TIDMLCG
RNS Number : 2632M
London Capital Group Holdings PLC
22 August 2013
22 August 2013
LONDON CAPITAL GROUP HOLDINGS PLC
("LCG", "LCGH", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013
London Capital Group Holdings plc today announces interim
results for the six months ended 30 June 2013.
Operating Summary
-- Return to profitability following challenging conditions of
H2'12
-- Adjusted profit before tax* up 59% to GBP3.2 million (H1'12:
GBP2.0 million)
-- Profit before tax from continuing operations down 61% to
GBP0.3 million (H1'12: GBP0.8million)
-- Revenue from continuing operations down 9% to GBP16.3 million
(H1'12: GBP17.8 million)
-- Appointment of Kevin Ashby as CEO
-- Disposal of Australian subsidiary completed
-- First migration of clients to new trading platform
successfully completed
-- Additional exceptional charge of GBP1.1m recognised in
relation to provision for Financial Ombudsman Service complaints to
reflect expected liability
Commenting on the results, Kevin Ashby, Chief Executive,
said:
"Our underlying business is robust and despite the lack of
marketing investment, we continue to attract new clients. However,
in order to drive longer-term growth, the Company needs to increase
investment in marketing, sales and product development. We have the
resources and the intellectual capital required to execute this
mandate and I believe this will provide the platform for superior
performance."
Unaudited Unaudited
Six months ended Six months ended
30 June 2013 30 June 2012
GBP'000 GBP'000
Total revenue from continuing and discontinued operations 17,140 18,414
Revenue from continuing operations 16,258 17,788
Adjusted profit before tax* from continuing and discontinued operations 3,207 2,013
Adjusted profit before tax from continuing operations 3,072 2,697
Adjusted profit/(loss) before tax from discontinued operations 135 (684)
Statutory profit before tax from continuing operations 325 830
Basic earnings per share from continuing operations 0.36 1.65
Diluted earnings per share from continuing operations 0.36 1.65
* Adjusted profit before tax is stated before recognising
previously announced costs associated with the current change in IT
platform of GBP0.9m, non-recurring restructuring costs of GBP0.7m,
and provisions pertaining to the Financial Ombudsman Service
complaints.
For further information, please www.londoncapitalgroup.com
contact:
London Capital Group Holdings
plc 020 7456 7000
Kevin Ashby, Chief Executive
Officer
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" or "London
Capital Group" or "the Company" or "the Group") is a financial
services company offering online trading services.
London Capital Group Limited (LCG Ltd), a wholly owned trading
subsidiary of LCGH, is authorised and regulated by the Financial
Conduct Authority. Its core activity is the provision of spread
betting and CFD products on the financial markets to retail clients
under the trading names Capital Spreads, 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. Its white label partners include TD Direct Investing,
TradeFair, Bwin.party, and Saxo Bank.
ProSpreadsLimited, a wholly owned trading subsidiary of LCGH, 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.
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
I am pleased to announce that the Group returned to
profitability in the first half of 2013 after a difficult second
half in 2012. The first half of 2013 was a period of significant
internal change for the Group. We announced at the beginning of the
year that we planned to reduce our fixed cost base by 15% and I am
pleased to report that we are on track to make the planned savings
which will be realised in 2014. However we expect that these
savings will be partially offset by reinvestment in sales,
marketing and product development over the forthcoming 12 months. A
significant portion of the savings will be achieved through
disposal of our overseas subsidiaries, the last of which is due to
complete, subject to regulatory approval, in the next few
weeks.
As announced in July, Mark Slade resigned as CEO for personal
reasons and was replaced by Kevin Ashby. I would like to welcome
Kevin to his new role. Kevin brings considerable experience and
expertise from across the financial services industry and has made
a significant positive impact since he joined the Company's
management team earlier this year.
Our Group Finance Director, Siobhan Moynihan, has decided after
three years to seek a new challenge and will be leaving us towards
the end of the year. I would like to thank her for her dedication
and hard work over the past few years and we will appoint her
successor in due course.
We have continued to challenge the complaints to the Financial
Ombudsman Service ("FOS"). Although we are awaiting the final
judgment, provisional correspondence regarding the total
compensation that will be payable to complainants means we now
believe the final provision required will be in the region of
GBP4.7m. This has led to an additional exceptional charge of
GBP1.1m being recognised. As previously disclosed the Group
received a claim against its subsidiary, London Capital Group
Limited, in relation to the termination of a fee sharing agreement
with Integrity Financial Solutions Limited, the company that
introduced clients to the fund which resulted in the complaints to
the FOS. On the basis of legal and expert advice received, the
Group views the claim as without merit. The current court timetable
means the matter is expected to be resolved during the second half
of the year.
