LCG releases trading update for 2011 – profit just £2.0m

LCG is a rather large spread betting and CFD broker and a fairly large fx prime broker however its results

LCG is a rather large spread betting and CFD broker and a fairly large fx prime broker however its results aren’t anything outstanding and profit for 2011 (year ending June 30th) is just £2.0m slightly down when comparing to the same period last year.

On the positive note LCG reports improvement in revenue and clients acquisition as well as the launch of several new white labels who may contribute to better results next year.

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The Board of London Capital Group Holdings plc (“the Group”), the financial services and online spread betting and CFD company, is pleased to give the following trading update in respect of the first half of the current financial year and announces that it will release interim results for the period ended 30 June 2012 on 22 August 2012.

The Group is expecting to report that adjusted profit before tax for the six months to 30 June 2012 will be in the region of £2.0m compared to £3.0m for the same period last year. This is stated before recognising a charge for share based payment expense and a provision for £1.9m as previously disclosed relating to Financial Ombudsman Service (FOS) claims.

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Although market volatility and volumes remained low in the first half of the year, the retail spread betting and CFD business continues to trade well and revenues were 10% higher than the same period last year. Client acquisitions grew by 4.2%. The Group is also pleased to announce that it has added a number of significant new white label partners which are due to commence trading in H2 of this year.

The Australian CFD business has doubled both its client base and trade volumes. As expected, it has continued to generate losses which amounted to £0.3m for the first 6 months (2011: £0.3m). The Board expects the business to be operating at a profitable level in the next 12 months.

The institutional foreign exchange business has seen revenue remain stable compared to 2011. Margin pressure has resulted in the net contribution being 26% lower than the same period in 2011. The institutional broking business has had a slower first half resulting in divisional revenue of £0.5m compared to £1.5m in 2011 but this is expected to rebalance in the next 12 months.

We are pleased to report that ProSpreads, the Direct Market Access (DMA) financial spread betting business in Gibraltar, has recently been granted a retail license opening up the potential client base for this product. Low volatility during the early part of the year has meant the business incurred losses of £0.4m for the first 6 months (2011: profit of £0.04m). The Group is currently restructuring the business in Gibraltar to create greater efficiencies across the Group to ensure its future profitability.

Overall the Group continues to trade well, is well capitalised and as at 30 June 2012 had net cash resources and amounts due from brokers amounting to £25.6m. The Board is focused on ensuring the Group’s cost base remains low whilst maintaining sufficient flexibility to progress its growth strategy.

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