24th Jul 2018 08:27
LONDON (Alliance News) - IG Group Holdings PLC on Monday posted a 30% increase in annual profit with growth across all divisions but said new regulations will pose a challenge going forward.
In its financial year that ended May 31, the contracts-for-difference and spread-betting platform recorded pretax profit of GBP280.8 million, up 31% from GBP213.7 million the year before.
Revenue was GBP590.2 million, growing 14% from GBP518.7 million. The largest change was seen in the company's share dealing & investments segment, which brought in revenue of GBP4.0 million, a 67% increase from GBP2.4 million the previous year.
The company's largest segment, OTC leveraged, brought revenue of GBP548.4 million. This was a 16% improvement from its GBP474.6 million revenue recorded the year prior.
A final dividend of 33.51 pence per share will be paid by IG, bringing the full-year payout to 43.2p. This represents a 34% increase from its 32.3p per share total dividend last year.
IG expects revenue for its current year to be lower than in financial 2018 due to regulatory changes in the UK and EU. For this reason, it expects to maintain its dividend going forward rather than resume a progressive dividend policy.
"As the European Securities & Markets Authority's product intervention measures are focused on the contracts for difference industry, they risk creating an unlevel playing field by giving an advantage to other forms of leveraged trading products which are offered to retail clients," said IG Chief Executive Peter Hetherington.
"The business is well positioned to mitigate the impact of regulatory change and to continue to deliver sustainable growth and attractive shareholder returns," Hetherington added.
In March, the European Securities & Markets Authority announced that it would be regulating contracts for difference. The regulations apply to the marketing, distribution, and sale of these contracts. The change means that investors will not be able to lose more than they have paid in and restricts the use of incentives by companies like IG.
Shares in IG Group were up 2.7% at 888.50p on Monday morning.
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