IG Group Interim Results

[idpickering]

Highlights

- A record performance in H1 FY21:

- Net trading revenue up 67% to £416.9 million (H1 FY20: £249.9 million)

- Profit before tax increased 129% to £231.3 million (H1 FY20: £101.2 million)

- Active clients rose 55% to 238,600 (H1 FY20: 154,000), 64,000 new clients onboarded (H1 FY20: 28,800)

- New client retention rates are comparable to historical averages

- Capital, funding, and liquidity remain very strong with regulatory capital resources of £712.3 million (31 May 2020: £675.5 million)

- Interim cash dividend of 12.96 pence per share (H1 FY20: 12.96 pence per share)

- Excellent progress in executing the growth strategy:

- Revenue of £340.6 million in Core Markets (H1 FY20: £209.9 million), up 62%

- Revenue of £76.3 million in Significant Opportunities (H1 FY20: £40.0 million), up £36.3 million

- Successfully served a substantially larger client base and handled sharply elevated trading volumes, brought about by the dedication of our people and resilience of our platform, made possible by the continued investment in both

- Announced the landmark acquisition of tastytrade, a transaction that expands and diversifies IG's growth drivers into US options and futures, through entry into the largest listed derivatives market in the world

- Continued support of the Company's broader communities through Group-wide environmental, social and governance (ESG) activities:

- Distributed £2 million of IG's Brighter Future fund to selected charities to improve the educational opportunities for disadvantaged children across the world through the Teach for All network

- Distributed a further £1 million from the fund to selected charities in need of Covid-19 pandemic relief

https://www.investegate.co.uk/ig-group- ... 00033916M/

I hold IGG in my HYP, and ok, the held dividend is disappointing, but not life-threatening. They've performed very well since my purchase in mid 2019.

Ian.

[Arborbridge]

This has become a quasi fixed interest investment for three years, but let's also look at the positive case - as you say, Ian, it has been doing quite well.

The dividend increase over five years is 8.94%pa (not taking into account this latest announcement); the yield is 5.0% on my current capital; the TR has been 14.15% since purchase in 2011.

It is not the perfect HYP share, but it ticks several boxes and has to be one of my more successful purchases at present, have not missed a beat during the pandemic. I'm told that this type of share does well when markets are volatile, so maybe it's struggled because we have been in a bit of a bull, as well as their having to cope with an increasingly difficult regulatory regime.

Most of us can live with a held dividend in the current circumstance (a held dividend is the new dividend increase? ) and compared with a HYP stalwart - GSK - which has also turned into a quasi fixed interest investment, which has been giving a lower TR of 5.9% from 2007 - coincidentally very close to the yield I received last year - looks favourable.

Just looking at those numbers, one could make a case for IGG being the better HYP share, but GSK is more often talked about in that regard. That ignores the probability that GSK is a more resilient share and more "mainstream".
Arb.

[idpickering]

This has become a quasi fixed interest investment for three years, but let's also look at the positive case - as you say, Ian, it has been doing quite well.

The dividend increase over five years is 8.94%pa (not taking into account this latest announcement); the yield is 5.0% on my current capital; the TR has been 14.15% since purchase in 2011.

It is not the perfect HYP share, but it ticks several boxes and has to be one of my more successful purchases at present, have not missed a beat during the pandemic. I'm told that this type of share does well when markets are volatile, so maybe it's struggled because we have been in a bit of a bull, as well as their having to cope with an increasingly difficult regulatory regime.

Most of us can live with a held dividend in the current circumstance (a held dividend is the new dividend increase? ) and compared with a HYP stalwart - GSK - which has also turned into a quasi fixed interest investment, which has been giving a lower TR of 5.9% from 2007 - coincidentally very close to the yield I received last year - looks favourable.

Just looking at those numbers, one could make a case for IGG being the better HYP share, but GSK is more often talked about in that regard. That ignores the probability that GSK is a more resilient share and more "mainstream".
Arb.

Thanks for your well reasoned post Arb. I get that it's not the perfect HYP share, even more so with a static dividend (for now at least) but I can live with that.

Evidently, some investors think otherwise, with IGG being down 8.6% as I type. I'm guessing that's just short term thinking on their part, and some taking a profit perhaps?

I'm happy to continue holding this share in my HYP. I bought into IGG on 21 Aug 2019, and my average buying price is 550.38p per share, so that's a capital return thus far of 49%, not including the dividends received to date.

My top up of my GSK shares went through this morning funnily enough. Both GSK and IGG account for 4% in capital value terms, of my 25 share HYP.

Ian.

[Dove21]

They seem to have announced plans for a large US acquisition today, which may explain part of the SP reaction

Dove

[Howard]

This has become a quasi fixed interest investment for three years, but let's also look at the positive case - as you say, Ian, it has been doing quite well.

