Ig Group Holdings Plc · LSE:IGG
Ig — FY2014 Earnings Presentation
27 slides from Ig's earnings presentation, 2014
Slide 1: Results Presentation
RESULTS PRESENTATION Year ended 31 May 2014 IG | 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: FY14 Summary
FY14 SUMMARY Record results in subdued markets FY14 RESULTS 5 YEAR REVENUE, PBT1 AND DIVIDEND Net trading revenue £370.4m, up 2.4% PBT £194.7m, up 1.3% Diluted EPS 40.18p, up 3.6% £160.6m own funds generated from operations, up 4.1% Final dividend of 22.40p; Full year dividend of 28.15p, u
Slide 4: Income Statement
INCOME STATEMENT PBT margin strong in a year of slow revenue growth YEAR ON YEAR COMPARISON FY14 FY13 Yr on Yr Record net trading revenue, ahead by £8.5m H1 H2 Full Year Full Year − Active clients down 7.3% £m £m £m £m Net trading revenue 1 182.7 187.7 370.4 361.9 2.4% − Average revenue per client
Slide 5: Revenue Bridge
REVENUE BRIDGE Drivers of revenue change reflect the quiet markets REVENUE BRIDGE1 220 200 Revenue (£m) 18.4 (12.9) 15.0 12.2 (12.7) 15.7 (1.1) (14.0) (18.1) 180 6.0 5.1 5.1 160 171.3 192.9 169.0 192.9 171. 182.7 187.7 3 140 1. Existing clients not trading are clients who traded in the previous half
Slide 6: Drivers of Revenue
DRIVERS OF REVENUE Regional performance influenced by asset mix REVENUE AND ACTIVE CLIENTS1 BY COUNTRY REVENUE AND ACTIVE CLIENTS BY MONTH Revenue (£m) Clients (000s) FY14 FY13 Yr on Yr % FY14 FY13 Yr on Yr % UK (inc Ireland) 192.7 186.5 3.3% 59.3 68.3 (13.2%) Australia 52.2 56.3 (7.3%) 18.0 19.0 (5
Slide 7: Revenue Composition
REVENUE COMPOSITION Support provided by diversity in asset class REVENUE BY PRODUCT FY14 REVENUE COMPOSITION1 Significant drop off in Forex revenue Shift towards Equity indices and Shares – Volatility at historic lows Year-on-year weakness in Forex 1. FY13 in brackets IG | FY14 RESULTS PRESENT
Slide 8: Daily Revenue Trend
DAILY REVENUE TREND IG’s risk management has delivered consistent results DAILY REVENUE VOLATILITY TREND FY14 REVENUE DISTRIBUTION IG | FY14 RESULTS PRESENTATION | P8
Slide 9: Operating Cost Detail
OPERATING COST DETAIL Costs continue to be well controlled YEAR ON YEAR COMPARISON FY14 FY13 Yr on Yr Costs excluding variable £m £m remuneration up 2.0% Salaries (65.0) (64.6) Advertising and Marketing (31.7) (32.6) Positive impact in interim FSCS levy Premises related costs (10.0) (10.2) Sig
Slide 10: Net Own Cash Available
NET OWN CASH AVAILABLE Strong cash delivery enables higher dividend and growth NET OWN CASH AVAILABLE1 APPLICATION OF OWN CASH AVAILABLE1 FY14 H1 FY14 H2 FY14 FY13 FY14 £m £m £m £m £m Own funds generated from operations 79.1 81.5 160.6 154.3 Net own cash available 202.2 Movement in working capital (
Slide 11: Regulation
REGULATION No significant recent developments UPDATE Europe – FTT: discussions between 11 member states continue slowly – EMIR: addressing additional trade reporting requirements – MiFID II: detail still to be clarified, but assume no significant risk – monitoring carefully Japan – New regulatio
Slide 12: Summary
SUMMARY Solid financial performance in subdued markets FINANCIAL REVIEW Record revenue with well controlled costs Another year of strong cash generation Confidence in future cash flows enables increased dividend payout Solid balance sheet Continued investment for growth IG | FY14 RESULTS P
Slide 13: Business Update
THANK YOU BUSINESS UPDATE IG | FY14 RESULTS PRESENTATION | P13
Slide 14: The Year in Focus
THE YEAR IN FOCUS Good progress on strategic priorities UPDATE Increase in revenue, profit and cash generation Good delivery on growth initiatives – Stockbroking launch on track for September 2014 – Swiss office opened, with the licence approval anticipated – Progressing discussions with the reg
