LCG chief exec resigns as numbers nosedive
Simon Denham resigns with immediate effect on the same day spread betting firm announces year-on-year revenues down 27%, £7m profit in 2011 turns into £200,000 loss and that it will not pay shareholders dividend as a result.
London Capital Group’s decade-long CEO Simon Denham has resigned with immediate effect on the same day the spread betting firm announced year-on-year revenues are down 27%, a £7m profit in 2011 has been turned into a £200,000 loss and that it will not pay shareholders a dividend as a result.
Announcing its annual results for the year ended 31 December 2012 company chairman Giles Vardey admitted 2012 was a “difficult” year for the group and called financial results “disappointing” with a “marked decline in customer trading activity, especially in the second half of the year”.
Refusing to blame market conditions, he said it remains true that lower levels of volatility in markets overall meant that there were less trading opportunities for LCG’s customers to pursue. As a result revenues were 27% lower than 2011 and profits declined throughout the year leading to a £0.2m adjusted loss before tax for the year as a whole.
Given the results, and having paid a 1.3p dividend at the half year, the chairman added that the company’s board “does not consider it appropriate” to pay a final dividend.
Today also saw LCG’s long-serving chief executive Simon Denham resign with immediate effect after “almost ten years of building London Capital Group’s business”, the chairman announced in a statement. He will be replaced by 51 year-old Mark Slade, who, according to Vardey, has a “long and enviable track record in growing financial businesses” with the LCG board adding that they are “confident that he is the right person to take the company forward”.
A decade after founding the company Denham said he felt it was the “right time” to hand over to a successor. “I am very proud of the part I played, together with my colleagues, in building London Capital Group from a small trading business to one operating globally, offering multiple products and partnered with some of the world’s premier financial services and gaming brands,” he said.
“With the company looking to achieve the next phase in its growth and development, I believe that a fresh perspective will be very valuable,” he added.
Denham added that the last year had been “very difficult” for most of the financial services industry especially for the mid to small scale companies. “The increasing burdens of regulation, compliance and capital have fallen most onerously on the smaller scale firms and this has, unfortunately, coincided with a considerable fall in UK retail and institutional business volumes,” he said.
Towards the end of last year COO Rachel Woodford announced she would step down from her role to pursue other interests and that she would leave the board in July 2013.
Slade has “extensive knowledge” of both trading in financial markets and risk management gained in a 30-year career most recently as CEO of Marex Financial, and previously as managing director of Refco Overseas. He also served as a director on the London Metal Exchange for seven years. Slade will take up the role from 25 February.
The company, that owns brands Capital Spreads and white labels its financial spread trading to operators including bwin.party, did not update the market on three individual “preliminary approaches” it received on 12 February for a potential acquisition of the business.
In the last quarter the board said it had decided to address three “urgent problems”. It launched a review to ensure that the group’s costs were aligned to a “possible lower revenue base” hedging against the fact that lower market volatility would persist for a long time and identified potential savings of £4m which it said would be implemented in 2013. Secondly, it concluded that LCG’s current international operations would not meet the group’s return on investment expectations in 2013 and certain of these operations should “therefore be sold or restructured”. Thirdly, the review included an overall assessment of organisational effectiveness which it said would “lead to changes” in the structure of the operational management.
“All of the above gives the group the opportunity to focus on what it does best in terms of offering attractive products,” Vardey said. “LCG continues to expand its partnership programme with a growing pipeline of high quality domestic and international partners who wish to white label the company’s trading services and products. In addition, the group continues to make improvements to its trading platform which allows LCG to remain at the forefront of improved customer trading experience,” he added.
The chairman concluded by saying that 2013 has started with stronger equity markets and the “possibility of more activity” in the currency and credit markets.
“The group remains well capitalised and well positioned to take advantage of any major upswing in activity. The board plans are to promote the company’s core businesses, and use the group’s partnership programmes to develop international business in a more cost effective manner,” he said. “The board believe that the fundamentals of the business remain sound but that some of the increases in costs and overall efficiency need correcting swiftly without cutting out the capacity for growth in the business,” he added.