LCG Capital Group Holdings Posts Substantial H1 Loss Amid Restructuring

Main causes - increased expenditure on new staff, the Swiss National Bank event and additional technology infrastructure spending

A filing with the London Stock Exchange has just revealed that in the first half of 2015 ending on the 31st of June, LCG Capital Group Holdings (LON:LCG) posted an adjusted loss before tax totaling £9.9 million ($15.1 million).

Commenting to Finance Magnates exclusively, the company’s CEO Charles-Henri Sabet stated, “The business has been operating in challenging market conditions throughout the first half of the year, with relatively low levels of volatility across financial markets for much of the period, this after the SNB event, which was very destructive for the FX industry.”

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“We have been focused on developing exciting new technology, a full rebranding, initiating a new client journey as well as optimizing our internal processes in order to facilitate client acquisition. This has now been largely completed ahead of schedule and on budget. We have also focused on rationalizing the fixed cost base,” he added.

Citing decreased revenues due to lower market volatility, an exceptional £1.7 million loss incurred as a result of the movement in the Swiss franc in January and additional administrative costs of £1.7 million mainly due to staff turnover, contracting fees and increased IT spend, the company’s management is positive about the development of the broker going forward.

The EBITDA loss, excluding the impact of the Swiss franc event and additional administrative costs relating to staff turnover and IT, would have been £2.0 million.

“Our limited client growth in this period has been due to a core focus on our relaunch and a strategic decision to limit marketing of the current brand. We plan on launching our new product in the coming months with a full scale marketing drive and significant coverage,” Mr. Sabet explained.

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The operating loss totaled £6.9 million, which compares to an operational loss of £4.8 million since the arrival of the new management team in October 2014.

LCG Capital KPIs, LCG, LCG Capital
LCG Capital KPIs, © Finance Magnates

Looking at key performance indicators, the figures show a turn when compared to last year’s metrics. The company’s management has shared with Finance Magnates’ reporters that it will be committing to marketing efforts starting in October.

“The Group is confident that with the development of our new advanced technology, a renewed commitment to hiring the industry’s most talented people and a big increase in marketing driving our rebrand, the majority of the short-term strategy will be achieved in the second half of the year,” Mr. Sabet explained.

Cash Position Remains Solid

Looking at the company’s cash position, LCG Group Holdings plc (LCG:LON) remains strongly capitalized. The net cash and short-term receivables, increased 38% to £22.9m (H1’14: £16.5m) primarily as a result of the convertible loan note financing last year. Available liquidity which comprises own cash held, title transfer funds, unsegregated funds and amounts due from brokers decreased by £10.1m from December 31, 2014.

Up until now, the company has not been spending resources on marketing its services, instead being committed to building new infrastructure and building up its team. With the increased IT spending, the firm has committed resources to building some proprietary technology which could improve its prospects in attracting new clients to the brand once it starts spending on marketing its services next month.


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