WorldSpreads Revenue up 85% to €12.89m

Financial spread betting provider WorldSpreads has reported pre-tax profits of €3m for its continuing businesses for the twelve months ended 31 March 2010. This compares very favourably to the €250,000 reported on the previous year.

The company attributed its strong performance to better margins due to higher levels of international business as well as increass in average daily trades and the number of new accounts opened. Revenue jumped by 85% to just under €13m, as the company benefited from stock market volatility.

Average trades per day rose by more than 40%, while WorldSpreads also registered more than 4,000 new customers during the year. During the year, WorldSpreads sold its Irish financial spread betting business and moved to new offices in the City of London. In March 2010, WorldSpreads also launched XEQT, the Group’s new Trading Platform which has since been rolled out to all WorldSpreads’ partner websites.

During the year ended 31 March 2010, the number of new accounts opened at WorldSpreads was 4,124 (2009: 3,673), with 41 per cent of all trades and 31 per cent of trading profit was recorded from outside of the UK. Similarly, average daily trade numbers during the year were 6,148 (2009: 4,367), an increase of 41% on the same period in the previous year.

During the final quarter of the year under review, the average number of trades per day grew to 6,502 per day from 4,836 per day during the comparable period last year. The combination of the growth in these two Key Performance Indicators resulted in a significant uplift in revenue from continuing operations, which increased by 85% for the year ended 31 March 2010 to €12.89 million (£11.41 million), up from €6.96 million (£6.16 million) in the comparable period last year.

Profit for the year from continuing operations was EUR 2.25 million or 5.6 euro-cents per share versus EUR 63 thousand or 0.2 euro-cents per share for fiscal 2009.

Profit for the year from discontinued spread betting operations amounted to €3.11 million or 7.8 euro-cents, up from €1.84 million or 4.5 euro-cents in the previous year. Last April, the Group sold its sports divisions, Sports Spread Betting (Ireland) Ltd and Supreme Odds Ltd, and also its stake in the joint venture company Phumelela Gaming and Leisure Service Ltd. In December 2009, WorldSpreads had disposed off its Irish financial spread betting unit WorldSpreads Ltd.

Commenting on the results Chief Executive Officer, Conor Foley, said: ‘We are pleased to announce very positive results for the year ended 31 March 2010, the third set of annual results to be reported since the Company floated on AIM in August 2007.’

‘The year ended 31 March 2010 was a year of transition for WorldSpreads. We sold our Irish Financial Spread Betting division, we launched a new, proprietary trading platform, we appointed new staff in key positions, we moved to a new office in the City of London and we formed new key partnerships, including a revenue sharing arrangement with Ladbrokes, one of the leading brands in the UK and Europe. At the same time, we remained focused on the core elements of the business and delivered a Profit Before Tax figure on continuing operations of €3.0 million (£2.66 million), a significant increase on the €0.25 million achieved over the same period the previous year.’

The company said the proceeds from the Irish sale had placed it on the strongest financial footing of any time in its history, and it was continuing to expand in overseas markets, a key element of the Group’s strategy, protecting the Group somewhat from the uncertain economic conditions in the UK economy.

However, the company cautioned that operating margins would be ‘temporarily depressed’ as it waited to see the full benefits of its new strategy, which includes aggressive sales and marketing and investment to support the next stage of the Group’s expansion. This investment program would temporarily lower the group’s operating margins in the short-term. In particular the company pointed out that administrative expenses have gone up to EUR 6.64 million from EUR 3.69 million. The firm also indicated that current trading continues to perform in line with its expectations.

“Conor Foley, Chief Executive Officer said, “Even against the background of a very weak macro environment, current trading continues to perform in line with our expectations and the Board is confident that the Group will continue to deliver on its focused business plan to expand not only in its local UK market but also into carefully selected international markets within the EU, while continuing to explore alternatives to reduce the dependence on specific markets.”

Financial Spread Betting Division

The growth in the Group’s Financial Spread Betting Division continued to accelerate over the course of the financial period under review. Financial Spread Betting revenues grew from €6.96 million (£6.16 million) for the year to 31 March 2009 to €12.89 million (£11.41 million) for the year to 31 March 2010, an increase of 85%. This growth was experienced across all geographic regions and in particular the Group’s more profitable international regions.

The Group’s international business showed extremely positive results for the year, with revenues more than doubling from €2.14 million (£1.89 million) in the year to 31 March 2009 to €4.82 million (£4.27 million) for the year to 31 March 2010. In particular, the growth levels experienced in Spain were well ahead of management expectations as the Group is establishing a much stronger presence in the international markets.

Other Financial Derivatives Division

The Group’s Financial Derivative Division which has products such as futures, options, forex and contracts for difference (‘CFDs’) continues to deliver steady, if unspectacular, returns. While this division made a net contribution of €0.40 million (£0.35 million) during the year to 31 March 2010 (2009: €0.37 million, £0.33 million), the Board is presently reviewing it with a view to either terminating the Division or re-structuring it. A decision is expected to be reached by October, 2010. The results of this division are included in the UK spread trading division.

Balance Sheet

With net assets of €23.04 million (£20.39 million) (2009: €17.4 million, £15.40 million), of which €13m (£11.50m) (2009: €8 million, £7.08 million) is cash (excluding monies held on behalf of clients), the Group is in a strong financial position. The Group is due to receive €1.575 million (£1.39 million) in cash in December 2010 and a further €1.65 million (£1.46 million) in cash in December 2011 as the deferred proceeds of the disposal of the Irish Financial Spread Betting Division. The Group’s continued focus on small to medium sized clients and the implementation of its credit policies have ensured that the Group continues to experience low levels of unrecoverable debt.

Highlights

- Revenue from continuing operations: up 85% to €12.89m (£11.41m) (2009: €6.96m, £6.16m).
- Operating profit from continuing operations: up 666% to €3.04m (£2.68m) (2009: €0.4m, £0.35m).
- Basic EPS from continuing operations: up to 5.7 euro-cents per share from 0.2 euro-cents per share in 2009.
- Strong balance sheet with net assets of €23.04m (£20.39m) (2009: €17.4m, £15.40m) and Cash (excluding monies held on behalf of clients) of €13m (£11.50m) (2009: €8.0m, £7.08m).
- Average trades per day from continuing operations: up 41% to 6,148 (2009:4,367).
- 4,124 (2009:3,673) new clients registered in year to 31 March 2010.
- 41% of all trades (2009:29%) and 37% of trading profit (2009:31%) recorded outside the UK.
- Disposal of the Group’s Irish Financial Spread Betting Division completed in December 2009 for a total consideration in excess of €11m.
- Successful negotiation and launch of a new strategic partnership with Ladbrokes plc.

Tags: world spreads, worldspreads

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