London Capital Group Holdings Regulatory News (LCG)

21 Sep 2006 07:01

London Capital Group Holdings PLC21 September 2006 21 September 2006 LONDON CAPITAL GROUP HOLDINGS PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006 London Capital Group Holdings plc ("LCG", the "Company" or the "Group")announces interim results for the six months ended 30 June 2006. LCG is arapidly growing and profitable spread betting and financial services companyoffering online trading in the financial markets. Fist Half 2006 Highlights: • Turnover up 52% to £3.53 million (H1 05: £2.33 million) • Profit before tax up 385% to £1.65 million (H1 05: £0.34 million) • Average daily spread betting trades up 191% to 4,307 • Number of live financial spread betting client accounts increased 135% to 6,740 • FX division growing fast and is now profitable Commenting on the results, Frank Chapman, Chief Executive Officer, said: "LCG has had an excellent six months. We have continued to experience strong trading with encouraging growth in both the number of live customer accounts and the daily trading volumes in the spread betting division. We are delighted with the progress made with Capital Forex which we believe will further enhance the development of the business in 2006." All of our business areas have started the second half of the year well and we continue to perform in line with market expectations." For further information, please contact: www.londoncapitalgroup.com ----------------------------- London Capital Group Holdings plc 020 7456 7000Frank Chapman, Chief Executive Officer Smithfield Consultants 020 7360 4900Sara Musgrave / George Hudson 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 is a rapidly growing and profitable spreadbetting and financial services company offering online trading in the financialmarkets. Its core activity is the provision of spread betting products on thefinancial markets to retail clients under the trading name Capital Spreads. LCGalso provides online foreign exchange trading services to institutional andintermediate clients under the Capital Forex brand and institutional derivativesbroking under the name Capital Derivatives. Based in London, LCG is regulated and authorised by the Financial ServicesAuthority, has a European passport and is a member of the London Stock Exchange,Liffe, Eurex and Euronext, giving it direct access to all European markets. LCGalso has access to international markets through its global clearingrelationships. LCG floated on the London Stock Exchange's AIM market on 22nd December 2005 atan issue price of 82p. 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 Results The Group achieved a profit before tax of £1.65 million (H1 05: profit £0.34million) on turnover of £3.53 million (H1 05: £2.33 million). We experiencedvery strong growth from our spread betting business, Capital Spreads, in theperiod, with operating profit of £2.62 million, up 87% in like for like periods(H1 05: £1.40 million). The average number of spread bets taken per day has increased by 191% to 4,307(H1 05: 1,480) and the number of live spread betting client accounts at 30 June2006 stood at 6,740, an increase of 135% on the number at the same point lastyear. Customer cash held on account has risen by 132% from £2.07 million to£4.79 million in the spread betting division and from £0.52m to £7.13 million inthe foreign exchange ("forex") division, which is now profitable and showingvery strong growth. Whilst the Group's principal trading division, Capital Spreads, has been themain contributor to this strong performance, I am pleased to report that boththe derivatives division, Capital Derivatives, and the forex division, CapitalForex have also had a good first half. We are very pleased to announce that we have identified a Finance Director whohas agreed to take up his post in November 2006. Details of his appointment willbe confirmed in due course. Dividend The Group's policy is to pay dividends which reflect the earnings and cash flowrecord and potential of the Group. Dividends for the current financial year willdepend upon full year results. Current Trading and Outlook All of our business areas have started the second half of the year well and wecontinue to perform in line with market expectations. Robert LoosemoreChairman21 September 2006 Chief Executive's Statement Financial Review The turnover from our continuing business rose by 52% from £2.33 million in thefirst half of 2005 to £3.53 million in the six months ended 30 June 2006. Thisreflects