Form 8-K GAIN Capital Holdings, For: Mar 15

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March 15, 2016 7:55 AM EDT


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
March 15, 2016
Date of Report (Date of earliest event reported)
GAIN CAPITAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)
 
 
 
 
 
Delaware
 
001-35008
 
20-4568600
(State of Incorporation)
 
(Commission File No.)
 
(IRS Employer Identification No.)
Bedminster One
135 Route 202/206
Bedminster, New Jersey 07921
(Address of Principal Executive Offices)
(908) 731-0700
(Registrant’s Telephone Number, Including Area Code)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))








Item 2.02 Results of Operations and Financial Condition.

On March 15, 2016, GAIN Capital Holdings, Inc., a Delaware corporation (the “Company”), issued a press release to report the Company’s financial results for the fourth quarter and full year ended December 31, 2015. The full text of the press release is attached to this current report on Form 8-K as Exhibit 99.1.*

Item 7.01 Regulation FD Disclosure.
On March 15, 2016, beginning at 8:00 a.m., eastern time, the Company will host a conference call concerning the Company’s financial results for the fourth quarter and fiscal year ended December 31, 2015. In connection with this conference call, the Company has made available for review on its website (ir.gaincapital.com) a copy of its corporate presentation. A copy of the corporate presentation is also attached hereto as Exhibit 99.2.*
Item 8.01 Other Events.
On March 15, 2016, the Company announced that its Board of Directors has declared a dividend of $0.05 per share of the Company’s common stock. The dividend will be paid on March 29, 2016 to shareholders of record at the close of business on March 25, 2016.
Item 9.01. Financial Statements and Exhibits
 
 
 
Exhibit
No.
 
Description
 
 
99.1
 
Press Release of GAIN Capital Holdings, Inc., dated March 15, 2016, reporting its financial results.

99.2
 
Corporate Presentation

*
The information furnished in Items 2.02, 7.01 and 9.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: March 15, 2016
 
 
 
GAIN CAPITAL HOLDINGS, INC.
 
 
By:
 
/s/ Nigel Rose
Name:
 
Nigel Rose
Title:
 
Chief Financial Officer






Exhibit Index

Exhibit
No.
 
Description
 
 
99.1
 
Press Release of GAIN Capital Holdings, Inc., dated March 15, 2016, reporting its financial results.

99.2
 
Corporate Presentation





GAIN Capital Reports Fourth Quarter and Full Year 2015 Results

Fourth Quarter 2015
-Net revenue of $102.8 million
-Net income of $15.5 million
-Adjusted EBITDA of $21.5 million
-Earnings per diluted share of $0.32
-Adjusted earnings per share1 of $0.42

Full Year 2015
-Net revenue of $ 435.4 million
-Net income of $10.2 million
-Adjusted EBITDA1 of $80.5 million
-Earnings per diluted share of $0.22
-Adjusted earnings per share1 of $0.71

BEDMINSTER, N.J., March 15, 2016 /PRNewswire/ -- GAIN Capital Holdings, Inc. ("GAIN") (NYSE: GCAP), a leading global provider of online trading services, announced financial results for the fourth quarter and full year ended December 31, 2015.

Net revenue for fiscal year 2015 was $435.4 million, up from $369.2 million in fiscal year 2014.  Adjusted EBITDA for the year was $80.5 million, up from $74.7 million in 2014.  GAIN’s financial highlights for the three months and fiscal year ended December 31, 2015 are included in the chart below.

 
Three Months Ended
December 31,
 
Fiscal Year Ended
December 31,
 
2015
 
2014(2)
 
2015(2)
 
2014(2)
Net Revenue
$
102.8

 
$
115.2

 
$
435.4

 
$
369.2

Less: Acquisition contingent consideration adjustment
(2.3
)
 
—

 
(6.7
)
 
—

Adjusted Net Revenue
100.5

 
115.2

 
428.7

 
369.2

Operating Expenses
79.0

 
78.6

 
348.2

 
294.5

Adjusted EBITDA(1)
$
21.5

 
$
36.6

 
$
80.5

 
$
74.7

Adjusted EBITDA Margin %(1)
21
%
 
32
%
 
19
%
 
20
%
 
 
 
 
 
 
 
 
Net Income
$
15.5

 
$
22.5

 
$
10.2

 
$
24.9

 
 
 
 
 
 
 
 
GAAP EPS
$
0.32

 
$
0.51

 
$
0.22

 
$
0.53

Adjusted EPS(1)
$
0.42

 
$
0.56

 
$
0.71

 
$
0.72




_________________________________________
1See below for reconciliation of non-GAAP financial measures.
2As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information.



“This year reflects GAIN’s continued success in executing its strategy, particularly relating to the scaling and diversification of our retail business, while also growing our other business segments,” commented Glenn Stevens, CEO of GAIN Capital. “We successfully closed on the acquisition of City Index in Q2 and are seeing the benefits of the cost synergies reflected in our financial results. Our achievement of approximately $45 million in run-rate cost synergies by Q4 2016 will drive continued expansion in our operating margins,” continued Mr. Stevens. “This marks the first earnings release that GAIN has disclosed segment reporting which provides a comprehensive picture of the results and profitability of each of GAIN’s business lines and, as a result, greater transparency regarding the value of the enterprise,” concluded Mr. Stevens.

Retail Segment
In the fourth quarter of 2015, GAIN’s retail segment generated net revenue of $82.8 million and adjusted EBITDA of $24.8 million, reflecting a margin of 30%.

For the fiscal year ended December 31, 2015, the retail segment generated net revenue of $351.5 million and adjusted EBITDA of $94.3 million, reflecting a margin of 27%.

Average daily retail trading volume was $12.5 billion in the fourth quarter of 2015, down 1% from $12.6 billion in the fourth quarter of 2014 and $15.4 billion in fiscal year 2015, up 39% from $11.1 billion in the previous year.

Institutional Segment
In the fourth quarter of 2015, GAIN’s institutional segment generated net revenue of $7.4 million and adjusted EBITDA of $2.1 million, reflecting a margin of 28%.

For the fiscal year ended December 31, 2015, the institutional segment generated net revenue of $35.1 million and adjusted EBITDA of $10.1 million, reflecting a margin of 29%.

Average daily trading volume on the ECN and for the Swap Dealer was $6.4 billion and $2.8 billion, respectively, in the fourth quarter of 2015 and $7.2 billion and $3.1 billion, respectively, in fiscal year 2015.

Futures Segment
In the fourth quarter of 2015, GAIN’s futures segment generated net revenue of $10.9 million and adjusted EBITDA of $0.7 million, reflecting a margin of 6%.

For the fiscal year ended December 31, 2015, the futures segment generated net revenue of $45.8 million and adjusted EBITDA of $3.9 million, reflecting a margin of 9%.

Average daily futures contracts were 31,476 in the fourth quarter of 2015 and 34,356 in fiscal year 2015.

Capital Return and Dividend
In the fourth quarter, GAIN repurchased 388,095 shares at an average price of $7.57. For the year, GAIN repurchased 654,362 shares at an average price of $7.76.

GAIN’s Board of Directors declared a quarterly cash dividend of $0.05 per share of the Company’s common stock. The dividend is payable on March 29, 2016 to shareholders of record as of the close of business March 25, 2016.




February Operating Metrics
Retail Metrics

•
OTC average daily volume1 of $13.2 billion, a decrease of 17.4% from January 2016 and an increase of 7.7% from February 2015.2 

•
OTC trading volume1 of $276.3 billion, a decrease of 13.3% from January 2016 and an increase of 13.1% from February 2015.3 

•
Active OTC accounts4 of 143,673, a decrease of 0.1% from January 2016 and an increase of 47.9% from February 2015.5 

•
Futures average daily contracts of 36,993, a decrease of 13.5% from January 2016 and 0.9% from February 2015.

•
Futures contracts of 739,859, a decrease of 8.9% from January 2016 and an increase of 4.3% from February 2015.

Institutional Metrics

•
ECN average daily volume1 of $8.3 billion, a decrease of 12.1% from January 2016 and an increase of 25.0% from February 2015.

•
ECN volume1 of $174.0 billion, a decrease of 7.7% from January 2016 and an increase of 31.3% from February 2015.

•
Swap Dealer average daily volume1 of $3.0 billion, an increase of 4.5% from January 2016 and a decrease of 3.0% from February 2015.

•
Swap Dealer volume1 of $64.0 billion, an increase of 9.7% from January 2016 and 1.9% from February 2015.





















