Ig Group Holdings Plc · LSE:IGG

Ig — H1 FY2017 Earnings Presentation

30 slides from Ig's earnings presentation, January 2017

  1. Slide 1: Results Presentation

    RESULTS PRESENTATION Half Year Ended 30th November 2016 IG Group Holdings plc FY17 H1 Results

  2. Slide 2: Disclaimer

    DISCLAIMER This presentation, prepared by IG Group Holdings plc (the “Company”), may contain forward-looking statements about the Company. Forward-looking statements involve known and unknown risks and uncertainties because they are beyond the Company’s control and are based on current beliefs and e

  3. Slide 3: Financial Results and Position

    FINANCIAL RESULTS AND POSITION Paul Mainwaring Chief Financial Officer IG Group Holdings plc FY17 H1 Results

  4. Slide 4: FY17 H1 Summary

    FY17 H1 SUMMARY Solid revenue and profit growth FY17 H1 RESULTS  Net trading revenue £244.9m, up 14% on FY16 H1  PBT £105.2m, up 7%  PAT £83.3m, up 9%  Diluted EPS 22.55p, up 8%  £93.9m own funds generated from operations, up 8%  Interim dividend of 9.42p, in line with dividend policy 1 5 YR R

  5. Slide 5: Income Statement

    INCOME STATEMENT Continued investment in growth YEAR ON YEAR COMPARISON FY17 H1 FY16 H1 Yr on Yr  Net trading revenue up by £30.1m (14%) £m £m % on FY16 H1 Net trading revenue 244.9 214.8 14% – Active clients up 22% – Revenue per client Net interest on client funds 1.8 1.7 down 6% Betting duty & FT

  6. Slide 6: Revenue and Active Clients

    REVENUE AND ACTIVE CLIENTS Growth in active clients drives growth in revenues ACTIVE CLIENTS (000’s) 1 HALF YEAR REVENUE BRIDGES (£m) FY16 H2 160 241.5 140 FY16 H1 7.9 30.7 214.8 (19.9) 8.0 120 100 80 Existing clients Returning/new clients = (£12.0m) 60 = £38.7m FY16 H2 FY17 H1 40 244.9 241.5 20 (15

  7. Slide 7: Drivers of Revenue

    DRIVERS OF REVENUE Revenue and active clients up in all regions REVENUE AND CLIENT TRENDS FY17 H1 REVENUE COMPOSITION FY17 FY16 Yr on Yr Revenue (£m) H1 H1 % Binaries 12% Shares UK (incl Ireland) 120.0 110.3 9% 16% Europe 53.3 45.6 17% 11% 15% Australia 35.1 30.4 16% Commodities 12% 7% ROW 36.5 28.5

  8. Slide 8: Operating Expenses

    OPERATING EXPENSES Continued investment in online marketing YEAR ON YEAR COMPARISON FY17 H1 FY16 H1  Operating expenses up 23% on FY16 H1 £m £m  Continued investment in online marketing driving Salaries (46.2) (42.4) client recruitment Bonus (7.5) (8.7)  Operating expenses excluding marketing Sha

  9. Slide 9: Balance Sheet

    BALANCE SHEET Unaudited Unaudited 30 Nov 16 31 May 16 30 Nov 15 £m £m £m Goodwill 108.2 107.1 107.0 Intangible assets 50.0 18.0 16.9 Property, plant and equipment 13.4 13.0 12.7 Fixed Assets 171.6 138.1 136.6 Liquid asset buffer 82.6 82.6 82.9 Amounts at brokers 338.6 298.9 254.6 Cash in IG bank acc

  10. Slide 10: Regulatory Capital

    REGULATORY CAPITAL Unaudited 30 Nov 16 31 May 16 £m £m Shareholders' Funds 680.7 663.0 less declared dividends (34.6) (84.0) less goodwill (108.2) (107.1) less intangible assets (50.0) (18.0) less deferred tax assets (7.4) (7.2) Capital resources A 480.5 446.7 Total Pillar 1 Risk Exposure Amounts B

