to PwC, as discussed in
note 4 to the Financial Statements. These
principally related to software services
which ceased during the year.

The Group continues to engage Ernst &
Young (EY) for global tax compliance.

135

The 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 Auditors 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 Auditors, and the setting of a policy on the
provision of non-audit services. The External Auditors are
required to rotate the audit partner responsible for the Group
audit every five years, and a new audit partner will take over
from the next financial year.

As a result of the audit tender process carried out in 2019,
the Company will be proposing the reappointment of PwC
at the 2020 AGM.

JIM NEWMAN
CHAIRMAN OF THE AUDIT COMMITTEE
23 July 2020

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

Audit Committee Report
CONTINUED

Effectiveness of the 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 and resources, as well as the effectiveness of the
audit process, including a report from the External Auditors
on their own internal quality procedures and independence.

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 Auditors, the external audit process and an
assessment of the External Auditors’ independence and
objectivity, the Committee recommended the reappointment
of PwC to the Board for recommendation to and approval by
shareholders at the Company’s 2020 AGM.

There are no contractual obligations restricting choice of
External Auditors.

Audit Committee effectiveness
During the year, an evaluation of the performance of the
Committee and its members was undertaken in line with
the Committee’s ToR. The evaluation process was externally
facilitated by independent consultancy firm Boardroom
Review Limited as part of the overall annual Board and
Committee effectiveness review. Boardroom Review Limited
is independent of the Company, and has no connection with
it or with any of the individual Directors.

Further information of the evaluation of the Board and
its Committees and of individual Directors is given on page
91, together with a review of the progress on actions arising
from the internally run performance review undertaken
during 2019.

136

Board Risk Committee Report

Jonathan
Moulds

Jonathan Moulds, Chairman of the
Board Risk Committee, gives his review
of the Committee’s activities during the
financial year.

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.

JONATHAN MOULDS
CHAIRMAN OF THE BOARD RISK COMMITTEE

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

This year’s review comes with the added consideration of
the complexity we have faced during the last three months
of the financial year, during which nearly all of our workforce
across the Group has been working from home, and we’ve
witnessed unprecedented market volatility – both as a result
of the Covid-19 pandemic.

I believe the way that the Risk Management Framework and
business have adapted to a changing risk profile in light of the
pandemic has been excellent. We’ve faced significant turmoil
and heightened risk across the business. This has ranged
from levels of market and credit risks never seen before
due to extreme levels of market volatility, to operational and
technology risks associated with distance working. We’ve
experienced increased load on our systems caused by the
heightened market volatility and increased client numbers.
We’ve also faced process and conduct risks due to the
unprecedented demand for our products and services, which
drove up the volume of new applications and trading. Despite
this, through our resilience and control infrastructure, we
haven’t seen any significant manifestation of risk, or events
out of keeping with the volumes of business we’ve witnessed.

Chairman’s overview
The Committee has continued to focus on providing
oversight and advice to the Board in relation to the Group’s
current and potential future risk exposures, including risks to
the achievement of our strategy. The Committee’s agenda
reflects the importance of reviewing the key actual and
emerging risks faced by the business.

I’m 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.
This has been enabled by the ongoing development of the
Risk Taxonomy and Key Risk Indicators, including alignment
of the two elements, throughout the year.

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. The
operational risk management systems have continued to
be developed and embedded into the business, with strong
stakeholder engagement that encourages a culture of
event reporting. The Operational Risk team has adapted its
approach to better assist first-line functions in root-cause
analysis relating to events, which has enabled us to improve
the design and implementation of controls. Operational
risk reports are regularly provided to related management
Committees, such as the Executive Risk Committee and the
Client Money and Assets Committee.

137

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

Board Risk Committee Report
CONTINUED

This year’s annual Non-Executive Director Risk Workshop
once again provided active oversight of and input to our
regulatory capital calculations, as set out in the Group’s
Internal Capital Adequacy Assessment Process (ICAAP). It
also covered the stress-testing of our risks, and our capital
and liquidity held against those, as well as our reverse stress-
test. Recovery Plans (RP) were considered at subsequent
Committee meetings.

Internal Audit reporting to the Committee has focused on the
review and advisory work conducted by the function on the
state of the Risk Management Framework – particularly the
development of the operational risk framework, as well as the
Group’s current and potential risk exposures.

Role of the Board Risk Committee
The Committee refreshed its Terms of Reference (ToR) during
the year to reflect that its responsibilities had been extended
to include advising the Boards of IG Markets Limited and
IG Index Limited with respect to those entities’ current and
future risk appetite and assisting with oversight of strategy
implementation by senior management.

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 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:

¼¼ 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

¼¼ Considering, and recommending for approval by the

Board, the Risk Appetite Statement and Key Risk Indicators

¼¼ Reviewing the scope and nature of the work undertaken

by the risk management and control functions, particularly
in relation to business, regulatory, compliance, anti-
money-laundering, conduct and culture risks

¼¼ Reviewing the adequacy and effectiveness of the Group’s
technology infrastructure and supporting documentation
in the Risk Management Framework

¼¼ 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

¼¼ Ensuring rigorous stress-testing and scenario-testing of

the Group’s business and receiving reports that explain the
impact of identified risks and threats

¼¼ Monitoring, reviewing and challenging key regulatory

documents – the Individual Liquidity Adequacy
Assessment (ILAA), ICAAP and the Recovery Plan (RP)

138

¼¼ Reviewing and recommending the statements to be

included in the Annual Report concerning controls and
risk management, for approval by the Board

¼¼ Considering whether any changes in the Group’s

risk profile warrant a change in proposed insurance
arrangements

¼¼ Continuing to work closely with other Board Committees

where risk-related input is required

¼¼ Considering reports from Internal Audit on the function’s
advisory work and assessment of the state of the Risk
Management Framework and the Group’s current and
potential risk exposures

The 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

Jonathan Moulds

Stephen Hill1

Jim Newman2

Sally-Ann Hibberd3

1 Stephen Hill resigned as a Committee member effective from 18 March 2020, ahead

of his retirement from the Board on 27 April 2020.
Jim Newman did not attend one scheduled meeting due to a personal commitment.
His apologies were received by the Committee Chairman in advance of the meeting.

3 Sally-Ann Hibberd was appointed as a Committee member on 18 March 2020.

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 (or appoints
a delegate to attend), all Committee meetings, Executive
Directors, the Chief Risk Officer (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.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

During the year, the membership of the Committee changed.
Sally-Ann Hibberd became a member of the Committee and
Stephen Hill resigned as a member of the Committee on
18 March 2020, ahead of his retirement from the Board on
27 April 2020.

JONATHAN MOULDS
CHAIRMAN OF THE BOARD RISK COMMITTEE
23 July 2020

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.

Activity during the financial year
During the year, the Committee’s key activities included:

¼¼ 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

¼¼ Considering current and emerging risks facing the business,

including the risk associated with regulatory change,
Brexit, the global Covid-19 pandemic and market volatility
¼¼ Requesting and/or reviewing a number of specific reports,
including in relation to financial crime risk, anti-money-
laundering controls, and product governance

¼¼ Reviewing and challenging of operational risk development
¼¼ Reviewing IT and cyber security in the context of the

annual technology risk review

¼¼ Review of regulatory waivers applying to legal entities

across the Group

¼¼ Formal annual compliance assessment of material breaches
¼¼ Reviewing enhancements to IG’s approach to transaction

reporting

¼¼ Reviewing a culture risk dashboard and report covering

client outcomes, technology, regulatory outcomes, people
outcomes and conduct more broadly

¼¼ Reviewing the capital and liquidity position of the Group

including through the ICAAP, ILAA and the RP

¼¼ Reviewing its own performance and considering steps
to enhance Committee effectiveness and making
appropriate recommendations to the Board

Committee evaluation and future priorities
During the year, an evaluation of the performance of the
Committee and its members was undertaken in line with
the Committee’s ToR. The evaluation process was externally
facilitated by independent consultancy firm Boardroom
Review Limited, as part of the overall annual Board and
Committee effectiveness review.

Boardroom Review Limited is independent of the Company
and has no connection with it or with any of the individual
Directors.

139

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

Directors’ Report

Directors’ Report
The Directors present their report, together with the Group
Financial Statements, for the year ended 31 May 2020. The
Directors’ Report comprises pages 140 to 142 of this report,
together with the sections of the Annual Report incorporated
by reference as set out below:

CONTENTS

Corporate Governance Report

Directors’ Responsibilities Statement

Financial instruments

Greenhouse gas emissions

Workforce engagement, communication
and equal opportunities

Employees, Customers, Suppliers and
Others Reporting Requirements Under
the Companies (Miscellaneous
Reporting) Regulations 2018

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

Anti-bribery and corruption

PAGE

74-93

143

178

65-69

24-29

99-128

9-71

50-59

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 20 to 73.

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
414C of the Act, which can be found in the ESG Report
section on page 71.

In line with the requirements under Capital Requirements
Capital Directive IV, requiring credit institutions and
investment firms to publish annually certain tax and financial

140

data for each country where they operate, the Group’s UK
regulated subsidiaries will make available their country-by-
country reporting on iggroup.com.

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:

DETAIL

Waiver of dividends

PAGE

140

Modern slavery
In compliance with Section 4 (I) of the Modern Slavery
Act 2015, the Group has published its slavery and human
trafficking statement online.

Branch offices
The Group has the following overseas branches within the
meaning of the Companies Act 2006: branch offices in
Australia, China (Representative Office), France, Germany,
Hong Kong, Ireland, Italy, New Zealand, Norway, Poland,
South Africa, Spain and Sweden.

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 £240.4 million (2019: £158.3 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 £111.7 million, making
a total of 43.2 pence per share and £159.5 million for the
year (2019: 43.2 pence and £159.1 million). 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
22 October 2020 to those shareholders on the register
as at 25 September 2020.

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

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 on 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.

Board of Directors and their interests
The Directors who held office during the financial year are
set out below:

Chairman
Andy Green – stepped down from the Board and as Chairman
on 19 September 2019
Mike McTighe – appointed to the Board and as Chairman on
3 February 2020

Independent Non-Executive Directors
Andrew Didham – appointed on 19 September 2020
Stephen Hill – retired on 27 April 2020
Malcolm Le May
Jonathan Moulds
Jim Newman
Helen Stevenson – appointed on 18 March 2020

Executive Directors
June Felix
Paul Mainwaring1
Bridget Messer
Jon Noble

1 Paul Mainwaring retired on 1 June 2020.

Our Chief Financial Officer (CFO), Paul Mainwaring,
announced on 21 January 2020 his intention to retire as CFO
and a Director of the Company. He stepped down from the
Board on 1 June 2020. Charlie Rozes has been appointed
as CFO and as a Director of the Company with effect from
1 June 2020.

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.

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 will stand for election or re-election at
the 2020 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 89.

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 2020. 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, we regularly develop
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 (2019: £nil).

Share capital
The Company has three classes of shares: ordinary shares,
deferred redeemable shares and preference shares. As at
31 May 2020, our issued shares comprised 369,439,455
ordinary shares of 0.005 pence each (representing 99.97% of
the total issued share capital), 65,000 deferred redeemable
shares of 0.001 pence 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 our share capital and rights attached
to the issued shares are given in note 22 to the Financial
Statements. Information about the rights attached to our
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 49.

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.

141

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

GOVERNANCE REPORT

Directors’ Report
CONTINUED

Restrictions on transfer of securities
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 are required to obtain
approval prior to dealing in the Company’s securities.
We aren’t 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
2019 AGM. The authority to issue or buy back shares will
expire at the 2020 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 36,943,945 of the Company’s
ordinary shares. However, no ordinary shares were
repurchased during the year.

During the year, the Company instructed the trustees of
the Employee Benefit Trusts to purchase shares in order
to satisfy awards under our share-incentive plan schemes.
The Company also issued shares in respect of the sustained
performance plan. Details of the shares held by our Employee
Benefit Trusts, and the amounts paid during the year, are
disclosed in note 24 to the Financial Statements.

Major interest in shares
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 our 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 2020 and as at 30 June 2020. The lowest
threshold is 3% of the Company’s voting rights, and holders
are not required to notify us of any change until this, or 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
interest 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 our share schemes and plans may vest
on a takeover, under the schemes’ provisions.

Annual General Meeting
The Company’s AGM will be held on 17 September 2020.
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 17 September 2020.

Subsequent events
Please refer to note 29 to the Financial Statements.

