LONDON Capital Group (LCG)’s shares slumped to their lowest point this year yesterday as the online spread-betting firm announced it expects a drop in profits.
Predictions for the six months to July saw pre-tax profits fall to £2m, compared with £3m for the same period last year, with LCG blaming the disappointing figures on “low market volatility and trade volumes”.
The company said it expected revenues from its spread-betting and contract for difference (CFD) operations to increase by 10 per cent, but that its foreign exchange and broking businesses would suffer, with income dropping 26 per cent and 67 per cent respectively.
LCG has had to put aside £1.9m to provide for a potential £3.3m compensation payment for clients who lost money on a third-party currency fund provided by the company, pending an appeal against the financial ombudsman.
The company continued to see losses in some overseas operations, with its Australian CFD office, which opened in 2010, expecting a £0.3m deficit, and its spread-betting operation in Gibraltar losing £0.4m. LCG said it expects both ventures to become profitable in the future.
Shares in LCG fell 10 per cent to 63p yesterday, its lowest point since last August, before ending the day slightly higher at 65p.