Ig Group Holdings Plc · LSE:IGG
Ig — FY2012 Earnings Presentation
30 slides from Ig's earnings presentation, 2012
Slide 1: Results presentation
Results presentation Year ended 31 May 2012 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 IG’s market leadership and investment in technology drives strong results FY12 performance Consistent strategy Double-digit growth in revenue, PBT Maintain market leadership and EPS Sustain our investment in Impact of Q1 volatility technology Continued active client growth and S
Slide 4: Business review
Business review
Slide 5: FY12 summary
FY12 summary FY12 results1 5 year revenue and PBT3 Net trading revenue1 £366.8m, up 17.3% PBT2 £185.7m, up 13.8% Adjusted EPS2 37.54p, up 15.3% – 37.44p including discontinued operations £140.7m cash generated from operations Total dividend per share 22.5p, up 12.5% (1) FY12 and FY11 compa
Slide 6: Income statement
Income statement Revenue and profit growth continues Year on year comparison4 FY11 Total H1 FY12 H2 Total Yr on Yr growth Net trading revenue up £m £m £m £m 17.3% 1 Net trading revenue 312.7 195.5 171.3 366.8 17.3% Betting duty (3.1) (5.7) (3.2) (8.9) Volatility impacted betting Other net operat
Slide 7: Revenue bridge
Revenue bridge Exceptionally strong first half FY11 to FY12 revenue bridge H1 53% of FY12 revenue − Impact of exceptional volatility H2 47% of FY12 revenue − Q3 “hangover” − 7% growth on FY11 -7-
Slide 8: Active clients
Active clients FY12 revenue growth exceeded client growth in both H1 and H2 Monthly revenue and active client trend FY09 to FY12 Year on year revenue and clients Revenue (£m) FY11 FY12 YoY UK 167.1 191.8 14.7% Australia 47.6 58.0 21.8% Europe 57.5 72.2 25.7% Rest of World 19.9 28.4 42.8% Total excl
Slide 9: Trading revenue per client
Trading revenue per client Revenue per client is converging Half yearly revenue by client FY09 to FY121 Focus on quality of clients FY12 H2 revenue per client above FY11 H2 level (1) Unique clients trading in each half year (Financial only) -9-
Slide 10: Volatility of trading days
Volatility of trading days Daily trading distribution returned to normal profile in FY12 H2 Distribution of FY12 daily trading revenue Daily trading revenue volatility Daily mean £1.37m (FY11 £1.22m) FY12 H2 daily mean £1.32m (H1 £1.45m) - 10 -
Slide 11: Product mix
Product mix Higher equity indices revenue compared to shares and FX in FY12 Financial revenue by product FY11 to FY12 FY11 Financial revenue £312.7m FY12 Financial revenue £366.8m - 11 -
Slide 12: Cost bridge
Cost bridge Continued investment in the business FY11 to FY12 operating costs1 bridge FY11 to FY12 headcount bridge Headcount related costs key drivers of cost growth. Investment in IT and Marketing Movement in bad debts reflects higher recoveries in FY11 £2.0m prior period VAT recovery charge
Slide 13: Cost base
Cost base Remuneration and Marketing comprise 71% of costs Year on year comparison1 FY11 FY12 Yr on Yr Total H1 H2 Total change £m £m £m £m % Total ongoing costs Salaries (53.9) (29.3) (30.4) (59.7) up 21.1% Advertising and marketing (31.3) (15.4) (15.7) (31.1) IT, Market Data and Communications P
Slide 14: Marketing spend profile
Marketing spend profile Growing investment reflects growth in overseas markets Marketing spend trend FY08 to FY12 Spend at a consistent percentage of revenue in UK and Australia Percentage of revenue spent on new offices declines as markets become more established - 14 -
Slide 15: Operating cash flow
Operating cash flow Business is highly cash generative Year on year comparison FY11 FY12 £m £m £140.7m generated from Operating activities Profit before tax1 operations after tax 163.0 185.3 Depreciation and amortisation Other cash and non-cash adjustments 10.9 6.3 10.8 2.1 Own funds increased b
Slide 16: Own cash and working capital
