London Capital Group Holdings Regulatory News (LCG)

LONDON CAPITAL GROUP HOLDINGS PLC

("LCG", the "Company" or the "Group")

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2011

Financial Highlights

§ Revenue increased 13% to £39.0m (2010: £34.5m)

§ Adjusted profit before tax* increased 9% to £7.1m (2010: £6.5m)

§ Volatility in H2 led to record trade volumes and increased revenue

§ Losses incurred in relation to our Australian CFD business amounted to £0.4m (2010: £0.3m)

§ Included within adjusted profit before tax* are exceptional legal costs incurred in relation to the professional client debt and FOS claims of £0.7m (2010: £0.2m), and non-recurring costs in relation to the office move of £0.2m (2010: £nil). Excluding the effect of these items adjusted profit before tax* would have been £8.0m (2010: £6.7m)

§ Statutory profit before tax of £6.1m (2010: loss of £56k)

§ Net cash and short term receivables of £25.1m at year end (2010: £13.9m)

§ Final dividend of 2.6p per share (2010: £nil), bringing total dividend for the year to 3.9p (2010: 1p)

Operational Highlights

§ Strong UK financial spread betting ("FSB") performance

- Average revenue per user ("ARPU") increased 7% to £1,370 (2010: £1,279) for the year

- FSB average trades per day increased 11% to 33,042 (2010: 29,832)

- New client acquisition totalled 10,398 (2010: 12,036)

- Robust regulatory capital position following placing in April 2011

- Successful launch of several new white label clients including TD Direct Investing

§ Good institutional foreign exchange performance

- Trade volumes increased to $544bn (2010: $429bn)

- 33% increase in revenue to £8.0m (2010: £6.0m)

- Divisional net profit up 14% to £2.4m (2010: £2.1m)

Commenting on the results, Simon Denham, Chief Executive, said: "Despite a difficult start to 2011 the Group has delivered a strong set of results and made positive inroads operationally and financially. We are particularly delighted to have improved our scalability, competitive position and to have developed our international operations further. Whilst the uncertain economic outlook both in the Eurozone and UK presents a challenging backdrop we are confident in the robustness of our business model and our future growth plans."

*Adjusted profit before tax represents profit before tax excluding share based payment expense, exceptional software impairment charge, provision for FOS claims, charge for onerous lease provision and write off of professional client debt. Applied consistently hereafter.

**Adjusted EBITDA represents profit before interest, tax, depreciation, amortisation and share based payment expense and excludes the exceptional software impairment charge, provision for FOS claims, charge for onerous lease provision and write off of professional client debt. Applied consistently hereafter.

For further information, please contact: www.londoncapitalgroup.com

London Capital Group Holdings plc

Simon Denham, Chief Executive Officer

020 7456 7000

Cenkos Securities plc

Nicholas Wells/Camilla Hume

020 7397 8900

Smithfield Consultants

John Kiely

020 7360 4900

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 products on the financial markets to retail clients under the trading name Capital Spreads. 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, PartyGaming Plc, 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 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 trading 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

For the year ended 31 December 2011

I am pleased to report that despite a difficult start, 2011 has been a record year for the Group in terms of trading activity and revenues achieved. Increased volatility in the second half of the year has resulted in net revenue increasing by 13% to £39.0m. This led to a 9% increase in adjusted profit before tax to £7.1m. Given the difficult economic conditions, and particularly in a low interest rate environment, the ability of the business to continue to grow profitably demonstrates the robustness of our business model. Based on the performance of the business, the Board believes it is appropriate that the Group pays a final ordinary dividend of 2.6p per share. This will bring the total for the year to 3.9p, a fourfold increase on last year, representing 29% of adjusted profit before tax.

During the year the Group announced that it had settled the professional client debt which arose in 2010. This has resulted in an exceptional expense of £0.5m being recognised. We also incurred £0.3m of legal costs finalising this matter.

Whilst we continue to work with our advisors to challenge the decision by the Financial Ombudsman Service ("FOS") announced at the beginning of last year, there has been no material change to the assessment or where we are in the process and as such we have not made any further disclosure or altered the level of provision in the financial statements. Following the placing in April 2011, for which we are grateful to our shareholders for their support, the Group has sufficient capital should a liability crystallise. We disagree with the FOS's assessment and will continue to challenge robustly their assessment of the Group's liability. Legal costs incurred in 2011 in relation to the FOS claims amounted to £0.4m.

