Ig Group Holdings Plc · LSE:IGG
Ig — H1 FY14 Earnings Presentation
31 slides from Ig's earnings presentation, January 2014
Slide 1: Results Presentation
RESULTS PRESENTATION Half year ended 30 November 2013 IG | H1 FY14 RESULTS PRESENTATION | P1
Slide 2: Disclaimer
DISCLAIMER This presentation, prepared by IG Group Holdings plc (the “Company”), may contain forward-looking statements about the Company. Forward-looking statements involve uncertainties because they relate to events, and depend on circumstances, that will, or may, occur in the future. If the assum
Slide 3: Financial Review
THANK YOU FINANCIAL REVIEW IG | H1 FY14 RESULTS PRESENTATION | P3
Slide 4: H1 FY14 Summary
H1 FY14 SUMMARY Strong year on year growth against weak comparatives H1 FY14 RESULTS 5 YEAR REVENUE AND PBT1 400 H2 Revenue H1 Revenue Net trading revenue £182.7m, up 8.1% 350 PBT £95.1m, up 17.3% 300 Revenue (£m) 250 Diluted EPS 19.63p, up 22.4% 200 150 £79.1m own funds generated from opera
Slide 5: Income Statement
INCOME STATEMENT PBT growth reflects higher revenue and lower costs YEAR ON YEAR COMPARISON H1 FY14 H1 FY13 Yr on Yr FY13 Net trading revenue up 8.1% on H1 FY13 £m £m £m 1 − Active clients down 4.5% Net trading revenue 182.7 169.0 8.1% 361.9 Betting duty & FTT (1.3) (1.3) (5.2) − Revenue per clien
Slide 6: Revenue Bridge
REVENUE BRIDGE Revenue continues to reflect the market backdrop REVENUE BRIDGE1 220 200 (12.9) 18.4 Revenue (£m) 12.2 (12.7) 15.7 (18.1) 180 (9.4) 6.0 18.0 5.1 (15.3) 160 192.9 171.3 4.4 169.0 171. 192.9 182.7 3 171.3 140 1. Existing clients not trading are clients who traded in the previous half ye
Slide 7: Active Clients
ACTIVE CLIENTS H1 FY14 revenue growth driven by ongoing revenue per client uplift YEAR ON YEAR REVENUE AND CLIENTS REVENUE AND CLIENT TREND Revenue Active clients Revenue (£m) H1 FY14 H1 FY13 Yr on Yr % 40 64 UK 93.4 86.9 7.5% Australia 27.0 28.2 (4.3%) 35 60 Revenue (£m) Clients (000s) Europe 40.2
Slide 8: Revenue Composition
REVENUE COMPOSITION Broad product offering provides greater stability REVENUE BY PRODUCT H1 FY14 REVENUE COMPOSITION1 100 Equity indices 90 80 Binaries 6% (6%) 70 Commodities Shares Revenue (£m) 6% (6%) 19% (17%) 60 50 Forex 40 Shares Forex 30 Commodities 23% (24%) 20 10 Binaries Equity indices 0 46
Slide 9: Daily Revenue Trend
DAILY REVENUE TREND IG’s hedging model aligns revenue to trading volumes DAILY REVENUE VOLATILITY TREND H1 FY14 REVENUE DISTRIBUTION 0.0m 1.0m 2.0m 3.0m 3.0 1.6 Daily revenue (60 day 12 1 rolling average) 1.4 0.9 2.5 Revenue volatility (60 day 10 Daily mean £1.40m 0.8 rolling coefficient of (FY13 H1
Slide 10: Operating Cost Bridge
OPERATING COST BRIDGE Like for like cost increase H1 FY13 – H1 FY14 OPERATING COSTS BRIDGE 90 Operating costs 1.9% lower (£1.7m) 88 Operating costs (£m) (4.6) 3.5% like for like cost increase 86 1.6 – Excluding £4.6m one-offs in H1 84 3.0 FY13 86.6 84.9 82 (0.6) (1.1) Points to note: 82.0 Year
Slide 11: Operating Cost Detail
OPERATING COST DETAIL Costs remain tightly controlled but higher FY spend forecast YEAR ON YEAR COMPARISON H1 FY14 H1 FY13 H2 FY13 FY13 Investment to increase in H2 £m £m £m £m Salaries 1 (31.2) (33.0) (31.6) (64.6) – New roles Advertising and Marketing1 (15.4) (17.5) (15.1) (32.6) – Switzerland I
Slide 12: Net Own Cash Available
NET OWN CASH AVAILABLE £79.1m own funds generated from operations NET OWN CASH AVAILABLE1 APPLICATION OF OWN CASH AVAILABLE1 H1 FY14 H1 FY13 FY13 H1 FY14 £m £m £m £m Own funds generated from operations 79.1 58.6 154.3 Net own cash available 153.1 Movement in working capital (11.3) (24.6) (12.0) Over
Slide 13: Regulation
REGULATION No material impact from recent or foreseeable regulatory developments UPDATE European Financial Transactions Tax – Enhanced co-operation process between 11 member states showing little sign of real progress – French and Italian unilateral taxes have had minimal impact Japan – New regu
Slide 14: Summary
SUMMARY Encouraging start to the year FINANCIAL REVIEW Positive results in a period of little explicit volatility – Revenue, profit, earnings and cash ahead Prior year H2 is a challenging comparative Costs and investment weighted towards second half of this year Solid balance sheet Year to
Slide 15: Business Update
THANK YOU BUSINESS UPDATE IG | H1 FY14 RESULTS PRESENTATION | P15
Slide 16: Strategy
