IG Group Holdings plc (IGG) Earnings Call Transcript & Summary

Good morning, and welcome to IG's 2024 Full Year Results Presentation. I'm Breon Corcoran, the Chief Executive. I'm known to some of you already. Thank you for taking time to be with us this morning, and I'm delighted to be speaking to you as -- at my first results presentation as Chief Executive. I'll kick off with some early impressions of the business before taking you through our 2024 financial results and then finish up by discussing some of our early priorities. But before that, let me explain why I'm delighted to join IG. I've known this business for many, many years. I was a customer as far back as the '90s and have respected what they do from a product point of view, in particular. But largely, today, I'm here because of the opportunity. IG has solid positioning in large and growing addressable markets, and there's much we can do to further unlock our potential. We do need to get closer to our customers to deliver better products that are tailored to their needs, and we need to do that more quickly. We also can and must drive more efficiency and add scale in the pursuit of stronger growth. There's considerable enthusiasm across the business to deliver this change and I am very excited by our potential. So I've been here now nearly 6 months. And to date, I've spent most of my time speaking with and listening to our colleagues across the business and our clients understand our strengths and our weaknesses. Our over-the-counter business still drives nearly 3/4 of the total revenue, and we have some relevant scale, but there's still opportunities in our core market to grow that, for example, by increasing our geographical coverage across the world. We have a very loyal but generally older and wealthier client base, and we have a well-established brand and strong risk management and control culture developed over many years. Over the past 10 years, our bad debt rate has averaged under 1% of trading revenue. The business is highly cash-generative, and we have a very strong balance sheet. In summary, this is a solid platform, but there is considerable work to do, in particular, on our technology stack, and culture, which I will touch upon later. I've mentioned the backdrops in the large markets, but we operate in an industry exposed to strong structural growth drivers. Our success will be dictated by how well we position the business to capitalize on these. Technology and content are improving access to financial markets and the range of tradable instruments is rapidly evolving. For example, derivatives are constantly being listed on new underlyings and digital asset classes, though nascent, are growing rapidly. Wealth is moving between generations and younger generations are likely to be more tech-savvy and will take greater control of their own finances as state pension support is understood to be less valuable to them. And growing wealth per capita in emerging markets also presents IG with an opportunity to expand our global footprint. These trends are supporting long-term growth across over-the-counter and exchange-traded products. So we operate in large target addressable markets and we're the over-the-counter -- we're the global over-the-counter market leader, but our penetration of the revenue pool is relatively small at 9%. Establishing a physical presence and a brand presence in more countries will improve our positioning to tap into this opportunity. The global B2C exchange-traded futures and options revenues opportunity in the United States and the U.K., in Europe, Australia and Singapore alone is similar to the OTC opportunity globally. Our penetration of that revenue pool is probably less than 3%. And stock trading and investments, our offering is very limited, and we're only scratching the surface of the opportunity. And there are synergies by -- that come from being in multiple product verticals across this industry. This is a fast-paced industry and to win in this environment, we need to get closer to our client needs and develop -- deliver relevant product at pace. The OTC business is characterized by a small number of global players with relative scale, but the industry is otherwise highly fragmented, potentially providing opportunities for consolidation. New entrants pose constant risk of disruption, highlighting the importance of agility. For example, there was a growth in the emerging B2B2C providers ranging from electronic market makers to competitors providing liquidity to other retail-facing businesses. The exchange-traded derivatives market is dominated by large players with broad product ranges, typically based in the United States and challenges such as ourselves need clear differentiation. Tastytrade does give us relevance in the largest retail trading market in the world, particularly in the active trader segment. And the stock trading and investment scale and brand affinity creates significant barriers to entry, but competition and regulation is increasing the pricing pressure on incumbents. So this is an industry of considerable change. In addition to that, regulation will be a constant feature of the industry landscape, and we support the efforts of regulators to raise standards. We've demonstrated an ability to adapt to change and grow our business throughout periods of regulatory change, and we continue to adapt and broaden our product range within regulatory frameworks. Current areas of regulatory focus include the implementation of consumer duty in the U.K., which is focused on price and value for customers, including the treatment of interest on client money. Regulators around the world remain focused on consumer protection measures. For example, in July last year, the CNMV in Spain introduced a ban on retail on advertising CFDs to retail investors. The financial markets authority in New Zealand is currently consulting on potential retail CFD leverage restrictions. And there's been ongoing monitoring of knockout products in Japan for several years. Crypto regulation continues to change rapidly. And in the United States of America, the SEC has been consulting on payment for order flow for several years. But there's nothing currently new to report on that matter. Payment for order flow was less than 4% of group total revenue last year. So to summarize, benefit -- and we benefit from the great work that happened and has happened -- is happening at IG, but there are areas for improvement. My initial 3 priorities are improving our product, changing our culture and improving -- enhancing efficiency. Our product and UX needs to be more responsive to client needs. We need to ship new products and features more quickly and constantly evolve our offering in response to consumer demand, which is fickle and fast changing. We're also developing our culture to get closer to the customer and focus on accelerating growth. And finally, we