The Group has continued to invest for the future both in our product offering and in developing our overseas operations and partnership opportunities. Our new CFD businesses launched in 2010 which are key to our international growth programme are already showing signs of profitability with only the Australian operation incurring losses of £0.4m.

I am very pleased to welcome Bill Newton to the Board as Chief Information Officer. Bill was previously CIO at ODL Securities and brings considerable experience of financial trading systems to the Group. He has made a significant contribution to the Company since joining in April.

Whilst we recognise that economic conditions are still uncertain, the ongoing projects and partnerships planned for 2012 mean we are confident that we will continue to grow and deliver profitable results. Finally the Board and I would like to express our gratitude to all of our employees, whose outstanding efforts have enabled us to achieve these results.

Richard Davey

Chairman

22 February 2012

CHIEF EXECUTIVE'S REVIEW

2011 has seen the Group take significant steps to improve our scalability and competitive position. As well as maintaining a strong UK presence we have made significant progress towards establishing our international business. We have launched a number of new functionalities to our trading platforms and have relocated our data centres to improve the resilience of our trading environment.

2011 also saw considerable change in the competitive landscape with a number of operators including MF Global ceasing to trade. The Board will consider appropriate acquisitions should the opportunity arise.

The ongoing uncertainty created by the Eurozone resulted in considerable volatility in the financial markets during the second half of the year as concerns were raised about financial stability. Whilst extreme volatility such as that seen in August and September can lead to technological issues in our industry, the Group had no such issues and was able to report over 99.9% platform availability throughout the period. The sophistication and speed of our system has generally reached the level where further improvements have no noticeable impact on our retail customers and as such our developments are now more application driven. During the year LCG deployed a number of new applications including new charting functionality, multilingual platforms and our Android Mobile trading platform which we are pleased to report was launched ahead of most of our large competitors.

Despite mixed trading conditions and minimal interest revenue from our cash deposits, the Group's business model remains robust. Our increased capital base has meant the company can now derive even greater profitability from client trading. Our year on year revenue growth was 13%, with Group revenue reaching £39.0m in 2011, of which £0.75m was derived from our new CFD businesses launched in 2010. Our revenue streams are much less at risk from the loss of individual clients with no single client representing more than 1% of our revenue.

Whilst we believe the economic situation in the UK and Europe is unlikely to improve significantly in the medium term, LCG has shown that it can build its business even in tough times.

In May 2011 we successfully relocated our London offices to Devonshire Square. We can now accommodate all of our employees on one floor and we have significant capacity to grow. Mindful of our focus on international expansion, we have increased headcount in the areas of IT, sales and multilingual customer support. My thanks go to the employees of LCG for their continued commitment to the business. Led by a strong management team, the positive contribution of our employees has helped the Company to deliver strong results as we work towards our continued expansion.

Divisional performance review

Financial Spread Betting (FSB), UK

LCG's Spread Betting unit continues to generate the majority of Group revenue and we have consolidated our position in the market place. The recent independent survey conducted by Investment Trends places the Group second in terms of numbers of accounts with our own brand Capital Spreads third. Our product offering continues to score very highly on client satisfaction and value for money. Although our major competitors have focused large amounts of marketing resource on trying to encourage clients to switch providers this has not had any noticeable impact on our level of active clients or acquisitions.

During the year we secured partnerships with several major financial institutions and continued to build our portfolio of White Label partners. Although Paddy Power's decision to exit FSB at the start of the year was a disappointment we have added in four new White Label partners during the year including TD Direct Investing (previously TD Waterhouse). We have managed to retain a good proportion of the Paddy Power clients with 94% transferring their accounts to Capital Spreads. The Paddy Power revenue sharing agreement will cease in June 2012 from which point all revenue will be retained by LCG. These clients represented 11% of our active client base.

Whilst Q3 exhibited strong volatility in many of the financial markets, the rest of the year was considerably less volatile. As such revenues were more volume driven than directional in those periods thereby reducing the revenue generated from client activity. Nonetheless, the increased capital base resulted in an improvement in profitability and return on spread increasing Average Revenue Per User ("ARPU") to £1,370 (2010: £1,279).

We have launched a wide array of new products for our clients including Guaranteed Stops, Trailing Stops, new language packs, Fantasy Game functionality for newspaper competitions and our own bespoke charting package which removes our reliance on a third party supplier. This flow of new content will continue through 2012 with more languages and functionality planned to be added.

CFDs UK

We are pleased to report that our UK CFD businesses launched in 2010 became profitable in H2 2011 and that we have been recruiting an institutional sales team that will focus on developing international partnerships to deliver clients throughout Europe and Asia.