Overall the Group continues to trade reasonably well and is
appropriately capitalised. The Company's strategy continues to be a
strong focus on improving its core businesses, including developing
its successful white label programme and broadening its customer
base.
Giles Vardey
Chairman
Chief Executive's Statement
It gives me great pleasure to deliver my first statement as
Chief Executive of the Company. I would like to start by expanding
upon the Chairman's statement and providing further insight into
the Company's financial position and business activities. My
statement will then summarise the status of the current business,
including an overview of the issues we are addressing and the
Group's longer-term opportunities.
Financial Results
Following the difficult trading conditions experienced in the
second half of last year, a change in market direction and
increased volatility led to an increase in client trading activity
in the first half of the year. Volatility generally offers greater
trading opportunities for our clients and therefore improved
revenue and profitability for the Group. Total revenue for the
Group amounted to GBP17.1m (H1'12: GBP18.4m) of which GBP16.3m was
derived from continuing operations, an increase of 70% over H2'12,
a fall of 9% on H1'12. Adjusted profit before tax from continuing
operations was GBP3.1m, compared to a loss of GBP1.7m for H2'12 and
a profit of GBP2.7m for H1'12. Adjusted profit before tax is stated
before previously announced costs associated with the current
change in IT platform of GBP0.9m, non-recurring restructuring costs
of GBP0.7m associated with the cost reduction plan, and an
exceptional charge of GBP1.1m to provide for FOS claims.
The profit generated from discontinuing operations, which
comprised the Australian and Gibraltar based subsidiaries, was
GBP0.1m compared to a loss of GBP0.7m for the same period last
year. In May, the Australian subsidiary's activities were wound
down and the entity sold. Our Gibraltar based subsidiary
ProSpreads, is due to be sold in the next few weeks.
Adjusted administrative costs from continuing operations were in
line with the previous period. While a number of cost reductions
were made earlier this year, the impact will only start to be fully
realised in 2014.
The Group continues to incur a significant level of legal costs,
mainly with respect to the ongoing FOS claims and associated
litigation. In anticipation of a final adverse judgment from the
FOS, we are increasing our provision by GBP1.1m to GBP4.7m and
increasing our contingent liability by GBP0.4m to GBP1.4m.
UK Financial Spread betting and CFDs
Revenue derived from the UK Financial Spread betting and CFD
business was GBP13.2m (H1'12 GBP12.8m). The division has maintained
underlying trading statistics with average trades per day falling
slightly to 25,900 (2012: 26,400) and Average Revenue Per User
("ARPU") up 15%. Gross margin improved slightly, increasing from
71% in 2012 to 73% in H1'13, primarily as a result of lower
transaction costs.
In early August we successfully completed the first migration of
clients to our new trading platform, and are on track to complete
the migration in early 2014 as originally projected. We are still
incurring dual running costs and accelerated depreciation for the
former platform, which amounted to GBP0.9m in the period. These
additional costs will continue throughout the rest of the year.
FX and Broking
The institutional foreign exchange business continues to suffer
from falling volumes and commission rates. Revenue fell by 52% and
contribution fell by 47%. The institutional broking division
experienced better volumes, compared to the same period last year,
resulting in divisional revenue of GBP1.0m compared to GBP0.5m in
2012.
Outlook
Private Client Business
Although the summer months have reflected the normal seasonal
trends, I remain positive about the longer-term prospects for the
Group.
The level of trading from existing clients remains encouraging,
but a material reduction in the resources dedicated to marketing
and private client sales activities in H1'13 has led to a material
drop in the number of new clients acquired during the period. New
client acquisition fell by 22% to 4,500 in H1'13 compared to 5,756
in H1'12. This fall demonstrates the need to reinvest in a more
focussed and efficient approach to our private client marketing and
sales activity, which is already underway, and I expect to see an
improvement in the fourth quarter.
Institutional and White Label Business Development
Late 2012 and early 2013 saw the Company also reduce the level
of resources dedicated to growing and developing its institutional
and white label partnership business. The process of reversing this
position is already underway, as is a plan to rejuvenate our
institutional FX business. However, due to the long sales cycles
associated with this business, I do not expect to see a material
improvement in sales until the second quarter of 2014.
