LCG Shares Hit 52-Week Low On 2009 Profit Warning

Shares in London Capital Group fell by nearly 13% in London Monday after the online financial spread betting and trading company warned that its results for 2009 would be below market expectations, with pre-tax profits expected to be between £6 million and £6.5 million for the year.

In a trading update released Monday, London Capital Group said that the general economic environment was continuing to affect the company's profitability and that although trading revenue had remained strong, the company had continued to experience lower volatility and lower interest income on deposits.

Combined with higher expenditure on infrastructure and white label partnerships including Saxo Bank, Betfair and Paddy Power, these have impacted the company's profitability, with the Board now expecting pre-tax profit in the £6 - £6.5 million range and adjusted EBITDA of between £8 million and £8.5 million, below market expectations.

London Capital Group said it has not experienced any significant bad debts in the period to date and that all its businesses remain profitable. The company's KPI's continue to be robust, with strong client acquisitions, trading volumes and growth in client funds on deposit.

The company added that it continues to generate good profits, and that the balance sheet and net cash resources remain strong.

"We are disappointed by the 2009 expected results which are due to the general business environment which has eroded the positives of our KPI's," said Frank Chapman, CEO of London Capital Group. "Nonetheless the investment that we have put in this year leads us to be confident that the group will continue to capitalise on its opportunities and we are optimistic for next year."

The Board will publish its results for the year ended December 31st 2009 on February 25th 2010.

Shares in London Capital Group plc (Co. Profile) (LSE:LCG) hit a new 52-week low in London yesterday before recovering slightly to trade at 142.00 pence per share, down 12.88% on the day.