Spread-betting group yields 77% rise in pre-tax earnings

IG Group, the UK’s biggest spread-betting firm, enjoyed its busiest-ever day of trading on July 7, day of the London bombings, the company confirmed yesterday.

IG, which relisted three months ago after being floated in 2000 and was then taken private by founder and Tory Party funder Stuart Wheeler, said current trading was strong as it met forecasts with a 40% rise in underlying annual profit in its year to May 31.

Nat Le Roux, chief executive, said: “Since the end of the financial year all parts of the business have performed well and our volumes have been strong.”

As the London tube and bus blasts caused a massive plunge and then rebound in the FTSE-100, punters pushed about 40% more trades than usual through the IG Index business.

Le Roux said: “On days like that you do get a lot of volatility – we saw that effect magnified.” By the following afternoon, trading had returned to normal, he added.

The surge in global oil prices resulted in heavier trading in the price of crude than on the FTSE-100 index in some months, a first for the firm, le Roux said.

IG’s turnover rose 25% to £62.3m, yielding a 77% rise in pre-tax profits to £14m.

The group’s market value has risen 25% since its return to the market only three months ago, benefiting from a rush for gaming stocks. Its value now dwarfs the £143m paid only two years ago by private equity group CVC Capital to take it private.

IG said the higher valuation reflected strong revenue growth during the group’s two years as a private company, spurred in part by a thorough overhaul of its operations.

The latest improvement was driven by continued strong growth in financial spread betting, where turnover rose 23.5% on the year to £50.5m, despite subdued equity markets, and partly reflected the rapid expansion at IG’s Australian division. Sports spread-betting, however, was stagnant with revenues little changed at £6.83m, partly reflecting a string of adverse results in a series of UK sporting events this year.

Le Roux said he was confident the group could sustain its momentum even when market growth tails off. He said the group was also setting up a Chinese-language sport betting website, but warned that its prospects were hard to predict.

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