TIDMLCG
RNS Number : 5269K
London Capital Group Holdings PLC
22 August 2012
The following replaces the Half Yearly report released at 0700
under RNS 5061K
The interim dividend has been amended to 1.3p
The full amended release appears below
22 August 2012
LONDON CAPITAL GROUP HOLDINGS PLC
("LCG", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012
London Capital Group Holdings plc, a leading online financial
services company, announces interim results for the six months
ended 30 June 2012.
Financial Highlights:
-- Revenue stable at GBP18.41 million (H1'11: GBP18.34 million)
-- Adjusted profit before tax* GBP2.05 million (H1'11: GBP3.01
million), reflecting lack of market volatility
-- Profit before tax of GBP0.15 million (H1'11: GBP2.69million)
following recognition of additional provision for FOS claims of
GBP1.9m
-- Company pursuing a settlement strategy with respect to outstanding FOS claims
-- Net cash and short term receivables up GBP3.06 million to
GBP25.54 million (H1'11: GBP22.48 million)
-- Interim dividend 1.3p (H1'11: 1.3p)
Operational Highlights:
-- Robust UK financial spread betting and CFD performance
-- Net revenue per active client up 20% on H1'11 to GBP970
(H2'11: GBP807)
-- Divisional revenue up 12% to GBP12.8m
-- Client acquisition up 11% on H2'11 and 4% on H1'11
-- Six new White Label clients gained, including Selftrade,
Victor Chandler and Goodbody Stockbrokers
-- Institutional FX
-- Consistent divisional revenue of GBP4.35 million (H1'11:
GBP4.41 million)
-- 26% decrease in operating profit due to margin pressure from
competitive environment
Commenting on the results, Simon Denham, Chief Executive,
said:
"The business operated against a backdrop of difficult market
conditions in the first half of the year. Notwithstanding a lack of
market volatility, our core spread betting and CFD business has
performed well and, in line with our growth strategy, we have
signed a number of significant new White Label partnerships and
continue to see growth opportunities in this market.
We believe that our settlement strategy in relation to the
outstanding FOS claims will reach a satisfactory resolution. We
remain very well capitalised, with a strong cash position, and are
encouraged by the medium-term prospects for the Group."
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
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 financial services
company which offers 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 and
LCG MT. 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 and CFD platforms
and its white label partners include TD Direct Investing,
TradeFair, Bwin.party, Selftrade and Saxo Bank.
Prospreads Limited, a wholly owned trading subsidiary of LCGH
plc, is authorised and regulated by the Financial Services
Commission in Gibraltar and provides Direct Market Access ("DMA")
spread betting products on financial markets that are aimed at
professional clients.
Capital CFDs (Australia) and LCG Markets (Australia) are trading
names of London Capital Group Pty Limited, a wholly owned trading
subsidiary of LCGH plc, which 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.
LCGH plc 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
It gives me great pleasure to be delivering my first statement
as Chairman of London Capital Group. I would like to thank my
predecessor Richard Davey for his significant contribution to the
business over the last five years as Chairman.
The first half of 2012 has shown mixed results for the Group's
divisions. Whilst our core business, the UK Financial Spread
betting (UK FSB) division, has demonstrated growth in both revenues
and client acquisition over the last year, the institutional
businesses and our overseas businesses have not performed as well
as expected. Total revenue for the Group amounted to GBP18.4m
(2011: GBP18.3m) and adjusted profit before tax totalled GBP2.05m
(2011: GBP3.01m).
The contribution from our institutional broking and
institutional foreign exchange businesses was down by GBP0.7m as
volumes fell throughout the industry. ProSpreads, the Direct Market
Access (DMA) financial spread betting business in Gibraltar,
experienced a fall in volumes and volatility returning a net loss
of GBP0.4m (2011: profit of GBP0.04m). As noted in our earlier
trading statement the Group is currently restructuring this
business to create greater efficiencies to ensure its future
profitability.
Positively, the UK FSB division has successfully launched a
number of new White Label partnerships including Selftrade,
Goodbody Stockbrokers and a number of White Label partners gained
from the Group's former competitor Worldspreads.
Encouragingly, the UK CFD business launched in 2010 has
increased both revenue and volumes by five fold. Whilst the
Australian CFD business has yet to establish itself we have seen
signs of growing trade volumes and client numbers. The division
generated a loss of GBP0.3m for the period (2011: GBP0.3m). The
Board expects the business to be operating at a profitable level in
the next 12 months.