_________________________________________
1US dollar equivalent of notional amounts traded.
2OTC average daily volume decreased 18.3% from February 2015 on a pro forma basis (simple pro forma addition of GAIN and City Index).
3OTC trading volume decreased 14.1% from February 2015 on a pro forma basis (simple pro forma addition of GAIN and City Index).
4OTC accounts that executed a transaction during the last 12 months.
5Active OTC accounts decreased 5.4% from February 2015 on a pro forma basis (simple pro forma addition of GAIN and City Index).



Conference Call
GAIN will host a conference call March 15, 2016 at 8.00 a.m. ET. Participants may access the live call by dialing +1.888.349.0112 (US Domestic), or +1.412.317.6001 (International). Please let the operator know you would like to join the GAIN Capital call.

A live audio webcast of the call, as well as a PDF copy of the earnings presentation, will be available on the Investor Relations section of the GAIN Capital website (http://ir.gaincapital.com).

An audio replay will be made available for one month starting approximately one hour after the call by dialing +1.877.344.7529 from the U.S. or +1.412.317.0088 from abroad, and entering the passcode 10081891#.

For more corporate information or to sign up for alerts, please visit: http://ir.gaincapital.com.

About GAIN
GAIN Capital Holdings, Inc. provides innovative trading technology and execution services to retail and institutional investors worldwide, with multiple access points to OTC markets and global exchanges across a wide range of asset classes, including foreign exchange, commodities, and global equities.  GAIN Capital is headquartered in Bedminster, New Jersey, with a global presence across North America, Europe and the Asia Pacific regions.  For further company information, visit www.gaincapital.com.

Investor Relations Contact
+1 908.731.0737
Media Contact
Chris Mittendorf, Edelman for GAIN Capital
+1 212.704.8134




















Restatement of Certain Financial Information

We have determined that there were errors in the manner in which we accounted for income taxes as of and for the years ended December 31, 2014 and 2013 and for certain quarters of 2015.  These errors related primarily to the manner in which certain intercompany payables and receivables among our domestic and overseas subsidiaries were treated for tax purposes during the impacted periods. The financial information of GAIN Capital for these periods included herein has been restated to reflect the correction of these errors.  In addition, certain other adjustments, previously determined to be immaterial individually and in the aggregate, have also been corrected in the restated financial information.  For more information regarding the restatement, please see our Current Report on Form 8-K, as filed with the SEC on March 15, 2016.







Condensed Consolidated Statements of Income
In millions except share data
(unaudited)
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2015
 
2014(1)
 
2015(1)
 
2014(1)
REVENUE:
 
 
 
 
 
 
 
Retail revenue
$
81.6

 
$
97.7

 
$
347.5

 
$
292.8

Institutional revenue
7.2

 
9.1

 
33.8

 
34.5

Futures revenue
10.6

 
8.6

 
45.4

 
36.2

Other revenue(2)
3.3

 
(0.3
)
 
8.5

 
4.9

Total non-interest revenue
102.7

 
115.1

 
435.2

 
368.4

Interest revenue
0.3

 
0.3

 
1.2

 
1.4

Interest expense
0.2

 
0.2

 
1.0

 
0.6

Total net interest revenue
0.1

 
0.1

 
0.2

 
0.8

Net revenue
$
102.8

 
$
115.2

 
$
435.4

 
$
369.2

OPERATING EXPENSES:
 
 
 
 
 
 
 
Employee compensation and benefits
$
24.9

 
$
28.0

 
$
106.6

 
$
99.2

Selling and marketing
6.8

 
4.1

 
27.2

 
20.2

Referral fees
18.8

 
25.2

 
103.5

 
91.0

Trading expenses
7.8

 
6.0

 
31.9

 
26.2

General and administrative
14.8

 
10.4

 
55.1

 
38.6

Depreciation and amortization
3.5

 
1.4

 
11.1

 
6.6

Purchased intangible amortization
5.9

 
3.2

 
16.5

 
8.1

Communications and technology
4.8

 
3.9

 
18.9

 
15.6

Bad debt provision
1.1

 
1.0

 
7.5

 
3.7

Acquisition expenses
0.1

 
2.0

 
2.8

 
3.5

Restructuring expenses
1.5

 
0.2

 
3.5

 
2.3

Integration expenses
10.0

 
0.8

 
33.1

 
2.5

Impairment on investment
—

 
0.1

 
—

 
0.1

Total operating expenses
100.0

 
86.3

 
417.7

 
317.6

Operating profit
2.8

 
28.9

 
17.7

 
51.6

Interest on long term borrowings
2.6

 
1.8

 
9.2

 
6.1

Income before income tax expense/(benefit)
0.2

 
27.1

 
8.5

 
45.5

Income tax (benefit)/expense
(15.6
)
 
4.2

 
(3.4
)
 
19.2

Net Income
15.8

 
$
22.9

 
$
11.9

 
$
26.3

Net income attributable to non-controlling interests
0.3

 
$
0.4

 
$
1.7

 
$
1.4

NET INCOME APPLICABLE TO GAIN CAPITAL HOLDINGS, INC.
$
15.5

 
$
22.5

 
$
10.2

 
$
24.9

Earnings per common share(3):
 
 
 
 
 
 
 
Basic
$
0.32

 
$
0.54

 
$
0.22

 
$
0.56

Diluted
$
0.32

 
$
0.51

 
$
0.22

 
$
0.53

Weighted averages common shares outstanding used in computing earnings per share:
 
 
 
 
 
 
 
Basic
48,902,186

 
41,506,205

 
47,601,979

 
40,561,644

Diluted
49,379,362

 
43,684,324

 
48,379,051

 
43,214,895

 

_____________________________
1 As restated for 2014 and the first three quarters of 2015. See the Company's Form 8-K filed on March 15, 2016 for additional information.
2 Net revenue includes $2.3 million in Q4 2015 and $6.7 million in FY 2015 arising from a fair value adjustment to the contingent consideration of a prior period acquisition.
3 Earnings per share includes an adjustment for the redemption value of the NCI put option.





Condensed Consolidated Balance Sheet
In millions
(unaudited)
 
December 31,
 
December 31,
 
2015
 
2014(1)
ASSETS:
 
 
 
Cash and cash equivalents
$
171.9

 
$
139.4

Cash and securities held for customers
920.6

 
759.6

Receivables from brokers
121.2

 
134.9

Prepaid assets
7.8

 
2.5

Property and equipment - net of accumulated depreciation
30.4

 
18.8

Intangible assets, net of accumulated amortization
91.5

 
60.8

Goodwill
34.0

 
33.5

Other assets
47.4

 
33.8

          Total assets
$
1,424.8

 
$
1,183.3

LIABILITIES AND SHAREHOLDERS' EQUITY:
 
 
 
Payables to customers
920.6

 
759.6

Accrued compensation & benefits
12.4

 
16.9

Accrued expenses and other liabilities
51.6

 
76.2

Income tax payable
1.1

 
1.0

Convertible senior notes
122.0

 
68.3

          Total liabilities
$
1,107.7

 
$
922.0

Redeemable non-controlling interests
11.0

 
11.3

Shareholders' Equity
$
306.1

 
$
250.0

          Total liabilities and shareholders' equity
$
1,424.8

 
$
1,183.3















_____________________________
1 As restated for 2014. See the Company's Form 8-K filed on March 15, 2016 for additional information.



GAIN CAPITAL HOLDINGS, INC.
Consolidated Statements of Cash Flows
(in thousands)
 
For the Fiscal Years Ended December 31,
 
2015(1)
 
2014(1)
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
11,939

 
$
26,310

Adjustments to reconcile net income to cash provided by / (used for) operating activities
 
 
 
Loss / (Gain) on foreign currency exchange rates
2,432

 
(1,618
)
Depreciation and amortization
27,660

 
14,690

Integration Costs
26,827

 
1,162

Deferred taxes
(12,355
)
 
5,108

Amortization of deferred financing costs
354

 
354

Bad debt provision
7,463

 
3,699

Impairment of cost method investment
—

 
50

Convertible senior note discount amortization
3,624

 
2,150

Gain on extinguishment of debt
—

 
—

Stock compensation expense
3,680

 
3,452

Adjustment to fair value of contingent Consideration
(6,722
)
 
—

Changes in operating assets and liabilities:
11,257

 
82,764

Cash provided by / (used for) operating activities
76,159

 
138,121

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchases of property and equipment
(19,676
)
 
(8,759
)
Sale of treasury bills
—

 
614

Intangible asset purchases
—

 
(12,400
)
Funding of acquisitions, net of cash acquired
(3,258
)
 
(14,918
)
Cash received relating to acquisitions
7,612

 
—

Purchase of investment
(759
)
 
—

Cash used for investing activities
(16,081
)
 
(35,463
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Contractual payments for acquisition
(13,892
)
 
—

Proceeds from issuance of convertible senior note, net
—

 
—

Principal payment on notes payable
—

 
—

Proceeds from exercise of stock options
2,386

 
2,087

Proceeds from employee stock purchase plan
789

 
740

Purchase of treasury stock
(5,088
)
 
(1,250
)
Tax benefit from employee stock option exercises
1,140

 
1,221

Dividend payments
(9,530
)
 
(8,139
)
Distributions to non-controlling interest holders
(1,643
)
 
(597
)
Cash (used for) / provided by financing activities
(25,838
)
 
(5,938
)
Effect of exchange rate changes on cash and cash equivalents
(1,704
)
 
2,760

INCREASE IN CASH AND CASH EQUIVALENTS
32,536

 
99,480

CASH AND CASH EQUIVALENTS—Beginning of year
139,351

 
39,871

CASH AND CASH EQUIVALENTS—End of year
171,887

 
139,351



_____________________________
1 As restated for 2014 and the first three quarters of 2015. See the Company's Form 8-K filed on March 15, 2016 for additional information.





