Ig Group Holdings Plc · LSE:IGG
Ig — FY2009 Earnings Presentation
33 slides from Ig's earnings presentation, 2009
Slide 1: Results presentation, Year ended 31 May 2009
GROUP Results presentation Year ended 31 May 2009 Tim Howkins, CEO Steve Clutton, Finance Director
Slide 2: Disclaimer
Disclaimer This presentation, prepared by IG Group Holdings plc (the “Company”), contains 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 fu
Slide 3: Overview
Overview Record results History of growth Revenue £257m, up 40% Like for like(1) growth 25% PBT(2) £126m, up 30% EPS(2) 24.7p, up 22% Proposed final dividend of 11.0p per share Total dividend of 15.0p up 25% ! " ! (1) Like for like excludes FXOnline (2) Excludes amortisation of intangibles on consol
Slide 4: Financial Results
Financial Results
Slide 5: Income statement
Income statement Strong revenue and profit growth continues Year on year comparison FY08 FY09 Total H1 H2 Total Financial revenue growth £'m £'m £'m £'m Turnover 184.0 126.5 130.6 257.1 continues despite challenging Betting duty -10.8 -6.2 -1.0 -7.2 macro economic conditions 173.2 120.3 129.6 249.9
Slide 6: Revenue by business line
Revenue by business line Financial business continues growth trend Year on year comparison by product FY08 FY09 yr on yr Like for like growth H1 H2 Total H1 H2 Total growth £'000 £'000 £'000 £'000 £'000 £'000 % 28% Financials Financial 25% Group Spread betting 43,386 51,471 94,857 58,138 51,258 109,
Slide 7: Financial revenue by geography and office
Financial revenue by geography and office Reconciling revenue by client location to revenue by office location FY08 FY09 Location of office Location of office Asia Asia UK Europe USA Total UK Europe USA Total Pacific Pacific Location of client UK 122,592 538 10 40 123,180 138,659 34 35 0 138,728 Eur
Slide 8: Revenue per client trend - financial business
Revenue per client trend - financial business H209 stabilised following impact of October volatility Revenue per client FY06 to FY09(1) FY09 monthly revenue by client(2) £5,000 UK spread betting UK CFD £1,000 £4,500 Europe CFD Asia Pacific £4,000 m t £ n t £800 ie l £3,500 n e C il r C e r P £3,000
Slide 9: Operating costs overview
Operating costs overview Operating costs impacted by exceptional doubtful debt provision FY08 to FY09 operating costs bridge £13m FXOnline costs Excluding exceptional bad debt Like for like cost growth 18% *& * ,) $ %& - £18m volume growth Marketing drives client ) ( ' &% $ " # # # acquisition # + )
Slide 10: Cost base
Cost base Costs tightly managed and controlled Year on year comparison FY08 FY09 Total H1 H2 Total H2 reflects full 6 £'000 £'000 £'000 £'000 months of FXOnline Salaries 27,768 18,518 21,651 40,169 (H1: 2 months) Advertising and marketing 11,922 9,414 14,268 23,682 H2 doubtful debt IT, Market Data a
Slide 11: Free cash, capital and dividend policy
Free cash, capital and dividend policy Year on year comparison May 08 May 09 Highly cash generative business £m £m Working capital Fall in amounts due to clients (£118m Amounts due from brokers & clients 263.3 183.1 excluding FXOnline impact) Cash 471.7 520.4 Amounts due to clients -582.7 -511.7 Shi
Slide 12: Financial business
Financial business Account opening remains a key lead indicator Quarterly account opening FXOnline Over 74k new accounts FXOnline acquired Oct 08 26,000 opened in FY09: CFD - New Offices 24,000 74% growth CFD - Australia 22,000 44% growth like for like CFD - UK Webinar 20,000 18,000 UK Financial SB
Slide 13: Business review
Business review
Slide 14: Overseas CFD expansion
Overseas CFD expansion Organic rollout continues to drive strong growth Number of clients dealing (monthly) 3,000 Newer offices mainly ! '%")$ continue to outperform early 2,500 experience in Australia 6 newest offices delivered 2,000 over 300% revenue growth $ %0 year on year 1,500 $% ( *&$% % Sing
Slide 15: Product diversification
Product diversification Client shift away from shares FY08 - FY09 Financial revenue FY08 - FY09 Financial revenue mix % ( % / %$ * + ' ( , - ) # % (% ) )- & * # !4%$ * / %$ * # ) )- & * $$ ( * $$ ( * # 3 &0 -( * 3 &0 - ( * !4%$ * # 2 2 2 2 % (% / %$ * ' ( , ) Change of mix reflects ) )- & * # # Equi
Slide 16: FXOnline
FXOnline The competitive landscape has shifted significantly for forex in Japan Competitive landscape - forex The main price aggressors A handful of firms are competing aggressively . ) % / ' 0 5 ' Narrow spreads – 1 pip or less on $/Y 1 23 34 24 High leverage – up to 400 times % &% Mass market adve
Slide 17: FXOnline
FXOnline IG’s technology and product offering enable FXO to re-position itself as a premium provider FXO competitive positioning - forex FXO pricing - forex Progressively reduce emphasis on cash back Introduced variable spreads “from 0.9 pip” Seek experienced clients through better on 1 June quality