STRATEGY Strategic objectives focused on medium term sustainable growth STRATEGIC OBJECTIVES KEY AREAS OF H1 FY14 FOCUS Address the needs of active retail traders Product development Achieve, maintain or extend our market – Stockbroking leadership – Sprint markets Strengthen our global prese
Slide 17: Client Focus
CLIENT FOCUS Continued focus on active traders NEW CLIENT VALUE BY MONTH ACTIONS TAKEN TO CHANGE CLIENT FOCUS 40% Consistent focus on active retail traders 35% 30% – Platforms & website – % of Clients 25% Marketing 20% 15% – Brand 10% 5% Increased minimum deposits 0% Increased deal sizes less
Slide 18: IG.com
IG.COM Creating an effective recruitment channel PROGRESS BENEFITS Scale of migration in 2013 Global web traffic is consolidated onto a single – 15 countries domain – 9 languages Market insight pages are now accessible by – Over 100,000 pages non-clients Inevitable short term dip in our sear
Slide 19: Forex
FOREX Increasing Forex market share is an objective IG MARKET SHARE1 KEY INITIATIVES MetaTrader 4 50 FX CFD SB 41 40 38 – Launched in second quarter 34 – Usage building steadily Market share (%) 29 30 22 20 19 16 19 – Enhancements to follow including equity 11 12 9 indices and spread betting 10 0
Slide 20: Mobile
MOBILE Positioning IG for mobile to become the dominant platform INCREASING IMPORTANCE OF MOBILE MOBILE DEVELOPMENT 40% % of Client initiated transactions Clients increasingly regard mobile apps as their 35% primary interface 30% Native apps provide competitive advantage % Relating to mobile 25%
Slide 21: International Expansion
INTERNATIONAL EXPANSION Increasing geographic reach remains a key objective PROGRESS SWITZERLAND Switzerland office at advanced stage Wealth demographic very supportive – Subject to regulatory approval Product traded but market immature Ongoing discussions with the regulator in another Cur
Slide 22: Nadex
NADEX Long-term project making steady progress PERFORMANCE TREND KEY DEVELOPMENTS 300 1,800 Volume (contracts traded) 1,600 Nadex Connect “out of the box” software Members trading 250 solution is now complete 1,400 200 1,200 – Discussions ongoing with potential new FCMs (brokers) Members trading V
Slide 23: Online Stockbroking
ONLINE STOCKBROKING Broadening the reach of the IG brand MARKET OPPORTUNITY BUILDS ON EXISTING IT INFRASTRUCTURE Significant addressable market in the UK Uses much of our existing infrastructure for – Selective rollout to other countries pricing and execution Extends the reach of the IG brand
Slide 24: Summary
SUMMARY Continued short term delivery underpins investment for the future BUSINESS UPDATE Satisfactory performance given relatively subdued trading conditions Weak prior year comparatives in H1 – H2 progressively more challenging Disciplined investment in initiatives to grow future revenue str
Slide 25: Appendices
THANK YOU APPENDICES IG | H1 FY14 RESULTS PRESENTATION | P25
Slide 26: Appendix 1: Financial net trading revenue per client
Appendix 1: Financial net trading revenue per client HALF YEAR ANALYSIS1 Revenue (£m) H1 FY10 H2 FY10 H1 FY11 H2 FY11 H1 FY12 H2 FY12 H1 FY13 H2 FY13 H1 FY14 Total UK 79.9 82.7 82.9 84.3 102.1 89.7 86.9 99.5 93.4 Australia 22.2 23.5 22.9 24.7 32.7 25.2 28.2 28.1 27.0 Europe 21.7 25.7 26.7 30.8 37.8
Slide 27: Appendix 2: Client trading activity
Appendix 2: Client trading activity CLIENT RETENTION RATES TREND Total IG Financial clients excl Japan FY09 FY10 FY11 FY12 FY13 New accounts 61,538 63,757 60,631 60,968 51,769 First trades (in period) 44,291 46,612 44,803 45,292 35,854 Implied conversion rate (%) 72% 73% 74% 74% 69% Total active cli
Slide 28: Appendix 3: Broker margin requirement trend
Appendix 3: Broker margin requirement trend BROKER REQUIREMENT (£m) FY 11 H2 FY 11 H2 FY 12 H1 FY 12 H2 FY 13 H1 FY 13 H2 FY 14 H1 £224m £217m £184m £196m £243m £246m £273m FY13 Peak £298m FY14 H1 Peak £274m IG | H1 FY14 RESULTS PRESENTATION | P28
Slide 29: Appendix 4: Pillar 1 regulatory capital
Appendix 4: Pillar 1 regulatory capital YEAR ON YEAR COMPARISON H1 FY14 H1 FY13 £m £m Regulatory capital Total Tier 1,2 & 3 capital 515.4 447.4 Intangible assets (119.4) (115.7) Investment in own shares (1.1) (1.5) Total capital resources (a) 394.9 330.2 Capital resources requirement - Pillar 1 (b)
Slide 30: Appendix 5: Market share
Appendix 5: Market share CFD & SPREADBETTING MARKET SHARE1 1. Share of primary accounts, by number, as stated by Investment Trends reports IG | H1 FY14 RESULTS PRESENTATION | P30
Slide 31: Thank You
THANK YOU END IG | H1 FY14 RESULTS PRESENTATION | P31