TIDMLCG
RNS Number : 5638M
London Capital Group Holdings PLC
18 August 2011
18 August 2011
LONDON CAPITAL GROUP HOLDINGS PLC
("LCG", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011
London Capital Group Holdings plc, a leading online financial
services company, announces interim results for the six months
ended 30 June 2011.
Financial Highlights:
-- Profit before tax up 213% to GBP2.69 million (H1'10: GBP0.86
million)
-- Revenue down 12% to GBP18.34 million (H1'10: GBP20.90
million)
-- Adjusted profit before tax* GBP3.0 million (H1'10: GBP4.2
million)
-- Total cash and cash equivalents up GBP18.43 million to
GBP76.51 million (H1'10: GBP58.08m), and net cash** position up
GBP8.35 million to GBP22.48 million (H1'10: GBP14.13 million)
-- Basic EPS up 180% to 3.89p (H1'10: 1.39p)
-- Interim dividend up 30% to 1.3p per share (H1'10: 1.0p)
Operational Highlights:
-- Robust UK financial spread betting and CFD performance
- Total UK financial spread betting and CFD accounts up 19% to
68,652 (H1'10: 57,890)
- Total UK financial spread betting and CFD funds on account up
21% to GBP24.67 million (H1 '10: GBP20.45 million)
- Net revenue per active client up 15% on H2'10 to GBP807
(H2'10: GBP702) and down 23% on H1'10 following the extreme
volatility of May 2010 (H1'10: GBP1,051)
- Four new White Label clients gained, including TD Waterhouse
and XTB
-- Strong institutional FX performance
- 51% increase in trade volumes to $292 billion (H1'10: $194
billion)
- 4% increase in divisional operating profit to GBP1.43 million
(H1'10: GBP1.38 million)
-- Encouraging KPIs from international operations
Commenting on the results, Simon Denham, Chief Executive,
said:
"In the first half of the year we successfully strengthened and
widened our product range and made significant progress with our
international subsidiaries, as well as bolstering our capital base.
LCG is now in a stronger position for the longer term and there are
many reasons to be optimistic for the remainder of the year. We are
encouraged by current trading, which is a reflection of the
strengths of LCGs business model."
* Adjusted profit before tax represents profit before tax
excluding share based payment charge, onerous lease charge,
exceptional software impairment charge and charge for provision
against FOS claims. Applied consistently hereafter.
** Net cash represents total cash and cash equivalents less
client money held on balance sheet.
For further information, please contact: www.londoncapitalgroup.com
London Capital Group Holdings plc 020 7456 7000
Simon Denham, Chief Executive
Siobhan Moynihan, Group Finance Director
Smithfield Consultants 020 7360 4900
John Kiely, Gemma Froggatt
Cenkos Securities plc
Nick Wells 020 7397 8900
Print resolution images are available for the media to view and
download from www.vismedia.co.uk
Notes to Editors:
London Capital Group Holdings plc (hereafter "LCGH plc" or "LCG"
or "London Capital Group" or "the Group") is a rapidly growing
financial services company offering online trading services.
London Capital Group Limited (LCG Ltd), a wholly owned trading
subsidiary of LCGH plc, is authorised and regulated by the
Financial Services Authority. Its core activity is the provision of
spread betting and CFD products on the financial markets to retail
clients under the trading name Capital Spreads and Capital CFDs.
Its other divisions provide online foreign exchange trading
services to institutional and professional clients and also
institutional derivatives broking. LCG Ltd is one of the leading
providers of white label financial spread trading platforms and its
white label partners include TD Waterhouse, TradeFair, Bwin.Party,
and Saxo Bank. Prospreads.com is authorised and regulated by the
Financial Services Commission in Gibraltar and provides spread
betting products on financial markets to professional clients.
Capital CFDs (Australia) is a trading name of London Capital
Group Pty Limited, a wholly owned subsidiary of LCGH plc, and is
regulated by the Australian Securities and Investments
Commission.
LCG Ltd has a European passport and is a member of the London
Stock Exchange. LCG Ltd also has access to international markets
through its global clearing relationships.