CFDs Australia

Our Australian subsidiary is starting to gain traction in terms of client numbers and trade volumes. During the year it generated £0.2m of revenue and made a net loss of £0.4m, of which £0.3m was incurred in H1. We are therefore seeing signs of the business maturing to break even and are planning to increase our marketing and sales resource in 2012 to boost revenue growth.

FSB Gibraltar

Our subsidiary in Gibraltar ProSpreads, disappointingly returned a loss in H2 following a profitable H1. The business increased revenue by 24% year on year but is still 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, we expect ProSpreads to see significant acceleration in its growth and profitability.

Institutional Foreign Exchange

The institutional foreign exchange business delivered a 32% increase in revenue in a market that was generally seen to be stagnant by many participants. Volumes have increased steadily through 2011 and the average daily trade numbers are now over $2 billion. The Currenex platform that we promote continues to attract worldwide interest due to its exceptional liquidity and resilience.

Whilst margins have been eroded over the last year with the division returning a 14% increase in profit on a 32% increase in revenue, the business has the highest return on capital in the Group. We expect to see improved margins as worldwide FX volumes return to more normal levels. Further, in 2012 LCG expects to focus on increasing revenue and profitability through retail as well as institutional product offerings.

Institutional Broking

The institutional broking division derives much of its business from short term interest rates and this market has remained subdued through 2011. However the other product streams held revenues up and year on year this division increased revenue by 76% and operating profit by 124%

Summary and Outlook

Despite a difficult start in 2011 with the adverse ruling from the FOS adjudicator, 2011 has been another year of growth and profitability. Following the completion of the placing in April 2011, the company is well capitalised to support its future growth plans.

2012 has started well and we anticipate many changes within the Group over the next 12 months. We will execute our international sales strategy in earnest; we will continue to invest significantly in our trading platforms, middle, back office and internal CRM solutions to ensure that the Group can remain robust whilst introducing both cost and time saving technological solutions.

We are extremely grateful to both our shareholders and our employees for their continued support over the last year; with a number of initiatives underway we look forward to a successful 2012.

Simon Denham

Chief Executive

22 February 2012

OPERATING AND FINANCIAL REVIEW

For the year ended 31 December 2011

Financial Review

A Group and divisional financial performance review is provided in the Chairman's Statement and Chief Executive's Review.

Revenue and Gross Margin

Net trading revenue grew across all divisions in 2012. UK Spread Betting remains the largest revenue contributor to the Group at 68% however the percentage contribution to overall revenue has decreased from 2010 due to the significant revenue growth seen in all other divisions. The second half of 2011 saw an improvement in market conditions driven by volatility in August and September which boosted average daily trade volumes and revenue per client to 33,042 (2010: 29,832) and £1,370 (2010: £1,279) respectively. Whilst client acquisition was lower in 2011, our other KPI's remained strong with funds on deposit standing at £22.3m (2010: £24.0m) as of 31 December. Gross margin remained stable at 66% (2010: 67%) with White Label commission payments remaining the largest direct cost at £7.3m (2010: £7.0m).

Our UK CFD businesses are showing strong signs of growth with number of trades per day increasing to 723 (2010: 24) and net revenue generated of £0.6m. These divisions have grown rapidly since their launch in 2010 and are already profitable additions. Currently 51% of the customer base is made up of non-UK customers demonstrating our growing international presence.

The Australian CFD business is improving KPI's with average trades per day now standing at 115 and net revenue for the year increasing to £0.2m (2010: £nil). As expected, the business returned a loss of £0.4m (2010: £0.3m), we anticipate this business to achieve profitability in H2'12.

The institutional FX division has continued to show very strong revenue growth with annual volumes standing at $544bn (2010: $449bn) and revenue increasing 33% to £8.0m (2010: £6.0m). There has however been ongoing pressure on margins resulting in a lower increase to divisional profit of 14% to £2.4m (2010: £2.1m).

ProSpreads, our Direct Market Access ("DMA") financial spread betting business increased revenue by 24% to £1.9m. Margin pressure resulted in a lower increase in gross profit of 22% to £1.7m (2010: £1.4m) leading the business to return a loss of £0.3m (2010: £0.4m) for the year. There are a number of new key initiatives under way to support growth in this business and we are therefore optimistic that it will return to profitability in 2012.

