Ig Group Holdings Plc · LSE:IGG
Ig — H1 FY2016 Earnings Presentation
28 slides from Ig's earnings presentation, 2016
Slide 1: Peter Hetherington, Chief Executive Officer
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Slide 2: Forward-looking statements and basis of presentation
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 assumptions on w
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Slide 4: Financial Results
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Slide 5: H1 FY16 financial highlights
Net trading revenue £214.8m, up 8.8% on H1 FY15 PBT £98.6m, down 2.8% PAT £76.7m, down 2.5% Diluted EPS 20.91p, down 2.5% £87.2m own funds generated from operations Interim dividend of 8.45p, in line with dividend policy 1 500 250 30 400 200 25 20 300 150 15 200 100 10 100 50 5 0 0 0 FY1
Slide 6: Income statement and net trading revenue
FY16 H1 FY15 H1 Yr on Yr Net trading revenue ahead by £17.4m £m £m % (8.8%) on H1 FY15 Net trading revenue1 214.8 197.4 8.8% – Active clients up 11% – Revenue per client relatively stable at Net interest on client funds 1.7 2.4 a Group level Betting duty & FTT (6.4) (4.5) Other operating income 0.
Slide 7: Revenue bridge and active clients
(000’s) ¹ 22.5 197.4 (5.0) 6.7 202.8 (18.8) H1 H2 FY15 Existing clients New/returning clients FY15 = (£23.8m) = £29.2m H2 FY15 2.2 5.9 202.8 (17.9) 21.8 214.8 H2 H1 FY15 Existing clients New/returning clients FY16 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 = (£15.7m) = £27.7m FY14 FY14 FY15 FY15 FY15 FY15 FY16 FY16 1.
Slide 8: Revenue, clients and revenue per client by region
FY16 FY15 FY15 Yr on Yr Revenue (£m) H1 H2 H1 % UK (inc Ireland) 110.3 105.1 106.8 3.4% Europe 45.6 40.4 40.5 13% Australia 30.4 30.5 28.7 5.7% ROW 28.5 26.8 21.4 33% TOTAL 214.8 202.8 197.4 8.8% Clients1 (000’s) UK (inc Ireland) 46.8 46.7 45.8 2.2% Europe 25.3 24.0 21.5 18% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 9: Operating costs
Net own funds available¹ FY16 FY15 - Underlying1 Yr on Yr Underlying operating costs, excluding H1 £m H1 £m FY £m % variable remuneration up £16.7m (22%) on H1 FY15 Salaries (42.4) (35.4) (74.0) Advertising and marketing (21.4) (17.5) (37.8) Increase in salaries due to full year Premises related
Slide 10: Net own funds available
H2 FY14 H2 FY15 £285m £205m 300 FY14 Peak FY15 Peak £290m £294m 280 260 240 220 200 180 160 140 Nov May Nov May Nov 2013 2014 2014 2015 2015
Slide 11: Own funds movement and liquidity
Net own funds available¹ FY16 H1 FY15 H1 FY15 Application of FY16 H1 £m £m £m own funds available¹ £m Own funds generated from operations 87.2 87.4 136.8 Net own funds available 296.5 Movement in working capital (7.3) (16.8) 7.9 Overseas regulatory and working capital (61.2) Other (including capex)
Slide 12: Regulatory update
£2.5m financial impact in 2016 year Phased approach to capital regime changes through to 2018 Lobbying to be excluded going forward – IG well capitalised under any scenario Remuneration changes inevitable No explicit progress on a financial transactions tax MiFID II implementation delaye
Slide 13: Business Review
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Slide 14: Strategic priorities
1 Product diversification 2 Geographic development 3 Maximising current opportunity Optimising marketing effectiveness Transforming client conversion Increasing client activity and retention Maximising client value
Slide 15: Product diversification
Leveraging IG’s core advantages – Leading technology platform – Retail client service capabilities – Proven risk management Servicing greater degree of clients’ financial requirements – A broad range of risk, return and timeframe LEVERAGED - LIMITED STOCK- – Concentrated on real-time execution L
Slide 16: Stockbroking launch and expansion