the increased number of spread betting accounts and trades, whichaveraged 4,307 trades per day for the first half of 2006 (H1 05: 1,480), a likefor like increase of 191%. As a result, profit before tax increased by 385% to£1.65 million from £0.34 million. We are able to maintain a low cost operation by comparison with other companiesin our sector because we have adopted an outsourcing model, whereby we sub-contract specialist support services to specialist providers. Included inadministration costs, was expenditure of £0.5 million on IT infrastructure, up67% on the previous year. We continue to invest in upgrading our software andtrading platforms in order to provide our clients with the most up to datetechnology solutions. Earnings per share increased from 0.86p to 3.14p per share. The Company had no debt at end June 2006 and had cash resources of £2.05 million as well as £11.9 million of client funds. Operating Review Capital Spreads Capital Spreads, our financial spread betting business, has continued to enjoyexceptional growth during the period with the number of live accounts havinggrown from 2,864 at 30 June 2005 to 6,740 at 30 June 2006 and trading volumeswere also up from 41,000 trades in June 2005 to over 100,000 in June 2006. Whilst our marketing activity plays a significant part in building ourclient base, our reputation means that over 50% of our clients join us viarecommendation. Therefore, it is essential that we continue to provide ourunique service, integral to this is our commitment to offer some of the tightestspreads in the industry. Currently, 70% of our activated clients have funds on account and approximately 33% have traded within the last month, with over 99% of transactions being executed online. Binary Bets Binary betting is a hybrid of spread and fixed odds betting. We now have an active binary platform within our spread betting site and are continuing to develop this offering. Capital Forex Our foreign exchange trading platform, Capital Forex, provides the retail marketwith the ability to trade currencies whilst Capital Forex Pro providesprofessional traders with access to Currenex and Hotspot FX, two major onlineforeign exchange trading platforms. Volumes have grown exponentially during theperiod and this growth is continuing in the second half. Capital Derivatives Capital Derivatives provides execution services for exchange traded futures andoptions in fixed income products for institutional clients. Capital Derivativeshas had a satisfactory six months in which its position was consolidated by thewinning of a number of major new top tier institutional clients. Growth Strategy We are now becoming more focused on overseas markets for our product range andare in the process of forming strategic relationships to pursue this end. Thecompany is actively pursuing Far Eastern partners for all of its productdivisions. The company is also launching a new Financial Fantasy Game platformwhich is being marketed to media partners which will act as a client portal toLCG's product offerings. Summary and Outlook LCG has had an excellent six months. We have continued to experience strongtrading with encouraging growth in both the number of live customer accountsand the daily trading volumes in the spread betting division. We are delightedwith the progress made with Capital Forex which we believe will further enhancethe development of the business in 2006. Frank ChapmanChief Executive Officer21 September 2006 GROUP PROFIT & LOSS ACCOUNT For the period ending 30 June 2006 H1 06 H1 05 Note £'000 £'000 GROUP TURNOVER 2 3,528 2,328 Cost of sales 711 765 ------- ------- GROSS PROFIT 2,817 1,563 Administrative expenses 1,219 1,252 EBITDA 1,656 751 Depreciation (58) (25) Exceptional items 3 - (415) OPERATING PROFIT 1,598 311 Net interest receivable/ (payable) 57 26 ------- ------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 1,655 337 Tax on profit on ordinary activities 4 (451) (28) ------- ------- PROFIT FOR THE PERIOD 1,204 309 ======= ======= GROUP BALANCE SHEET As at 30 June 2006 H1 06 H1 05 £'000 £'000 FIXED ASSETS Intangible assets 9,303 - Tangible assets 767 189 ------- ------- 10,070 189 ------- ------- CURRENT ASSETS Debtors 1,199 1,074 Cash at bank 13,062 2,621 ------- ------- 14,261 3,695 CREDITORS: Amounts falling due within one year 12,640 2,520 ------- ------- NET CURRENT ASSETS 1,621 1,175 ------- ------- TOTAL ASSETS LESS CURRENT LIABILITIES 11,691 1,364 PROVISIONS FOR LIABILITIES Deferred taxation 91 77 ------- ------- 11,600 