Product Development
Innovation is the key to developing an online business. However,
the focus on upgrading our trading platform has resulted in an
insufficient focus on enhancing our clients' trading experience.
Although our various trading platforms are not materially behind
those of our competitors, I do not believe we are offering the
level of differentiation required to deliver material growth. We
have already initiated a number of projects that will not only
redress the situation, but also position LCG as an innovator in the
sector.
Summary
LCG's underlying business is solid and despite the lack of
marketing investment, the LCG brand continues to attract new
clients. We have already restructured and improved the focus of the
business, however, in order to drive longer-term growth the Company
needs to increase investment in focussed marketing, sales and
product development. LCG has the resources and the intellectual
capital required to execute this mandate and this will provide a
platform for superior performance in the future.
Kevin Ashby
Chief Executive
London Capital Group Holdings plc
CONDENSED CONSOLIDATED INCOME STATEMENT
For the period ended 30 June 2013
Unaudited Unaudited Audited
6 Months 6 Months Year
to 30 to 30 to 31
June June December
2013 2012 2012
Notes GBP'000 GBP'000 GBP'000
Revenue 3 16,258 17,788 27,374
Cost of sales (4,511) (6,403) (9,521)
---------- ---------- ----------
Gross profit 11,747 11,385 17,853
Administrative expenses
(before certain items)
Certain items: (8,804) (8,836) (17,097)
Charge for provision against
FOS claims 12 (1,140) (1,867) (1,542)
Impairment of goodwill - - (395)
Restructuring costs (692) - -
Costs related to change
in IT platform including (915) - -
accelerated amortisation
-------------------------------- ------ ---------- ---------- ----------
Total administrative expenses (11,551) (10,703) (19,034)
Operating profit/(loss) 196 682 (1,181)
Investment revenue 129 148 269
Profit/(loss) before taxation 325 830 (912)
Tax (expense)/credit (137) 36 340
Profit/(loss) for the period
from continuing operations 188 866 (572)
Discontinued operations
Profit/(loss) for the period
from discontinued operations 6 135 (684) (1,174)
Profit/(loss) for the period 323 182 (1,746)
Earnings per share
From continuing operations:
Pence Pence Pence
Basic 5 0.36 1.65 (1.09)
Diluted 5 0.36 1.65 (1.09)
Adjusted basic 5 4.38 4.34 1.72
From continuing and discontinuing
operations:
Pence Pence Pence
Basic 5 0.62 0.35 (3.33)
Diluted 5 0.62 0.35 (3.33)
Adjusted basic 5 4.64 3.04 (0.52)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 June 2013
Unaudited Unaudited Audited
6 Months 6 Months Year
to 30 to 30 to 31
June June December
2013 2012 2012
GBP'000 GBP'000 GBP'000
Profit/(loss) for the
period 323 182 (1,746)
Exchange differences in
translation of foreign
operations - (7) (59)
---------- ---------- ----------
Total comprehensive income/(loss)
for the period 323 175 (1,805)
---------- ---------- ----------
Total comprehensive income/(loss)
for the period attributable
to the owners of the parent 323 175 (1,805)
========== ========== ==========
London Capital Group Holdings plc
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2013
Unaudited Unaudited Audited
30 June 30 June 31 December
2013 2012 2012
Notes GBP'000 GBP'000 GBP'000
NON-CURRENT ASSETS
Intangible assets 11,615 13,146 12,495
Property, plant and
equipment 2,075 2,599 2,327
Available-for-sale investment 100 100 100
Deferred tax asset 24 121 474
13,814 15,966 15,396
------------ ------------ --------------
CURRENT ASSETS
Trade and other receivables 8 4,540 6,275 9,246
Cash and cash equivalents 9 29,297 35,668 22,194
Assets classified as
held for sale 6 5,630 - -
39,467 41,943 31,440
------------ ------------ --------------
TOTAL ASSETS 53,281 57,909 46,836
------------ ------------ --------------
CURRENT LIABILITIES
Trade and other payables 10,11 12,538 18,216 11,539
Current tax liabilities - 446 211
Provisions 12 4,725 5,067 3,585
Liabilities directly
associated with assets
classified as held for
sale 6 4,140 - -
21,403 23,729 15,335
------------ ------------ --------------
TOTAL LIABILITIES 21,403 23,729 15,335
NET ASSETS 31,878 34,180 31,501
============ ============ ==============
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 13,619 15,921 13,242
Other reserves (5,344) (5,344) (5,344)
TOTAL EQUITY ATTRIBUTABLE
TO EQUITY HOLDERS OF
THE PARENT 31,878 34,180 31,501
============ ============ ==============
London Capital Group Holdings plc
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2013
Share Own shares
