Spreading the word

THE FRIDAY INTERVIEW/Conor Foley, WorldSpreads:CONOR FOLEY admits he's not much of a gambler but his punt on launching online financial spread-betting group WorldSpreads in 2000 has so far paid off nicely.

"We were fairly confident that there would be an appetite for the product because a lot of Irish people were already trading with UK firms," he says.

Having worked as a currencies trader with Smurfit Paribas bank in Dublin for about 10 years, Foley spotted a gap in the financial trading market that he thought he could exploit with the growing popularity of the Internet.

Spread-betting began in London in the early 1970s but took almost 30 years to find its way here.

WorldSpreads was set up to allow people to take a punt on a variety of shares, commodities and currencies without having to own them. It also offers a sports spread-betting service, although that division is suffering major growing pains.

If you buy a company share in the traditional way, stamp duty of 1 per cent is levied by the Government on the trade. If you sell at a profit, the tax man takes 20 per cent. Companies like WorldSpreads offer regular traders the opportunity to sidestep these taxes. There's no commission or tax to pay on any money made bartering stock. WorldSpreads earns its crust in the spread between the buy and sell prices that it offers clients on shares.

People can also execute their trades from the comfort of their own homes, either online or by phone. His clients are almost exclusively male, aged 25 to 60, "internet savvy" and will be "well educated and opinionated on the markets".

Fewer than 1 per cent of his customers are female. "Men love the short-term buzz," Foley says. "Women are probably too sensible, if the truth be known."

In April, WorldSpreads launched a range of derivative products, including futures, options, foreign exchange and CFDs. This business has performed better than expected.

Foley says trading in oil has been "phenomenal" over the past 12 months as has betting on the decline in banking stocks. Currencies account for about 30 per cent of its business.

WorldSpreads, whose backers include former Irish soccer and GAA star Kevin Moran, has gathered significant momentum in the past couple of years. In mid-June, WorldSpreads said it had added 2,560 new clients in the year to the end of March.

Turnover was up 87 per cent to €12.3 million while its operating profit rose by 576 per cent to €3.6 million.

This was the betting group's first set of full-year results since it hit the stock exchange itself, first floating on the London Aim market last August and then adding an IEX listing in Dublin on May 15th. That in itself was a gamble, given the volatility in markets over the past year.

Not that the company has been immune to the decline of global stock markets. After a decent run up in its share price, the stock has shed more than 20 per cent of its value in the past month, shaving about €13 million off its market value.

"We don't watch the share price on a day-to-day basis unless it's going up," Foley says with a smile. "I'm guessing it's some profit-taking, it had a good run up to that point."

Foley himself is on a bit of a roll, having been nominated for the Ernst Young Entrepreneur of the Year award. He is just back from Haiti in the Caribbean, where the entrepreneurs lent their expertise to a number of projects in the western world's poorest society.

"It was an amazing trip, I'm really glad I went," he says. "It just opens your eyes up and the commitment of the entrepreneurs is fantastic."

WorldSpreads has 8,000 "clients" with 1,500 active accounts. "That's continually increasing," Foley says.

It is by far the biggest player in this market in Ireland - Foley reckons it is three to four times the size of Delta Index, another Irish-owned player.

He believes there is still significant growth potential here. "There are 120,000 individuals trading financial markets in Ireland," he says. "We've only got a small percentage of that as active clients on our books so there's a lot of room to go."

Ireland, however, is just the tip of the iceberg. WorldSpreads has already expanded its business to Britain and offers trading to clients in Austria, Greece, Germany, Hungary and Spain. Foley intends to expand the footprint farther east, all the way to Russia if he can. Just 20 of the 65 staff are based in its Dublin head office on the south quays of the Liffey, which has a great view across the docklands. Thirty are based in London and 15 in Malaysia.

Plans are already well advanced for launching businesses in Poland and the Czech Republic through partnerships with local financial players. He is also tentatively exploring possibilities in Dubai. WorldSpreads will provide the product and technical expertise and the local players will market to local clients and run tutorials.

"It's essentially a land grab to sign up as many financial partners as possible on a revenue-sharing basis," Foley explains. "This is a very scalable business over the internet."

While the financial trading side of the business has been a big hit, its sports division has failed to shine. Revenues from the sports book declined to €1.6 million in the year to the end of March, down from €2.3 million in the previous 12 months. Its percentage of group turnover fell to 13 per cent and is set to decline further.

An internal review of the division began in February and Foley says a decision on its future will be taken in August. "The entire sports [spread-betting] industry is going through a decline. None of the UK companies ever managed to successfully export the product and there's a finite market in the UK and Ireland, which has probably reached saturation.

"It's not loss-making for us but it's not contributing much to the bottom line. We'll either look to partner with somebody else or we could sell it. We're not in any rush to do something with it."

Foley lives in London, travelling to Dublin for a set number of days each month. He usually works 12-hour days. The growth of the business overseas has increased the amount of time he spends in the air. Not that it has put him off flying - he's currently taking lessons as a pilot.

Otherwise, he plays a little football in his spare time and some touch rugby at London Irish but, unlike many Irish chief executives, he doesn't own a set of golf clubs. "I've never been bitten by the golf bug . . . hopefully I won't for at least 10 years."

He comes across as an astute, well-organised, focused individual. He's had offers to sell the business in the past couple of years but his sights are firmly set on retaining ownership and conquering overseas markets.

"The UK is a very competitive market, which is why we're having to look to other markets for international expansion," he says. "We are still in the very early stages of our growth. There are 100-plus countries where we believe we could expand this to. We haven't hit the value that could be reached in three to five years."

ON THE RECORD

Name:Conor Foley

Job:chief executive of WorldSpreads

Age:41

Home:London

Something you might expect:He set up a not-for- profit body in London and New York for Irish expat entrepreneurs to network. Called Irish International Business Network, it has about 600 members.

Something that might surprise:He is training to be a pilot. "It could be a long process, in fact it's probably more accurate to say I'm taking flying lessons."