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IG Group Profits from International Growth

9th December 2009 8:48 am GMT

Achieving strong growth against a challenging economic backdrop, IG Group Holdings plc said Wednesday that it expects to report revenues of approximately £143 million for the six month period ended November 30th, a 13% increase on the comparative period last year which included a period of extreme financial market volatility.

Revenues from IG Group's London office amounted to £80 million during the half year period, similar to that of the corresponding period last year when market events disproportionately impacted the company's UK financial business.

IG Group's Australian business saw revenues increase 64% to £22 million, with revenues from operations in mainland Europe up 65% year-on-year to £22 million and revenues from the Singapore office up 22% to £5 million during the period.

U.S operations saw revenues increase 2% to £1 million as the company awaits a change of regulatory designation for Nadex so as to allow it to accept clients via intermediaries. Until this is granted, the company is incurring minimal marketing expense in the U.S.

Revenues from Japan's FX Online reached £11 million for the first half of 2009 compared to £10 million in the prior year period when IG Group had owned the business for just two months, with the company benefiting from the extreme volatility of the yen during October 2008.

The company also said that the total charge for doubtful debts during the period is expected to be less than 0.5% of revenue compared to the 12% recorded last year.

Excluding FX Online, IG Group opened 32,000 new accounts during the period, unchanged from the first half of last year during which account openings had a significant short-term boost due to the extraordinary events in financial markets.

As a result of the strong revenue growth, the company recorded adjusted pre-tax profit of approximately £77 million during the period, an increase of 32% on the same period a year ago.

IG Group said that while it continues to manage costs aggressively, some additional investment is planned to enhance the company's market leading positions and capitalise on growth opportunities. Operating costs will be higher during the second half of the financial year due mainly to growth in staff levels, reflecting higher than expected activity levels, while marketing expenditure will also increase, due in part to the usual seasonal phasing.

The company added that it plans to secure new premises for its headquarters in London, incurring an exceptional non-cash cost of £4 million in the second half of its financial year, representing a period of overlap between old and new leases when double rent charge is taken. The company said that the cash cost is more than offset by the rent-free period on the new lease, the terms of which are sufficiently attractive over the long-term to merit the short-term impact on profitability.

Shares in IG Group Holdings plc (Co. Profile) (LSE:IGG) have gained 3.56% to 352.00 pence per share in London this morning following the announcement.

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