Shares in IG Group (IGG) jumped nearly 10 per cent in morning trading after the spread-betting specialist increased the dividend payout from 60 per cent of net earnings to 70 per cent. The move accompanied full-year results that saw revenue rise to a record high, even as low volatility remained a drag on growth.
Chief executive Tim Howkins blamed a 25-year low in foreign-exchange volatility on the low and stable interest-rate environment and quantitative easing - although he noted that both these headwinds may change direction as interest rates start to rise. This would also improve the return on the £1.4bn IG holds in cash and other interest-earnings assets.
In the UK, which accounts for just over half of group turnover, active client numbers were down by 13 per cent, but average revenue per client rose by 19 per cent. The fall in client numbers reflects the company's move to cut loose those clients with the lowest levels of trading activity; IG increased the minimum deposit level from £10 to £100, for example.
Plans are also in place to offer stock-broking facilities for share trading. The majority of existing clients have online share-trading accounts with another provider, and management hopes many of these will transfer to IG.
Analysts at Numis are forecasting pre-tax profits for the current year of £200m and EPS of 41.2p (from £194.7m and 40.2p).
| IG GROUP (IGG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 612p | MARKET VALUE: | £2.24bn | |
| TOUCH: | 611-612p | 12-MONTH HIGH: | 656p | LOW: 546p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 156p* | NET CASH: | £152m† | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 299 | 101 | 28.2 | 18.5 |
| 2011 | 313 | 13 | -5.7 | 20 |
| 2012 | 367 | 186 | 37.9 | 22.5 |
| 2013 | 398 | 192 | 39.0 | 23.25 |
| 2014 | 408 | 195 | 40.3 | 28.15 |
| % change | +3 | +2 | +3 | +21 |
Ex-div: 22 Oct Payment: 18 Nov *Includes intangible assets of £123m or 34p a share †Includes £50.3m of liquid assets | ||||
