Ig Group Holdings Plc · LSE:IGG
Ig — H1 FY2012 Earnings Presentation
28 slides from Ig's earnings presentation, January 2012
Slide 1: Results presentation 6 Months ended 30 November 2011
GROUP Results presentation 6 Months ended 30 November 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 IG’s market leadership and investment in technology drives strong results FY12 H1 performance Return on technology investment Return of good growth from UK and 100% dealing uptime Australia with continued market share Minimal bad debts gains No loss making days Continued strong growth from
Slide 4: FY12 H1 summary
FY12 H1 summary FY12 H1 results1 5 year revenue and PBT3 Net trading revenue1 £195.5m, up 28% PBT2 £103.2m, up 28% Adjusted EPS2 20.68p, up 31% - 28% including discontinued operations Interim dividend per share 5.75p, up 9.5% (1) FY12 and FY11 comparatives exclude discontinued Sport operation (2) FY
Slide 5: Business review
Business review
Slide 6: Income statement
Income statement Revenue and profit growth continues Year on year comparison H1 12 H1 11 Yr on Yr FY11 £m £m growth £m Net trading revenue up 28% - 1 Net trading revenue 195.5 153.0 27.8% 312.7 Betting duty (5.7) (0.8) (3.1) 15% growth in clients Other net operating income 5.5 3.8 9.0 trading Net op
Slide 7: Revenue bridge
Revenue bridge Revenue growth driven by new clients FY11 H1 to FY12 H1 revenue bridge Reactivations and new clients exceed the impact of attrition FY12 volatility - has stimulated client activity - may increase attrition -7-
Slide 8: Active clients
Active clients Revenue growth exceeded client growth in FY12 H1 Monthly revenue and active client trend FY09 to FY12 Year on Year revenue and clients #%! !" #$ %&" ' ) #* " % ("%! + ,- + $ . $# %!"% + / + !" #$# %&" ' 01 + 2% % 3 + " % ("%! #%! " % ("%! + ) #* + ,- + . $# %!"% + 2 3 2 3 2 3 2 3 4 (3
Slide 9: Trading revenue per client
Trading revenue per client Revenue per client growth Half yearly revenue by client FY09 to FY12 H11 Daily revenue/client by month FY10 to FY12 H12 £30 # &!" ,- 9 ,- 4 . $# %!"% / 2% % #%! " % ("%! 8 £25 8 (!" # £20 (!" # 8 £15 8 £10 4 %"!7 8 £5 £0 6 3 . . 2 3 4 (3 2 3 4 (3 2 3 . '3 0 (#3 . '3 0 (#3
Slide 10: Volatility of trading days
Volatility of trading days Trading revenue volatility remains low Daily trading revenue volatility Distribution of FY12 H1 daily trading revenue 4%"!7 &%7 !!" ' % %' !%#"!"#7 &%7 !!" ' 4 %"!7 % ( 3 ::"(" # : % "%5"!"#7 # :4 %7$ ::"(" # ; %73 ; %73 ; %73 ; %73 ; %73 ; %73 ; %73 ; %73 ; %73 ; %73 ; %7
Slide 11: Product mix
Product mix Client activity shifts between asset classes with changing market conditions Financial revenue by product FY11 H1 – FY12 H1 "% "$ ! " # $% & ! " # $% & "% "$ &"#" $ + + &"#" $ + + 9*% $ 9*% $ + + = /< "#7 = /< "#7 + " &"( $ + " &"( $ + + - 11 -
Slide 12: Cost bridge
Cost bridge Growth in costs largely performance and new investment related FY11 to FY12 H1 operating costs1 bridge £8m increase in performance related bonus and share plan Impact of regulatory levy increases %#" ' ( $#$ from FY11 H2 Movement in bad debts reflects net recoveries last year 0 - £1.3m c
Slide 13: Cost base
Cost base Cost base growth is less than revenue growth Year on year comparison1 #%! (*% ' Ongoing operating + costs up 15% before 9%!% " $ performance related .& #"$" ' % & % ? #" ' payments > 8; % ? #4%#% % & "$ $ !%# & ( $#$ "(%#" $ - Total ongoing ' !%# 7 $ costs up 24% 4 5#: !& 5#$ (*% ' A( &"#
Slide 14: Own cash and working capital
Own cash and working capital Working capital supports business growth Year on year comparison H1 12 H1 11 FY11 £m £m £m Net own cash available Available liquidity has increased further to Own cash and title transfer funds 200.6 109.3 124.5 £151m Amount due from brokers 201.9 212.5 267.8 less other a
Slide 15: Strategy update
