19th Jan 2016 07:32
LONDON (Alliance News) - IG Group Holdings PLC, which enables retail customers to bet on financial assets through derivative products, on Tuesday said the second half of the financial year has started well, after reporting a slight fall in pretax profit in the opening six months.
The FTSE 250 group, which competes against the likes of Denmark's Saxo Bank, US rival Gain Capital's City Index and soon-to-be London-listed CMC Markets, said pretax profit fell 2.8% to GBP98.6 million in the six months ended November 30, from GBP101.4 million in the corresponding half the prior year. The group maintained its interim dividend at 8.45 pence per share.
Net trading revenue, which strips out interest on segregated client funds and is presented net of introducing partner commissions, rose 8.8% to GBP214.8 million in the half from GBP197.4 million.
First-half administrative expenses were up about 19% at GBP111.9 million, versus GBP94.3 million the prior year period, as IG continued to invest in the infrastructure and marketing required to support expansion into new markets and in development of its technology for mobile and the web.
"Half way through the year IG remains on track, and, although it is impossible to forecast what opportunities the markets will offer our clients over the next few months, the second half has started well," said Peter Hetherington, who officially took over from long-serving Tim Howkins as chief executive in December.
"The rate of growth in investment spend is already moderating, having now almost established the appropriate resource and skills to allow us to develop the current business and exploit our other growth initiatives. Beyond the existing guidance for this financial year, the increase in operating costs is likely to be much more inflationary and discretionary in nature, with any discretionary element being primarily marketing related, and then only if the payback remains compelling," Hetherington added.
Howkins' resignation was followed by the departure of Chris Hill, who left the spread betting company to become the chief financial officer of FTSE 100 DIY stockbroker Hargreaves Lansdown PLC, forcing IG to wave goodbye to two of its most senior and experienced executives just months apart.
Mark Ward, a senior partner at Deloitte LLP, was named last week as the group's new finance boss until a permanent successor to Hill is found.
IG, which still makes most of its money from its spread betting and contracts-for-difference, as well as a smaller but growing contribution from so-called binary products, has been pushing to diversify its sources of income. The most significant part of that effort came in September 2014, when the group set up execution-only stockbroking activities in the UK and Ireland, and has since extended the service to the Netherlands, Germany and Austria.
Meanwhile, the group has sought geographic expansion, broadening its reach beyond the UK and Ireland, Europe, and Australia, the three markets in which it makes most of its revenue, and has opened offices in Switzerland and Dubai since October 2014.
By Samuel Agini; [email protected]; @samuelagini
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