Slide 1: Results presentation, Year ended 31 May 2010
Results presentation Year ended 31 May 2010 Tim Howkins, CEO Matt Tooth, Interim Finance Director
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: Continuing to deliver on our strategy
Overview Continuing to deliver on our strategy Performance Ongoing strategy Breadth of product offering caters for Maintain market leading positions in all market conditions existing markets Net recovery of doubtful debts, despite Continue to expand IG’s global reach chaotic markets in May
Slide 4: Growth story continues
Growth story continues FY10 results Performance since IPO 350 Trading revenue £298.6m, up 16% 300 5 year revenue CAGR 37% Adjusted PBT1 £157.6m, up 25% 250 Overseas Revenue (£m) 200 UK Adjusted EPS1 30.8p, up 24% 150 100 Proposed final dividend of 13.5p 50 Full year dividend of 18.5p, up 2
Slide 5: Business review
Business review
Slide 6: Income statement
Income statement Strong revenue and profit growth continues Year on year comparison FY09 FY10 Yr on Yr Total H1 H2 Total growth Trading revenue Interest income on client money 257.1 12.9 143.8 1.8 154.8 4.0 298.6 5.8 16% 16% Trading revenue growth Total revenue Interest expense on client money 270
Slide 7: Revenue by region
Revenue by region Continued growth in trading revenues Year on year comparison: H210 vs H209 growth rates 90.0 18% H109 H209 H110 H210 UK revenue growth - 80.0 increased shares business 70.0 Market-leading Australian 60.0 business increases market Revenue (£m) 50.0 share to 29% (FY09 25%)1 40.0
Slide 8: Revenue by product and by channel
Revenue by product and by channel Shares stage a comeback H209 – H210 Financial revenue Year on year comparison: partners revenue H2 FY09: £126.0m Binaries £4.4m FY09 FY10 Shares Commodities 4% £22.0m 16.0 £5.2m 17% 4% 14.0 + 31% + 40% + 49% + 47% 12.0 Revenue (£m) 10.0 Forex £50.7m 8.0 40% Equity i
Slide 9: Volatility of revenues
Volatility of revenues Trading revenue volatility remains low Daily trading revenue volatility Distribution of FY10 daily trading revenue 1.4 daily revenue (60 day rolling average) 3.0 20 daily mean £1.14m revenue volatility (60 day coefficient of variability) 18 1.2 2.5 16 1.0 14 Revenue (£000s) 2.
Slide 10: Operating costs overview
Operating costs overview Year on year operating costs reflect change in doubtful debts and performance related bonuses FY09 to FY10 operating costs bridge 140 130 13.2 Operating costs (£m) 120 -19.2 2.6 4.8 133.2 133.8 126.4 3.6 110 4.4 120.0 115.2 111.6 107.2 107.2 100 FY09 operating Doubtful debts
Slide 11: Cost base
Cost base The importance of salary and marketing costs Year on year comparison FY09 FY10 Total H1 H2 Total Operating costs up 10% year on £'000 £'000 £'000 £'000 year excluding doubtful debt, Salaries 40,165 21,737 23,202 44,939 Advertising and marketing 23,682 12,812 14,485 27,297 bonus and excep
Slide 12: Cash and Regulatory capital
Cash and Regulatory capital Strong capital and cash position Year on year comparison May 09 May 10 £m £m Working capital Strong cash generation Amounts due from brokers & clients 183.1 206.2 Cash and cash equivalents 520.4 678.6 Client balances increase reflects Amounts due to clients -511.6 -60
Slide 13: Client recruitment
Client recruitment Account opening remains a key lead indicator Quarterly account opening FXOnline acquisition and 26,000 exceptional volatility Oct 08 FXOnline cash back 39k new H210 24,000 FXOnline campaigns end Sept 09 financial accounts 22,000 New Offices opened 20,000 Australia Maintained h
Slide 14: Trading revenue per client
Trading revenue per client Revenue per client is now more stable 1 Half yearly revenue by client FY09 to FY10 Average revenue per client by month 2009-2010 UK Spreadbetting UK CFD Australia Europe Japan mean £446 £5,000 £600 £4,500 Average revenue per client (£) £500 £4,000 Revenue per client (£) £3