must focus on enhancing efficiency. Expense growth has exceeded revenue growth in recent years, and our cost to serve remains high. Embedding these changes will take time, but there is an appetite for change in the business and a willingness to move quickly and achieve more. So moving to the financial performance in the year. As a reminder, all figures are presented on an adjusted basis, which exclude certain one-off items, noncash costs in both the current and prior year periods. These adjustments match our prior disclosure and for completeness, we've included a reconciliation with non-IFRS performance measures in the appendix. We've delivered resilient results in the period of considerable corporate change. Group trading revenue was down 10% in the period, while the average level of the VIX was down much more than that. Total revenue declined 3%, supported by higher interest income on cash balances, which held up well. Costs were controlled -- were better controlled and helped us to defend profit margins. And turning to capital. Following a review from our principal regulator, the group minimum regulatory capital requirement was reduced about 40% late last year. We've increased total dividend per share and repurchased over 58 million shares in the past 24 months, over 13% of our share count. As I'll discuss in more detail later, we've also made changes to our organizational model to enhance efficiency. So on this slide, we summarize group financial performance in the year. Total revenue was just under GBP 1 billion, down 3% on the prior year, but our second highest year in the group's history. PBT was GBP 456 million, down 7% on the prior year, and the PBT margin was 46%. We returned GBP 423 million of capital during the year, equivalent to 120% of adjusted profit after tax through a combination of dividends and share buybacks. We've increased the dividend per share in line with our commitment to maintain a progressive and sustainable ordinary dividend. And today, we've announced a new buyback of GBP 150 million, which will be completed by the end of January 2025, subject to share price performance and other demands on capital. Turning to the P&L. Trading revenue was softer -- trading revenue was lower than in the prior year, reflecting soft market conditions and a strong comparative. Interest income increased significantly driven by higher policy rates in most of the countries in which we operate. Cost growth moderated in the period, increasing 4% on last year, supported by efficiency measures put in place in the period. Net finance income rose year-on-year, reflecting higher interest on our own cash balances, while finance costs remain largely fixed. The effective tax rate for the group of 23% increased on the prior year level of 19%, driven by the higher U.K. corporation tax. Tax rate. The tax rate for the full year was slightly lower than reported in the first half, reflecting a geographical mix of profits in the period and standard tax incentives. Earnings per share was down year-on-year due to the lower profit after tax, partly offset by the lower share count. We now look at trading revenue in more detail. Market volatility was significantly lower in the period against the strong prior year comparative. The over-the-counter business just weighed on trading -- client trading volumes and revenue per client was down 8%. Client income conversion for the full year was at the midpoint of our typical range in the mid-70s. Despite the slower market backdrop, active client numbers held up well -- relatively well, reflecting continued high level of engagement on our platforms. And our exchange-traded derivatives and stock trading businesses substantially outperformed the drop in market volatility, highlighting the benefit of diversification. So IG continues to be the largest provider of OTC derivatives by revenue globally, but our market leadership position has weakened in recent years as evidenced by the declining primary account share in several geographies. In the U.K., for example, our share of primary accounts has declined 8 percentage points since 2018. And in Singapore, it's down 4 points to 11%. We must move faster to recapture lost market share and to extend our leadership position. I've spent considerable time with our colleagues at tastytrade, our U.S. options futures and equity business, and I've been very impressed by what I've seen. The technology stack, the newer technology stack and the culture supports faster product velocity. Tastytrade delivered a record performance in the year. Total revenues increased by 23% to $252 million, reflecting 10% growth in trading revenue and a 53% growth in interest income. Total client equity reached a new high of $5.1 billion at the period end, supported by higher market levels and net asset transfers into tastytrade. Net client assets transferred to tastytrade from competitors reached a record GBP 509 million in the year up from GBP 163 million in 2023. Last month, we launched tastytrade in the U.K. under the IG brand, substantially broadening our product range in this market. We're applying for regulatory licenses. We are applying for regulatory licenses to launch the tasty offering in several other countries. And going down the P&L, we now look at costs in the year. Adjusted costs increased 4%. We're much better controlled relative to prior year levels, reflecting the implementation of efficiency measures put in place in October. Increases in fixed rem reflected higher average headcount in 2024, along with severance costs associated for senior levers. Higher revenue-reflected costs -- higher revenue-related costs reflecting -- reflect a GBP 15.5 million bad debt charge, of which GBP 10.5 million was occurred in the first half and GBP 5 million in the second half of last year. Bad debt was driven by credit losses resulting from positions that several professional clients had 2 suspended stocks in the period. We don't expect further charges related to this matter. And we'll aim to recover the losses in line with our standard credit risk management practices. Advertising and marketing spend declined as acquisition spend will scale back in line with lower market demand. Technology maintenance, structural market data charges and communication costs increased 21% on FY '23, reflecting cybersecurity enhancements, continued deployment of our cloud strategy, inflationary pressures on contract renewals and projects to support future growth in new products. DNA includes amortization of the small exchange assets and an additional GBP 8 million impairment of daily FX, which we took the decision to close in the period. Higher legal and professional fees were driven by ongoing litigation and external IT services supporting enhancements to our technology. And for completeness, on this slide, we outlined live or recently settled litigation. Along with several competitors, including