Slide 18: FXOnline - CFDs
FXOnline - CFDs IG is well positioned to become the leading provider of CFDs and binary options in Japan Direct offer White labels Progressive launch between March and Primary providers currently all Western firms May Most online securities firms are considering Interest from existing FXO forex clie
Slide 19: IG is well positioned to begin more active US marketing in September
US IG is well positioned to begin more active US marketing in September Product set Proposition is “derivatives, simplified” Acquired December 2007 Simple Hedgestreet re-branded as Nadex in June Small contract size 2009 Limited risk Last 18 months spent on redevelopment Attractive to a much wider au
Slide 20: White label
White label Potential to access major client bases for zero acquisition cost Enables accelerated client recruitment in overseas markets Complements direct retail approach Recent white label wins 2 of the top 4 online brokers in France Top 4 online broker in Spain FXOnline implementing two arrangemen
Slide 21: Future developments
Future developments Near term focus on growing revenue from existing geographies Build on positions in existing geographies Continue to improve recruitment, conversion and retention of clients Expand introducer and white label partner network Continue technological enhancements Continue to evaluate
Slide 22: Summary
Summary Strong growth continues Trading strong despite global recession Continued growth in UK and Australia Acceleration of newer international businesses Japan Repositioning business in an increasingly competitive FX market White label opportunities Improved risk management processes Cash generati
Slide 23: Appendices
Appendices
Slide 24: International diversification
International diversification Business increasingly diversified FY06 - FY09 overseas Financial revenue H209 Financial revenue by geography 9& : *& )6= )$ - * % %( 6( 8 $)" )6 % (% & ! / 8 % (% 67 -8 8 )6 ( 8 2 2 2 2 2 2 2 2 49% of revenue now from outside UK - 24 -
Slide 25: Revenue per client - financial business
Revenue per client - financial business Half-year analysis FY06 – FY09(1) Turnover (£m) H106 H206 H107 H207 H108 H208 H109 H209 UK 3.5 4.8 5.8 10.1 9.6 9.0 10.3 10.0 Europe 2.0 3.2 4.6 7.2 8.9 11.5 18.4 20.8 Asia Pac 3.7 5.5 5.4 7.3 12.1 15.3 17.6 19.5 Rest of World 0.5 0.7 0.3 0.4 0.7 0.8 2.1 2.4 C
Slide 26: Risk management and quality of earnings
Risk management and quality of earnings Income volatility remains low Daily revenue volatility FY01 – FY09 1,200 3.0 Volatility of revenue daily revenue (60 day rolling average) revenue volatility (60 day coefficient of variability) remains in a tight 2.5 1,000 range 800 2.0 No loss making days s 0
Slide 27: Exchange rate sensitivity
Exchange rate sensitivity Growing impact of exchange rates 3% revenue currency benefit IG revenue FY 08 FY 09 Growth £'m £'m % Non-UK revenue represented 44% of UK (including Sport) Europe 134.7 23.8 147.5 39.5 9% 66% FY09 Financial revenue Asia Pacific 28.6 37.6 31% Main impact is Euro ROW 1.6 4.6
Slide 28: Intangibles arising on FXOnline acquisition
Intangibles arising on FXOnline acquisition Non-cash item but material amortisation charge Acquisition of 87.5% for Y22.2bn(1) IFRS 3 requirement to allocate purchase price . &% ' / %** &* *&) $ $ %& ) *4 "* # 8$%- % # + & %/ & * ># ))-? /% % ( # ) * - $%& ) /%* * # Goodwill subject to annual impair
Slide 29: Continued growth through market turmoil and economic downturn
Continued growth through market turmoil and economic downturn Client behaviour stable through extraordinary conditions Median client (£) balances(1) Recent market conditions have not impacted client balances Strong position post October 08 50% of established clients have balance above £500 (£462 at
Slide 30: Client churn
Client churn After initial fall, churn rate tails off and revenue stream stabilises Client retention(1) FY02 clients(1) 25,000 70% 140% 140% % FY02 clients still trading in subsequent years Number of clients dealing for first time 60% 120% % of 2002 revenue earned in subsequent years 120% Proportion
Slide 31: Client risk management
Client risk management Clients trade across asset classes and actively manage risk Revenue %(1) % of bets with a stop(2) 1! % 8 80% % 8 78% 76% 74% ; % 8 72% 70% . )) 68% % 66% 8 64% 62% " 60% 8 72% of revenue generated from clients Clients manage risk in volatile markets trading multiple asset clas
Slide 32: Delivery of our strategy
Delivery of our strategy Maximising shareholder value through four main business objectives FY09 delivery Future focus (1) Source: “CFD report” by Investment Trends, July 2009 with regard to active CFD users in Australia - 32 -
Slide 33: GROUP
GROUP