  11. Slide 11: Liquidity

    LIQUIDITY MOVEMENT IN OWN FUNDS AVAILABLE LIQUIDITY FY17 H1 FY16 H1 FY16 FY17 H1 £m £m £m £m Own funds generated from operations 93.9 87.2 197.9 Liquid assets 651.3 Movement in working capital (15.9) (7.3) (0.6) Broker margin requirement (277.6) Capital expenditure: Non-UK liquid assets (96.6) 1 Pur

  12. Slide 12: Broker Margin

    BROKER MARGIN PEAK MARGIN REQUIREMENT OCT 16 (£m) £320m END NOV 16 350 £278m 300 250 200 150 FY17 H1 average FY16 average £264m 100 £213m 50 0 1 Jun 30 Nov 31 May 30 Nov 2015 2015 2016 2016 12 IG Group Holdings plc FY17 H1 Results

  13. Slide 13: Business Review

    BUSINESS REVIEW Peter Hetherington Chief Executive IG Group Holdings plc FY17 H1 Results

  14. Slide 14: IG in Transition

    IG IN TRANSITION A changing landscape MACRO DEVELOPMENTS  Major political change happened and more possible  Regulatory transition in progress - particularly FCA and Europe  MiFID II and EMIR implementation IG STRATEGIC TRANSITION  Move towards sophisticated trading and investing  Investment li

  15. Slide 15: UK (incl Ireland)

    UK (incl Ireland) REVENUE (£m) CLIENTS REVENUE PER CLIENT (£) FY17 H1 120.0 +9% FY17 H1 60,589 +30% FY17 H1 1,979 -16% FY16 H1 110.3 FY16 H1 46,760 FY16 H1 2,361 The UK segment comprised our offices in London and Dublin and constituted 49% of Group revenue in the period  First trades up 114% on FY1

  16. Slide 16: FCA Consultation

    FCA CONSULTATION IG agrees that the FCA should act to improve outcomes for UK consumers MAIN ELEMENTS OF THE FCA PROPOSALS  Ban on bonus offers  Enhanced risk warnings, including win/loss ratios  Split of retail traders into Experienced and Inexperienced  Leverage restrictions – differentiation

  17. Slide 17: Europe

    EUROPE REVENUE (£m) CLIENTS REVENUE PER CLIENT (£) FY17 H1 53.3 +17% FY17 H1 29,770 +18% FY17 H1 1,791 -1% FY16 H1 45.6 FY16 H1 25,289 FY16 H1 1,802 The Europe segment comprised the German, French, Italian, Spanish, Swedish, Luxembourg and Swiss offices and accounted for 22% of Group revenue in H1,

  18. Slide 18: Australia

    AUSTRALIA REVENUE (£m) CLIENTS REVENUE PER CLIENT (£) FY17 H1 35.1 +16% FY17 H1 17,112 +9% FY17 H1 2,053 +7% FY16 H1 30.4 FY16 H1 15,761 FY16 H1 1,927 The Australia segment comprised the Melbourne office and the revenue from New Zealand and other countries in the Asia Pacific region where IG has no

  19. Slide 19: Rest of the World

    REST OF THE WORLD REVENUE (£m) CLIENTS REVENUE PER CLIENT (£) FY17 H1 36.5 +28% FY17 H1 27,974 +19% FY17 H1 1,305 +8% FY16 H1 28.5 FY16 H1 23,504 FY16 H1 1,212 The Rest of World segment comprised the offices in Singapore, Japan, South Africa, Dubai and the retail exchange Nadex (in the US). Segment

  20. Slide 20: Limited Risk Accounts

    LIMITED RISK ACCOUNTS Successful launch of new limited risk accounts1 in Q1 2 2 ACCOUNTS OPENED Q2 FY17 FIRST TRADES Q2 FY17 11% 50% 40% 19% 81% 30% 25% 69% 89% 81% 70% 75% 60% 50% 31% 19% UK Europe Australia ROW UK Europe Australia ROW (incl Ireland) (incl Ireland) Standard Account Limited Risk Acc