(*) Reconciliation of GAAP Net Income to Adjusted Net Income and Adjusted EPS
Adjusted net income is a non-GAAP financial measure and represents our net income excluding restructuring, acquisition and integration related expenses, adjustment to fair value of contingent consideration and bad debt expense related to the SNB event in January of 2015. This non-GAAP financial measure has certain limitations, including that it does not have a standardized meaning and, therefore, our definition may be different from similar non-GAAP financial measures used by other companies and/or analysts. Thus, it may be more difficult to compare our financial performance to that of other companies. We believe our reporting of adjusted net income assists investors in evaluating our operating performance. However, because adjusted net income is not a measure of financial performance calculated in accordance with GAAP, such measure should be considered in addition to, but not as a substitute for, other measures of our financial performance reported in accordance with GAAP, such as net income.

Net Income to Adjusted Net Income and Adjusted EPS
In millions, except per share data
(unaudited)

 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2015
 
2014(1)
 
2015(1)
 
2014(1)
Net income applicable to Gain Capital Holdings Inc.
$
15.5

 
$
22.5

 
$
10.2

 
$
24.9

Add Back, net of tax:
 
 
 
 
 
 
 
Acquisition costs
0.1

 
1.4

 
2.2

 
2.5

Restructuring
—

 
0.1

 
2.7

 
1.7

Integration costs
6.5

 
0.6

 
21.5

 
1.8

Adjustment to fair value of contingent consideration
(1.5
)
 
—

 
(4.4
)
 
—

Bad debt related to SNB event in January of 2015
—

 
—

 
2.0

 
0.1

Adjusted net income
$
20.6

 
$
24.6

 
$
34.2

 
$
31.0

 
 
 
 
 
 
 
 
Basic
$
0.42

 
$
0.59

 
$
0.72

 
$
0.76

Diluted
$
0.42

 
$
0.56

 
$
0.71

 
$
0.72

Weighted averages common shares outstanding used in computing earnings per common share
 
 
 
 
 
 
 
Basic
48,902,186

 
41,506,205

 
47,601,979

 
40,561,644

Diluted
49,379,362

 
43,684,324

 
48,379,051

 
43,214,895






_____________________________
1 As restated for 2014 and the first three quarters of 2015. See the Company's Form 8-K filed on March 15, 2016 for additional information.






(*) Reconciliation of Cash from Operating Activities and Free Cash Flow per Share
The table set forth below provides information regarding our total available liquidity as of December 31, 2015 and as of December 31, 2014. We use this non-GAAP measure to evaluate our business operations and our ability to continue to grow our business, including through acquisitions (amounts in millions):  
 
Fiscal Year Ended Dec 31,
 
2015(1)
 
2014(1)
Cash Flow from Operations
$
76.2

 
$
138.1

Less: Capital Expenditures
(19.7
)
 
(8.8
)
Free Cash Flow
$
56.5

 
$
129.3

Free Cash Flow per Share
$
1.17

 
$
2.99

 
 
 
 
Diluted Shares Outstanding
48,379,051

 
43,214,895























____________________________
1 As restated for 2014 and the first three quarters of 2015. See the Company's Form 8-K filed on March 15, 2016 for additional information.





Reconciliation of GAAP Net Income to Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that represents our earnings before interest, taxes, depreciation and amortization, purchased intangible amortization, restructuring, acquisition and integration-related expenses, non-controlling interest, adjustment to fair value of contingent consideration and bad debt expense related to the SNB event in January of 2015. This non-GAAP financial measure has certain limitations, including that it does not have a standardized meaning and, therefore, our definition may be different from similar non-GAAP financial measures used by other companies and/or analysts. Thus, it may be more difficult to compare our financial performance to that of other companies. We believe our reporting of adjusted EBITDA assists investors in evaluating our operating performance. However, because adjusted EBITDA is not a measure of financial performance calculated in accordance with GAAP, such measure should be considered in addition to, but not as a substitute for, other measures of our financial performance reported in accordance with GAAP, such as net income.

Reconciliation of GAAP Net Income to Adjusted EBITDA
In millions
(unaudited)
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2015
 
2014(1)
 
2015(1)
 
2014(1)
Net revenue
$
102.8

 
$
115.2

 
$
435.4

 
$
369.2

Less: Acquisition contingent consideration adjustment
(2.3
)
 
—

 
(6.7
)
 
—

Core net revenue
100.5

 
115.2

 
428.7

 
369.2

Net income applicable to Gain Capital Holdings Inc.
15.5

 
22.5

 
10.2

 
24.9

Net income margin %
15
%
 
20
%
 
2
%
 
7
%
 
 
 
 
 
 
 
 
Net income
15.5

 
22.5

 
10.2

 
24.9

Depreciation and amortization
3.5

 
1.4

 
11.1

 
6.6

Purchased intangible amortization
5.9

 
3.2

 
16.5

 
8.1

Interest expense
2.6

 
1.8

 
9.2

 
6.1

Income tax expense
(15.6
)
 
4.2

 
(3.4
)
 
19.2

Acquisition expense
0.1

 
2.0

 
2.8

 
3.5

Restructuring
1.5

 
0.2

 
3.5

 
2.3

Integration
10.0

 
0.8

 
33.1

 
2.5

Acquisition contingent consideration adjustment
(2.3
)
 
—

 
(6.7
)
 
—

Bad debt related to SNB event in January of 2015
—

 
—

 
2.5

 
—

Net income attributable to non-controlling interest
0.3

 
0.4

 
1.7

 
1.4

Other non-recurring items
—

 
0.1

 
—

 
0.1

Adjusted EBITDA
$
21.5

 
$
36.6

 
$
80.5

 
$
74.7

Adjusted EBITDA Margin
21
%
 
32
%
 
19
%
 
20
%



____________________________
1 As restated for 2014 and the first three quarters of 2015. See the Company's Form 8-K filed on March 15, 2016 for additional information.





Segment Information:
ASC 280, Disclosures about Segments of an Enterprise and Related Information, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker, or decision making group, in deciding how to allocate resources and in assessing performance. Reportable segments are defined as an operating segment that either (a) exceeds 10% of revenue, or (b) reported profit or loss in absolute amount exceeds 10% of profit of all operating segments that did not report a loss or (c) exceeds 10% of the combined assets of all operating segments. The Company’s operations relate to global trading services and solutions. Based on the Company’s management strategies, and common production, marketing, development and client coverage teams, the Company has concluded that it operates in three operating segments: Retail Segment, Institutional Segment and Futures Segment.

Retail

 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2015
 
2014(1)
 
2015(1)
 
2014(1)
Revenue
$
82.8

 
$
97.0

 
$
351.5

 
$
296.9

Employee Comp & Ben
16.2

 
17.2

 
67.5

 
62.0

Marketing
6.5

 
3.9

 
26.1

 
19.6

Referral Fees
14.6

 
20.8

 
87.2

 
78.6

Other Operating Exp
20.7

 
12.7

 
76.4

 
51.6

ADJUSTED EBITDA
$
24.8

 
$
42.4

 
$
94.3

 
$
85.1

% Margin
30
%
 
44
%
 
27
%
 
29
%

Institutional

 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2015
 
2014(1)
 
2015(1)
 
2014(1)
ECN
$
4.6

 
$
5.5

 
$
22.4

 
$
19.3

Swap Dealer
2.8

 
3.8

 
12.6

 
16.2

Other
—

 
—

 
0.1

 
—

Total Revenue
7.4

 
9.3

 
35.1

 
35.5

 
 
 
 
 
 
 
 
Employee Comp & Ben
3.1

 
4.0

 
15.3

 
14.0

Marketing
—

 
—

 
0.1

 
0.1

Other Operating Exp
2.2

 
2.7

 
9.6

 
10.9

EBITDA
$
2.1

 
$
2.6

 
$
10.1

 
$
10.5

% Margin
28
%
 
28
%
 
29
%
 
30
%

____________________________
1 As restated for 2014 and the first three quarters of 2015. See the Company's Form 8-K filed on March 15, 2016 for additional information.




