TIDMIGG
RNS Number : 9399O
IG Group Holdings plc
23 May 2018
23 May 2018
LEI No: 2138003A5Q1M7ANOUD76
IG GROUP HOLDINGS PLC
Trading Update and Capital Markets Day
IG Group Holdings plc ("IG", "the Group", "the Company") today
issues a trading update on its financial year ending 31 May 2018
("FY18"). The Company is also hosting a Capital Markets Day today
for investors and analysts at its London head office, and sets out
below the new and updated information that will be disclosed at
that meeting.
Trading Update
IG has continued to perform well in the final quarter of FY18.
Net trading revenue for the full year is expected to be around
GBP565m (FY17: GBP491m).
The Group's operating expenses for FY18, excluding variable
remuneration, are expected to be around GBP254m (FY17: GBP253m), in
line with previous guidance. The Group's charge for variable
remuneration is expected to be around GBP36m (FY17: GBP24m).
Outlook
The Group expects the product intervention measures announced by
ESMA on 27 March 2018 to come into effect in the first half of
FY19. As previously disclosed:
- the Company believes that the reduction in historic revenue
from the implementation of the measures announced by ESMA, taking
into account the expected proportion of revenue that will be
generated from clients categorised as professional, would have been
approximately 10%
- the Company expects that its revenue in FY19 will be lower
than that expected for FY18, reflecting the impact of the
regulatory changes in the UK and EU
- the Company expects to return to growth after FY19
Capital Markets Day Content
At the Capital Markets Day today the Group's senior management
will set out how and why the Group's business is well positioned to
mitigate the impact of regulatory change and to deliver sustainable
growth and attractive shareholder returns. This includes setting
out:
- the Group's vision and values
- its approach to risk management
- more detailed analysis of the cost base
- specific actions being taken to deliver growth from existing
and new countries and from product and platform innovation
- explanation of the key areas of the business (prospect
acquisition, sales and client service, technology, and
internalisation and dealing) and how these activities contribute to
the Group's sustainable competitive advantage
New and updated information
The Group has received around 15,000 applications since November
2017 from clients to elect to be categorised as professional, and
3,800 clients are now categorised as professional. The Group's
process for assessing these applications is appropriately rigorous
and over three-quarters of the applicants to date have been
rejected. Clients categorised as professional contributed over 35%
of UK and EU OTC leveraged revenue in the last three months, and
the Group continues to expect this proportion to rise to 50% when
the ESMA measures come into effect.
IG is supportive of the objectives of regulators to improve
client outcomes, and the Group will continue to engage with
regulators across the globe in their efforts to develop appropriate
regulation of the industry. There are a number of actions that
retail clients may take in response to the ESMA measures. The Group
will allow appropriate retail clients to continue to trade as they
choose where this is fully compliant with the regulatory rules.
The Group believes that macro trends will continue to fuel
business growth. The business expects to benefit from its US
subsidiary serving the OTC FX market, which is planned to go live
by the end of the first half of FY19, from the MTF in Europe that
is expected to be live for FY20, and from acquiring licences to
operate in jurisdictions in selected emerging markets that fit our
strict criteria.
The Group intends to continue to invest to broaden the
business's product offering and to reinforce its competitive
advantage. Operating expenses excluding variable remuneration are
expected to increase in FY19 reflecting the Group's continued
investment in product and platform development and additional
headcount in sales and client service. Total operating costs
(operating expenses plus variable remuneration) in FY19 are
expected to be at a similar level to the GBP290m total operating
costs in FY18, reflecting a lower expected charge for variable
remuneration.
A number of large technology firms are taking action on
inappropriate advertising and marketing, and on unlicensed
operators in the industry. These actions include introducing bans
on the advertising and marketing of cryptocurrencies and binary
options, and the requirement that firms advertising and marketing
CFDs can demonstrate that they are appropriately licensed in those
jurisdictions in which the services are being promoted. The Group
also expects that some of the large payment and card providers will
soon introduce rules to ensure that these businesses only
facilitate payments from and to clients in jurisdictions in which
the firms are appropriately licensed.
IG has delivered a sustainable business by placing good client
outcomes at the heart of everything it does. As a compliant
provider of its services, and with a model of operating through
local presence with local regulatory approvals, the Company does
not expect that the actions currently being taken, if applied
appropriately, will have any significant impact on its
business.
Effective Tax Rate
The Group expects that it will be granted a patent, today, by
the UK Patent Office for its invention in measuring latency. In
addition, the Group has been notified that patents are expected to
be granted by the European Patent Office in the next few months for
inventions relating to automatic pricing and for the
synchronisation of independent systems. As a result of the Group
recognising the benefit of a 'patent box' claim in its FY18
results, the effective tax rate ("ETR") for FY18 is expected to be
around 19.5% (FY17: 20.8%), including the impact of the reduction
in value of its US deferred tax assets.
The presentation materials from the Capital Markets Day will be
available by close of business today on the Group website
http://www.iggroup.com/
For further information, please contact:
IG Group
Liz Scorer 020 7573 0727
investors@iggroup.com
FTI Consulting
Neil Doyle / Ed Berry 020 3727 1141 / 1046
Disclaimer - Market abuse regulation and forward-looking
statements
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.
This statement, prepared by IG Group Holdings plc (the
"Company"), may contain forward-looking statements about IG Group
Holdings plc and its subsidiaries (the "Group"). Forward-looking
statements involve uncertainties because they relate to events, and
depend on circumstances, that will, or may, occur in the future. 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 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
derivatives firm, it continued leading the way by launching the
world's first online and iPhone trading services.
IG is now 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, Germany, France, Ireland, Austria and the
Netherlands. IG has a range of affordable, fully managed investment
portfolios, to 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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