June 09, 2011

IG writes off Extrabet business

Financial spreadbetting business IG Group expects to report revenue for 2010 of £320m and adjusted profit before tax of £163m, representing year-on-year increases of 7% and 3% respectively.

UK revenues were up 3% year-on-year, Australia by 4% and Europe by 21%. The group however said in a trading statement this morning that it had been unable to secure a sale of its Extrabet sports betting business in its entirety on terms that were acceptable to the company, and so had commenced a redundancy consultation process with the employees of Extrabet.

The group would consequently incur one off costs in the year to 31 May 2011 of around £7.75m, comprising the write off of goodwill associated with the sports business of £5.25m (non-cash) and likely cash closure costs, including potential redundancy and lease-related costs, of around £2.5m. These cash costs have been recognised within adjusted profit before tax, said IG.

The spreadbetting operator however has reached agreement to sell the majority of the client list of Extrabet’s sports spreadbetting and fixed odds business to Spreadex Limited for semi-annual payments over the next three years, said IG. The payments will be calculated according to revenue that the acquirer generates from clients on this client list. This transaction is expected to conclude by the end of June.

IG is also seeking a buyer for its pricing engine software, used for market making into betting exchanges.

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