Ig Group Holdings Plc · LSE:IGG
Ig — H1 FY2015 Earnings Presentation
28 slides from Ig's earnings presentation, January 2015
Slide 1: Results Presentation
RESULTS PRESENTATION Half year ended 30 November 2014 IG | H1 FY15 RESULTS PRESENTATION | P1
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 uncertainties because they relate to events, and depend on circumstances, that will, or may, occur in the future. If the assum
Slide 3: Swiss Franc Movement - 15th January
SWISS FRANC MOVEMENT - 15th JANUARY Maximum £30 million impact from market exposure and client debts IMPACT EUR/CHF MOVEMENT 1.25 30% movement in Swiss Franc 1.20 Lack of liquidity during move 1.15 715 clients had a net £161.6m short position 1.10 1.05 Currently 327 clients with outstanding
Slide 4: H1 FY15 Summary
H1 FY15 SUMMARY Strong results after a slow start H1 FY15 RESULTS 5 YEAR REVENUE, PBT 1 AND DIVIDEND 400 350 Net trading revenue £197.4m, up 8% on H1 FY14 300 H2 Revenue 250 PBT £101.4m, up 2.8%¹ H1 Revenue Revenue (£m) 200 150 PAT £78.6m, up 6% 100 50 - Effective tax rate down to 22.5% 0 FY11
Slide 5: Income Statement
INCOME STATEMENT Record first half revenue with increased investment to support future growth YEAR ON YEAR COMPARISON H1 FY15 H1 FY14 Yr on Yr FY14 Record net trading revenue, ahead by £14.7m £m £m £m - Active clients up 2.7% 1 197.4 182.7 8.0% 370.4 Net trading revenue - Average revenue per clien
Slide 6: Revenue Bridge
REVENUE BRIDGE Clients responded to increased volatility in Q2 FY15 HALF YEAR REVENUE BRIDGES QUARTERLY ACTIVE CLIENTS¹ 192.9 (12.9) (18.1) 15.7 182.7 ROW Europe Australia UK (inc Ireland) 90 5.2 H2 FY13 H1 FY14 80 70 60 Clients (000s) Revenue (£m) 16.5 197.4 50 187.7 2.0 (13.7) 5.0 40 30 H2 FY14 H1
Slide 7: Drivers of Revenue
DRIVERS OF REVENUE Stronger revenue growth in more established markets REVENUE AND CLIENTS BY COUNTRY Revenue (£m) Clients Revenue per client Q1 FY15 Q2 FY15 H1 FY15 H1 FY14 Yr on Yr % Yr on Yr % Yr on Yr % UK (inc Ireland) 45.9 60.9 106.8 93.4 14.3% (0.8%) 15.2% Australia 12.3 16.4 28.7 27.0 6.6% (
Slide 8: Revenue Composition
REVENUE COMPOSITION Support provided by diversity in asset class REVENUE BY PRODUCT H1 FY15 REVENUE COMPOSITION 60 Equity Indices Binaries 9% 50 Commodities Shares 18% 4% 40 Forex 17% Revenue (£m) 30 Forex 20 Equity Indices 52% Shares 10 Binaries Significant Q2 increase in Equity Indices Commoditi
Slide 9: Daily Revenue Trend
DAILY REVENUE TREND Client activity in the period key driver of revenue H1 FY15 REVENUE DISTRIBUTION DAILY REVENUE VARIABILITY 12 1.8 3.0 1.6 2.5 9 1.4 1.2 2.0 Count of Days Revenue (£m) Coefficient 1.0 Daily revenue (60 day 6 1.5 rolling average) 0.8 Coefficient of 0.6 variability (60 day 1.0 rolli
Slide 10: Operating Cost Detail
OPERATING COST DETAIL Increased cost base to support future growth YEAR ON YEAR COMPARISON H1 FY15 H1 FY14¹ Yr on Yr Costs excluding variable remuneration up 13.6% £m £m Investment in Switzerland, mobile and Dubai main Salaries (35.4) (31.2) drivers of cost increases Advertising and Marketing (1
Slide 11: Broker Margin
BROKER MARGIN BROKER MARGIN (£m) FY 11 H2 FY 12 H1 FY 12 H2 FY 13 H1 FY 13 H2 FY 14 H1 FY 14 H2 FY15 H1 £217m £184m £196m £243m £246m £273m £285m £188m FY13 Peak £298m FY14 Peak £290m 300 280 Margin requirement (£m) 260 240 220 200 180 160 140 120 IG | H1 FY15 RESULTS PRESENTATION | P11
Slide 12: Net Own Funds Available
NET OWN FUNDS AVAILABLE Broker margin significantly below recent highs NET OWN FUNDS AVAILABLE1 APPLICATION OF OWN FUNDS AVAILABLE1 H1 FY15 H1 FY14 FY14 H1 FY15 £m £m £m £m Own funds generated from operations 87.4 79.1 160.6 Net own funds available 282.6 Movement in working capital (16.8) (11.3) (3.
