London Capital Group Holdings Regulatory News (LCG)

LONDON CAPITAL GROUP HOLDINGS PLC

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

AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014

Financial Highlights

§ Adjusted profit before tax1 from continuing operations of £1.1m (2013: £2.2m)

§ Statutory loss before tax from continuing operations of £7.9m (2013: £4.8m)

§ Statutory loss after tax from continuing and discontinued operations of £7.8m (2013: £3.7m)

§ Revenue from UK financial spread betting ("FSB") and contracts for difference ("CFD") down 7% to

£19.4m (2013: £20.8m)

§ Revenue from continuing operations decreased 10% to £22.7m (2013: £25.2m)

§ Net cash and short term receivables2 of £32.9m at year end (2013: £21.8m) including amounts due from brokers £6.1m (2013: £4.6K)

Operational Highlights

§ UK FSB and CFD performance

- Divisional revenue down 7% to £19.4m (2013: £20.8m); divisional profit of £8.8m (2013: £9.8m)

- FSB average trades per day decreased 9% to 19,994 (2013: 22,008)

- New client acquisitions decreased 13% to 5,615 (2013: 6,431)

§ Institutional foreign exchange performance

- Trade volumes decreased to $215bn (2013: $242bn)

- Divisional revenue of £3.3m (2013: £4.3m); divisional profit of £1.1m (2013: £1.3m)

§ New management in place at end of third quarter implementing a strategy for growth.

Charles-Henri Sabet, Executive Chairman said: "I am pleased to report that a strategy is now in place for the Group to return to growth at all levels of the business during the second half of 2015, while we anticipate that the restructuring process we began in 2014 will last until the end of 2016."

"We shall continue to invest in the quality of our people, products and services, and with the strength of our balance sheet and management drive to execute on our strategic vision, we are confident in the prospects for a return to growth in order to deliver long-term sustainable returns to all our shareholders."

1Adjusted profit before tax represents profit before tax excluding share based payment expense, impairment charges to goodwill and investments, non-recurring restructuring costs, costs related to change in IT platform, the movement in the provision for FOS claims and non-recurring legal fees. Applied consistently hereafter.

2Net cash and short term receivables represents Cash and cash equivalents, less unsegregated amounts due to clients, plus amounts due from brokers.

3Adjusted EBITDA represents profit before interest, tax, depreciation, amortisation, share based payment expense, impairment charges to goodwill and investments, non-recurring restructuring costs, costs related to change in IT platform, the movement in the provision for FOS claims and non-recurring legal fees.

For further information please contact;

Cenkos

Nicholas Wells

020 7397 8923

Morgan Rossiter

James Rossiter

Richard Morgan Evans

020 3195 3240

CHAIRMAN'S STATEMENT

For the year ended 31 December 2014

I am pleased to report that the Group is on schedule to return to growth during the second half of 2015, after a period of significant and ongoing change which was initiated in the final quarter of 2014.

Strategic reviewAgainst a backdrop of challenging market conditions and a period of losses accumulated under the previous management's chosen strategy, the new management undertook a review of the Group and all its business lines and operations, shortly after taking control at the end of the third quarter. The review encompassed a focus on the markets, products, platforms, operational structures and key personnel required in order to deliver the growth required to meet the ambitions of a revitalised management team and the expectations of investors.

Organisational restructureAs part of the restructuring and recruitment of the required personnel with the skill level to drive the Group forward, approximately 75% of the previous workforce has now departed.

During the fourth quarter we strengthened the main board of Directors with the addition of non-executives, a move which has given the Group a broad spectrum of skills and experience from the highest level within the financial, professional and investment services industries. We have also significantly bolstered the management board, and have continued to hire best-in-class personnel to support our drive to provide a more institutional-level of service and product offering to our retail clients.

We are in the process of reshaping our IT department and infrastructure capability, revamped our sales trading, customer service, marketing and partnerships departments, and are building a team of highly-experienced market analysts.

As a consequence of the initial changes put in place, we were able to take advantage of increased market volatility in the fourth quarter, which resulted in a positive EBITDA figure.

OutlookA strategy is now in place for the Group to return to long-term sustainable growth at all levels of the business during the second half of 2015, while we anticipate that the restructuring process will last until the end of 2016.

