Ig Group Holdings Plc · LSE:IGG

Ig — H1 FY2011 Earnings Presentation

26 slides from Ig's earnings presentation, January 2011

  1. Slide 1: Results presentation

    Results presentation Six Months ended 30 November 2010 Tim Howkins, CEO Matt Tooth, Interim Finance Director

  2. 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

  3. Slide 3: Overview

    Overview Business growth despite lower market volatility FY11 H1 performance Ongoing strategy unchanged  Revenue impacted by a period of low  Maintain market leading positions in and falling volatility existing markets  Business fundamentals strong  Continue to expand IG’s global reach  14% gro

  4. Slide 4: FY11 H1 summary

    FY11 H1 summary FY11 H1 results Net trading revenue since IPO  Net trading revenue £156.7m, up 9% H1 Group revenue H2 Group revenue  Adjusted PBT1 £81.6m, up 5% 300 % FY revenue achieved in H1 48%  Adjusted EPS1 16.1p, up 5% 275 49% 250  Interim dividend of 5.25p, up 5% 225 200 47% Revenue (£m)

  5. Slide 5: Business review

    Business review

  6. Slide 6: Income statement

    Income statement Revenue and profit growth continues Year on year comparison H1 11 H1 10 FY10 Net trading revenue 1 £m 156.7 £m 143.8 9% £m 298.6  Margins maintained Other net operating income 2.6 -0.3 1.2 above 50% Net operating income Operating costs 159.3 -72.8 143.4 -62.4 299.7 -133.8  Statuto

  7. Slide 7: Net trading revenue by region

    Net trading revenue by region Growth against tough comparatives Year on year comparison: H1 11 vs. H1 10 revenue 90.0  Tough comparatives for 4% UK & Australia in FY10 80.0 70.0 H109 H209 H110 H210 H111  Europe 60.0  Germany step Revenue (£m) 50.0 change in revenue 40.0  ROW boosted by addition

  8. Slide 8: Volatility of trading revenues

    Volatility of trading revenues Trading revenue volatility remains low Daily trading revenue volatility Distribution of H1 11 daily trading revenue 1.4 daily revenue (60 day rolling average) 3.0 10 revenue volatility (60 day coefficient of variability) daily mean £1.18m 9 1.2 2.5 8 1.0 7 Revenue (£00

  9. Slide 9: Market volatility

    Market volatility H1 11 impacted by declining volatility VIX index historical trend – last 5 years 90 FY11 80 70 60 Closing VIX Index 50 40 30 20 10 0  Volatility falling for much of the period  Uptick in volatility in November short-lived  3 ½ year VIX low in December 2010 -9-

  10. Slide 10: Client recruitment

    Client recruitment Account opening remains a key lead indicator Quarterly account opening FXOnline acquisition and exceptional volatility Oct 08 26,000 FXOnline cash back campaigns end Sept 09  36k new H1 11 FXOnline 24,000 financial accounts ROW 22,000 opened Europe 20,000 18,000 Australia UK Fina

  11. Slide 11: Active clients

    Active clients Revenue growth reflects growth in active client numbers Monthly revenue and active clients trend FY09-FY11 Clients trading (000s) 35 80 Clients trading Japan (000s) Financial revenue (£m) 70  In H1, Financial revenue 30 increased by 9% 60 Financial revenue (£m)  Active clients Clien

  12. Slide 12: Trading revenue per client

    Trading revenue per client Revenue per client impacted by falling volatility 1 Half yearly revenue by client FY09 to FY11 Monthly revenue per client 2009-2010 UK SB UK CFD Australia Europe Japan £600 £5,000 £4,500 £500 Average revenue per client (£) £4,000 Revenue per client (£) £400 £3,500 £3,000 £

  13. Slide 13: Cost base

    Cost base Remuneration and marketing make up 75% of cost base Year on year comparison FY11 FY10 H1 H1 H2 Total £000 £000 £000 £000  Ongoing operating costs Salaries 27,090 21,737 23,202 44,939 up 17% year on year Bonus 8,892 9,942 12,391 22,333 LTIP/SIP 2,098 1,577 3,205 4,782  H1 11 average Adver

