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Interim Management Statement

Posted:
13/3/2012

IG Group Holdings plc today issues the following Interim Management Statement for the period from 1 December 2011 to 12 March 2012.

RNS Number: 1871Z
IG Group Holdings plc
13 March 2012

Interim management statement

IG Group Holdings plc ("IG" or the "Group") today issues the following Interim Management Statement for the period from 1 December 2011 to 12 March 2012. Unless otherwise stated, trends and figures highlighted below refer to the three months ended 29 February 2012 and the corresponding period last year. The commentary below excludes the Sport business which was discontinued as of June 2011.

Revenue in the third quarter was approximately £75m, an increase of 1.5% from the £74m in the corresponding period last year. This reflects growth in active client numbers of 4.6% offset by a decline of 3.0% in revenue per client.

After a period of elevated and somewhat exceptional volatility during the first half of the financial year, particularly in August, volatility during the third quarter reduced significantly across all asset classes. As is normally the case, this adversely affected client activity levels and the slow down for the holiday period during December and January both started earlier and ended later than in previous years. Despite this, revenue in December was slightly higher than in the previous year while January was down on what was a strong comparable. As clients became more accustomed to the lower volatility environment, their activity levels increased and revenue in February 2012 was 10% higher than in February 2011.

The table below shows the geographical split of revenue and changes in active client numbers and revenue per client.

Geographical Revenue Q3
Revenue
FY12
£m
Q3
Revenue
FY11
£m
Q3 Revenue % Change % Change in active clients % Change in revenue per client
UK 39.4 39.9 (1.4%) 1.1% (2.5%)
Australia 11.2 10.5 7.3% 8.4% (1.0%)
Europe 14.8 14.2 4.2% 26.7% (17.8%)
Rest of World 5.7 4.9 16.9% 30.7% (10.6%)
Total Financial
excluding Japan
71.1 69.5 2.3 8.8% (5.9%)
Japan 4.0 4.5 (11.8%) (24.1%) 16.2%
Total Financial 75.1 74.0 1.5% 4.6% (3.0%)

The UK business achieved revenue of £39.4m compared to £39.9m in the prior year, a 1.4% decline driven by a 1.1% increase in active clients and a 2.5% fall in revenue per client.

The Australian business achieved revenue of £11.2m compared to £10.5m in the prior year, a 7.3% increase driven by an 8.4% increase in active clients and a 1.0% fall in revenue per client.

The European business achieved revenue of £14.8m compared to £14.2m in the prior year, an increase of 4.2%. The region continued to deliver good growth in active clients, which were 26.7% higher than in the corresponding quarter of last year, with every country within Europe delivering active client growth in excess of 20%. However, revenue per client fell by 17.8% with Germany and Spain down 23.1% and 22.3% respectively, Italy down 18.0% and France down 8.2%. This range of outcomes reflects the differing mix of asset classes traded across Europe and differing responses from clients to falling volatility in equity and forex markets.

Rest of the World, which comprises Singapore, the US and South Africa, achieved revenue of £5.7m compared to £4.9m in the prior year, an increase of 16.9%. Singapore made up 79% of this growth with revenue of £4.5m in the quarter, compared to £3.8m in the prior year. PFGBest, the first independent broker to connect to Nadex, the Group's US-regulated exchange, has completed the development of its Nadex-related client offering and, within the last few days, has begun advertising Nadex products. It is too early to assess the effectiveness of this advertising. As previously indicated, Nadex represents an attractive albeit longer-term opportunity.

Japan achieved revenue of £4.0m compared to £4.5m in the prior year. Although active clients fell by 24.1% in the period, the increased revenue per client of 16.2% meant that revenue was only down 11.8% compared to the corresponding quarter.

The Group continues to invest heavily in its platforms. During the period IG launched a new platform, Insight, which offers clients a wide range of information that can be used to inform their trading decisions, including client sentiment. This platform has been well received by IG’s clients in the UK and Australia and the Group intends to continue to develop and enhance it, while rolling it out across the remainder of the Group's businesses.

Current trading and outlook

The Group continues to see progressive growth in active client numbers, which is the key driver of long-term revenue growth. This growth is in turn underpinned by the on-going significant investment the Group makes in its technology platforms and systems.

Activity levels picked up in the final month of the quarter and this trend has continued into March.

The Group remains well capitalised and is strongly positioned competitively. The Board remains confident in the prospects of the Group.

There will be a conference call today for analysts and investors at 8.30am (UK time).

The dial-in for the conference call is +44(0)20 3140 8286 with the passcode 2182249. A replay of the call will be available until 23 March 2012 with the dial-in +44 (0)20 7111 1244 and the passcode 2182249.

For further information please contact:

IG Group 020 7896 0011
Tim Howkins, Chief Executive
Chris Hill, Chief Financial Officer

FTI Consulting
Neil Doyle 020 7269 7237
Ed Berry 020 7269 7297