Ig Group Holdings Plc · LSE:IGG
Ig — H1 2010 Earnings Presentation
31 slides from Ig's earnings presentation, January 2010
Slide 1: Results presentation: Six Months ended 30 November 2009
Results presentation Six Months ended 30 November 2009 Tim Howkins, CEO Steve Clutton, Finance Director
Slide 2: Disclaimer
Disclaimer This presentation, prepared by IG Group Holdings plc (the “Company”), contains 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 fu
Slide 3: Overview: Continuing to deliver on our strategy
Overview Continuing to deliver on our strategy H1 10 performance Ongoing strategy Market leading breadth of Continuing to develop all existing product offering proven to cater markets for all market conditions Maintaining technology lead Benign competitive landscape Continuing to develop new markets
Slide 4: H110 Summary
H110 Summary Record results History of growth 275 Trading revenue £143.8m, up 14% 250 H1 Group revenue H2 Group revenue 225 Adjusted PBT1 £78.0m, up 34% 200 Revenue £m 175 Adjusted EPS1 15.28p, up 30% 150 125 100 Interim dividend of 5.0p per share, up 75 50 25% 25 0 Well capitalised balance sheet FY
Slide 5: Business performance
Business performance
Slide 6: Income statement
Income statement Strong revenue and profit growth continues Year on year comparison Trading revenue 143.8 126.5 14% 257.1 Interest income on client money Total revenue 1.8 145.6 10.2 136.7 12.9 270.0 Trading revenue growth 14% Interest expense on client money (0.3) (4.6) (5.3) despite tough comparat
Slide 7: Financial trading revenue by office region
Financial trading revenue by office region Financial business continues growth trend Year on year comparison with H110 vs H109 growth rates 70.0 -12% H109 H209 H110 Spread betting impacted by 60.0 October 08 UK CFD uptake 50.0 Strong CFD growth across Revenue £m 40.0 42% 64% 65% newer and more estab
Slide 8: Geographical margin analysis
Geographical margin analysis Margins remain strong; investment for growth has an impact Year on year comparison with H110 vs H109 pp change Centralised operating model Segmental EBITDA1 margin trend H109 H209 H110 UK disproportionately hit by 14% 5% H109 doubtful debt charge 9% 70% 10% -27% Newer ma
Slide 9: Cost base
Cost base Tight cost management Year on year comparison H1 FY09 H2 Total FY10 H1 Cautious investment approach £'000 £'000 £'000 £'000 entering H110 Salaries 18,518 21,651 40,169 21,737 Additional investment planned Advertising and marketing 9,414 14,268 23,682 12,812 in H210, particularly headcount
Slide 10: Cash and Regulatory capital
Cash and Regulatory capital Strong capital and cash position maintained Comparison to FY09 year end May 09 Nov 09 Strong cash generation £m £m Working capital Client balances increase Amounts due from brokers & clients 183.1 221.8 reflects higher proportion of Cash 520.4 566.5 equities trading (high
Slide 11: Risk management and quality of earnings
Risk management and quality of earnings Income volatility remains low Daily trading revenue volatility Distribution of daily trading revenue since November 08 3.0 50 1,200 Daily Revenue Bands (greater than current band, less than next band) daily revenue (60 day rolling average) 45 revenue volatilit
Slide 12: Trading revenue per client trend: financial business
Trading revenue per client trend: financial business Recovery after October 08 market turmoil Half yearly revenue by client FY06 to H1101 FY09-FY10 to date monthly revenue by client2 Revenue by client FY06 to FY10 UK Spreadbetting UK Spreadbetting FY09 and FY10 monthly revenue by client FY09 and FY1
Slide 13: Product diversification
Product diversification Client return to shares during equity rally H109 – H110 Financial revenue H108 – H110 Financial revenue mix H1 FY09 Financial Revenue £122.3m 100% Financial binaries 90% £5.6m Shares Commodities 5% £22.5m 80% £8.2m 18% 7% 70% Financial binaries 60% Commodities 50% Currencies
Slide 14: Client recruitment
Client recruitment Account opening remains a key lead indicator Quarterly account opening FXOnline acquired and exceptional volatility Oct 08 FXOnline cash back Over 41k new financial campaign Aug 09 accounts opened in 26,000 70% 24,000 FXOnline H110 CFD - New Offices 22,000 CFD - Australia Webinar
Slide 15: The UK Market: Independent research from Investment Trends
The UK Market: Independent research from Investment Trends Pty Limited Research conducted between July and September 2009 www.investmenttrends.co.uk
Slide 16: UK SB: Market sizing
UK SB: Market sizing Context of UK performance Total number of traders (traded within last year) Total number of traders (traded within one month) “Active traders” in this report are defined as those who traded within 12 months to July 2009 unless otherwise specified. “Investment Trends 2009 UK Spre