Own cash and working capital Working capital supports business growth Year on year comparison FY11 £m FY12 £m Net own cash available increased Available liquidity to £192.3m Own cash and title transfer funds Amount due from brokers 124.5 267.8 228.2 207.0 – £100.4m higher than FY11 Less other amou
Slide 17: Regulatory capital
Regulatory capital Importance of a strong regulatory capital position Year on year comparison FY11 FY12 £m £m 26% increase in total capital resources Regulatory capital from prior year Total Tier 1,2 & 3 capital 380.1 448.7 Intangible assets (adjusted) (115.3) (115.4) Regulatory capital surplus
Slide 18: Regulatory overview
Regulatory overview An evolving regulatory environment Proactive engagement with regulators and industry bodies – We promote protection for clients Majority of regulatory changes are likely to have limited impact on the business, e.g. – IG to be regulated by the new FCA body following the split
Slide 19: CEO update
CEO update
Slide 20: Overview: Sustainable growth
Overview Sustainable growth Continuing growth from UK and Australia Strong growth from newer offices Growth and market leadership underpinned by technology investment Focus on quality of clients and revenue per client - 20 -
Slide 21: Growth in established markets continues
Growth in established markets continues IG continues to grow in our most mature offices FY12 trading Revenue growth FY07 to FY12 Year on year FY12 growth 300 Australia 3 year CAGR 27.5% – UK 15% 250 UK 3 year CAGR 8.4% – Australia 22% 200 Initiatives to help drive revenue per client Revenue £m 1
Slide 22: Newer markets overview
Newer markets overview Strong growth but tougher conditions in Germany Year on year revenue and client growth Europe client and revenue trend FY07 to FY12 Revenue Clients Italy 25% 28% France 25% 26% Germany 15% 25% Spain 24% 33% Portugal 52% 46% Sweden 60% 72% Total Europe1 26% 32% Singapore 49% 14
Slide 23: Nadex
Nadex Remains a long-term opportunity Current trading Active clients Growth in clients driven by new marketing campaigns PFG Best relationship disappointing Focus on B to C opportunities through – Step-up in marketing spend – New local marketing resource – New branding Platform enhancements
Slide 24: Investment in technology: mobile
Investment in technology: mobile IG has the scale to invest in multiple technologies % of clients using mobile Mobile headlines Over 40% of clients use mobile Over 20% of revenue and transactions 6k clients solely trade mobile Over 20% of mobile revenue from iPad Composition of mobile revenu
Slide 25: Investment in technology: Insight
Investment in technology: Insight Insight is popular with our clients Key initiatives Insight is a research tool integrated within our trading platform Provides live market data, streaming news and current trading sentiment FY12 launch in UK, Australia and Singapore − c 50% of active clients u
Slide 26: Summary
Summary Well positioned for continued growth but with challenging comparatives this year Strong performance in FY12 (including good Q4) More subdued start to FY13 Competitive position is strong Long term growth driven by – continued expansion of our geographic reach – on-going investment in
Slide 27: Appendices
Appendices
Slide 28: Appendix: Trading revenue per client
Appendix: Trading revenue per client Half-year analysis FY06 to FY121 Net trading revenue (£m) H1 06 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 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 74.8 66.4 UK CFD 6.6 8.7 10.7 15.2 17.6 16.0 16.9 15.6
Slide 29: Appendix: Client trading activity
Appendix: Client trading activity Client period to period trading activity Full year and half year trends 2007 to 2012 Total IG Financial clients excl Japan FY07 FY08 FY09 FY10 FY11 FY12 New accounts 23,785 42,693 61,538 63,757 60,631 60,968 First trades (in period) 15,809 29,211 44,291 46,612 44,80
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