Slide 15: Client Focus
CLIENT FOCUS Continued focus on active traders STEP DOWN IN CLIENT NUMBERS ACTIVE NEW CLIENT VALUE BY MONTH One-off step down in client numbers from management actions (Q4 FY13/Q1 FY14) Continue to target growth in client numbers IG | FY14 RESULTS PRESENTATION | P15
Slide 16: Geographic Expansion
GEOGRAPHIC EXPANSION Ongoing targeted geographic roll-out SWITZERLAND DUBAI Switzerland licence imminent Regulatory application in progress Favourable market for IG’s products Anticipate office opening in 2015 – High average income High average income – Limited competition Specific local
Slide 17: Nadex
NADEX Continuing to make progress PERFORMANCE TREND KEY DEVELOPMENTS Full year revenue of £3.1m, up £1.1m on prior year One 3rd party market maker adding liquidity since April-14 – Tightening of spreads Full suite of mobile Apps in development IG | FY14 RESULTS PRESENTATION | P17
Slide 18: Stockbroking
STOCKBROKING Delivery of key strategic initiative UK MARKET OPPORTUNITY1 STOCKBROKING AT IG IG potential market Developed for active retail traders Real time ‘multi-exchange’ pricing Market-leading technology 55,000 (59%) of SB & CFD Traders also trade shares online Full suite of mobile plat
Slide 19: Mobile Development
MOBILE DEVELOPMENT Continuing transition to mobile CURRENT USE OF MOBILE AT IG DEVELOPMENTS Mobile use continues to grow Significant investment over the next 2 years Continuing to develop existing Apps for experienced traders Priority to address early client journey on mobile – Developing Ap
Slide 20: Conclusion
CONCLUSION Continuing to invest for future growth BUSINESS UPDATE Delivered record revenue and profit Year of investment in growth initiatives Stockbroking International expansion – Switzerland – Dubai Mobile investment – Continue to develop existing apps for experienced traders – New apps
Slide 21: Appendices
THANK YOU APPENDICES IG | FY14 RESULTS PRESENTATION | P21
Slide 22: Appendix 1: Net trading revenue per client
Appendix 1: Net trading revenue per client HALF YEAR ANALYSIS1 Revenue (£m) H1 FY12 H2 FY12 FY12 H1 FY13 H2 FY13 FY13 H1 FY14 H2 FY14 FY14 UK (inc Ireland) 102.1 89.7 191.8 86.9 99.5 186.5 93.4 99.3 192.7 Australia 32.7 25.2 58.0 28.2 28.1 56.3 27.0 25.2 52.2 Europe 37.8 34.5 72.2 32.1 39.0 71.0 40.
Slide 23: Appendix 2: Client trading activity
Appendix 2: Client trading activity CLIENT RETENTION RATE TREND Total clients (incl Japan) FY12 FY13 FY14 New accounts 67,593 55,889 54,957 First trades (in period) 48,029 37,914 33,709 Implied conversion rate (%) 71% 68% 61% Total active clients (in period) 143,304 136,063 126,108 Clients trading f
Slide 24: Appendix 3: Broker margin requirement
Appendix 3: Broker margin requirement BROKER REQUIREMENT (£m) FY 11 H2 FY 12 H1 FY 12 H2 FY 13 H1 FY 13 H2 FY 14 H1 FY 14 H2 £217m £184m £196m £243m £246m £273m £285m FY13 Peak £298m FY14 Peak £290m IG | FY14 RESULTS PRESENTATION | P24
Slide 25: Appendix 4: Pillar 1 regulatory capital
Appendix 4: Pillar 1 regulatory capital YEAR ON YEAR COMPARISON FY14 FY13 £m £m Regulatory capital Total Tier 1 570.8 508.4 Intangible assets (122.7) (120.5) Investment in own shares (1.1) (1.5) Deferred tax asset (5.7) 0.0 Total capital resources (a) 441.3 386.4 Capital resources requirement - Pill
Slide 26: Appendix 5: Market share
Appendix 5: Market share PRIMARY ACCOUNT MARKET SHARE COMPARISON TO BIGGEST COMPETITOR 1. Share of primary accounts, by number, as stated by Investment Trends reports IG | FY14 RESULTS PRESENTATION | P26
Slide 27: Thank You
THANK YOU END IG | FY14 RESULTS PRESENTATION | P27