Business


Market slowdown puts skids under IG


Despite an excellent 12 months, the current market stability has proved detrimental to IG Group’s profitability.


SPREAD BETTING S


pread betting and financial tool sup- plier IG Group has posted a 13.8 per cent rise in profit


before tax for the financial year ending 31 May, but has found current trading tough going as the financial markets have settled down. IG’s European business saw revenues up 26 percent to £72.2m, Australia rose 22 percent to £58m while its largest market, the UK, was up 15 percent to £191.8m. Chief


executive Tim


Howkins said: “For the year as a whole we increased revenue by 17 per cent. Undoubtedly this success sets us some tough comparatives for the year ahead, but we will continue to invest appropriately in the capabilities of our business, in technology, marketing and geo- graphic and product develop- ment, to position the company for long term growth. I remain confident in the prospects for the business going forward.” In spread betting, market volatility boosts activity and therefore profits. After a topsy turvy 12 months on the markets, mainly influenced by the euro crisis, the recent sta- bility has hit IG’s business. Howkins explained: “Revenue


in the first six weeks of the current financial period has been lower than the same period last year, as dull markets in this period have presented our clients with fewer trading opportunities. As we have pre- viously commented, compara- tives are increasingly challenging for the remainder of the current quarter and the beginning of the next. Against this backdrop, revenue this year is forecast to be more weighted towards the second half than historically. Under normal market conditions, we continue to expect modest growth in revenue for the year as a whole.”


Going forward, Howkins explained that the company was planning on attracting more quality customers rather than go down the mass recruit- ment method. “There is a trade- off between the number of active clients and average revenue per client and for the last 18 months our focus, par- ticularly in our longer estab- lished markets, has been on improving the quality of our client base. We have sought to recruit


higher value new


clients, and have ensured that our very largest clients receive a dedicated personal service. I was therefore pleased that


appointments corporate


Mecca Bingo, part of The Rank Group PLC, has appointed James Condon as brand ANALYSIS


An impressive year for IG has been spoiled somewhat by the recent quiet period, but the company has the structure and depth to benefit when the financial markets take off once more after the summer period. The sale of its list of clients for its sports spread business Extrabet last year appears to have been a wise move for IG as well. The firm sold part of its client list to Spreadex under a three year revenue share agreement. Instead of ploughing resources into a struggling business, the deal has seen a stress free income of £1m from the same clients via Spreadex.


TIM HOWKINS: ‘EXPECT MODEST GROWTH IN REVENUE’


during this financial year we achieved improvements in revenue per client of 10, 9 and 30 per cent respectively in the UK, Australia and Singapore. “In Europe revenue per


client is some 20 per cent higher than it is in our much longer established UK market, reflect- ing the relative immaturity of our European


businesses


where high value early adopters still raise the average. Revenue per client in Europe fell by 5 per cent this year in a continuation of what is now a clear trend. Over time I would expect revenue per client for the established and newer markets to slowly converge.”


Sportech rejigs its banking facilities FINANCE F


ootball pools operator Sportech has signed new banking facilities providing it with a £75m, multi currency revolving credit facility, includ- ing up to £5m of ancillary working capital facilities across key trading jurisdictions, pro- vided by Bank of Scotland Plc, Barclays Bank Plc and The Royal Bank of Scotland Plc. It has an initial debt maturity date of 31 August 2015, which is able to be extended at Sportech’s request, with the agreement of the lenders, for a further 12 month period. The facility replaces


the


group’s previous amortising loan facilities provided solely by the Bank of Scotland Plc, which were due to expire in July 2013 and consisted at the time of refinanc- ing of a £55.5m term loan and a £3m UK working capital facility.


Sportech said the new deal provides operational flexibility to implement its medium term plans. The facility will remain in place even if it is successful in its ongoing Spot the Ball VAT claim against HM Revenue & Customs,


36 BettingBusinessInteractive • AUGUST 2012


which is due to be heard at the First Tier Tax Tribunal in October of this year.


The tax debate has been rum- bling on since April 2009 when Sportech first put a £40m claim for overpaid tax into Customs,


SPORTECH IS CLAIMING BACK ITS SPOT THE BALL VAT


claiming that it had been erro- neously paying VAT on its Spot the Ball competition for 17 years between 1979 and 1996. It claims that as a skill competition, the product should never have attracted VAT.


The taxman rejected the claim at the end of 2010, which Sportech is in the process of appealing. Some analysts have suggested that Sportech’s claim could rise to £150m if Customs are required to pay interest on the amount. The renewed war chest, even without the VAT money, will give Sportech confidence gong forward. Its last major acquisi- tion, of Scientific Games’ racing division in the US, has trans- formed the scope of the company drastically and the enhanced cash reserves will help Sportech exploit the new found potential.


marketing director. The appointment comes in the wake of a corporate restructure at Mecca Bingo. The company has integrated the land-based business with the interactive division, creating one Mecca Bingo brand team under the leadership of managing director Mark Jones. Jones said: “Recent customer insights reveal that it doesn’t matter whether our customers play online, in clubs, on their smartphone or Ipad - as far as they are con- cerned they are playing at Mecca. For that reason, we took the deci- sion to move from a channel-based structure to a brand-based one, creating a single Mecca brand team so that we can collectively focus on delivering a fantastic experience for our customers no matter how they choose to play.”


JAMES CONDON Horse Racing Ireland (HRI) has appointed


Tim Higgins as chief executive of its pool- betting subsidiary Tote Ireland. He will join in September from Microsoft Ireland where he most recently held the post of IT director for European Operations and Development. He commented: “The Tote is, and always will be, an integral a part of Irish racing. I am incred- ibly positive on the opportunities to grow the business in the coming years.”


Bruce Elliott’s appointment as group com- mercial director at the Isle of Man’s


Boston Group has marked the launch of the company’s specialist eCommerce and eGaming practice. CEO Greg Ellison com- mented: “Having set in motion our high-growth strategy last year, we have broken into new markets both geographically and by industry, whilst redefining how financial and fiduciary services are delivered. As part of this, we have now committed to providing specialist services to both eGaming and broader eCommerce clients and Bruce’s appointment is central to this new offering.”


BRUCE ELLIOTT Scientific Games Corporation has con-


firmed two senior appointments to bolster its Gaming division, which includes The Global Draw, Barcrest and Games Media. Michael Koch has been named managing director of international business while Gareth Philips has been appointed to the role of chief technology officer for the divi- sion.


GARETH PHILLIPS


Koch, who joined in 2011 to manage The Global Draw’s strategic relationship with Playtech subsidiary Videobet, will oversee all gaming opera- tions and growth strate- gies internationally. Philips joined The Global Draw in 2010 as managing director of international business after having served as CTO of Aristo-


crat Technologies. He will now be responsi- ble for driving the group’s technology strategy.


ACTION IMAGES / PAUL HAZLEWOOD


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