Major Interest in shares

No. of shares

Percentage

No. of shares

Percentage

31 May 2020

30 June 2020

Artemis Investment Management LLP
BlackRock (Index)
MFS Investment Management
The Vanguard Group, Inc.
Marathon Asset Management
Royal London Asset Management
Troy Asset Management Limited
M&G

25,336,713
24,802,307
24,234,888
15,570,651
13,781,010
13,246,846
12,660,582
11,218,648

6.86
6.71
6.56
4.21
3.73
3.59
3.43
3.04

25,093,371
21,107,638
24,730,546
15,238,861
13,089,666
13,418,900
12,735,082
11,415,810

6.79
5.71
6.69
4.12
3.54
3.63
3.45
3.09

142

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

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.

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.

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.

Each of the Directors, whose names and functions are listed
in the Directors’ Report confirms that, to the best of their
knowledge:

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:

¼¼ 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

¼¼ The Directors’ Report includes a fair review of the

¼¼ Select suitable accounting policies and apply them

consistently

¼¼ 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

¼¼ Make judgments and accounting estimates that are

reasonable and prudent

¼¼ 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 International
Accounting Standards Regulation.

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:

¼¼ So far as the Director is aware, there is no relevant audit
information of which the Group and Company’s Auditors
are unaware

¼¼ 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

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.

JUNE FELIX
CHIEF EXECUTIVE OFFICER
23 July 2020

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.

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Report on the audit of the financial statements
Opinion
In our opinion, IG Group Holdings plc’s group financial statements and company financial statements (the “financial statements”):

¼¼ give a true and fair view of the state of the group’s and of the company’s affairs as at 31 May 2020 and of the group’s profit

and the group’s and the company’s cash flows for the year then ended;

¼¼ 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

¼¼ 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 2020; the Consolidated and Company Statements of Changes in Equity, the
Consolidated and Company Cash Flow Statements, the Consolidated Income Statement and the Consolidated Statement of
Comprehensive Income 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.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not
provided to the group or the company.

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 2019 to 31 May 2020.

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Our audit approach
Overview

Materiality

Audit scope

¼¼ Overall group materiality: £14.8 million (2019: £9.7 million), based on 5% of profit before tax.
¼¼ Overall company materiality: £6.8 million (2019: £6.4 million), based on 1% of total assets.

¼¼ 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.

¼¼ This approach gave us sufficient coverage over the group’s total assets and consolidated profit

before tax

¼¼ 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

¼¼ Revenue recognition (group)
¼¼ Management override of control, including privileged access management (group and company)
¼¼ Impact of Covid-19 (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 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,
European Securities and Markets Authority (“ESMA”) 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 privileged access management and the
recording of journals, and potential bias in the determination of material estimates. Audit procedures performed by the group
engagement team included:

¼¼ Enquiries of management, internal audit, and those charged with governance in relation to known or suspected instances

of non-compliance with laws and regulation and fraud;

¼¼ Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect

irregularities;

¼¼ Identifying and, where relevant, testing journal entries posted by senior management or with unusual account

combinations;

¼¼ Validation of IT changes made in key financial reporting systems by review of logs and approvals;
¼¼ Review of correspondence with regulators, and internal audit reports in so far as they are related to the financial

statements; and

¼¼ Incorporated unpredictability into the nature, timing and/or extent of our testing.

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.

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Key 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.

The group’s revenue on these activities arises principally from
spreads, overnight funding charges and commissions.

The risk is that there are large volumes of trades entered into
by the group, and while revenue calculations are automated,
depending on the specific product they can be relatively
complex in nature, requiring varying logic and inputs.

We focused firstly on understanding the control environment
in which revenue is recorded. We understood and evaluated
the design of key controls in place and tested their operating
effectiveness.

These controls included:

¼¼ Client onboarding;
¼¼ Trade capture and recording;
¼¼ Validation of system calculated revenue numbers by the

group’s revenue control team;

¼¼ Cash and settlement reconciliations;
¼¼ Market counterparty and other third party reconciliations;

and

¼¼ Recording and access to modification of complaints

records.

We noted no significant exceptions in the design or operating
effectiveness of the above controls and we determined we
could rely on these controls for the purposes of our audit.

In addition, we performed the substantive procedures
described below:

¼¼ We tested the valuation of selected client positions to third

party pricing sources;

¼¼ 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;

¼¼ We agreed selected amounts and balances held with

market counterparties to independent confirmations and
other external third party evidence; and

¼¼ Using data enabled audit techniques, we recalculated the
revenue recorded in relation to an extensive sample of
trades, and agreed these to the underlying accounting
records.

In order to address the risk that improper or inaccurate
adjustments or transactions had been entered into the
trading systems, we also considered the nature of client
complaints and related matters, making further enquiries
of management where relevant.

No material issues arose from this work.

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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.

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.

Although the Directors are 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.

To address the risk of management override of controls,
including privileged access management, we performed the
following procedures:

¼¼ Enquired of those charged with governance,

management, and internal audit, in relation to known or
suspected instances of non-compliance with laws and
regulation and fraud;

¼¼ Reviewed correspondence with regulators, and internal
audit reports in so far as they are related to the financial
statements;

¼¼ Tested the validity of a sample of journals using fraud risk

based criteria for journal selection;

¼¼ Assessed the judgemental areas underlying key

accounting estimates (for example Impairment of
Intangible Assets including Goodwill), and evaluated
whether there was any evidence of management bias;

¼¼ Evaluated the nature of customer litigation and complaints,
for evidence of activity that may have a bearing on the
financial statements;

¼¼ Validated that the most recent changes to the systems

had been recorded in the IT change management system
for approval;

¼¼ For each key automated control, tested whether any

inappropriate changes had been made during the period;

¼¼ Using data enabled audit techniques, recalculated the
revenue recorded in relation to an extensive sample of
trades, and agreed these to the underlying accounting
records;

¼¼ Agreed selected cash account balances to external third
party evidence at year-end through a combination of
independent confirmations and examination of bank
statements;

¼¼ Agreed selected amounts and balances held with market
counterparties to independent confirmations and other
external third party evidence; and

¼¼ Incorporated unpredictability into the nature, timing and/

or extent of our testing.

No issues arose from this work.

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Key audit matter

How our audit addressed the key audit matter

Impact of Covid-19 – Group and Company
The economic disruption arising from the Covid-19 pandemic
has created significant volatility in market prices, and high
volumes of client trading activity. The pandemic has also
resulted in changes to working practices being required,
which may impact the effectiveness of the financial reporting
control environment.

The trading circumstances have also resulted in updates to
plans and forecasts being introduced,and required active
management of volatile liquidity requirements arising from
hedging activities.

As a result of the above, we have determined consideration
of the impact of Covid-19 to be a key audit matter.

In assessing the Directors’ consideration of the impact of
Covid-19 on the financial statements, we have undertaken
the following audit procedures:

¼¼ Considered the impact that Covid-19 may have had on

controls in a disrupted and remote working environment.
This included performing testing of key controls over the
impacted period to obtain audit evidence to determine
whether the controls continued to be designed and
operating effectively; and

¼¼ In assessing the Directors’ going concern assessment:

– Evaluated and challenged management’s assessment
of the impact of Covid-19 on the group’s financial
plans, liquidity and capital position, and operating
arrangements;

– Evaluated the stress testing performed by management

and considered whether these were adequate;

– Substantiated the nature and existence of the group’s
financial resources and liquidity financing facilities.

We also evaluated the adequacy of the disclosures made
in the financial statements with respect to the impact of
Covid-19.

As a result of these procedures, we concluded that the
impact of Covid-19 has been appropriately evaluated and
reflected in the preparation of the financial statements.

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 group’s business activities.

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.

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Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall materiality

How we determined it

Rationale for benchmark applied

Group financial statements

Company financial statements

£14.8 million (2019: £9.7 million).

£6.8 million (2019: £6.4 million).

5% of profit before tax.

1% of total assets.

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.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£0.7 million (Group audit) (2019: £0.5 million) and £0.3 million (Company audit) (2019: £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

Outcome

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.

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.

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.

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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).

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 2020 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:

¼¼ The directors’ confirmation on page 91 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.

¼¼ The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
¼¼ The directors’ explanation on page 72 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:

¼¼ The statement given by the directors, on page 143, 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.

¼¼ The section of the Annual Report on pages 129-136 describing the work of the Audit Committee does not appropriately

address matters communicated by us to the Audit Committee.

¼¼ 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)

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Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of the Directors’ Responsibilities in respect of the Financial Statements set out on
page 143, 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:

¼¼ we have not received all the information and explanations we require for our audit; or
¼¼ 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

¼¼ certain disclosures of directors’ remuneration specified by law are not made; or
¼¼ 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 10 years, covering the years ended 31 May 2011 to 31 May 2020.

DARREN MEEK (SENIOR STATUTORY AUDITOR)
FOR AND ON BEHALF OF PRICEWATERHOUSECOOPERS LLP
Chartered Accountants and Statutory Auditors
London
23 July 2020

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INTRODUCTION

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SHAREHOLDER AND COMPANY
INFORMATION

FInAnCIAL
STATeMenTS

PG. 152-198

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

Notes to the Financial Statements
1. General information, basis of

preparation and critical accounting
estimates and judgments

2. Net trading revenue

3. Operating costs

4. Auditor’s remuneration

5. Staff costs

6. Finance income

7. Finance costs

8. Taxation

9. Earnings per share

10. Dividends paid and proposed

11. Property, plant and equipment

12. Intangible assets

13. Financial investments

14. Goodwill

15. Trade receivables

159

160

161

162

163

166

167

168

169

170

154

155

156

157

158

170

171

16. Other assets

17. Borrowings

18. Leases

19. Trade payables

20. Other payables

21. Contingent liabilities and provisions 171

22. Share capital and share premium

23. Other reserves

24. Employee share plans

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

172

173

174

177

178

181

185

196

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Consolidated Income Statement
for the year ended 31 May 2020

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 costs
Net credit losses on financial assets
Gain on sale of subsidiaries

Operating profit
Finance income
Finance costs

profit before taxation
Taxation

profit for the year and attributable to owners of the parent

earnings per share:
Basic
Diluted

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

657.7
(8.5)

649.2
(7.4)
6.0
(1.0)
1.4

648.2
(341.9)
(11.0)
0.7

296.0
5.8
(5.9)

295.9
(55.5)

240.4

65.3p
64.9p

488.0
(11.1)

476.9
(7.9)
6.9
(0.6)
1.9

477.2
(282.5)
(1.8)
–

192.9
5.4
(4.0)

194.3
(36.0)

158.3

43.1p
42.8p

Note

3
27

6
7

9
9

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SHAREHOLDER AND COMPANY
INFORMATION

Consolidated Statement of Comprehensive Income
for the year ended 31 May 2020

profit for the year attributable to owners of the parent
Other comprehensive income:
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

Foreign currency translation gain

Other comprehensive income for the year

Total comprehensive income attributable to owners of the parent

Year ended 31 May 2020

Year ended 31 May 2019

£m

0.7

2.4

£m

240.4

3.1

243.5

£m

0.6

6.2

£m

158.3

6.8

165.1

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Consolidated Statement of Financial position
at 31 May 2020

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
Lease liabilities
Deferred income tax liabilities

Current liabilities
Trade payables
Other payables
Lease liabilities
Income tax payable

TOTAL LIABILITIeS

equity
Share capital and share premium
Other reserves
Retained earnings

TOTAL eQuITY

TOTAL eQuITY AnD LIABILITIeS

1 Refer to note 23 for further information.

Note

31 May 2020
£m

31 May 2019
Restated1
£m

11
12
13
8

15
16

17
18
8

19
20
18

22
23

46.4
147.2
83.8
11.5

288.9

347.0
22.1
11.1
3.9
486.2
140.5

1,010.8

1,299.7

14.4
151.5
189.9
9.0

364.8

301.1
33.1
9.7
5.3
373.3
35.3

757.8

1,122.6

99.7
22.5
0.7

99.6
–
0.4

122.9

100.0

143.1
81.1
6.8
9.9

240.9

363.8

125.8
168.4
641.7

935.9

110.4
60.0
–
10.4

180.8

280.8

125.8
161.2
554.8

841.8

1,299.7

1,122.6

The Consolidated Financial Statements on pages 154 to 198 were approved by the Board of Directors on 23 July 2020 and
signed on its behalf by:

CHARLES ROZES
CHIEF FINANCIAL OFFICER
Registered Company number: 04677092

156

Consolidated Statement of Changes in equity
for the year ended 31 May 2020

Note

Share capital
£m

Share premium
Restated1
£m

Other reserves
Restated1
£m

Retained earnings
£m

At 1 June 2018

Profit for the year and attributable to

owners of the parent

Other comprehensive income 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

own shares

Equity dividends paid
Transfer of share-based payment

reserve

At 31 May 2019

IFRIC 23 transitional adjustment
IFRS 16 transitional adjustment

At 1 June 2019
Profit for the year and attributable to

owners of the parent

Other comprehensive income 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 own

Equity dividends paid
Transfer of share-based payment

reserve

At 31 May 2020

1 Refer to note 23 for further information.

–

–
–

–

–
–

–

–
–

–

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

125.8

152.6

–

–
–

–

6.8

2.1

7.2

–

(2.0)

–
(5.5)

Total
£m

842.1

158.3

563.7

158.3

–

6.8

158.3

(2.1)

–

0.5

–

(171.1)
5.5

165.1

–

7.2

0.5

(2.0)

(171.1)
–

125.8

161.2

554.8

841.8

–
–

125.8
–

–
–

161.2
–

–

–
–

3.1

9.7

–

(1.5)

–
(4.1)

0.5
0.5

555.8
240.4

0.5
0.5

842.8
240.4

–

3.1

240.4

243.5

–

0.6

–

9.7

0.6

(1.5)

(159.2)
4.1

(159.2)
–

125.8

168.4

641.7

935.9

157

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

Consolidated Cash Flow Statement
for the year ended 31 May 2020

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
Proceeds on disposal of subsidiaries
Net cash flow from financial investments

net cash flow used in investing activities

Financing activities
Interest and fees paid
Interest unwinding of lease liabilities
Repayment of principal element of lease liabilities
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 2020
£m

Year ended
31 May 2019
£m

349.6
(57.1)

292.5

4.5
(9.9)
(6.4)
0.6
3.3

(7.9)

(5.3)
(0.6)
(6.7)
(159.2)
(1.5)
–

(173.3)

111.3
373.3
1.6

486.2

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

158

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

notes to the Financial Statements

1. General information, basis of preparation and critical accounting estimates and judgments
General information
The Financial Statements of IG Group Holdings plc and its subsidiaries (together the Group) for the year ended 31 May 2020
were authorised for issue by the Board of Directors on 23 July 2020 and the statement of financial position was signed on
the Board’s behalf by Charles Rozes. 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 (including derivative instruments) at fair value through other
comprehensive income and fair value through profit and loss.

