Pre-close Trading Update

RNS Number : 8982V

IG Group Holdings plc

04 June 2008

 



4 June 2008

IG GROUP HOLDINGS PLC

Pre-close Trading Update

IG Group Holdings plc ('IG' or 'the Group') issues the following trading update relating to the financial year ended 31 May 2008.

The Group has continued to see strong growth across all of its financial businesses throughout the year, which has been one of significant expansion with the launch of four new businesses in France, Spain and the USA.  The board expects to report an increase in revenue of over 50% to around £184m (2007: £122m) with an EBITDA* margin of approximately 53%. 

The rate of account opening in the Group's financial business, a key lead indicator of the strength of the business, has continued to accelerate.  The Group's UK spread betting business has opened over 2,000 new accounts in each of the last five months, representing approximately twice the run-rate of the same period last year.  The number of CFD accounts opened worldwide exceeded 2,000 for the first time in April, again roughly double the run-rate of the same period last year.

The Group's Asia Pacific business, which comprises offices in Australia and Singapore, is expected to report revenue growth in excess of 115%.  This business contributed approximately 15% of Group revenue, compared to 10% in the prior year. 

The Group now also has four Continental European operations, targeting clients in Germany, Italy, France and Spain. All four are achieving good levels of account opening and strong revenue growth.  

The Group's two US based businesses, HedgeStreet Inc and IG Markets Inc., commenced trading in February and April, respectively. Both businesses are in the very early stages of their development and revenue for the period was not material. HedgeStreet Inc is currently operating with a very limited product set, but has now undertaken much of the preparatory work necessary to enable it to offer a broader product range which will be rolled out later in 2008.  

The Group's new businesses in France, Spain and the USA, together with its Singapore, German and Italian operations which were established in 2006, now account for revenue of over £1.3m per month and continue to experience rapid revenue growth.  As previously noted, the launch of these new businesses has inevitably resulted in costs being put in place ahead of income.  The Group has also continued to focus on its client marketing efforts and on enhancing the functionality of all of its dealing platforms.  Betting duty, which is impacted by market volatility and direction, is expected to be around 6% of Group revenue, compared to approximately 3% in the prior year.  As a result of these factors, EBITDA* margin will be lower than that achieved in the prior year (2007: 57.7%). 

The Group's financial business has benefited from high levels of market volatility which is a key driver of client activity.  While it remains difficult to predict future trends in volatility or customer reaction to any change in market conditions, IG is well positioned for further growth.  Current trading remains strong and the Board remains confident of the Group's prospects as we enter the new financial year.

The results for the year ended 31 May 2008 will be announced on Monday 21 July 2008.  There will be a presentation for analysts at 9.30am at the offices of Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB. Analysts wishing to attend should contact Rob Bailhache at [e-mail] or on [phone].

* EBITDA represents earnings before exceptional administrative costs, depreciation, amortisation charges, taxation, interest payable on debt and interest receivable on corporate cash balances and includes interest receivable on clients' money net of interest payable to clients.

For further information please contact:

IG Group                                           020 7896 0011

Tim Howkins, Chief Executive

Steve Clutton, Finance Director

Financial Dynamics                           020 7269 7200

Robert Bailhache

Nick Henderson

 

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