IG Group Releases Q4 and Full Year Trading Statement for 2013

IG Group released its Trading Statement for the year ending May 31st, 2013. The statement includes unaudited figures for Q4

IG Group released its Trading Statement for the year ending May 31st, 2013. The statement includes unaudited figures for Q4 and the full year, with official audited results due out in July. As current results are unaudited, IG Group refers to them as ‘forecasted’ figures. For the fourth quarter, total revenues are forecasted at £104.3 million, 8% above the same period last year. Full year results are forecasted at £361.9 million, 1% below last year’s figures. As seen below, IG experienced a drop in revenues in its three largest regions, the UK, Europe, and Australia. Also, total active clients dropped 5% from 2012 levels.

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During the fourth quarter, IG experienced a rebound from slow activity the rest of the year. During the quarter, revenues grew along each of its regions (see below) with the largest gains seen in Japan. Commenting on the quarter, IG stated “ In the final quarter of the year, although April provided the largest year-on-year uplift, both April and May were strong revenue months as clients responded to a number of separate market events including the Cyprus bail-in, a significant fall in Gold prices, continuing strength in the global equity markets and movements in the Yen and the Nikkei, driven by Bank of Japan intervention.”

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Business Development

Viewers to IG Group’s website may have noticed that the broker has recently acquired the IG.COM domain and is rebranding their operations as IG. In its Trading Statement, IG made reference to the new domain and stated “Capital expenditure in the year was higher than the historic run-rate, as IG invested in a suite of domain names, including IG.com and a series of local domain names, such as IG.co.uk and IG.de which will feed into IG.com. The acquisition of these domain names is another important step in IG’s global brand positioning and further enhances the Group’s online marketing strategy.” According to IG, the acquisition of domains, as well as software investments in its Nadex unit cost the broker approximately £5 million.

In regards to binary options, IG referred to upcoming regulation in Japan that would impose expiration durations on products. The broker explained that their offerings would be unaffected by the new rules as their current options are longer than the proposed minimum durations. However, IG added that other rules such as requirements for a ‘client knowledge assessment’ would make it more difficult to acquire new customers.

Outlook

For the year, IG expects pre-tax profits to be above 2012 levels. Looking towards 2014, IG stated that they expect operating costs to rise in the coming year. The broker explained that “the primary drivers here are the resetting of employee variable compensation into the new financial year, the impact of inflation on people costs, an increase in the FSCS levy and additional investment in growing the business.”

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