18th Jul 2005 07:00
IG Group Holdings plc18 July 2005 18 July 2005 IG GROUP HOLDINGS PLC Preliminary Results for the year ended 31 May 2005 IG delivers turnover growth of 25% and EBITDA growth of 40% Following its IPO in May 2005 IG is pleased to announce its maiden preliminaryresults for the year to 31 May 2005. Highlights • Turnover up 25% at £62.3 million• EBITDA* up 40% at £35.1 million• Continued EBITDA margin improvement to 56.3%• Number of clients trading up 23% at 26,102**• More than 85% of transactions now online***• Binary betting contributed 9% of turnover• Further strong growth in Australia• Group confident of outlook for year ahead * EBITDA represents earnings after interest on client money, and before otherinterest, exceptional items, taxation, depreciation and amortisation** Growth in the number of clients dealing in the 12 months up to the end of thereported period compared to the corresponding period in the previous year*** Online transactions includes the Internet, mobile dealing and IG's L2 CFDtrading platform Nat le Roux, Chief Executive"IG has delivered significant growth in turnover and profits for a thirdconsecutive year, reflecting healthy client acquisition, the continuingexpansion of our product range and the rapid growth of our Australian business.Current trading is strong and the Group is well placed to make further progressduring the coming year." Jonathan Davie, Chairman"The year to May 2005 was another successful year for our business. The periodprior to listing has been one of significant change at IG Group. The listingallowed the company to pay down its outstanding debt thus strengthening thegroup's balance sheet and positioning it for further growth." Financial Highlights Year ended Year ended Growth 31 May 2005 31 May 2004*** Turnover £62.3m £49.8m +25%EBITDA £35.1m £25.1m +40%EBITDA margin 56.3% 50.4%EBITA* £31.2m £21.8m +43%EBITA margin 50.1% 43.8%EBIT** £25.5m £17.6m +45%EBIT margin 40.9% 35.3%Profit before tax £14.0m £7.9m +77%------------ ------------- ------------- ------------- * EBITA represents earnings after interest on client money and depreciation, andbefore other interest, exceptional items, taxation and amortisation** EBIT represents earnings after interest on client money, depreciation andamortisation, and before other interest, exceptional items and taxation*** Comparatives in this summary, the chief executive's report and the operatingand financial review are for the full year to 31 May 2004. For further information please contact: IG Group 020 7896 0011Nat le RouxTim Howkins Financial Dynamics 020 7269 7200Robert BailhacheDominick Peasley www.iggroup.com Chief Executive's Report This has been a busy year for the group, particularly in the months precedingthe listing and I am proud of the performance of the business during thisperiod. For the third consecutive year, the group delivered growth in turnover andEBITDA. Group turnover was £62.3 million, up 25% over the preceding year andEBITDA was £35.1million, up 40%. The main contributors to this growth were thecontinued strong rate of client acquisition in the UK, the increasing diversityof our product range (including our rapidly growing binary business) andparticularly strong growth from our Australian business. Financial businesses All of the financial businesses performed strongly. Excluding binaries, turnoverwas up 23.5% to £50.5m, reflecting continued healthy growth in account numbers.Over 85% of all financial deals are now transacted on one of our two electronicplatforms, as against 20% at the beginning of 2003. On-line clients are easierto recruit and trade more frequently. IG's transformation into a true internetbusiness is the most significant reason behind our continued strong performancein indifferent financial markets. Spread Betting Spread betting volumes are vulnerable to lack of volatility in financialmarkets, and for much of the past year world stock indices have been relativelysubdued. As a consequence, the balance of the core UK spread betting businesshas continued to shift away from stock indices into individual shares,currencies and commodity markets, for example, in some recent months we haveseen more business in crude oil than in FTSE. Over the year, the dealing spreads offered by UK financial spread betting firmson some markets narrowed, but this trend has not affected the turnover orprofitability of the group adversely. Price competition has largely focused on the most short-term and speculativeinstruments such as foreign exchange and 'daily' stock index bets; in thesemarkets, price cuts and special offers, if positioned intelligently, can resultin an overall increase in turnover. In addition, our uniquely wide product rangemeans that