1,287 ======= ======= CAPITAL AND RESERVES Called-up equity share capital 3,829 1,055 Share premium account 11,607 - Other reserves (5,344) - Profit and loss account 1,508 232 ------- ------- SHAREHOLDERS' FUNDS 11,600 1,287 6 months to 6 months to 30 June 2006 30 June 2005 restated £'000 £'000 Profit for the period 1,204 309 Dividend in period - (242) ------- ------- Net addition to shareholders' funds 1,204 67 Opening shareholders' funds 10,396 1,220 ------- ------- Closing shareholders' funds 11,600 1,287 ======= ======= GROUP CASH FLOW STATEMENT For the period ended 30 June 2006 6 months to 30 June 2006 £'000 NET CASH INFLOW FROM OPERATING ACTIVITIES 7,962 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 57 TAXATION - CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (549) ------- CASH INFLOW/(OUTFLOW) BEFORE FINANCING 7,470 FINANCING - ------- INCREASE IN CASH 7,470 ======= RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 6 months to 30 June 2006 £'000 Operating profit 1,598 Depreciation 58 Increase in debtors (155) Increase in creditors 6,461 ------- Net cash inflow from operating activities 7,962 ======= RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 6 months to 30 June 2006 £'000 Increase in cash in the period 7,470 ------- Movement in net funds in the period 7,470 ======= Net funds brought forward 5,592 ------- Net funds at period end 13,062 Notes to Financial Statements 1. BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION The financial information contained in this statement does not constitutestatutory accounts within the meaning of section 240 of the Companies Act 1985.The unaudited consolidated financial information for the six months ended 30June 2006 have been prepared in accordance with accounting policies adopted inthe London Capital Group Holdings statutory accounts for 31 December 2005. Comparative figures for 2005 are for memorandum purposes and comprise LondonCapital Group Limited results. Charges in respect of employee share schemes will be completed in accordancewith FRS 20 as part of the full year audited accounts. The effect of the changeof accounting policy is expected to significantly accelerate the timing of theschemes' cost. A copy of this interim statement is being sent to all shareholders and furthercopies are available from the Company's Registered Office as well as on theCompany's website: www.londoncapitalgroup.com 2. TURNOVER Turnover is stated net of brokerage and hedging costs: 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000 Spread betting income 3,373 1,940 4,242 Brokerage income 517 625 1,066 Forex income 240 - - ---------- ---------- ---------- Turnover - continuing 4,130 2,565 5,308 Turnover - discontinued - - - ---------- ---------- ---------- Gross group turnover 4,130 2,565 5,308 Hedging and brokerage costs (602) (237) (447) ---------- ---------- ---------- Net group turnover 3,528 2,328 4,861 ========== ========== ========== 3. EXCEPTIONAL ITEMS The exceptional items comprises the following: 6 months to 6 months to 30 June 30 June 2006 2005 £'000 £'000 Vendor non recurring costs - (266) Bonus - (153) Other non recurring costs - (116) Exceptional income - 120 ---------- ---------- - (415) ========== ========== 4. TAXATION ON ORDINARY ACTIVITIES Analysis of charge in the period 6 months to 6 months to 30 June 30 June 2006 2005 £'000 £'000 Current tax: In respect of the period: UK Corporation tax based on the results for the period at 30% (2005 - 30%) 442 28 ---------- ---------- Total current tax 442 28 Deferred tax: Origination and reversal of timing differences 9 - ---------- ---------- Tax on profit on ordinary activities 451 28 ========== ========== 5. EARNINGS PER SHARE The basic earnings per ordinary share is calculated by dividing profit for theperiod less non-equity dividends and other appropriations in respect of non-equity shares by the weighted average number of equity shares outstanding duringthe period. at 30 June 2006 £ Profit after tax 1,204,000 Weighted average no of shares 38,292,683 Weighted average basic EPS 3.14p ========== The diluted earnings per ordinary share is the basic earnings per share afterallowing for the dilative effect of the conversion into Ordinary shares of theweighted average number of options outstanding during the period. at 30 June 2006 £ Profit after tax 1,204,000 Weighted average no of shares 41,507,564 Weighted average diluted EPS 2.90p ========== This information is provided by RNS The company news service from the London Stock Exchange