Adjusted Administrative Expenses

Adjusted administrative expenses, which excludes depreciation and amortisation, share based payment expense and the exceptional items noted below increased by 10.9% to £16.3m (2010: £14.7m). The significant increases were seen in legal expenses as a result of resolving the professional client debt dispute, and the ongoing FOS claims and marketing expenses as we look to promote our products to a wider customer base internationally. The Group has also been impacted by the increase in UK VAT which is incurred on IT and data costs, marketing costs and legal and professional expenses. We do not expect our legal costs to continue at this level through 2012.

Employee remuneration costs, inclusive of employer related taxes and pensions costs, increased 12% to £6.8m (2010: £6.1m) primarily as a result of an increase in headcount from 93 as at the end of 2010 to 105 as at the end of 2011. As noted in the Chief Executive's review the increases in headcount have primarily been in the areas of IT, sales and multilingual customer support as we look to expand the business internationally.

Marketing costs increased 35% to £2.3m (2010: £1.7m) which reflect the Group's initiatives to develop an international customer base. Marketing costs in the UK remained stable with the increase entirely representing amounts spent in new jurisdictions.

As noted in the Chief Executive's Review the Group moved its London head office to a larger office space in Devonshire Square. The move resulted in one-off move costs of £0.1m and accelerated depreciation of £0.1m which were expensed in the period and an onerous lease provision of £0.2m which has been separately noted as an exceptional item. Whilst a large fit out cost was incurred in taking on the premises, over the period of the lease term the new premises are less expensive, more suitable to the business needs, and provide additional space for growth.

Exceptional items excluded from adjusted profit before tax

During the year two exceptional items of expense arose: the write off of £0.5m of the professional client debt and £0.2m onerous lease provision in relation to the excess office space arising from the overlap of the new lease.

Further to the £0.5m loss recognised in writing off the professional client debt, legal costs of £0.3m were also expensed in settling the issue.

Tax

The Group's effective tax rate increased to 31% following the statutory loss realised by the Group in 2010. Due to losses incurred in overseas jurisdictions and the effect of disallowable expenses the effective tax rate remains higher than the current UK corporation tax rate.

Dividend policy

The Board has recommended a final dividend of 2.6p per share (2010: nil) bringing the total for the year to 3.9p (2010: 1p). This will be paid on 4 May 2012 to shareholders on the register at the close of business on 30 March 2012. It is the Board's policy to pay a progressive, sustainable dividend out of available profits whilst ensuring retention of sufficient capital to meet future growth and regulatory requirements.

Financial Position

As discussed in the Chief Executive's review the Group has continued to invest in its technology base during the year. Total additions to software and hardware in the year amounted to £2.2m (2010: £1.8m) and the carrying value at the year end was £3.9m (2010: £3.4m). In 2012 we plan to continue to invest in the development of applications and to enhance customer experience.

The head office relocation resulted in £2.0m of additions to leasehold improvements. The lease term is for a period of 10 years and provides a more suitable environment for both the business' current needs and for longer term growth.

We have reclassified amounts due from brokers from cash and cash equivalents to receivables in the year to more appropriately reflect the nature of these balances which represent cash held with counterparties as margin in relation to the Group's hedging activities. This has lead to a restatement of the balance sheet of £3.4m in 2010. As at 31 December 2011, amounts receivable from brokers amounted to £3.5m, a slight increase on last year due to greater hedging requirements at the year-end.

Total client money as at the year-end was £52.2m (2010: £47.6m) of which £36.3m (2010: £30.2m) was held in segregated accounts with banks. 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. This treatment is in line with the reporting of other financial services companies. Remaining amounts held on behalf of clients are primarily held in relation to the institutional foreign exchange business.

Trade and other payables comprise amounts due to clients where funds are not held in segregated accounts and other trade payables and accruals. The provisions balance of £3.3m (2010: £3.2m) comprises the onerous lease provision and the provision for FOS claims. There has been no material change to the assessment from the FOS or where we are in the process and as such we have not altered the level of provision since the previous year.

Available liquidity and cash flow

Available liquidity which comprises own cash held and amounts due from brokers increased by £11.1m primarily as a result of the placing in April 2011 to £25.1m (2010: £13.9m). Net cash inflow from operating activities after adjustments for movements in working capital amounted to £9.5m (2010: net cash outflow £2.5m). The leasehold improvements in relation to the new premises, and our ongoing programme of IT developments resulted in a net cash outflow from investing activities of £4.0m.

