Interim Management Statement
RNS Number: 3231I
IG Group Holding plc
10 March 2010
IG GROUP HOLDINGS PLC
Interim Management Statement
IG Group Holdings plc ("IG" or "the Group") today issues the following Interim Management Statement. Unless otherwise stated, trends and figures highlighted below refer to the three months ended 28 February 2010 and the corresponding period last year.
Group revenue for the quarter was approximately £69m compared to £62m in the corresponding quarter in the prior year, an increase of approximately 11% (10% on a constant currency basis). Together, the Group's UK, Australian, European and Singaporean financial businesses, which comprised 90% of Group revenues in the period, grew at 29% (26% on a constant currency basis). Operating costs are in line with management expectations.
This revenue growth was achieved against a backdrop of significantly reduced volatility in both equity and forex markets. The strong equity market rally, which helped stimulate client activity through much of 2009, showed signs of weakness in the first two months of 2010.
The Group's UK financial business achieved revenue of £37.2m, compared to £31.4m in the corresponding period in the prior year, an increase of 18%. This growth was driven by continued growth in the number of clients dealing.
The Group's Australian office continued to deliver strong growth with revenue increasing by 67% from £6.4m to £10.7m. This growth benefited from favourable exchange rate movements and was 34% on a constant currency basis.
The Group's European offices achieved revenue of £12.1m, up from £7.9m, an increase of 52% (56% on a constant currency basis). All of the established European offices achieved good levels of growth, but growth was strongest in Germany and France.
The Group continues to achieve high levels of account opening in its financial businesses, which it considers a key lead indicator of future growth prospects. Excluding Japan, the Group’s financial businesses opened 14,900 accounts, compared to 14,300 in the corresponding quarter in the previous financial year. Account opening in the UK remains strong.
Revenue from the Group's Japanese office was £5m, down 54% (50% on a constant currency basis) from £10.8m. The decline in this business reflects the loss of clients experienced in the Spring and Summer of 2009. There are signs that volumes and revenue are improving and revenue for February was the highest it has been since October. The Japanese business opened 3,200 accounts in the quarter, compared to 4,600 in the corresponding quarter of the prior year, reflecting a successful shift in focus to recruiting a smaller number of higher-value, more experienced clients as well as a reduction of marketing activity during this re-focusing. The business began to increase its marketing activity during February once this re-focusing was complete. Subsequent to the period end the Group's white label arrangement with one of Japan's largest online brokers went live.
The Group is still awaiting the change of regulatory designation for Nadex, the Group's CFTC regulated exchange, which will allow it to accept clients via intermediaries. Until this change of designation is granted, the Group is incurring minimal marketing expenditure in the US.
The Group remains in discussion with the South African Reserve Bank regarding the exchange control permissions needed for it to do business in South Africa and the scope of products that these permissions will allow the Group to offer to South African residents. The previously announced acquisition of the client list and business of Ideal CFD Financial Services (Pty) Limited ("Ideal") will not complete until these discussions are satisfactorily concluded. The existing white label arrangement with Ideal will remain in place until this time.
The Group continues to develop its offering in order to maintain or extend its competitive lead. One recent development has been connecting to a number of Multilateral Trading Facilities enabling both the Group and its clients to benefit from lower market spreads on equities.
It remains difficult to predict future trends in volatility or customer reaction to changing market and economic conditions. Strong account opening and the continued development of the Group's offering leave the Group well positioned for further growth.
There will be a conference call today for analysts and investors at 8.30am (UK time). The call can be accessed by dialling +44 (0)20 7138 0839 and using passcode 4210029. A replay of the conference call will be available for a period of 14 days after the event by dialling +44 (0)207111 1244 / +1 347 366 9565 and using passcode 4210029#.
For further information please contact:
IG Group 020 7896 0011
Tim Howkins, Chief Executive
Steve Clutton, Finance Director
Financial Dynamics 020 7269 7114
References to revenue in this statement are to trading revenue, being total revenue less interest income on client money.