Ig Group Holdings Plc · LSE:IGG
Ig — H1 FY2009 Earnings Presentation
25 slides from Ig's earnings presentation, January 2009
Slide 1: Results presentation: Six Months ended 30 November 2008
GROUP Results presentation Six Months ended 30 November 2008 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: Introduction
Introduction Strong growth continues Implementing the strategy Revenue £126m, up 47% Continued growth in the UK Adjusted PBT £58m, up 21% (1) 39% of H1 09 Financial revenue is now outside the UK : H1 exit run rate of Interim dividend of 4.0p per share (up 33%) 50% Record levels of account opening an
Slide 4: Financial Results
Financial Results
Slide 5: Income statement
Income statement Strong revenue and profit growth continues Year on year comparison H1 09 H1 08 FY 08 £'m £'m £'m Strong financial revenue Turnover 126.5 85.8 47% 184.0 growth Betting duty -6.2 -4.9 -10.8 120.3 80.9 173.2 Interest on client money 5.6 5.1 10.2 Exceptional volatility impacted Doubtful
Slide 6: Revenue by business line
Revenue by business line Financial business continues growth trend Year on year comparison FY 08 FY 09 Spread betting reflects H1 H2 FY H1 yr on yr market leadership and £'000 £'000 £'000 £'000 growth continued high client Financial recruitment levels Spread betting 43,386 51,471 94,857 58,138 34% C
Slide 7: Revenue per client trend – financial business
Revenue per client trend – financial business Convergence trend skewed by surge in FY09 H1 recruitment Revenue per client FY06 to H1 FY09 (1) ()& * &! + , -. " / && # &! + , !. " && # . & +, * . & Convergence to UK 0 ). * . & ! 1 2 * . & ' ' spread betting ' average expected ' Q2 recruitment jump '
Slide 8: Exchange rate sensitivity
Exchange rate sensitivity Growing impact of exchange rates Currency exposure Exchange rate trend Non-UK revenue represented 39% of Sterling depreciation is beneficial H1 09 Financial revenue Average H109 exchange rates: 50% since acquisition of FXOnline Euro 1.24 Yen 1.47 (post FXOnline acquisition)
Slide 9: Interest rate sensitivity
Interest rate sensitivity General downward trend in interest rates will impact H2 Client balances Currently 45% receive interest Typically 50-100 bpts below benchmark rate No impact until rates fall below 1% Remainder receive no interest Direct impact of falling rates Most exposure to £, € and Aus$
Slide 10: Cost base
Cost base Operating costs reflect exceptional doubtful debt provision Year on year comparison FY 08 FY 09 Includes £3m FXOnline H1 H2 FY H1 operating costs £'000 £'000 £'000 £'000 Reduced bonus provision Salaries 12,384 15,384 27,768 18,518 reflects H1 performance Bonus 8,051 7,920 15,971 6,514 LTIP
Slide 11: Impact of extreme volatility
Impact of extreme volatility Speed and size of market moves were severe Unprecedented volatility drove client recruitment Impact of new processes Revenue benefit impacted by doubtful debts provision £14.7m H1 charge, of which 80% arising from October Close out monitor example - Jan 14th Concentrated
Slide 12: Business review
Business review
Slide 13: Continued growth through market turmoil and economic downturn
Continued growth through market turmoil and economic downturn Client behaviour stable through extraordinary conditions Median client balances (£) (1) Average daily performance (2) 600 Established clients New clients 1.4 500 1.2 average daily revenue £m 1.0 400 0.8 300 0.6 200 0.4 0.2 100 0.0 0 Sep-0
Slide 14: Financial business
Financial business Account opening remains a key lead indicator Quarterly account opening (1) FXOnline 26,000 acquired Oct 08 24,000 Q2 FY09 24,000 FX Online Financial account 22,000 CFD - New Offices Webinar openings compared to programme 20,000 CFD - Australia UK launch Mar 08 10,000 Q2 FY08 18,00
Slide 15: Overseas CFD expansion
Overseas CFD expansion Organic rollout continues to drive strong growth Number of clients dealing (monthly) 2,000 - # .) Newer offices outperforming 1,800 early experience in Australia 1,600 Minimal set up costs, modest 1,400 headcount requirement 1,200 7 Milan office supplements Italian 1,000 desk
Slide 16: International diversification
International diversification Financial revenue run rate: 50% outside UK FY09 overseas Financial revenue Exit run rate Financial revenue by geography (1) ROW Other Asia 2% Europe (excl UK) Asia Pacific 70 60% 60 Rest of World % of Financial revenue 13% 50% % of Financial revenue 50 39% 40% Revenue £
Slide 17: FXOnline
FXOnline A major strategic step Delivers immediate scale in a key strategic market Integration going well: Minimal integration costs FXO platform relocated to IG data centres Delivering expected synergies Feb 2009: Launch IG’s PureDeal platform and CFDs Strong client recruitment White label opportun
Slide 18: US progress
US progress Significant opportunity: new products to boost growth IG Markets Inc Started trading in April 2008 OTC spot forex, forex options and forex binary options Strong revenue growth Recruitment levels in line with Europe despite lower marketing spend Testing increased marketing spend in H209 H
Slide 19: Future developments
Future developments Continued focus on driving growth Immediate focus is growing existing business Evaluating new markets but limited financial impact expected in FY09 New product and platform developments underway Direct market access platform (PureDMA) to be launched late January in Australia Othe
Slide 20: Summary
Summary Strong growth continues Growth across all financial businesses Record levels of account opening and client activity Extraordinary volatility during October Processes revised to mitigate future risk Increasing product and geographic diversification Newer overseas operations see accelerating g
Slide 21: Appendices
Appendices
Slide 22: Revenue per client – financial business
Revenue per client – financial business Strong growth in financial clients trading Half-year financial revenue FY06 – H1 FY09 (1) Turnover H1 06 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 £'m £'m £'m £'m £'m £'m £'m UK 3.5 4.8 5.8 10.1 9.6 9.0 10.3 Europe 2.0 3.2 4.6 7.2 8.9 11.5 18.4 Asia Pac (excl FXOnli
Slide 23: Risk management and quality of earnings
Risk management and quality of earnings Income volatility remains low Daily revenue volatility FY01 – FY09 H1 3.0 1,200 Daily revenue (60 day rolling average) Volatility of Revenue volatility (60 day co-efficient of variability) revenue remains 2.5 1,000 in a tight range 2.0 No loss making 800 days
Slide 24: Intangibles arising on FXOnline acquisition
Intangibles arising on FXOnline acquisition Non-cash item but material amortisation charge Acquisition of 87.5% for Y22.2bn (1) IFRS 3 requirement to allocate purchase price Y'bn Tangible Assets 2.3 Intangible Assets Customer relationships 7.8 Trade name 0.1 Goodwill (balance) 15.8 Consideration (10
Slide 25: Cash and Regulatory capital
Cash and Regulatory capital Comparison to FY 08 year end May 08 Nov 09 Working capital remains £m £m Working capital relatively flat Amounts due from brokers & clients 263.3 158.8 Cash 471.7 408.4 Falling amounts due to clients Amounts due to clients -582.7 -420.7 reflects shift away from large 152.