22nd Jan 2014 09:51
LONDON (Alliance News) - Online trading and spread betting company London Capital Group Holdings PLC Wednesday reported slightly higher revenues for the second half of 2013, and said it managed to swing to a pretax profit for the year as a whole excluding the payouts it is having to make for claims related to a former forex trading platform.
In a trading update, the company said revenues for the second half of the year were GBP10.9 million, up from GBP10.2 million in the second half of 2012, although revenues for the whole of 2013 were GBP28.0 million, down from GBP28.6 million. It said revenue from its continuing financial spread betting, CFDs and institutional FX business was GBP25.2 million, down from GBP26.6 million in 2012.
It said it expects its adjusted pretax profit for 2013 to be about GBP2.4 million, compared with a loss of GBP0.2 million in 2012. The adjusted profit figure is before impairments, charges, restructuring and disposal costs and costs related to IT platform changes.
London Capital, which operates under the name Capital Spreads, has had a tough couple of years after it was hit by legal costs and claims related to the repayment of a client who lost GBP100,000 through a forex platform that London Capital provided to the now defunct Integrity Group. It has also been setting aside money to cover other possible claims after a ruling by the Financial Ombudsman Service.
London Capital admitted mistakes in administering the fund's clients, who wrongly received rebates on commission paid to London Capital. The company argued however, that they were not responsible for losses the customers incurred. An adjudicator ruled that London Capital did have a duty of care to the clients.
In November, London Capital said it had settled a claim against it regarding the termination of a fee sharing agreement with Life Settlement Consulting Ltd, which introduced clients to the managed forex fund. That meant that all claims brought by Integrity were withdrawn. London Capital agreed to pay GBP350,000 as a contribution to legal expenses.
In its statement Wednesday, London Capital said the 2013 charge for the Integrity claim will be GBP1.6 million, with the same amount for claims made through the Financial Ombudsman Service. Its said its total provision for claims through the ombudsman is now GBP4.9 million, and it has started to pay settled claims.
Chief Executive Kevin Ashby said settlement of the Financial Ombudsman Service claims to be largely completed in the first quarter of this year.
"The company has moved forward with the deployment of its new trading platform which will be completed by the end of the first quarter of 2014, from which point we plan to release a number of new trading tools and applications which will attract new users to our platform," Ashby said.
London Capital shares last traded at 32.75 pence in London.
By Steve McGrath; [email protected]; @SteveMcGrath1
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