IG Group Holdings plc Records Strong First-Half Results

IG Group (LSE: IGG) — the international provider of financial spread betting and CFDs — published its interim results for the half-year to 30 November 2013 this morning.  Despite what are described as “strong results”  — albeit relative to a “subdued prior year” —  its share price is essentially unchanged on the day so far.

Net trading revenue rose 8%, to £182.7 million.  Pre-tax profit was up 17%, at£ 95.1m, with the increase attributed to a combination of the higher revenue and one-off operating costs incurred in the previous year.  Diluted earnings per share grew 22%, to 19.63p, the growth enhanced by a lower tax rate.

Looking geographically, the UK saw 7% revenue growth, with Europe being IG Group’s stand-out region, where revenues soared 25%, offsetting a 4% decline in Australia and an essentially flat performance in the rest of the world.  

But most of the upside was seen in the first quarter. Second quarter revenues in the Europe still grew by 21%, but the UK was flat, Australia saw a fall of 6%, with those in the rest of the world dropped 10%.

The company said that there was “significantly higher average revenue per client” — it was up 18% — but that it had been partially offset by a lower number of active clients. IG Group said that this was due to its on-going strategy of focusing on a more active (and, it reasons, potentially more valuable) client base. 

The board has recommended an interim dividend of 5.75p per share, which is the same as last year and the year before.

Commenting on the results, Chief Executive Tim Howkins said

The performance in the first half was satisfactory, with revenue, profit and cash generation all well ahead of what was a particularly subdued prior half year.  Importantly, we continue to make good progress in executing on our strategy aimed at attracting and retaining active traders, broadening our offering and product set and developing the business globally.  I believe the investment over the next few years in a number of exciting and key long-term initiatives will help us to deliver good levels of growth into the future.

At 628p, IG Group’s share price is up 33.7% on this time year, well ahead of the 10% gain recorded by the FTSE 100 index over the same period. And the picture is similar over the past five years, with IG Group’s 134% share price growth comprehensively beating the FTSE 100 index’s 52% increase.

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> Jon doesn't own shares in IG Group.