To enable the Group to achieve a return to growth later in the year, we have instigated several significant improvements - these include marketing our competitive MetaTrader 4 offering, improving the overall client experience and installing a greater emphasis on client servicing. We are also well underway with a major rebrand exercise, which will help to position the Group as a leading provider of online trading services. In addition, we have put in place the building blocks to take active advantage of opportunities globally, which will complement our core domestic business in the UK.

We shall continue to invest in the quality of our people, products and services, and with the strength of our balance sheet and management drive to execute on our strategic vision, we are confident in the prospects for a return to growth in order to deliver long-term sustainable returns to all our shareholders.

Charles-Henri SabetExecutive Chairman25 March 2015

STRATEGIC REPORT

For the year ended 31 December 2014

IntroductionA strategic review of the Group which began following the arrival of new management towards the end of Q3 2014 is ongoing, and the Group is being restructured to position the business for a return to growth.

The quality of the Group's employees has been refreshed in order to execute the Board's strategic vision to reposition the company, enabling the provision of a best-in-class foreign exchange trading service, improved technology for clients and employees, a focus on providing the best possible client experience, and enhancing the overall sales service.

The ambition of management and staff is aligned with the Board's strategic vision in order to drive the Group forward towards a profitable period of sustained growth. When the period of restructuring is complete the business will be fully scalable, allowing the company to start growing abroad.

Business modelLondon Capital Group Holdings plc operates through its principal subsidiary, London Capital Group Limited. Its core activity is the provision of spread betting and contracts for difference (CFD) products based on financial market products, such as futures, equities and foreign exchange. It provides online trading to private, retail and high net worth and professional clients.

London Capital Group Limited is authorised and regulated by the Financial Conduct Authority (FCA) in London and its parent company London Capital Group Holdings plc is listed on the London Stock Exchange Alternative Investment Market (AIM).

Revenues are generated from the dealing spread - the difference between the buy and sell price of our CFD and spread betting products, commission income, exchange gains and interest.

The Group's success is driven by providing a high quality service to our customers and offering a variety of financial trading products and platforms. Clients are attracted to us for our value for money, ease of platform navigation, tight dealing spreads and competitive margin requirements, in addition to high levels of customer service.

Strategy and objectivesFollowing a detailed strategic review of the business and industry trends, the senior management team has taken the decision to focus the business towards servicing the needs of active retail traders. Our aim is to provide an institutional-level of service and product offering to our retail clients.

Short-term strategyThe Group's short-term strategy will encompass the following:

- Facilitating better access to financial markets 

- Provide best-in-class technology

- Offer best-in-class sales and sales trading services

- Create a value proposal in term of market analysis

- Grow internationally, starting in Europe

- The further development of both our technology and marketing, ensuring that our systems, customer proposition and brand are far better aligned to deliver sustainable growth

Medium-term strategyFollowing the completion of our near-term strategic aims, the Group's focus will be on the promotion and further development of our key unique selling points:

- Industry-leading platformsThe Group will offer improved technology and trading platforms on web, desktop, mobile and API ensuring our offering fits in with the demands of the active trader.

- ServiceThe Group will provide an industry-leading customer experience and a service tailored to individual customers' needs, both online and through our telephone, email and 'live-chat' channels.

- Professional tools and news serviceTargeted to our customers' needs, the Group's experienced in-house market analysts will keep clients up-to-date with market events, as well as offering access to professional third-party news and tools providers.

- Educational materialsThe Group will create significantly enhanced education services to address all levels of trading experience, including face-to-face seminars and live market webinars from our team of market analysts.

- Pricing

The Group will deliver a value proposition to our clients without any compromise of our strict adherence to quality products, platforms and service, in order to position the Group at the forefront of the industry's most competitive providers.

- MarketingThe Group is focusing its brand and client proposition primarily through the trusted LCG name, consolidating our online presence into a single LCG-led offering which incorporates all of the Group's products and services. A consolidated focus on a single brand will provide greater clarity for the Group's clients while enabling optimisation of marketing spend.

- Dealing executionThe Group aims to provide a best-in-class dealing experience for clients across a broad range of markets and via multiple platform offerings. Clients will benefit from the Group's transparent and competitive dealing and execution services, for example through our liquidity providers, and the execution model on the MetaTrader4 platform.

