So, while revenues in the group's largest division - UK Financial Spread Betting - rose 12 per cent in the first half of last year, double-digit falls in active clients and trading volumes led to a 50 per cent reversal in the second half. The Australian contracts for difference (CFD) business recorded a loss, while ProSpreads, the group's direct market access financial spread betting arm, saw revenue slide 43 per cent. Aggregate losses incurred at the two operations amounted to £1.2m.
Accordingly, the board has identified three main objectives. The first is to reduce the cost base, especially if lower volatility persists, and £4m of potential savings have already been identified. Secondly, some overseas operations will be sold or restructured, and thirdly there will be changes in the structure of the operational management.
After 10 years building up the group, chief executive Simon Denham has resigned with immediate effect, while chief operating officer Rachel Woodford will leave in July.
|LONDON CAPITAL GROUP (LCG)|
|ORD PRICE:||48p||MARKET VALUE:||£25.5m|
|TOUCH:||47-48p||12-MONTH HIGH:||86p||LOW: 32p|
|DIVIDEND YIELD**:||2.7%||PE RATIO:||NA|
|NET ASSET VALUE:||59p*||NET CASH:||£22m|
Shares in LCG surged 50 per cent earlier this month on the bid approach, but these gains will be hard to preserve if a bid fails to materialise, especially if volatility levels remain subdued. So, given the bleak outlook, selling now might be the best option. Sell.
Last IC view: Hold, 63p 23 Aug 2012