As previously disclosed, the company received a judgement from
the Financial Ombudsman Service ("FOS") that clients previously not
determined to be under the protection of FOS would be considered
for compensation. This led to the Company recognising GBP1.9m of
the previously disclosed GBP3.3m contingent liability as a
provision in the period. The charge has been recognised as an
exceptional item in the income statement. After two years of
defending the claims the Company has recently begun pursuing a
settlement strategy with the complainants. We are pleased to report
that 25% of the outstanding complainants have agreed to the
proposed settlement. A further announcement will be made in due
course once the outcome of the settlement is known.
Overall the Group continues to trade well given the present
market conditions and is well capitalised. The company's strategy
continues to be a strong focus on improving its core businesses,
including developing its successful white label programme and to
increase the quality and breadth of its international
operations.
Based on the performance of the Group, the Board is recommending
an interim dividend of 1.3p a share (2011: 1.3p) representing 33%
of adjusted profit before tax and a total cost of GBP0.7m (2011:
GBP0.7m). This will be paid on 28 September 2012 to shareholders on
the register at the close of business on 7 September 2012.
Giles Vardey
Chairman
Chief Executive's Statement
On behalf of the board I would like to begin by thanking Richard
Davey, who resigned earlier this month, for all the hard work and
support that he has given me and the other Directors over his five
years as Chairman of the Board. He has helped us through some of
the critical issues that have emerged over the last few years and
has been instrumental in growing our business to record levels of
revenue.
In turn, I would like to welcome Giles Vardey to his new role as
Chairman. Giles brings considerable experience and expertise from
across the financial services industry and has been a valued member
of the Board since he joined the Company as Non-Executive Director
earlier this year.
As has been widely commented upon, market conditions for the
first half of 2012 were particularly poor for much of the financial
services industry with trading volumes being heavily depressed.
Market direction and volatility, key drivers of our business, and
trading activity were limited during the period. This has resulted
in significantly lower revenue and profitability in both our
professional spread betting offering and institutional foreign
exchange and brokerage businesses. However, the retail businesses
have continued to grow with UK spread betting increasing revenues
by 7% and the new CFD businesses increasing revenues from GBP0.1m
in the first half of 2011 to GBP0.8m in this half.
Adjusted administrative costs increased by GBP1.2m on the
previous period; the increase can be attributed to an increase in
marketing costs of GBP0.3m, increased regulatory fees and levies of
GBP0.3m, increased IT and data usage costs of GBP0.3m and higher
salary costs of GBP0.3m. These cost increases are mainly
attributable to the UK FSB and CFD business which grew revenue by
12% on the comparative period. Also included within administrative
expenses were GBP0.2m of legal costs incurred in relation to the
outstanding FOS claims. The Board is closely monitoring the Group's
cost base to ensure it does not continue to grow disproportionately
to the growth in revenue. The Board believes those administrative
costs which are controllable including salary costs are now
stable.
Financial Spread Betting (FSB), UK
Retail Spread Betting continues to generate the majority of
revenue for the Group. With the fall in revenue from the
institutional businesses the proportion of Group revenue generated
by retail spread betting has increased from 61% in the first half
of 2011 to 66% in the first half of 2012. The division has produced
encouraging growth, with client acquisitions up 4.2% and Average
Revenue Per User ("ARPU") up 20% to GBP970 (2011: GBP807).
We continue to follow our strategy of building relationships
with White Labels and Marketing Agents, signing up three
significant new White Labels in the period in Selftrade, Victor
Chandler and Goodbody Stock Brokers. We are in the process of
negotiating further White Label contracts and believe that the
addition of these new partners will contribute to an increase in
client acquisition and trade volumes in the second half of the
year.
CFDs UK
Our UK based CFD business which services mainly international
customers, has grown revenue and contribution by GBP0.6m and
GBP0.7m respectively over the previous period. This business is
where the Group expects to generate a significant proportion of its
future growth as it acquires more European based clients and
partners.
CFD's, Australia
The Australian CFD business is showing positive signs of growth
with both its client base and trade volumes doubling over the same
period last year. As expected the division has generated a loss for
the period in line with the loss generated last year of GBP0.3m.
