TIDMIGG
RNS Number : 5096T
IG Group Holdings plc
21 March 2019
21 March 2019
LEI No: 2138003A5Q1M7ANOUD76
IG GROUP HOLDINGS PLC
Third Quarter Revenue Update
IG Group Holdings plc ("IG", "the Group", "the Company"), a
global leader in online trading, today issues an update on its
revenue for the three months to 28 February 2019, the third quarter
of its FY19 financial year ("Q3 FY19").
Q3 FY19 Revenue
Q3 FY19 is the second quarter when the ESMA product intervention
measures that impose restrictions relating to the offering of CFDs
and which prohibit the offer of binary options to Retail clients in
the UK and EU, were in effect throughout.
Net trading revenue was GBP108.0m in Q3 FY19, 12% lower than in
Q2 FY19. The total number of OTC leveraged active clients in Q3
increased by 1% to 84,200. The lower revenue in Q3 compared with Q2
is due to lower revenue per client which reflects the reducing
levels of volatility in financial markets throughout the quarter,
culminating in persistently low levels of volatility and market
activity in February.
IG's track record of sustainable revenue growth in its OTC
leveraged derivatives business over the medium and long term has
been delivered through growth in the size and quality of its active
client base. The Group is pleased to see continued demand for its
products and services, with 7,742 new OTC leverage clients placing
a first trade in Q3 compared with 7,553 in Q2. During Q3 a further
1,425 ESMA region Retail clients applied to be classified as
Professional, with 14% of these applications accepted.
The table below sets out revenue and active client numbers by
reporting segment for Q3 FY19 compared with Q2 FY19.
Reporting Segment Revenue (GBPm) % Change Clients ('000s) % Change
----------------------------- --------- ---------
Q3 FY19 Q2 FY19 Q3 FY19 Q2 FY19
----------------------------- -------- -------- --------- -------- -------- ---------
UK 41.8 49.7 (16%) 31.5 31.2 1%
EU 15.1 17.3 (13%) 20.3 19.9 2%
ESMA Region 56.9 67.0 (15%) 51.8 51.1 1%
-------- -------- -------- --------
EMEA ex EU 11.3 10.7 6% 4.5 4.6 (2%)
APAC 35.0 38.6 (9%) 27.9 27.6 1%
-------- -------- -------- --------
OTC Leveraged 103.2 116.3 (11%) 84.2 83.3 1%
-------- -------- -------- --------
US 4.0 4.5 (11%) 8.7 8.6 1%
Share Dealing & Investments 0.8 1.3 (38%) 37.4 37.0 1%
Multi product clients - - - (4.7) (4.8) (2%)
Group 108.0 122.1 (12%) 125.6 124.1 1%
-------- -------- -------- --------
ESMA Region
The table below sets out the split of revenue and active client
numbers within the ESMA region between clients categorised as
Professional and Retail.
Revenue (GBPm) % Change Clients ('000s) % Change
------------------- --------- ---------
Q3 FY19 Q2 FY19 Q3 FY19 Q2 FY19
------------------- -------- -------- --------- -------- -------- ---------
ESMA Professional 37.1 46.3 (20%) 5.2 5.2 -
ESMA Retail 19.8 20.7 (4%) 46.6 45.9 2%
ESMA Region 56.9 67.0 (15%) 51.8 51.1 1%
-------- -------- -------- --------
The total number of OTC leveraged active clients in the ESMA
region increased by 1% in Q3 compared with Q2, with the number of
active Retail clients increasing by 2% to 46,600. The reduction in
revenue in the ESMA region in Q3 compared with Q2 reflects lower
revenue per client, consistent with the market conditions. The
level of trading by Professional clients, who are not constrained
by the ESMA measures, is more sensitive to volatility than Retail
clients. The proportion of ESMA region revenue generated from
clients categorised as Professional was 65% in Q3 FY19 compared
with 69% in Q2 FY19.
Year to Date Revenue
Year to date net trading revenue of GBP359.0m is 15% lower than
in the same period in the prior year, reflecting the impact of the
ESMA measures and the exceptional performance in Q3 FY18 when
revenue was boosted by the heightened level of interest in
cryptocurrencies.
The table below sets out revenue and active client numbers by
reporting segment for Q3 FY19 year to date compared with the same
period in FY18. The underlying change in revenue shown in the table
adjusts for the revenue generated by clients that had previously
contracted with an entity in the ESMA region who elected to open an
IG account in a jurisdiction which is not subject to the ESMA
product intervention measures during FY19.