CMC plus 500 and IC markets, we're currently defending a class action matter in Australia. The essence of these allegations is that CFDs were unsuitable for retail clients and providers misrepresented the risks associated with these products. We filed our defense and denied the allegations. The matter is in the early stages of discovery, which will be completed towards the end of the current calendar year or early next year. If the matter reaches trial, it is unlikely to do so before late calendar 2026. Credit and risk markets -- credit and market risk have been well managed within our board-approved risk appetite, but we will continue to enhance controls to achieve greater efficiency. We have ongoing focus on modernizing our technology stack, which is necessary to enhance product velocity. We now take a look at the group's regulatory capital position. In September, we announced that our minimum group regulatory capital requirement was reduced by about 40% following a detailed review by the U.K. regulator. At year-end, we had GBP 638 million of surplus capital over our minimum group requirement of GBP 299 million. When assessing surplus capital available for distribution or acquisitions, we apply stress tests and management buffers over minimum requirements. At the end of the year, GBP 30 million was still left to be executed on the current share buyback program, which was deducted from capital resources in line with regulatory guidance. This slide will be familiar to you, but turning to our capital allocation in the year. We've increased the full year dividend by $0.01 per share in line with our policy. M&A may be necessary to accelerate delivery of our strategy, and we will be disciplined in assessing such opportunities. And during the year, we spent GBP 244 million buying back our own shares. I've reviewed our regulatory capital headroom, which today announced a share buyback program of GBP 150 million to be executed in the first 6 months of this financial year. That allows us to get shares out of the market faster than our last tranche but also to retain flexibility for other uses of capital. And lastly, turning to guidance for FY '25. We expect total revenue and adjusted PBT to be in line with current market expectations, which can be found in the Investor Relations section of our website. We expect the group tax rate to be approximately 24% and the new buyback program to start in the coming weeks. So looking forward and thinking in terms of initial priorities. Here is a standard flywheel, and we show what we must do to win. Our priorities are to invest in products in UX, deliver it quickly and improve customer acquisition and retention to accelerate revenue growth. At the same time, we're seeking opportunities to enhance efficiency with the opportunity of delivering higher operating leverage through lowering our cost to serve. In summary, we're focused on customer relevance in the pursuit of scale to drive faster growth. Doing this will take time, but there is huge potential and a real desire across the organization to move faster and achieve more. In terms of initial priorities, we must build better products and get closer to our customers, understand better what they want and adapt our offerings as their needs change. We do have work to do on culture. We must put the client at the center of everything we do and increase pace across the organization. We're empowering our people to focus on outcomes that have greater commercial impact and giving them the resources to do that. And finally, we're seeking opportunities to reduce cost to serve and increase efficiency. Turning now to our existing product offering and geographical coverage. We have broad over-the-counter product range and global reach, although we have work to do to cover off some product and capability gaps. Our B2B2C offering requires investment, and there's much we can do to broaden our OTC business around the world. Tastytrade does provide us with the footprint and one of the world's largest retail exchange derivative markets. And there's more to do that we can do -- there's more we can do to take that offering to other countries around the world in response to customer demand. And as I said earlier, our stock trading offer requires work, but currently comprises tastytrade in the U.S. and IG's platform in the U.K., Australia and the UAE. Our crypto offering around the world is very limited. One of my initial priorities has been to implement a new organizational structure to enhance client centricity and increase P&L ownership and accountability through the business. We now have 4 distinct decentralized divisions arranged geographically, the U.K., Asia and the Pacific markets and the Middle East, including Japan, Singapore, Australia and UAE, International covering Continental Europe, South Africa and emerging markets. And finally, the Americas. Each region has been given and continues to receive dedicated marketing, technology and product engineering resources to deliver product aligned to local customer needs. And turning to the leadership team. We have a good mix of deep domain knowledge and new perspectives. I'd like to welcome Jody Dunn, Sarah Gore Langton to the Executive Committee, both long-standing members of the team here. Adam Wheelwright, our CTO, has been with IG for just over a year and has been focused on changing working practices to accelerate product development and to improve our technology stack. We have a highly experienced commercial team leading our 4 geographical divisions. We're making very good progress on the CFO search that you know is in progress. And finally, on my own behalf and on the part of the Board, I'd like to record my thanks to Charlie for the job he's done at IG over the last 4 years as a CFO, and more recently as acting CEO. And turning to cost efficiency. Costs have grown faster than revenues in recent years, which is unsustainable. The business put in place an operational improvement program in October of last year, and this has started to reduce headcount. We've also made progress changing our headcount location footprint to optimize the way we're using our global centers of excellence in Poland, India and South Africa. Increasingly, we talk of cost to serve as an important metric in the business. So in summary to conclude, we've got a solid platform for growth. We operate with the supportive industry backdrop with strong structural growth drivers and large addressable market opportunities. I've got 3 initial priorities, product velocity, culture and efficiency. We have a lot of work to do to unlock our potential and doing so will take time, but I remain very excited about the opportunity. I'll leave it there in terms of slides, but I'm very happy to take questions initially from people in the room, and then we'll open to the phone line. There is a mic and perhaps you just introduce yourself, please.

