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IG Group reports a strong fiscal year, Forex growth in UK slows down, Japan is becoming competitive
IG Group issued the following trading update relating to the financial year ended 31 May 2009. While IG is not a major Forex player it is still medium sized and is one of the largest UK brokers.
The Group expects to report revenue of around £257m (2008: £184m) and adjusted profit before tax of around £125m (2008: £97m). Excluding the impact of FX Online JapanKK (“FXO”), which the Group acquired during the period, organic revenue growth for the year was 25%. For the final quarter organic revenue growth was 18% year on year, compared to 12% in the third quarter. This improvement in rate of growth was achieved despite significant reductions in the level of market volatility.
The UK and Australia Forex figures were lower in the third quarter but improved in the fourth. The revenues and profits were bolstered by the newly acquired Japanese FXO as well as by the rally in equity markets which contributed to higher client trading.
FXO also faced an increased competition in the local market which immediately resulted in major drop in earnings in February.
This should serve as a warning sign to all Forex brokers operating in developed markets only: either break into new and emerging markets (Dubai) or expand your offering to clients. Forex is no longer enough in order to keep up with the pace.
Full release is embedded below:
IG Group Holdings plc (“IG” or the “Group”) issues the following trading update relating
to the financial year ended 31 May 2009.
The Group expects to report revenue of around £257m (2008: £184m) and adjusted profit
before tax of around £125m (2008: £97m).1 Excluding the impact of FX Online Japan
KK (“FXO”), which the Group acquired during the period, organic revenue growth for
the year was 25%. For the final quarter organic revenue growth was 18% year on year,
compared to 12% in the third quarter. This improvement in rate of growth was achieved
despite significant reductions in the level of market volatility.
As previously reported the Group’s UK financial business and its Australian business
suffered small declines in revenue in the third quarter.2 Both businesses performed better
in the final quarter and grew over the same period a year earlier. For the year as a whole
these businesses achieved revenue of £150m (2008: £137.8m) and £28m (2008: £25m)
respectively, representing growth of approximately 9% and 12% respectively.
The Group’s six newest offices in Singapore, Germany, France, Spain, Italy and the US,
all achieved strong growth, delivering revenue of approximately £42m (2008: £9.7m),
representing growth of 333%.
As previously reported FXO saw a sudden decline in its revenue run-rate during
February. Following this, revenue stabilised and was approximately £7m for the final
quarter, giving total revenue for the eight months of ownership of £28m. The Group
believes that the main cause of the weakness was a shift in the competitive landscape
with a number of competitors offering ostensibly lower spreads. On 1 June 2009 FXO
moved to the same variable spread model that IG had successfully introduced elsewhere
during the final quarter. This change is expected to result in an increase in client activity
and improved revenue.
IG Group Holdings plc (“IG” or the “Group”) issues the following trading update relating to the financial year ended 31 May 2009. The Group expects to report revenue of around £257m (2008: £184m) and adjusted profit before tax of around £125m (2008: £97m).1 Excluding the impact of FX Online Japan KK (“FXO”), which the Group acquired during the period, organic revenue growth for the year was 25%. For the final quarter organic revenue growth was 18% year on year, compared to 12% in the third quarter. This improvement in rate of growth was achieved despite significant reductions in the level of market volatility. As previously reported the Group’s UK financial business and its Australian business suffered small declines in revenue in the third quarter.2 Both businesses performed better in the final quarter and grew over the same period a year earlier. For the year as a whole these businesses achieved revenue of £150m (2008: £137.8m) and £28m (2008: £25m) respectively, representing growth of approximately 9% and 12% respectively. The Group’s six newest offices in Singapore, Germany, France, Spain, Italy and the US, all achieved strong growth, delivering revenue of approximately £42m (2008: £9.7m), representing growth of 333%. As previously reported FXO saw a sudden decline in its revenue run-rate during February. Following this, revenue stabilised and was approximately £7m for the final quarter, giving total revenue for the eight months of ownership of £28m. The Group believes that the main cause of the weakness was a shift in the competitive landscape with a number of competitors offering ostensibly lower spreads. On 1 June 2009 FXO moved to the same variable spread model that IG had successfully introduced elsewhere during the final quarter. This change is expected to result in an increase in client activity and improved revenue.
Michael
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Article Source: ArticlesBase.com – IG Group reports a strong fiscal year, Forex growth in UK slows down, Japan is becoming competitive
