IG Group (IGG) – like its sector peers – is in damage limitation mode ahead of the introduction of restrictions on the sale of contracts for difference (CFDs) for retail clients. UK and EU clients that have signed up as elected professionals – escaping the rules – accounted for more than 40 per cent of revenue by the end of June, and that proportion is growing rapidly (the spread-betting specialist also allows affected clients to contract with other regulated group entities in jurisdictions outside the EU).
The group is entering the new regulatory environment in good shape. Net trading revenue was 16 per cent up on 2017, which, combined with flat costs, meant the operating profit margin was 5.9 percentage points higher at 49.4 per cent. Active client numbers were down 2 per cent due to strong comparatives in the UK in the previous year, although that was offset by a 10 per cent rise in revenue per client to £2,915.
The group is also diversifying its product range, including the launch of a European derivatives trading platform during the second half of the financial year. Chief executive Peter Hetherington says: “Lots of our European clients are suspicious of trading in products over the counter.”
Analysts at Numis expect adjusted pre-tax profits of £233m for the May 2019 year-end, giving EPS of 50.6p (down from £281m and 61.2p in 2018).
| IG GROUP (IGG) | ||||
| ORD PRICE: | 862.5p | MARKET VALUE: | £3.17bn | |
| TOUCH: | 862-863p | 12-MONTH HIGH: | 909p | LOW: 596p |
| DIVIDEND YIELD: | 5.0% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 229p* | NET CASH: | £290m | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 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 |
| 2018 | 569 | 281 | 61.7 | 43.2 |
| % change | +16 | +31 | +34 | +34 |
| Ex-div: | 27 Sep | |||
| Payment: | 26 Oct | |||
| *Includes intangible assets of £151m, or 41p a share | ||||
