TIDMIGG
RNS Number : 7136G
IG Group Holdings plc
19 March 2020
19 March 2020
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 a scheduled update on
its revenue for the three months to 29 February 2020 ("Q3 FY20"),
the third quarter of its financial year ending 31 May 2020
("FY20").
Business performance in Q3
The business performed strongly in the third quarter driven by a
significant increase in active clients and reflecting increased
client trading activity, particularly in the last week of February
when financial market volatility was exceptionally high.
Revenue in Q3 FY20 was GBP139.8 million, 29% higher than in the
same period in the prior year. Q3 FY20 was IG's strongest revenue
quarter since the implementation of the ESMA product intervention
measures in August 2018 and is the third highest quarterly revenue
in the Group's history, exceeded only by the last two quarters of
FY18.
Revenue by product (GBPm) Q3 FY20 Q3 FY19 % Change
------------------------------- -------- -------- ---------
OTC leveraged 135.2 103.2 31%
Exchange traded derivatives 3.9 4.0 (4%)
Stock trading and investments 0.7 0.8 (11%)
------------------------------- -------- -------- ---------
Group 139.8 108.0 29%
------------------------------- -------- -------- ---------
The Group served 101,700 OTC leveraged active clients in the
quarter, 21% higher than in the same period in the prior year, with
average OTC leveraged revenue per client 9% higher than in the
prior year, at GBP1,330.
The Group's sustainable business model - of internalising client
flows and hedging the residual risk in each market - has not
changed, and the Board approved market risk limits have not
changed. The Group's revenue reflects the transaction fees paid by
clients ("client income"), net of the Group's external hedging
costs, clients' trading profits and losses, and corresponding
hedging profits and losses. The Group's revenue does not benefit
from client trading losses, nor is it exposed to client trading
profits. The Group's business model is designed to give clients the
best trading and execution experience available, with execution
always favouring the client.
This client execution benefit is generally higher in more
volatile market conditions, and the conversion of client income to
net trading revenue in Q3 FY20 was 70%, compared with the circa 74%
conversion in H1 FY20 and in FY19 and FY18.
Year to date net trading revenue of GBP389.7 million is 9%
higher than in the same period in the prior year. Revenue in the
Group's Core Markets is 3% higher, with revenue from the Group's
portfolio of Significant Opportunities 51% higher.
Revenue by product (GBPm) Q3 FY20 YTD Q3 FY19 YTD % Change
------------------------------- ------------ ------------ ---------
OTC leveraged ("OTC") 374.7 343.3 9%
Exchange traded derivatives
("ETD") 11.7 12.4 (5%)
Stock trading and investments 3.3 3.3 -
------------------------------- ------------ ------------ ---------
Group 389.7 359.0 9%
------------------------------- ------------ ------------ ---------
Revenue (GBPm) Q3 FY20 YTD Q3 FY19 YTD % Change
------------------------------------
Core Markets
ESMA region OTC 198.3 201.3 (1%)
Other Core Markets OTC 123.1 111.4 10%
Stock trading and investments 3.3 3.3 -
------------------------------------ ------------ ------------ ---------
Total Core Markets 324.7 316.0 3%
Significant Opportunities
OTC 53.3 30.6 74%
ETD 11.7 12.4 (5%)
------------------------------------ ------------ ------------ ---------
Total Significant Opportunities 65.0 43.0 51%
------------------------------------ ------------ ------------ ---------
Group 389.7 359.0 9%
------------------------------------ ------------ ------------ ---------
The prior year included two months of trading prior to the
implementation of the ESMA product intervention measures. To
understand the performance of the business in the ESMA region since
the product intervention measures have been in effect, the most
appropriate comparison is to compare the Q1-Q3 FY20 quarterly
average with the Q2-Q4 FY19 quarterly average when the measures
were in effect throughout. On this analysis, ESMA region revenue in
FY20 is 8% higher, driven by a 7% increase in the number of active
OTC leveraged clients.
Year to date revenue in the Other Core Markets is 10% higher
than in the prior year, driven by a 7% increase in the number of
active OTC leveraged clients.
Year to date revenue from the Group's portfolio of Significant
Opportunities of GBP65.0 million is GBP22.0 million higher than in
the same period in the prior year. Whilst the Group is still at an
early stage in the implementation of its strategy and noting that
each opportunity is at a different stage of development, there has
been good initial progress.
The 74% growth in OTC leveraged revenue from the Group's
portfolio of Significant Opportunities reflects the strong
performance in Japan and Emerging Markets driven by the increase in
the number of active clients in those businesses. The Group's
recently launched European MTF, Spectrum, has continued to attract
clients trading Turbo24s with nearly 1,300 active clients year to
date, the Institutional business has increased its active client
numbers by over 40%, and the Group's new US OTC FX business has
served over 4,000 active clients this year. Conditions were more
challenging in the US Exchange Traded Derivatives business, Nadex,
where client numbers were 8% lower.
