Ig Group Holdings Plc · LSE:IGG

Ig — FY2016 Earnings Presentation

25 slides from Ig's earnings presentation, 2016

  1. Slide 1: Results Presentation: Year Ended 31st May 2016

  2. Slide 2: Forward-looking statements 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 expectations

  3. Slide 3: Financial Results

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  4. Slide 4: FY16 financial highlights

     Net trading revenue £456.3m, up 14% on FY15  PBT £207.9m, up 7.6%  PAT £164.3m, up 9%  Diluted EPS 44.58p, up 8.5%  £197.9m own funds generated from operations  Final dividend 22.95p, full year 31.40p, up by 11.5% 1 500 50 35 30 400 40 25 300 30 20 200 20 15 10 100 10 5 0 0 0 FY12 FY13 FY14 F

  5. Slide 5: Income statement and key drivers

    H1 16 H2 16 FY16 FY15 Yr on Yr  Net trading revenue ahead by £m £m £m £m % £56.1m (14%) on FY15 Net trading revenue1 214.8 241.5 456.3 400.2 14.0% – Active clients up 12% – Revenue per client up Net interest on client funds 1.7 1.7 3.4 4.5 1.7% Betting duty & FTT (6.4) (4.8) (11.2) (5.9) Other oper

  6. Slide 6: Net trading revenue and client bridge

    (000’s) ¹ 180 80.1 160 14.5 (47.1) 456.3 140 8.6 120 400.2 Existing clients Returning/new clients 100 = (£32.6m) = £88.7m 80 60 40 20 FY15 FY16 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 1. FY15 excludes impact of Swiss franc event 2. Unique clients trading in each period

  7. Slide 7: Revenue and clients by region

    Yr on Yr Revenue (£m) FY16 FY15 % 250 UK (inc Ireland) 231.1 211.9 9.0% Europe 98.6 80.9 21.8% 200 Australia 64.0 59.2 8.0% 150 ROW (inc Japan) 62.6 48.2 30.1% TOTAL 456.3 400.2 14.0% 100 Clients1 (000’s) 50 UK (inc Ireland) 64.5 60.4 6.8% Europe 35.0 29.7 17.8% 0 Australia 19.8 18.7 6.0% FY12 FY13

  8. Slide 8: Operating costs

    H1 16 H2 16 FY16 FY15 Yr on Yr  Operating costs excluding £m £m £m £m % variable remuneration and marketing up by £15.2m on Salaries (42.4) (40.8) (83.3) (74.1) FY15 Advertising and marketing (21.4) (28.3) (49.7) (37.8) Premises related costs (5.9) (6.2) (12.1) (11.1)  Salaries increase due to ful

  9. Slide 9: Half-yearly revenue trend

    H2 FY14 H1 FY15 H2 FY15 H1 FY16 H2 FY16 £285m £188m £205m £210m £228m 300 280 260 240 220 200 180 160 140 May Nov May Nov May 2014 2014 2015 2015 2016

  10. Slide 10: Net own funds available and liquidity

    Net own funds available¹ FY16 FY15 Application of FY16 £m £m own funds available¹ £m Own funds generated from operations 197.9 136.8 Net own funds available 360.1 Movement in working capital (0.6) 7.9 Overseas regulatory and working capital (64.3) Other (including capex) (14.9) (13.5) Funds required

  11. Slide 11: Business Review

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  12. Slide 12: Maximising current opportunity

    1 Product diversification 2 Geographic development 3 Maximising current opportunity  Optimising marketing efficiency and client conversion  Increasing client activity and retention  Maximising client value

  13. Slide 13: Product diversification

     Successful ISA campaign with 760 new active ISA accounts in March and April 1,200 3,600  Monthly active clients up by 108% since beginning of FY16 1,000 3,000  Cross sell to leverage products stabilising at 800 2,400 around 15%  SIPPs product offered in UK in May 2016 600 1,800  Stockbroking l

  14. Slide 14: Geographic development: Europe and Switzerland

     Europe revenue 22% ahead of FY15  Altered approach to operate out of strategic hubs 1,200 – Premised on improved online marketing skills 1,000 – Requires less physical presence  Switzerland revenue progression ahead of the 800 average 600  Very strong early revenue performance 400 200  FY16 re

  15. Slide 15: Marketing spend payback

    ¹ 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Month Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY15 FY16  Average payback of marketing spend occurs in the fourth month  Margin dilution as marketing ramps up 1. Marketing spend (including irrecoverable VAT) in the period divided by number of first tr

  16. Slide 16: Client applications and conversion

    120,000 100,000 80,000 60,000 40,000 20,000 0 H1 H2 H1 H2 H1 H2 FY14 FY15 FY16 FY14 FY14 FY15 FY15 FY16 FY16  Marked increase in prospective clients starting application process, particularly via mobile  Continued strong focus on conversion – New desktop and mobile-optimised application forms unde

  17. Slide 17: My IG, new web platform and client lifetime

     ‘My IG’ provides client landing page with cross 36% 5+ years sell opportunity  New web trading platform in development for launch later this year 18% 3-5 years – Currently undergoing extensive testing and gathering feedback 20% 1-3 years – Existing platform remains popular and technically strong

  18. Slide 18: Long-term revenue and client trends

    70 60 50 40 30 20 10 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Jun Sep Dec Mar Jun Sep Dec Mar May 14 14 14 15 15 15 15 16 16 1. Excluding impact of Swiss franc event (Jan 15) 2. Including impact of Swiss franc event (Jan 15)

  19. Slide 19: Regulatory update

     Doesn’t apply to IG, no impact in FY16 or forward  Continue to anticipate small impact from 2012 FX leverage proposals  No explicit progress on Financial Transactions Tax  ASIC support for full segregation of client money  MiFID II delayed until January 2018 – Requires government action – Prop

  20. Slide 20: Summary and outlook

     Return to strong revenue and earnings growth  Continued good cash generation and robust balance sheet  Good operational progress in the year  Heavy project build phase coming to a close  Investment initiatives beginning to pay off – New offices performing well – Stockbroking relaunch promising

  21. Slide 21: Appendices

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  22. Slide 22: Revenue and clients by region, five-year history

    1 FY12 FY13 FY14 FY15 FY16 Revenue (£m) H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY UK (inc Ireland) 102.1 89.7 191.8 86.9 99.5 186.5 93.4 99.3 192.7 106.8 105.1 211.9 110.3 120.8 231.1 Europe 37.8 34.5 72.2 32.1 39.0 71.0 40.2 41.9 82.1 40.5 40.4 80.9 45.6 53.0 98.6 Australia 32.7 25.2 58.0 28.2 2

  23. Slide 23: New clients, first trades and active clients

    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 Clients trading from prior period (%) 68% 75% 73% FY13 FY14 FY15 FY16

  24. Slide 24: Capital resources and Common Equity Tier 1

    Common Equity Tier 1 capital 580.8 520.7 2 Intangible assets (125.1) (124.0) Investment in own shares (1.8) (1.1) Deferred tax asset 1 (7.2) (7.1) Total Capital Resources a 446.8 388.5 Total Risk Exposure Amounts - Pillar 1 Equivalent b (1,568.4) (1,401.3) Total Capital Requirement - Pillar 1 (8% of

  25. Slide 25: END

IG Group Holdings — FY2016 Earnings Presentation on 6ix