As an online spreadbetting specialist, IG Group (IGG) relishes market volatility because it encourages clients to trade. However, a decision by the Swiss Central Bank to remove controls limiting the strength of the Swiss franc in January pushed the currency 30 per cent higher within minutes and left some clients nursing big losses. IG took a £15m bad debt charge as a result.
Aside from this, trading in the year to May showed encouraging signs, with underlying revenue up 8 per cent at £400m, although underlying pre-tax profits were slightly lower at £193m, even excluding the Swiss franc provision. This reflected greater investment in new services including an execution-only stockbroking service, and banking licences for new offices in Switzerland and Dubai.
In the UK, which accounts for around half of group turnover, underlying revenue was ahead by 10 per cent at £212m, with active client numbers up by 2 per cent, while revenue per client was up by 8 per cent at £3,500.
Analysts at Numis are forecasting adjusted pre-tax profits for the year to May 2016 of £205.2m and EPS of 43.9p (from £193.2m/41.1p in 2015).
| IG GROUP (IGG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 756p | MARKET VALUE: | £2.8bn | |
| TOUCH: | 756-757.5p | 12-MONTH HIGH: | 814p | LOW: 570p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 161p* | NET CASH: | £149m | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 313 | 13 | -5.7 | 20 |
| 2012 | 367 | 186 | 37.9 | 22.5 |
| 2013 | 398 | 192 | 39.0 | 23.25 |
| 2014 | 408 | 195 | 40.4 | 28.15 |
| 2015 | 422 | 170 | 36.1 | 28.15 |
| % change | +3 | -13 | -10 | - |
Ex-div: 1 Oct Payment: 30 Oct *Includes intangible assets of £124m or 34p a share | ||||