a significant proportion of our turnover is derived from businesslines where there is less price competition. CFDs Our CFD (contracts for differences) business also performed strongly,particularly in individual shares. The continued development of L2TM, our DirectMarket Access platform, has helped us to win a larger share of the professionalend of the CFD market, where we can offer stockbrokers and fund managerssignificantly better dealing technology than most of our competitors. At thesame time improvements in our own terms of business have allowed us to quotevery competitive commission rates. In recent months we have developed the technology to allow other financialservice providers to white-label our CFD service to their clients and we are nowable to tailor these deals very quickly by applying a generic contractual andtechnology structure. I expect the proportion of our business which derives fromwhite-label and other introductory arrangements to increase over the next year. Financial binaries Turnover in financial binaries increased by 130% to £5.0m. Since the launch ofour binary product in 2003, IG has dominated this fastest growing sector of thefinancial betting business and there is as yet no effective competition. Whilethis cannot remain the case indefinitely, we are very strongly positioned in aninteresting business which is capable of significant further growth. Over the past few months we have developed the technology to act as amarket-maker on electronic exchanges, and have so far signed market-makingagreements with two such exchanges. Binary bets of the type which we offer ourclients are, from the clients' perspective, no different from the back-and-layfixed odds markets offered by betting exchanges. By acting as a liquidityprovider to these exchanges, we hope to attract significant additional businessin both financial and sports binary markets. Australia Our Australian operation, whose main business is in CFDs on local andinternational shares, performed impressively. Turnover of £3.8m was more than150% higher than in the previous year, and this growth rate has been maintainedsince the end of the period under review, June being easily a record month. The Melbourne office now employs over 20 people, and in addition to locallysourced clients handles overnight business for the whole financial dealingoperation, allowing us to dispense with the night shift in London. Less than three years after its launch, our Australian operation has a turnoverlarger than the whole of IG in 1996. This remains an immature market capable ofsignificant further growth.In the year ahead, we also intend to establish at least one sales office in Asia. This operation will market our foreign exchange and CFD products to theChinese speaking market, with dealing and risk management handled in Melbourne. Sports businesses The sports businesses delivered turnover of £6.8m, a slight increase on 2004. Spread betting Sports spread betting volumes were significantly higher than in the previousyear. As the number of clients betting was little changed, this increase involume mainly reflects greater activity from existing clients. As most sportsclients have accounts with more than one firm, it is reasonable to conclude thatit also represents a transfer of business from competitors in response to thevarious service enhancements which we have implemented over the last year. Assports spread betting is a mature sector any significant future increase involumes is likely to be at the expense of competitors rather than the result offresh client recruitment. Binary betting In contrast, sports binary volumes, while still small in absolute terms, grewvery rapidly in the second half of the year. We believe this business is capableof significant further development. Uniquely, our binary product offers clientsthe ability to back or lay fixed-odds propositions, and thus to close betsbefore settlement, without the liquidity constraints encountered on bettingexchanges. We also have significantly better pricing technology than mostconventional bookmakers, and this allows us to provide simultaneous automatedprices on large numbers of in-running markets. In the months ahead we intend tosimplify and re-brand the sports binary offering to widen its appeal to a massaudience, both in the UK and internationally. We are currently test marketing afull Chinese-language version of our binary website. This will, be followed byversions targeted at other non-English speaking markets in the coming year. Relative to volume, both sports businesses performed poorly especially in thesecond half of the year, with a long run of results which favoured clientsrather than bookmakers. Despite this there is no reason to believe