IG Group Holdings plc · LSE:IGG
IG — FY2013 Earnings Presentation
30 slides from IG's earnings presentation, July 2013
Slide 1: Results Presentation
RESULTS PRESENTATION Year ended 31 May 2013 IG | FY13 RESULTS PRESENTATION: JULY 2013| 1
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 | FY13 RESULTS PRESENTATION: JULY 2013| 3
Slide 4: FY13 Summary
FY13 SUMMARY Earnings growth on lower revenue FY13 RESULTS 5 YEAR REVENUE AND PBT1 H1 Group revenue Net trading revenue £361.9m, down 1.4% 400 H2 Group revenue FY13 H2 up 12.6% year on year 350 Revenue (£m) 300 PBT1 £192.2m, up 3.5% 250 200 150 Diluted EPS 38.80p, up 3.4% 100 50 £155.4m fund
Slide 5: Income Statement
INCOME STATEMENT Strong FY13 H2 performance leads to year on year PBT growth YEAR ON YEAR COMPARISON FY13 FY12 Yr on Yr H1 H2 Total Total growth Net trading revenue down 1.4% £m £m £m £m 1 − Active clients down 5% Net trading revenue 169.0 192.9 361.9 366.8 (1.4%) Betting duty (1.3) (3.9) (5.2) (8
Slide 6: Revenue Bridge
REVENUE BRIDGE Strong revenue growth from existing and new clients in FY13 H2 FY12 H1 – FY13 H2 REVENUE BRIDGE1 220 FY12 H1 Bridge FY12 H2 Bridge FY13 H1 Bridge FY13 H2 Bridge (22.6) 200 31.0 18.4 Revenue (£m) 195.5 12.2 (12.7) 192.9 180 12.3 (27.1) 6.0 (14.8) 21.8 (9.4) 18.0 7.3 (15.3) 171.3 169.0
Slide 7: Active Clients
ACTIVE CLIENTS FY13 H2 revenue growth driven by revenue per client uplift YEAR ON YEAR REVENUE AND CLIENTS REVENUE AND CLIENT TREND FY12 - FY13 45 Revenue (£m) 75 Revenue (£m) FY12 FY13 Yr on Yr Clients trading (000s) Clients trading (000s) 40 70 UK 191.8 186.5 (3%) Revenue (£m) Australia 58.0 56.3
Slide 8: Revenue Mix
REVENUE MIX Strong growth in Equity indices YEAR ON YEAR PRODUCT MIX FY12 - FY13 REVENUE COMPOSITION 100 FY13 revenue composition 90 Binaries Commodities 6% (5%) 80 6% (11%) Shares 18% (18%) 70 Trading revenue (£m) 60 Equity indices Forex 24% (22%) 50 Forex 40 Shares 30 Equity indices 46% (44%) Comm
Slide 9: Volatility of Trading Days
VOLATILITY OF TRADING DAYS IG’s hedging model produces low levels of daily revenue variability DAILY TRADING REVENUE VOLATILITY TREND FY13 TRADING REVENUE DISTRIBUTION1 0.0m 1.0m 2.0m 3.0m 1.6 Daily revenue (60 day rolling 3.0 18 daily mean £1.36m1 average) FY12 £1.37m 16 0.9 Revenue volatility (60
Slide 10: Operating Cost Bridge
OPERATING COST BRIDGE Variable remuneration is the main driver of lower year on year costs FY12 – FY13 OPERATING COSTS BRIDGE1 185 1.5 4.9 Growth in salary costs largely reflects pay 180 inflation and redundancy programme 175 (£1.3m) Operating Costs (£m) 170 174.0 Closing headcount down year on ye
Slide 11: Operating Cost Detail
OPERATING COST DETAIL 5.9% reduction in year on year operating costs1 YEAR ON YEAR COMPARISON FY13 FY12 Yr on Yr H1 H2 Total Total Flat costs pre variable £m £m £m £m % remuneration and Salaries 2 (33.0) (31.6) (64.6) (59.7) exceptional costs Advertising and marketing (17.5) (15.1) (32.6) (31.1) I
Slide 12: Net Own Cash Available
NET OWN CASH AVAILABLE £155m own funds generated from operations FY12 – FY13 NET OWN CASH AVAILABLE1 APPLICATION OF OWN CASH AVAILABLE1 FY13 H1 FY13 H2 FY13 FY12 FY13 H2 £m £m £m £m £m Own funds generated from operations 59.3 96.1 155.4 140.7 Net own cash available 183.6 Movement in working capital
Slide 13: Regulation
REGULATION Global regulatory activity ongoing: no material impact expected MARKET UPDATE European Financial Transactions Tax Drafting process remains in progress between 11 member states Appears increasingly likely to produce a significant compromise Japan Binaries Increasing scrutiny around app
Slide 14: Business Update
THANK YOU BUSINESS UPDATE IG | FY13 RESULTS PRESENTATION: JULY 2013| 14
Slide 15: Driving Performance
DRIVING PERFORMANCE In FY14 we will build on the foundations put in place during FY13 ACHIEVEMENTS IN THE YEAR Successful brand relaunch achieved around IG.com Technical foundations in place for platform and product expansion High levels of client satisfaction and market leading positions driv
Slide 16: Market Share
MARKET SHARE Continued market share gains in our largest revenue generating countries CFD & SPREADBETTING MARKET SHARE1 FX MARKET SHARE1 Primary account market share Market share compared to biggest competitor 50 Current year 44 Prior year 50 IG 41 40 37 Biggest competitor 40 Market share (%) 34 Mar