The Board is reviewing the current business strategy to ensure we
are capitalising on the positive KPIs and has also taken the
decision to launch a new platform and brand, "LCG Markets", to
capitalise on the popularity of certain products and markets in the
region.
Financial Spread Betting (FSB), Gibraltar
ProSpreads has recently been granted a retail licence which will
open up the potential client base for this product. Whilst we are
disappointed that the business returned a loss in the period of
GBP0.4m (2011: profit GBP0.04m) our future strategy for the
business should ensure its profitability.
Institutional Foreign Exchange
Although Global FX market volumes were reported to be lower in
the first half of 2012 compared to the same period last year the
institutional foreign exchange business has seen revenues remain
stable compared to 2011. Over the past 18 months we have seen
margins eroded due to the increased competition in the market,
resulting in the division returning a 25% reduction in gross profit
to 24% (2011: 32%) compared to the same period last year. During
the second half of the year the division is focusing on increasing
revenue through wider product and platform offerings.
Institutional Broking
The institutional broking division experienced lower volumes
compared to the same period last year resulting in divisional
revenue of GBP0.5m compared to GBP1.5m in 2011. We expect volumes
to return to more normal levels towards the end of the year.
Outlook
Despite difficult market conditions, the Group has managed to
grow its retail revenue streams and maintain total revenue at the
same level as last year. We have continued to invest in our trading
platforms ensuring we have a stable and scalable trading
environment on which we can deliver future growth. The addition of
a number of new partners as well as new sales initiatives we are
currently implementing should ensure we deliver strong revenue
growth in future years.
Simon Denham
Chief Executive
London Capital Group Holdings plc
CONDENSED CONSOLIDATED INCOME STATEMENT
For the period ended 30 June 2012
Unaudited Unaudited Audited
6 Months 6 Months Year to
to 30 to 30 31 December
June 2012 June 2011 2011
Notes GBP'000 GBP'000 GBP'000
Revenue 3 18,414 18,342 38,963
Cost of sales (6,481) (6,665) (13,754)
----------- ----------- -------------
GROSS PROFIT 11,933 11,677 25,209
Administrative expenses (before
certain items)
Certain items: (8,945) (7,783) (16,325)
Depreciation and amortisation (1,109) (984) (2,069)
Charge for onerous lease provision 12 - (213) (213)
Software impairment charge - - (530)
Charge for provision against Financial
Ombudsman Service ("FOS") claims
Share based payment charge 12 (1,867) - -
(37) (114) (179)
---------------------------------------- ------ ----------- ----------- -------------
Total administrative expenses (11,958) (9,094) (19,316)
OPERATING (LOSS)/PROFIT 4 (25) 2,583 5,893
Investment revenue 171 104 248
PROFIT BEFORE TAXATION 146 2,687 6,141
Tax credit/(expense) 5 36 (926) (1,922)
Profit for the period attributable
to the owners of the parent 182 1,761 4,219
=========== =========== =============
Earnings per share
Pence Pence Pence
Basic 6 0.35 3.89 8.64
Diluted 6 0.35 3.89 8.64
Adjusted basic 6 3.09 4.42 10.03
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 2012
Unaudited Unaudited Audited
6 months 6months Year to
to 30 June to 30 June 31 December
2012 2011 2011
GBP'000 GBP'000 GBP'000
Profit for the period 182 1,761 4,219
Exchange differences in translation
of foreign operations (7) 3 (1)
----------- ------------------ ----------------
Total comprehensive income for the
period 175 1,764 4,218
----------- ------------------ ----------------
Total comprehensive income for the
period attributable to the owners
of the parent 175 1,764 4,218
=========== ================== ================
London Capital Group Holdings plc
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2012
Audited
31 December
Unaudited Unaudited 2011
30 June 30 June
2012 2011
(restated)
Notes GBP'000 GBP'000 GBP'000
NON-CURRENT ASSETS
Intangible assets 13,146 12,939 13,173
Property, plant and equipment 2,599 2,595 2,354
Available-for-sale investment 100 100 100
Deferred tax asset 121 114 110
15,966 15,748 15,737
----------- ------------- -------------
CURRENT ASSETS
Trade and other receivables 8 6,275 12,025 5,126
Cash and cash equivalents 9 35,668 29,135 37,429
41,943 41,160 42,555
----------- ------------- -------------
TOTAL ASSETS 57,909 56,908 58,292
----------- ------------- -------------
CURRENT LIABILITIES