that themargins in these businesses have fundamentally changed, and indeed theirperformance has seen a material improvement since the end of the year underreview. Systems and organisation Technology is a key component of our business and we place a major emphasis onthe reliability of our systems and the enhancement of our clients' on-lineexperience. We have continued to expand system capacity, and have progressivelyreduced the average deal time which is now under one second. On-line tradingvolumes and client log-ons continued to grow very rapidly throughout the year.Our overall up-time statistics have also improved significantly, although westill have further to go in this direction. Over the next year we intend tofurther enhance our systems resilience as we move towards operating on a true 24/7 basis. During the year we successfully tested our disaster recovery and continuitymanagement plan, with the whole company working from the back-up site for a day.We have also recently appointed a new chief technology officer with overallresponsibility for systems integrity and development. In the business generally, reporting lines have been re-organised and simplifiedand some senior managers' roles redefined to reflect changes in the underlyingbusiness. I believe we have the right people in the right jobs and a rationalorganisational structure. Current trading and outlook The year to 31 May 2005 was a year of continuing success at IG. Since the end ofthe financial year all parts of the business have performed well and our volumeshave been strong. I remain confident about IG's prospects and believe the groupis well placed to make further progress during the coming year. Nat le RouxChief Executive Operating and financial reviewfor the year ended 31 May 2005 The group profit and loss account and statement of cashflows for the priorperiod includes the results of the group from 5 September 2003 (the date of theacquisition of the group) to 31 May 2004. The operating and financial review andchief executive's report present the group results for the full year ended 31May 2004 and for each preceding twelve month period as if IG Group Limited(formerly IG Group plc) was a member of the group throughout. Five year summary Year ended 31 May 2005 2004 2003 2002 2001 £000 £000 £000 £000 £000Turnover 62,298 49,839 40,996 33,573 34,056EBITDA (1) 35,083 25,128 17,188 14,628 15,881EBITDA margin 56.3% 50.4% 41.9% 43.6% 46.6%Exceptional administrative costs 889 267 180 - 269Profit before tax 13,999 7,920 15,281 13,375 15,385 Earnings per share (normalised (2)) 6.84p 4.94p 3.30p 2.86p 3.33pBasic earnings per share (3) 2.27p 1.55p - - -Diluted earnings per share (3) 2.10p 1.43p - - - (1) EBITDA represents earnings before exceptional administrative costs,depreciation, amortisation charges, taxation, interest payable on debt andinterest receivable on corporate cash balances and includes interest receivableon clients' money net of interest payable to clients. (2) As set out in note 11 to the financial statements, normalised earnings pershare represents earnings adjusted for normalising items, divided by the numberof ordinary shares in issue at 31 May 2005. Normalising items comprise theimpact, net of tax, of exceptional administrative costs, amortisation charges,debt interest, preference dividends and non-recurring tax items. This is notintended to comply with FRS14 (3) Basic and diluted earnings per share are presented for the full year ended 31May 2005 and for the period from 5 September 2003 to 31 May 2004. Comparativesare not available for the preceding years as IG Group Holdings plc was not inexistence. Financial highlights For the third consecutive year the group achieved substantial growth in turnoverand EBITDA. Turnover increased by 25.0%. The main contributor to this growth was continuedstrong client acquisition by the group's UK financial business. The group's Australian operation and the binary betting business bothcontributed to the overall growth in turnover, but while they have exhibitedstrong growth, still remain a relatively small portion of the group's overallincome. EBITDA grew by 39.6% and the EBITDA margin showed further expansion up to 56.3%from 50.4% in the previous year. During the year the company repaid all of its outstanding debt and at the yearend the group had net cash of £20.8m. The group had a consolidated regulatory capital surplus of approximately £7m atthe year end. Turnover by business segment 2005 2004 Increase £000 £000 £000Financial 50,512 40,895 9,617Financial binaries 4,950 2,153 2,797Sports 6,836 6,791 45 ----------- ----------- ----------- 62,298 49,839 12,459 ----------- ----------- ----------- ------------- ------------- ------------- The group's