LCGH Reports 2013 Full Year Results: Full Year Loss Widens to $8 Million
The company’s CFD business is consolidating, while institutional FX volumes drop sharply lower as competition in the space has briskly
London Capital Group Holdings Plc (LCGH), the company behind some of the big spread betting brands in the UK such as Capital Spreads, Capital CFDs and LCG MT has issued its audited results for the year ending on December 31st, 2013. Revenues have stagnated with the spread betting and CFD division marking a relatively flat year coming out at $33.3 million (£20.8 million) which is barely 2% higher than 2012, while revenue from continuing operations has decreased by 5% to $42 million (£25.2 million) as the company’s institutional trading division has marked a substantial decline in volumes throughout 2013.
The bottom line result is a loss of $8 million (£4.8 million) which is more than four times higher than last year’s $1.7 million (£1.1 million). After plunging more than 6% at the open, share prices of the company are currently trading only 3% lower as investors digest the numbers. According to the report, spread betting and CFD activities accounted for $16.3 million in profits (£9.8 million),which is about 25% higher than a year ago.
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Average trades per day have decreased by 12% to 22,008 in 2013, while new client acquisitions have dwindled to 6,431, which is lower by about 36% to last year’s figures. The apparent drop in new clients can well be tied to Plus500’s aggressive marketing model that has been attracting a lot of new spread betting business throughout 2013, squeezing competitors out of the UK market.
Institutional trading volumes at the company have not fared any better as the company reports a drop totalling to $242 billion which is lower by 37% when compared to 2012. The company has disposed of its losing ventures in Australia and Gibraltar and focused on its domestic market strength instead, and has successfully settled with Life Settlement Consulting Limited (Integrity).
Full year results were addressed by the company’s CEO, Kevin Ashby who stated, “Having addressed and resolved a number of material internal and external issues, the Group emerged from 2013 in a much stronger structural and operational position than could have been predicted at the start of the year, and the general confidence of the business has materially improved. We have a clear strategy to reposition LCG and I am confident that we will make further progress with the turnaround in 2014.”
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That doesn’t sound too good. The retail business under pressure from tough competition, and institutional most likly not going anywhere either. Who would want to deposit larger amounts of margin/collateral with a firm with uncertain future?
Hi Andy, just wanted to clarify that there is no reason to believe that your collateral is unsafe with LCG, as under FCA regulations all client collateral is separated from the company’s own funds. In addition, the company still has a solid balance sheet with more than £17 million pounds in cash and cash equivalents. Of course, It depends on their incoming decisions as to where do they go from here, but there is no imminent danger for existing and prospective clients.
@MC making it perfect would be the addition of a slot handle to pull to initiate the binary wager
@MC making it perfect would be the addition of a slot handle to pull to initiate the binary wager
But is 17 million all that solid, with a loss of 8 million? It sounds like they need to change something drastic, and fast.
17 million GBP and 8 million…. USD
Victor, they may be regulated and your funds guaranteed by the regulators but why take the risk? I had money with PFG and am still waiting nearly 2 years to get it back.
There are brokers who are as good if not better than LGC but are not having financial difficulties.
Hi Bobby,
all I am saying is that they are quite far from insolvent. With a cash pile under the bed there is still way to go to draw hasty conclusions as to their solvency. What is true is that the key results are in the quarters (or years) ahead… They claim to have disposed of their money losing divisions – so let’s see if that is correct when the next statement comes.
Cheers
Please note that there was an adjusted pre tax profit of £2.2m. We incurred around £7m of exceptional costs and these were associated with the closure of legal matters and related claims, restructuring, duplication of systems during migration and a material (non cash) adjustment to good will, much of which was covered in the half year statement. Buried in the annual report you will find that we have regulatory capital of £18.6m. If anyone needs more info please contact me at k.ashby@londoncapitalgroup.com. or 07588 650944