Trade and other payables 10,11 18,216 19,555 18,984
Current tax liabilities 446 400 647
Provisions 5,067 3,413 3,312
----------- ------------- -------------
23,729 23,368 22,943
----------- ------------- -------------
TOTAL LIABILITIES 23,729 23,368 22,943
NET ASSETS 34,180 33,540 35,349
=========== ============= =============
EQUITY
Share capital 5,318 5,318 5,318
Share premium account 19,572 19,572 19,572
Own shares held (1,287) (1,287) (1,287)
Retained profits 15,921 15,281 17,090
Other reserves (5,344) (5,344) (5,344)
TOTAL EQUITY ATTRIBUTABLE TO
EQUITY HOLDERS OF THE PARENT 34,180 33,540 35,349
=========== ============= =============
London Capital Group Holdings plc
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2012
Share capital Share premium Own shares
account held Retained Other Total equity
profits reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
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
loss for the
period - - - 1,764 - 1,764
Share based
payment
transaction - - - 102 - 102
At 30 June 2011 5,318 19,572 (1,287) 15,281 (5,344) 33,540
Total
comprehensive
income for the
period - - - 2,454 - 2,454
Equity
dividends paid - - - (691) - (691)
Share based
payment
transactions - - - 46 - 46
At 1 January
2012 5,318 19,572 (1,287) 17,090 (5,344) 35,349
Total
comprehensive
income for the
period - - - 175 - 175
Equity
dividends paid - - - (1,362) (1,362)
Share based
payment
transactions - - - 18 - 18
At 30 June 2012 5,318 19,572 (1,287) 15,921 (5,344) 34,180
=============== =============== =============== =============== =============== ===============
London Capital Group Holdings plc
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the period ended 30 June 2012
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
to 30 to 30 to 31 December
June 2012 June 2011
2011
(restated)
GBP'000 GBP'000 GBP'000
Profit for the financial period 182 1,761 4,219
Adjustments for:
Depreciation of property, plant
and equipment 253 224 458
Amortisation of intangible assets 856 760 1,611
Equity settled share based payment 37 114 179
Charge for provision against Financial
Ombudsman Service ("FOS") claims 12 1,867 - -
Charge for onerous lease provision 12 - 213 213
Investment income (171) (104) (248)
Current tax charge (25) 872 1,864
Movement in deferred tax asset (11) 54 58
Operating cash flows before movements
in working capital 2,988 3,894 8,354
(Increase)/decrease in receivables (1,149) (5,419) 1,545
(Decrease) in payables (905) (1,687) (2,448)
Cash generated from operations/(utilised
in operations) 934 (3,212) 7,451
Taxation paid (176) - (744)
Net cash generated from operations/(utilised
in operations) 758 (3,212) 6,707
---------- ------------- ------------------
Investing activities
Investment income 171 104 248
Acquisitions of property, plant
and equipment (499) (2,222) (2,215)
Acquisitions of intangible assets (829) (954) (2,039)
Net cash used in investing activities (1,157) (3,072) (4,006)
---------- ------------- ------------------
Financing activities
Dividends paid (1,362) - (691)
Cash from issue of share capital - 7,515 7,515
Net cash (used in)/from financing
activities (1,362) 7,515 6,824
---------- ------------- ------------------
Net (decrease)/increase in cash
and cash equivalents (1,761) 1,231 9,525
Cash and cash equivalents at beginning
of period 37,429 27,904 27,904
Cash and cash equivalents at end
of period 35,668 29,315 37,429
========== ============= ==================
London Capital Group Holdings plc
Notes to the condensed consolidated financial statements
For the period ended 30 June 2012 (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 2012 were authorised for issue by the Board of
Directors on 22 August 2012. The information for the year ended 31
December 2011 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 2012 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 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.
Changes in accounting policies
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. These include changes implemented in the 31
December 2011 financial statements which were:
-- Client Funds: segregated client funds were previously held on
the Group's balance sheet, with an asset in cash and cash
equivalents and a corresponding liability to clients held within
trade and other payables. The segregated client funds have been
reclassified to better reflect the legal "trust status" of these
funds, which are held in accordance with the Customer Asset (CASS)
rules of the Financial Services Authority which restrict the
Group's ability to control the funds.
