Ig Group Holdings Plc · LSE:IGG
Ig — FY2011 Earnings Presentation
30 slides from Ig's earnings presentation, July 2011
Slide 1: Results presentation, Year ended 31 May 2011
GROUP Results presentation Year ended 31 May 2011 Tim Howkins, CEO Christopher Hill, CFO
Slide 2: Disclaimer
Disclaimer This presentation, prepared by IG Group Holdings plc (the “Company”), may contain forward-looking statements about the IG Group. By their very nature, forward-looking statements involve uncertainties because they relate to events, and depend on circumstances, that will or may occur in the
Slide 3: Overview
Overview Business growth despite lower market volatility FY11 performance Consistent strategy Mixed trading conditions Maintain market leading positions in existing markets Business fundamentals are positive Continue to expand IG’s global reach - 9% revenue growth1 Sustain our technology lead - 13%
Slide 4: FY11 summary
FY11 summary FY11 results 5 year revenue and EBITDA Net trading revenue1 £320.4m, up 7% Adjusted PBT2 £163.0m, up 3% - Includes £8.4m of charges and provisions: - Closure of extrabet (£2.5m) - Cost of office move (£1.8m) - FSCS interim levy (£4.1m) Adjusted EPS2 32.64p, up 6% Total dividend per shar
Slide 5: extrabet closure
extrabet closure Closure reflects management focus on our financial business Impact of closure extrabet revenue profile FY06 – FY11 Represents just 2% of revenue #" Football world cup year (FY07 10%) " " Barely profitable after direct costs " Unable to sell extrabet as a going !" concern on acceptab
Slide 6: Business review
Business review
Slide 7: Income statement
Income statement Revenue and profit growth continues Year on year comparison FY10 FY11 Yr on Yr Total H1 H2 Total growth £m £m £m £m PBT margin maintained Net trading revenue 1 298.6 156.7 163.7 320.4 7% above 50% despite Other net operating income 1.2 2.6 2.3 4.9 Net operating income 299.7 159.3 16
Slide 8: Cost bridge
Cost bridge £9m increase in regulatory and VAT charges impacts year on year cost comparison FY10 to FY11 operating costs1 bridge ! " " " # " %& ' () % # " Net £2.7m remuneration $ " # "! # "! # " " " " "# " $ %& ' ' * %&) + - . %& ' / * & ) + 0 1 %2 $ %& ' () % , () % (1) excluding exceptional costs
Slide 9: Cost base
Cost base £9m increase in regulatory and VAT charges impacts year on year cost comparison Year on year comparison FY10 FY11 Total H1 H2 Total Year on year operating £000 £000 £000 £000 Salaries 44,939 27,090 29,136 56,226 costs increased by 13% Bonus 22,333 8,892 5,383 14,275 LTIP/SIP 4,782 2,098 2,
Slide 10: Net trading revenue by region
Net trading revenue by region Growth against tough comparatives FY09-FY11 trend " Japan impacted by +3% leverage restrictions ! " # " - FY11 Q4 reversed two quarters of decline " ROW revenue " " - Singapore 38% growth +21% - 31% like for like growth1 ! " +4% # " (14)% +52% " " % *& )$ 3$ 4 (1) Ideal
Slide 11: Volatility of trading revenues
Volatility of trading revenues Trading revenue volatility remains low Daily trading revenue volatility Distribution of FY11 daily trading revenue 1.4 3.0 Daily revenue (60 day rolling average) ! 1.2 2.5 8 &*7 " Revenue volatility (60 day rolling co-efficient of variability) # 1.0 2.0 Revenue (£000s)
Slide 12: Product mix
Product mix Client activity shifts between asset classes with volatility Financial revenue by product FY10 – FY11 ! " # ! " # $ %&" ' %&" ' ( ( $ - 12 -
Slide 13: Active clients
Active clients Continued growth in the client base Monthly revenue and active client trend FY09-FY11 5*& % % 8& ' 11% year on year client 5*& % % 8& ' 3 $ & (& * growth ! - 13% excluding Japan - Financial revenue (£m) Clients trading (000s) 33% European growth - Double digit growth in # UK and Austr
Slide 14: Trading revenue per client
Trading revenue per client Revenue per client stabilised in H2 Half yearly revenue by client FY09 to FY111 Daily revenue per client by month FY10-FY112 £32 / 5 £30 % *& )$ 3$ )% * & (& * :(*3 $ £28 9 £26 £24 9 £22 (*& % £20 (*& % 9 £18 $ £16 9 £14 $ £12 £10 8 &*7 9 £8 £6 £4 £2 £0 ; ; ; ; ; ; (< (< 3
Slide 15: Client retention
