IG Group net trading revenue down 6% YoY in H1 FY19, multilateral trading facility Spectrum launches in May

IG Group office

UK online trading leader IG Group Holdings plc (LON:IGG) has just announced its results for the six months ended 30 November 2018 (H1 FY19).

As previously communicated, the Company continues to expect that its revenue in FY19 will be lower than in FY18, reflecting the impact of the ESMA measures, and the exceptional performance in the second half of FY18 when revenue was boosted by the heightened level of interest in cryptocurrencies.

Operating and Strategic Summary

  • The ESMA product intervention measures came into effect during the first quarter of the Group’s financial year (Q1 FY19)
  • The actions taken by the Group in preparation for these regulatory changes have resulted in the Company successfully navigating the introduction of the ESMA measures, and the impact of the measures overall has been in line with the Group’s expectations
  • 69% of the Group’s ESMA region revenue in Q2 FY19 came from Professional clients
  • 14,626 new OTC leveraged clients (H1 FY18: 18,027), with an improvement in client quality
  • Significant progress made with strategic initiatives:

IG Europe (IGE), the Group’s client facing subsidiary in Germany, is expected to launch by the end of January 2019
– Spectrum, the Group’s multilateral trading facility (MTF), is expected to launch in May 2019
– IG US, the Group’s USA subsidiary operating as a retail FX dealer, is expected to launch by the end of January 2019

  • The Company appointed June Felix as its CEO on 30 October 2018 Financial Summary
  • Net trading revenue £251.0 million (H1 FY18: £268.4 million) – down 6%
  • Operating expenses excluding variable remuneration £122.1 million (H1 FY18: £117.6 million) – up 4%
  • Operating profit £112.5 million (H1 FY18: £136.5 million) – down 18%
  • Own funds generated from operations £100.1 million – 89% of operating profit
  • Basic EPS 24.9 pence (H1 FY18: 29.5 pence) – down 16% Dividend

An interim dividend of 12.96 pence per share, calculated as 30% of the full year dividend of 43.2 pence per share for FY18, will be paid on 28 February 2019 to those members on the register at the close of business on 1 February 2019.

FY19 Outlook

The Company continues to expect that its total operating costs (operating expenses plus variable remuneration) in FY19 will be at a similar level to the £290 million total operating costs in FY18.

IG Group hires Verifone exec June Felix as CEO

June Felix, IG Group

June Felix, Chief Executive, commented:

The actions that have been taken over the last two years have resulted in the Company successfully navigating the introduction of the ESMA measures. At the same time the business has developed innovative new products, continued to on-board new, valuable clients, and has continued to deliver a high quality service. Our ability to do so reflects the quality of our people, our technology, and our approach to innovation.

IG has experienced significant change and will continue to do so in the future. Change will be driven by regulation, by shifting patterns of wealth, and by the continued development of financial markets around the world. I believe that IG has the capability to adapt and thrive in this evolving market. The size and quality of our client base and our broadening product offering, all underpinned by our culture and values, provide an excellent platform for sustainable growth in the medium term.

I am excited to bring my experience in strategy and product innovation, and in successfully developing businesses in the USA, Asia and Europe, to the Company. I am looking forward to leading the evolution of IG’s strategy to deliver sustainable growth and attractive shareholder returns and we expect to provide an update on our strategy before the end of the current financial year.

I am confident that the Company will, as previously guided, return to growth after FY19.

The Board reiterates that we expect to maintain the 43.2p per share annual dividend until the Group’s earnings allow the Company to resume progressive dividends.

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