It's Ian White from Autonomous Research. And 3 questions from my side, please. First of all, maybe you could just say a little bit more about the desire for increased product dynamism in the leveraged OTC business specifically. I guess sort of two subparts to that. Sort of first, how could that be done without significant investment in the technology, i.e. over and above sort of existing spending plans? And secondly, what are the areas you think where maybe the lack of velocity or dynamism has sort of cost the group over the last few years? Where has IG missed out basically relative to competitors? That's questions one and two. And then just finally, on the M&A point, what capabilities would you look for in a potential acquisition? You've talked a bit about some of the product gaps there. But are there specific things on technology or geographical presence, for example, would be attractive to you?

Thank you. And to take the M&A question first. I think there are clear product gaps. I'd reference back to the slide that I looked at that we used a few minutes ago. And I think they're also geographical gaps. And I think M&A should primarily address either a product or geographical gap first. But obviously, I'm not prepared to be drawn on specifics on that. On the product dynamism, as you put it in the OTC product in particular, we have a very mature product that is very well designed to target experienced users. But in addressing the needs of the heavy users, we have obfuscated or complicated the product on unnecessary ways. Our charging, for example, can be simplified and improved. Some of the basic UX and conversion funnel can be simplified and improved. Some of the -- you referenced us versus competitors, some of the focus on efficiency and consistency, while well intended and with some merit has meant that we have underperformed in local markets where we've been late with payment options or slow in introducing best practice in terms of local conversion or KYC processes, for instance. So I think by disaggregating away from a central product-led organization to one that's more decentralized and more client-centric, we will have a more educated view on what customers need and how competitors are serving them. And we will be able to make more local prioritization decisions closer to the customer rather than feeding things back to the mothership here in London, where there was an almost impossible task of juggling literally a global priority list, which slowed the organization down and meant we were less customer -- less responsive to customer needs. So I think what should happen is we will make better, educated, faster choices. We will take more frequent product bets to address customer needs that should result in better traction with customers, which should lead to more revenue growth. And as we generate more revenue from that, we will redeploy that into building more product and more marketing to get on to this kind of virtuous circle that was also in the slide. M&A, we'll talk about as and when we get there. I hope that's helpful.

Just to the question in terms of your sort of lessons you learned from your previous career in terms of betting gaming. Is there anything from that industry you think would be very relevant and you could do better here, particularly in terms of things like marketing efficiencies and in terms of personalization, anything you can sort of take from that?

Well, I hope we all learn from the mistakes we made elsewhere. I don't think marketing is -- we spend a very modest amount of money on marketing or in many ways, underspend on marketing relative to some of our competitors. So I think the brand here is very well established. There's a question as to whether a brand with our strong heritage and sense of legacy is the optimal positioning at a time like this when customers are seeing newer brands that are maybe more product-led and maybe distinguish on different variables. But I think also, I worked in payments for many years, and that was a global business where we had to make trade-offs between scale, efficiency and customer relevance and there is real value in being closer to your customers because ultimately, we're also competing with local champions rather than just global players. So customer centricity, understanding localization, obsession about local conversion, there are things that I think any e-commerce business like this has to take very, very seriously.

It's Ben Bathurst from RBC. I've got a couple of questions, if I may. Starting with costs, as you mentioned, the company is on a bit of a roll of growing costs more quickly than revenues. What's your view on the kind of appropriateness of the overall cost base of the business? And I think there could be scope to extend the operational improvement program announced in October. And then secondly, on tasty, what's your assessment of the investment that's been placed into tasty to improve the brand and the recognition there? And do you think there's evidence of return on that investment? And is the intention at this stage to continue to invest there?

Okay. So in terms of efficiency, so the company talked about a particular focus on efficiency, I think, in October of last year. That's largely been executed. It was framed as multiyear project. That was sort of somewhat one-off in nature. I think it probably needs to be more deeply embedded in the culture and there's real merit in trying to run this business lean and make a virtue of rather to frugality. So we have -- we are moving to more of a mindset about cost to serve and an ongoing kind of commitment to efficiency. But to your question in particular, I think over the next few years, the question should be, can we show customer relevance and can we show accelerated revenue growth rather than can we show operating efficiency. We could run this company more leanly tomorrow. But I think the opportunity demands that we invest in technology and people and marketing to see how fast we can grow at first. And I think that's the balance for the next couple of years. On your second question in terms of tasty, that's relevant to tasty, but I think it will be relevant to the other divisions over time. Tasty has grown well last year. Yes, it benefits a lot from interest income. But I am quite excited by the way that they have got customer funds to transfer into the platform. But effectively, we will run some kind of competitive marketplace internally for capital and businesses that can produce returns of marketing or product or talent should get more capital rather than ones that can't grow. So tasty are very excited about the business. It's a not insignificant part of the reason I came here. I think there's more we can do there. So we continue to invest there with growing confidence, both in terms of marketing and people and tech. And there's -- we think there's room to grow that business. It's still a relatively small business in the market it operates. If there's no other questions in the room, and there are questions, can you see other questions online?

We've got one that is coming by the webcast. Two questions from the web, Breon. First, could you provide an update on plans to take tasty to other international markets? And secondly, before you joined, there was talk of the new stock trading offering. Could you provide an update on that too, please?

Thanks, Martin. So tasty went live in the U.K., kind of branded as tasty at IG about 3 weeks ago. I'm reasonably happy with the progress so far because there is some friction, so customers in the U.K., including all customers in the U.K. with long-standing customers in the U.K. because this is effectively a product offered from a different jurisdiction, there is incremental friction in terms of signing up for -- to trade exchange-traded options in the United States. So we're working at removing that friction as best we can. But the early -- I'm delighted it's live and the product from kind of start to finish went live as quickly as anything we've done in years. And this is the first material product launch in the U.K. in many years. There is a plan to roll out tasty in other markets in which we're licensed, and we are separately receiving inbound from other markets where people would like to license the tasty product or a white label version of the tasty product. Predicting regulatory approval is infamously hard. So we will talk about that as and when it goes. But we are working on a number of jurisdictions to roll out tasty as soon as we can. The second question was about the cash equities product that was teased, I suppose, back in January of this year. The company has been working on kind of an upgrade towards cash equity product on -- with an intention to roll that out on a global basis. That project is more or less stalled at the moment, and we're looking at doing it in a slightly different way. We were working with a third party. We probably will do some more of the work internally. So it is important to us to improve our cash equities offer some 20-something percent of our CFD customers in the U.K. also trade cash equities. So I think it's important that we continue to improve our cash equities offer. But the way that we position that back in January is probably not the way it's going to play out over the coming months.

