GAIN Capital clarifies US Tax Cuts and Jobs Act impact on Q4 and 2017 results

Gain Capital

FX brokerage group Gain Capital Holdings Inc (NYSE:GCAP) has issued a brief clarification to its Q4 and 2017 full year financial results, which were released last week.

GAIN Capital, which operates the retail and City Index brands and the institutional GTX business, stated that it wishes to clarify its prior statement regarding the impact of the U.S. Tax Cuts and Jobs Act on its net income included in the Company’s previously disseminated fourth quarter and full year 2017 earnings release, issued on Thursday, March 8, 2018.

The company’s prior statement in the fourth bullet under the “Key Financial Results” section is amended to read, “Removing the impact of the U.S. Tax Cuts and Jobs Act on GAAP net loss, net income in the fourth quarter would have been a net profit of $1.2 million or $0.03 per share, while the full year would have been a net loss of $6.3 million or $0.10 per share.”

Effectively, based on our calculations, the U.S. Tax Cuts and Jobs Act caused GAIN Capital to take an approximate $5 million hit in the fourth quarter. The company reported a Q4 net loss of $3.7 million, and a full year net loss of $11.2 million. It looks like Q4 net income was reduced by $4.9 million, and full year 2017 net income by a similar number.

We believe that the tax hit was mainly due to GAIN Capital being a US company which does most of its business outside the US.

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