Slide 15: Active clients
Active clients Revenue growth reflects growth in active client numbers Monthly revenue and active clients trend FY09-FY10 35 Clients trading (000s) Revenue (£m) 80 Number of clients trading drives 70 revenue growth 30 60 Revenue per client largely stable Clients trading (000s) 25 Seasonal and
Slide 16: Strategy update
Strategy update
Slide 17: Client offering
Client offering IG is continually improving its client offering Improving our product offering Forex – variable spreads (April 2009) Shares Tiered margining (September 2009) MTFs (January 2010) Indices – spread cuts (January and March 2010) 1 Ongoing improvements to our dealing platfor
Slide 18: UK Financial overview
UK Financial overview Resilient market UK financial revenue FY06 - FY10 100 Business has recovered from the 90 impact of October 08 80 70 Account opening remains strong Mix between CFD and SB Revenue (£m) 60 50 influenced by: 40 Market conditions 30 CGT rate 20 10 No adverse impact from
Slide 19: Strong organic growth
Strong organic growth Newer offices growing strongly Number of clients dealing (monthly since launch)1 Number of clients dealing (monthly since June 06) 4,000 Australia Singapore 40,000 UK Italy Germany Australia 3,500 35,000 France Iberia Europe US Sweden 3,000 30,000 2,500 25,000 2,000 20,000 1,50
Slide 20: Case study of overseas expansion: Germany
Case study of overseas expansion: Germany Recent success story German office opened October 06 12 Germany revenue summary FY07 - FY10 Market share concentrated amongst IG, 10 CAGR in excess of 150% Revenue (£m) 8 CMC, RBS and Flatex 6 Key initiatives this year 4 2 Increased Marketing 0 1-p
Slide 21: South Africa acquisition
South Africa acquisition Emerging market with longer term potential £1.6m cash acquisition of business and clients of Ideal CFD Financial Services (Pty) Ltd Established April 06 Vendor retains 20% interest in IG IG partner for 4 years South Africa FY10 revenue £3.4m split 56:44 between IG
Slide 22: FXOnline update
FXOnline update Early signs of Japan stabilising Revenue and lots traded growth since Jan 10 May 10 significant volatility benefit Positive client feedback on low spreads and quality of execution Significant challenges remain in Japan: Leverage limits Competitive environment FXOnline cus
Slide 23: US update
US update Nadex opportunity beyond FY11 Nadex (North American Derivatives Exchange) offers options and futures on forex, equity indices and commodities Primary distribution channel will be via brokers CFTC permission for intermediation received in March IT work by trading platform providers
Slide 24: Summary
Summary IG is in position to deliver continued growth IG is clear market leader in the UK, Australia and many of its developing markets Many of the newer markets may have long-term potential similar to that of the UK and Australia Nadex is an interesting long-term opportunity Current trading
Slide 25: Appendices
Appendices
Slide 26: Trading revenue per client - financial business
Trading revenue per client - financial business Half-year analysis FY06 – FY101 Turnover (£m) H106 H206 H107 H207 H108 H208 H109 H209 H110 H210 UK SB 24.0 31.6 33.6 36.6 48.0 56.2 63.4 54.6 55.8 55.1 UK CFD 6.6 8.7 10.7 15.2 17.6 16.0 16.9 15.6 24.1 27.6 UK Total 30.7 40.3 44.3 51.9 65.6 72.2 80.4 7
Slide 27: Geographical margin analysis
Geographical margin analysis Breakdown of FY10 segment EBITDA Year ended 31 May 2010 UK Australia Europe Japan ROW Central Total £000 £000 £000 £000 £000 £000 £000 Segment trading revenue 168,477 45,660 47,431 23,946 13,037 - 298,551 Interest income on segregated client funds - - - - - 5,791 5,791 R
Slide 28: IG Group
GROUP