IG Group warns of higher costs this year

23rd Jul 2013 15:53

Shares in spread-betting and CFDs provider IG Group were under pressure on Tuesday despite the firm reporting record annual profits, as the company warned of higher costs during the current financial year.IG labelled the results for the year ended May 31st as "satisfactory" with revenue down 1.4% at £361.9m from £366.8m (as previously disclosed in June) as the company fought its way back following a "challenging" first half - sales fell 14% in the first half alone.Nevertheless, profit before tax increased by 3.5% to £192.2m from £185.7m helped by "tight expense control and materially lower employee variable compensation", the firm said. Even after the strong pre-close trading update last month, the bottom-line figures still came in above analysts' estimates."I am pleased to report another year of record profitability for the group, a significant achievement given the particularly challenging trading environment in the first half of the year," said Chairman Jonathan Davie.The final dividend was raised by 4.5% to 17.5p per share, lifting the total full-year payout to 23.25p a share, up 3.3% on the year before.Chief Executive Tim Howkins pointed out that the business faces "relatively benign" comparatives with last year in the first two quarters, though these will become "increasingly challenging" in the second half. He also said that operating costs would rise - following a reduction in the year just gone - due to the resetting of employee variable compensation, the impact of inflation on pay, an estimated increase in regulatory fees as well as additional investment in the company.Howkins said: "This is a business in which we need to continue to invest for the longer-term. The investments we will make in the coming year should leave us well placed for future growth. I am confident in the prospects for the business going forward."The stock was down 2.68% at 582p before the close of trade.BC