The online spread betting company’s AGM statement opened with the encouraging news that key performance indicators for the first quarter were ahead of management expectations – clearly the key performance indicators in question were less important to investors than news of a fall in pre-tax profit which resulted in a 18% fall in share price!

Gross revenue for the Group is also ahead of last year but group profit before tax is down on last year as a result of an increase in costs (accelerated investment in new trading software and increased white label expenses) and less less volatile conditions in their main markets - we like lower volatility! The lower level of interest income also doesn’t help a business like LCG that is awash with client’s cash on deposit!

Average daily trade volumes have risen to 28,000 in the first quarter of 2009 (1st quarter 2008: 17,700), new client acquisition is well ahead of last year and has accelerated to over 2000 per month in the first quarter of 2009 (1st quarter 2008: 1000) and spread betting client funds on deposit have risen in the first quarter by 26% to £30.5m – unfortunately with interest rates well down they haven’t gained much from these.

Unlike it’s larger peer IG Group, LCG’s risk averse model also ensures that bad debts remain negligible.

Assuming the cost increase was a one off and introduction of new trading software is a positive move, it appears that the group should reap the rewards of the higher client numbers and new white label arrangements over the coming months!