London Capital Group reports £7.3 million 1H loss as restructuring investment nears completion


UK spreadbetting and forex broker London Capital Group Holdings plc (LON:LCG) has reported First Half 2015 results, which as expected included a fairly sizable net loss – £7.3 million (USD $11 million). That includes a loss of about £1.7 million from the January 15 Swiss Franc spike.

While technically reported as a loss, LCG’s first half results reflect mainly the investment made by Charles-Henri Sabet and his new management team at LCG in the company’s future. The first half of 2015 was mainly about restructuring at LCG – layoffs and the hiring of new personnel and preparing a full rebrand of the company under the ‘LCG’ umbrella.

We expect that in the next few weeks London Capital Group will formally unveil a new website under lcg.com (which the company acquired as part of the planned restructuring), a new unified trading platform and a new back-office CRM. LCG currently offers a number of trading platforms under a number of different brands.

Financial highlights for H1 2015 include:

  • Adjusted loss before tax from continuing operations of £9.9 million (H1’14 loss: £0.9 million);
  • Loss before tax from continuing operations of £8.6 million (H1’14 loss: £0.4 million), whereas net loss amounted to £7.3 million;
  • EBITDA loss before certain one-off items from continuing operations for period from October 2014 when new management was appointed of £2 million;
  • Revenue from continuing operations down 42% to £5.3 million (H1’14: £9.2 million);
  • Net cash and short term receivables, excluding amounts due to clients increased 38% to £22.9 million (H1’14: £16.5 million).

Key performance indicators of the UK financial spread betting and CFD business for the reporting period, however, were solid when compared with the preceding six-month period (that is – H2 2014).

kpi_lcg_inside_h1_2015

Referring to the robust KPI, Charles-Henri Sabet, Chief Executive, struck an upbeat note regarding the future performance of LCG. He commented:

Due to the positive direction shown in our key performance indicators, we are confident in our strategy during this transitional and challenging period.

Mr Sabet said:

Charles Henri Sabet“The business has been operating in challenging market conditions throughout the first half of the year, with relatively low levels of volatility across financial markets for much of the period. We have been focused on developing exciting new technology, a full rebranding, initiating a new client journey as well as optimising our internal processes in order to facilitate client acquisition. We have also focused on rationalising the fixed cost base.

Since the arrival of the new management team in October 2014, the Group has recognised an EBITDA loss of £5.4 million. This is a result of: decreased revenues due to lower market volatility; an exceptional £1.7 million loss incurred as a result of the movement in the Swiss Franc; and additional administrative costs of £1.7 million mainly due to staff turnover, contracting fees and increased IT spend. The EBITDA loss excluding the impact of the Swiss Franc event and additional administrative costs relating to staff turnover and IT would have been £2.0 million.

Our limited client growth in this period has been due to a core focus on our relaunch and a strategic decision to limit marketing of the current brand. We plan on launching our new product in the coming months with a full scale marketing drive and significant coverage.

The Group is confident that with the development of our new advanced technology, a renewed commitment to hiring the industry’s most talented people and a big increase in marketing driving our rebrand, the majority of the short-term strategy will be achieved in the second half of the year.”

inside_fin_results_lcg

So how will LCG’s strategy look going forward?

Well first off, LCG’s new marketing effort will be being aimed at attracting active retail traders. And its investment in the first half of the year was clearly centered on upgrading IT across the board, back and front end (e.g. LCG will shortly unveil new mobile trading apps), and in bringing in new people to run the firm.

Specifically, LCG states its strategy will include:

Industry-leading platforms

The 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.

Service

The 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 service

Targeted 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 material

The 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.

Marketing

The 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 execution

The 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.

To view the official announcement from LCG, click here.

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London Capital Group reports £7.3 million 1H loss as restructuring investment nears completion

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