Futures
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2015(1)
 
2014(1)
 
2015(1)
 
2014(1)
Revenue
$
10.9

 
$
10.5

 
$
45.8

 
$
36.0

Employee Comp & Ben
2.4

 
2.6

 
10.6

 
8.9

Marketing
0.2

 
0.1

 
0.9

 
0.5

Referral Fees
4.2

 
4.4

 
16.4

 
12.4

Other Operating Exp
3.4

 
3.2

 
14.0

 
11.6

EBITDA
$
0.7

 
$
0.2

 
$
3.9

 
$
2.6

% Margin
6
%
 
2
%
 
9
%
 
7
%


Corporate and Other

 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2015
 
2014(1)
 
2015(1)
 
2014(1)
Revenue(2)
$
(0.7
)
 
$
(1.6
)
 
$
(3.7
)
 
$
0.8

Employee Comp & Ben
2.9

 
4.3

 
13.1

 
14.4

Other Operating Exp
2.5

 
2.8

 
11.0

 
10.0

EBITDA
$
(6.1
)
 
$
(8.7
)
 
$
(27.8
)
 
$
(23.6
)
% Margin
n/a

 
n/a

 
n/a

 
n/a















___________________________
1 As restated for 2014 and the first three quarters of 2015. See the Company's Form 8-K filed on March 15, 2016 for additional information.
1 Excludes impact of acquisition consideration adjustment of $2.3 million and $6.7 million in Q4 2015 and FY 2015, respectively.




Forward-Looking Statements:
The forward-looking statements contained herein include, without limitation, statements relating to GAIN Capital’s and/or City Index (Holdings) Limited (“City Index”) expectations regarding the opportunities and strengths of the combined company created by the business combination, anticipated cost and revenue synergies, the strategic rationale for the business combination, including expectations regarding product offerings, growth opportunities, value creation, and financial strength. All forward looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that GAIN Capital or City Index will realize these expectations or that these beliefs will prove correct. In addition, a variety of important factors could cause results to differ materially from such statements. These factors are noted throughout GAIN Capital's annual report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on March 16, 2015 (as updated or supplemented by the information set forth in GAIN Capital's annual report on Form 10-K for the year ended December 31, 2015, which is expected to be filed on March 15, 2016), and include, but are not limited to, the actions of both current and potential new competitors, fluctuations in market trading volumes, financial market volatility, evolving industry regulations, errors or malfunctions in GAIN Capital’s systems or technology, rapid changes in technology, effects of inflation, customer trading patterns, the success of our products and service offerings, our ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to successfully integrate assets and companies we have acquired, our ability to effectively compete, changes in tax policy or accounting rules, fluctuations in foreign exchange rates and commodity prices, adverse changes or volatility in interest rates, as well as general economic, business, credit and financial market conditions, internationally or nationally, and our ability to continue paying a quarterly dividend in light of future financial performance and financing needs. The forward-looking statements included herein represent GAIN Capital’s views as of the date of this release. GAIN Capital undertakes no obligation to revise or update publicly any forward-looking statement for any reason unless required by law.



Financial and Operating Results Fourth Quarter and Full Year 2015 March 2016

 
GAIN Capital 2 Safe Harbor Statement Forward Looking Statements The forward-looking statements contained herein include, without limitation, statements relating to GAIN Capital’s and/or City Index (Holdings) Limited (“City Index”) expectations regarding the opportunities and strengths of the combined company created by the business combination, anticipated cost and revenue synergies, the strategic rationale for the business combination, including expectations regarding product offerings, growth opportunities, value creation, and financial strength. All forward looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that GAIN Capital or City Index will realize these expectations or that these beliefs will prove correct. In addition, a variety of important factors could cause results to differ materially from such statements. These factors are noted throughout GAIN Capital’s annual report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on March 16, 2015 (as updated or supplemented by the information set forth in GAIN Capital’s annual report on Form 10-K for the year ended December 31, 2015, which is expected to be filed on March 15, 2016), and include, but are not limited to, the actions of both current and potential new competitors, fluctuations in market trading volumes, financial market volatility, evolving industry regulations, errors or malfunctions in GAIN Capital’s systems or technology, rapid changes in technology, effects of inflation, customer trading patterns, the success of our products and service offerings, our ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to successfully integrate assets and companies we have acquired, our ability to effectively compete, changes in tax policy or accounting rules, fluctuations in foreign exchange rates and commodity prices, adverse changes or volatility in interest rates, as well as general economic, business, credit and financial market conditions, internationally or nationally, and our ability to continue paying a quarterly dividend in light of future financial performance and financing needs. The forward-looking statements included herein represent GAIN Capital’s views as of the date of this release. GAIN Capital undertakes no obligation to revise or update publicly any forward-looking statement for any reason unless required by law. Non-GAAP Financial Measures This presentation contains various non-GAAP financial measures, including adjusted EBITDA, adjusted net income, adjusted EPS and various “pro forma” non-GAAP measures. These non-GAAP financial measures have certain limitations, including that they do not have a standardized meaning and, therefore, our definitions may be different from similar non-GAAP financial measures used by other companies and/or analysts. Thus, it may be more difficult to compare our financial performance to that of other companies. We believe our reporting of these non-GAAP financial measures assists investors in evaluating our historical and expected operating performance. However, because these are not measures of financial performance calculated in accordance with GAAP, such measures should be considered in addition to, but not as a substitute for, other measures of our financial performance reported in accordance with GAAP, such as net income.

 
GAIN Capital 3 Fourth Quarter and Full Year Overview • Fourth quarter and full year results reflect successful execution of GAIN’s strategic plan and the Company’s ability to generate significant EBITDA and cash flow • Introduction of segment reporting to provide a comprehensive view of the value of GAIN’s businesses • Fixed operating cost reductions from the City Index integration showing benefits in retail segment • ECN continuing to gain market share resulting in margins of ~30% for institutional segment • GAIN futures segment continues to show strong growth and stable revenues • Returning capital to shareholders with increased buyback activity in fourth quarter

 
GAIN Capital 4 4th Quarter 2015 Financial and Operating Results • Financial Results • Net revenue: $102.8 million • Adjusted EBITDA(1): $21.5 million • Net income: $15.5 million • Earnings per share: $0.32 • Adjusted EPS(2): $0.42 • Operating Metrics(3) • Average daily OTC trading volume: $12.5 billion • Average daily futures contracts: 31,476 • Active retail accounts: 146,977 • GTX average daily volume: $9.2 billion (1) Adjusted EBITDA is a non-GAAP financial measure that represents our earnings before interest, taxes, depreciation, amortization and other one-time items. A reconciliation of net income to adjusted EBITDA is available in the appendix to this presentation. (2) Adjusted EPS is a non-GAAP financial measure that represents net income per share excluding the impact of one-time items. A reconciliation of GAAP EPS to adjusted EPS is available in the appendix to this presentation. (3) Definitions for operating metrics are available in the appendix to this presentation.

 
GAIN Capital 5 Full Year 2015 Financial and Operating Results • Financial Results • Net revenue: $435.4 million • Adjusted EBITDA(1): $80.5 million • Net income: $10.2 million • Earnings per share: $0.22 • Adjusted EPS(2): $0.71 • Free cash flow per share(3): $1.17 • Operating Metrics(4) • Average daily OTC trading volume: $15.4 billion • Average daily futures contracts: 34,356 • Customer assets: $920.6 million • GTX average daily volume: $10.3 billion (1) Adjusted EBITDA is a non-GAAP financial measure that represents our earnings before interest, taxes, depreciation, amortization and other one-time items. A reconciliation of net income to adjusted EBITDA is available in the appendix to this presentation. (2) Adjusted EPS is a non-GAAP financial measure that represents net income per share excluding the impact of one-time items. A reconciliation of GAAP EPS to adjusted EPS is available in the appendix to this presentation. (3) Free cash flow represents operating cash flow less capital expenditures. (4) Definitions for operating metrics are available in the appendix to this presentation.

