The European Securities and Markets Authority (ESMA) – and by extension the Financial Conduct Authority (FCA) – may yet be to finalise its rules around contracts for difference (CFD) for retail clients, but IG Group (IGG) is trying to get ahead of the game. During the first half, it introduced an online process allowing its clients to apply for professional status. Applicants must pass two of the three hurdles – have traded at least 40 times during the past year, investable assets (excluding property) of €0.5m (£0.44m), and at least one year’s experience working in a relevant area of financial services.
Since the process was introduced the proportion of IG’s revenue generated by professional clients has increased from 5 per cent to more than a quarter, and is on track to be more than half. However, UK client numbers were down 11 per cent due to strong comparators in the prior year. New client recruitment was also down due to the introduction of new appropriateness tests. However, this was offset by a 14 per cent increase in revenue per client.
Higher client spend was also behind the rise in sales generated in the Asia Pacific region, which were up almost a fifth to £66m. The EMEA region (Europe, the Middle East and Africa) was the only business segment to report an increase in client numbers, albeit marginally, boosting trading revenue by 14 per cent.
Analysts at Numis expect adjusted pre-tax profits of £260m, giving adjusted EPS of 55.6p for the 12 months to May 2018 (from £214m and 45.9p in 2017).
| IG GROUP (IGG) | ||||
| ORD PRICE: | 780.5p | MARKET VALUE: | £2.87bn | |
| TOUCH: | 779.5-780.5p | 12-MONTH HIGH: | 815p | LOW: 488p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 204p* | NET CASH: | £202m** | |
| Half-year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 245 | 105 | 22.7 | 8.45 |
| 2017 | 268 | 136 | 29.5 | 9.69 |
| % change | +10 | +30 | +30 | +15 |
| Ex-div: | 01 Feb | |||
| Payment: | 02 Mar | |||
| *Includes intangible assets of £154m, or 42p a share **Excludes liquid asset buffer and broker collateral | ||||