financial segment showed significant growth during the year withturnover 23.5% up on the previous year. Part of this growth is attributable tothe success of the group's Australian operation. Financial binaries have grown impressively since their introduction in May 2003with turnover increasing 129.9% on the previous year. This business linecontributed 7.9% of the group's turnover in the year compared to 4.3% in theprevious year. Turnover in the group's sports segment increased by 0.7% on the previous year.Turnover by geographical segment 2005 2004 Increase £000 £000 £000United Kingdom 58,522 48,412 10,110Australia 3,776 1,427 2,349 ----------- ----------- ----------- 62,298 49,839 12,459 ----------- ----------- ----------- ----------- ----------- ----------- Turnover generated in the United Kingdom increased 20.9% compared with theprevious year, while turnover generated in Australia increased 164.6% comparedwith the previous year. Turnover generated by Australia increased as a percentage of the group's totalturnover from 2.9% in the previous year to 6.1% in the year under review. Number of clients dealing and new accounts Turnover is determined to a significant extent by the number of clients dealingwhich in turn is heavily influenced by the number of accounts opened and thenumber of accounts betting or trading for the first time. 2005 2004 2003 2002 2001Number of clients dealing 26,102 21,263 16,700 15,678 15,214Average turnover per client (£) 2,387 2,344 2,455 2,141 2,238Number of accounts opened 18,747 15,992 7,736 6,644 7,755Number of accounts betting ortrading for the first time 11,297 9,376 5,240 5,005 7,194 The introduction of online account opening in June 2003 has made itsignificantly easier to open accounts as immediate identity checks, performedfor regulatory purposes, have reduced the requirement for documentary proof ofidentity. The group's unregulated business, binarybet.com, has contributed to the growthin the number of clients dealing. These clients tend to bet more regularly thanregulated clients but these transactions are typically for a smaller amount.This explains the fall in average turnover per client between 2003 and 2004. Compared with the previous year, the number of clients dealing has increased by22.8%, the number of accounts opened has increased 17.2% and the number ofaccounts betting or trading for the first time has increased by 20.5%. The average turnover per client has also improved from £2,344 for the previousyear to £2,387 for the year under review. Segmental profit The profit of the group's segments (after attributable costs, but before commoncosts) were: 31 May % of 31 May % of 2005 segment 2004 segment £000 turnover £000 turnoverFinancial 39,744 78.7% 31,121 76.1%Financial binaries 3,474 70.2% 1,419 65.9%Sports 921 13.5% 1,449 21.3% ----------- ----------- 44,139 33,989Common costs (30,140) (26,069) ----------- -----------Profit before taxation 13,999 7,920 ----------- ----------- ----------- ----------- Each segment has costs which are largely fixed, including the employment costsof the senior dealers who are responsible for setting prices and managing risk.Once these fixed costs are covered the incremental costs associated withadditional income are lower and hence as income rises, so does the percentageprofit. This explains why financials, which is the largest of the group'ssegments, currently enjoys the highest percentage profit. Staff costs The average number of staff increased from 243 in the year ended 31 May 2004 to267 in the year under review and fixed employment costs have increasedaccordingly. A significant proportion of the employment cost consists ofperformance related bonuses which vary according to profitability and increasedby 3.4% compared with the previous year. 2005 2004 £000 £000Fixed employment costs 12,770 11,538Performance related bonuses 5,255 5,081 ----------- ----------- 18,025 16,619 ----------- ----------- ----------- ----------- Bad debts The charge for bad and doubtful debts for the year was approximately 0.5% ofrevenue. The company continues to pursue outstanding debts vigorously. Tangible fixed assets The group continues to invest heavily in technology in order to enhance thecapacity and resilience of its systems which are critical to the success of thebusiness. Fixed asset additions during the year amounted to £2.7m compared with£2.6m in the previous year. Depreciation charged in the year amounted to £3.9mcompared with £3.3m in the previous year. Goodwill The goodwill arising on the acquisition of the group amounting to £109.8m hasbeen capitalised and is being amortised over the estimated useful life of 20years. In the year under review the amortisation charge amounted to £5.7mcompared with £4.2m