Share capital premium held Retained Other Total equity
account profits reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
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
Total
comprehensive
loss for the
period - - - (1,980) - (1,980)
Equity dividends
paid - - - (670) - (670)
Share based
payment
transactions - - - (29) - (29)
At 1 January 2013 5,318 19,572 (1,287) 13,242 (5,344) 31,501
Total
comprehensive
income for the
period - - - 323 - 323
Share based
payment
transactions - - - 30 - 30
Reclassification
of foreign
currency
differences on
disposal of
subsidiary - - - 24 - 24
At 30 June 2013 5,318 19,572 (1,287) 13,619 (5,344) 31,878
=============== ============== =============== ============== =============== ===============
London Capital Group Holdings plc
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the period ended 30 June 2013
Unaudited Unaudited Audited
6 Months 6 Months Year
to 30 to 30 to 31
June June December
2013 2012 2012
GBP'000 GBP'000 GBP'000
Profit for the financial
period 323 182 (1,746)
Adjustments for:
Depreciation of property,
plant and equipment 256 253 495
Amortisation of intangible
assets 1,204 856 1,684
Write off of goodwill - - 395
Share based payments 30 37 (41)
Gain on disposal of discontinued
operation (42) - -
Gain on disposal of property,
plant and equipment (12) - -
Provisions 12 1,140 1,867 1,542
Investment income (129) (171) (280)
Current tax charge (313) (25) 60
Movement in deferred tax
asset 450 (11) (364)
Operating cash flows before
movements in working capital 2,907 2,988 1,745
Decrease/(increase) in receivables 2,430 (1,149) (4,120)
Increase/(decrease) in payables 5,166 (905) (8,745)
Cash generated from operations/(utilised
in operations) 10,503 934 (11,120)
Taxation paid - (176) (494)
Net cash generated from
operations/(utilised in
operations) 10,503 758 (11,614)
------- ------------ -----------
Investing activities
Investment income 129 171 280
Disposals of non-current
assets and of non-current
assets held for sale 13 239 - -
Proceeds on the disposal
of property, plant and equipment 12 - -
Acquisitions of property,
plant and equipment (28) (499) (468)
Acquisitions of intangible
assets (407) (829) (1,401)
Net cash used in investing
activities (55) (1,157) (1,589)
------- ------------ -----------
Financing activities
Dividends paid - (1,362) (2,032)
Net cash used in financing
activities - (1,362) (2,032)
------- ------------ -----------
Net increase/(decrease)
in cash and cash equivalents 10,448 (1,761) (15,235)
Cash and cash equivalents
at beginning of period 22,194 37,429 37,429
Cash and cash equivalents
at end of period 32,642 35,668 22,194
======= ============ ===========
London Capital Group Holdings plc
Notes to the condensed consolidated financial statements
For the period ended 30 June 2013 (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 2013 were authorised for issue by the Board of
Directors on 22 August 2013. The information for the year ended 31
December 2012 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 2013 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 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 2013
Continuing Operations Discontinued
Operations
Financial CFDs Institutional Institutional Total CFDs Financial Total Total
spread UK foreign brokerage Australia spread Group
betting, exchange betting,
UK Gibraltar
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP000 GBP'000 GBP'000 GBP'000
Revenue
Segmental
revenue 12,711 448 2,089 1,010 16,258 169 713 882 17,140
---------- -------- -------------- -------------- --------- ---------- ----------- -------- ---------
Total group
revenue 17,140
Segmental
operating
profit 5,168 318 588 231 6,305 47 79 126 6,431
---------- -------- -------------- -------------- --------- ---------- ----------- -------- ---------
Unallocated
corporate
expenses (6,067)
---------
Operating
profit 364
Finance
income 129
---------
Profit
before
taxation 493
Taxation (170)
---------
Profit
for the
period 323
=========
Segmental
assets 6,642 1 13,952 473 21,068 - 5,630 5,630 26,698
---------- -------- -------------- -------------- --------- ---------- ----------- -------- ---------
Unallocated
corporate
assets 26,583
---------
Consolidated
total assets 53,281
Segmental
liabilities (1,356) - (9,440) (459) (11,255) - (4,140) (4,140) (15,395)
---------- -------- -------------- -------------- --------- ---------- ----------- -------- ---------
Unallocated
corporate
liabilities (6,008)
---------
Consolidated
total
liabilities (21,403)
=========
Included within revenue is interest income earned on client
money held.
