IG eyes Japan as results defy gloom
Spread betting company IG Group revealed yesterday it was looking at Japan as the next most promising area to expand into.
The company, which already has offices in Australia, Singapore as well as Germany, Italy, France and Spain, said it was actively looking for opportunities, following regulatory changes which would allow it to offer its contract for difference (CFD) product there.
“We are currently talking to one or two people about white label possibilities which would be a good way to get a feel for it,” chief executive Tim Howkins told CityA.M.
Its focus on international expansion came as IG announced a 40 per cent rise in full year profit, helped by volatile financial market conditions encouraging clients to place more bets.
IG’s pre-tax profit for the year to 31 May was £96.99m, up from £68.9m the previous year, while revenues for the year increased 51 per cent to £184m. IG has now achieved compound annual revenue growth of over 40 per cent for the past ten years.
IG said it benefited from higher business volumes as customers sought to profit from sharp price swings in financial markets after the credit crunch developed.
“Volatility and falling share prices are good for us. When shares go down, we’re the only game in town,” added Howkins.
IG also said it had seen no sign that clients were spending less in response to the deteriorating economic outlook.
“Our client base is pretty well financially cushioned, we had a record month in June and have seen zero impact from the economic downturn,” said Howkins.
However, shares in IG tumbled 12.6 per cent to 305p, with concerns over bad debts, representing 2.2 per cent of turnover, compared to 1.2 per cent the previous year, unsettling investors. “Bad debts are a legitimate concern, but the absolute value remains small and higher debts are perhaps inevitable
in such volatile markets,” said Citigroup analyst Richard Taylor.