Long-term strategy

The Group remains focused on progressing longer-term objectives:

- Actively extending the business' geographic reach via representative offices in designated key locations across Europe and in the Middle East.

- Continuing to develop and add to current product offering in response to customer demand.

- Expanding the range of products to encompass more investment vehicles in order to meet the needs of existing customers and attract new customers with a broader product reach and appeal.

Our people

We have undertaken a significant review of the Company which has included a restructuring of the business, and this has resulted in the departure of a significant number of the previous workforce. Beginning in Q4 2014, we have strengthened the main board of directors and significantly improved the management board, while employing best-in-class personnel to support our Group ambitions.

We continue to focus on staff communication, including regular presentations from the Executive Chairman and Directors, covering our strategic direction, commercial objectives, business initiatives and financial results. Employees are incentivised with a performance-related bonus should the Group have a profitable year, and a range of other benefits are provided including pension contributions and private health insurance.

Environment

Given the nature of its activities, there is limited scope for the Group to have a major impact on environmental matters. Nevertheless, the Directors are mindful of their responsibilities in this regard and strive to seek opportunities where improvements may be made; these are generally concentrated in areas of energy conservation, recycling and waste control.

Equality and diversity

The Group is committed to promoting and developing equality of opportunity in all areas. We encourage people to achieve their full potential in every aspect of their employment and we support fair and equitable treatment of our employees irrespective of gender, sexual orientation, religious beliefs, age, colour, ethnic or racial origin, nationality, disability or trade union membership.

Applications for employment by disabled persons are always fully considered and in the event of members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees. 

Health and safety

The Group aims to provide and maintain a safe working environment for all its employees and visitors and seeks the involvement of its employees in improving health and safety throughout its operations. The Board keeps its health and safety policy under regular review to take account of changes in legislation, best practice and the working environment.

Principal risks and uncertainties

The principal risks and uncertainties to which the Group is exposed could each have a material impact on the Group's long-term performance and achievement of its strategic goals. The Group's risk appetite is set by the Board and is documented in the Risk Management Framework document.

The Group uses Key Risk Indicators to identify, monitor and measure risk in the business and maintains a Risk Register of all financial and operational risk events and the mitigating controls. This quantification process ensures that the Group operates within its risk appetite.

Ultimate responsibility for risk management lies with the Board, which has established a Risk committee, chaired by an independent non-executive Director, which considers risk management in more detail. The principles and objectives of the Risk Management Framework are cascaded down through the Group. The responsibility for establishing specific internal control policies and procedures is being overseen by a management Risk committee. The new management has recognised the importance of a seamless approach to risk and appointed a dedicated Head of Risk.

The effectiveness of the Group's Risk Management Framework is monitored by the Compliance function and reported to the management Risk committee and the Board. The effectiveness of internal controls is monitored by the Compliance function and outsourced expert assessors and is also reported to the Risk committee and the Board.

The main areas of risk for the Group currently, in line with previous periods, are considered to be the following:

· Market risk: Market risk is the risk that changes in market prices will affect the Group's profit and loss or the value of financial instruments held and traded by clients. Although the Group does not directly enter into speculative proprietary positions, the effect of client trades does result in the Group retaining a net market risk. The Group has a formal risk policy and a methodology for setting limits for every financial market in which it operates. Market risk is managed on a day to day basis by the respective divisional heads with oversight provided by the Risk Management function, the Risk Committee and the Board. The risk limits determine the maximum net exposure arising from client activity which the Group is prepared to carry. If the Group's exposure to clients exceeds these limits, the policy requires that the positions are hedged reducing exposure to within defined limits.

· Credit risk and concentration risk: The Group has a credit exposure to the banks with which it deposits funds and the counterparties with which it hedges its market positions. The Group mitigates this risk by ensuring diversification of counterparties and setting minimum levels of credit worthiness for Group counterparties. LCG does not ordinarily offer credit and currently has no clients with credit accounts that are not fully underwritten by a letter of credit, drawn on a major financial institution, or by a white label partner. The Group ensures client credit risk is minimised via real time monitoring, management of unrealised profit and loss, margin and net equity and supported by mandatory stops and guaranteed stop losses being used by many clients to manage their accounts.

