London Capital Group’s 2013 Annual Report – looking to regain solid footing, planning for internationalization

Report states general confidence of the business has materially improved with challenges ahead

London Capital Group Holdings plc (LON:LCG) which is authorized and regulated by the Financial Conduct Authority (FCA) in London released their 2013 annual report to investors this week. The report shows they believe their worst is behind them after a tough 2012 and they made 2013 a transition year. The leadership makes some encouraging statements as it relates to their future as they try to juice up their marketing, innovation, and global reach in a competitive market.

The shares in London Capital Group (LON:LCG) which trade on the LSE and is an established member of the AIM Market are off 14.48% year-to-date per the end of the trading day on Thursday, April 24 to stand at 28.30. Can London Capital Group do anything to turn performance around? They believe they are on the right path. We will highlight below some important notes from their annual report and let you download the full PDF if you wish at the end of the article.

In the Chairman’s Statement prepared by Giles Vardey he stated the following as it pertains to the top and management: “…Kevin Ashby, a highly experienced senior executive in the sector, who agreed to become CEO as well as John Jones, who joined the Group as Chief Operating Officer. Kevin set about completing a number of important tasks for the Company including recruiting a new Chief Financial Officer in David Sparks, to replace Siobhan Moynihan, and a number of other senior managers. The Board’s other focus has been finishing the migration to our new trading platform which will be completed in a matter of weeks.”

Further notes from the Chairman’s Statement and Introduction:

After tough 2012, launched a complete overhaul in most areas of the business.

– Early in 2013, the Company received a number of approaches from interested parties, but none resulted in any offers for the Company.

– Disposed of our underperforming operations, LCG Australia and ProSpreads (Gibraltar).

– Exiting the non-core institutional broking operations.

– More open view towards partnerships and foreign growth opportunities as well as pursuing new product innovations on the new platform, which in turn should facilitate growth.

– Financial results will need to show more progress before the Board can consider resuming dividend payments.

– The successful settlement of the litigation brought by Integrity; and significant progress made with the FOS claims, allowing the majority to be settled in early 2014.

– UK centric nature of the Group’s business did not allow it to be cushioned by growth in other markets.

– Embarked on a major investment programme involving the complete replacement of the core trading systems, which will be completed in April 2014.

The report is detailed and goes on to list short term – tactical, medium term – repositioning and differentiation, as well as long term – strategic goals in which they hope to accomplish to get the company growing.

Short term notes:

– After a lack of investment and direction in sales and marketing in 2012, LCG hopes their new platform will juice up their sales pipeline. The challenge in 2014 is to re-grow the business, but this cannot be achieved until the platform migration has been completed, the new system bedded in and a new marketing campaign initiated, which is planned for the second quarter of 2014.

– They state that short-term focus is on completing the migration process and undertaking the stabilizing actions as far as business intelligence and reporting that are required with any new system.

Medium term notes:

– Marketing to experienced trading group will be focused around promoting new innovation – giving a reason to move to Capital Spreads.

– For new traders, we need to grab their attention, and stand out from the crowd. As with traders changing accounts, innovation will play its part; but we need to present LCG as materially different from our competitors. This will be achieved by both an innovative marketing campaign and the promotion of our recognized core strengths of ease of navigation, value for money and customer service.

– Seek to increase the number of partnerships we have outside the UK, as they believe they are too UK centric.

– Re-position LCG as different from the crowd and support this rhetoric with the regular release of innovative technology solutions.

Long term notes:

– Our innovation will be orientated around improving navigation and ease of use and delivering tools and services that help clients reduce risk and make better trading decisions.

– Once we have re-established momentum, the Company will seek to expand into Asian and Latin American time zones, organically, via partnerships, joint ventures and acquisitions.

– LCG has made improving the customer journey a core long-term objective. We have also determined that the best way of measuring our progress is by measuring how many clients refer friends and recommend us to others.

It seems obvious LCG understands what their problems could be and they have outlined a plan forward to fix it. LCG plans to move full speed ahead by focusing on ease of use, unique marketing to highlight their technological superiority and differentiation and finally making the clientele happy with rapid response and warm customer service and back office support. To read more about what they believe are key risks facing them going forward and a number of detailed financial statements please click here to download the PDF of 2013 LCG Annual Report.

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