21st Jul 2015 11:20
LONDON (Alliance News) - IG Group Holdings PLC said it is seeking a new chief executive as Tim Howkins is set to retire to relax and go travelling, with Howkins telling reporters Tuesday that he will attend a balloon festival in Bristol and that Yosemite in California is top of his list of US national parks to visit.
The London-listed spread betting and contracts-for-difference company, which gives retail traders access to financial markets, said Howkins, 52, is to step down at its annual meeting of shareholders in October.
"During my time at IG, I have seen our business transform, as we have grown revenues from GBP12 million to an underlying GBP400 million. In my time as CEO, we have grown earnings per share from 10.88 pence to an underlying 41.07 pence, and have gone from less than 10% of our revenue coming from outside the UK to now almost 50%," Howkins said in a statement.
Peter Hetherington, currently the group's chief operating officer, has put himself forward to replace Howkins, who served as chief financial officer before he was chief executive, and will take the top job on an interim basis until a permanent successor is confirmed.
Emphasising the importance of good corporate governance, Howkins told reporters that Hetherington is a strong candidate for the job as IG prepares to consider a range of proper candidates.
"The board would be negligent in its obligations if it didn't look further afield and make sure it has run a true and fair selection process," Howkins said.
Separately, the company said it made a GBP169.5 million pretax profit in the year ended May 31, compared with GBP194.9 million in the prior year.
The company maintained its dividend at 28.15 pence per share.
Net trading revenue, which excludes interest on segregated client funds and is presented net of introducing partner commissions, increased to GBP388.4 million from GBP370.4 million, and administrative expenses increased to GBP217.6 million from GBP178.8 million.
IG Group's earnings were hit in January when the Swiss National Bank removed the Swiss franc's cap against the euro. The subsequent jump in the value of the franc ended up costing IG Group GBP27 million, the company said on Tuesday.
Howkins told reporters that the biggest lesson to learn from the Swiss franc's move was around stress testing, with the company making sure it looks at the effects of "really big" moves in markets. As well as efforts to tighten its stress testing, IG has looked at clients who present "big gap risk" in large market fluctuations, considering whether the risk-return is right.
"There are some trading strategies, for instance a client who sells options, that potentially give us quite a lot of gap risk in a very extreme market move, but doesn't actually pay us very much in terms of IG revenue, so we've done a few things to tweak their terms," Howkins said.
The company also revealed a tie-up with asset management giant BlackRock to offer a range of exchange traded fund-based investment portfolios through IG's stockbroking platform.
"We see it as a natural evolution of stockbroking business. It's a combination of our ability to deal with retail clients and give them access to the financial markets using technology-led solutions, coupled with their obvious brand strength in portfolio construction. It's a way of us very quickly entering much more of an investment space," Howkins told reporters.
IG Group said the aim is to offer ETF-based investment portfolios at some stage in 2016, with UK clients the initial target.
"Traditionally, we've been very focused on the active trader. We think there's a lot of overlap between the active traders and the more sophisticated investor, and certainly if you look at our existing client base, there's a lot of interest and knowledge amongst that client base in things like ETFs," Howkins said.
IG Group shares are the worst performing in the FTSE 250 index, down 5.5% at 762.50 pence on Tuesday at midday in London, having fallen to an intraday low of 746.50p.
By Samuel Agini; [email protected]; @samuelagini
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