Capital Adequacy

Following the placing in April 2011 we have had significant head room over our capital resource requirement. The following table summarises the Group's capital adequacy, further details can be found within the Pillar 3 Information section:

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

As at 31 December 2011

CONSOLIDATED BALANCE SHEET

As at 31 December 2010

The comparative Group balance sheet has been restated to reflect the change in accounting policy for segregated client funds and amounts due from brokers, Refer to note 12.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the year ended 31 December 2011

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2011

The comparative Group Cash Flow Statement has been restated to reflect the change in accounting policy for segregated client funds and amounts due to brokers. Refer to note xx for more information.

NOTES TO THE FINANCIAL STATEMENTS

As at 31 December 2011

1. Introduction

The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 31 December 2011, 2010 or 2009. The financial information for the year ended 31 December 2009 and 31 December 2010 is derived from the statutory accounts for those years which have been delivered to the Registrar of Companies. The auditors reported on those accounts: their report in respect of the year ended 31 December 2009 was unqualified and did not draw attention to any matters by way of emphasis. Their report in respect of the year ended 31 December 2010 was unqualified; however it did include two matters of emphasis. The first emphasis of matter paragraph was in respect of the uncertainty surrounding the eventual outcome of complaints to the FOS. The second emphasis of matter paragraph was in respect of the ability of the group to continue as a going concern should the issue of new ordinary shares in 2011 not be successful. Their opinions in respect of the years ended 31 December 2009 and 31 December 2010 did not contain a statement under s498(2) or (3) of the Companies Act 2006.

Statutory accounts for 2011 will be delivered following the company's annual general meeting. The auditors have reported on those accounts: their reports were unqualified and did not contain statements under s498 (2) or (3) of the Companies Act 2006. However, their report for the year ended 31 December 2011 includes an emphasis of matter paragraph in respect of the uncertainty surrounding the eventual outcome of complaints to the FOS.

The information included within the preliminary announcement has been based on the consolidated financial statements, which are prepared in accordance with the accounting policies adopted under International Financial Reporting Standards ("IFRSs"), as issued by the International Accounting Standards Board, and as adopted by the European Union. The accounting policies followed are the same as those detailed within the 2010 statutory accounts which are available on the Group's website www.londoncapitalgroup.com with the exception of the restatements discussed in Note 12.

While the financial information included in this preliminary announcement has been prepared in accordance with IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs.

2. Revenue and segmental information

For the year ended 31 December 2011

2. Revenue and segmental information

For the year ended 31 December 2010

3. Adjusted profit before tax, adjusted operating profit and adjusted EBITDA

4. Earnings per ordinary share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted number of ordinary shares in issue during the year, after deducting any own shares. 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. Dilutive potential ordinary shares were 12,532 (2010: 1,615,398).

5. Dividends

6. Intangible fixed assets

COST

AMORTISATION

NET BOOK VALUE

7. Impairment charge

The professional client debt of £1.4m that arose in 2010 was settled in 2011 for £0.87m. The amount outstanding was impaired by £0.53m as part of the settlement agreement.

In 2010 the Group recognised impairment on its Chaucer Digital software as a result of a change in the focus of its IT asset use. The Board determined that the value of its Chaucer Digital software asset in relation to financial spread betting was not supportable and therefore recognised an impairment charge of £3.2m.

8. Property, plant and equipment

COST

DEPRECIATION

NET BOOK VALUE

9. Trade and other receivables

The directors consider that the carrying amount of trade receivables, amounts owed to group undertakings and other receivables approximates to their fair value.

Trade receivables due from brokers represents the combination of open derivative positions and cash in excess of required margin available to call from brokers.

10. Cash and cash equivalents

Gross cash and cash equivalents include Group cash, all client funds (segregated funds and funds under title transfer) and surplus cash available to call from brokers.

Segregated client funds include client funds held in segregated accounts or 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. The accounts have been restated to exclude these funds from the Group's balance sheet.

Title transfer funds are held by the Group's subsidiary under a 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.

11. Provisions and contingent liabilities

As previously disclosed, during Half 1'09 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 £0.1m plus interest. LCG is challenging the revised assessment.

The Board assessed that a gross provision of £3.2m should be made and a contingent liability of a further £3.3m 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 £0.1m on the £3.2m previously disclosed as a contingent liability due to the changes announced during the year 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 a charge of £0.2m has been recognised in the income statement for the onerous lease in relation to the Group's former premises with a provision at the year-end of £0.1m following part utilisation of £0.1m.

12. Prior period adjustment

The accounting policies adopted in the preparation of Financial Statements are consistent with those followed in the preparation of the Group's Annual Report for the year ended 31 December 2010, other than:

·; 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.

The impact of this adjustment on the reported comparative figures was as follows: