Shares in IG group, a service provider of financial spread betting and contracts for difference (CFDs), increased to nearly 7 % last week following the company’s announcement that it would be paying out more of its earnings to shareholders.
IG, which offers online trading in shares, indexes and foreign exchange, said that it would be lifting its dividend payout ratio from 60 % to approximately 70 %.
The company further said that it had planned to pay a final dividend of 22.40 pence per share in order to take full year dividend to 28.15 pence per share which is a 21 % increase on the previous year.
IG’s chief executive reported a 2.4 % increase in full-year revenue according to the move indicative of a boost in confidence in the cash generating nature of the business. Shares in the group were at an approximate 7 % at 614.5 pence which was the highest among gainers on the FTSE index of small and mid-cap companies by far.
The company earlier reported to have a full-year revenue of 370.4 million pounds (($632.6 million) which was slightly below the 373.8 million pounds speculators had expected but with a 2.4 % gain ahead of the year. Moreover, profit tax was 1.3 % higher at 194.7 million pounds. The growth was primarily driven by an increase in the revenue it had previously earned per client which increased by 19 % in the U.K. and 10 % in Europe respectively.
IG has been constantly making efforts to appeal more active clients who produce a greater shares of revenue by further extending trading hours for the U.S. stocks which raised minimum deposits and creating a more personalised service for its preferred clients.
The firm further said that despite the relatively low volatility experienced throughout the year, especially when foreign exchange fell to 25 year lows, it had taken in record levels of client money in the final quarter as well.
The same conditions have continued to the early part of the IG’s new financial year, with the firm expected to benefit from among the future movement of monetary policy.
For the first part, there should be an expected increase in market volatility which would drive greater levels of client activity and secondly with the present hold of 1.4 billion pounds of cash and other interest producing assets which will boost interest income. Thirdly, a greater level of consumer confidence is predisposed to increase trading activity among existing clients.
With the end of quantitative easing in the U.S. and the U.K., it could somehow trigger some activity by autumn’s end. The coming year would be focused on longer term initiatives, including international expansion. Its application to operate in Switzerland is close to being supported with the expectation that it will commence running in the country by 4th quarter this year. Furthermore, IG is also in the process of applying its expansion into Dubai, where it is confident to harness full advantage of the bountiful wealth in the region in building a foundation for a broad Arab-speaking customer base.
Finally, with the stock broking service which is currently in its pilot stage, will be formally launch this September in Britain and Ireland and will be rolled out to some other markets by next year. Furthermore, additional plans which include overhauling its mobile platform which will bring in roughly 30 % of its current revenue in order to better serve a much larger clientele and newcomers to trading by providing educational tools to assist traders in making a well informed trade will also be initiated before the end of the year.