Slide 17: UK SB: Market share
UK SB: Market share Almost half of spread betters had an IG Index account three out of ten used IG Index as their main provider Which FSB providers do you have accounts with? Traded in last 12 months / one month: by brand Traded in last 12 months: by underlying provider 0% 10% 20% 30% 40% 50% 60% 70
Slide 18: UK: Brand attributes
UK : Brand attributes IG Index features among top three brands for all measured brand attributes Top 3 providers on each brand element among ‘Active FSB Traders’ [n=3010] IG Index IG Index IG Index IG Index IG Index IG Index IG Index IG Index IG Index IG Index IG Index IG Index “Investment Trends 20
Slide 19: International expansion strategy
International expansion strategy
Slide 20: Organic CFD expansion
Organic CFD expansion Organic rollout continues to drive strong growth Number of clients dealing (monthly since launch) Number of clients dealing (monthly since June 06) 3,500 35,000 Chart Title 3,000 30,000 2,500 25,000 20,000 2,000 15,000 1,500 10,000 1,000 5,000 500 0 Oct-06 Dec-06 Oct-07 Dec-07
Slide 21: Case study of overseas expansion: France
Case study of overseas expansion: France Tried and tested rollout strategy Launched November 07 1,800 France trading since formation 1.8 1,600 Trading revenue 1.6 achieved operational breakeven within 6 months trading revenue £m 1,400 Clients trading 1.4 clients trading 1,200 1.2 Monthly revenue ave
Slide 22: South Africa acquisition
South Africa acquisition Emerging market with significant potential £2.0m cash acquisition of business and clients of Ideal CFD Financial Services (Pty) Ltd Established April 06 IG partner for 3 years IG South Africa formed: 85% ownership with Steady growth despite call / put option exercisable in J
Slide 23: FXOnline update
FXOnline update Early signs of Japan stabilising Challenging competitive environment of reduced spreads and aggressive marketing IG response has been to Introduce new low spread model Focus on clients with experience of forex trading Promote binary options and CFD business where competition less int
Slide 24: Revenue through partners
Revenue through partners Growing share of revenue from partners despite impact of October 08 Revenue composition Key features Year on year growth reflects New deals will take time to resilience post October 2008 events: generate significant revenue Period Revenue % of total Ave/month streams £m % £m
Slide 25: Summary: Long term growth story
Summary Long term growth story IG has delivered growth through all stages of market and economic cycles Strong financial growth, margins and cash generation IG is clear market leader in the UK and many of its developing markets We believe there is considerable growth in the UK still to come Many of
Slide 26: Appendices
Appendices
Slide 27: Competitive landscape
Competitive landscape Background to key markets UK: Investment trends report Oct 09 SWEDEN: Good market GERMANY: IG made significant gains in FY09 ITALY: IG is the first company to offer indicates that IG is clear market leader: awareness of the product with average number of dealing clients in the
Slide 28: Exchange rate sensitivity
Exchange rate sensitivity Growing impact of exchange rates Currency tailwind Trading revenue from outside the UK Trading revenue reported H1 09 restated 1 H1 10 Yr on yr growth reported restated 1 represented 42% of H110 Financial £m £m £m % % UK 84.5 84.5 82.9 (2%) (2%) revenue (32% H109) Australia
Slide 29: Trading revenue by office region
Trading revenue by office region Financial business continues growth trend Year on year comparison1 FY09 FY10 yr on yr H1 H2 Total H1 growth £000 £000 £000 £000 % UK Spreadbetting 63.4 54.6 118.0 55.8 (12%) CFD 16.9 15.6 32.5 24.1 42% Financial sub-total 80.4 70.2 150.6 79.9 (1%) Sport 4.2 4.6 8.7 3
Slide 30: Trading revenue per client - financial business
Trading revenue per client - financial business Half-year analysis FY06 – FY10 H11 Turnover (£m) H106 H206 H107 H207 H108 H208 H109 H209 H110 UK SB 24.0 31.6 33.6 36.6 48.0 56.2 63.4 54.6 55.8 UK CFD 6.6 8.7 10.7 15.2 17.6 16.0 16.9 15.6 24.1 UK Total 30.7 40.3 44.3 51.9 65.6 72.2 80.4 70.2 79.9 Aus
Slide 31: Geographical margin analysis H110
Geographical margin analysis H110 Breakdown of segment EBITDA Rest of UK Australia Europe Japan World Central Total £000 £000 £000 £000 £000 £000 £000 Segment trading revenue 82,862 22,204 21,733 10,937 6,022 - 143,758 Net client interest - - - - - 1,575 1,575 Revenue from external customers 82,862