 
GAIN Capital 6 Segment Reporting • Beginning with the Q4 and FY 2015 earnings results, GAIN is providing separate disclosure for 3 operating segments, plus corporate and other revenue/expenses • Each segment includes all directly attributable revenue and costs • Description of segments • Retail: services active retail clients principally trading FX and CFD products via GAIN’s FOREX.com and City Index brands • Institutional: provides institutional clients with a venue for trading via the GTX platform and services provided through Swap Dealer offering • Futures: includes direct and indirect clients trading futures via the GAIN Futures, Daniels Trading and Top Third brands • Corporate and other includes central costs, such as compensation and benefits for executive management, finance and legal and net interest revenue generated from client and corporate cash • Introduction of segment reporting provides a comprehensive picture of the results and profitability of each of GAIN’s business lines, providing greater transparency and a more accurate representation of the value of the enterprise

 
GAIN Capital 7 Summary Operating Segments/Corporate & Other Note: Dollars in millions, except where noted otherwise. (1) As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information. (2) Excludes impact of acquisition consideration adjustment of $2.3 million and $6.7 million in Q4 2015 and FY 2015, respectively. Corporate & Other 3 M onths Ended Dec. 31 Fiscal Year Ended Dec. 31, 2015 2014 (1 ) 2015 (1 ) 2014 (1 ) Revenue (2) ($0.7) ($1.6) ($3.7) $0.8 Em ployee Com p & Ben 2.9 4.3 13.1 14.4 Marketing - - - - Referral Fees - - - - Other Operating Exp. 2.5 2.8 11.0 10.0 Adjusted EBITDA ($6.1) ($8.7) ($27.8) ($23.6) % Margin NA NA NA NA Futures 3 M onths Ended Dec. 31 Fiscal Year Ended Dec. 31, 2015 2014 (1 ) 2015 (1 ) 2014 (1 ) Revenue $10.9 $10.5 $45.8 $36.0 Em ployee Com p & Ben 2.4 2.6 10.6 8.9 Marketing 0.2 0.1 0.9 0.5 Referral Fees 4.2 4.4 16.4 12.4 Other Operating Exp. 3.4 3.2 14.0 11.6 Adjusted EBITDA $0.7 $0.2 $3.9 $2.6 % Margin 6% 2% 9% 7% Operating M etrics Avg. Daily Contracts 31,476 31,920 34,356 28,108 Active Accounts 8,668 8,184 8,668 8,184 Client Assets $245.6 $201.1 $245.6 $201.1 /Contract $5.50 $5.31 $5.31 5.12 Insitutional 3 M onths Ended Dec. 31 Fiscal Year Ended Dec. 31, 2015 2014 (1 ) 2015 (1 ) 2014 (1 ) ECN $4.6 $5.5 $22.4 $19.3 Swap Dealer 2.8 3.8 12.6 16.2 Other - - 0.1 - Total Revenue $7.4 $9.3 $35. $35.5 Em ployee Com p & Ben 3.1 4.0 15.3 14.0 Marketing - - 0.1 0.1 Other Operating Exp. 2.2 2.7 9.6 10.9 Adjusted EBITDA $2.1 $2.6 $10.1 $10.5 % Margin 28% 28% 29% 30% Operating M etrics ECN ADV (bns) $6.4 $6.6 $7.2 $5.8 Swap Dealer ADV (bns) 2.8 4.3 3.1 6.5 Retail 3 M onths Ended Dec.31 Fiscal Year Ended Dec. 31, 2015 2014 (1 ) 2015 (1 ) 2014 (1 ) Revenue $82.8 $97.0 $351.5 $296.9 Em ployee Com p & Ben 16.2 17.2 67.5 62.0 Marketing 6.5 3.9 26.1 19.6 Referral Fees 14.6 20.8 87.2 78.6 Other Operating Exp. 20.7 12.7 76.4 51.6 Adjusted EBITDA $24.8 $42.4 $94.3 $85.1 % Margin 30% 44% 27% 29% Operating M etrics ADV (bns) $12.5 $12.6 $15.4 $11.1 Ac ive Acco nts 146,9 7 94,8 5 146,977 94,89 Client Assets $675 $5585 $675.1 $5585 PnL/m m $99 111 $86 $96

 
GAIN Capital 8 Retail Segment • For the year, generated EBITDA of ~$94mm and a margin of 27% • Grew revenue by ~18% year-over-year • Acquisition of City Index • Improved marketing efficiency • Trend of revenue diversification continues • 2H 2015 revenue contribution by product: • FX: 35% (2H 14: 48%) • Non-FX: 65% (2H 14: 52%) • Partnership optimization lowers Q4 referral fee to $43.2 per million (compared to $75.3 per million Q4 2014) • Expecting realization of targeted synergies from City Index integration by Q4 2016 • Q4 2016 run-rate savings: ~$45mm • Targeting EBITDA margins >30% for FY 2016 Note: Retail segment includes OTC and advisory. Retail Revenue Composition 2H 2014 2H 2015 FX 48% Indices 17% Equities 5% Commodities & Other 30% FX 35% Indices 31% Equities 10% Commodities & Other 24% Well-positioned to grow market share in the FX & CFD trading space with two market leading brands: FOREX.com and City Index

 
GAIN Capital 9 Institutional Segment • For the year, generated EBITDA of ~$10mm and a margin of 29% • ECN continues to be the growth engine of GAIN’s institutional segment • ADV and revenue annual growth of 24% and 16%, respectively • Fully automated and scalable business provides GAIN with the opportunity to grow margins further • Robust client pipeline expected to result in increasing market share • Strategic plan to grow institutional segment includes: • Introduction of new products • Further development of SEF and Swap Dealer offerings • Hiring of sales and product management teams • Targeting margins >30% for FY 2016 Volume by Business Note: Dollars in millions, except where noted otherwise. ECN 47%Swap Dealer 53% FY 2014 ECN 70% Swap Dealer 30% FY 2015 GTX, GAIN’s institutional offering, gaining traction with hedge funds, banks and other professional investors with its innovative ECN technology & comprehensive regulatory solutions (Swaps Dealer/SEF), complemented by high touch agency execution services

 
GAIN Capital 10 Futures Segment • Scaling of futures business resulting in improved margins and revenue with annual revenue up 27% y-o-y • Increased client engagement • FY 2015 average daily contracts up 22% y-o-y • Client assets up ~22% y-o-y • FY 2015 revenue per contract of $5.31 reflects 4% increase over FY 2014 capture • Interest rate sensitivity on client assets • 100bps move in interest rates earned on customer funds results in $2-$3mm in incremental EBITDA • Targeting margins of ~10% for FY 2016 Average Daily Contracts & Revenue per Contract Note: Dollars in millions, except where noted otherwise. 31,920 39,034 32,633 34,429 31,476 $5.31 $4.80 $5.29 $5.67 $5.50 $4.20 $4.40 $4.60 $4.80 $5.00 $5.20 $5.40 $5.60 $5.80 - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Average Daily Contracts Revenue per Contract Exchange-traded futures business focused on increasing US market share and pursuing international expansion opportunities via both our Daniel’s Trading & Top Third house brands as well as intermediaries

 
GAIN Capital 11 Pro Forma Operating Expenses(1) Note: Dollars in millions. Operating expenses shown on a pro forma basis. (1) Represents the simple pro forma addition of GAIN Capital and City Index. (2) As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information. • 20% year-over-year drop in quarterly fixed operating expenses • 30% drop in total operating expenses for same period • Targeting ~$45mm of run-rate operating expense synergies by Q4 2016 • Continuing to focus on reducing operating expenses to enhance margins 2014 (2 ) 2015 (2 ) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Fixed em ployee com p & benefits 26.8$ 25.0$ 24.1$ 27.3$ 103.2$ 25.2$ 23.6$ 22.2$ 20.1$ 91.1$ Marketing 8.7 9.6 9.0 7.5 34.8 9.0 8.4 7.4 6.8 31.6 Trading 9.2 9.0 7.7 7.6 33.5 8.7 8.1 8.9 7.8 33.6 Fixed G&A 16.9 15.3 13.9 18.6 64.7 14.2 14.1 15.3 14.8 58.4 Com m s & Tech 6.4 6.3 6.8 7.1 26.6 5.9 5.8 5.6 4.8 22.0 Fixed Operating Expenses 68.0$ 65.2$ 61.5$ 68.1$ 262.8$ 63.0$ 60.0$ 59.5$ 54.3$ 236.7$ Bad Debt and other variable 0.2 0.1 1.4 0.9 2.6 4.9 1.2 3.3 1.1 10.5 Referral Fees 26.8 26.1 30.6 31.8 115.3 33.0 29.5 28.6 18.8 109.9 Variable em ployee com p & benefits 7.0 8.7 10.2 11.7 37.6 7.5 6.9 6.7 4.8 26.0 Total Operating Expenses 102.0$ 100.1$ 103.7$ 112.5$ 418.3$ 108.5$ 97.6$ 98.1$ 79.0$ 383.0$

 
GAIN Capital 12 GAIN Returning Capital to Shareholders via Dividends and Buybacks • For the year, GAIN returned $14.6mm to shareholders via buybacks and dividends • Buybacks: $5.1mm • Dividends: $9.5mm • GAIN continued to repurchase shares in Q4 • Repurchased 388,095 shares at an average price of $7.57 • Represents an increase of >70% from Q3 2015 repurchase of 224,334 shares • For the year, GAIN repurchased 654,362 shares • Buyback continues in Q1 2016 (across the capital structure) • Quarterly dividend • $0.05 per share quarterly dividend approved • Record date: March 25, 2016 • Payment date: March 29, 2016

 
GAIN Capital 13 February 2016 Operating Metrics Note: Volume in billions. $15.1 $17.5 $17.4 $18.7 $16.6 $18.5 $15.8 $13.3 $11.2 $12.9 $15.9 $13.2 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0 OTC Average Daily Volume 99.0 146.7 147.6 148.7 148.7 150.6 149.8 148.3 148.9 147.0 143.8 143.7 - 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 Active OTC Accounts (000s) 8.6 8.6 8.7 8.8 8.8 8.8 8.6 8.8 8.8 8.7 8.3 8.8 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 0.0 Active Future Accounts (000s) $9.1 $7.6 $7.4 $8.2 $6.8 $7.1 $6.6 $6.0 $6.4 $6.8 $9.4 $8.3 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 ECN Average Daily Volume $4.2 $3.3 $2.5 $2.7 $3.3 $3.0 $2.7 $2.1 $3.8 $2.6 $2.9 $3.0 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 Swap Dealer Average Daily Volume 42.2 32.5 33.9 31.6 30.3 35.1 38.1 32.6 28.4 33.2 42.7 37.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 Futures Average Daily Contracts (000s)

 
GAIN Capital 14 Closing Remarks • FY 2015 represented a strong year for GAIN Capital • Revenue: $435mm • Adjusted EBITDA: $81mm • Expect FY 2016 EBITDA and margins to improve as we continue to execute on our synergy plan • Introduction of segment reporting brings greater visibility to GAIN’s businesses and enterprise value • Actively returning capital to shareholders via buybacks (both equity and debt) and dividends • Continuing to explore M&A opportunities to further drive shareholder value

 
GAIN Capital Appendix 15

 
GAIN Capital 16 Consolidated Statement of Operations Note: Dollars in millions, except per share data. (1) As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information. (2) Net revenue includes $2.3 million in Q4 2015 and $6.7 million in FY 2015 arising from a fair value adjustment to the contingent consideration of a prior period acquisition. (3) Earnings per share includes an adjustment for the redemption value of the NCI put option. Three Months Ended Twelve Months Ended Decem ber 31, Decem ber 31, 2015 2014(1 ) 2015(1 ) 2014(1 ) Revenue Retail revenue 81.6$ 97.7$ 347.5$ 292.8$ Institutional revenue 7.2 9.1 33.8 34.5 Futures revenue 10.6 8.6 45.4 36.2 Other revenue 3.3 (0.3) 8.5 4.9 Total non-interest revenue 102.7 115.1 435.2 368.4 Interest revenue 0.3 0.3 1.2 1.4 Interest expense 0.2 0.2 1.0 0.6 Total net interest revenue 0.1 0.1 0.2 0.8 Net revenue (2) 102.8$ 115.2$ 435.4$ 369.2$ Expenses Em ployee com pensation and benefits 24.9 28.0 106.6 99.2 Selling and m arketing 6.8 4.1 27.2 20.2 Referral fees 18.8 25.2 103.5 91.0 Trading expense 7.8 6.0 31.9 26.2 General & Adm inistrative 14.8 10.4 55.1 38.6 Depreciation and am ortization 3.5 1.4 11.1 6.6 Purchased intangible am ortization 5.9 3.2 16.5 8.1 Com m unication and technology 4.8 3.9 18.9 15.6 Bad debt provision 1.1 1.0 7.5 3.7 Acquisition costs 0.1 2.0 2.8 3.5 Restructuring 1.5 0.2 3.5 2.3 Integration costs 10.0 0.8 33.1 2.5 Im pairm ent on investm ent - 0.1 - 0.1 Total expenses 100.0 86.3 417.7 317.6 Operating incom e 2.8 28.9 17.7 51.6 Interest on long term borrowings 2.6 1.8 9.2 6.1 Incom e before tax expense 0.2 27.1 8.5 45.5 Incom e tax expense (15.6) 4.2 (3.4) 19.2 Net incom e 15.8 22.9 11.9 26.3 Net incom e attributable to non-controlling interest 0.3 0.4 1.7 1.4 Net incom e applicable to Gain Capital Holdings Inc. 15.5$ 22.5$ 10.2$ 24.9$ Earnings per com m on share (3) Basic $0.32 $0.54 $0.22 $0.56 Diluted $0.32 $0.51 $0.22 $0.53 W eighted averages com m on shares outstanding used in com puting earnings per com m on share: Basic 48,902,186 41,506,205 47,601,979 40,561,644 Diluted 49,379,362 43,684,324 48,379,051 43,214,895

 
GAIN Capital 17 Consolidated Balance Sheet Note: Dollars in millions. (1) As restated for 2014. See the Company’s Form 8-k filed on March 15, 2016 for additional information. As of 12/31/2015 12/31/2014(1) ASSETS: Cash and cash equivalents 171.9$ 139.4$ Cash and securities held for custom ers 920.6 759.6 Receivables from brokers 121.2 134.9 Prepaid assets 7.8 2.5 Property and equipm ent - net of accum ulated depreciation 30.4 18.8 Intangible assets, net 91.5 60.8 Goodwill 34.0 33.5 Other assets 47.4 33.8 Total assets 1,424.8$ 1,183.3$ LIABILITIES AND SHAREHOLDERS' EQUITY: Payables to custom ers 920.6$ 759.6$ Accrued com pensation & benefits 12.4 16.9 Accrued expenses and other liabilities 51.6 76.2 Incom e tax payable 1.1 1.0 Convertible senior notes 122.0 68.3 Total liabilities 1,107.7$ 922.0$ Non-controlling interest 11.0$ 11.3$ Shareholders' Equity 306.1 250.0 Total liabilities and shareholders' equity 1,424.8$ 1,183.3$

 
GAIN Capital 18 Cash Flow Statement Note: Dollars in thousands. (1) As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information. For the Fiscal Years Ended Decem ber 31, 2015(1 ) 2014(1 ) CASH FLOW S FROM OPERATING ACTIVITIES: Net incom e 11,939$ 26,310$ Adjustm ents to reconcile net incom e to cash provided by / (used for) operating activities Loss / (Gain) on foreign currency exchange rates 2,432 (1,618) Depreciation and am ortization 27,660 14,690 Integration Costs 26,827 1,162 Deferred taxes (12,355) 5,108 Am ortization of deferred financing costs 354 354 Bad debt provision 7,462 3,699 Im pairm ent of cost m ethod investm ent - 50 Convertible senior note discount am ortization 3,624 2,150 Stock com pensation expense 3,680 3,452 Adjustm ent to fair value of contingent consideration (6,722) - Changes in operating assets and liabilities 11,258 82,764 Cash provided by operating activities 76,159 138,121 CASH FLOW S FROM INVESTING ACTIVITIES: Purchases of property and equipm ent (19,676) (8,759) Sale of treasury bills - 614 Intangible asset purchases - (12,400) Cash received relating to acquisitions 7,612 - Funding of acquisitions, net of cash acquired (3,258) (14,918) Puchase of investm ent (759) - Cash used for investing activities (16,081) (35,463) CASH FLOW S FROM FINANCING ACTIVITIES: Contractual paym ents for acquisitions (13,892) - Proceeds from exercise of stock options 2,386 2,087 Proceeds from em ployee stock purchase plan 789 740 Purchase of treasury stock (5,088) (1,251) Tax benefit from em ployee stock option exercises 1,140 1,221 Dividend paym ents (9,530) (8,139) Distributions to non-controlling interest holders (1,643) (596) Cash (used for) provided by financing activities (25,838) (5,938) Effect of exchange rate changes on cash and cash equivalents (1,704) 2,760 INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 32,536 99,480 CASH AND CASH EQUIVALENTS— Beginning of period 139,351 39,871 CASH AND CASH EQUIVALENTS— End of period 171,887$ 139,351$

 
GAIN Capital 19 Current Liquidity Note: Dollars in millions. (1) As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information. (2) Reflects cash that would be received from brokers following the close-out of all open positions. (3) The convertible senior notes are excluded given their long-dated maturity. As of 12/31/2015 (1 ) 12/31/2014 (1 ) Cash and cash equivalents $171.9 $139.4 Receivables from banks and brokers (2) 121.2 134.9 Free Operating Cash $293.1 $274.3 Less: Minim um regulatory capital requirem ents (114.5) (76.3) Free Cash Available (3) $178.6 $198.0

 
GAIN Capital 20 Adjusted EBITDA & Margin Reconciliation Note: Dollars in millions. (1) As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information. (2) Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net revenue. 3 M onths Ended Dec. 31 Fiscal Year Ended Dec. 31, 2015 2014 (1 ) 2015 (1 ) 2014 (1 ) Net Revenue 102.8$ 115.2$ 435.4$ 369.2$ Less: Acquisition contingent consideration adjustm ent (2.3) - (6.7) - Adjusted Net Revenue 100.5$ 115.2$ 428.7$ 369.2$ Net Incom e 15.5 22.5 10.2 24.9 Net Incom e Margin % 15% 20% 2% 7% Net Incom e 15.5$ 22.5$ 10.2$ 24.9$ Depreciation & am ortization 3.5 1.4 11.1 6.6 Purchase intangible am ortization 5.9 3.2 16.5 8.1 Interest expense 2.6 1.8 9.2 6.1 Incom e tax expense / (incom e) (15.6) 4.2 (3.4) 19.2 Acquisition costs 0.1 2.0 2.8 3.5 Restructuring 1.5 0.2 3.5 2.3 Integration costs 10.0 0.8 33.1 2.5 Acquisition contingent consideration adjustm ent (2.3) - (6.7) - Bad debt related to SNB event in January of 2015 - - 2.5 - Net incom e attributable to non-controlling interest 0.3 0.4 1.7 1.4 Other non-recurring item s - 0.1 - 0.1 Adjusted EBITDA 21.5$ 36.6$ 80.5$ 74.7$ Adjusted EBITDA Margin % (2) 21% 32% 19% 20%

 
GAIN Capital 21 Adjusted Net Income and EPS Reconciliation Note: Dollars in millions, except per share and share data. (1) As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information. 3 M onths Ended Dec. 31 Fiscal Year Ended Dec. 31, 2015 2014 (1 ) 2015 (1 ) 2014 (1 ) Net Incom e 15.5$ 22.5$ 10.2$ 24.9$ Acquisition costs, net of tax 0.1 1.4 2.2 2.5 Restructuring, net of tax - 0.1 2.7 1.7 Integration costs, net of tax 6.5 0.6 21.5 1.8 Acquisition contingent consideration adjustm ent, net of tax (1.5) - (4.4) - Bad debt related to SNB event in January of 2015, net of tax - - 2.0 - Other non-recurring item s - - - 0.1 Adjusted Net Incom e 20.6$ 24.6$ 34.2$ 31.0$ Adjusted Earnings per Com m on Share: Basic 0.42$ 0.59$ 0.72$ 0.76$ Diluted 0.42$ 0.56$ 0.71$ 0.72$ W eighted average com m on shares outstanding used in com puting earnings per com m on share: Basic 48,902,186 41,506,205 47,601,979 40,561,644 Dilued 49,379,362 43,684,324 48,379,051 43,214,895

 
GAIN Capital 22 Free Cash Flow per Share Note: Dollars in millions, except per share and share data. (1) As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information. Fiscal Year Ended Dec. 31, 2015 (1 ) 2014 (1 ) Cash Flow from Operations $76.2 $138.1 Less: Capital Expenditures (19.7) (8.8) Free Cash Flow $56.5 $129.3 Free Cash Flow per Share $1.17 $2.99 Diluted Shares Outstanding 48,379,051 43,214,895

 
GAIN Capital 23 Q4 and FY 2015 Key Financial Results Note: Dollars in millions, except per share data. (1) As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information. (2) See page 20 for a reconciliation of GAAP net income to adjusted EBITDA. (3) See page 21 for a reconciliation of GAAP EPS to adjusted EPS. (4) See page 22 for a calculation of free cash flow per share. (5) Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net revenue. 3 Months Ended Dec. 31 Fiscal Year Ended Dec. 31, % Change 2015 2014(1) 2015(1) 2014(1) Q4 FY As Reported Net Revenue $102.8 $115.2 $435.4 $369.2 (11%) 18% Less: Galvan Earnout Adjustm ent (2.3) - (6.7) - NA NA Adjusted Net Revenue $100.5 $115.2 $428.7 $369.2 (13%) 16% Operating Expenses (79.0) (78.6) (348.2) (294.5) 1% 18% Adjusted EBITDA (2) $21.5 $36.6 $80.5 $74.7 (41%) 8% Adjusted EBITDA Margin % (2)(5) 21% 32% 19% 20% (11 pts) (1 pts) Net Incom e $15.5 $22.5 $10.2 $24.9 (31%) (59%) Adjusted EPS(3) $0.42 $0.56 $0.71 $0.72 (26%) (1%) Pro Form a Net Revenue $102.8 $158.8 $472.4 $505.8 (35%) (7%) Less: Galvan Earnout Adjustm ent (2.3) - (6.7) - NA NA Adjusted Net Revenue $100.5 $158.8 $465.7 $505.8 (37%) (8%) Operating Expenses (79.0) (112.5) (383.0) (416.0) (30%) (8%) Adjusted EBITDA (2) $21.5 $46.3 $82.7 $89.8 (54%) (8%) Adjusted EBITDA Margin % (2)(5) 21% 29% 18% 18% (8 pts) 0 pts

 
GAIN Capital 24 Pro Forma Reconciliation – 2015(1) Note: Dollars in millions. (1) As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information. (2) “Other” represents Galvan, GAA and TT. These acquisitions are included in GAIN 1H 2015 financial results. (3) City Index Q2 and Q3 2015 financial results are included in GAIN results. Q1 2015 Q2 2015 GAIN CITY OTHER (2 ) TOTAL GAIN CITY (3 ) OTHER (2 ) TOTAL Retail 72.9$ 36.0$ n/a 108.9$ 86.4$ n/a n/a 86.4$ Institutional 9.9 - - 9.9 8.4 - - 8.4 Futures 11.5 - - 11.5 10.8 - - 10.8 Operating revenue 94.3 36.0 n/a 130.3 105.6 n/a n/a 105.6 Other (1.4)$ 1.1 n/a (0.3) 5.8$ - - 5.8 Net Interest 0.1 - n/a 0.1 0.0 - - 0.0 Net revenue 93.0 37.1 n/a 130.1 111.4 n/a n/a 111.4 Net Incom e 5.5$ (4.0) n/a 1.5 (12.9)$ n/a n/a (12.9) Depreciation & am ortization 2.0 2.4 - 4.4 2.7 - - 2.7 Purchased intangible am ortization 2.2 3.1 - 5.3 4.3 - - 4.3 Interest Expense 1.5 - - 1.5 2.6 - - 2.6 Incom e tax expense 5.7 - - 5.7 (0.3) - - (0.3) Acquisition costs 0.0 - - 0.0 2.4 - - 2.4 Restructuring - 0.3 - 0.3 1.9 - - 1.9 Integration Costs 0.1 - - 0.1 12.3 - - 12.3 Acquisition contingent consideration adjustm ent- - - - (4.4) - - (4.4) Bad debt related to SNB event in January 15 2.5 - - 2.5 - - - - Other one-tim e expenses - 0.6 - 0.6 - - - - Net incom e attributable to NCI 0.3 - - 0.3 0.4 - - 0.4 Adjusted EBITDA 19.8$ 2.4$ n/a 22.2$ 9.0$ n/a n/a 9.0$ Q3 2015 Q4 2015 FY 2015 GAIN CITY (3 ) OTHER (2 ) TOTAL GAIN CITY (3 ) OTHER (2 ) TOTAL GAIN CITY OTHER TOTAL Retail 106.5$ n/a n/a 106.5$ 81.6$ n/a n/a 81.6$ 347.4$ 36.0$ n/a 383.4$ Institutional 8.3 - - 8.3 7.2 - - 7.2 33.8 - - 33.8 Futures 12.5 - - 12.5 10.6 - - 10.6 45.4 - - 45.4 Operating revenue 127.3 n/a n/a 127.3 99.4 n/a n/a 99.4 426.6 36.0 n/a 462.6 Other 0.8$ - - 0.8 3.3$ - - 3.3 8.5 1.1 - 9.6 Net Interest 0.1 - - 0.1 0.1 - - 0.1 0.3 - - 0.3 Net revenue 128.2 n/a n/a 128.2 102.8 n/a n/a 102.8 435.3 37.1 n/a 472.4 -$ Net Incom e 2.2$ n/a n/a 2.2 15.5$ n/a n/a 15.5 10.3 (4.0) n/a 6.3 Depreciation & am ortization 2.9 - - 2.9 3.5 - - 3.5 11.1 2.4 - 13.5 Purchased intangible am ortization 4.3 - - 4.3 5.9 - - 5.9 16.7 3.1 - 19.8 Interest Expense 2.6 - - 2.6 2.6 - - 2.6 9.3 - - 9.3 Incom e tax expense 6.6 - - 6.6 (15.6) - - (15.6) (3.5) - - (3.5) Acquisition costs 0.2 - - 0.2 0.1 - - 0.1 2.7 - - 2.7 Restructuring - - - - 1.5 - - 1.5 3.4 0.3 - 3.7 Integration Costs 10.7 - - 10.7 10.0 - - 10.0 33.1 - - 33.1 Acquisition contingent consideration adjustm ent- - - - (2.3) - - (2.3) (6.7) - - (6.7) Bad debt related to SNB event in January 15 - - - - - - - - 2.5 - - 2.5 Other one-tim e expenses - - - - - - - - - 0.6 - 0.6 Net incom e attributable to NCI 0.6 - - 0.6 0.3 - - 0.3 1.6 - - 1.6 Adjusted EBITDA 30.1$ n/a n/a 30.1$ 21.5$ n/a n/a 21.5$ 80.3$ 2.4$ n/a 82.7$

 
GAIN Capital 25 Pro Forma Reconciliation – 2014(1) Note: Dollars in millions. (1) As restated for 2014 and the first three quarters of 2015. See the Company’s Form 8-k filed on March 15, 2016 for additional information. (2) “Other” represents Galvan, GAA and TT in Q1 2014; GAA and TT results are included in GAIN for Q2 2014. GAIN CITY OTHER (2) TOTAL GAIN CITY OTHER (2) TOTAL Retail 63.3$ 27.9$ 5.4$ 96.6 51.8$ 22.7$ 2.3$ 76.8 Institutional 8.6 - - 8.6 8.6 - - 8.6 Futures 8.5 - - 8.5 9.0 - - 9.0 Operating revenue 80.4 27.9 5.4 113.7 69.4 22.7 2.3 94.4 Other 0.1$ (0.1) - (0.0) 0.6$ (0.2) - 0.5 Net Interest 0.3 - (0.2) 0.1 0.3 - - 0.3 Net revenue 80.8 27.8 5.2 113.7 70.3 22.5 2.3 95.2 Net Incom e 0.5$ (8.3) 1.3 (6.4) (7.7)$ (9.4) 0.7 (16.4) Depreciation & am ortization 1.7 1.8 0.3 3.8 1.8 1.9 - 3.7 Purchased intangible am ortization 1.2 5.1 - 6.3 1.4 2.9 - 4.3 Interest Expense 1.4 - - 1.4 1.5 - - 1.5 Incom e tax expense 3.3 - - 3.3 1.2 - - 1.2 Acquisition costs 1.5 - - 1.5 0.2 - - 0.2 Restructuring 0.4 - - 0.4 0.2 - - 0.2 Integration Costs 1.5 - - 1.5 0.3 - - 0.3 Other one-tim e expenses - 2.5 - 2.5 - 0.2 - 0.2 Net incom e attributable to NCI 0.0 - - 0.0 0.2 - - 0.2 Adjusted EBITDA 11.5$ 1.1$ 1.6$ 14.2$ (0.9)$ (4.4)$ 0.7$ (4.6)$ Q3 2014 Q4 2014 FY 2014 GAIN CITY OTHER (2) TOTAL GAIN CITY OTHER (2) TOTAL GAIN CITY OTHER TOTAL Retail 80.1$ 33.5$ n/a 113.6$ 97.7$ 43.6$ n/a 141.3$ 292.9$ 127.7$ 7.7$ 428.3$ Institutional 8.3 - - 8.3 9.1 - - 9.1 34.6 - - 34.6 Futures 10.0 - - 10.0 8.6 - - 8.6 36.1 - - 36.1 Operating revenue 98.4 33.5 n/a 131.9 115.4 43.6 n/a 159.0 363.6 127.7 7.7 499.0 Other 4.5$ 1.5 n/a 6.0$ (0.3)$ - n/a (0.3) 4.9 1.3 - 6.1 Net Interest 0.2 - n/a 0.2 0.1 - n/a 0.1 0.9 - (0.2) 0.7 Net revenue 103.1 35.0 n/a 138.1 115.2 43.6 n/a 158.8 369.4 129.0 7.5 505.8 Net Incom e 9.6$ 1.8 n/a 11.4 22.5$ 3.1 n/a 25.6 25.0 (12.8) 2.0 14.2 Depreciation & am ortization 1.7 2.1 - 3.8 1.4 2.4 - 3.8 6.6 8.2 0.3 15.1 Purchased intangible am ortization 2.2 2.9 - 5.1 3.2 3.0 - 6.2 8.0 13.9 - 21.9 Interest Expense 1.5 - - 1.5 1.8 - - 1.8 6.2 - - 6.2 Incom e tax expense 10.5 - - 10.5 4.2 - - 4.2 19.1 - - 19.1 Acqu sition costs 0.9 - - 0.9 2.0 - - 2.0 4.6 - - 4.6 Restructuring 0.4 - - 0.4 0.2 - - 0.2 1.2 - - 1.2 Integration Costs - - - - 0.8 1.2 - 2.1 2.5 1.2 - 3.7 Im pairm ent on investm ent - - - - 0.1 - - 0.1 0.1 - - 0.1 Other one-tim e expenses - (0.4) - (0.4) - - - - - 2.3 - 2.3 Net incom e attributable to NCI 0.8 - - 0.8 0.4 - - 0.4 1.4 - - 1.4 Adjusted EBITDA 27.6$ 6.4$ n/a 34.0$ 36.6$ 9.7$ n/a 46.3$ 74.7$ 12.8$ 2.3$ 89.8$ Q1 2014 Q2 2014

 
GAIN Capital 26 Quarterly Operating Metrics Note: Volumes in billions; assets in millions. Definitions for all operating metrics are available on page 27. 3 M onths Ended, Sep-14 Dec-14 M ar-15 Jun-15 Sep-15 Dec-15 Retail OTC Trading Volum e $697.5 $821.3 $894.6 $1,160.2 $1,118.4 $812.6 OTC Average Daily Volum e $10.6 $12.6 $14.2 $17.8 $16.9 $12.5 Active OTC Accounts 93,779 94,895 99,017 148,730 149,846 146,977 Futures Contracts 1,764,586 1,979,013 2,381,073 2,055,878 2,203,456 1,982,985 Futures Average Daily Contracts 27,572 31,920 39,034 32,633 34,429 31,476 Active Futures Accounts 7,780 8,184 8,562 8,799 8,567 8,668 Institutional ECN Volum e $333.4 $430.8 $495.7 $502.8 $451.2 $415.4 ECN Average Daily Volum e $5.1 $6.6 $7.9 $7.7 $6.8 $6.4 Swap Dealer Volum e $422.2 $282.4 $240.8 $183.2 $198.5 $184.3 Swap Dealer Average Daily Volum e $6.4 $4.3 $3.8 $2.8 $3.0 $2.8 Trading Days - Retail & Institutional 66 65 63 65 66 65 Trading Days - Futures 64 62 61 63 64 63

 
GAIN Capital 27 Definition of Metrics • Active Accounts: Retail accounts who executed a transaction within the last 12 months • Trading Volume: Represents the U.S. dollar equivalent of notional amounts traded • Customer Assets: Represents amounts due to clients, including customer deposits and unrealized gains or losses arising from open positions

 
Financial and Operating Results Fourth Quarter and Full Year 2015 March 2016

 

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