The Financial Conduct Authority's (FCA) proposals for tighter restrictions on spread betting providers might be grabbing all the headlines at the moment, but IG Group (IGG) was already in the middle of a strategic shift to attract longer-term investors rather than short-term speculators. The spread betting specialist has decided to stop offering its Sprints binary product - which allows clients to take a position on whether an asset's value will go up or down at a specified point in time - to new clients, with immediate effect.
Net trading revenue increased by 14 per cent to £245m. In the second quarter, revenue was ahead more than a fifth year on year. This was helped by market volatility around the US election, which did not see the kind of drop-off in trading activity that followed the UK's "knife-edge" EU membership vote, according to chief executive Peter Hetherington.
UK revenue was up 9 per cent, as active client numbers increased by almost a third. However limiting trading leverage around the time of the election, plus taking on more unleveraged clients via its stockbroking platform, pushed down IG's revenue per client here by 16 per cent. Sales in Europe and Australia were up 17 per cent and 16 per cent, respectively, during the period. Meanwhile, the 'rest of the world' segment increased its contribution to sales, accounting for 14 per cent.
Analysts at Numis expect adjusted pre-tax profits of £222m and EPS of 47.4p for the 12 months to May 2017 (up from £211m and 44.5p in FY2016).
IG GROUP (IGG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 524.5p | MARKET VALUE: | £1.92bn | |
| TOUCH: | 524.5-525p | 12-MONTH HIGH: | 968p | LOW: 442p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 185p* | NET CASH: | £152m | |
| Half-year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 231 | 99 | 21.0 | 8.45 |
| 2016 | 263 | 105 | 22.7 | 9.42 |
| % change | +14 | +7 | +8 | +11 |
Ex-div: 2 Feb Payment: 3 Mar *Includes intangible assets of £158m, or 43p a share | ||||