in the previous year. Working capital and liquidity 2005 2004 £000 £000Amounts due from brokers 40,262 31,474 --------------- --------------- --------------- --------------- Amounts due from clients 3,735 2,173Amounts due to clients (26,934) (19,920) --------------- --------------- Net amounts due to clients (23,199) (17,747) --------------- --------------- --------------- --------------- Cash at bank and in hand 20,832 23,076Loan notes (167) (570)Bank loans and interest payable - (101,113) --------------- --------------- Net funds/(debt) 20,665 (78,607) --------------- --------------- --------------- --------------- One of the main elements of working capital is amounts due from the brokers andother counterparties with whom the group hedges its financial business. Thegroup places cash or treasury bills with these brokers in order to provideinitial and variation margin to support its positions. This has increasedsignificantly in the year under review as the level and volume of clientpositions have increased. Amounts due to and from clients include unrealised profits and losses onclients' open positions as well as the result of closed positions. The amountdue from clients therefore fluctuates according to the movement in markets. Amounts due to clients relates to clients who have agreed not to have theirmoney segregated in accordance with the Financial Services Authority's (FSA's)client money rules. The increase in amounts due to clients is due to theincrease in CFD business, where the majority of clients are not segregated. Cash at bank and in hand has reduced from the previous year primarily because ofthe utilisation of surplus cash, together with the proceeds of listing on theLondon Stock Exchange to repay debt. Operating activities generated £25.4m of cash, interest received amounted to£6.0m and the finance raised on the flotation of the company amounted to£131.7m. These funds were used to repay debt amounting to £102.1m, preferenceshares of £35.7m, debt interest of £11.9m and to pay professional fees arisingin the year on the flotation of £5.8m. In addition expenditure on fixed assetsamounted to £2.7m. The group holds client money on account in segregated bank accounts which at theyear end amounted to £99.7m compared with £66.3m in the previous year. At the year end the group had total bank facilities of £25.0m, all of which wereundrawn. Facilities of £12.0m are to provide the short term liquidity which maybe necessary to meet payments to market counterparties before payment isreceived from clients in the event of a large market movement. Facilities of£13.0m provide the ability for paperless settlement of share transactions(CREST). Regulatory capital Two of the group's UK operating subsidiaries are regulated by the FSA. The FSAimposes a minimum level of regulatory capital which must be retained by eachcompany and also an overall level of regulatory capital which must be maintainedby the group. At 31 May 2005 the two subsidiaries had regulatory capital whichexceeded their regulatory capital requirement by a total of approximately £24m.The group had an overall consolidated regulatory capital surplus ofapproximately £7m. Group profit and loss accountfor the year ended 31 May 2005 Year ended Period ended 31 May 31 May 2005 2004 Notes £000 £000 Turnover 62,298 38,997Cost of sales (2,528) (1,527) --------------- --------------- Gross profit 59,770 37,470 Administrative expenses excludingexceptional administrative costs (37,900) (25,696)Exceptional administrative costs 3 (889) (267) --------------- --------------- (38,789) (25,963) --------------- --------------- Operating profit 20,981 11,507 Interest receivable 6,013 2,908Interest payable (12,995) (10,706) --------------- --------------- Profit on ordinary activities beforetaxation 13,999 3,709 Tax charge on profit on ordinaryactivities (4,538) (614) --------------- --------------- Profit on ordinary activities aftertaxation 9,461 3,095 Minority interests - equity 55 9 --------------- --------------- Profit attributable to members of theparent company 9,516 3,104 Dividends 4 (4,749) - --------------- --------------- Retained profit for the year 4,767 3,104 --------------- --------------- --------------- --------------- Earnings per share- Basic 5 2.27p 1.55p- Diluted 5 2.10p 1.43p- Normalised 5 6.84p 4.05p --------------- --------------- --------------- --------------- There were no recognised gains or losses other than the profit for the financialyear. The group profit and loss account for the period ended 31 May 2004 includes theresults from 5 September 2003, the date of acquisition of the group. All results relate to continuing operations. Group reconciliation of shareholders' fundsfor the year ended 31 