Chief Executive Frank Chapman said in his statement: "Our performance continues to demonstrate the benefits of our longer term approach to the development of the business combined with strict cost controls. We continue to improve financial performance through growing our white label offering, developing new products and services to meet the evolving needs of our clients whilst continually investing in IT, infrastructure and key personnel.
"Operating Review - Overall, the Group has continued to pursue its strategy of controlled growth in its own brands and by expanding via new White Label partnerships and joint ventures."
"Capital Spreads, our financial spread betting business, continues to grow at a rapid pace. During 2007, the number of live accounts has grown significantly."
"We have devoted increased resource into our marketing activity during the year to further build our client base. However, it is also remains the case that in excess of 50% of Capital Spreads clients continue to be acquired via word of mouth and recommendation."
"Clients are attracted to our spread betting platform due to both our commitment to some of the tightest spreads in the industry and to our exceptional customer service team."
"We are also continuing to monitor and looking to capitalise, where we can, on the impact of MiFID (Markets in Financial Instruments Directive) which came into force during the latter part of 2007."
"Longer term, we plan to continue to expand our operations across continental Europe and also into Asia."
"As on-line financial trading becomes more widespread outside the U.K., we plan to offer white label solutions to partners in other jurisdictions (other than the U.S.) rather than to set up our own operations. This will provide cheaper and faster access to these markets."
"During the latter part of 2007 we launched significant white labels with Paddy Power and Betfair and are encouraged by early trading volumes. With the implementation of new European directives during 2007, the Group plans to market its spread betting and trading products throughout Europe with associated growth arising from this region in 2008."
"As the benefits of trading via spread betting and trading platforms become more evident globally, Capital Spreads is well placed to take advantage of its strong brand name, reputation and quality product offering and will continue to be a major player in this sector."
"We have devoted increased resource into our marketing activity during the year to further build our client base. However, it is also remains the case that in excess of 50% of Capital Spreads clients continue to be acquired via word of mouth and recommendation."
Financial spread-betting operator London Capital has announced booming profits off the back of a year of financial market volatility.
The operator of the Capital Spreads website saw turnover rose 119% over the year to £19m (E25m) while EBITDA was up 138% to £9.6m.
Frank Chapman, chief executive, said: “We have obviously had a good year, and this has been helped by market volatility.”
The number of clients has more than doubled over the year to 19,125 with 37% of those accounts being active.
Simon Denham, managing director, said this enhanced user-base was the key to the year ahead. “The base we have is very important,” he added. He said that tight spreads, a good risk policy as regards stop-loss and a platform that was very understandable should help the company retain clients in the year ahead.
Capital Spreads also runs white-label sites for Betfair and Paddy Power which both began operations within the past year.
Its Capital Spreads retail spread betting business is what has driven the exceptional rate of growth in the past year. During the period that business (which accounts for 80% of profits) attracted 4,472 new accounts, now at 13,180 compared with 8,708 at the beginning of the year.
Financial spread-betting company London Capital Group has seen profits soar in the past year according to results published this morning. The operator of the Capital Spreads website said earnings before interest, tax, depreciation and amortisation (EBITDA) rose 144% to just over £4m (US$7.9m) on a turnover that rose 78% to £8.65m. Operating profit rose 142% to £3.87m. The company announced a maiden dividend of 1.7p.
The trend has been accelerating, with approximately 1,000 new clients a month gained in the second quarter. But Frank Chapman, chief executive officer, admits this acceleration can keep going on: 'If IG index is making 1,000 a month it is going to be difficult for us to beat them since we are spending less than a fifth of what they are on client acquisition.' From now on Chapman believes the rate in growth of new clients, 50% of whom come from recommendations, will plateau.
Share price: 117.5p (+1p)
Turbulent stock markets may have given private investors sleepless nights, but they are manna from heaven for spread-betting companies, who thrive on volatility. Take London Capital Group, the people behind Capital Spreads. Yesterday, LGC unveiled a 52 per cent rise in sales to PS3.5m in the first six months of this year. Profits before tax surged 385 per cent to PS1.7m, although this startling improvement is flattered by a PS400,000 dividend paid to the group's previous owner last May that depressed interim profits in 2005.
Capital Spreads has 7,500 clients, against 2,850 just over a year ago, and is signing up about 300 a month.
They are drawn to some of the tightest spreads in the market, which the company is able to offer because of its low-cost, almost exclusively online model.
Spread-betting may be the engine room of LCG's impressive growth, but other parts of the group are pulling their weight.
Its institutional foreign exchange business is turning over $1bn (PS526m) a day, with little marketing by LCG. Its derivatives trading arm may not be expanding, but it gives the group access to cheap hedging for spread-betting positions.
The shares edged 1p higher yesterday, valuing LCG at PS45m. They are trading at about 11.2 times expected 2007 profits, a 45 per cent discount to the much bigger rival IG Group.
Taken with LCG's promise to pay a dividend with the final results (provided the business continues to do well) and its attractions to bigger players in a consolidating industry, the shares look well worth a flutter.
'We have continued to experience strong trading with encouraging growth in both the number of live customer accounts and the daily trading volumes in the spread betting division,' chief executive Frank Chapman said in a statement.
'All of our business areas have started the second half of the year well and we continue to perform in line with market expectations.'