3. Segment information (continued)
Unaudited 6 months to 30 June 2012
Continuing Operations Discontinued
Operations
Financial CFDs Institutional Institutional Total CFDs Financial Total Total
spread UK foreign brokerage Australia spread Group
betting, exchange betting,
UK Gibraltar
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP000 GBP'000 GBP'000 GBP'000
Revenue
Segmental
revenue 12,215 731 4,350 492 17,788 30 596 626 18,414
---------- -------- -------------- -------------- --------- ---------- ----------- -------- ---------
Total group
revenue 18,414
Segmental
operating
profit/(loss) 4,906 599 1,055 145 6,705 (327) (357) (684) 6,021
---------- -------- -------------- -------------- --------- ---------- ----------- -------- ---------
Unallocated
corporate
expenses (6,046)
---------
Operating
loss (25)
Finance
income 171
---------
Profit
before
taxation 146
Taxation 36
---------
Profit
for the
period 182
=========
Segmental
assets 7,954 11 12,483 284 20,732 403 3,598 4,001 24,733
---------- -------- -------------- -------------- --------- ---------- ----------- -------- ---------
Unallocated
corporate
assets 33,176
---------
Consolidated
total assets 57,909
=========
Segmental
liabilities (625) - (12,125) (201) (12,951) (48) (2,706) (2,754) (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)
Audited 12 months to 31 December 2012
Continuing Operations Discontinued
Operations
Financial CFDs Institutional Institutional Total CFDs Financial Total Total
spread UK foreign brokerage Australia spread Group
betting, exchange betting,
UK Gibraltar
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP000 GBP'000 GBP'000 GBP'000
Revenue
Segmental
revenue 19,637 891 6,101 745 27,374 137 1,075 1,212 28,586
---------- -------- -------------- -------------- --------- ---------- ----------- -------- ---------
Total group
revenue 28,586
Segmental
operating
profit/(loss) 6,617 737 1,647 129 9,130 (568) (570) (1,138) 7,992
---------- -------- -------------- -------------- --------- ---------- ----------- -------- ---------
Unallocated
corporate
expenses (10,322)
---------
Operating
loss (2,330)
Finance
income 280
---------
Loss before
taxation (2,050)
Taxation 304
---------
Loss for
the year (1,746)
=========
Segmental
assets 10,647 30 7,602 254 18,533 449 1,771 2,220 20,753
---------- -------- -------------- -------------- --------- ---------- ----------- -------- ---------
Unallocated
corporate
assets 26,083
---------
Consolidated
total assets 46,836
=========
Segmental
liabilities (979) - (11,321) (1) (12,301) (14) (2,170) (2,184) (14,485)
---------- -------- -------------- -------------- --------- ---------- ----------- -------- ---------
Unallocated
corporate
liabilities (850)
---------
Consolidated
total
liabilities (15,335)
=========
Included within revenue is interest income earned on client
money held.
4. Adjusted profit before tax and adjusted EBITDA from continuing operations
Unaudited Unaudited Audited Year to 31 December 2012
6 Months to 30 June 6 Months to 30 June
2013 2012 GBP'000
GBP'000 GBP'000
Reported profit/(loss) before tax from continuing
operations 325 830 (912)
Add back - charge for provision against FOS claims 1,140 1,867 1,542
Add back - impairment of ProSpreads goodwill - - 395
Add back - restructuring costs 692 - -
Add back - costs related to change in IT platform 915 - -
Adjusted profit before tax from continuing
operations 3,072 2,697 1,025
Tax as reported (137) 36 340
Tax effect of add backs (639) (461) (464)
------ --------------------- ---------------------------------
Adjusted profit after tax from continuing
operations 2,296 2,272 901
====== ===================== =================================
Reported profit/(loss) before tax from continuing
operations 325 830 (912)
Add back - amortisation and depreciation from
continuing operations 1,435 1,081 2,125
Add back - charge for provision against FOS claims 1,140 1,867 1,542
Add back - impairment of ProSpreads goodwill - - 395
Add back - restructuring costs 692 - -
Add back - costs related to change in IT platform 915 - -
Adjusted EBITDA from continuing operations 4,507 3,778 3,150
====== ===================== =================================
5. 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 year, after deducting
any own shares held. Fully diluted earnings per share is calculated
by dividing the earnings attributable to ordinary shareholders by
the total of the weighted average number of shares in issue during
the year and the dilutive potential ordinary shares relating to
share options.
