IG Group reports 'solid start' to year

17th Sep 2013 08:16

IG Group, the financial derivatives trader, said the first quarter delivered a 'solid start' to the year, but warned it should be considered in light of a weak comparative quarter and the particularly strong second half of the prior year. The quarter, which covered the three months ended August 31st, delivered revenue of £93.6m, 15% ahead of the same period in the prior year, which was a particularly quiet period for IG and the wider industry. Client activity was at its strongest early on in the period in response to heavy falls in equity markets on the back of quantitative easing tapering fears in the US and concerns over the Chinese economy.The company said revenue in the UK, Europe and Rest of World was well ahead of last year but behind in Japan and in Australia, hit by subdued consumer sentiment ahead of the recent election and the weakness in the Australian dollar. Active client numbers were also ahead in Europe and Rest of World, while in the more mature markets of the UK and Australia there were fewer active clients trading in the period. "This fall in active client numbers reflects both weakness in the recruitment and conversion of new trading clients and the strategy of the group not to actively attract or retain very low value clients, with the drop off occurring in the lowest value brackets," the group said. It continued: "The first quarter has provided IG with a solid start and puts the company on track at this early stage of the year [...] Management outlined a range of initiatives with the results in July, aimed at broadening the offering, attracting new clients and improving current client retention. The company continues to work on these initiatives, which it believes will provide it with an increasingly strong platform for growth in future years." IG also commented on the Italian derivatives tax, which came into force at the start of September, saying that although it contains a relatively complex charging structure, the group believes the low level of taxation on its main Italian equity index CFD contract will limit the impact on revenue.NR