IG's track record for delivering sustainable revenue growth over
the medium and long term has been driven by the growth in the size
and quality of its active client base.
The tables setting out more detail on the breakdown of Core
Markets (including further analysis of the ESMA region metrics) and
total Significant Opportunities are shown in the Appendix to this
document.
Business developments
During the period the Group opened a new client facing
subsidiary in Bermuda, IG International. IG International is
regulated by the Bermuda Monetary Authority (BMA). IG's strong
global brand has always attracted international clients from
countries where the Group does not have a local presence. This
investment means that the Group is better positioned to capture
client demand and simplifies its arrangements with existing
international clients. IG International will not offer products or
services to residents of any EU country or residents of countries
where IG has a regulated presence.
Actions to enable successful navigation of the impact of
proposed changes to the regulatory environment in Australia are
progressing as planned. The Group has received no further
information on the nature or timing for implementation of the
Australian Securities and Investments Commission measures.
Business continuity
IG has implemented a comprehensive business continuity plan in
response to the COVID-19 virus, which is operating as anticipated.
All employees have the capability to work from home and IG will
continue to provide the best possible service for its clients when
they choose to trade the financial markets. The Group is in regular
communication with its staff members to ensure their safety, and
that of their families, during this challenging time.
Current Trading
The high level of volatility in the last week of February has
continued into March. Revenue in the first 12 trading days of the
61 in Q4 FY20 is estimated to be around GBP52 million.
These are extraordinary times. This sustained level of
volatility and revenue is unprecedented, and it is not possible to
determine how long it will persist or how clients will continue to
respond. In addition, the actions of governments and regulators are
not predictable, and the Group may face circumstances and events it
has not previously anticipated. It therefore remains difficult to
predict accurately the level of revenue in the final quarter of
this financial year.
Analyst and investor call
There will be a conference call for analysts and investors at
8.00am (UK time) today. The call can be accessed by visiting
https://pres.iggroup.com/ig051/vip_connect . The call will also be
available via audio webcast at https://pres.iggroup.com/ig051 . The
audio recording of the conference call will be archived for access
at www.iggroup.com/investors .
For further information, please contact:
IG Group Investors IG Group Press FTI Consulting
Liz Scorer Jon Laycock Neil Doyle / Ed Berry
020 7573 0727 07388 440127 020 3727 1141 / 1046
investors@ig.com press@ig.com
Disclaimer - forward-looking statements
This statement, prepared by IG Group Holdings plc (the
"Company"), may contain forward-looking statements about the
Company and its subsidiaries (the "Group"). Forward-looking
statements involve known and unknown risks and uncertainties
because they are beyond the Company's control and are based on
current beliefs and expectations about future events. No assurance
can be given that such results will be achieved; actual events or
results may differ materially as a result of risks and
uncertainties facing the Group. If the assumptions on which the
Group bases its forward-looking statements change, actual results
may differ from those expressed in such statements. Forward-looking
statements speak only as of the date they are made, and the Company
undertakes no obligation to update these forward-looking
statements. Nothing in this statement should be construed as a
profit forecast.
About IG
IG empowers informed, decisive, adventurous, people to access
opportunities in over 16,000 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 provide the world's best trading experience.
Established in 1974 as the world's first financial derivatives
firm, it continued leading the way by launching the world's first
online and iPhone trading services.
IG is an award-winning, multi-product trading company which
allows retail, professional and institutional clients to trade via
its platforms 24 hours a day, 7 days a week*. IG is 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 stock trading service in the UK,
Australia, Germany, France, Ireland, Austria and the Netherlands.
IG has a range of affordable, fully managed investment portfolios,
which provide a comprehensive offering to investors and active
traders.
IG is a member of the FTSE 250, with offices across Europe,
including a Swiss bank, Africa, Asia-Pacific, the Middle East and
North America. IG Group Holdings plc holds a long-term investment
grade credit rating of BBB- with a stable outlook from Fitch
Ratings.
