RNS Number : 1520Z
ICAP PLC
16 July 2008
Press Release
ICAP plc Interim Management Statement
London, 16 July 2008 - ICAP plc (IAP.L), the world's premier interdealer broker, is making
this Interim Management Statement in relation
to the period from 1 April 2008 to 30 June 2008 and the outlook for ICAP's financial year
ending 31 March 2009. It will be delivered to
shareholders attending ICAP's Annual General Meeting today.
Performance during the period
Group revenue (excluding the recent Link acquisition) grew by 15% in the quarter ended 30
June 2008 compared with the same period in the
previous year. ICAP has a broadly diversified revenue base and in many markets the Group
benefited from higher than average levels of
volatility. The increase in electronic broking revenue was particularly strong, especially in
foreign exchange.
ICAP's newer business activities contributed significantly during the quarter. Revenue
growth in post-trade services, where the group
has recently been investing, was noteworthy. There was also a strong performance from equity
derivatives compared with the same period last
year. ICAP strengthened these activities during the quarter with the acquisition of Link on 7
April 2008 (see below).
ICAP's increasingly diversified business now operates in 50 countries, covering a broad
range of products and servicing an extensive
customer base where no single customer accounts for more than 5% of revenues.
In the medium term ICAP's markets are expected to continue to display strong structural
growth with an underlying industry revenue
growth rate estimated to be at least 10% per annum. This structural growth rate covers both
periods when volatility and volumes in the
wholesale financial markets can be very high and also quieter periods when these markets are
more subdued. In the previous financial year
there were several months of high levels of volatility from June 2007 onwards. The resulting
increase in activity in ICAP's markets led to
revenue growth that was significantly above the underlying, medium term growth rate for the
industry.
At this early stage in this financial year, taking into account the effects of more
uncertain market conditions on our customers and
their balance sheets, we continue to expect industry revenue during the year to achieve the
underlying medium term growth rate.
ICAP's profit before tax, amortisation and impairment of intangibles arising on
consolidation and exceptional items for the financial
year ending 31 March 2009 is anticipated to be broadly in line with the current average of
analysts' forecasts.
Commenting on the first quarter and outlook, Michael Spencer, Chief Executive of ICAP,
said "ICAP has continued to benefit from higher
than average levels of volatility as well as the investment we have made in recent years to
broaden our business. We remain very positive
about the outlook for the business. As a result of this volatility, activity levels in
interest rates (particularly in Europe), foreign
exchange and energy markets continued to be high during this period. By contrast, emerging
market revenues are slightly down on the
exceptional strong quarter in the previous year. Growth in the credit derivatives market has
slowed, but revenue in the corporate bond
markets has increased."
"ICAP's electronic broking business grew very strongly, particularly in foreign exchange
and post trade services. Traiana, which we
acquired in late 2007, is performing in line with our high growth expectations."
Highlights
ICAP made an important further step in building the Group's overall capability in the
equity markets with the completion of the
acquisition of The Link Asset and Securities Company Limited (Link) on 7 April 2008. Link
enjoys a very strong market position as the
leading global equity derivatives broker with 136 staff covering Europe, the Americas and
Asia.
ICAP paid an initial consideration of £156 million, including a payment for the net
assets. In addition ICAP will pay deferred
consideration equal to 25% of nine times the profit after tax for the year ended 31 March 2010
of the Link group after it has been
amalgamated with certain complementary ICAP businesses. The aggregate of the initial
consideration and the deferred consideration is capped
at £250 million. The consideration paid to Link shareholders has been financed by debt.
ICAP's average daily electronic broking volumes (covering US Treasury products, spot FX,
US dollar and euro Repo) in the quarter ended
30 June 2008 increased by seven percent over the corresponding period in 2007 to US$825.5
billion. Average daily spot FX volumes on the EBS
platform in the quarter ended 30 June 2008 were $213.4 billion, 40 percent higher than the
corresponding period in 2007. ICAP is continuing
expand and develop the Group's electronic systems to handle future demand generated by both
manual and algorithmic trading.
On 8 July 2008 ICAP purchased 1,000,000 of its 10p ordinary shares at a price of 454.13
pence per ordinary share. ICAP has access to
sufficient capital to continue to develop its businesses under its already announced strategy
of organic and acquisition driven growth and
has made this purchase in recognition of the recent weakness in its share price.
Notes:
1) The current forecasts for ICAP plc pre-tax profits referred to in this announcement are
based on forecasts of profit before tax,
amortisation and impairment of intangibles arising on consolidation and exceptional items
provided by 11 equity analysts. The range of those
forecasts for the year to March 2009 is from £344 million to £405 million with an average of
£375 million. This compares with the results
for the year to March 2008 when ICAP plc's profit increased by 31% to £330 million. The
source of these estimates Bloomberg, Reuters and the
analysts.
2) ICAP introduced the publication of its market volume data in selected markets on its
website at the beginning of September 2007. The
aim is to provide more frequent, transparent, granular data about activity levels in the
global OTC financial markets in which ICAP has a
significant market share.
_________________________________________________________________________ ________
Contacts:
Michael Spencer Group Chief Executive +44 (0) 20 7050 7400
Mike Sheard Director of Corporate Affairs +44 (0) 20 7050 7103
Neil Bennett Maitland +44 (0) 20 7379 5151
About ICAP:
ICAP is the world's premier voice and electronic interdealer broker, delivering specialist
intermediary broking services to trading
professionals in the wholesale financial markets. The group covers a very broad range of OTC
(over-the-counter) financial products and
services in commodities, foreign exchange, interest rates, credit and equity markets, as well
as data, commentary and indices. ICAP's daily
average transaction volume is in excess of $1.5 trillion, more than 60% of which is
electronic. ICAP plc was added to the FTSE 100 Index on
30 June 2006. For more information go to www.icap.com
This information is provided by RNS
The company news service from the London Stock Exchange
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