  21. Slide 21: Client Recruitment

    CLIENT RECRUITMENT Investment in online marketing transforming client recruitment CLIENT RECRUITMENT (excl Nadex) CLIENT ACQUISITION (incl Nadex) Client first trades Marketing cost per first trade (£)¹ 35,000 1,600 140,000 Applications 30,000 1,400 120,000 Opens 1,200 First trades 25,000 100,000 1,0

  22. Slide 22: Client Value and Attrition

    CLIENT VALUE AND ATTRITION 1 1 CLIENT ATTRITION CUMULATIVE AVERAGE CLIENT VALUE 100% 5,000 80% 4,000 60% 3,000 40% 2,000 Target marketing cost per first trade2 20% 1,000 0% 0 0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 2 4 6 8 10 12 14 16 18 20 22 24 Months Months FY12 FY13 FY14 FY15 FY16 FY17 

  23. Slide 23: Client Retention

    CLIENT RETENTION REVENUE BY CLIENT TENURE NEW WEB TRADING PLATFORM  Rolled out to new spread betting clients in early January 2017  Now available to all existing spreadbetting clients 35% 35%  Positive feedback received to date  Roll out to continue through 2017, including CFD clients 15% 20% 5+

  24. Slide 24: Conclusion

    CONCLUSION Summary  A strong set of results in the first half – business showing a clear pattern of growth  Increased marketing spend continuing to be very effective  Other costs growing in line with revenue  Business maintains an appropriately robust balance sheet  Important progress made in t

  25. Slide 25: Appendices

    APPENDICES IG Group Holdings plc FY17 H1 Results

  26. Slide 26: Appendix 1: Net trading revenue per client

    APPENDIX 1: Net trading revenue per client Half year analysis1 FY13 FY14 FY15 FY16 FY17 Revenue (£m) H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY H1 UK (incl Ireland) 86.9 99.5 186.5 93.4 99.3 192.7 106.8 105.1 211.9 110.3 120.8 231.1 120.0 Europe 32.1 39.0 71.0 40.2 41.9 82.1 40.5 40.4 80.9 45.6 53.0 98.6 5

  27. Slide 27: Appendix 2: Client trading activity

    APPENDIX 2: Client trading activity Client retention rate trend FY14 FY15 FY16 New clients (000’s) 55.0 71.0 100.7 First trades (000’s) 33.7 40.9 53.0 Implied conversion rate (%) 61% 58% 53% Total active clients (000’s) 126.1 136.1 152.6 Clients trading from prior period (000’s) 92.4 95.2 99.7 Clien

  28. Slide 28: Appendix 3: Revenue maximisation

    APPENDIX 3: Revenue maximisation Balance between revenue quantum and variability 1 2 REVENUE VARIABILITY REVENUE PERFORMANCE REVENUE (£m) COEFFICIENT REVENUE (£m) 2.5 2.5 80 70 2.0 2.0 60 50 1.5 1.5 40 1.0 1.0 30 20 0.5 0.5 10 0.0 0.0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Jun Nov May Nov May

  29. Slide 29: Appendix 4: FY17 H1 regional revenue composition

    APPENDIX 4: FY17 H1 regional revenue composition UK (incl Ireland) EUROPE Binaries Binaries Shares 8% Shares 10% 10% 20% Commodities 13% 7% Commodities 9% 9% 19% 11% 9% 7% FY16 Forex 10% 10% FY16 49% 44% Equity indices 65% 59% Equity indices Forex 15% 16% AUSTRALIA REST OF THE WORLD Binaries Shares

  30. Slide 30: End

    END IG Group Holdings plc FY17 H1 Results

IG Group Holdings — H1 FY2017 Earnings Presentation on 6ix