IG Group profits from H1 market volatility

IG Group Holdings plc has reported strong earnings growth in the 6 months up to November, helped by volatile markets. The company which operates IG Index reported a 28% increase in net trading revenues to £195.5m for the period. Following the record figures, IG Group stated that the growth in net trading revenues was fuelled by a 15% increase in the number of clients trading in the period. Financial spread betting revenues rose by 36% to £71.0m, while revenues from CFDs increased 24% to £116.1m. Binary trading contributed an additional £8.3m in revenues, up 18% year-on-year.

Active clients increased 38% in continental Europe for the half-year, more than in any other are, and the region contributed £37.8m to group revenue. IG’s Japanese operation was adversely impacted last year by new rules which curbed leverage limits for its clients trading CFDs. Its revenue in the country fell by 25% in the period to £8.4m.

IG pointed out that market conditions for the first half-year period were mixed, with relatively subdued months of trading in June and July, greatly offset by extraordinary market volatility in August which spiked client activity to new record levels. After August market volatility remained high but as clients became more accustomed to these market conditions, client activity reverted back to more normal levels.

The FTSE 250 company recorded profit before taxes and exceptionals amounting to £103.2m for the six months ended November 30 – which is sharply up compared to a loss of £70.1m, or a profit of £80.6m when one-off items were excluded. Administrative costs increased by 23% to £92.3m, with tax expenses amounting to £27.6m, up 20% year-on-year. IG, which has around 140,000 clients, also reported an 11% increase in average revenue per client in the first half of fiscal 2012. As a result the company registered net profit o £75.2m for the period. Meanwhile, the company is evaluating the possibility of setting up operations in Switzerland and parts of the Middle East, CEO Tim Howkins said Tuesday.

‘IG has again delivered record results with strong growth in both revenue and profits,” said IG CEO Tim Howkins. “Our significant investment in technology and strong financial position support our increasing market lead and we remain well positioned to deliver further profitable growth. I remain confident about the outlook for the business.’

The growth was boosted not only by market turbulence but also by substantial investments in IT and marketing as well as the demise of rival MF Global at the end of October 2011. IG has highlighted that its international roll-out mobile trading platforms which now include mobile apps for iPhone, iPad, Android, Windows Phone 7 and Blackberry devices now accounts for 16% of all client-initiated trades – more than double what it was a year earlier. IG declared an interim dividend of 5.75 pence, amounting to £20.9m, which amounts to an increase of 10% when compared to the same period last year. As at November 30th the company held cash and cash equivalents of £200.6m compared to £109.3m a year ago.

This entry was posted on Wednesday, January 18th, 2012 at 9:44 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.