IG Group Shares Soar on Annual Profit Growth

IG Group Holdings PLC (IGG.LN), a spread betting, foreign exchange and CFO trading company, said Tuesday for the fiscal year ended May 31 it expects to report revenue of £257 million compared with £184 million a year earlier.

MAIN FACTS:

- Adjusted pretax profit, excluding amortization of intangibles, was £125 million (2008: £97 million).

- Organic revenue growth for year was 25%, excluding recently acquired FX Online Japan KK.

- Final quarter organic revenue growth was 18% year-on-year, compared to 12% in third quarter.

- U.K. financial business and Australian business suffered small declines in revenue in the third quarter.

- Both businesses performed better in final quarter and grew over the same period a year earlier.

- For year these businesses achieved revenue of £150 million (2008: £137.8 million) and £28 million (2008: £25 million).

- Representing growth of 9% and 12% respectively.

- Six newest offices all achieved strong growth, delivering revenue of £42 million (2008: £9.7 million).

- FXO revenue run-rate stabilised and was £7 million for final quarter Total FXO revenue for eight months of ownersip £28 million.

- Not yet possible to assess impact of Japan’s Financial Services Agency’s possible restriction on leverage for retail foreign exchange trading.

- Approach to managing credit successful in reducing incidence of doubtful debts.

- Doubtful debts charge in second half expected to be below 3% of revenue, compared to 12% of revenue in the first half.

- Final quarter of the year saw a significant fall in volatility, which encouraged greater client trading in equities.

- Activity in forex was strong.

- Recent decline in volatility will make comparative for the first half of the current financial year challenging. Continues to achieve strong account opening worldwide.

- During year clients opened 74,000 accounts compared to 42,000 in prior year, an overall increase of 76% and a like-for-like increase of 45%.

- Group well is positioned for further growth.

Thoughts: An excellent trading update from IG Group which operates the biggest spread betting provider in the UK: IG Index. Makes you wonder why on earth the shares of IG fell the day preceding the results – make your pick: irrational pessimism or irrational exuberance?

Tags: IG Group, IG Index

This entry was posted on Tuesday, June 9th, 2009 at 3:44 pm and is filed under Financial Updates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.