*Excluding 10pm Friday (GMT) to 4am Saturday (GMT)
**Based on revenue excluding FX (from published financial
statements, June 2019)
Appendix
1. Q3 FY20 Group client metrics
Revenue (GBPm) Q3 FY20 Q3 FY19 % Change
------------------------------------
Core Markets
ESMA region OTC leveraged 71.7 56.6 27%
Other Core Markets OTC
leveraged 42.8 35.8 20%
Stock trading and investments 0.7 0.8 (11%)
------------------------------------ -------- -------- ---------
Total Core Markets 115.2 93.2 24%
Significant Opportunities
OTC 20.7 10.8 92%
ETD 3.9 4.0 (4%)
------------------------------------ -------- -------- ---------
Total Significant Opportunities 24.6 14.8 65%
------------------------------------ -------- -------- ---------
Group 139.8 108.0 29%
------------------------------------ -------- -------- ---------
Active clients ( '000 Q3 FY20 Q3 FY19 % Change
)
------------------------------------
Core Markets
ESMA region OTC leveraged 58.6 51.7 13%
Other Core Markets OTC
leveraged 25.7 23.7 8%
Stock trading and investments 38.4 37.4 3%
Multi product clients (5.0) (4.7) 6%
------------------------------------ -------- -------- ---------
Total Core Markets 117.7 108.1 9%
Significant Opportunities
OTC 17.4 8.8 99%
ETD 9.4 8.7 7%
------------------------------------ -------- -------- ---------
Total Significant Opportunities 26.8 17.5 53%
Other multi product clients (0.7) - nm
------------------------------------ -------- -------- ---------
Group 143.8 125.6 14%
------------------------------------ -------- -------- ---------
Revenue per client (GBP) Q3 FY20 Q3 FY19 % Change
------------------------------------
Core Markets
ESMA region OTC leveraged 1,224 1,093 12%
Other Core Markets OTC
leveraged 1,669 1,511 10%
Stock trading and investments 19 22 (14%)
------------------------------------ -------- -------- ---------
Significant Opportunities
OTC 1,189 1,232 (4%)
ETD 415 466 (11%)
------------------------------------ -------- -------- ---------
2. Q3 FY20 YTD Group client metrics
Revenue (GBPm) Q3 FY20 YTD Q3 FY19 YTD % Change
------------------------------------
Core Markets
ESMA region OTC leveraged 198.3 201.3 (1%)
Other Core Markets OTC
leveraged 123.1 111.4 10%
Stock trading and investments 3.3 3.3 -
------------------------------------ ------------ ------------ ---------
Total Core Markets 324.7 316.0 3%
Significant Opportunities
OTC 53.3 30.6 74%
ETD 11.7 12.4 (5%)
------------------------------------ ------------ ------------ ---------
Total Significant Opportunities 65.0 43.0 51%
------------------------------------ ------------ ------------ ---------
Group 389.7 359.0 9%
------------------------------------ ------------ ------------ ---------
Active clients ( '000 Q3 FY20 YTD Q3 FY19 YTD % Change
)
------------------------------------
Core Markets
ESMA region OTC leveraged 73.1 74.1 (1%)
Other Core Markets OTC
leveraged 34.0 31.6 7%
Stock trading and investments 38.4 37.4 3%
Multi product clients (5.9) (6.1) (3%)
------------------------------------ ------------ ------------ ---------
Total Core Markets 139.6 137.0 2%
Significant Opportunities
OTC 23.2 11.2 106%
ETD 15.1 15.1 -
------------------------------------ ------------ ------------ ---------
Total Significant Opportunities 38.3 26.3 45%
Other multi product clients (1.0) - nm
------------------------------------ ------------ ------------ ---------
Group 176.9 163.3 8%
------------------------------------ ------------ ------------ ---------
Revenue per client (GBP) Q3 FY20 YTD Q3 FY19 YTD % Change
------------------------------------
Core Markets
ESMA region OTC leveraged 2,711 2,718 -
Other Core Markets OTC
leveraged 3,626 3,525 3%
Stock trading and investments 87 88 (1%)
------------------------------------ ------------ ------------ ---------
Significant Opportunities
OTC 2,301 2,730 (16%)
ETD 775 818 (5%)
------------------------------------ ------------ ------------ ---------
3. ESMA region OTC leveraged quarterly average analysis
To understand the performance of the business in the ESMA region
since the product intervention measures have been in effect, the
most appropriate comparison is to compare the Q1-Q3 FY20 quarterly
average with the Q2-Q4 FY19 quarterly average when the measures
were in effect throughout. This analysis is provided in the tables
below.
Quarterly average Revenue (GBPm)
Q1-Q3 FY20 Q2-Q4 FY19 Change %
-------------------------- ------------ ----------- ---------
ESMA region Professional 40.0 40.5 (1%)
ESMA region Retail 26.1 20.7 26%
--------------------------- ----------- ----------- ---------
Total ESMA region 66.1 61.2 8%
--------------------------- ----------- ----------- ---------
Quarterly average Active Clients ('000)
Q1-Q3 FY20 Q2-Q4 FY19 Change %
-------------------------- ------------ ----------- ---------
ESMA region Professional 5.0 5.1 (1%)
ESMA region Retail 50.2 46.4 8%
--------------------------- ----------- ----------- ---------
Total ESMA region 55.2 51.5 7%
--------------------------- ----------- ----------- ---------
Quarterly average Revenue per client (GBP)
Q1-Q3 FY20 Q2-Q4 FY19 Change %
-------------------------- ------------ ----------- ---------
ESMA region Professional 7,918 7,915 -
ESMA region Retail 520 447 16%
--------------------------- ----------- ----------- ---------
Total ESMA region 1,195 1,188 1%
--------------------------- ----------- ----------- ---------
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END
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