Periods of market calm tend to signal turbulence for online trading companies, ensuring a torrid 2012 for the likes of London Capital Group (LCG). However, the return of significant activity in the first half of this year meant greater opportunities for profitable trading, and resulted in the company posting an increase in underlying pre-tax profits of 15 per cent to £3.1m when one-off costs of £2.7m are stripped out.
But times are still tough in a competitive market, and cutbacks in marketing spending in order to preserve cash had a knock-on effect on new private client numbers. These fell by 22 per cent in the half to 4,500, with no improvement forecast before the fourth quarter. Management also appears to have discounted any progress this year with the rebuilding of its white label and institutional clients business and no material pick up in sales is expected before the second quarter of next year.
London Capital had to book a further £1.1m charge to cover the expected costs from an ongoing financial ombudsman investigation into the group's botched handling of a managed forex account in 2009. That brought the total recognised provision to £4.725m at the half-year mark.
Housebroker Cenkos said it was waiting for new management to settle in before issuing forecasts.
LONDON CAPITAL GROUP (LCG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 45p | MARKET VALUE: | £23.9m | |
| TOUCH: | 44-46p | 12-MONTH HIGH: | 65p | LOW: 28p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 60p* | NET CASH: | £24.5m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 17.8 | 0.83 | 1.65 | 1.30 |
| 2013 | 16.3 | 0.36 | 0.36 | nil |
| % change | -9 | -57 | -78 | - |
Ex-div: na Payment: na *Includes intangible assets of £11.6m, or 22p a share | ||||