From continuing and discontinued operations
The calculation of the basic and diluted earnings per share is
based on the following data:
Unaudited Unaudited Audited Year to 31 December 2012
6 Months to 6 Months to
30 June 30 June GBP'000
2013 2012
GBP'000 GBP'000
Earnings
Earnings for the purposes of basic earnings
per share being net profit attributable to
the
owners of the company 323 182 (1,746)
-------------- ------------- ---------------------------------
Number of shares
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 52,365,908 52,365,908 52,365,908
Effect of dilutive potential ordinary
shares:
Share options 150,920 16,247 -
-------------- ------------- ---------------------------------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 52,516,828 52,382,155 52,365,908
-------------- ------------- ---------------------------------
From continuing operations
Net profit attributable to equity holders of
the parent 323 182 (1,746)
Adjustments to exclude profit for the period
from discontinued operations (135) 684 1,174
Earnings from continuing operations for the
purpose of basic earnings per share
excluding
discontinued operations 188 866 (572)
-------------- ------------- ---------------------------------
Earnings from continuing operations for the
purpose of diluted earnings per share
excluding
discontinued operations 188 866 (572)
-------------- ------------- ---------------------------------
The denominators used are the same as those detailed above for
both basic and diluted earnings per share from continuing and
discontinued operations
5. Earnings per share (continued)
Earnings per share
Unaudited Unaudited Audited
6 Months to 6 Months to Year to 31 December 2012
30 June 30 June
2013 2012
Basic earnings/(loss) per share from continuing operations 0.36p 1.65p (1.09p)
Basic earnings/(loss) per share from discontinued
operations 0.26p (1.30p) (2.24p)
------------- ------------- --------------------------
Basic earnings/(loss) per share 0.62p 0.35p (3.33p)
------------- ------------- --------------------------
Diluted earnings per share
Unaudited Unaudited Audited
6 Months to 6 Months to Year to 31 December 2012
30 June 30 June
2013 2012
Diluted earnings/(loss) per share from continuing
operations 0.36p 1.65p (1.09p)
Diluted earnings/(loss) per share from discontinued
operations 0.26p (1.30p) (2.24p)
------------- ------------- --------------------------
0.62p 0.35p (3.33p)
------------- ------------- --------------------------
Adjusted earnings per share from continuing operations
Unaudited Unaudited Audited
6 Months to 6 Months to Year to 31 December 2012
30 June 30 June
2013 2012
Adjusted basic earnings per share from continuing
operations 4.38p 4.34p 1.72p
Adjusted basic earnings/(loss) per share from continuing
and discontinued operations 4.64p 3.04p (0.52p)
6. Discontinued Operations
The Group has classified both London Capital Group Pty Limited,
the Group's Australian subsidiary, and ProSpreads, the Group's
Gibraltarian subsidiary, as discontinued operations at the balance
sheet date.
The results of the discontinued operations, which have been
included in the consolidated income statement, are as follows:
Unaudited Unaudited Audited Year to 31 December 2012
6 Months to 6 Months to
30 June 30 June GBP'000
2013 2012
GBP'000 GBP'000
Revenue 882 626 1,212
Expenses (756) (1,310) (2,350)
------ ------------- ---------------------------------
Profit before tax 126 (684) (1,138)
Attributable tax expense (33) - (36)
Profit on disposal of discontinued operations 42 - -
------ ------------- ---------------------------------
Net profit attributable to discontinued operations
(attributable to the owners of the Company) 135 (684) (1,174)
------ ------------- ---------------------------------
During the period the discontinued operations contributed the
following cash flows:
Unaudited Unaudited Audited Year to 31 December 2012
6 Months to 6 Months to
30 June 30 June GBP'000
2013 2012
GBP'000 GBP'000
Cash flows from discontinued operations:
Operating cash flows 1,932 (19) (953)
Investing cash flows 23 (34) (31)
Financing cash flows - - -
------ ------------- ---------------------------------
Total cash flows from discontinued operations 1,955 (53) (984)
6. Discontinued Operations (continued)
London Capital Group Pty Limited
On 3 May 2013 the Group entered into a sale agreement to dispose
of London Capital Group Pty Limited, the Group's Australian entity.
