IG Group Holdings plc · LSE:IGG
IG — FY2007 Earnings Presentation
19 slides from IG's earnings presentation, July 2007
Slide 1: Tim Howkins, CEO and Steve Clutton, Finance Director
Tim Howkins, CEO Steve Clutton, Finance Director
Slide 2: Highlights
Highlights Revenue Revenue up 36% Earnings per share up 33% All parts of business contributed to growth Benefits of increased IT spend Proposed final dividend of 6.50p per share (total dividend of 8.50p, up 55%) Current trading strong Initiatives in place to drive further growth -2-
Slide 3: Strong revenue and profit growth continues
Year ended 31 May 2006 2007 Strong revenue and profit £'m £'m Revenue 89.4 122.0 +36% growth continues Betting duty (1.6) (4.2) 87.8 117.8 +34% Betting duty varies with client Interest on client balances 5.0 6.5 +30% performance Operating costs (40.2) (53.9) +34% EBITDA 52.6 70.4 +34% Margin (%) 58.
Slide 4: All areas of business continue to deliver profitable growth
! "#" $ $ $% Year ended 2006 Year ended 2007 H1 H2 Total H1 H2 Total Growth £'000 £'000 £'000 £'000 £'000 £'000 Financial Spread Betting 21,798 29,377 51,175 30,577 31,640 62,217 +22% CFD 9,721 14,233 23,954 16,018 25,014 41,032 +71% Binaries 2,701 2,495 5,196 3,098 3,444 6,542 +26% Sports Fixed odd
Slide 5: Operating costs
$"$ Year ended Year ended 31 May 2006 31 May 2007 FY H1 H2 FY £'000 £'000 £'000 £'000 H2 margin improvement Salaries 15,326 9,940 10,287 20,227 Increased bonus reflects H2 Bonuses 8,695 3,709 6,038 9,747 performance LTIP and SIP 1,696 911 933 1,844 Advertising and marketing 3,321 3,328 3,668 6,996 G
Slide 6: Strong growth continues in client transactions
&'( ) %* + , Strong growth continues Number of client transactions¹ 500,000 Average monthly transactions CAGR: 44% 400,000 36% higher than FY 06 Strong account opening 300,000 continues 200,000 Strong brand and recognition of IG as UK leader 100,000 0 Jun-04 Jul-04 Oct-04 Jan-05 Feb-05 Mar-05 May-05
Slide 7: Account opening is key lead indicator
) % Account opening is key lead indicator Quarterly account opening 8,000 Overall client recruitment up 43% YoY 7,500 7,000 CFD Global CFD client recruitment up 104% YoY 6,500 UK financial spread - represents 50% of new accounts 6,000 betting - 65% outside UK 5,500 5,000 4,500 Singapore, Germany and
Slide 8: Return to strong growth in Australia
$ %() % Return to strong growth Number of clients dealing - Australia (monthly) Income and number of transactions¹ (monthly) 3,600 160,000 1,800 3,400 Number of transactions Income 3,200 140,000 1,600 3,000 2,800 1,400 120,000 2,600 2,400 1,200 2,200 100,000 2,000 1,000 1,800 80,000 1,600 800 1,400
Slide 9: Revenues growing strongly in current regions of focus
)-$( !$ %" $ $ $ Revenues growing strongly in current regions of focus CFD revenue by location of client CFD revenue by region 25 UK Australia Rest of W orld Asia Pacific W estern Europe Ireland Europe 20 UK Singapore Eastern Europe Far East Middle East Africa South Asia 15 Americas £m 10 5 0 H1 06
Slide 10: Big opportunity; manageable, modest costs
.! $ $/0 * $ Big opportunity; manageable, modest costs Cumulative clients trading Overseas office costs (annualised) 1,500 700 1,400 1,300 600 1,200 Marketing Other 1,100 500 1,000 Aus tralia 900 No. of clients 400 Singapore 800 £'000 Italy 700 300 Ge rm any 600 200 500 400 100 300 200 0 100 1 2 3 4
Slide 11: Significant CFD growth
! * % () %+ $ $ $ Turnover H1 2006 H2 2006 H1 2007 H2 2007 £'m £'m £'m £'m UK 3.5 4.8 5.8 10.1 Europe 2.0 3.2 4.6 7.2 Asiapac 3.7 5.5 5.4 7.3 Significant CFD growth ROW 0.5 0.7 0.3 0.4 CFD Total 9.7 14.2 16.0 25.0 – UK & Europe income per client reflects higher end clients UK Financial Spread Bettin
Slide 12: Sports business has returned enhanced growth over last 2 years
* $ Sports business has returned enhanced growth over last 2 years Sports revenue 14 34% compound growth 12 Fixed Odds Making a solid contribution Spread Betting 10 Fixed odds risk managed on a unified business basis across binaries, extrabet and betting 8 exchanges £m 6 Dedicated IT development res
Slide 13: Dividend and use of cash limited by regulatory capital requirements
) $ 12 * % ! * %# Dividend and use of cash for acquisition or return to shareholders is limited by regulatory capital requirements 31-May-06 31-May-07 £m £m Cash Capital increases with retained earnings Total cash 247.3 484.6 Less: Segregated client money (199.2) (391.3) Own cash 48.1 93.3 Capital r
Slide 14: Income volatility remains low
$ 3 , 4 %# 5 ,$ Income volatility remains low 700,000 3.00 Daily revenue (60 day 600,000 rolling average) 2.50 revenue volatility (60 day Volatility of revenue remains within tight range coefficient of variability) 500,000 2.00 Group’s maximum exposure to global equity markets is 400,000 £15m (incre
Slide 15: Enhancing recruitment and conversion of clients
6 $ Enhancing the recruitment and conversion of clients within our existing retail financial businesses Launched in UK Jan 07 57% take up by UK spread betting clients Increased account opening Improved conversion Being rolled out progressively worldwide - 15 -
Slide 16: Technology is a competitive differentiator and key driver of growth
6 1 %,# ! $ Technology is a competitive differentiator and a key driver of growth PureDealTM – One click dealing – Information rich, customisable interface – Price ImprovementTM – Reuters News – Works on greater range of operating systems and browsers L2TM – DMA FX – Ongoing improvements to function
Slide 17: Europe has been the key focus of the last six months
%0 * $ Europe has been the key focus of the last six months Continuing to build Italian and German operations – Seminars and investment shows – Introducers – Direct advertising Preparing for MiFID – Office in Madrid – Office in Paris – Building language capability within the UK office Introducers an
Slide 18: Outlook: strong growth continues
. %3 Strong growth from UK and Australia continues Europe becoming significant, Madrid and Paris offices open in H1 08 Introducers and white labels further broaden geographic reach Continuing technology innovation TradeSense, rolling out across our international offering Record revenue in June, stro
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