Strategy update
Slide 16: Market leadership drives competitive advantage
Market leadership drives competitive advantage IG’s scale and market leadership give it sustainable competitive advantage Benefits of scale Revenue in most recent full year accounts (£m)1 Financial strength and security Investment in technology Investment in marketing Word of mouth recommendation Be
Slide 17: Financial strength and security
Financial strength and security IG takes a market leading stance on client money protection IG gives all individuals full client money protection – even where regulation permits otherwise - No use of Title Transfer in UK/Europe for individuals - Voluntary adoption of full UK style segregation in Aus
Slide 18: Investment in technology
Investment in technology IG has the scale to invest in multiple technologies Key initiatives % of executed orders fully automated Rollout of mobile applications – first + wave substantially complete + - iPhone / iPad - + Android - Windows Phone 7 + - Blackberry + 16% of revenue and transactions now
Slide 19: Investment in marketing
Investment in marketing IG is building up its internal marketing resource Key initiatives Marketing focus Reducing dependency on external Quality rather than quantity of new agencies accounts Building capacity to produce campaigns - Aiming to drive up average revenue across multiple channels per cli
Slide 20: Growth in established markets continues
Growth in established markets continues IG continues to gain market share, while underlying market grows Market share Revenue growth FY06 to FY12 H1 - !! 1 * + # " 7 % #%!,- . $# %!"% + + + + + + + + 5 year CAGR 18% % ? #$*% + + + + + + + + 5 year CAGR 47% + ,- 9 ,- 4 . $# %!"% " 1 * ! , + > 6 =#!%
Slide 21: European markets still nascent
European markets still nascent Germany and France each of same scale as Australia four years ago Client and revenue trends FY07 to FY12 H1 Clients trading since launch 8 8 . $# %!"% >#%!7 / % .(#" !" #$ 8 8 % 7 % ( / % 8 >5 "% 9) & !" #$ %&" ' 8 8 8 8 8 8 8 8 8 1 3 5 7 9 11 13 15 17 19 21 23 25 27 2
Slide 22: Continuing high levels of client service
Continuing high levels of client service Focus on the quality of pricing and execution Key initiatives Net promoter score1 overview Treating Customers Fairly (TCF) > "'' $#( #"# > & $# 7% %' C 2 3 45 3 Multilateral trading facilities (MTF) 3 C 2 3 $6 3 Price improvement 3 C 7 3 Automation of dealing
Slide 23: Summary
Summary Growth continues Strong growth in H1 driven by - Continued growth in client base - Improved revenue per client Established markets deliver good growth Subdued client activity in December and early January Competitive position is strong - Financial strength and focus of full client money prot
Slide 24: Appendices
Appendices
Slide 25: Appendix: Regulatory capital
Appendix: Regulatory capital Importance of a strong regulatory capital position Year on year comparison H1 12 H1 11 FY 11 Total capital resources £m £m £m increased by 10% from year Regulatory capital Total Tier 1,2 & 3 capital 406.9 342.8 380.1 end position Intangible assets (adjusted) (116.1) (117
Slide 26: Appendix: Client retention
Appendix: Client retention Client retention levels consistent excluding periods after extreme trading conditions Client retention rates by year and half year trend FY07 to FY12 H1 1 ,- . $# %!"% #%!> =(!2% % + #%!> " % ("%!(!" #$ =(!2% % 6 ) %(( #$ 8 8 8 8 8 + $" %# + + + + + + + " $## %& $ 8 8 8 8
Slide 27: Appendix: Trading revenue per client – financial only
Appendix: Trading revenue per client – financial only Half-year analysis FY06 to FY12 H11 Turnover (£m) H106 H206 H107 H207 H108 H208 H109 H209 H110 H210 H111 H211 H112 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 UK CFD 6.6 8.7 10.7 15.2 17.6 16.0 16.9 15.6 24.1 27.6 26.7
Slide 28: GROUP
GROUP