Thanks, Breon. Operator, I think I've got a couple of questions on the line, would you be able to connect us with them.

[Operator Instructions] We have our first question from Vivek Raja with Shore Capital.

Breon, I think some of my questions have been asked, but I thought I'd just try in terms of tastytrade rollout. I appreciate you sort of said where IG is already licensed. I just wonder if you could perhaps give a hint as to which markets you think are most right for tastytrade where the market opportunity is most advertising for that way. I also wanted to understand the efficiency drives because there seems to be sort of attention here. So to some extent, you're decentralizing the business in terms of your geographical spread to give more autonomy, I certainly understand that. So the sort of medical customers is -- demand is better tailored to. But how do you sort of square that with -- efficiently because that would seem to me more cost-intensive? Yes, those are my questions.

Thank you. So no, I mean I think 3 points on the tasty rollout. There are many, many markets in which the tasty product, we believe the tasty product is relevant and attractive. In some, but not all of those markets, we already have licenses and relationships with regulators, and we are in conversation with regulators in specific markets that I'm not going to name, but in specific markets, we're in conversations with regulators and have been in some cases for 6 months. But predicting how quickly -- predicting that regulatory approval and how quickly that might occur is, as I said, infamously hard and not a great use of our time. And then lastly, there are inbound requests from brokerage businesses around the world who are excited by tasty's offer and specifically the user-friendly way, which it gives access to exchange traded -- to U.S. exchange-traded product. And it may be the case that having now proven, we can distribute tasty through a third-party platform, specifically the IG brand that we will consider doing that with other markets as well. But predicting we will give full disclosure as and when something is live or nearly live. But predicting the choreography of that is just possibly hard. There continues, and I have to stress this. There continues to be -- these are regulated products, and there continues to be friction by rolling out products from one geography under the regulatory framework of another geography. So this is slow, complicated and often a little bit more painful for customers than you might imagine at first cut. On the second question about efficiency, you're right, there's a slight disconnect between an obsession about cost to serve and efficiency. And I think as best -- the best way I can explain what's happening is that there was when attention talk about efficiency in the past is something we should do because off the back of COVID and of the revenue. As revenue growth has slowed post-COVID, but cost growth remained quite high. There was a need for cost cutting. What we're trying to do now is just be much more disciplined about how we spend. And yes, we accept that we're baking in some inefficiency with the decentralized model. So I fully accept that, that's baking in some inefficiency. But that inefficiency is rationalized in the pursuit of customer relevance, faster product velocity in the hope of accelerating revenue growth. If we can't drive revenue growth, I believe we will. But if we can't drive revenue growth, and we failed to do that over the coming quarters or a couple of years, then I think there's still potential to run this business more leanly. But if we choose to go the other direction and take out costs now, it becomes a one-way door. It becomes effectively a binary choice where if we take out costs now and underinvest now at a time when there's still a considerable global opportunity, we won't get the opportunity to do that later. So with purpose, we're putting money into product and people and brand and marketing in a more decentralized way, acknowledging that, that's slightly inefficient now. But if we deliver revenue growth from that, we feel we'll be able to redeploy that incremental return with more confidence and grow this business faster, be more relevant to customers, make it bigger and make it a stronger business. I think we've landed the message for efficiency when there are no questions. And people just want to go back to work.

We've had a couple more come in the web, Breon, [ Haily Tan ] at UBS is asked on Slide 25, featuring the [ Harvey Bulls ], it looks like there's some white space there. So is there anything we can share at this point on prioritizing opportunities? Second question is just a follow-up on investment needs. How are we thinking about operating margin guidance in the medium term at this point?

Okay. So Slide 25, which is the what is it called?

I think they called [ Harvey Bulls ].