  14. Slide 14: Own cash and working capital

    Own cash and working capital Working capital surplus allows the business to keep growing Year on year comparison H1 11 H1 10 FY 10 £m £m £m  Broker margin requirement increasing in line with growth in the Available liquidity shares book Cash and cash equivalents 765.4 566.5 678.6 less segregated cl

  15. Slide 15: Regulatory capital

    Regulatory capital Strong regulatory capital position Year on year comparison H1 11 H1 10 £m £m  Regulatory capital resources up £46m Regulatory capital Tier 1,2 & 3 capital 338.6 396.9  Regulatory capital surplus up Intangible assets (adjusted) -117.3 -243.9 £25m Investment in own shares -1.3 -1.

  16. Slide 16: Strategy update

    Strategy update

  17. Slide 17: FXOnline: Unfavourable regulatory environment impacts Japan

    FXOnline Unfavourable regulatory environment impacts Japan Japan trading Oct 09 - Dec 10 Trades per client  First two stages of leverage Revenue per trade restriction now in place ¥1,000 80 1st leverage change ¥900 70 Revenue per trade (Yen)  Impairment review ¥800 60 Trades per client ¥700 ¥600 5

  18. Slide 18: UK and Australia market share update

    UK and Australia market share update Market share1 growth continues Primary account market share 50% 45% 39% 2009 2010  Market lead extended in UK and 40% Australia market share % 35% 30% 29% 30% 25% 22% 27% 25%  Clear market leader 20% 15% 10%  Competing on price, technology 5% and service 0% UK

  19. Slide 19: Europe still in early stages of development

    Europe Europe still in early stages of development H1 11 headlines Trend Monthly active clients FY07-FY11  Growth story continues 10,000 9,000 Australia 8,000 Europe  revenue growth 23% 7,000 6,000 5,000  active clients up 41% 4,000 3,000 2,000  Step-change in Germany 1,000 0  56% year on year

  20. Slide 20: US update

    US update Sign up of PFGBEST to Nadex is an important milestone  Nadex (North American Derivatives Exchange) offers options on forex, equity indices and commodities  Regulatory environment benefits Nadex long term  Steady growth in Nadex volumes  PFGBEST has become a member of Nadex  Expected t

  21. Slide 21: Mobile

    Mobile IG has the scale to invest in multiple technologies Developments Growing importance of mobility  Progress to date UK Spreadbetting mobile deals in 2010 iPhone app  iPhone trading platform launched in 250 other mobile platforms total mobile deals (000s) 200 2009 150  iPhone app for UK SB la

  22. Slide 22: Summary

    Summary IG is positioned to deliver continuing growth  Low and falling volatility have reduced client activity levels in the period  Continued strong growth in client numbers  Competitive position is strong  Technological investment is a key competitive differentiator  Mixed trading since perio

  23. Slide 23: Appendices

    Appendices

  24. Slide 24: Geographical margin analysis

    Geographical margin analysis Breakdown of FY11 H1 segment EBITDA Rest of UK Australia Europe Japan Central Total Six months ended 30 November 2010 World £000 £000 £000 £000 £000 £000 £000 Segment net trading revenue 86,588 22,873 26,710 11,125 9,404 - 156,700 Interest income on segregated client fun

  25. Slide 25: Trading revenue per client - financial business

    Trading revenue per client - financial business Half-year analysis FY06 – FY111 Turnover (£m) H106 H206 H107 H207 H108 H208 H109 H209 H110 H210 H111 UK SB 24.0 31.6 33.6 36.6 48.0 56.2 63.4 54.6 55.8 55.1 56.2 UK CFD 6.6 8.7 10.7 15.2 17.6 16.0 16.9 15.6 24.1 27.6 26.7 UK Total 30.7 40.3 44.3 51.9 6

  26. Slide 26: GROUP

    GROUP

IG Group Holdings — H1 FY2011 Earnings Presentation on 6ix