The dividend increase over five years is 8.94%pa (not taking into account this latest announcement); the yield is 5.0% on my current capital; the TR has been 14.15% since purchase in 2011.

It is not the perfect HYP share, but it ticks several boxes and has to be one of my more successful purchases at present, have not missed a beat during the pandemic. I'm told that this type of share does well when markets are volatile, so maybe it's struggled because we have been in a bit of a bull, as well as their having to cope with an increasingly difficult regulatory regime.

Most of us can live with a held dividend in the current circumstance (a held dividend is the new dividend increase? ) and compared with a HYP stalwart - GSK - which has also turned into a quasi fixed interest investment, which has been giving a lower TR of 5.9% from 2007 - coincidentally very close to the yield I received last year - looks favourable.

Just looking at those numbers, one could make a case for IGG being the better HYP share, but GSK is more often talked about in that regard. That ignores the probability that GSK is a more resilient share and more "mainstream".
Arb.

Thanks for your well reasoned post Arb. I get that it's not the perfect HYP share, even more so with a static dividend (for now at least) but I can live with that.

Evidently, some investors think otherwise, with IGG being down 8.6% as I type. I'm guessing that's just short term thinking on their part, and some taking a profit perhaps?

I'm happy to continue holding this share in my HYP. I bought into IGG on 21 Aug 2019, and my average buying price is 550.38p per share, so that's a capital return thus far of 49%, not including the dividends received to date.

My top up of my GSK shares went through this morning funnily enough. Both GSK and IGG account for 4% in capital value terms, of my 25 share HYP.

Ian.

I think the reason that IGG are down today is that they have announced that they have made an expensive investment in the US company Tastytrade.

Some shareholders are a bit nervous about this as they think IGG have paid too much.

regards

Howard

PS Have held IGG for around 20 years and personally am applying strategic ignorance to the acquisition news.

PPS I see Dove got there first as I was previewing my post!

[idpickering]

They seem to have announced plans for a large US acquisition today, which may explain part of the SP reaction

Dove

That is correct Dove21. I put an item up on the IGG Company News Board this morning about the proposed acquisition of Tastytrade, Inc here; viewtopic.php?p=379173#p379173

Ian.

[OLTB]

Hi all - yes, I was wondering about the share price fall as the update seemed good to me (as Ian's highlights above show). Reading on a few other boards, it seems that some investors fear the amount paid for tastytrade was too much (approx 20 x EBITDA).

I am sitting tight as they're still paying a dividend and that's ok with me - hopefully the acquisition will, in a few years, be cash accretive and dividends may start to increase.

Cheers, OLTB.

[funduffer]

They seem to have announced plans for a large US acquisition today, which may explain part of the SP reaction

Dove

That is correct Dove21. I put an item up on the IGG Company News Board this morning about the proposed acquisition of Tastytrade, Inc here; viewtopic.php?p=379173#p379173

Ian.

Hopefully this acquisition will make IGG a tastier proposition.

I’ll get my coat.

[idpickering]

Hopefully this acquisition will make IGG a tastier proposition.

I’ll get my coat.

No, hang around FD. I agree with you. I think it will be a great buy.

Ian.

[Arborbridge]

They seem to have announced plans for a large US acquisition today, which may explain part of the SP reaction

Dove

That is correct Dove21. I put an item up on the IGG Company News Board this morning about the proposed acquisition of Tastytrade, Inc here; viewtopic.php?p=379173#p379173

Ian.

Not just the fear of paying too much, but in shareholders minds this has other worries.
It opens the company to unknown risks which were not present previously; a new president and a possible new trading situation vis a vis the US post Brexit - plus the fact that the US has often been the graveyard of UK companies who venture over there full of hope.
I'm not saying this adventure won't succeed: just explaining what the factors were which gave shareholders an incentive to sell. They may be asking: we have a nice little company - why risk upsetting the apple cart by going into the unknown? That's the psychology at work here.

Arb.

[idpickering]

Not just the fear of paying too much, but in shareholders minds this has other worries.
It opens the company to unknown risks which were not present previously; a new president and a possible new trading situation vis a vis the US post Brexit - plus the fact that the US has often been the graveyard of UK companies who venture over there full of hope.
I'm not saying this adventure won't succeed: just explaining what the factors were which gave shareholders an incentive to sell. They may be asking: we have a nice little company - why risk upsetting the apple cart by going into the unknown? That's the psychology at work here.

Arb.

Thanks for your input, and wise words Arb.

I guess time will tell. Either way, I’m not selling my IGG shares.

Ian.

[tjh290633]

My purchase at the end of December was clearly premature, but who was to know that. This fall of about 12.5% in value has propelled IGG to the top of my top-up list. Looks probable during the second week in February.

TJH