A marked lack of market volatility in the first half meant traders were inclined to spend more time on the golf course than opening up trading positions with spread-betting company IG Group (IGG). As a result, the number of active clients fell by 5 per cent in the financial year, which resulted in net trading revenues declining by 1.4 per cent. However, a combination of a more volatile second half and tight cost control kept profits ticking over.
The situation is best illustrated by the UK market, which is IG's largest. Revenues here were down 3 per cent to £186m overall, but this was a decent result after the business endured a 15 per cent fall in turnover in the first half. The second half proved to be more interesting for traders with the Cyprus bail-in, monetary stimulus in Japan and the US central bank's intention to wind down quantitative easing, providing ample opportunities to trade.
Chief executive Tim Howkins said that costs had been held down during the year, mostly by linking bonuses to revenue targets and by reducing the headcount. "Expansion overseas doesn't really counteract any slowdown in our core markets as the financial system around the world tends to move in lockstep," he added.
Broker Investec forecasts flattish current year pre-tax profits of £187m and EPS of 38.2p.
IG GROUP (IGG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 590p | MARKET VALUE: | £2.15bn | |
| TOUCH: | 587-590p | 12-MONTH HIGH: | 615p | LOW: 413p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 139p* | NET CASH: | £149m | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 257 | 111 | 20.6 | 15.0 |
| 2010 | 299 | 101 | 28.2 | 18.5 |
| 2011 | 313 | 13 | -5.7 | 20.0 |
| 2012 | 367 | 186 | 37.9 | 22.5 |
| 2013 | 362 | 192 | 39.0 | 23.2 |
| % change | -1 | +3 | +3 | +3 |
Ex-div: 18 Sep Payment: 22 Oct *Includes intangible assets of £120m, or 33p a share | ||||