The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgment 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 2020 are
disclosed in note 30.

Critical accounting estimates and judgments
The preparation of Financial Statements requires the Group to make estimates and judgments 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 judgments 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 2020 in relation to the
DailyFX intangible asset to determine whether there were any indicators of impairment. The Group considered the number
of first trades generated by the asset and the average net trading income generated by each active client 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. Whilst the global economic outlook is uncertain due to the Covid-19
pandemic, taking into account the performance of the asset and wider Group, this was not determined to be an indicator
of impairment. The Group also considered the estimated life of DailyFX and concluded that the total useful life of ten years
remained appropriate.

The Group undertakes an impairment assessment of goodwill annually. The goodwill balance as at 31 May 2020 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. Information on the key assumptions used in the Group’s impairment
assessment of goodwill is disclosed in note 14.

(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. 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. For further information please see note 8.

159

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

1. General information, basis of preparation, and critical accounting estimates and judgments CONTINUED
(c) DailyFX asset acquisition (judgment) – 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 judgment which remains relevant for the
year ended 31 May 2020 given the carrying value of £21.0 million at 31 May 2020 (31 May 2019: £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.

(d) Accounting for cryptocurrencies (judgment) – the Group has recognised £22.1 million of cryptocurrency assets and rights
to cryptocurrency assets on its Statement of Financial Position as at 31 May 2020 (31 May 2019: £33.1 million). These assets
are used for hedging purposes and held for sale in the ordinary course of business and a judgment has been made to apply
the measurement principles of IAS 2 Inventories in accounting for these assets. The assets are presented as ‘Other assets’
on the Statement of Financial Position. The accounting treatment of cryptocurrency assets is considered to be a critical
accounting policy judgment.

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 CODM 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 client trading activity.

The CODM continue to consider business performance from a product perspective, split into OTC leveraged derivatives,
exchange traded derivatives and stock trading and investments. The revenue from exchange traded derivatives derives from
the United States and EU. The revenue from stock trading and investments derives from the UK, EU and Australia.

During the year ended 31 May 2020, the basis of allocation for net trading revenue by product has changed. Net trading
revenue allocated to the stock trading and investments product now includes the currency conversion fees charged to stock
trading and investments clients. These fees were previously included in OTC leveraged revenue.

The Group manages market risk and a number of other activities on a Group-wide portfolio basis and accordingly a large
proportion of costs are incurred centrally. These central costs are not allocated to individual segments for decision-making
purposes for the CODM, and, accordingly, these costs have not been allocated to segments. Additionally, the Group’s assets
and liabilities are not allocated to individual segments and not reported as such for decision-making purposes to the CODM.

160

Notes to the Financial Statements CONTINUEDINTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

2. Net trading revenue CONTINUED
The segmental analysis shown below therefore does not include a measure of profitability, nor a segmented balance sheet,
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
US

Total net trading revenue

net trading revenue by product:
OTC leveraged derivatives
Exchange traded derivatives
Stock trading and investments

Total net trading revenue

The Group does not derive more than 10% of revenue from any single client.

3. Operating costs

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
Other costs

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

257.7
89.0
55.2
91.9
57.0
46.6
28.3
23.5

649.2

617.2
18.4
13.6

649.2

201.1
68.0
43.5
70.1
40.5
19.2
17.5
17.0

476.9

451.4
16.8
8.7

476.9

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

Note

116.4
44.3

160.7

61.8
7.3
26.6
14.2
6.8
25.6
38.9

106.3
24.7

131.0

51.7
13.1
23.7
13.8
3.6
17.3
28.3

341.9

282.5

11, 12

Included in premises-related costs is £0.7 million relating to short-term operating leases which do not meet the criteria to
be capitalised as right-of-use assets. Prior to the introduction of IFRS 16 Leases, all expenses relating to operating leases of
£6.6 million were included in premises costs for the year ended 31 May 2019.

161

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

4. Auditors’ remuneration

Audit fees
Parent
Subsidiaries

Total audit fees

Audit-related fees
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 2020
£m

Year ended
31 May 2019
£m

0.6
0.7

1.3

0.6
0.1

0.7

0.1

0.5
0.6

1.1

0.6
0.1

0.7

0.2

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.
This licensing service ceased during the year ended 31 May 2020.

5. 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 2020
£m

Year ended
31 May 2019
£m

137.8

15.8
7.1

160.7

112.2

12.2
6.6

131.0

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 2020 and 31 May 2019 is set out in the Directors’ Remuneration
Report on page 117.

The average monthly number of employees, including Directors, split into the key activity areas was as follows:

Prospect acquisition
Sales and client management
Technology
Operations
Business administration

162

Year ended
31 May 2020
Number

Year ended
31 May 2019
Number

308
260
709
336
274

270
221
678
353
258

1,887

1,780

Notes to the Financial Statements CONTINUED6. Finance income

Bank interest receivable
Interest receivable on cash held at brokers
Interest accretion on financial investments

7. Finance costs

Bank interest payable
Revolving credit facility interest and fees
Term loan interest and fees
Interest payable to brokers
Interest payable on lease liabilities

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 income statement:
Tax recognised in other comprehensive income

Tax recognised directly in equity

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

2.5
1.7
1.6

5.8

3.1
1.2
1.1

5.4

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

0.5
0.9
2.8
1.1
0.6

5.9

0.3
0.5
2.7
0.5
–

4.0

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

52.7
4.9
(0.2)

57.4

(1.4)
(0.2)
(0.3)

(1.9)

55.5

0.2

(0.6)

32.6
4.1
(1.1)

35.6

(0.3)
0.7
–

0.4

36.0

0.1

(0.5)

163

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

8. Taxation CONTINUED
Reconciliation of the total tax charge
The standard rate of Corporation Tax in the UK for the year ended 31 May 2020 is 19.0% (31 May 2019: 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 2019: 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
Current year losses not recognised as deferred tax assets

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

295.9

56.2

194.3

36.9

0.4
(0.4)
1.1
(1.7)
(0.3)
(1.3)
1.5

0.9
(0.4)
1.5
(1.1)
–
(3.3)
1.5

Total tax expense reported in the income statement

55.5

36.0

The effective tax rate for the year is 18.8% (year ended 31 May 2019: 18.5%).

Deferred income tax assets

Tax losses available for offset against future profits
Temporary differences arising on share-based payments
Temporary differences arising on fixed assets
Other temporary differences

Deferred income tax liabilities

Temporary differences arising on fixed assets
Other temporary differences

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

164

31 May 2020
£m

31 May 2019
£m

4.3
2.7
1.8
2.7

11.5

4.6
0.8
1.7
1.9

9.0

31 May 2020
£m

31 May 2019
£m

(0.4)
(0.3)

(0.7)

(0.4)
–

(0.4)

31 May 2020
£m

31 May 2019
£m

4.8
6.7

11.5

(0.1)
(0.6)

(0.7)

2.3
6.7

9.0

–
(0.4)

(0.4)

Notes to the Financial Statements CONTINUEDINTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

8. Taxation CONTINUED
The UK Government reversed the planned reduction in the rate of UK Corporation Tax from 19% to 17% in March 2020. The
impact of this change on deferred tax has been reflected, and 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 £4.2 million (31 May 2019: £2.4 million) in respect of prior years’ losses
of the US businesses, and current year losses in respect of the German and Hong Kong 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 £12.7 million (31 May 2019: £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 is as follows:

At the beginning of the year
– Income statement (charge)/credit
– Tax credited to other comprehensive income
– Tax (charged)/credited directly to equity
– Impact of movement in foreign exchange rates

At the end of the year

The movement in the deferred income tax liability is as follows:

At the beginning of the year
– Income statement (charge)
– Tax (charged) to other comprehensive income

At the end of the year

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

9.0
2.0
–
0.6
(0.1)

11.5

9.1
(0.1)
0.1
(0.2)
0.1

9.0

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

(0.4)
(0.1)
(0.2)

(0.7)

–
(0.3)
(0.1)

(0.4)

Factors affecting the tax charge in future years
Factors that may affect the Group’s future tax charge include the geographic location of the Group’s earnings, the tax rates in
those locations, changes in tax legislation, the recognition of previously unrecognised tax losses and the resolution of open tax
issues. The Group’s future tax charge may also be impacted by changes in the Group’s business activities, client composition
and regulatory status, which could impact the Group’s exemption from the UK Bank Corporation Tax surcharge.

The calculation of the Group’s total tax charge involves estimations and judgments with respect to several items, including
the recognition of deferred tax assets, which are dependent on the Group’s estimation of future profitable income, transfer
pricing, and certain items whose tax treatment cannot be finally determined until resolution has been reached with the
relevant tax authority. The Group is subject to a number of disparate tax jurisdictions worldwide as a result of its global
operations, and these tax regimes themselves are subject to change. 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.

There are two historic UK tax schemes that are subject to formal resolution with HMRC. The Group has previously paid all tax
and interest arising on these transactions and expects them to be resolved with no further impact on the Group’s tax charge.

165

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

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 FY19 at 30.24p per share (FY18: 33.51p)
Interim dividend for FY20 at 12.96p per share (FY19: 12.96p)

Year ended
31 May 2020
£m

240.4

Year ended
31 May 2019
£m

158.3

368,081,407
2,540,279

367,570,489
2,796,998

370,621,686

370,367,487

Year ended
31 May 2020

Year ended
31 May 2019

65.3p
64.9p

43.1p
42.8p

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

111.4
47.8

159.2

123.3
47.8

171.1

The final dividend for the year ended 31 May 2020 of 30.24 pence per share amounting to £111.7 million was proposed by the
Board on 23 July 2020 and has not been included as a liability at 31 May 2020. This dividend will be paid on 22 October 2020,
following approval at the Company’s AGM, to those members on the register at the close of business on 25 September 2020.

166

Notes to the Financial Statements CONTINUEDINTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

11. Property, plant and equipment

Cost:
At 1 June 2018
Additions
Disposals/write-offs
Impact of movement in foreign exchange rates

At 31 May 2019

IFRS 16 transitional adjustment

At 1 June 2019
Additions
Impact of movement in foreign exchange rates

At 31 May 2020

Accumulated depreciation:
At 1 June 2018
Provided during the year
Amounts derecognised upon disposal
Impact of movement in foreign exchange rates

At 31 May 2019

Provided during the year
Impact of movement in foreign exchange rates

At 31 May 2020

net book value – 31 May 2020

Net book value – 31 May 2019

Net book value – 31 May 2018

Leasehold
improvements
£m

Office
equipment,
fixtures and
fittings
£m

Computer and
other equipment
£m

Right-of-use
assets
£m

23.1
0.8
(2.1)
(0.2)

21.6

–

21.6
1.3
0.1

23.0

17.0
1.0
(2.1)
(0.2)

15.7

1.6
(0.1)

17.2

5.8

5.9

6.1

6.3
0.5
(0.4)
(0.1)

6.3

–

6.3
0.7
(0.1)

6.9

3.7
0.8
(0.4)
(0.1)

4.0

0.9
(0.1)

4.8

2.1

2.3

2.6

30.9
4.2
(1.0)
(0.2)

33.9

–

33.9
7.9
–

41.8

24.1
4.9
(1.0)
(0.3)

27.7

4.9
–

32.6

9.2

6.2

6.8

–
–
–
–

–

24.0

24.0
12.1
0.1

36.2

–
–
–
–

–

6.9
–

6.9

29.3

–

Total
£m

60.3
5.5
(3.5)
(0.5)

61.8

24.0

85.8
22.0
0.1

107.9

44.8
6.7
(3.5)
(0.6)

47.4

14.3
(0.2)

61.5

46.4

14.4

15.5

As of 1 June 2019, the Group has adopted IFRS 16 Leases and recognised right-of-use assets arising from the Group’s lease
arrangements. All right-of-use assets relate to premises leases. Refer to note 30 for further information on the transitional
impact of IFRS 16 Leases.

