IG Group's (IGG) net trading revenue was not just dented by tighter leverage limits for retail clients last year, but also suffered due to a less appetising market for traders. Macroeconomic uncertainty during the second half, including the ongoing US-Sino trade war, contributed to a 9 per cent decline in active client numbers, said chief executive June Felix. “At some point, they’re not sure what to do, so they stop trading,” she said.
Unsurprisingly, the decline in trading revenue in the European Securities and Markets Authority (ESMA) region offset solid gains in Japan and emerging markets, as active client numbers fell by a fifth and average revenue per client was down 14 per cent on the prior year. Professional clients generated two-thirds of trading revenue in the area.
Management expects to return to revenue growth this year, expanding into the US FX dealing market in January and launching a platform offering turbo warrants – a venue-traded limited risk product – in September. It has earmarked £30m in spending this year to “maximise the benefits” of these investments, Ms Felix said.
Analysts at Peel Hunt expect adjusted pre-tax profits of £189m for the year to May 2020 and EPS of 41.6p, from £190m and 41.9p, respectively, in FY2019.
| IG GROUP (IGG) | ||||
| ORD PRICE: | 580.6p | MARKET VALUE: | £ 2.14bn | |
| TOUCH: | 580.6-581.8p | 12-MONTH HIGH: | 957p | LOW: 467p |
| DIVIDEND YIELD: | 7.4% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 228p | NET CASH: | £274m | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 427 | 170 | 36.1 | 28.15 |
| 2016 | 456 | 208 | 44.9 | 31.4 |
| 2017 | 491 | 214 | 46.2 | 32.3 |
| 2018 | 569 | 281 | 61.7 | 43.2 |
| 2019 | 477 | 194 | 43.1 | 43.2 |
| % change | -16 | -31 | -30 | - |
| Ex-div: | 26 Sep | |||
| Payment: | 24 Oct |