LCGH plc is listed on the London Stock Exchange's AIM market.
LCG is included in the General Financial sector (8770) and
Speciality Finance sub sector (8775) and has a RIC code of
LCG.L.
Chairman's statement
The first half of 2011 was a period of significant internal
focus for the Group. Following an adverse decision from the
Financial Ombudsman Service ("FOS") in February 2011 the Company
was required to raise additional capital through an institutional
share placing which concluded in April 2011. The additional funds
raised by the Company have meant that the Group is now adequately
capitalised. In addition, we relocated our London head office in
May 2011 to new premises. The new offices are a much improved
working environment and are 50% larger which will serve the Group
well in the coming years as we continue our growth strategy.
Turning to the future, the Group is focused on evaluating
opportunities to enter new markets particularly internationally
whilst ensuring we continue to develop and grow our established
businesses in the UK. We have started to see more encouraging signs
from our international subsidiaries and with the launch of our
multilingual trading platform we expect our expansion into Europe
to start gaining momentum. We have also seen significant product
development with the roll out of our mobile trading applications
which have been well received by both our customers and our White
Label partners.
Based on the performance in the first half and the net cash
position of the Group, the Board is recommending an interim
dividend of 1.3p a share (2010: 1.0p) representing 33% of basic
earnings per share and total cost of GBP0.7m (2010: GBP0.4m). This
will be paid on 23 September 2011 to shareholders on the register
at the close of business on 26 August 2011. Our policy continues to
be to pay a sustainable dividend from recurring profits which
reflect the earnings and cashflow potential of the Group whilst
ensuring retention of sufficient capital to meet regulatory and
future growth requirements.
Whilst trading conditions for the first half were not as
favourable as H1 last year, the Group has delivered solid revenue
and profit figures demonstrating the strength of our business
model.
Looking forward to the second half of the year we remain
optimistic. The recent increases in market activity have led to new
records in daily trade volumes and account opening. This combined
with our planned growth strategy and addition of key White Label
partners in H1 means we are confident of our ability to grow.
Richard Davey Chairman
18 August 2011
Chief Executive's Statement
I am pleased to report the results for the Group for H1 2011.
The market conditions for the first half of the year were not
particularly conducive to the style of trading favoured by our
retail derivative clients. A lack of market activity has meant that
trading volumes in the spread betting and CFD unit were lower than
H1 2010. However, trade volumes and revenue in our institutional FX
and institutional broking divisions reached new highs. As a result,
net revenue achieved by the Group was in line with expectations and
this gives the Board confidence that the return to more volatile
market conditions will deliver both stronger client and revenue
growth.
The Company has delivered several good pieces of operational
news through the first half, notably the addition of TD Waterhouse
as a White Label client. This however was overshadowed by an
unexpected Financial Ombudsman Service ("FOS") assessment by the
adjudicator which we continue to challenge and is being referred to
the Ombudsman. In light of this we completed a capital raising in
April 2011 and we are grateful to our shareholders for their
continued support.
Whilst still in its infancy we have seen trade volumes from our
CFD business grow 2.5 times in the first six months of the year.
Growth in our international units has been encouraging through the
first half and we expect this to continue through to the end of the
year.
Financial Review
Total revenue for the first six months was GBP18.34m, an
increase of 35% on H2 2010, and a fall of 12% on H1 2010 following
the extreme volatility of May 2010. Cost of sales fell by a similar
proportion resulting in gross margins remaining stable at 64% half
on half. Adjusted administrative expenses fell by GBP0.5m to
GBP7.8m giving an adjusted profit before tax of GBP3.0m (2010:
GBP4.2m).
In May 2011 the Group relocated its London office resulting in
the recognition of an onerous lease provision of GBP0.2m relating
to its previous offices. Whilst the new office space is 50% larger
than our previous offices the savings achieved from the move mean
that this will not result in a significant increase to the Group's
ongoing operating costs. In addition to the onerous lease provision
the Group incurred GBP0.1m in exceptional move costs which are
included within adjusted administrative expenses.