167

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

12. Intangible assets

Cost:
At 1 June 2018
Additions
Disposals
Impact of movement in foreign exchange rates

At 31 May 2019

Additions
Disposals
Impact of movement in foreign exchange rates

At 31 May 2020

Accumulated amortisation:
At 1 June 2018
Provided during the year
Amounts derecognised upon disposal
Impact of movement in foreign exchange rates

At 31 May 2019

Provided during the year
Amounts derecognised upon disposal
Impact of movement in foreign exchange rates

At 31 May 2020

net book value – 31 May 2020

Net book value – 31 May 2019

Net book value – 31 May 2018

13. Financial investments
Financial investments are UK Government securities:

Held as:
Liquid asset buffer
Collateral at brokers

Of which:
Non-current portion
Current portion

Goodwill
£m

Domain names
£m

Internally
developed
software
£m

Software and
licences
£m

108.0
–
–
0.1

108.1

–
–
–

108.1

–
–
–
–

–

–
–
–

–

108.1

108.0

38.9
–
–
1.6

40.5

–
(3.5)
0.7

37.7

11.4
3.4
–
0.3

15.1

3.6
(3.5)
0.2

15.4

22.3

25.4

27.5

30.9
5.9
–
(0.1)

36.7

4.3
–
(0.1)

40.9

17.3
5.0
–
(0.2)

22.1

5.8
–
(0.2)

27.7

13.2

14.6

13.6

Total
£m

200.7
9.1
(0.1)
1.6

211.3

6.4
(3.5)
0.6

22.9
3.2
(0.1)
–

26.0

2.1
–
–

28.1

214.8

20.6
2.1
(0.1)
–

22.6

1.9
–
–

24.5

3.6

3.4

2.3

49.3
10.5
(0.1)
0.1

59.8

11.3
(3.5)
–

67.6

147.2

151.5

151.4

31 May 2020
£m

31 May 2019
£m

83.8
140.5

224.3

83.8
140.5

224.3

84.4
140.8

225.2

189.9
35.3

225.2

The effective interest rates of securities held at the year-end range from 0.29% to 1.04% (31 May 2019: 0.08% to 1.04%).

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SHAREHOLDER AND COMPANY
INFORMATION

14. 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 2020
£m

31 May 2019
£m

100.9
6.1
0.1
1.0

108.1

100.9
6.0
0.1
1.1

108.1

¼¼ UK – from the reorganisation of the UK business on 5 September 2003
¼¼ Australia – from the acquisition of the non-controlling interest in IG Australia Pty Limited in the year ended 31 May 2006
¼¼ US – from the acquisition of Nadex (formerly HedgeStreet Exchange) on 6 December 2007
¼¼ 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 2020 or 31 May 2019. For the purposes of the Group’s impairment testing of goodwill,
the carrying amount of each CGU is compared to the estimated recoverable amount of the relevant CGU and any deficits are
considered impairments requiring recognition in the year. The carrying amount of a CGU includes only those assets that can
be attributed directly, 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 long-term 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 2.0%
(31 May 2019: 2.5%) has been applied to the fourth year of 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% (31 May 2019: 10.0%) for UK, 15% for South Africa
(31 May 2019: 10.0%), 12.0% (31 May 2019: 12.0%) for Australia and 12.0% (31 May 2019: 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 a 500 basis points discount rate increase and to business performance of 30% below forecast.
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.

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FINANCIAL STATEMENTS

15. Trade receivables

Amounts due from brokers
Own funds in client money
Amounts due from clients

31 May 2020
£m

31 May 2019
£m

274.8
66.5
5.7

347.0

245.4
53.9
1.8

301.1

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 posts UK Government securities as collateral with brokers to partly meet margin requirements of which £51.8 million
(31 May 2019: £81.6 million) are held in custody accounts and £88.7 million (31 May 2019: £59.2 million) is considered as full
title transferred held in non-custody accounts. These are classified as financial investments.

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 £16.5 million (31 May 2019: £13.5 million) to be transferred to the Group on the following business day.
Amounts due from clients arise when a client’s 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.

16. 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 clients’ cryptocurrency trading positions. The Group holds rights to
cryptocurrencies on exchange and in vaults as follows:

Exchange
Vaults

31 May 2020
£m

31 May 2019
£m

6.0
16.1

22.1

14.2
18.9

33.1

Other assets are measured at fair value. Other assets are level 2 assets in accordance with the fair value hierarchy (note 26).

17. Borrowings
In May 2020 the Group extended its credit facility with four UK banks. The credit facility is for £200 million, of which
£100 million is a fully drawn term loan which is repayable on maturity of the facility in June 2022. The term loan is stated net
of £0.3 million of unamortised arrangement fees. The Group also has access to a £100 million revolving credit facility with a
maturity date of June 2021 having been extended by one year in May 2020. The revolving credit facility was not drawn as at
31 May 2020.

18. Leases
Following the adoption of IFRS 16 Leases from 1 June 2019, the Group now recognises a lease liability on the balance sheet to
represent its obligation to make lease payments. The table below shows the maturity analysis of the recognised lease liability
at 31 May 2020, and the rental commitments under non-cancellable operating leases that related to leases that have not been
recognised as right-of-use assets prior to the adoption IFRS 16 at 31 May 2019.

Future minimum payments due:
Within one year
After one year but not more than five years
After more than five years

31 May 2020
£m

31 May 2019
£m

6.8
20.9
1.6

29.3

7.0
19.0
2.6

28.6

In addition to the £29.3 million lease liability, the Group has £0.2 million lease commitments under non-cancellable operating
leases which are not capitalised as right-of-use assets.

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FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

£m

24.0
11.5
0.7
(6.9)

29.3

£m

24.5
11.5
(7.3)
0.6

29.3

31 May 2020
£m

31 May 2019
£m

141.4
1.7

143.1

107.4
3.0

110.4

18. Leases CONTINUED
The movements in balances associated with IFRS 16 Leases can be reconciled as follows:

Right-of-use asset

Right-of-use asset at 1 June 2019
New lease agreements – present value of lease liabilities
New lease agreements – estimated restoration costs
Depreciation in the year

Right-of-use asset at 31 May 2020

Lease liability

Lease liability at 1 June 2019
New lease agreements – present value of lease liabilities
Lease payments made in the year
Unwinding of discount

Lease liability at 31 May 2020

19. Trade payables

Client funds
Amounts due to clients

Client funds comprise title transfer funds and client deposits with the Group’s Swiss banking subsidiary. These amounts are
included within cash and cash equivalents. Client funds also includes financial liabilities relating to issued turbo warrants.
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 FCA ‘CASS’ rules and similar rules of other regulators in whose
jurisdiction the Group operates.

20. Other payables

Accruals
Payroll taxes, social security and other taxes

31 May 2020
£m

31 May 2019
£m

74.2
6.9

81.1

53.9
6.1

60.0

21. Contingent liabilities and provisions
In the ordinary course of business, the Group is subject to legal and regulatory risks in a number of jurisdictions. 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 2020 (31 May 2019: £nil).

171

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FINANCIAL STATEMENTS

22. Share capital and share premium

Allotted and fully paid:
(i) Ordinary shares (0.005p)
At 31 May 2018
Issued during the year

At 31 May 2019
Issued during the year

At 31 May 2020

(ii) Deferred redeemable shares (0.001p)
At 31 May 2019

At 31 May 2020

(iii) Redeemable preference shares (£1.00)
At 31 May 2019

At 31 May 2020

1 Refer to note 23 for further information.

Number of shares

Share capital
£m

Share premium
account
Restated1
£m

367,889,455
955,000

368,844,455
595,000

369,439,455

65,000

40,000

–
–

–

125.8
–

125.8

–

During the year ended 31 May 2020, 595,000 (31 May 2019: 955,000) ordinary shares with an aggregate nominal value
of £29.75 (31 May 2019: £47.75) 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 £29.75 (31 May 2019: £47.75).

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 2019: 8.0%).

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SHAREHOLDER AND COMPANY
INFORMATION

23. Other reserves

Share-based
payments
reserve
£m

Foreign
currency
translation
reserve
£m

Own shares
held in
Employee
Benefit Trusts
£m

At 1 June 2018

15.7

65.5

(7.4)

Transfer of transactions with

non-controlling interests reserve

Equity-settled employee share-

based payments

Foreign currency translation on

overseas subsidiaries

–

7.2

–

Exercise of UK share incentive

(0.9)

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

(5.5)

reserve

At 31 May 2019

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 financial assets
held at fair value through other
comprehensive income

16.5

9.7

–

(5.4)

–

Transfer of share-based payment

(4.1)

–

6.2

–

–
–

–

71.7

–

2.4

–

0.9

(2.0)

–
–

–

(8.5)

–

5.4

(1.5)

–

reserve

At 31 May 2020

1 Refer to note 23 for further information.

16.7

74.1

(4.6)

Transactions
with non-
controlling
interests
reserve
£m

(2.1)

2.1

–

–
–

–

Available-for-
sale reserve
£m

FVOCI
reserve
£m

Merger
Reserve
Restated1
£m

Total other
reserves
Restated1
£m

81.0

152.6

–

–
–

–

2.1

7.2

6.2

–

(2.0)

–
0.6

(5.5)

–

(0.1)
0.6

–

0.5

81.0

161.2

–

0.7

–

9.7

2.4

–

(1.5)

0.7

(4.1)

1.2

81.0

168.4

(0.1)

–

0.1
–

–

The share-based payments reserve relates to the estimated cost of equity-settled employee share plans based on a straight-
line basis over the vesting period. The foreign currency translation reserve relates to translation of overseas subsidiaries. It
includes a balance of £53.7 million arising from foreign exchange gains on Japanese goodwill and customer list assets that
were acquired in 2008, and were subsequently impaired in full in the year ended 31 May 2011. The fair value through other
comprehensive income (FVOCI) reserve includes unrealised gains or losses in respect of financial investments, net of tax.

In the year ended 31 May 2009, the Group carried out a share placement of 27,864,407 shares at a placing price of £2.95 per
share, raising £82.2 million. After deducting £1.2 million transaction costs, £81.0 million was recognised as ‘share premium’.

173

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FINANCIAL STATEMENTS

23. Other reserves CONTINUED
This placing was facilitated through IG Jersey Cashbox Limited, a Jersey incorporated company which has since been
liquidated. The Group has now determined that the transaction qualified for merger relief under section 612 Companies Act
2006. As a result, £81.0 million has now been reclassified to ‘other reserves’ from ‘share premium’, reflecting the merger relief
treatment. The affected financial statement line items for the prior periods are restated as follows:

Statement of Financial Position and Statement of Changes in Equity (extract)

At 1 June 2018
equity
Share capital and share premium
Other reserves

At 31 May 2019
equity
Share capital and share premium
Other reserves

Previously
reported
£m

Adjustments
£m

Restated
£m

206.8
71.6

206.8
80.2

(81.0)
81.0

125.8
152.6

(81.0)
81.0

125.8
161.2

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 and sale of own shares held in trust

At the end of the year

Year ended
31 May 2020
Number

Year ended
31 May 2019
Number

1,126,490
858,852
(706,004)

1,022,024
1,181,079
(1,076,613)

1,279,338

1,126,490

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 2020, 277,478 ordinary shares (31 May 2019:
339,934) were held in the trust. The market value of the shares at 31 May 2020 was £2.1 million (31 May 2019: £1.9 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 2020, the Trust held 974,678 ordinary shares (31 May 2019:
745,694). The market value of the shares at 31 May 2020 was £7.5 million (31 May 2019: £4.1 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 2020, 27,182 ordinary shares (31 May 2019: 40,862) were held in the trust. The market value of the shares at
31 May 2020 was £0.2 million (31 May 2019: £0.2 million).

24. 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
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 predefined
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.