May 2005 Year ended Period ended 31 May 31 May 2005 2004 £000 £000 Profit for the financial year 9,516 3,104Dividends (4,749) - --------------- --------------- 4,767 3,104 Issue of ordinary share capital 131,731 10Issue of preference share capital - 35,700Redemption of preference share capital (35,660) -Costs of share issue (6,528) -Issue costs of preference share capital - (792)Amortisation of preference share capitalissue costs 480 312 --------------- --------------- Net addition to shareholders' funds 94,790 38,334 Opening shareholders' funds 38,334 - --------------- --------------- Closing shareholders' funds 133,124 38,334 --------------- --------------- --------------- --------------- Group balance sheetat 31 May 2005 2005 2004 £000 £000Fixed assetsIntangible assets 100,542 105,541Tangible assets 5,160 6,347Investments - 2 --------------- --------------- 105,702 111,890Current assetsDebtors 47,291 35,618Cash at bank and in hand 20,832 23,076 --------------- --------------- 68,123 58,694 Creditors: amounts falling due within oneyear (40,161) (31,303) --------------- --------------- Net current assets 27,962 27,391 --------------- --------------- Total assets less current liabilities 133,664 139,281 Creditors: amounts falling due after morethan one year (500) (101,113) Minority interests - equity (40) 166 --------------- --------------- 133,124 38,334 --------------- --------------- --------------- --------------- Capital and reservesOrdinary share capital 16 10Preference share capital 40 35,220Share premium account 125,197 -Profit and loss account 7,871 3,104 --------------- --------------- Shareholders' funds:Equity 133,084 3,114Non-Equity 40 35,220 --------------- --------------- Total shareholders' funds 133,124 38,334 --------------- --------------- --------------- --------------- Group statement of cash flowfor the year ended 31 May 2005 Year Period ended ended 31 May 31 May 2005 2004 £000 £000 Net cash inflow from operating activities 25,412 21,686 --------------- --------------- Returns on investments and servicing of financeInterest received 6,013 2,908Interest paid (11,934) (3,358)Issue costs of new long term finance - (6,544) --------------- --------------- (5,921) (6,994) --------------- --------------- TaxationCorporation tax paid (2,480) (2,805) --------------- --------------- Capital expenditure and financial investmentPayments to acquire tangible fixed assets (2,680) (1,885)Receipts from sales of fixed assets - 3 --------------- --------------- (2,680) (1,882) --------------- --------------- Dividends paid (4,749) - --------------- --------------- Acquisitions and disposalsInvestments in subsidiary undertakings (21) (151,229)Net cash acquired with subsidiary undertaking - 27,464 --------------- --------------- (21) (123,765) --------------- --------------- FinancingLoans advanced - 116,256Loans repaid (101,694) (15,700)Loan notes issued - 1,138Loan notes repaid (403) (568)Issue of ordinary shares 131,731 10Issue of preference shares - 35,700Redemption of preference shares (35,660) -Costs of share issue (5,779) - --------------- --------------- (11,805) 136,836 --------------- --------------- (Decrease)/increase in cash (2,244) 23,076 --------------- --------------- --------------- --------------- The group statement of cash flow for the period ended 31 May 2004 includes thecashflows from 5 September 2003, the date of acquisition of the group. Reconciliation of net cash flow to movement in net fundsfor the year ended 31 May 2005 2005 2004 £000 £000 (Decrease)/increase in cash (2,244) 23,076Cash inflow from increase in loans - (117,394)Cash outflow from repayment of loans 101,694 15,700Accrued interest 1,765 (1,765)Net cash outflow/(inflow) from loan notes 403 (570) --------------- --------------- Change in net funds resulting from cash flows 101,618 (80,953) Issue costs of new long term loans (2,346) 2,346 --------------- --------------- Change in net funds 99,272 (78,607) Opening net debt (78,607) - --------------- --------------- Closing net funds/(debt) 20,665 (78,607) --------------- --------------- --------------- --------------- Net funds/(debt) include cash at bank and in hand, bank loans and loan notes. Notes 1. Basis of consolidation The group financial statements consolidate the financial statements of IG GroupHoldings plc and its subsidiary undertakings drawn up to 31 May 2005. No profitand loss account is presented for IG Group Holdings plc as permitted by section230 of the Companies Act 1985. IG Group Holdings plc was incorporated on 25 February 2003 and between 5September 2003 and 20 November 2003 acquired the entire issued share capital ofIG Group Limited (formerly IG Group plc). This has been accounted for usingacquisition accounting. Accordingly the group profit and loss account andstatement of cash flows for the prior period includes the results of IG GroupLimited and its subsidiaries for the 269 day period since 5 September 2003. 