· Operational risk: Operational risk is defined as the risk of loss arising from inadequate internal processes, people or systems. The most significant operational risks the Group is exposed to are:

o Technology risk and business continuity: Technology risk is the risk of a sustained loss of LCG's systems leading to an inability to provide online trading platforms to its clients. This will inevitably lead to a significant loss of customers and income. LCG operates backup for all its trading platforms in separately hosted environments and to support the loss of physical premises LCG also licenses disaster recovery premises. This is supported by ongoing business continuity planning and regular testing of our disaster recovery facilities and procedures.

o Employee risk: LCG requires suitably skilled staff to operate, control, develop and manage its business. LCG has a wide range of skill requirements including IT, project management, dealing/market risk management, customer support, HR, compliance, finance, sales and marketing. Without adequate staff resources the Group would not be able to operate effectively or achieve its strategic aims. The risk is managed initially through the recruitment and selection of appropriately qualified employees, validated by a pre-employment screening process. Employee risk is also managed on an ongoing basis through training and development (both regulatory and non-regulatory), and reviews of performance to ensure that individual remuneration and performance is managed consistently and fairly. Finally, we ensure the continued success of the Group through the proactive identification and retention of our high potential employees through share based payment awards under long term incentive plans.

o Legal, regulatory and compliance risk: Legal, regulatory and compliance risk is the risk of legal or regulatory sanctions, legal claims, defective contractual arrangements and the resulting financial loss, or damage to the reputation of the Group. LCG is a full scope firm and is therefore subject to close regulation. As such, regulatory risk is an important element of the risk assessment and management process. The regulatory landscape changes at an ever increasing pace and this imposes significant demands on the resources of the Group. The Group therefore continues to ensure sufficient investment is made in resources and training to ensure regulatory demands are met. The responsibility for compliance is spread throughout the Group, and results are monitored and reported to senior management by the Compliance Department.

o Reconciliation risk: The Group's financial control functions depend on key reconciliations being performed on a daily basis with exceptions being resolved in a timely manner to meet regulatory requirements. Reconciliation is monitored on a daily basis by the London Capital Group Limited board.

· Liquidity risk: Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group has established policies and a liquidity risk management framework to manage its liquidity risk, including daily production of liquidity reports that summarise current liquidity and liabilities. Liquidity is monitored daily by the London Capital Group Limited board. The Group also undertakes various stress and scenario testing as part of its Individual Capital Adequacy Assessment Process (ICAAP) that is a requirement of the FCA. These scenarios stress the effect on the Group's capital and liquidity adequacy of both an individual risk materialising or a series of risk events occurring within a short timeframe.

· Treasury risk: Treasury risk is the risk arising from the movements in the interest rates or exchange rates which affect the Group's profitability or net cash resources.

o Interest rate risk: Interest rate risk arises from the loss of revenue from interest earned on client deposits and margined client positions, and the Group's own cash resources. While interest rates remain low, interest income will not make a material contribution to Group profit. Conversely, as interest rates rise the Group should benefit. The Group's issued convertible loan note instruments charge a fixed interest rate of 5% and therefore no risk arises on this debt.

o Foreign currency risk: The Group faces currency exposures on translation of its monetary assets and liabilities. This risk is managed by daily monitoring of the Group's net foreign currency position as part of its liquidity risk management.

· Key supplier risk: Key supplier risk is the risk of failure of one of our principal business partners to provide contractual services. We conduct initial and ongoing due diligence on key suppliers, in addition to using multiple providers where available. The source code for the third party software the Group relies on for key operational activities is held in Escrow.

Key Performance Indicators

The Company uses the following key performance indicators to measure its financial and operational performance on delivering the strategic goals of the business.

· Revenue

· Adjusted profit before tax

· Cash

· Active trading clients

· Trades per day

· New client acquisitions

Review of the year

2014 was a year of significant change for the Group resulting in revenues from continued operations falling by 10% to £22.7m from £25.2m in 2013. However, as explained above, the Group will continue to invest in its people, products and platforms throughout 2015 to deliver the revised strategy and prepare the Group for future growth.