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SHAREHOLDER AND COMPANY
INFORMATION

24. Employee share plans CONTINUED
The following table shows the movement of options in the SPP for the year ended 31 May 2020:

Award date

Performance
period
(year ended)

Share price
at award

Expected full
vesting date

4 Aug 2014 31 May 2014 609.90p 1 Aug 2025
6 Aug 2015 31 May 2015 742.55p 1 Aug 2025
2 Aug 2016 31 May 2016 868.65p 1 Aug 2025
1 Aug 2017 31 May 2017 626.50p 1 Aug 2025
7 Aug 2018 31 May 2018 893.00p 1 Aug 2025
6 Aug 2019 31 May 2019 559.20p 1 Aug 2025

At the start
of the year
Number

Awarded
during
the year
Number

Lapsed
during
the year
Number

Exercised
during
the year
Number

61,126
65,325
303,397
223,976
760,535

–
–
–
–
–
– 461,366

–
–
(11,905)
(6,870)
(26,575)
(12,686)

(24,667)
(26,034)
(108,078)
(74,658)
(253,512)
(101,403)

Dividend
equivalent
awarded
during
the year
Number

1,527
2,680
12,912
9,712
19,741
23,676

At the end
of the year
Number

37,986
41,971
196,326
152,160
500,189
370,953

Total

1,414,359 461,366

(58,036)

(588,352)

70,248

1,299,585

The average share price at exercise of options during the year was 565.84 pence.

The exercise price of all SPP awards is 0.005 pence.

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 2020 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.

The table below details the number of options expected to be awarded for the year ended 31 May 2020, based on the year-
end share price:

Expected award date

6 Aug 2020

Closing share price at
31 May 2020

Expected full
vesting date

Awards expected
for the year ending
31 May 2020
Number

765.0p

1 Aug 2025

2,307,805

Long-term incentive plan
The LTIP is 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. There are no performance targets.

The maximum number of LTIP awards that can vest under the awards made are:

Award date

1 Aug 2017
7 Aug 2018
6 Aug 2019

Total

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

626.50p 1 Aug 2020
893.00p 7 Aug 2021
559.20p 6 Aug 2022

406,372
270,619
–

–
–
491,480

(143,377)
(43,240)
(17,476)

676,991

491,480

(204,093)

–
–
–

–

Dividend
equivalent
awarded during
the year
Number

–
–
–

–

At the end
of the year
Number

262,995
227,379
474,004

964,378

The exercise price of all options awarded under the LTIP is 0.005 pence. Awards issued on 12 August 2016 and expected to
vest on 12 August 2019 lapsed in full during the year ended 31 May 2019.

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FINANCIAL STATEMENTS

24. Employee share plans CONTINUED
Share incentive plan
SIP awards are made available to all UK, Australian and US 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 2019: £1,800/A$3,000) of
partnership shares, with the Company matching on a one-for-one (31 May 2019: one-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 US award invites employees to invest a maximum of 5% of their salary to the award. 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

2 Aug 2016
15 Jul 2016
1 Aug 2017
15 Jul 2017
7 Aug 2018
15 Jul 2018
6 Aug 2019
15 Jul 2019

Share price
at award

Expected vesting
date

879.50p 2 Aug 2019
930.00p 15 Jul 2019
626.50p 1 Aug 2020
626.50p 15 Jul 2020
893.00p 7 Aug 2021
935.84p 15 Jul 2021
559.20p 6 Aug 2022
597.00p 15 Jul 2022

At the start
of the year
Number

Awarded during
the year
Number

Lapsed during
the year
Number

Exercised during
the year
Number

98,175
7,234
112,936
12,082
107,294
11,156
–
–

348,877

–
–
–
–
–
–
68,745
3,395

72,140

(862)
–
(7,902)
(240)
(12,112)
(1,024)
(1,591)
(471)

(97,313)
(7,234)
(3,680)
(1,156)
(2,814)
(1,326)
(956)
(566)

At the end
of the year
Number

–
–
101,354
10,686
92,368
8,806
66,198
2,358

(24,202)

(115,045)

281,770

Of the above SIP awards exercised during the year ended 31 May 2020, the average weighted share price at exercise was:

Country of award

UK
Australia
UK
Australia
UK
Australia
UK
Australia

Award date

2 Aug 2016
15 Jul 2016
1 Aug 2017
15 Jul 2017
7 Aug 2018
15 Jul 2018
6 Aug 2019
15 Jul 2019

Weighted
average share
price at exercise

668.25p
548.50p
626.50p
640.00p
871.26p
859.50p
556.00p
614.12p

The weighted average exercise price of the SIP awards exercised during the year ended 31 May 2020 is 561.14 pence.

Accounting for share schemes
The IFRS expense recognised in the income statement in respect of share-based payments was £9.7 million (31 May 2019:
£7.2 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 IFRS 2 during the year was
£13.5 million (31 May 2019: £7.8 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.

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SHAREHOLDER AND COMPANY
INFORMATION

24. Employee share plans CONTINUED
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 6 August 2019:

Date of grant
Share price at grant date
Expected life of awards
Risk-free Sterling interest rate
IG Group Holdings plc expected volatility

6 August 2019
559.2p
0.82 years
0.61%
35.96%

Due to the small exercise price of 0.005 pence, 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 2020

Year ended 31 May 2019

At the beginning
of the year

Awarded during
the year

Lapsed during
the year

Exercised during
the year

At the end
of the year

751.23p

468.83p

743.20p

739.50p

577.48p

749.83p

845.11p

873.98p

736.38p

751.23p

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 Related Party Disclosures. 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 2020
£m

Year ended
31 May 2019
£m

4.6
7.9

12.5

6.0
6.5

12.5

The average number of key management personnel during the year was nine (year ended 31 May 2019: ten).

177

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

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.

Note

13
15

19
19
17

FVTPL
£m

Amortised cost
£m

FVOCI
£m

Total carrying
amount
£m

–
–
(1.8)

–

486.2
–
276.6

66.5

5.7

3.9

–
224.3
–

486.2
224.3
274.8

Fair value
£m

486.2
224.3
274.8

–

66.5

5.7

3.9

5.7

3.9

(1.8)

838.9

224.3

1,061.4

12.6
–
–
–

12.6

(154.0)
(1.7)
(99.7)
(81.1)

(336.5)

–
–
–
–

–

(141.4)
(1.7)
(99.7)
(81.1)

(323.9)

Note

FVTPL
£m

Amortised cost
£m

FVOCI
£m

Total carrying
amount
£m

Fair value
£m

13
15

19
19
17

–
–
(28.6)

–

373.3
–
274.0

53.9

1.8

5.3

–
225.2
–

–

373.3
225.2
245.4

53.9

1.8

5.3

373.3
225.2
245.4

53.9

1.8

5.3

(28.6)

708.3

225.2

904.9

41.0
–
–
–

41.0

(148.4)
(3.0)
(99.6)
(60.0)

(311.0)

–
–
–
–

–

(107.4)
(3.0)
(99.6)
(60.0)

(270.0)

(107.4)
(3.0)
(99.6)
(60.0)

(270.0)

As at 31 May 2020

Financial assets:
Cash and cash equivalents
Financial investments
Total trade receivables – amounts due

(to)/from brokers

Trade receivables – own funds in client

money

Trade receivables – amounts due from

clients

Other receivables

Financial liabilities:
Trade payables – client funds
Trade payables – amounts due to clients
Borrowings
Other payables

As at 31 May 2019

Financial assets:
Cash and cash equivalents
Financial investments
Total trade receivables – amounts due

(to)/from brokers

Trade receivables – own funds in client

money

Trade receivables – amounts due from

clients

Other receivables

Financial liabilities:
Trade payables – client funds
Trade payables – amounts due to clients
Borrowings
Other payables

178

Notes to the Financial Statements CONTINUED

INTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

26. Financial instruments CONTINUED
Financial instrument valuation hierarchy
The hierarchy of the Group’s financial instruments carried at fair value is as follows:

As at 31 May 2020

Financial assets:
Total trade receivables – amounts due (to)/from brokers
Financial investments
Financial liabilities:
Trade payables – client funds

As at 31 May 2019

Financial assets:
Trade receivables – due (to)/from brokers
Financial investments
Financial liabilities:
Trade payables – client funds

Level 1
£m

(3.0)
224.3

–

Level 1
£m

6.0
225.2

Level 2
£m

1.2
–

12.6

Level 2
£m

(34.6)
–

–

41.0

Level 3
£m

Total fair value
£m

–
–

–

(1.8)
224.3

12.6

Level 3
£m

Total fair value
£m

–
–

–

(28.6)
225.2

41.0

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 to fair value hierarchy, the valuation techniques and accounting estimates for any of the Group’s
financial instruments held at fair value in the year (31 May 2019: 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 2020 and
31 May 2019.

179

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

26. 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:

As at 31 May 2020

Financial assets:
Cash and cash equivalents
Trade receivables – amounts due from brokers
Trade receivables – own funds in client money
Trade receivables – amounts due from clients
Other receivables
Financial liabilities:
Trade payables – client funds
Trade payables – amounts due to clients
Borrowings
Other payables

As at 31 May 2019

Level 1
£m

Level 2
£m

Level 3
£m

Total fair value
£m

–
–
–
–
–

–
–
–
–

486.2
276.6
66.5
5.7
3.9

(154.0)
(1.7)
(99.7)
(81.1)

–
–
–
–
–

–
–
–
–

486.2
276.6
66.5
5.7
3.9

(154.0)
(1.7)
(99.7)
(81.1)

Level 1
£m

Level 2
£m

Level 3
£m

Total fair value
£m

–
–
–
–
–

–
–
–
–

373.3
274.0
53.9
1.8
5.3

(148.4)
(3.0)
(99.6)
(60.0)

–
–
–
–
–

–
–
–
–

373.3
274.0
53.9
1.8
5.3

(148.4)
(3.0)
(99.6)
(60.0)

The fair value of the financial assets and liabilities measure at amortised cost approximate their carrying amount:

¼¼ Cash and cash equivalents
¼¼ Trade and other receivables (excluding the Group’s open financial derivative hedging positions with brokers above)
¼¼ Trade and other payables
¼¼ Borrowings

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 2020 and 31 May 2019.

Offsetting financial assets and liabilities
The following financial assets and liabilities have been offset and are subject to enforceable netting agreements.

As at 31 May 2020

Financial assets
Trade receivables – amount due from/(to) brokers
Financial liabilities
Trade payables – client funds

180

Gross amounts
of recognised
financial assets
£m

Gross amounts
of recognised
financial
liabilities set off
£m

Net amounts of
financial assets
£m

733.1

(458.3)

274.8

14.8

747.9

(156.2)

(614.5)

(141.4)

133.4

Note

Notes to the Financial Statements CONTINUEDINTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

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

42.2

652.8

(149.6)

(514.8)

(107.4)

138.0

Note

26. Financial instruments CONTINUED

As at 31 May 2019

Financial assets
Trade receivables – due from/(to) brokers
Financial liabilities
Trade payables – client funds

Amounts due from brokers and client funds have been presented gross to reflect the impact of offsetting. The Group is
entitled to offset amounts due from brokers on a broker account level. Client funds represents balances with clients where
the cash held on balance sheet and the valuation of open derivate positions result in an amount due to clients. The offsetting
note has been restated to include these balances, which the Group is entitled to offset.

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 50.

Market risk
Market risk disclosures are analysed into these categories:

¼¼ Non-trading interest rate
¼¼ 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

non-trading interest rate risk
The Group has interest rate risk relating to financial instruments 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:

Within 1 year

Between 2 and 5 years

Total

31 May 2020
£m

31 May 2019
£m

31 May 2020
£m

31 May 2019
£m

31 May 2020
£m

31 May 2019
£m

Fixed rate:
Financial investments
Floating rate:
Cash and cash equivalents
Trade receivables – due from brokers
Trade receivables – own funds in client

money
Borrowings

140.5

486.2
274.8
66.5

–

35.3

83.8

189.9

224.3

225.2

373.3
245.4
53.9

–

–
–
–

(99.7)

(15.9)

(99.6)

90.3

486.2
274.8
66.5

(99.7)

952.1

373.3
245.4
53.9

(99.6)

798.2

968.0

707.9

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.

181

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

27. Financial risk management CONTINUED
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.

Interest rate sensitivity has been performed on floating rate financial instruments by considering an adverse interest rate
movement of 1% on financial assets and liabilities. The impact of such a movement on the Group’s profit for the year is
shown below.

Impact:
Cash and cash equivalents
Trade receivables – amount due from brokers
Trade receivables – own funds in client money
Borrowings

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

(4.9)
(2.7)
(0.7)
1.0

(3.7)
(2.5)
(0.5)
1.0

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 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
in other comprehensive income. 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)

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

(2.2)

(2.3)

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 predefined limits. The Group’s Risk Management
Framework is set out on page 50 of the Annual Report. The Group’s Market Risk Policy incorporates a methodology for setting
market risk limits for each financial market in which clients can trade, as well as certain groups of markets or assets which are
considered to be correlated.

The table below presents the Group’s combined exposure to indices and equities, and the Group’s largest exposure to foreign
exchange and commodities, as at 31 May 2020. The sensitivity analysis presents the impact on the income statement of a 5%
adverse market movement with all other variables held constant:

31 May 2020

31 May 2019

Notional
exposure
£m

0.7
2.9
0.6

Impact
£m

–
(0.1)
–

Notional
exposure
£m

4.0
6.9
1.8

Impact
£m

(0.2)
(0.3)
(0.1)

Indices and equities
Foreign exchange
Commodities

182

Notes to the Financial Statements CONTINUEDINTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

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 increase/(decrease) of the Group’s net assets would be
as follows:

Impact:
US Dollar
Euro
Yen
South African Rand
Swiss Franc
Other

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

(4.2)
(2.0)
0.8
(1.6)
(0.2)
(0.6)

(5.0)
1.0
0.7
(0.9)
(1.1)
0.2

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 £0.1 million (31 May 2019: £nil),
are all less than 30 days past due. Amounts due from clients, which are stated net of an expected credit loss of £15.7 million
at 31 May 2020 (31 May 2019: expected credit loss of £9.3 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:

Credit rating:
AA+ & above
AA to AA-
A+ to A-
BBB+ to BBB-
BB+ to B
Unrated

Total carrying amount

Cash and cash equivalents

Trade receivables –
amounts due from brokers

Trade receivables –
amounts due from clients

Trade receivables –
own funds in client money

31 May 2020
£m

31 May 2019
£m

31 May 2020
£m

31 May 2019
£m

31 May 2020
£m

31 May 2019
£m

31 May 2020
£m

31 May 2019
£m

25.7
22.9
420.2
7.2
10.2
–

486.2

30.4
22.8
305.4
2.7
11.5
0.5

373.3

–
–
267.8
–
3.3
3.7

274.8

–
42.4
182.3
14.7
0.1
5.9

245.4

–
–
–
–
–
5.7

5.7

–
–
–
–
–
1.8

1.8

–
5.4
60.1
1.0
–
–

66.5

–
1.7
44.6
4.9
–
2.7

53.9

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 2020
£m

Year ended
31 May 2019
£m

9.3

13.8
(2.8)
(4.4)
(0.1)

15.8

11.0

3.0
(1.2)
(3.6)
0.1

9.3

183

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

27. Financial risk management CONTINUED
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).

Credit grade:
Investment grade
Non-investment grade

Gross carrying amount

Loss allowance

Total carrying amount

Credit grade:
Investment grade
Non-investment grade

Gross carrying amount

Loss allowance

Total carrying amount

Stage 1
12-month
ECL
£m

700.3
10.2

710.5

–

710.5

Stage 1
12-month
ECL
£m

586.5
12.0

598.5

–

598.5

Stage 2
lifetime
ECL
£m

31 May 2020

Stage 3
lifetime
ECL
£m

–
–

–

–
–

–

Stage 2
lifetime
ECL
£m

31 May 2019

Stage 3
lifetime
ECL
£m

–
–

–

–
–

–

Simplified
approach
£m

328.2
40.3

368.5

Total
£m

1,028.5
50.5

1,079.0

(15.8)

352.7

1,063.2

Simplified
approach
£m

319.2
15.8

335.0

(9.3)

325.7

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 2020 was £70.2 million (A+ rated) (31 May 2019:
£58.6 million (A+ rated)). Included in cash and cash equivalents, the Group’s largest credit exposure to any bank at 31 May
2020 was £100.1 million (A+ rated) (31 May 2019: £99.7 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 within one year, with the exception of the Group’s term loan which is
repayable in full in June 2022.

The Group has non-derivative cash flows payable over five years in relation to the redeemable preference shares of £40,000
at 31 May 2020 (31 May 2019: £40,000).

184

Notes to the Financial Statements CONTINUEDINTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

296.0
25.6
9.7
(0.7)
(35.6)
54.6

349.6

192.9
17.3
7.2
–
72.5
(33.1)

256.8

28. Cash generated from operations

Operating activities
Operating profit
Depreciation and amortisation
Share-based payments charge
Gain on sale of subsidiaries
(Increase)/decrease in trade and other receivables and other assets
Increase/(decrease) in trade and other payables

Cash generated from operations

29. Subsequent events
There are no subsequent events that have a material impact on the Financial Statements.

30. Significant accounting policies
The accounting policies and interpretations 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 2019, except for the change related to
IFRS 16 Leases as described below, and IFRIC 23 Uncertainty over Income Tax Treatments.

New accounting standards and interpretations adopted during the year
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. IFRS
16 reflects a major change in the way that operating leases are accounted for by the Group. Previously the annual lease
expense was recognised in the income statement, with future minimum operating lease payments disclosed in the notes.
IFRS 16 requires all leased assets, except for short-term or low-value leases, to be recognised as assets, with a corresponding
lease liability. This has the effect of grossing up the balance sheet. The depreciation of the asset is recognised in the income
statement, along with a corresponding finance cost.

Where the Group is the lessee, it now recognises a right-of-use asset and a related lease liability from the date at which the
right-of-use asset has been obtained. The lease liability is measured as the net present value of future lease payments, which
are discounted at the Group’s estimated incremental secured borrowing rate. For low-value or short-term leases, payments
are recognised as lease payments on a straight-line basis over the lease term. These are recognised as premises costs in
operating expenses.

Transition considerations
The Group adopted IFRS 16 as of 1 June 2019 using the modified retrospective approach and as permitted by the standard,
the Group has not restated comparatives. IFRS 16 has had a significant impact on the Group’s balance sheet. Prior to
adoption, the future minimum rentals payable for operating leases, all of which relate to office accommodation totalled
£28.6 million at 31 May 2019. As at 1 June 2019, the Group recognised a right-of-use asset of £24.0 million, a lease liability
of £24.5 million and an adjustment to retained earnings of £0.5 million.

Lease related depreciation of £6.9 million and an interest expense of £0.6 million has been recognised in the income
statement for the year ended 31 May 2020. Under IAS 17 Leases, the corresponding operating lease expense recognised
in operating expenses would have been £7.0 million.

In applying IFRS 16 for the first time, the Group has used the following practical expedients as at 1 June 2019:

¼¼ Applying the use of hindsight in determining the lease term where the contract contains an option to extend
¼¼ Accounting for operating leases with a remaining lease term of less than 12 months as short-term leases

185

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

30. Significant accounting policies CONTINUED
The lease liability is measured at the present value of future lease payments, discounted using the Group’s estimated
incremental secured borrowing rate. The lease liability recognised on 1 June 2019 can be reconciled to operating lease
commitments disclosed in note 18 as follows:

Operating lease commitments disclosed as at 31 May 2019
Less: recognition of lease commitment using the incremental secured borrowing rate
Less: short-term leases not recognised as a liability
Less: low-value leases not recognised as a liability

Lease liability recognised as at 1 June 2019

Of which are:
Current lease liabilities
Non-current lease liabilities

£m

28.6
(1.8)
(0.4)
(1.9)

24.5

4.9
19.6

24.5

The right-of-use asset is initially measured at cost, comprising the initial measurement of lease liability, adjusted for lease
payments made at or before commencement date, restoration costs, and lease incentives. The right-of-use asset can be
reconciled to the lease liability as follows:

Lease liability recognised as at 1 June 2019
Restoration costs
Less: lease incentives

Right-of-use asset recognised as at 1 June 2019

£m

24.5
0.5
(1.0)

24.0

The adjustment of £0.5 million relating to restoration costs and lease incentives resulted in a £0.5 million transitional
adjustment to retained earnings.

The Group did not need to make any adjustments to lessor accounting as a result of the adoption of IFRS 16.

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 72.

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 in note 31.

Subsidiaries are consolidated from the date which the Group obtains control until the date on which control ceases. Control
comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities.
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 subsidiaries used in the preparation
of the Consolidated Financial Statements are prepared for the same reporting year as the parent company. 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 transactions, balances, income and expenses between the Group entities, including
unrealised profits arising from them, are eliminated on consolidation.

186

Notes to the Financial Statements CONTINUEDINTRODUCTION

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

30. Significant accounting policies CONTINUED
Business combinations are accounted for using the acquisition method. On acquisition, the identifiable 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 transferred including an estimate of any contingent or deferred consideration.
Contingent or deferred consideration is remeasured at each balance sheet date with periodic changes to the estimated
liability recognised in the income statement. Acquisition related costs are expensed as incurred. Goodwill is initially measured
as the excess of the consideration transferred over the fair values of identifiable net assets. If this consideration is lower than
the fair values of identifiable net assets acquired, the difference is credited to the income statement in the year of acquisition.

The results of subsidiaries acquired or disposed of during the year are included in the 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 reporting provided to the
Chief Operating Decision-Maker (CODM) regarding components of the Group. The Group has identified the CODM as the
Executive Directors of IG Group Holdings plc, who regularly review this management information to assess the performance
and allocate resources to the ‘operating segments’. Operating segments that do not meet the quantitative thresholds required
by IFRS 8 are aggregated.

Foreign currencies
The Group’s functional currency is Pound Sterling. Transactions in other currencies are initially recorded in the functional
currency by applying spot exchange rates prevailing on the date of the transactions. Monetary assets and liabilities
denominated in foreign currencies are revalued at the Group’s functional currency rate of exchange prevailing at the balance
sheet date. Gains and losses arising on revaluation are taken to the income statement. Non-monetary assets and liabilities
carried at fair value and denominated in foreign currencies are translated at the rates prevailing at the date when the fair value
was determined.

The functional currency of each entity in the Group is consistent with the primary economic environment in which the entity
operates. On consolidation, the assets and liabilities of the Group’s overseas operations are translated into Pound Sterling at
exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates
for the year. Exchange differences arising from translation of overseas operations are recognised in ‘other comprehensive
income’ and the accumulated translation reserve. Such accumulated translation differences are recognised as income or as
expenses in the period in which the overseas operation is disposed of.

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

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 daily with gains and losses arising on this valuation recognised in
revenue. The policies and methodologies associated with the determination of fair value are disclosed in note 26, ‘Financial
Instruments’.

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. Revenue also represents gains and
losses incurred by the Group arising on its market-making activity on the Group’s futures and options exchange and the
Group’s multilateral trading facility.

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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 the trade
being placed or the fee being charged.

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
can be reliably measured. Revenue is shown net of sales taxes and excludes 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 represents trading revenue after adjusting for 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 amount
outstanding and at the applicable interest rate.

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 Board of Directors.

Employee benefits
(a) pension obligations
The Group operates defined contribution schemes. Contributions are charged to the income statement 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 takes 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.

Leases
Prior to 1 June 2019, leases were 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 is recognised as an expense on a straight-line basis over
the lease term unless another systematic basis was more representative of the time pattern of the user’s benefit.

From 1 June 2019, the Group’s leases are recognised as a right-of-use asset with a corresponding lease liability from the date
at which the asset is available for use.

Leasing arrangements can contain both lease and non-lease components. The Group has elected to separate out the non-
lease component and to account for these separately from the right-of-use asset.

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The lease liability is initially measured as the net present value of the following payments:

¼¼ Fixed payments less any lease incentives
¼¼ Variable lease payments dependent on an index or rate initially measured as at the commencement date
¼¼ Amounts payable by the Group under residual guarantees
¼¼ Payments of penalties for terminating the lease

Lease payments are discounted at the Group’s estimated incremental secured borrowing rate. This represents the cost to
borrow funds to obtain a similar valued right-of-use asset in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising of:

¼¼ Lease liability at initial recognition
¼¼ Any lease payments made at or before the commencement date less any lease incentives received
¼¼ Any initial direct costs
¼¼ Restoration costs

Right-of-use assets are depreciated over the duration of the lease term.

Lease payments for low-value assets or with a period of 12 months or less are recognised on a straight-line basis as an expense.

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 balance sheet 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 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 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 balance sheet 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 balance
sheet 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.

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30. Significant accounting policies CONTINUED
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 annually and residual values are
based on prices prevailing at the balance sheet date. Depreciation is charged on a straight-line basis over the expected useful
lives as follows:

Leasehold improvements
Office equipment, fixtures and fittings – over five years
Computer and other equipment
Right-of-use asset

– over two, three or five years
– over the lease term of up to 15 years

– over the lease term of up to 15 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 is determined as the difference
between the sale proceeds and carrying amount of the asset and is immediately recognised in the income statement.

Goodwill
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.

Goodwill is recognised as an asset and is allocated to cash-generating units by management 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. 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 a business unit, or of an operation within it.

Intangible assets
Intangible assets are carried at cost less accumulated amortisation and 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 internal software 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:

¼¼ The project’s technical feasibility and commercial viability can be demonstrated
¼¼ The availability of adequate technical and financial resources and an intention to complete the project have been confirmed
¼¼ Probable future economic benefit has been established

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 ten years

– straight-line basis over three to five years
– straight-line basis over the contract term of up to five years
– straight-line basis over two years
– straight line basis over three years

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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 non-financial assets to
determine whether there is any indication of impairment. If any such indication exists (or at least annually for goodwill), the
recoverable amount of the asset is estimated 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.

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 balance sheet 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
and previously recognised impairment losses are 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
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 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.

(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). 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 at fair value with gains or losses recognised in trading
revenue in the 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’.

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30. Significant accounting policies CONTINUED
(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, lease liabilities and borrowings. These are measured subsequently at
amortised cost using the effective interest method, excluding the derivative element of ‘trade payables – amounts due from
brokers’. The interest expense is calculated at each reporting period by applying the effective interest rate, and the resulting
charge is reflected in finance costs on the income statement.

(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 13 Fair Value Measurement. 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:

¼¼ Level 1: Valued using unadjusted quoted prices in active markets for identical financial instruments
¼¼ 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

¼¼ 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 income statement includes a loss allowance reflecting 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.

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, except for where the simplified approach is used where an allowance is made for
the lifetime expected credit loss. 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. The Group applies the simplified
approach for trade and other receivables. The Group applies the general approach for other financial assets.

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.
In accordance with the Group’s internal credit risk management definition, financial instruments have a 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.

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. The Group determines that a default occurs when a payment is 90 days past due
for all assets except for receivables from clients where it uses 120 days. This is aligned 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 written off, either partially or in full, against the related allowance when the Group has no reasonable
expectations of recovery of the asset. Subsequent recoveries of amounts previously written off decrease the amount of
impairment losses recorded in the income statement.

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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 (i) has transferred substantially all the risks and rewards of the asset, or (ii) 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.

(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 applied the simplified approach. The
expected lifetime credit loss is recognised at initial recognition of the financial asset, with the loss allowance calculated by
reference to an aging debt profile. 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 activity.

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 Inventories, 3(b)). The assets are measured at fair value less costs to
sell, with changes in valuation being recorded in income statement in the period in which they arise. Cryptocurrency assets
are not financial instruments and they are categorised as non-financial assets.

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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 applied the simplified approach. The
expected lifetime credit loss is recognised at initial recognition of the financial asset, with the loss allowance calculated by
reference to an aging debt profile. Other 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 made in advance for services or goods. They do not qualify as
financial assets and are amortised over the period in which the economic benefit is expected to be consumed.

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 if 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 off-balance sheet.

The amount of segregated client funds held at year-end was £1,964.1 million (31 May 2019: £1,349.2 million) and the amount
of segregated client assets was £1,509.8 million (31 May 2019: £1,096.8 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 2020, IG Bank S.A. was required to hold £23.9 million (31 May 2019: £20.0 million) in
satisfaction of this requirement. This amount, which represents restricted cash, is included in cash and cash equivalents.

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 balance sheet 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.

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On disposal of an investment, the accumulated unrealised gain or loss included in equity is recycled to the 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 but
does 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, 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 income statement as a reclassification adjustment.

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 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 on the balance
sheet; measured initially at fair value net of transaction costs and subsequently at amortised cost until extinguished on
conversion or redemption. Dividends paid are charged as an 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 recognised in equity,
with any difference between the proceeds from the sale and the 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
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 vest.

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For non-market-based vesting conditions, at each balance sheet 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 balance sheet 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. Upon awards vesting, the cost of
awards is transferred from the share-based payments reserve into retained earnings.

31. List of investments in subsidiaries
The following companies are all owned directly or indirectly by IG Group Holdings plc:

Name of Company

Registered office and country of incorporation

Holding

Voting rights Nature of business

Subsidiary undertakings held directly:
IG Group Limited

Cannon Bridge House,

Ordinary shares

100%

Holding company

25 Dowgate Hill, London,
EC4R 2YA, United Kingdom

Subsidiary undertakings held indirectly:
IG Index Limited

Cannon Bridge House,

Ordinary shares

100%

Spread betting

25 Dowgate Hill, London,
EC4R 2YA, United Kingdom

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

Deal City Limited
InvestYourWay Limited
IG Trading and Investments

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

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

exchange and market
risk management

CFD trading
Data distribution
Nominee company
Software development
Non-trading
Financing
Financing
Financing
Financing
Financing
Financing
Financing
Financing
Financing
Holding company
Holding company

Ordinary shares

100%

Domains registrar

Ordinary shares

100%

Domains registry

Ordinary shares
Ordinary shares
Ordinary shares

100%
–
100%

ETF trading
Non-trading
Non-trading

IG Australia Pty Limited

Level 15, 55 Collins Street,

Ordinary shares

100%

Sales and marketing

Melbourne VIC 3000, Australia

office

Ordinary shares

100%

Non-trading

IG Share Trading Australia Pty

Limited

196

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SHAREHOLDER AND COMPANY
INFORMATION

31. List of investments in subsidiaries CONTINUED

Name of Company

Registered office and country of incorporation

Holding

Voting rights Nature of business

IG Asia Pte Limited

9 Battery Road, 01-02 MYP
Centre, 049910, Singapore

Ordinary shares

100%

CFD trading and

foreign exchange

Kunxin Translation (Shenzhen)
Co. Limited

IG Securities Limited

Room A02-2679, 26/F, Anlian

Ordinary shares

100%

Translation services

Building, Jin Tian Road No. 4018,
Lianhua Street, Futian District,
Shenzhen, 518026, China

Izumi Garden Tower 26F, 1-6-1
Roppongi, Minato-ku, 106-
6026, Tokyo

Ordinary shares

100%

CFD trading and

foreign exchange

IG Europe GmbH

Westhafenplatz 1, Frankfurt am

Ordinary shares

100%

CFD trading and

Main, 60327, Germany

foreign exchange

IG Bank S.A.

42 Rue du Rhone, Geneva,

Ordinary shares

100%

CFD trading and

IG Infotech (India) Private Limited Infinity, 2nd Floor, Katha No. 436,

Ordinary shares

100%

1204, Switzerland

foreign exchange

Software development
and support services

IG US Holdings Inc.
North American Derivatives

Exchange Inc.

Market Risk Management Inc.
FX Publications Inc
Nadex Domains Inc.
IG US LLC

Survey No. 13/1B, 12/2B,
Challagatta Village, Bangalore,
560071, India

2711 Centerville Road, Suite 400,
Wilmington, Delaware, 19808,
United States

Ordinary shares
Ordinary shares

Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares

Fox Sub Limited
Fox Sub 2 Limited
Fox Japan Holdings

IG Limited

57/63 Line Wall Road, Gibraltar Ordinary shares
Ordinary shares
Ordinary shares

Office 2&3, Level 27,

Ordinary shares

Brightpool Limited

Currency House – Tower 2,
Dubai International Financial
Centre,
PO Box – 506968 Dubai,
United Arab Emirates

Christodoulou Chatzipavlou,
221 Helios Court, 3rd floor
3036, Limassol, Cyprus

100%
100%

100%
100%
100%
100%

100%
100%
100%

100%

Holding company
Exchange

Market maker
Publications
Domains registry
Foreign exchange

trading

Financing
Financing
Holding company

CFD trading and

foreign exchange

Ordinary shares

100%

Market maker

IG Markets Kenya Limited

William House, 4th Ngong

Ordinary shares

100%

Non-trading

Avenue, Nairobi, Nairobi West
District, PO Box 40111,
00100, Kenya

Spectrum MTF Operator GmbH Westhafenplatz 1, Frankfurt am

Ordinary shares

100%

Multilateral trading

Raydius GmbH

Main, 60327, Germany

facility

Issuer of turbo warrants

IG International Limited

Canon’s Court, 22 Victoria Street,

Ordinary shares

100%

CFD trading and

Hamilton, HM 12, Bermuda

foreign exchange

IG Securities Hong Kong Limited 19/F, Lee Garden One,

Ordinary shares

100%

Financial services

33 Hysan Avenue Causeway Bay,
Hong Kong

197

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

31. List of investments in subsidiaries CONTINUED
The following UK entities, all of which are 100% owned by the Group, are not subject to an audit by virtue of Section 479A of
the Companies Act 2006 relating to subsidiary companies: 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) and
Deal City Limited (09635230).

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 Section 394A of the Companies Act 2006 relating to the individual Financial Statements of
dormant subsidiaries: IG Finance (05024562), IG Finance Two (05137194), IG Finance Four (05312015), IG Nominees Limited
(04371444), IG Spread Betting Limited (06806588), IG Finance 8 Limited (06807656), InvestYourWay Limited (07081901),
Extrabet Limited (04560348), 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)

198

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SHAREHOLDER AND COMPANY
INFORMATION

COMpAnY
FInAnCIAL
STATeMenTS

PG. 199–206

Company Statements
Company Statement of Financial Position

Company Statement of Changes in Equity

Company Cash Flow Statement

Notes to the Financial Statements
1. Authorisation of Financial Statements

and statement of compliance
with IFRS

2. Accounting policies

3. Auditor’s remuneration

4. Directors’ remuneration

5. Staff costs

6. Investment in subsidiaries

7. Property, plant and equipment

8. Cash generated from operations

203

204

200

201

202

205

206

9. Other receivables

10. Other payables

11. Share capital and share premium

12. Other reserves

13. Directors’ shareholdings

14. Risk management

15. Subsequent events

16. Dividends paid and proposed

199

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

Company Statement of Financial position

Assets
non-current assets
Investment in subsidiaries
Property, plant and equipment

Current assets
Prepayments
Other receivables
Cash and cash equivalents

TOTAL ASSeTS

Liabilities
non-current liabilities
Lease liabilities

Current liabilities
Other payables
Lease liabilities

TOTAL LIABILITIeS

equity
Share capital and share premium
Other reserves
Retained earnings

TOTAL eQuITY

TOTAL eQuITY AnD LIABILITIeS

Note

31 May 2020
£m

31 May 2019
Restated1
£m

6
7

11
12

541.9
7.5

549.4

0.2
134.3
0.2

134.7

684.1

6.4

4.1
1.3

5.4

11.8

125.8
88.1
458.4

672.3

684.1

508.6
–

508.6

0.2
168.1
0.8

169.1

677.7

–

10.5
–

10.5

125.8
83.1
458.3

667.2

677.7

1 Refer to note 23 of the Consolidated Financial Statements for further information.

The Financial Statements of IG Group Holdings plc (registered number 04677092) were approved by the Board of Directors
on 23 July 2020 and signed on its behalf by:

CHARLES ROZES
CHIEF FINANCIAL OFFICER

200

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SHAREHOLDER AND COMPANY
INFORMATION

Company Statement of Changes in equity

At 1 June 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

At 31 May 2020

Share capital1
£m

Share Premium1
Restated3
£m

Other reserves1
Restated3
£m

–

–
–
–
–
–

–

–
–
–
–
–

–

125.8

–
–
–
–
–

125.8

–
–
–
–
–

125.8

82.4

–
8.2
(2.0)
–
(5.5)

83.1

–
9.7
(1.5)
–
(4.2)

88.1

Retained
earnings2

£m

421.0

202.9
–
–
(171.1)
5.5

458.3

156.1
–
–
(159.2)
4.2

458.4

Total equity
£m

629.2

202.9
8.2
(2.0)
(171.1)
–

667.2

156.1
9.7
(1.5)
(159.2)
–

672.3

1 These reserves are not distributable.
2

IG Group Holdings (IGGH) distributable reserves as at 31 May 2020 are estimated as £257.0 million. The Company has determined whether profit is realised and unrealised
in accordance with UK company law. Distributable reserves as at 31 May 2020 are £201.4 million lower than the Company’s total retained earnings as a result of an internal
reorganisation in 2005 and a balance in retained earnings relating to vested employee share-based payments awards. In accordance with the UK Companies Act 2006 Section
831(2), a public company may make a distribution only if the amount of its net assets is not less than the aggregate of its called-up share capital and non-distributable reserves
following the distribution. IGGH distributable reserves as at 31 May 2019 are estimated as £265.4 million. This balance is restated to reflect that a further £58.7 million balance in
retained earnings relating to vested employee share-based payments awards and £3.7 million balance relating to shares transferred to employees is not distributable.

