There is little spread betting specialist such as IG Group (IGG) can do about the historically low level of volatility in the UK and some European markets in recent months. This subdued UK sales of leveraged over-the-counter products during the 12 months to May, making them flat on the previous year. Revenue per client was also down 7 per cent in its largest market, although the number of active clients increased.
However, management is trying to diversify the business by growing its sharedealing and investment services. The idea is that such services will encourage inactive account holders to resume trading, says Peter Hetherington. That service was rolled out to Australia and France during the period. Sales increased from £0.8m to £2.4m.
While EU operations grew slowly, recently opened offices in Dubai and Switzerland got off to a strong start. In fact, in non-EU offices – where the regulatory environment is more stable – sales almost doubled to £31m. That made the EMEA region the stand-out performer, generating a 17 per cent increase in sales to £138m. The Asia-Pacific region also grew revenue by a solid 9 per cent to £114m.
Analysts at Numis expect pre-tax profits of £211m during the 12 months to May 2018, giving EPS of 45.4p (from £214m and 45.9p in 2017).
| IG GROUP (IGG) | ||||
| ORD PRICE: | 621p | MARKET VALUE: | £2.28bn | |
| TOUCH: | 621-621.5p | 12-MONTH HIGH / LOW: | 968p | 442p |
| DIVIDEND YIELD: | 5.2% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 200p* | NET CASH: | £231m | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 398 | 192 | 39 | 23.25 |
| 2014 | 408 | 195 | 40.4 | 28.15 |
| 2015 | 427 | 170 | 36.1 | 28.15 |
| 2016 | 456 | 208 | 44.9 | 31.4 |
| 2017 | 491 | 214 | 46.2 | 32.3 |
| % change | +8 | +3 | +3 | +3 |
| Ex-div: | 28 Sep | |||
| Payment: | 27 Oct | |||
| *Includes intangible assets of £157m, or 43p a share | ||||