The trading operations were wound down and the subsequent disposal
was effected in order for the Group to concentrate on core UK
activities and minimise the losses from foreign subsidiaries. The
disposal was completed on 16 May 2013, on which date control of
London Capital Group Pty Limited passed to the acquirer.
The results of the discontinued operations for London Capital
Group Pty Limited, which have been included in the consolidated
income statement, were as follows:
Unaudited Unaudited Audited Year to 31 December 2012
6 Months to 6 Months to
30 June 30 June GBP'000
2013 2012
GBP'000 GBP'000
Revenue 169 30 137
Expenses (122) (357) (705)
------ ------------- ---------------------------------
Profit before tax 47 (327) (568)
Attributable tax expense (33) - (36)
Profit on disposal of discontinued operations 42 - -
------ ------------- ---------------------------------
Net profit attributable to discontinued operations
(attributable to the owners of the Company) 56 (327) (604)
------ ------------- ---------------------------------
A profit of GBP42,000 arose on the disposal of London Capital
Group Pty Limited, being the proceeds of the disposal less the
carrying amount of the subsidiary's net assets and foreign exchange
differences transferred to the income statement on disposal.
6. Discontinued Operations (continued)
ProSpreads Limited
In February the board resolved to dispose of the Group's
Gibraltarian operations and negotiations with several interested
parties have subsequently taken place. This operation, which is
expected to be sold within 12 months, has been classified as a
disposal group held for sale and presented separately in the
balance sheet. The proceeds of disposal are expected to exceed the
book value of the assets and accordingly no impairment losses have
been recognised on the classification of these operations as held
for sale.
The results of the discontinued operations for ProSpreads
Limited, which have been included in the consolidated income
statement, were as follows:
Unaudited Unaudited Audited Year to 31 December 2012
6 Months to 6 Months to
30 June 30 June GBP'000
2013 2012
GBP'000 GBP'000
Revenue 713 596 1,075
Expenses (634) (953) (1,645)
------ ------------- ---------------------------------
Profit before tax 79 (357) (570)
------ ------------- ---------------------------------
Net profit attributable to discontinued operations
(attributable to the owners of the Company) 79 (357) (570)
------ ------------- ---------------------------------
The major classes of assets and liabilities comprising the
operations of ProSpreads Limited, the subsidiary classified as held
for sale are as follows:
Unaudited
30 June 2013
GBP'000
Intangible assets 85
Property, plant and equipment 26
Trade and other receivables 110
Amounts due from brokers 2,064
Cash and bank balances 3,345
Total assets classified as held for sale 5,630
--------------
Trade and other payables 532
Amounts due to clients 3,521
Accruals 87
Total liabilities associated with assets classified as held for sale 4,140
------
Net assets of disposal group 1,490
======
7. Dividends
Unaudited Unaudited Audited
6 Months 6 Months Year to
to to 31 December
30 June 30 June 2012
2013 2012
Amounts recognised as distributions
to equity holders
in the period:
GBP'000 GBP'000 GBP'000
Final dividend for the year
ended 31 December 2012 of nil
(2011: 2.6p) - 1,351 1,351
Interim dividend for the year
ended 31 December 2013 of nil
(2012: 1.3p) - - 681
- 1,351 2,032
------------------------------------------------ --------- ------------
Dividends declared in respect of the period:
Interim dividend for the year
to 31 December 2013 of nil
(2012: 1.3p) - 681 681
----------- --------- ------------
8. Trade and other receivables
Unaudited Unaudited Audited
30 June 30 June 31 December 2012
2013 2012
GBP'000
GBP'000 GBP'000
Trade receivables 524 665 295
Amounts due from brokers 2,481 4,123 7,425
Other receivables 491 796 658
Current tax receivable 102 - -
Prepayments 942 691 868
4,540 6,275 9,246
---------- ---------- ------------------
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 Unaudited Audited
30 June 30 June 31 December 2012
2013 2012
GBP'000
GBP'000 GBP'000
Gross cash and cash equivalents 56,980 67,315 55,942
Less: Segregated client funds (27,683) (31,647) (33,748)
---------- ---------- ------------------
Own cash, Institutional foreign exchange client funds and title transfer
funds 29,297 35,668 22,194
Analysed as:
Cash at bank and in hand 23,297 26,551 20,119
Short-term deposits 6,000 9,117 2,075
---------- ---------- ------------------
29,297 35,668 22,194
---------- ---------- ------------------
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 FCA'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 Unaudited Audited