Stockbroking launched in UK September 2014 Launched in selected European countries in 2015, Australia to be launched in 2016 – 69% of traded accounts are new to IG – Clear evidence of cross sell – Over 1,300 accounts linked for collateral Further product development in 2016 – Cost leadership –
Slide 17: US office launch progress
Progressing well versus other launches Average revenue per trade significantly higher than average, driven by fewer high value clients Office soft launch in June 2015, full launch September 2015 Early indicators are positive and in line with expectations US operation running around breakev
Slide 18: Online marketing and gTLD strategy
gTLD strategy to broaden online reach to increase client recruitment – A number of gTLD websites launched including News.Markets, IG.Forex and IG.Spreadbetting – Further sites planned for 2016 Increased focus on online advertising – Regional centralisation of spend – Algorithmic and data driven
Slide 19: Client application process improvements
A number of projects underway to remove friction in client application process: New mobile application form launched in UK and Germany, desktop to follow in January Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY14 FY15 FY16 Electronic ID verification live in Germany, Austria and Netherlands Easy document uploa
Slide 20: Mobile client recruitment
FY13 FY14 FY15 FY16 FY14 FY15 FY16 Mobile increasingly important in client recruitment Proportion of transactions from mobile continues to grow Increase in prospective clients starting application process via mobile, however they are less likely to complete application than via desktop A num
Slide 21: Broadening product offering and service improvements
Broadening product offering to capture more of the trading lifecycle of a client – Increase activity with IG – Extend the length of the relationship Leveraged trading enhancements – New Limited Risk accounts – New web trading platform to be launched in 2016 Service improvements – ‘My IG’ landi
Slide 22: Natural client offset and revenue per volume
2.0 3.0 1.8 2.5 1.6 2.0 1.4 1.5 1.2 1.0 1.0 0.5 0.8 0.0 0.3 0.0 0.3 0.6 0.9 1.2 1.5 1.8 2.1 2.4 2.7 3.0 3.3 3.6 3.9 4.2 4.5 4.8 5.1 5.4 2009 2010 2011 2012 2013 2014 2015 Maximising value of natural client offset Optimising revenue return on volume Recognise the value of low revenue variabilit
Slide 23: Outlook and strategy
Trading in line with expectations in FY16 Strategy remains consistent – Product diversification, leveraging IG’s skills and technology – Continued geographic development – Driving maximum value from current business opportunity Continued reinvestment to deliver strategic priorities Increasin
Slide 24: Appendices
Appendices
Slide 25: Historical revenue and clients by region
1 FY12 FY13 FY14 FY15 FY16 Revenue (£m) H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY H1 UK (inc Ireland) 102.1 89.7 191.8 86.9 99.5 186.5 93.4 99.3 192.7 106.8 105.1 211.9 110.3 Europe 37.8 34.5 72.2 32.1 39.0 71.0 40.2 41.9 82.1 40.5 40.4 80.9 45.6 Australia 32.7 25.2 58.0 28.2 28.1 56.3 27.0 25.2 52.2 28.7
Slide 26: New and active client metrics
FY13 FY14 FY15 New clients (000s) 55.9 55.0 71.0 First trades (000s) 37.9 33.7 40.9 Implied conversion rate (%) 68% 61% 58% Total active clients (000s) 136.1 126.1 136.1 Clients trading from prior period (000s) 98.1 92.4 95.2 Clients trading from prior period (%) 68% 68% 75% FY13 FY14 FY15 FY16 H1 H
Slide 27: Common Equity Tier 1 capital and capital resources
Common Equity Tier 1 capital 521.5 486.1 Intangible assets (1.8) (1.2) Investment in own shares (123.9) (124.0) Deferred tax asset (7.0) (7.1) Total Capital Resources a 388.8 353.8 Total Risk Exposure Amounts - Pillar 1 Equivalent b (1,378.9) (1,349.2) Surplus Capital over 4.5% CET1 Ratio a+(b*4.5%)
Slide 28: NNN
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