2. Segmental analysis Turnover represents profits and losses on the running of a betting market incommodities, financial futures, traded options, stock indices and individualshares and a wide range of sporting events, and trading in foreign exchange andcontracts for differences together with the net result of hedging clientpositions, less commissions paid. Business segments The group operates in three principal areas of activity; financial, financialbinaries and sports.The types of financial instrument included within each of the above categoriesare: Financial Spread bets on equities, equity indices, precious and base metals, softcommodities, exchange rates, interest rates; bets on options on certain of theseproducts; exchange traded futures and options. Spot and forward contracts forforeign exchange and contracts for differences on shares, indices and otherfinancial instruments. Financial binaries Fixed odds bets on equities, equity indices, precious and base metals, softcommodities, exchange rates, interest rates and other financial instruments. Sports Spread bets and fixed odds bets on sporting and political events. Year ended Period ended 31 May 31 May 2005 2004 £000 £000TurnoverFinancial 50,512 31,680Financial binaries 4,950 1,769Sports 6,836 5,548 --------------- --------------- 62,298 38,997 --------------- --------------- --------------- --------------- Year ended Period ended 31 May 31 May 2005 2004 £000 £000Segment profitFinancial 39,744 24,954Financial binaries 3,474 1,142Sports 921 1,447 --------------- --------------- 44,139 27,543Common costs (30,140) (23,834) --------------- --------------- Profit before taxation 13,999 3,709 --------------- --------------- --------------- --------------- 2005 2004 £000 £000Net assetsFinancial 12,652 11,943Financial binaries (675) (367)Sports 520 372 --------------- --------------- 12,497 11,948Unallocated net assets 120,627 26,386 --------------- --------------- 133,124 38,334 --------------- --------------- --------------- --------------- Unallocated net assets comprise the following items which do not relate tospecific business segments: 2005 2004 £000 £000 Goodwill 100,336 105,115Tangible fixed assets 1,326 1,378Fixed asset investments - 2Debtors and prepayments 3,125 1,761Cash 20,163 22,416Creditor balances (7,176) (7,403)Corporation tax 2,893 4,064Minority interests (40) 166Loans - (101,113) --------------- --------------- 120,627 26,386 --------------- --------------- --------------- --------------- Geographical segments The group has offices in the United Kingdom and in Australia. Clients of theAustralian office deal with two of the UK operating subsidiaries, but undercustomer agreements which are specific to the Australian office. Clients of theLondon office may be situated anywhere in the world other than in Australia.Accordingly the group provides a geographical analysis based on the division ofclients between the UK and Australian offices. Year ended Period ended 31 May 31 May 2005 2004 £000 £000TurnoverUK 58,522 37,726Australia 3,776 1,271 --------------- --------------- 62,298 38,997 --------------- --------------- --------------- --------------- Year ended Period ended 31 May 31 May 2005 2004 £000 £000Segment profitUK 30,540 17,859Australia 1,638 419 --------------- --------------- 32,178 18,278Common costs (18,179) (14,569) --------------- --------------- Profit before taxation 13,999 3,709 --------------- --------------- --------------- --------------- 2005 2004 £000 £000Net assetsUK 31,136 33,654Australia 1,652 1,178 --------------- --------------- 32,788 34,832Unallocated net assets 100,336 3,502 --------------- --------------- 133,124 38,334 --------------- --------------- --------------- --------------- Unallocated net assets comprise the following items which do not relate tospecific geographical segments: 2005 2004 £000 £000 Goodwill 100,336 105,115Loans - (101,613) --------------- --------------- 100,336 3,502 --------------- --------------- --------------- --------------- 3. Exceptional administrative costs Year ended Period ended 31 May 31 May 2005 2004 £000 £000 Exceptional administrative costs 889 267 --------------- --------------- --------------- --------------- The exceptional administrative costs charged in 2005 relate to professional feespayable as a result of listing the company on the London Stock Exchange. Theamount charged in the period ended 31 May 2004 relates to the professional feesincurred as a result of a restructuring of the group and fees associated withdirectors' employment and service contracts. Total administrative expenses: £38.8m (2004: £26.0m). 