-- Trade Receivables due from brokers: Trade receivables due
from brokers represents the combination of open derivative
positions and cash in excess of required margin available to call
from brokers.
Previously these were disclosed as cash and cash equivalents,
however to better represent the nature of these balances these have
been reclassified in the balance sheet. These positions are held to
hedge client market exposures and hence are considered to be held
for trading and are accordingly accounted for at fair value through
profit and loss (FVTPL). These transactions are conducted under
terms that are usual and customary to standard margin trading
activities and are reported net in the Group balance sheet as the
Group has both the legal right and the intention to settle on a net
basis.
3. Segment information
Unaudited 6 months to 30 June 2012
Financial CFDs Institutional Institutional CFDs Financial Total
spread UK foreign brokerage Australia spread
betting, exchange betting,
UK Gibraltar
GBP'000 GBP'000 GBP'000 GBP'000 GBP000 GBP'000 GBP'000
Revenue
Segmental revenue 12,105 731 4,350 492 30 596 18,304
---------- ----------- ------------ -------------- ----------- ----------- ---------
Foreign exchange
gain on trading 110
Total group
revenue 18,414
Segmental operating
profit/(loss) 4,906 599 1,055 145 (327) (357) 6,021
---------- ----------- ------------ -------------- ----------- ----------- ---------
Unallocated
corporate expenses (6,046)
---------
Operating loss (25)
Finance income 171
Profit before
taxation 146
Taxation 36
---------
Profit for the
year 182
=========
Segmental assets 7,954 11 12,483 284 403 3,598 24,733
---------- ----------- ------------ -------------- ----------- ----------- ---------
Unallocated
corporate assets 33,176
---------
Consolidated
total assets 57,909
=========
Segmental liabilities (625) - (12,125) (201) (48) (2,706) (15,705)
---------- ----------- ------------ -------------- ----------- ----------- ---------
Unallocated
corporate
liabilities (8,024)
---------
Consolidated
total liabilities (23,729)
=========
Included within revenue is interest income earned on client
money held.
3. Segment information (continued)
Unaudited 6 months to 30 June 2011
Financial CFDs Institutional Institutional CFDs Financial Total
spread UK foreign brokerage Australia spread
betting, exchange betting,
UK Gibraltar
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 4,599 - 13,662 875 544 3,564 23,244
-------- ----------- ------------ -------------- ----------- ----------- --------
Unallocated
corporate assets 33,664
--------
Consolidated
total assets 56,908
========
Segmental liabilities 28 - 12,997 469 18 2,014 15,526
-------- ----------- ------------ -------------- ----------- ----------- --------
Unallocated
corporate liabilities 7,842
--------
Consolidated
total liabilities 23,368
========
Included within revenue is interest income earned on client
money held.
3. Segment information (continued)
Audited 12 months to 31 December 2011
Financial CFDs Institutional Institutional CFDs Financial Total
spread UK foreign brokerage Australia spread
betting, exchange betting,
UK Gibraltar
GBP'000 GBP'000 GBP'000 GBP'000 GBP000 GBP'000 GBP'000
Revenue
Segmental revenue 26,594 589 7,983 1,904 160 1,881 39,111
-------- ----------- ------------ -------------- ----------- ----------- --------
Foreign exchange
loss on trading (148)
Total group
revenue 38,963
Segmental operating
profit/(loss) 11,518 185 2,402 618 (436) (355) 13,932
-------- ----------- ------------ -------------- ----------- ----------- --------
Unallocated
corporate expenses (8,039)
--------
Operating profit 5,893
Finance income 248
Profit before
taxation 6,141
Taxation (1,922)
--------
Profit for the
year 4,219
========
Segmental assets 6,920 25 14,547 152 449 1,557 23,650
-------- ----------- ------------ -------------- ----------- ----------- --------
Unallocated
corporate assets 34,642
--------
Consolidated
total assets 58,292
========
Segmental liabilities 897 - 14,345 122 38 2,068 17,470
-------- ----------- ------------ -------------- ----------- ----------- --------
Unallocated
corporate liabilities 5,473
--------
Consolidated
total liabilities 22,943
========
Included within revenue is interest income earned on client
money held.
