Ig Group Holdings Plc · LSE:IGG
Ig — FY2006 Earnings Presentation
17 slides from Ig's earnings presentation, July 2006
Slide 1: Results presentation, Year ending 31 May 2006
Results presentation Year ending 31 May 2006
Slide 2: Introduction
Introduction Continuing the Group’s track record of growth Highlights Turnover Turnover up 44% Normalised earnings per share up 61% 90 80 All parts of business delivering growth 70 CA GR 40% 60 50 (£m) Proposed final dividend of 4p per share 40 30 Current trading strong 20 10 Well positioned to cont
Slide 3: Profit and loss
Profit and loss Year ending 31 May 2005 2006 £'m £'m Turnover 62.2 89.4 +44% Betting duty (2.6) (1.6) Strong revenue growth continues 59.6 87.8 +47% Operational gearing benefits Interest on client money 3.7 5.0 +35% earnings growth Operating costs (28.4) (40.2) +42% EBITDA 34.9 52.6 +51% Interest co
Slide 4: Revenue by business line
Revenue by business line 2005 2006 H1 H2 Total H1 H2 Total Growth £'000 £'000 £'000 £'000 £'000 £'000 Financial UK 21,178 25,437 46,615 27,889 38,315 66,204 +42% Australia & Singapore 1,841 1,935 3,776 3,630 5,295 8,925 +136% Binaries 2,541 2,409 4,950 2,701 2,495 5,196 +5% Sports Fixed odds 458 259
Slide 5: Cost base
Cost base Year ending Year ending 31 May 31 May 2006 2005 H1 H2 2006 £'000 £'000 £'000 £'000 Salaries 12,770 7,507 7,819 15,326 Bonuses 5,255 3,121 5,574 8,695 LTIP and SIP 0 627 1,069 1,696 Increase in bonuses and LTIP charge reflect strong second half growth Advertising and marketing 3,014 1,284 2
Slide 6: UK - financial
UK - financial Strong growth continues Number of transactions¹ Strong account opening continues 700,000 Client recognition of IG as UK leader 650,000 600,000 Increasing levels of introduced CFD business 550,000 UK CFD 500,000 UK financial spread Strong growth in both spread betting and CFDs betting
Slide 7: Australia - Financial
Australia - Financial Continued strong growth momentum from Australian business Number of clients dealing - Australia (monthly) Number of transactions¹ 60,000 1,800 55,000 1,600 50,000 1,400 45,000 40,000 1,200 35,000 1,000 30,000 800 25,000 600 20,000 15,000 400 10,000 200 5,000 0 0 2 03 04 05 02 0
Slide 8: CFDs – a diverse international business
CFDs – a diverse international business Non-UK revenues growing strongly, particularly Ireland UK CFD revenue by location of client Revenues generated outside UK, serviced from London UK W estern Europe IG’s London-based CFD business has clients in more than 70 countries Ireland Africa Americas East
Slide 9: Introducers are a significant source of CFD revenues
Introducers are a significant source of CFD revenues Introducers include stockbrokers and asset management companies worldwide UK clients of London CFD business Overseas clients of London CFD business direct direct introduced introduced -9-
Slide 10: Client acquisition is the key growth driver
Client acquisition is the key growth driver Account opening for UK financial spread betting accelerated dramatically in the second half Clients betting or trading for the first time Number of clients dealing¹ 10000 30,000 igmarkets.com 9000 igindex.co.uk 25,000 8000 Australia igsports.com CAGR 26% 7
Slide 11: Ease of account opening
Revenue per client H1 05 H2 05 H1 06 H2 06 Revenue per Potential Ease of account opening Turnover 1 £'000 £'000 £'000 £'000 UK CFD (inc. FX) 4,267 5,117 6,091 8,938 client market size UK fin. spread betting 16,911 20,320 21,798 29,378 Australia & Singapore 1,841 1,935 3,630 5,295 Total financial 23,
Slide 12: Risk management and quality of earnings
Risk management and quality of earnings Income volatility remains low 500,000 3.00 Volatility of income remains low, irrespective of market 450,000 Daily revenue (60 day rolling average) conditions 2.50 400,000 revenue volatility (60 day coefficient of variability) Run-rate of daily revenues has inc
Slide 13: Sports
Sports Delivered best growth rate for five years in 2006 Sport spread betting Market making on exchanges Financial market based technology and breath of product Currently market making in two exchanges range give competitive advantage A low cost source of sports business Business has demonstrated ab
Slide 14: Strategic priorities
Strategic priorities Continued growth from existing operations, coupled with expansion of geography and routes to market Extend UK market lead Continued international roll-out where regulatory – Quality, robustness and scale of dealing software environment and market conditions permit – Broadest pro
Slide 15: International expansion
International expansion Different approaches suit different territories Ireland Asia Significant increase in personal wealth Singapore gives base from which to approach introducers throughout Asia Money primarily being managed by private client stock – Indonesia brokers – Thailand Introducing arrang
Slide 16: Outlook
Outlook Foundations remain in place to deliver future growth Continuing strong growth from core UK business Australia growth continues Singapore office provides springboard into Asia European roll-out commencing Business debt free and highly cash generative Confident about growth prospects - 16 -
Slide 17: Slide 17