Thank you. It's a real team effort today. There is white space. And I think it's important to recognize that, and we're very strong over-the-counter. But we have an interesting geographic and regulatory footprint with product gaps. And I think we would like to fill some of those in thoughtfully over time where we can find attractive acquisitions that make this a stronger business. I referenced earlier, we believe there are synergies in offering multiple products within a regulatory vertical -- within a regulatory geography. But prioritizing those -- so we are doing outbound in the pursuit of thoughtful addressing the gaps. But M&A is an imprecise -- timing of these things is imprecise, and we will keep you briefed as and when we have more to say on that. On the second question, which was...

Second question was just on our thoughts on medium-term margin.

Yes, sorry, margin and guidance. So we've reaffirmed consensus for this year explicitly and implicitly, we're comfortable with the consensus numbers for FY '26. I've said now a couple of times that we are going to pursue product and customer-centric growth in the pursuit of faster revenue growth and that we will be more obsessive about that than evidencing operating margin expansion. So we're not taking operating margins down, but I'm not feeling any enormous urgency to show operating margin expansion in the short term. We'd much rather see if this business can further build on its potential, both brand, product and regulatory.

Thanks, Breon. No further questions by the web. It doesn't look like we've got any on the line. So I'll pass it back to you for any closing comments.

Is there any other question in the room, please?

Yes, Ian White to get your thoughts on this. So for those of you [indiscernible] that's okay. Just in terms of the IG Group model historically has been kind of a high-touch model, particularly for the most valuable users. So like to an investment bank that says trade and [indiscernible] attract and retain the most valuable clients. Do you see the group moving away from that to any significant degree in terms of being sort of leaner and more efficient? That's the question one. Secondly, you're talking about the stock trading offerings, is that with a view to making it more relevant for active traders and kind of getting a bigger share of stock trading business from IG's existing clients. Do you see the group moving more into a sort of savings and investments type market away from the active trader client base? And just lastly on capital. And so obviously, noting the comments you made around potentially having a closer look at M&A. But why [indiscernible] GBP 38 million is the correct level of capital surplus for a business where the capital requirement is broadly stable since the IFAR rebasing that level of surplus is more than double the actual gross capital requirement on [indiscernible].

Yes. So I agree. And a lot of value has been created through in your words, the high-touch relationship with experienced, often high-frequency, high-value traders in the past. I think that's a core capability we have. But I think we also need to broaden our footprint. And I think you can go from kind of our core heritage in that space to your next question, the kind of an active trader audience without going particularly mass market or without going to the very retail. I mean, retail in a mass market rather than in a regulatory sense way. So I think you can go from high touch kind of white glove service for very experienced traders to an active trader. And I think those active traders are also trading other underlying, so not just CFDs, but also trading cash in some cases, trading crypto assets or other assets as well. And I think rather than just an OTC offer, we expect that they will have demand for futures and options as launched or as provided or as will be provided by tasty and indeed, a cash equities product that just needs to evolve faster than it has in the past. And I think we'll be able to see -- we will learn as we go, and we will learn a lot over the next 12 months, I'd hope. On the capital allocation issue, I take your point, I'm very excited by the evidence of confidence that was expressed by the regulator when they reduced our capital requirements in September of last year. And the business is in a very strong place right now. We have, you'll note, increased the buyback and the rate at which that, that's both the quantum and the rate at which that's happening. We have also talked about how M&A may be attractive or may indeed be necessary to close some product gaps. So I think for this point in time, given that I'm not yet here at 6 months, and in advance of the CFO, a new CFO announcement that we hope to make in the coming months, we felt that the buyback, the increase in dividend and providing a little bit -- providing comfort around consensus. But the buyback and the increase in the dividend goes to showing some discipline about capital structure, and I expect we'll have that conversation in more detail over the coming quarters.

Any further questions in the room? There's nothing on the webcast, Breon, so just hand back to you for closing comments.

Well, thank you. Thank you, Martin. So just want to thank you all for joining us today, either online or in the room. I'm very excited by the opportunity ahead of us. There is work to do and there is time and investment required to do that. But I think the macro backdrop is very encouraging. We're very happy to follow up. We've got a busy few days with investor meetings, existing and potential investors. We're very happy to follow up on detail, either me directly or some of the guys here who have helped me prepare. I'm much better prepared than I may look and that's a credit to Martin and his colleagues. So thank you for joining us.