London Capital Group delivered a mixed first-half performance, with steady trading at the core UK spread betting side having been offset by a fall in business from the institutional brokerage and a loss at the Gibraltar-based spread betting operation. Headline profits were also dented by compensation provisions, relatively less market volatility and a competitive squeeze on margins. Add that tough trading environment to the possibility of more compensation provisions and share price upside looks limited.
Around two-thirds of group revenue was generated by the UK financial spread betting business – net revenue per active client here rose 20 per cent to £970, while the contracts for difference (CFD) operation turned the previous year’s small operating loss into a £0.6m profit. The group has also signed up six new White Label clients that will use its trading platform and this is expected to boost new client numbers next year by around 10 per cent. Meanwhile, the Gibraltar-based ProSpreads unit has been granted a retail licence that will allow it to accept applications from potential clients who previously failed to meet the conditions to trade as institutional clients.
Broker Cenkos expects full-year pre-tax profit of £6m, giving EPS of 8.5p (2011: £6.14m/8.64p).
| LONDON CAPITAL GROUP (LCG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 63p | MARKET VALUE: | £34m | |
| TOUCH: | 63-65p | 12-MONTH HIGH: | 91p | LOW: 61p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 64p* | NET CASH: | £26.6m | |
| Half-year to 30 Jun | Turnover (£m) | Pretax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 18.3 | 2.69 | 3.89 | 1.30 |
| 2012 | 18.4 | 0.15 | 0.35 | 1.30 |
| % change | +1 | -94 | -91 | - |
Ex-div: 5 Sep Payment: 28 Sep *Includes intangible assets of £13.1m, or 25p a share | ||||
