IG Group Holdings plc (LON:IGG), a global leader in online trading, today announced results for the twelve months ended 31 May 2019.
Operating and Strategic Summary
· Successful navigation of the ESMA product intervention measures which came into effect during the first quarter of the financial year.
– In the three quarters of the financial year during which the ESMA measures were in place throughout, 66% of ESMA region revenue was generated from Professional clients.
– The Group served 6,000 unique ESMA region Professional clients in FY19. The average revenue per ESMA Professional client was nearly £27,000 in the year.
· Continued to recruit and retain a high quality client base.
– 55% of the Group’s global OTC leveraged revenue in FY19 was generated from clients who have been trading with the Company for more than 3 years.
– The average tenure of the Group’s highest value clients in FY19, defined as those clients generating 80% of the Group’s revenue, was 4 years and 9 months.
– The Group has continued to attract new, high quality, OTC leveraged clients with 31,510 clients making their first trade in FY19, contributing £66.8m of revenue in the year.
– The Group estimates that the lifetime revenue value of the FY19 client cohort will be around £300m.
· Actions taken to deliver a return to revenue growth in FY20.
– IG Europe, the Group’s client facing subsidiary in Germany, has been operational since January 2019 and provides certainty that IG will be able to offer its regulated financial products in all EU member states following the UK’s exit from the EU.
– IG US, the Group’s Retail Foreign Exchange Dealer in the USA, launched in January 2019.
– Spectrum, the Group’s EU based MTF, has started operations, with the marketing launch campaign planned to start in September 2019.
– Updated strategy and new medium-term financial targets announced on 22 May 2019.
Financial Summary
· Net trading revenue £476.9 million (FY18: £569.0 million) – down 16% reflecting the impact of the ESMA measures and the less favourable market conditions throughout FY19, particularly in the second half of the financial year.
· Total operating costs £284.3 million (FY18: £290.1 million) – down 2%.
· Operating profit £192.9 million (FY18: £281.1 million) – down 31%.
· Basic EPS 43.1 pence (FY18: 61.7 pence) – down 30%.
Dividend
As previously guided, the Board is recommending a final dividend of 30.24 pence per share, taking the full year dividend for FY19 to 43.2 pence per share, unchanged from the 43.2 pence per share paid for FY18.
The final dividend, if approved by shareholders, will be paid on 24 October 2019 to those members on the register at the close of business on 27 September 2019.
Outlook
As previously disclosed, the Company expects to return to revenue growth in FY20. The revenue growth is expected to be delivered in the second half of the year as the first quarter of FY19 was only partly impacted by the implementation of the ESMA product intervention measures.
As set out in the strategy update, the Group’s operating expenses, excluding variable remuneration, are expected to increase by around £30 million in FY20. This is primarily due to additional investment in prospect acquisition, to continue to promote the IG brand, to grow the size and quality of the client base, and to establish the new businesses in the EU and the USA.
IG will continue to lead the way in the industry. The Company has delivered a profitable and sustainable business for more than 40 years by placing good client outcomes at the heart of everything it does. The Group has articulated its strategy to position the business so that it will continue to deliver for its clients, its shareholders and its other stakeholders, with clear medium-term financial targets.
The Board reiterates that it expects to maintain the 43.2p per share annual dividend until the Group’s earnings allow the Company to resume progressive dividends.
June Felix, Chief Executive, commented:
“The Company has made good strategic and operational progress during FY19, taking action to ensure that the business successfully navigated the impact of regulatory change.
We have developed our strategy to position the business so that it will continue to deliver for our clients, our shareholders and our other stakeholders under a more restrictive regulatory environment in the UK and EU. I am excited by the opportunities we have identified, and I am confident that the Company will return to revenue growth in FY20.
IG has experienced significant change over its 45-year history and will continue to do so – driven by an evolving regulatory environment, shifting patterns of wealth, and the continued evolution of financial markets around the world. The Company adheres to the highest regulatory standards, differentiates itself within the industry through its good conduct, and I believe that the business is well positioned to continue to adapt to regulatory change and to thrive in an evolving market.
I am looking forward to leading the implementation of IG’s strategy to deliver sustainable revenue growth and attractive shareholder returns.”