Slide 13: Regulation
REGULATION No significant recent developments but continue to monitor UPDATE Europe - FTT: Enhanced co-operation continues – another new target date of 1 Jan 2016 - MiFID II: Technical advice published Dec 2014 – no material concerns - EMIR: Adhering to all requirements Singapore - Continue to a
Slide 14: Summary
SUMMARY Period marked by the difference between the two quarters FINANCIAL REVIEW Strong second quarter following a subdued first three months Business responded well to increased client activity in Q2 Robust profit and operational cash delivery in the period Dividend supported by strong cas
Slide 15: Business Update
THANK YOU BUSINESS UPDATE IG | H1 FY15 RESULTS PRESENTATION | P15
Slide 16: Overview
OVERVIEW Focused investment in the period to deliver on IG’s strategy 5 STRATEGIC OBJECTIVES Address the needs of active traders Achieve, maintain or extend market leadership Strengthen global presence Deliver quality service to clients Sustain technology leadership IG | H1 FY15 RESULTS PR
Slide 17: Stockbroking
STOCKBROKING Early stages of key strategic initiative to broaden addressable market ACCOUNTS FIRST FUNDED EARLY PROGRESS 1800 Encouraging early take-up, especially from new 1600 clients Existing clients New clients 1400 Collateral launched in late November Accounts first funded (cumulative) 1200
Slide 18: Progress in Europe
PROGRESS IN EUROPE Europe remains a significant medium term opportunity EUROPEAN REVENUE TREND PERFORMANCE IN PERIOD Norway 45 Netherlands 25 Performance in period weaker than anticipated Sweden France 40 Iberia Recent weakness in major EU economies Germany Italy 20 35 Unique European Clients
Slide 19: Mobile Development
MOBILE DEVELOPMENT Increased focus on client acquisition on mobile PROGRESS TO DATE Dedicated mobile App development aimed at improving client acquisition Completed IG Major Markets App for iPad in the UK in December IG MAJOR MARKETS APP IG’s CURRENT TRADING APP Target audience New and potential
Slide 20: Geographic Expansion
GEOGRAPHIC EXPANSION Ongoing progress in Switzerland and the US SWITZERLAND NADEX Banking licence granted in September 450 3,000 Volume (contracts traded) 400 Members trading - Enables full product set offering 2,500 350 Began trading in October 300 2,000 Members trading National advertising c
Slide 21: Geographic Opportunities
GEOGRAPHIC OPPORTUNITIES Targeted expansion in new regions remains a strategic objective DUBAI OTHER MARKETS Plan to open by end of FY15 Continued assessment of regions for potential opportunity - Premises secured and recruitment started Encouraging progress on licence application China - Re
Slide 22: Conclusion
CONCLUSION Continued investment in future growth after strong Half Year SUMMARY Stockbroking successfully launched in UK - Selective international roll out commencing in 2015 Europe remains a significant opportunity Strategic investment in business ongoing for long term growth - Platform - Geo
Slide 23: Appendices
THANK YOU APPENDICES IG | H1 FY15 RESULTS PRESENTATION | P23
Slide 24: Appendix 1: Net trading revenue per client
Appendix 1: Net trading revenue per client HALF YEAR ANALYSIS1 Revenue (£m) H1 FY12 H2 FY12 FY12 H1 FY13 H2 FY13 FY13 H1 FY14 H2 FY14 FY14 H1 FY15 UK (inc Ireland) 102.1 89.7 191.8 86.9 99.5 186.5 93.4 99.3 192.7 106.8 Australia 32.7 25.2 58.0 28.2 28.1 56.3 27.0 25.2 52.2 28.7 Europe 37.8 34.5 72.2
Slide 25: Appendix 2: Client trading activity
Appendix 2: Client trading activity CLIENT RETENTION RATE TREND FY12 FY13 FY14 New accounts (000s) 67.6 55.9 55.0 First trades (000s) 48.0 37.9 33.7 Implied conversion rate (%) 71% 68% 61% Total active clients (000s) 143.3 136.1 126.1 Clients trading from prior period (000s) 95.3 98.1 92.4 Clients t
Slide 26: Appendix 3: Regulatory capital
Appendix 3: Regulatory capital YEAR ON YEAR COMPARISON H1 FY15 H1 FY14 £m £m Regulatory capital Total Tier 1 568.0 514.8 Intangible assets (124.1) (119.4) Investment in own shares (1.2) (1.1) Deferred tax asset¹ (7.0) 0.0 Total capital resources (a) 435.7 394.3 Capital resources requirement - Pillar
Slide 27: Appendix 4: Market share
Appendix 4: Market share PRIMARY ACCOUNT MARKET SHARE COMPARISON TO BIGGEST COMPETITOR Current Prior year IG Biggest competitor 50 50 41 40 40 40 38 Market share (%) 40 Market share (%) 34 33 33 30 26 30 26 25 22 22 22 19 20 17 20 17 17 17 17 13 12 13 13 10 10 8 0 0 UK SB UK CFD Australia Singapore
Slide 28: Thank You
THANK YOU END IG | H1 FY15 RESULTS PRESENTATION | P28