4. Dividends Year ended Period ended 31 May 31 May 2005 2004 £000 £000Preference dividends- Interim paid (13.3p per share) 4,749 -- Final proposed (0.6p per share) - - --------------- --------------- 4,749 - --------------- --------------- --------------- --------------- The directors did not propose an ordinary dividend for the period ended 31 May2004 or for the year ended 31 May 2005. An interim dividend on the non-cumulative preference shares was paid during theyear for the period from 5 September 2003 to 4 May 2005 when 35,660,000 of thecompany's preference shares were redeemed and restrictions on the payment ofpreference dividends ceased. This amounted to 13.3p per share at the rate of 8%per annum. A final preference dividend at 0.6p per share was declared for the remaining40,000 preference shares which amounted to £237. B shares carry no entitlement to dividends. 5. Earnings per ordinary share Year ended Period ended 31 May 31 May 2005 2004 £000 £000 Basic earnings attributable toordinary shareholders 4,767 3,104Effects of dilution - - --------------- --------------- -- --Diluted earnings attributable toordinary shareholders 4,767 3,104 --------------- --------------- --------------- --------------- Weighted average number of ordinary shares 209,780,895 200,000,000Effect of warrants 16,365,331 17,702,322Effect of LTIP awards 315,553 - --------------- --------------- -- --Diluted weighted average number ofordinary shares 226,461,779 217,702,322 --------------- --------------- -- -- --------------- --------------- Basic earnings per share 2.27p 1.55p --------------- --------------- -- -- --------------- ---------------Diluted earnings per share 2.10p 1.43p --------------- --------------- -- -- --------------- --------------- In the period ended 31 May 2004 there were 1,000,000 A ordinary shares in issue.Each of these shares was re-designated and subdivided into 200 ordinary shareson 31 March 2005. The weighted average numbers of shares have been shown as ifthe re-designation and subdivision had taken place prior to the period ending 31May 2004. The directors consider that the basic and diluted earnings per sharecalculations do not fully reflect changes in the group's capital structure as aresult of the flotation of the company on 4 May 2005. Normalising adjustmentscomprise the impact, net of tax, of exceptional administrative costs,amortisation charges, debt interest, preference dividends and non-recurring taxitems. The normalised earnings per share is used to calculate the number ofcontingent shares which vest under the LTIP and aids comparison of the earningsper share for the periods shown. This is not intended to comply with FRS14. Year ended 31 May 2005 Period ended 31 May 2004 Earnings Earnings Earnings per share Earnings per share £000 pence £000 pence Earnings attributableto ordinary shareholders 4,767 2.27 3,104 1.55 Normalising adjustmentto number of shares: Effect of basing calculation on number of shares in issue as at 31 May 2005 - (0.81) - (0.60)Normalising adjustments to earnings:Exceptional administrativecosts 889 0.27 267 0.08Interest and charges ondebt finance 11,851 3.62 10,281 3.14Tax effect of above items (3,555) (1.09) (3,098) (0.95)Amortisation charges 5,670 1.73 4,183 1.28Non-recurring tax items (2,004) (0.61) (1,470) (0.45)Preference dividends payable 4,749 1.46 - - --------------- --------------- --------------- --------------- -- -- -- --Total normalisation adjustments 17,600 4.57 10,163 2.50 --------------- --------------- --------------- --------------- Normalised earnings attributable to ordinaryshareholders 22,367 6.84 13,267 4.05 --------------- --------------- --------------- --------------- -- -- -- -- --------------- ---------------- --------------- ---------------- Number of shares in issue as at 31 May 2005 327,500,959 327,500,959 --------------- --------------- --------------- --------------- 6. Basis of preparation The above financial information for the year ended 31 May 2005 does not constitute statutory accounts. It is an extract from the 2005 unaudited group accounts, which have not yet been delivered to the UK Registrar of Companies; it is expected that the report of the auditors on those accounts will be unqualified. Copies of the full accounts will be posted to all shareholders in August 2005. Further copies will be available, from the date of posting, from the Company's headquarters at Friars House, 157-168 Blackfriars Road, London, SE1 8EZ, by telephone on 020 7896 0011 or via the Company's website at www.iggroup.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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