WorldSpreads alert points to end of spreadbet mania

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Just a week after IG Group also issued a profits alert, AIM-listed WorldSpreads admitted its overseas expansion plans will take longer to bear fruit than it originally hoped. As a result, it is now likely it will make a loss for the year to March, rather than the profits earlier expected.

Chief executive Conor Foley said: "The board remains convinced that the group's strategy for overseas expansion will achieve its original objectives, although the impact of this investment may not now be evident until the financial year commencing April 1, 2011."

WorldSpreads has opened offices in France, Germany, Denmark and Sweden as part of its growth plans, but returns from this investment are "taking longer than anticipated".

Foley added: "With market volatility lower than anticipated across all areas, the new businesses were launched into a much quieter period. Consequently, although growth in revenues from our existing international businesses has continued, incremental revenues from these new territories have not yet materialised to the originally envisaged extent."

Warning on profits last week, Tim Howkins, chief executive of IG, the biggest player in the spread-betting industry, said he wondered how smaller players were coping with recent market conditions, where low volatility has led to reduced trading activity from clients.

WorldSpreads shares today fell 8¾p to 48¼p.