The trading frenzy induced by last autumn’s exceptionally volatile financial market conditions has been good news for spread betting specialist, IG. As punters rushed to profit from collapsing equity markets, IG’s financial businesses opened 74,000 accounts during the year – up from just 43,000 in the previous financial year – which helped the group's full-year cash profits soar by a third to £131m.
The UK financial operation - the group’s largest business - reported 9 per cent revenue growth and, regulatory issues permitting, management remain keen on rolling-out that model overseas. Accordingly, the level of revenue generated from outside of the UK has risen to 47 per cent of the group’s total - up from 17 per cent three years ago. That expansion included acquiring an 87.5 per cent stake in Japanese retail foreign exchange business, FXOnline, while the European business more than trebled revenues in the 12 month period, albeit from a low base.
One downside of the autumn market collapse was a sharp rise in client bad debts up from £4.1m in 2007-08 to £18.2m, although only a fifth of this charge was incurred in the second half. And, beyond the financially-focused operations, IG's sport division saw revenue slide 24 per cent to £8.7m as recession hit punters chose to cut back on sports betting.
Numis Securities expects adjusted pre-tax profits to rise to £132m, giving EPS of 24.3p.
IG GROUP (IGG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 270p | MARKET VALUE: | £ 971m | |
| TOUCH: | 269-270p | 12-MONTH HIGH: | 376p | LOW: 159p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 109p* | NET CASH: | £520m** | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 62 | 16.6 | 5.8 | nil |
| 2006 | 89 | 51.1 | 10.9 | 5.5 |
| 2007 | 122 | 68.9 | 14.7 | 8.5 |
| 2008 | 184 | 97.0 | 20.6 | 12.0 |
| 2009 | 257 | 111.3 | 22.4 | 15.0 |
| % change | +40 | +14 | +9 | +25 |
Ex-div:09 Sep Payment:13 Oct *Includes intangible assets of £260.6m or 72p a share **Includes £421m of client money | ||||