Slide 17: Customer Service
CUSTOMER SERVICE High Net Promoter Scores in key markets NET PROMOTER SCORE1 CURRENT RESULTS IG Industry average IG Net Promoter Score (NPS) is high 25 across all six markets surveyed by UK SB 6 Investment Trends UK CFD 20 Significantly ahead of the industry in all of 3 these markets Australia 2
Slide 18: International Expansion
INTERNATIONAL EXPANSION Continued international growth PRIORITIES Continued growth from outside UK and Australia New geographies in FY13 were small opportunistic bolt-ons within EEA Ireland Norway Potential new geographies outside the EU Discussions with regulator at differing stages Higher co
Slide 19: Nadex
NADEX A long term project, making steady progress PERFORMANCE TREND1 KEY DEVELOPMENTS 250 1,600 Volume (contracts traded) Members trading 1,400 Regulatory clamp-down on illegal competitors 200 ongoing 1,200 Acquisition of PFG’s software Volume (000s) 150 1,000 Members 800 Nadex Connect will enab
Slide 20: Foundations for Long Term Growth
FOUNDATIONS FOR LONG TERM GROWTH Key building blocks created FEATURES Brand re-launch One clear global identity Single branding for all products and platforms Drive awareness IG.com Consolidate global traffic onto one domain Insight now available to public Establish IG as an authoritative data s
Slide 21: Platform Infrastructure
PLATFORM INFRASTRUCTURE Our platforms satisfy a broad range of client needs CORE PLATFORMS SPECIALIST PLATFORMS Browser based platform L2 (Equities) Our flagship platform, still used by the Direct Market Access for advanced majority of our clients share traders Mobile platforms MetaTrader (F
Slide 22: Key Developments for FY14
KEY DEVELOPMENTS FOR FY14 More focus on specific asset classes CORE PLATFORMS AND SERVICES SPECIALIST TRADING PLATFORMS IG.com MetaTrader (Forex) Global roll out Pilot just launched Insight as a sales/conversion tool Due for full roll out in August/September Gives access to a huge pool of active
Slide 23: Summary
SUMMARY Resilience of IG’s operating model demonstrated during FY13 Costs managed during more subdued trading conditions Maintained ability to benefit from more interesting H2 trading conditions Continued to invest for longer term revenue growth Profit growth despite revenue fall Continued prude
Slide 24: Appendices
THANK YOU APPENDICES IG | FY13 RESULTS PRESENTATION: JULY 2013| 24
Slide 25: Appendix 1: Restated FY13 H2 IMS tables
Appendix 1: Restated FY13 H2 IMS tables FY13 H2 IMS ORIGINAL SUMMARIES FY13 H2 IMS RESTATED SUMMARIES Q3 revenue KPI Q3 revenue KPI Geographical Revenue FY13 FY12 % Active Revenue Geographical Revenue FY13 FY12 % Active Revenue £m £m Change client per client £m £m Change client per client UK 45.2 39
Slide 26: Appendix 2: Financial net trading revenue per client
Appendix 2: Financial net trading revenue per client HALF-YEAR ANALYSIS FY09 - FY131 Revenue (£m) H109 H209 H110 H210 H111 H211 H112 H212 H113 H213 UK Spreadbetting 63.4 54.6 55.8 55.1 56.2 61.5 74.8 66.4 65.1 73.3 UK CFD 16.9 15.6 24.1 27.6 26.7 22.8 27.3 23.3 21.8 26.2 Australia 13.4 14.5 22.2 23.
Slide 27: Appendix 3: Client trading activity
Appendix 3: Client trading activity CLIENT RETENTION RATES BY YEAR AND HALF YEAR TREND FY09 - FY13 IG clients excluding Japan FY09 FY10 FY11 FY12 FY13 New accounts 61,538 63,757 60,631 60,968 51,769 First trades (in period) 1 44,291 46,612 44,803 45,292 35,854 Implied conversion rate (%) 72% 73% 74%
Slide 28: Appendix 4: Broker margin requirement trend
Appendix 4: Broker margin requirement trend BROKER REQUIREMENT (£m) TREND FY11 - FY13 320 FY11 H1 FY11 H2 FY12 H1 FY12 H2 FY13 H1 FY13 H2 £224m £217m £184m £196m £243m £246m 300 FY13 Peak £298m 280 260 Broker margin (£m) 240 220 200 180 160 140 120 IG | FY13 RESULTS PRESENTATION: JULY 2013| 28
Slide 29: Appendix 5: Pillar 1 regulatory capital
Appendix 5: Pillar 1 regulatory capital YEAR ON YEAR COMPARISON FY13 FY12 £m £m Regulatory capital Total Tier 1,2 & 3 capital 508.4 448.7 Intangible assets (120.5) (115.4) Investment in own shares (1.5) (1.5) Total capital resources (a) 386.4 331.8 Capital resources requirement - Pillar 1 (b) 115.1
Slide 30: Thank You
THANK YOU END IG | FY13 RESULTS PRESENTATION: JULY 2013| 30