Reporting Segment Revenue (GBPm) % Change Clients ('000s) % Change
----------------------- ---------
Q3 YTD Q3 YTD Reported Underlying Q3 YTD Q3 YTD
FY19 FY18 FY19 FY18
----------------------- -------- ------- --------- ----------- -------- -------- ---------
UK 145.5 185.8 (22%) (19%) 44.7 55.4 (19%)
EU 56.9 92.6 (39%) (34%) 29.4 36.1 (19%)
ESMA Region 202.4 278.4 (27%) (24%) 74.1 91.5 (19%)
-------- ------- -------- --------
EMEA ex EU 31.8 26.0 22% 6% 6.1 5.9 3%
APAC 109.1 102.4 7% 2% 36.7 35.3 4%
-------- ------- --------- ----------- -------- --------
OTC Leveraged 343.3 406.8 (16%) (16%) 116.9 132.7 (12%)
-------- ------- --------- ----------- -------- --------
US 12.4 11.6 7% 7% 15.1 18.8 (20%)
Share Dealing &
Investments 3.3 2.9 14% 14% 37.4 33.7 11%
Multi product clients (6.1) (6.3) (3%)
Group 359.0 421.3 (15%) (15%) 163.3 178.9 (9%)
-------- ------- -------- --------
Business Model
IG's business model ensures that its interests as a business are
aligned with the interests of its clients, which sets it apart from
most other companies in the industry. The Company wants its clients
to trade profitably, as successful clients are more likely to
continue trading.
The Group accepts market risk in order to allow instant
execution of client orders. The business manages the market risk it
faces through internalisation and by hedging residual risk in each
market at defined limits. This policy has been established for many
years, and has not changed in FY19.
New Operations
The Group's new subsidiary in the USA which is registered to
operate as a Retail Foreign Exchange Dealer, IG US, and its new
client facing subsidiary in Germany, IG Europe, both launched
operations at the end of January. Spectrum, the Group's MTF, is
expected to launch before the end of the financial year.
Outlook
As demonstrated in Q3, the Group's revenue in any one period is
affected by market volatility and client trading opportunities, and
the level of revenue in the last quarter of FY19 is difficult to
predict accurately. As previously communicated, the Company
continues to expect that its revenue in FY19 will be lower than in
FY18. The Company's cost guidance for FY19 remains unchanged with
total operating costs expected to be at a similar level to the
GBP290 million operating costs in FY18.
The Board reiterates that the Company expects to maintain the
43.2p per share annual dividend until the Group's earnings allow
the Company to resume progressive dividends.
There will be a conference call for analysts and investors at
8.30am (UK time) today. The call can be accessed by visiting
https://pres.iggroup.com/ig046/vip_connect. The audio recording of
the conference call will be archived for access at
www.iggroup.com/investors.
The Company will provide a business and strategic update on the
morning of 22 May 2019.
For further information, please contact:
IG Group FTI Consulting
Liz Scorer Neil Doyle / Ed Berry
020 7573 0727 020 3727 1141 / 1046
investors@iggroup.com
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation ("MAR"). Upon the publication of this
announcement via Regulatory Information Service ("RIS"), this
inside information is now considered to be in the public
domain.
About IG
IG empowers informed, decisive, adventurous people to access
opportunities in over 15,000 financial markets. With a strong focus
on innovation and technology, the company puts client needs at the
heart of everything it does.
IG's vision is to be a global leader in retail trading and
investments. Established in 1974 as the world's first financial
spread betting firm, it continued leading the way by launching the
world's first online and iPhone trading services.
IG is an award-winning, multi-platform trading company, the
world's No.1 provider of CFDs* and a global leader in forex. It
provides leveraged services with the option of limited-risk
guarantees, and offers an execution-only share dealing service in
the UK, Australia and Continental Europe. IG has a range of
affordable, fully managed investment portfolios, which provide a
comprehensive offering to investors and active traders.
It is a member of the FTSE 250, with offices across Europe,
including a Swiss bank, Africa, Asia-Pacific, the Middle East and
the US, where it offers on-exchange limited risk derivatives via
the Nadex brand.
* Based on revenue excluding FX (from published financial
statements, February 2018)
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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