Following the completion of the institutional share placing in
April 2011, the Group had net cash of GBP22.48m and regulatory
capital resources of GBP20.5m at 30 June 2011. The additional
capital resources removed the previous constraints on risk limits
which in turn resulted in an increase in return on spread from our
UK spread betting and CFD business.
Based on the results and resources available to the Group, the
Board is recommending a dividend of 1.3p per share (2010:
1.0p).
Operational Review
Financial Spread Betting, UK
Financial Spread Betting continues to be the largest contributor
to LCG's revenues but the overall lack of market direction has
constrained income while the growth in our other divisions has led
to a more balanced spread of revenues than in the past. Spread
Betting contributed 61% of group revenue in the period (2010: 77%).
We are however encouraged by the growth in funds on account which
stood at GBP24.67m at the end of the half (H1'10: GBP20.45m).
In relation to our White Label partners, although the Paddy
Power franchise was lost, LCG retained the existing clients. We
also gained a significant partner in TD Waterhouse as well as
several other financial services providers. Whilst the acquisition
of spread betting clients was not as strong as in previous periods
due to the lack of market activity in the first half making the
product less attractive, we are confident the addition of these new
partners will add considerably to client acquisition in the
future.
The professional client debt continues to be due and the
directors have been advised that the sum remains recoverable. No
provision has been made and we continue to pursue the amount
through legal action.
Institutional FX
The institutional FX division delivered another strong
performance with a 4% increase in divisional operating profits.
Volumes continue to grow as the unit acquires an ever increasing
portfolio of clients. Global FX volumes have started to move in a
positive direction again after weakening in 2010 and the
institutional FX business is well positioned to benefit from this.
We have also agreed several new portals to deliver our liquidity to
external counterparties and we expect this to deliver even stronger
revenue growth in the future.
Financial Spread betting, Gibraltar
H1 2011 has been a turnaround period for our Gibraltar based
subsidiary, with the business delivering its first operating profit
since acquisition. Revenue was up 23% to GBP1.04m (2010: GBP0.85m)
and operating profit was GBP0.04 (H1'10: operating loss of
GBP0.17m). ProSpreads is currently restricted to only accepting
'professional' clients as defined by MiFID, which has hindered
growth substantially. As a result ProSpreads has been in prolonged
negotiations with the Gibraltar regulator and Gaming authorities to
permit 'retail' client acquisition; if permission is granted,
ProSpreads should see significant acceleration in its growth.
Institutional Broking
The institutional broking unit had a strong start to the year
generating an 82% increase in revenue and 38% increase in operating
profit. The division now has a very strong customer base and is
well placed to take advantage of market conditions more suited to
their business model.
International Expansion
As announced in our 2010 results LCG now has a regulated entity
in Australia offering CFDs to retail clients. This initial
footprint in the Far East is expected to attract business from the
entire region as LCG expects that the attractions that have made
the spread betting and CFD business so successful in the UK will
begin to acquire traction across the globe.
Our existing partners are also heavily involved in pushing the
CFD product into mainland Europe and LCG now has a wide array of
multilingual platforms to suit this purpose. Our cost effective
White Label solution remains the product of choice for companies
looking to acquire financial trading revenue from their existing
client base.
Competitive environment
H1 2011 saw the first signs that some contraction in the
competitive landscape is probable over the next six to twelve
months. The current regulatory environment, the increasingly
expensive demands of IT expenditure, exchange costs and the now
very low spreads offered to clients means that the smaller
companies are struggling to attract clients or trade profitably. In
the longer term we do not see this situation improving which we
anticipate will have two effects, firstly drive out some of the
smaller offerings and secondly restrict the number of new
entrants.
Outlook
The Board believes the outlook for the remainder of 2011 to be
very good. The spread betting and CFD unit has launched its mobile
offering and a brand new advanced charting functionality increasing
our attraction to both new clients and new partners. The
institutional FX division remains on a strong upward volume and
profit trend, our other units are delivering solid growth. More
importantly, recent market conditions have demonstrated the
strengths of our business model as we have seen our revenue streams
increase, record daily profits, and increased client
acquisition.
Simon Denham
Chief Executive
18 August 2011
London Capital Group Holdings plc
CONDENSED CONSOLIDATED INCOME STATEMENT
For the period ended 30 June 2011
Unaudited Unaudited Audited
6 Months 6 Months Year to
to 30 to 30 31
June June December
2011 2010 2010
Notes GBP'000 GBP'000 GBP'000
Revenue 3 18,342 20,903 34,491
Cost of sales (6,665) (7,480) (11,368)
---------- ---------- ---------
GROSS PROFIT 11,677 13,423 23,123
Administrative expenses
(excluding depreciation,
amortisation, software
impairment charge, onerous
lease charge, charge for
provision against FOS claims
and share based payment
charge) (7,783) (8,241) (14,717)
Depreciation and amortisation (984) (1,005) (1,985)
Charge for onerous lease
provision (213) - -
Software impairment charge - (3,194) (3,194)
Charge for provision against
Financial Ombudsman Service
("FOS") claims Share based - - (3,200)
payment charge (114) (157) (168)
--------------------------------- ------ ---------- ---------- ---------
Total administrative expenses (9,094) (12,597) (23,264)
OPERATING PROFIT/(LOSS) 2,583 826 (141)
Investment revenue 104 30 85
PROFIT/(LOSS) BEFORE TAXATION 2,687 856 (56)
Tax (expense)/credit 5 (926) (315) 20
Profit/(loss) for the period
attributable to the owners of
the parent 1,761 541 (36)
========== ========== =========
Earnings per share
Pence Pence Pence
Basic 6 3.89 1.39 (0.09)
Diluted 6 3.89 1.37 (0.09)
Adjusted basic 6 4.42 7.58 12.02
All the Group's revenue and total comprehensive income for the
financial period and prior financial periods relate to continuing
activities.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 June 2011
Audited
Unaudited Unaudited Year to
6 months 6months 31
to 30 June to 30 June December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Profit/(loss) for the period 1,761 541 (36)
Exchange differences in translation
of foreign operations 3 - 14
-------- ------------ ------------
Total comprehensive income/(loss)
for the year 1,764 541 (22)
Total comprehensive income/(loss)
for the year attributable to the
owners of the parent 1,764 541 (22)
-------- ------------ ------------
London Capital Group Holdings plc
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2011
Unaudited Unaudited Audited
30 June 30 June 31 December
2011 2010 2010
Notes GBP'000 GBP'000 GBP'000
NON-CURRENT ASSETS
Property, plant and equipment 2,595 867 597
Intangible assets 12,939 13,023 12,745
Available-for-sale investment 100 100 100
Deferred tax asset 114 278 168
15,748 14,268 13,610
---------- ---------- -------------
CURRENT ASSETS
Trade and other receivables 8 4,346 3,024 3,233
Cash and cash equivalents 9 76,514 58,078 61,583
Current tax receivable - - 473
---------- ---------- -------------
80,860 61,102 65,289
---------- ---------- -------------
TOTAL ASSETS 96,608 75,370 78,899
---------- ---------- -------------
CURRENT LIABILITIES
Trade and other payables 10 59,255 49,697 51,540
Current tax liabilities 400 608 -
Provisions 3,413 - 3,200
---------- ---------- -------------
63,068 50,305 54,740
---------- ---------- -------------
TOTAL LIABILITIES 63,068 50,305 54,740
NET ASSETS 33,540 25,065 24,159
========== ========== =============
EQUITY
Share capital 12 5,318 3,981 3,985
Share premium account 19,572 13,358 13,390
Own shares held 12 (1,287) (1,287) (1,287)
Retained profits 15,281 14,357 13,415
Other reserves (5,344) (5,344) (5,344)
TOTAL EQUITY ATTRIBUTABLE TO
EQUITY HOLDERS OF THE PARENT 33,540 25,065 24,159
---------- ---------- -------------
London Capital Group Holdings plc
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2011
Share Own
Share premium shares Retained Other Total
capital account held profits reserves equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January,
2010 3,899 12,153 - 13,659 (5,344) 24,367
Total
comprehensive
income for
the period - - - 541 - 541
Issue of new
shares to
Joint Share
Ownership
Plan 82 1,205 (1,287) - - -
Share based
payment
transactions
including
deferred
taxation - - - 157 - 157
-------- -------- -------- --------- --------- ---------
At 30 June,
2010 3,981 13,358 (1,287) 14,357 (5,344) 25,065
Total
comprehensive
loss for the
period - - - (563) - (563)
Dividends paid - - - (390) - (390)
Share based
payment
transaction
including
deferred
taxation - - - 11 - 11
Exercise of
share options
in the
period 4 32 - - - 36
-------- -------- -------- --------- --------- ---------
At 1 January,
2011 3,985 13,390 (1,287) 13,415 (5,344) 24,159
Issue of share
capital 1,333 6,182 - - - 7,515
Total
comprehensive
income for
the period - - - 1,764 - 1,764
Share based
payment
transactions
including
deferred
taxation - - - 102 - 102
At 30 June,
2011 5,318 19,572 (1,287) 15,281 (5,344) 33,540
======== ======== ======== ========= ========= =========
London Capital Group Holdings plc
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the period ended 30 June 2011
Unaudited
Unaudited 6 Months Audited
6 Months to 30 12 Months
to 30 June to 31 December
June 2011 2010 2010
GBP'000 GBP'000 GBP'000
Profit/(loss) for the financial
period 1,761 541 (36)
Adjustments for:
Depreciation of property, plant
and equipment 224 258 542
Amortisation of intangible assets 760 747 1,443
Equity settled share based payment 114 157 168
Impairment of intangible assets - 3,194 3,194
Charge for provision against
Financial Ombudsman Service
("FOS") claims - - 3,200
Charge for onerous lease provision 213 - -
Investment income (104) (30) (85)
Current tax charge 872 589 145
Movement in deferred tax asset 54 (275) (165)
Operating cash flows before
movements in working capital 3,894 5,181 8,406
Increase in receivables (1,113) (1,699) (1,908)
Increase/(decrease) in payables 7,707 (7,026) (5,183)
Cash generated from
operations/(utilised in
operations) 10,488 (3,544) 1,315
Taxation paid - (755) (1,388)
Net cash generated from
operations/(utilised in
operations) 10,488 (4,299) (73)
----------- ---------- ----------------
Investing activities
Investment income 104 30 85
Acquisitions of property, plant
and equipment (2,222) (214) (228)
Acquisitions of intangible assets (954) (1,210) (1,608)
Acquisitions of investments - (100) (100)
Net cash used in investing
activities (3,072) (1,494) (1,851)
----------- ---------- ----------------
Financing activities
Dividends paid - - (390)
Cash from issue of share capital 7,515 - 26
Net cash from/(used in) financing
activities 7,515 - (364)
----------- ---------- ----------------
Net increase/(decrease) in cash
and cash equivalents 14,931 (5,793) (2,288)
Cash and cash equivalents at
beginning of period 61,583 63,871 63,871
Cash and cash equivalents at
end of period 76,514 58,078 61,583
=========== ========== ================
London Capital Group Holdings plc
Notes to the condensed consolidated financial statements
For the period ending 30 June 2011 (unaudited)
1. General information
The condensed consolidated financial statements of London
Capital Group Holdings plc and its subsidiaries for the six months
ended 30 June 2011 were authorised for issue by the Board of
Directors on 18 August 2011. The information for the year ended 31
December 2010 does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. A copy of the statutory
accounts for that year has been delivered to the Registrar of
Companies. The auditor's report on those accounts was not qualified
and did not contain statements under section 498(2) or (3) of the
Companies Act 2006.
2. Basis of preparation
The interim condensed consolidated financial statements for the
six months ended 30 June 2011 have been prepared using accounting
policies consistent with International Financial Reporting
Standards as adopted by the EU (IFRS) and in accordance with IAS 34
Interim Financial Reporting.
The same accounting policies, presentation and methods of
computation are followed in the condensed set of financial
statements as applied in the Group's latest annual audited
financial statements.
The directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis for
preparing the financial statements.
3. Segment information
Unaudited 6 months to 30 June 2011
Financial Financial
spread Institutional spread
betting, CFDs foreign Institutional CFDs betting,
UK UK exchange brokerage Australia Gibraltar Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP000 GBP'000 GBP'000
Revenue Segmental
revenue 11,300 136 4,408 1,512 4 1,038 18,398
-------- ---------- ------------ -------------- ------------ -------- -------------
Foreign exchange
loss on trading (56)
Total group
revenue 18,342
Segmental
operating
profit/(loss) 4,775 (75) 1,431 405 (323) 40 6,253
-------- ---------- ------------ -------------- ------------ -------- -------------
Unallocated
corporate
expenses (3,670)
-------------
Operating profit 2,583
Finance income 104
Profit before
taxation 2,687
Taxation (926)
----------
Profit for the
year 1,761
==========
Segmental assets 28,150 1,117 13,662 875 610 18,532 62,946
-------- ---------- ------------ -------------- ------------ -------- ----------
Unallocated
corporate assets 33,662
----------
Consolidated
total assets 96,608
==========
Segmental
liabilities 23,578 1,116 12,997 469 84 16,982 55,226
-------- ---------- ------------ -------------- ------------ -------- ----------
Unallocated
corporate
liabilities 7,842
----------
Consolidated
total
liabilities 63,068
==========
Included within revenue is interest income earned on client
money held.
3. Segment information (continued)
Unaudited 6 Months to 30 June 2010
Financial
Financial Institutional Spread
spread betting, CFDs foreign Institutional Betting,
UK UK exchange Brokerage Gibraltar Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Segmental revenue 16,188 4 3,020 831 846 20,889
------------ -------- -------------- --------- ----------------- --------
Foreign exchange gain
on trading 14
Total group revenue 20,903
Segmental operating
profit/(loss) 7,501 (297) 1,383 294 (169) 8,712
------------ -------- -------------- --------- ----------------- --------
Unallocated corporate
expenses (7,886)
--------
Operating profit 826
Net financing income 30
--------
Profit before taxation 856
Taxation expense (315)
--------
541
========
Segmental assets 26,354 38 17,648 291 7,854 52,185
------------ -------- -------------- --------- ----------------- --------
Unallocated corporate
assets 23,185
--------
Consolidated total assets 75,370
========
Segmental liabilities 21,407 38 17,364 238 5,719 44,766
------------ -------- -------------- --------- ----------------- --------
Unallocated corporate
liabilities 5,539
--------
Consolidated total liabilities 50,305
========
3. Segment information (continued)
Audited 12 Months to 31 December 2010
Financial
Financial Institutional spread
spread betting, CFDs foreign Institutional CFDs betting,
UK UK exchange brokerage Australia Gibraltar Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP000 GBP'000 GBP'000
Revenue
Segmental revenue 25,827 (67) 6,045 1,082 (2) 1,520 34,405
-------- -------- -------------- -------------- ------------ -------- -------------
Foreign exchange
gain on trading 86
Total group
revenue 34,491
Segmental operating
profit/(loss) 9,065 (532) 2,145 275 (323) (483) 10,147
-------- -------- -------------- -------------- ------------ -------- -------------
Unallocated
corporate expenses (10,288)
-------------
Operating loss (141)
Finance income 85
Loss before
taxation (56)
Taxation credit 20
----------
Loss for the
year (36)
==========
Segmental assets 29,254 316 16,743 281 445 8,432 55,471
-------- -------- -------------- -------------- ------------ -------- ----------
Unallocated
corporate assets 23,428
----------
Consolidated
total assets 78,899
==========
Segmental liabilities 24,917 316 16,481 48 21 6,507 48,290
-------- -------- -------------- -------------- ------------ -------- ----------
Unallocated corporate
liabilities 6,450
----------
Consolidated
total liabilities 54,740
==========
4. Adjusted profit before tax, adjusted operating profit and
adjusted EBITDA
Audited
Unaudited Year to
6 Months 31
Unaudited 6 to 30 December
Months to 30 June June 2010 2010
2011 GBP'000 GBP'000 GBP'000
Reported profit/(loss) before tax 2,687 856 (56)
Add back - software impairment charge - 3,194 3,194
Add back - onerous lease provision 213 - -
Add back - charge for provision against
FOS claims - - 3,200
Add back-share-based payment charge 114 157 168
----------- ---------- ----------
Adjusted profit before tax 3,014 4,207 6,506
Tax as reported (926) (315) 20
Tax effect on add backs (88) (938) (1,837)
----------- ---------- ----------
Adjusted profit after tax 2,000 2,954 4,689
=========== ========== ==========
Reported operating profit/(loss) 2,583 826 (141)
Add back - share based payment charge 114 157 168
----------- ---------- ----------
Adjusted operating profit 2,697 983 27
Add back - other amortisation and
depreciation 984 1,005 1,985
Add back - software impairment charge - 3,194 3,194
Add back - charge for provision against
FOS claims - - 3,200
Add back - onerous lease provision 213 - -
----------- ---------- ----------
Adjusted EBITDA 3,894 5,182 8,406
=========== ========== ==========
5. Taxation
Income tax for the six month period is charged at 34.5% (six
months ended 30 June 2010: 36.8%; year ended 31 December 2010:
35.8%), representing the best estimate of the average annual
effective income tax rate expected at the full year, applied to the
pre-tax income of the six month period.
6. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the period, after
deducting any own shares held (JSOP). Fully diluted earnings per
share is calculated by dividing the earnings attributable to the
ordinary shareholders by the total of the weighted average number
of ordinary shares in issue during the year and the dilutive
potential ordinary shares relating to share options.
Unaudited Audited
Unaudited 6 6 Months Year to 31
Months to 30 to 30 June December
June 2011 2010 2010
GBP'000 GBP'000 GBP'000
Basic EPS
Profit/(loss) after tax 1,761 541 (36)
Weighted average no of shares 45,220,420 38,989,228 38,994,692
Weighted average basic EPS 3.89p 1.39p (0.09)p
Diluted EPS
Profit after tax 1,761 541 (36)
Weighted average no of shares 45,222,966 39,527,442 40,610,090
Weighted average fully diluted EPS 3.89p 1.37p (0.09)p
Unaudited 6 Audited
Months to Unaudited 6 Year to 31
30 June Months to 30 December
2011 June 2010 2010
GBP'000 GBP'000 GBP'000
Adjusted basic EPS
Adjusted profit after tax 2,000 2,954 4,689
Weighted average no of shares 45,220,420 38,989,228 38,994,692
Weighted average adjusted basic 4.42p 7.58p 12.02p
EPS
7. Dividends
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2011 2010 2010
Amounts recognised as distributions
to equity holders
in the period:
GBP'000 GBP'000 GBP'000
Final dividend for the year ended 31
December 2010 of nil (2009: nil) - - -
Interim dividend for the year ended
31 December 2010 of 1.0p - - 390
- - 390
--------- --------- ------------
Dividends declared in respect of the period:
Interim dividend for the year to 31
December 2011 of 1.3p (2010:1.0p) 681 390 390
681 390 390
--------- --------- ------------
8. Trade and other receivables
Unaudited Audited 31
Unaudited 30 June 30 June 2010 December 2010
2011 GBP'000 GBP'000 GBP'000
Trade receivables 2,944 2,364 1,729
Other receivables 784 29 1,074
Prepayments 618 631 430
4,346 3,024 3,233
-------------------- -------------- -------------------
9. Cash and cash equivalents
Unaudited Audited 31
Unaudited 30 June 30 June 2010 December 2010
2011 GBP'000 GBP'000 GBP'000
Cash at bank and in
hand 2,774 6,356 5,651
Short-term deposits 19,706 7,769 8,297
------------------- -------------- -------------------
Net cash position 22,480 14,125 13,948
Client money held:
Spread Betting
Clients (UK and
Gibraltar) 39,854 26,552 30,826
Forex Clients 12,997 17,363 16,481
CFD Clients 1,183 38 328
------------------- -------------- -------------------
76,514 58,078 61,583
------------------- -------------- -------------------
Amounts due to clients represents client money held and is
repayable on demand.
10. Trade and other payables
Unaudited Audited 31
Unaudited 30 June 30 June 2010 December 2010
2011 GBP'000 GBP'000 GBP'000
Trade payables 1,752 1,718 1,067
Amounts due to
brokers 468 238 48
Other taxes and
social security 777 725 709
Accruals 2,224 3,063 2,081
Amount due to
clients 54,034 43,953 47,635
59,255 49,697 51,540
------------------- -------------- -------------------
11. Provisions and contingent liabilities
As previously disclosed, during H1'09 the Group made commission
rebating errors whilst preparing the customer statements of a
managed spot FX fund. The correction of these errors led to a
series of complaints to the Financial Ombudsman Service ("FOS").
The Board reviewed the initial assessment from the FOS and
concluded that the impact of the claims to the FOS would not be
material to the business. A revised assessment was received on 11
February 2011. Whilst LCG believes its actions did not directly
cause any loss to the client, the revised assessment determined
that LCG should repay the total losses incurred by the client of
GBP0.1m plus interest. LCG is challenging the revised
assessment.
The Board has assessed that a gross provision of GBP3.2m should
be booked and a contingent liability of a further GBP3.3m
disclosed. The Directors have made this assessment based on an
analysis of the losses incurred in the fund attributable to clients
under the protection of the FOS, the latest FOS assessment and the
FOS's rules on compensation. This represents an increase of GBP0.1m
on the GBP3.2m previously disclosed as a contingent liability due
to the recently announced changes in the FOS's compensation limits.
Whilst the Directors are confident that the provision represents a
best estimate of the implications of the latest FOS determination,
there remains significant uncertainty as to the eventual financial
outcome including the extent of the FOS's jurisdiction. The Group
has challenged the assessment and, although the Directors are
confident that there are grounds for challenge, the outcome of this
process is uncertain. As a result of these variables, the timing of
any such payment is also uncertain.
Following the relocation of the Group's London offices in May
2011 an onerous lease provision of GBP0.2m has been recognised in
relation to the Group's former premises.
12. Share capital
Following the recognition of a GBP3.2m provision in relation to
the FOS assessment the Board decided to raise GBP8.0m before
expenses by way of a placing of 13,333,333 new ordinary shares at
60 pence per share to ensure the continued operating effectiveness
and profitability of the Group. The placing was completed on the 7
April 2011 following shareholder approval obtained at a General
Meeting. The net increase to Share Capital and Share Premium was
GBP1,333,333 and GBP6,182,000 respectively.
The Group has a Joint Share Ownership Plan ("JSOP") to provide
incentives to Directors and employees. At 30 June 2011 820,000
shares were held in the JSOP. These shares have a total mid market
value in the Own Shares held reserve of GBP1,287,000.
13. Related party transactions
Transactions between the company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. There have been no transactions between the
company and other related parties, except for the key management
personnel compensation.
14. Capital commitments
At 30 June 2011, the Group has capital commitments for the
acquisition of software amounting to GBP0.8m (31 December 2010:
GBP2m).
15. Events after balance sheet date
There were no adjusting events or non-adjusting events after the
balance sheet date.
INDEPENDENT REVIEW REPORT TO LONDON CAPITAL GROUP HOLDINGS
PLC
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2010 which comprises the consolidated
income statement, consolidated statement of comprehensive income,
the consolidated balance sheet, the consolidated statement of
changes in equity, the consolidated cash flow statement and related
notes 1 to 15. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the AIM Rules of the London Stock Exchange.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Emphasis of matter- Uncertain outcome of complaint to Financials
Ombudsman Service
In forming our opinion on the financial statements we have
considered the adequacy of disclosures made in note 11 concerning
certain complaints before the Financial Ombudsman Service ("FOS")
in respect of a managed spot FX fund. As explained in note 11 there
remains significant uncertainty as to the eventual financial
outcome of this issue. Our opinion is not modified in respect of
this matter.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2011 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the AIM Rules of the London Stock Exchange.
Deloitte LLP
Chartered Accountants and Statutory Auditors
London, United Kingdom
18 August 2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUCURUPGGQM
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