The Group's principal business activity, UK financial spread betting and contracts for difference, saw divisional revenue fall by 7% to £19.4m from £20.8m in 2013. These results are against a backdrop of challenging market conditions during the first half of the year where the Group saw a 42% fall in divisional revenue to £7.7m compared to the same period in the prior year (2013 H1: £13.2m). However, the second half of 2014 saw a 53% increase in divisional revenue to £11.7m compared to the same period in the prior year (2013 H2: £7.6m), with the Group benefiting from a return to volatile global markets in both equities and commodities. New client acquisitions fell from 6,431 in 2013 to 5,615 in 2014, a drop of 13% due to low levels of market volatility compounded by a lack of marketing and sales activity in 2014. Funds on deposit fell by 5% to £21.4m (2013: £22.5m) and average daily trading volumes dropped by 9% to 19,994 (2013: 22,008). Gross margin increased to 77% (2013: 72%) with white label commission payments remaining the largest direct cost at £3.8m (2012: £4.4m).

The institutional foreign exchange business suffered from falling volumes in 2014. As a result, divisional revenue fell 26% to £3.2m (2013: £4.3m) and divisional profit fell by 15% to £1.1m (2013: £1.3m). The business derives revenue primarily from commission.

Adjusted administrative expenses (continuing operations)

Adjusted administrative expenses, which excludes the exceptional items noted below are comparable to prior year at £15.5m (2013: £15.7m).

Employee remunerations costs, inclusive of employer related taxes and pension costs remained consistent year on year. During 2014 the Group carried out significant restructuring to ensure employees had the required skill set to drive the Group forward which resulted in a large percentage of the previous workforce departing, as noted earlier. This resulted in exceptional redundancy costs which are split out below, however overall both headcount and salary costs year on year have remained stable.

Advertising and marketing investment has increased by 27.3% to £1.4m from £1.1m in 2013. In 2013 the Group reduced marketing expenditure while undertaking a review of the business strategy and objectives. As a result advertising and marketing costs fell by 42% from 2012 to 2013. Advertising and marketing investment increased in 2014 in line with expectations and we plan a significant increase in 2015 in order to deliver the revised strategy and growth the Group has forecast.

The reduction in other costs is principally due to reduced recruitment costs year on year of £0.3m.

The reduction in depreciation and amortisation is due to a reduction in amortisation on software. This is a result of stemming expenditure in this area and disposing of a number of assets no longer required whilst management realign their IT and strategy for the Group.

Exceptional items excluded from adjusted profit before tax

The credit for the FOS claims is a result of the Directors' best estimate of the provision required based on an analysis of the losses incurred in the fund attributable to clients, the FOS ruling and ongoing progress of the settlements. The reduced provision is due to less than expected interest on claims to date and a reduced level of claims made during 2014.

The Group tests annually for impairment of goodwill. At 31 December 2014, before impairment testing, goodwill of £8.0m was allocated to the London Capital Group Limited financial spread betting and contracts for difference (CFDs), UK business segment (CGU). New management has considered the future business model and revised forecasts in line with the changes they plan to make over the short and medium term. The updated cash flow forecasts for this CGU, in line with the revised business model, using the pre-tax discount rate of 11%, resulted in a reduction of the recoverable amount of the London Capital Group Limited CGU to nil, which has resulted in an impairment loss against goodwill.

Due to low volatility and difficult market conditions previous management implemented a redundancy program in summer 2014 to reduce the businesses headcount and salary costs. This was followed by further restructuring under the new management team who were appointed in the second half of the year, to ensure a strong, knowledgeable team of staff with the right skill base to guide the business forward under the revised business model.

In 2012 the Group decided to invest in a new spread betting and CFD platform. The implementation of the system took longer and required more investment than envisaged at the outset and was not completed until April 2014. This resulted in duplicated platform costs for the old platform of £0.3m during 2014 being treated as an exceptional expense in line with the disclosure in 2013.

Tax

The Group's effective tax rate increased to -2% (2013: -11%). This is primarily due to losses incurred in London Capital Group Limited. These losses will be carried forward and offset against future taxable profits and a deferred tax asset of £0.4m has been recognised in this respect.

Dividend policy

The Board has reviewed its dividend policy during the year and has concluded that a policy of paying dividends from available profits while considering the current and future capital requirements of the business is the most appropriate policy going forward. The Board is not recommending a final dividend (2013: nil).