30 June 30 June 31 December 2012
2013 2012
GBP'000
GBP'000 GBP'000
Trade payables 556 958 659
Amounts due to clients:
* Institutional FX clients 9,297 12,125 7,624
* Spread betting clients under TTCA - 2,131 1,617
9,853 15,214 9,900
---------- ---------- ------------------
11. Other payables
Unaudited Unaudited Audited
30 June 30 June 31 December 2012
2013 2012
GBP'000
GBP'000 GBP'000
Commission payments due 483 201 128
Other taxes and social security 201 243 181
Accruals 2,001 2,558 1,330
2,685 3,002 1,639
---------- ---------- ------------------
12. Provisions and contingent liabilities
Unaudited Unaudited Audited
30 June 30 June 31 December 2012
2013 2012
GBP'000
GBP'000 GBP'000
Provision against FOS claims 4,725 5,067 3,585
========== ========== ==================
Provision against FOS claims Contingency against FOS claims
GBP'000 GBP'000
At 1 January 2013 3,585 1,045
Additional provision 1,140 397
4,725 1,442
----------------------------- -------------------------------
During the first half of 2009 the Group made commission rebating
errors whilst preparing the customer statements of a managed 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. Whilst the final judgement has not been received,
provisional correspondence regarding the total compensation that
will be payable to complainants due to additional interest and
other charges has resulted in an increase to the provision and
contingent liability during the period.
As at the date of this report the Directors have made an
assessment of the provision and contingent liability based on all
available of information including an analysis of the losses
incurred in the fund attributable to clients under the protection
of the FOS, the FOS's rules on compensation and the portfolio of
complainants. Whilst the provision of GBP4.7m (2012: GBP3.6m)
represents a best estimate of the expected liability, there remains
significant uncertainty as to the eventual financial outcome and
timing of any payments to clients.
The Group has received a claim served against its subsidiary
London Capital Group Limited in relation to the termination of a
fee sharing agreement with Integrity Financial Solutions Limited,
the Company that introduced clients to the managed FX fund referred
to above.
On the basis of legal and expert advice received, the Group
views the claim as without merit. No provision has therefore been
made in relation to the matter. Whilst there are a range of
possible outcomes, the current court timetable means the matter is
expected to be resolved during the second half of the year.
13. Disposal of subsidiary
As referred to in note 6, on 16 May 2013 the Group disposed of
its interest in London Capital Group Pty Limited.
The net assets of London Capital Group Pty Limited at the date
of disposal were as follows:
Unaudited
30 June 2013
GBP'000
Other receivables 196
Prepayments 4
Cash 178
Corporation tax (27)
Foreign exchange differences transferred to the income statement on disposal 24
Gain on disposal 42
--------------
Total consideration 417
--------------
Net cash inflow arising on disposal:
Consideration received in cash and cash equivalents 417
Less: Cash and cash equivalents disposed of (178)
------
239
------
The total consideration was paid in cash
There were no disposals of subsidiaries made in 2012.
The impact of London Capital Group Pty Limited on the Group's
results in the current period are shown in Note 6.
14. Related party transactions
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note:
Purchase of goods
Unaudited Unaudited Audited Year to 31 December 2012
6 Months to 6 Months to
30 June 30 June GBP'000
2013 2012
GBP'000 GBP'000
Sensatus UK 73 84 162
The following amounts were outstanding at the balance sheet
date:
Amounts owed by related parties
Unaudited Unaudited Audited
30 June 30 June 31 December 2012
2013 2012
GBP'000
GBP'000 GBP'000
Sensatus UK 62 63 63
The Group holds a GBP100,000 investment in Sensatus UK Limited,
the provider of London Capital Group Limited's on-line charts.
Simon Denham, who was a Director of the Company during the period,
is currently a Director of Sensatus UK Limited. All purchases were
made at the market price.
The amounts outstanding are unsecured and will be settled in
cash. No guarantees have been given or received. No provisions have
been made for doubtful debts in respect of the amounts owed to
related parties. The outstanding loan balance bears interest at the
Barclays Bank Base Rate + 9% per annum.
15. Events after balance sheet date
As referred to in the Chairman's statement following the period
end Siobhan Moynihan, Group Finance Director, notified the Board of
her intention to resign.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUCGRUPWUAP
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