Spreadbetting firm MarketSpreads recorded a pre-tax loss of €709,213 in 2010 after making a €1m provision against the firm recovering debts owed by two former executive directors who diverted funds to another business.
Earlier this year in the High Court, former chief executive of Marketspreads, Brian O’Neill and his colleague Fergus Rice agreed to judgments against them for €1.68m.
They left MarketSpreads midway through last year after the board discovered they had diverted €1.4m from the company to another business in which they were involved. The judgment included the principal sum and interest.
Newly filed accounts for 2010 show MarketSpreads Ltd has made a provision of €1m against the firm recovering the amount from its two former directors.
The directors’ report states that the diversion of funds continued in 2011 “and a further provision will be made in subsequent financial statements”.
Last month, MarketSpreads re-opened after the Central Bank lifted its suspension of the firm’s trading licence.
The Central Bank ordered MarketSpreads to cease trading, citing “capital adequacy and audit opinion issues”.
The move by the Central Bank followed the collapse of UK-based WorldSpreads plc, the firm that was originally MarketSpreads’ parent company and from which MarketSpreads split in 2009.
The directors’ report attached to the new accounts — signed off on April 26 just prior to the Central Bank lifting its suspension — expressed confidence the suspension would be lifted.
However, the directors caution “it will take time to restore trading levels to those that existed prior to the suspension”.
The filings show the firm increased its revenues in 2010 by 78% from €2.2m to €3.9m — though the prior period was for a nine-month period.
The accounts show that the firm recorded an operating profit of €213,549 in 2010 following an operating loss of €1.6m in 2009.
According to the directors’ report, profits were boosted by interest income of €150,508 “to give a satisfactory performance by the company in the first year of ownership by OR Spreadbetting Ltd”.
The report points out: “Gross profits of €3.8m were a significant increase over those reported of €2.1m for 2009.”
The firm achieved higher gross profits with the increase in revenues and administrative costs decreasing from €3.8m to €3.6m.
The directors say they “are satisfied costs are being controlled so that the company will be profitable.”
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