Financial position

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 £2.0m (2013: £4.7m) represents the provision for FOS claims referred to above, a restructuring provision and a provision for market data. (See note 25)

Available liquidity and cash flow

Available liquidity which comprises own cash held, title transfer funds, unsegregated funds and amounts due from brokers increased by £11.1m. On 16 October 2014 the Group raised £16.4m (after transaction costs) through the issue of convertible loan notes; this has driven the increase in cash resources (see note 26).

Net cash used in operating activities after adjustments for movements in working capital, amounted to £2.4m (2013: inflow of £1.0m). The working capital movement predominantly relates to an increase in the amounts due from brokers and a decrease in provisions due to the payment of a majority of the FOS claims. Net cash used in investing activities of £1.2m pertains to finance costs of the convertible loan note, company cars, leasehold improvements and our investment in the Group's spread betting platform, net of interest income received (2013: £6.1m).

Total client money at the year-end was £29.7m (2013: £26.8m) of which £27.8m (2013: £26.5m) was held in segregated bank accounts. These balances are excluded from the Balance Sheet. Unsegregated amounts held on behalf of clients under a Title Transfer Collateral Arrangement ("TTCA") are included on the Balance Sheet (see notes 21 and 23).

Subsequent Events

Swiss Franc

Following the announcement on the 15 January 2015 by the Swiss National Bank, which resulted in extreme movement in the value of the Swiss Franc and a sudden reduced liquidity in the Swiss Franc foreign exchange market, the Group suffered a loss from market and credit exposure. This loss is dependent on the ability of the Group to recover client debts, but in total it is not expected to exceed £1.7 million.

All clients' positions were closed at a more beneficial level than the Company could close its own exposure.

Convertible Loan Note

During January 2015, the Company approved notices from holders of convertible loan notes to convert 3,668,000 convertible loan notes of £1.00 each in the Company at a price of 25.02p in accordance with the terms of the convertible loan notes (see note 26). Following the conversion, 19,791,367 ordinary shares in the Company were admitted to AIM.

Institutional Forex Business

Following the year, end the institutional forex business was rationalised resulting in a reduction in the number of customers. This may have a material impact on the balance sheet subsequent to the reporting date.

Capital Resources

The following table summarises the Group's capital resources. Further details can be found within the (unaudited) Pillar 3 Information section:

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2014

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED 31 DECEMBER 2014

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED 31 DECEMBER 2014

BALANCE SHEET AS AT 31 DECEMBER 2014

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2014

1. Introduction

The final information set out in the announcement does not constitute the company's statutory accounts for the years ended 31 December 2014 or 2013. The final information for the year ended 31 December 2013 derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, however it did include a matter of emphasis in respect of the uncertainty surrounding the eventual outcome of complaints to the FOS. Their opinion in respect of the year ended 31 December 2013 did not contain a statement under s498(2) or (3) of the Companies Act 2006.

Statutory accounts for 2014 will be delivered following the company's annual general meeting. The auditors have reported on thoses accounts: their reports were unqualified and did not contain statements under s498 (2) or (3) of the Companies Act 2006.

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 adopted by the European Union. The accounting policies followed are the same as those detailed within the 2013 statutory accounts which are available on the Group's website www.londoncapitalgroup.com

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 2014

For the year ended 31 December 2013

Year ended 31 December 2014

Year ended 31 December 2013

3. Adjusted loss before tax, adjusted operating loss and adjusted EBITDA from continuing operations

4. Earnings per ordinary 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 (JSOP and Treasury, see note 34). 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 and the convertible loan notes.

5. Dividends

No dividends have been proposed or paid in 2014 (2013: nil)

6. Impairment charge

An impairment charge of £7,950,257 (2013: £1,353,000) has been recognised in the year in relation to the goodwill allocated to the UK Financial spread betting and CFDs Cost Generating Unit ("CGU"). There is no remaining goodwill on the Group's balance sheet. Further information is provided in note 9.

7. Intangible fixed assets

Group

COST

AMORTISATION

NET BOOK VALUE

Software disposals include £5,428k Ariel software fully depreciated and written off following the Group's completion of the migration of the UK financial spread betting and CFD business to a new trading platform which was completed in April 2014.

8. Property, plant and equipment

COST

DEPRECIATION

NET BOOK VALUE

9. Impairment of goodwill