4. Adjusted profit before tax, adjusted operating profit and adjusted EBITDA
Unaudited 6 Months to 30 June Unaudited 6 Months to Audited Year to 31
2012 30 June 2011 December 2011
GBP'000
GBP'000 GBP'000
Reported profit/(loss) before tax 146 2,687 6,141
Add back - impairment of professional
client debt - - 530
Add back - onerous lease provision - 213 213
Add back - charge for provision against 1,867 - -
FOS claims
Add back - share-based payment charge 37 114 179
------------------------ ----------------------- ------------------------
Adjusted profit before tax 2,050 3,014 7,063
Tax as reported 36 (926) (1,922)
Tax effect of add backs (470) (88) (244)
------------------------ ----------------------- ------------------------
Adjusted profit after tax 1,616 2,000 4,897
======================== ======================= ========================
Reported operating (loss)/profit (25) 2,583 5,893
Add back - share based payment charge 37 114 179
------------------------ ----------------------- ------------------------
Adjusted operating profit 12 2,697 6,072
Add back - other amortisation and
depreciation 1,109 984 2,069
Add back - impairment of professional
client debt - - 530
Add back - charge for provision against 1,867 - -
FOS claims
Add back - onerous lease provision - 213 213
------------------------ ----------------------- ------------------------
Adjusted EBITDA 2,988 3,894 8,884
======================== ======================= ========================
5. Taxation
Income tax for the six month period is credited at 24.7% (six
months ended 30 June 2011: charged at 34.5%; year ended 31 December
2011: charged at 31.3%), 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 6 Months to 30 June Unaudited 6 Months to Audited Year to 31
2012 30 June 2011 December 2011
GBP'000 GBP'000 GBP'000
Basic EPS
Profit after tax 182 1,761 4,219
Weighted average no of shares 52,365,908 45,220,420 48,822,529
Weighted average basic EPS 0.35p 3.89p 8.64p
Diluted EPS
Profit after tax 182 1,761 4,219
Weighted average no of shares 52,382,155 45,222,966 48,835,061
Weighted average fully diluted EPS 0.35p 3.89p 8.64p
Unaudited 6 Months to 30 Unaudited Audited Year to 31
June 2012 6 Months to 30 June 2011 December 2011
GBP'000 GBP'000 GBP'000
Adjusted basic EPS
Adjusted profit after tax 1,616 2,000 4,897
Weighted average no of shares 52,365,908 45,220,420 48,835,061
Weighted average adjusted basic
EPS 3.09p 4.42p 10.03p
7. Dividends
Unaudited Unaudited Audited
6 months 6 months Year to
to to 31 December
30 June 30 June 2011
2012 2011
Amounts recognised as distributions
to equity holders
in the period:
GBP'000 GBP'000 GBP'000
Final dividend for the year ended 31
December 2011 of 2.6p (2010: nil) 1,362 - -
Interim dividend for the year ended
31 December 2012 of nil (2011: 1.3p) - - 691
1,362 - 691
--------- --------- ------------
Dividends declared in respect of the period:
Interim dividend for the year to 31
December 2012 of 1.3p
(2011:1.3p) 681 691 691
Final dividend for the year ended 31
December 2011 of 2.6p (2010: nil) - - 1,362
681 691 2,053
--------- --------- ------------
8. Trade and other receivables
Unaudited 30 June 2012 Unaudited Audited 31 December 2011
30 June 2011
(restated)
GBP'000 GBP'000
GBP'000
Trade receivables 665 2,944 283
Amounts due from brokers 4,123 7,679 3,509
Other receivables 796 784 814
Prepayments 691 618 520
6,275 12,025 5,126
----------------------- -------------- -------------------------
Trade receivables due from brokers represents the combination of
open derivative positions and cash in excess of required margin
available to call from brokers.
9. Cash and cash equivalents
Unaudited 30 June 2012 Unaudited Audited 31 December 2011
30 June 2011
(restated)
GBP'000 GBP'000
GBP'000
Gross cash and cash equivalents 67,315 68,835 73,761
Less: Segregated client funds (31,647) (39,700) (36,332)
----------------------- -------------- -------------------------
Own cash, Institutional foreign exchange client
funds and title transfer funds 35,668 29,135 37,429
Analysed as:
Cash at bank and in hand 26,551 22,214 29,394
Short-term deposits 9,117 6,921 8,035
----------------------- -------------- -------------------------
35,668 29,135 37,429
----------------------- -------------- -------------------------
Gross cash and cash equivalents include Group cash, all client
funds (segregated funds and funds under collateral title transfer)
and surplus cash available to call from brokers.
Segregated client funds include client funds held in segregated
accounts or on short term deposits (under 3 months) in line with
the FSA's Client Asset Rules ('CASS') and similar rules of other
regulators in jurisdictions where the Group operates.
Title transfer funds are held by the Group's subsidiary under
Title Transfer Collateral Arrangement ('TTCA') by which the client
agrees that full ownership of such monies is unconditionally
transferred to the Group. Funds under TTCA and institutional
foreign exchange client funds are included on the balance
sheet.
10. Trade payables and amounts due to clients
Unaudited 30 June 2012 Unaudited Audited 31 December 2011
30 June 2011
GBP'000 GBP'000
GBP'000
Trade payables 958 1,752 432
Amounts due to clients:
* Institutional FX clients 12,125 12,998 14,346
* Spread betting clients under TTCA 2,131 1,336 1,540
15,214 16,086 16,318
----------------------- -------------- -------------------------
11. Other payables
Unaudited 30 June 2012 Unaudited Audited 31 December 2011
30 June 2011
GBP'000 GBP'000
GBP'000
Profit share due to brokers 201 468 122
Other taxes and social security 243 777 179
Accruals 2,558 2,224 2,365
3,002 3,469 2,666
----------------------- -------------- -------------------------
12. Provisions and contingent liabilities
During the first half of 2009 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"). Whilst the
Group believes its actions did not directly cause any loss to the
clients, the assessment from the FOS determined that the Group
should repay the total losses incurred by the clients plus
interest.
The Group has recently begun pursuing a settlement strategy with
the complainants. Currently 25% of the outstanding complainants
have agreed to the proposed settlement.
As at the date of this report the Directors have made an
assessment of the provision and contingent liability based on an
analysis of the losses incurred in the fund attributable to clients
under the protection of the FOS, the latest FOS assessment, the
FOS's rules on compensation and ongoing progress of the settlement
offer made. Whilst the provision of GBP5.1m (2011: GBP3.2m)
represents a best estimate of the expected liability, there remains
significant uncertainty as to the eventual financial outcome
including the extent of the FOS's jurisdiction and the extent to
which the settlement offer is taken up.
With respect to those claimants that have rejected the
settlement offer, the Group continues to challenge the FOS
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.
A contingent liability of GBP1.4m (2011: GBP3.2m) has also been
disclosed in relation to these claims.
Unaudited 30 June 2012 Unaudited Audited 31 December 2011
30 June 2011
GBP'000 GBP'000
GBP'000
Provision against FOS claims 5,067 3,200 3,200
Onerous lease provision - 213 112
5,067 3,413 3,312
----------------------- --------------------------- -------------------------
Contingency against FOS Total
claims
GBP'000
GBP'000
At 1 January 2012 3,300 3,300
Movement from contingent
liability to provision (1,867) (1,867)
Utilisation of provision - -
At 30 June 2012 1,433 1,433
--------------------------- -------------------------
Provision against FOS claims Onerous lease provision Total
GBP'000 GBP'000
GBP'000
At 1 January 2012 3,200 112 3,312
Movement from contingent liability to provision 1,867 - 1,867
Utilisation of provision - (112) (112)
At 30 June 2012 5,067 - 5,067
----------------------------- ------------------------ ---------
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 2012, the Group has capital commitments for the
acquisition of software amounting to GBPnil (31 December 2011:
GBP0.8m).
15. Events after balance sheet date
After the balance sheet date a settlement offer was made to
clients who complained to the Financial Ombudsman Service ("FOS")
about commission rebating errors whilst preparing the customer
statements of a managed spot FX fund. Refer to note 12 for
details.
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 2012 which comprises the income statement,
the balance sheet, the statement of changes in equity, the 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 it 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 complaints to
Financial Ombudsman Service
In forming our opinion on the financial statements we have
considered the adequacy of the disclosures made in Note 12
concerning certain complaints before the Financial Ombudsman
Service ("FOS"). As explained in Note 12 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 2012 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 Auditor
London
22 August 2012
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BKBDQABKKNFB
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