3 Refer to note 23 of the Consolidated Financial Statements for further information.

201

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

Company Cash Flow Statement

Operating activities
Cash generated from operations

net cash flow generated from operating activities

Investing activities
Investment in subsidiary

net cash flow used in investing activities

Financing activities
Interest unwinding on lease liabilities
Repayment of principal element of lease liabilities
Equity dividends paid to owners of the parent
Employee Benefit Trust purchase of own shares

net cash flow used in financing activities

net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Note

Year ended
31 May 2020
£m

Year ended
31 May 2019
£m

185.7

(23.6)

(0.2)
(1.8)
(159.2)
(1.5)

(162.7)

(0.6)
0.8

0.2

173.8

–

–
–
(171.1)
(2.0)

(173.1)

0.7
0.1

0.8

202

INTRODUCTION

STRATEGIC REPORT

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FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

notes 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 2020 were authorised for issue by
the Board of Directors on 23 July 2020 and Statement of Financial Position was signed on the Board’s behalf by Charles Rozes.
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 judgment in the process of applying the Company’s accounting policies. There are
no significant areas of judgment or complexity, or areas where assumptions and estimates are significant to the Company’s
Financial Statements.

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 £156.1 million (year ended 31 May 2019: £202.9 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 2019: £nil).

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:

¼¼ Investments in subsidiaries are stated at cost less accumulated impairment losses
¼¼ 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

¼¼ Dividends receivable are recognised when the shareholder’s right to receive the payment is established

3. Auditors’ remuneration
Auditors’ remuneration is disclosed within note 4 of the Consolidated Financial Statements.

4. Directors’ remuneration
Directors’ remuneration is disclosed within the Directors’ Remuneration Report section of the Annual Report.

5. Staff costs
The Company has no employees (31 May 2019: nil).

6. Investment in subsidiaries
At cost:

At the beginning of the year
Additions in the year

31 May 2020
£m

31 May 2019
£m

508.6
33.3

541.9

501.3
7.3

508.6

Additions in the year include equity-settled share-based awards for employees of subsidiaries of £9.7 million.

A full list of the Group’s direct and indirectly owned subsidiaries is provided in note 31 of the Consolidated Financial Statements.

The Directors consider the carrying amount of the Company’s investments in subsidiary to be supported by the net present
value of future cash flows.

203

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

7. Property, plant and equipment

Cost:
At 31 May 2019
IFRS 16 transitional adjustment

At 1 June 2019
Additions in the year

At 31 May 2020

Accumulated depreciation:
At 31 May 2019
Provided during the year

At 31 May 2020

net book value – 31 May 2020

Net book value – 31 May 2019

Right-of-use
assets
£m

–
9.0

9.0
–

9.0

–
1.5

1.5

7.5

–

The Company’s right-of-use asset represents the commercial lease for office space. Following the application of IFRS 16
at 1 June 2019, the Group now recognises a lease liability on the balance sheet to represent its obligation to make lease
payments. The table below shows the rental commitments 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

8. Cash generated from operations

Operating activities
Operating loss
Dividends received
Lease asset depreciation
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables

Cash generated from operations

Operating losses consist of legal and professional fees and external audit fees.

31 May 2020
£m

31 May 2019
£m

1.3
6.4
–

7.7

1.8
7.4
1.4

10.6

31 May 2020
£m

31 May 2019
£m

(4.4)
160.8
1.5
33.8
(6.0)

185.7

(7.0)
209.9
–
(32.0)
2.9

173.8

204

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FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY
INFORMATION

31 May 2020
£m

31 May 2019
£m

131.2
1.8
1.2
0.1

134.3

130.9
32.6
4.5
0.1

168.1

9. Other receivables

Amounts due from Group companies:
– Market Data Limited
– IG Markets Limited
– Other Group companies
Other debtors

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. Other payables

Accruals
Amounts due to Group companies

31 May 2020
£m

31 May 2019
£m

3.2
0.7

3.9

2.7
7.8

10.5

11. Share capital and share premium
Share capital and share premium is disclosed within note 22 of the Consolidated Financial Statements. Share premium has
been restated, resulting in a reclassification of £81.0 million from share premium to other reserves. For further information
refer to note 23 of the Consolidated Financial Statements.

12. Other reserves

At 1 June 2019

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

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 2020

1 Refer to note 23 of the Consolidated Financial Statements for further information.

Share-based
payments
£m

Own shares held
in Employee
Benefit Trusts
£m

8.8

8.2
(0.9)
–
(5.5)

10.6

9.7
(5.4)
–
(3.2)

11.7

(7.4)

–
0.9
(2.0)
–

(8.5)

–
5.4
(1.5)
-

(4.6)

Merger reserve
restated1
£m

81.0

–
–
–
–

81.0

–
–
–
–

81.0

Total other
reserves
restated1
£m

82.4

8.2
–
(2.0)
(5.5)

83.1

9.7
–
(1.5)
(3.2)

88.1

205

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

FINANCIAL STATEMENTS

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 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 note 29 to the Group Consolidated Financial Statements.

16. Dividends paid and proposed
The dividends paid and proposed by the entity are the same as those disclosed in note 10 to the Group Consolidated
Financial Statements.

206

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GOVERNANCE REPORT

FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY

INFORMATION

Shareholder and Company Information

Shareholder information
Receiving shareholder information by email
You can opt to receive shareholder information from
us by email rather than by post. We will then email you
whenever we add shareholder communications to
the Company website. To set this up, please visit
www.investorcentre.co.uk/ecomms and register for
electronic communications (e-comms).

If you subsequently wish to change this instruction or revert
to receiving documents or information by post, you can do so
by contacting the Company’s registrars at the address shown
in the company information overleaf. You can also change
your communication method back to post by logging in to
your Investor Centre account and going to ‘update my details’
followed by ‘communication options’.

The Registrar can also be contacted by telephone on
0371 495 2032. Calls to this number cost no more than a
national rate call from any type of phone or provider. These
prices are for indication purposes only; if in doubt, please
check the cost of calling this number with your phone line
provider. Lines are open 8.30am to 5.30pm, Monday to Friday
excluding bank holidays.

Shareholder enquiries
If you have any queries relating to your shareholding,
dividend payments or lost share certificates, or if any of your
details change, please contact Computershare by visiting
www.investorcentre.co.uk or by using the contact
details above.

American Depositary Receipts (ADRs)
IG’s ADR programme trades in the US over-the-counter
(OTC) market, under the symbol IGGHY. Each ADR currently
represents one ordinary share.

Dividend dates1
Ex-dividend date
Record date
Last day to elect for dividend
reinvestment plan
Final dividend payment date
2021 interim dividend

Annual shareholder calendar1
Company reporting
Final results announced
Annual Report published
Annual General Meeting

24 September 2020
25 September 2020

1 October 2020
22 October 2020
February 2021

23 July 2020
10 August 2020
17 September 2020

Interim report
As part of our e-comms programme, we have decided not to
produce a printed copy of our Interim Report. We will instead
publish the report on our website, where it will be available
around mid-January each year.

Company information
Directors
executive Directors
J Y Felix (Chief Executive Officer)
C A Rozes (Chief Financial Officer)
B E Messer (Chief Commercial Officer)
J M Noble (Chief Operating Officer)

non-executive Directors
R M McTighe (Chairman)
A Didham
M Le May
J P Moulds
J A Newman
S-A Hibberd
H C Stevenson
R Bhasin

Company Secretary
J S Nayler

Independent Auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
7 More London Riverside
London
SE1 2RT

Bankers
Barclays Bank plc
1 Churchill Place
London
E14 5HP

HSBC Holdings plc
8 Canada Square
London
E14 5HQ

Lloyds Banking Group plc
25 Gresham Street
London
EC2V 7AE

Royal Bank of Scotland Group plc
280 Bishopsgate
London
EC2M 4RB

1 Please note that these dates are provisional and subject to change.

207

IG GROUP HOLDINGS PLC AnnuAL RepORT 2020

SHAREHOLDER AND COMPANY INFORMATION

Shareholder and Company Information CONTINUED

Cautionary statement
Certain statements included in our 2020 Annual Report, or
incorporated by reference to it, may constitute ‘forward-
looking statements’ in respect of the Group’s operations,
performance, prospects and/or financial condition.

Forward-looking statements involve known and unknown
risks and uncertainties because they are beyond the Group’s
control and are based on current beliefs and expectations
about future events about the Group and the industry in
which the Group operates.

No assurance can be given that such future results will
be achieved; actual events or results may differ materially
as a result of risks and uncertainties facing the Group. If
the assumptions on which the Group bases its forward-
looking statements change, actual results may differ from
those expressed in such statements. The forward-looking
statements contained herein reflect knowledge and
information available at the date of this Annual Report and
the Group undertakes no obligation to update these forward-
looking statements except as required by law.

This report does not constitute or form part of any offer or
invitation to sell, or any solicitation of any offer to purchase,
any shares or other securities in the Company, and nothing in
this report should be construed as a profit forecast.

Market share
Market share data has been provided by Investment Trends
Pty Limited (website: www.investmenttrends.co.uk). Contact:
Suzie Toohey (email: s.toohey@investmenttrends.com) or
Brian Chong (email: b.chong@investmenttrends.com). Unless
stated, market share data is sourced from the following
current reports:

¼¼ Investment Trends France Leverage Trading Report,

released October 2019

¼¼ Investment Trends US Leverage Trading Report, released

October 2019

¼¼ Investment Trends Singapore Leverage Trading Report,

released December 2019

¼¼ Investment Trends Australia Leveraged Trading Report,

released February 2020

¼¼ Investment Trends Hong Kong Warrants & FX Report,

released February 2020

¼¼ Investment Trends Germany Leverage Trading Report,

released May 2020

¼¼ Investment Trends Spain Leverage Trading Report,

released June 2020

¼¼ Investment Trends UK Leverage Trading Report, released

July 2020

Solicitors
Linklaters LLP
1 Silk Street
London
EC2Y 8HQ

Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ

Brokers
Barclays Bank plc
5 The North Colonnade
Canary Wharf
London
E14 4BB

Numis Securities Limited
10 Paternoster Square
London
EC4M 7LT

Registered office
Cannon Bridge House
25 Dowgate Hill
London
EC4R 2YA

Registered number
04677092

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FINANCIAL STATEMENTS

SHAREHOLDER AND COMPANY

INFORMATION

Glossary of Terms
Financial and non-financial Key Performance Indicators (KPIs)

Number of young lives positively impacted
The number of young lives we have positively impacted
through our work with our educational partners, including
Teach First in the UK. This figure incorporates students
directly impacted via initiatives such as hosted workplace
visits for pupils at IG, as well as those indirectly impacted
by our annual funding to recruit and train eight science,
technology, engineering and mathematics teachers, and an
additional 16 teachers and their pupils who will be coached
and supported by trained IG employees in the coming
academic year.

Operating profit margin (%)
Measures the operating profit that we generate as
a percentage of net trading revenue.

Percentage of OTC leveraged revenue generated
by clients that have traded with IG for at least three
years (%)
The proportion of OTC leveraged revenue generated by
clients that have traded with us for three or more years.

Proportion of employees who would recommend
working for IG (%)
Proportion of employees who would recommend working
for IG, as measured in our annual engagement survey.

Total dividend per share (pence)
The total value of our full-year dividend.

Total number of active OTC leveraged clients (000)
The total number of clients who have generated revenue
in the relevant financial year by trading our leveraged
OTC products.

Client income (£m)
The gross revenue generated from our products and
services, before hedging activity. This consists of the
transaction fees (spread, commission and funding) paid
by clients for the trading service we offer.

Conversion of client income to net trading revenue (%)
The percentage of our total client income that we’re able to
monetise into net trading revenue.

ESG KPIs
Scope 1-3 greenhouse gas emissions per employee (TCO2e)
Total scope 1-3 greenhouse gas emissions in the financial
year, divided by headcount on 31 May 2020.

Net own funds generated from operations after
investments (£m)
Measures the level of net own funds (cash) that we generate
from our operations after deductions for investment activity
and taxes.

Net trading revenue (£m)
Represents the transaction fees paid by clients (client
income), net of introducing partner commissions, our
external hedging costs, client trading profit and losses,
and corresponding hedging profits and losses.

Net trading revenue from Core Markets (£m)
Represents the revenue we source from our Core Markets
(the ESMA region, Australia, Singapore, Switzerland, Dubai
and South Africa). The Core Markets represent revenue
from locations where we already have a well-established,
often market-leading presence in the local leveraged
trading market.

Net trading revenue from Significant Opportunities
(£m)
Represents the revenue from IG’s portfolio of identified
Significant Opportunities (Japan, Emerging Markets, US,
Institutional, Spectrum and Greater China) as detailed in
our strategy. The Significant Opportunities represent IG’s
operations where we’re less well established, or where
the leveraged derivative market is at an early stage
of development.

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IG Group Holdings plc
Cannon Bridge House
25 Dowgate Hill
London EC4R 2YA

T: +44 (0)20 7896 0011
F: +44 (0)20 7896 0010
W: iggroup.com

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