IG bets on profitable US business

IG Group, the UK’s biggest spread-betting company, saw ‘no signs’ of a slowdown in customer activity in spite of a deteriorating UK economic outlook as its full-year earnings rose 40 per cent.

Tim Howkins, chief executive, said the company expected its US business to approach being profitable by the end of this financial year, following recent expansion into the region including the purchase of Hedge-Street, an off-exchange foreign exchange platform.

Market volatility helped drive earnings before interest, tax, depreciation and amortisation to £98.5m (£70.4m) in the year to May 31. Revenues rose 51 per cent to £184m (£122m) and the pre-tax profit was £97m (£68.9m). The results were in line with analysts’ expectations.

IG offers financial derivatives products ranging from simple spread bets to ‘trailing stops’ and ‘bungee bets’, allowing investors to make bets on future movements in stocks, foreign exchange and on sports, entertainment and political events. Mr Howkins said even as IG benefited from volatility, it was ‘encouraging to note that our best month’s revenue in the year was achieved in April, which was not a volatile month when compared to the preceding nine months’.

The company had recruited more than twice the number of spread betting and CFD (contracts for difference) clients compared with the previous year and over three times the number the year before that.

IG’s client base is mostly in the UK but the company has been expanding internationally, opening offices in Paris, Madrid and Chicago.

In December, IG completed its purchase of HedgeStreet, a dormant US exchange offering binary options. IG reactivated it in February and has been carrying out IT upgrades to allow it to expand its range of markets and opening hours.

Earnings per share rose from 14.67p to 20.62p and the dividend was lifted from 6.5p to 9p, giving a total pay-out for the year of 12p (8.5p) – an increase of 41 per cent.

Shares in the group fell 14p to 305p.

Tags: ig, IG Group, spread betting

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