Client retention Client retention levels consistent excluding extreme trading conditions Client retention rates FY07-FY111 Troughs in retention % *& )% * @ :(*3 $ after extreme volatility ? Client retention rate broadly stable ? ? ? Impact of Fall out from emerging crisis market crash and ! ? inc No
Slide 16: Client attrition
Client attrition Clients that cease trading tend to be lower value and limited trading history Profile of FY11 H1 active clients that subsequently didn’t trade in H2 Client attrition biased #9 toward new clients #9 & ' %) % 8 9 Tend to be lower 9 value clients 9 - Monthly revenue = ) )6 (*& % ( 9 at
Slide 17: Client recruitment
Client recruitment Focus on higher quality of clients impacts account opening levels Year on year headlines Year on year direct account openings Direct account openings up 9%1 9 New wealth limits introduced by IG in 9 A ? 2011 to deter lower value clients 9 Reduction in the number of introduced 9 ac
Slide 18: Own cash and working capital
Own cash and working capital Working capital supports business growth Year on year comparison FY11 FY10 £m £m Net own cash available Available liquidity reduced to £107m Own cash and title transfer funds 124.5 128.1 Amount due from brokers 267.8 203.7 - Additional broker margin requirement for incre
Slide 19: Regulatory capital
Regulatory capital Importance of a strong regulatory capital position Year on year comparison FY 11 FY 10 £m £m Total capital resources up Regulatory capital Tier 1,2 & 3 capital 380.1 475.6 £42m Intangible assets (adjusted) (115.3) (252.5) Investment in own shares (1.2) (1.0) Regulatory capital sur
Slide 20: Strategy update
Strategy update
Slide 21: Australia update
Australia update Further gains in market share FY11 headlines Market share trend1 FY11 revenue growth of 4% ? @ = :%* ' % () $ %&%) - FY11 Q4 12% up year on year ! ? ? ? Exceeded £5m revenue in a month . % 2 # ? for the first time in Mar-11 ? $ Market share lead widened ? - ? 34% from 29% last year
Slide 22: Europe update
Europe update Continuing to build scale in Europe FY11 headlines Client trends Monthly active clients FY07- FY11 FY11 growth continues 12,000 - Revenue growth 21% despite tough 10,000 % *& trading conditions in Italy and Spain 8,000 )$ - 6,000 Active clients up 33% 4,000 Growth in many countries exc
Slide 23: US update
US update Our first broker is now promoting Nadex Current focus Nadex monthly lots traded 2010 - 2011 (000s) Nadex (North American Derivatives # Exchange) offers options on forex, equity indices and commodities OTC business closed to enable the full focus on Nadex Steady increase in trading volumes
Slide 24: Increasing importance of mobile
Increasing importance of mobile IG has the scale to invest in multiple technologies Developments Mobile deals trend 2010 - 2011 Extensive global rollout of iPhone and 9 "? Blackberry apps during FY11 # 9 C * ) - )>&* ? * ) - )>&* "? # 9 Android devices app now released 9 "? 9 "? Ongoing developments
Slide 25: Summary
Summary IG is positioned to deliver continuing growth Continued growth in active client numbers Competitive position is strong - Investment in technology is a key competitive differentiator - Marketing re-focus on the recruitment of high value clients Good start to the new financial year - 25 -
Slide 26: Appendices
Appendices
Slide 27: Appendix 1: Client retention
Appendix 1: Client retention Client retention levels consistent excluding extreme trading conditions Client retention rates by year and half year trend FY07 – FY11 1 )% * @ & (& *(*& % :(*3 $ = B (() % 9 # 9! ! 9 ! 9 ! 9! 5) &) % !!? ! ? ? ? #? & %> % 9 9 ##9 #!9! ##9 )% * (%& (*& % #9# !9 9 ! 9 9 5
Slide 28: Appendix 2: Client recruitment
Appendix 2: Client recruitment Focus on higher quality clients reduces account opening levels Quarterly account opening FXOnline acquisition and FXOnline cash back UK wealth limits exceptional volatility Oct 08 campaigns end Sept 09 from Jan-11 Direct account openings up 9%1 26,000 24,000 FXOnline R
Slide 29: Appendix 3: Trading revenue per client – financial only
Appendix 3: Trading revenue per client – financial only Half-year analysis FY06 – FY111 Turnover (£m) H106 H206 H107 H207 H108 H208 H109 H209 H110 H210 H111 H211 UK SB 24.0 31.6 33.6 36.6 48.0 56.2 63.4 54.6 55.8 55.1 56.2 61.5 UK CFD 6.6 8.7 10.7 15.2 17.6 16.0 16.9 15.6 24.1 27.6 26.7 22.8 UK Tota
Slide 30: GROUP
GROUP