GAIN Capital’s City Index and UK Entity Reports £122m Revenues

GAIN Capital’s 2016 annual report shows that the broker's main source of revenue is outside of FX trading.

GAIN Capital’s UK entity, reporting the consolidated metrics of City Index and UK, has filed its annual report for 2016 with the UK Companies House. The firm is reporting a 39 percent annualized increase in revenues to £122 million ($165 million at current exchange rates).

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The volatility around the Brexit referendum and the US election have positively affected the company’s top and bottom lines.

Operating costs have increased materially when compared to 2015, with the figure rising to £87 million ($117 million). This metric was inflated staff transfers and other costs were executed early in the year, while revenues and clients were delayed until the second half of 2016.

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GAIN Capital UK’s earnings before interest, taxes, depreciation and amortization (EBITDA) increased by a factor of 3.5 to £35 million ($47.3 million). Margins almost doubled, to 29 percent from 15 percent in the previous year. The company expects further improvements in 2017, as it reports a full year of migrated revenues.

Gross profits totalled £86.7 million ($117 million) from £44.7 million in the previous year. The gross profit margin of GAIN Capital UK increased to 71.1 percent as administrative costs increased about 55 percent to £64.3 million ($87 million). The change also reflects legacy integration costs from GAIN UK entity that was handling until the beginning of last year.

GAIN Capital UK’s Client liabilities increased 68 percent, from £157 million to £263 million.

Composition of Revenues

Looking at the composition of revenues, the main part of GAIN Capital UK’s income comes from ‘Equities & Other’ with £92.6 million ($125 million), while FX totalled about £30 million ($40 million).

From a geographical distribution standpoint, the bulk of the revenues come from the EMEA region – £112.8 million ($152.5 million). Another £9 million ($12 million) originate in the Asia-Pacific region.

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