IAP.L Regulatory News (IAP)

18 Jul 2007 07:00

ICAP PLC18 July 2007 ICAP plc Interim Management Statement London - 18 July 2007. ICAP plc (IAP.L), the world's premier interdealer broker,is making this Interim Management Statement in accordance with the new EUTransparency Directive and FSA requirements. This statement relates to the threemonth period from 1 April 2007 to 30 June 2007 and will be delivered to thoseattending ICAP's Annual General Meeting today. Performance during the period ICAP's markets display strong, long-term structural growth with underlyingannual growth rate of industry revenues, in the medium term, estimated to bebetween 7% and 9% per annum. This underlying rate embraces periods whenvolatility and volumes in the wholesale financial markets can be very high andalso quieter periods when these markets are more subdued. The first quarterbegan with lower than average levels of volatility and ended with very highlevels. As a result ICAP's underlying revenue*, as expected, is ahead of lastyear. Commenting on the first quarter and outlook, Michael Spencer, Group ChiefExecutive of ICAP, said "Our positive outlook for the business remains positive.ICAP continues to perform well and has made another successful start to theyear. Over the quarter as a whole volatility in interest rates, foreignexchange, energy and credit markets ensured that both electronic and voicebroking volumes increased, boosting ICAP's revenues. Activity in the emergingmarkets, where ICAP enjoys a very strong position, continues to grow much morerapidly than other markets. The energy markets too have enjoyed a busy periodand the new acquisition in ship broking and freight derivatives, ICAP Hyde, isperforming strongly." Highlights • The combination of increased electronic activity with the delivery of incremental EBS synergies has driven very strong profit growth in our electronic business. • The very active conditions in global financial markets in June led to a significant increase in volumes (single count) on ICAP's electronic broking platforms. o Average daily electronic broking volumes in June were USD $842 billion, the highest level ever and an increase of 32 percent over the same month in the previous year. Daily electronic broking volume exceeded $1 trillion ($1,000 billion) twice during June. o U.S Treasury products saw particularly strong trading with an average daily volume of $168 billion in June. o Electronic broking volumes on ICAP's BrokerTec platform in the European repo market reached a record level of €261 billion a day at the end of May. o Increased activity in the global FX markets also pushed average daily volumes on ICAP's spot foreign exchange platform EBS to $167 billion during the month. The comparative period of the previous financial year was also particularly active for EBS • ICAP has further expanded its suite of electronically traded currency pairs on the EBS platform with the introduction of sterling/yen and Australian dollar/New Zealand dollar trading. ICAP currently offers trading in 26 currencies and precious metals across 34 currency pairs on the EBS platform. • Voice broking volumes also rose significantly in June on the back of the market volatility. Notably, ICAP's average daily voice broking volumes in the global interest rate swap market in June increased by 82% compared with June the previous year. Voice and electronic broking activity in both single name credit default swap (CDS) and index products also increased to its highest level since March 2007. Capital position The Group began the year with a net cash position of £19.5 million and is ahighly cash generative business that has produced consistently high profit tocash conversion. ICAP's strategy is to grow, both organically and by selective acquisition. Thereare an increasing number of expansion opportunities for the Group, both largeand small, as the world's financial markets grow and the current levels offinancial innovation continue. ICAP is well placed to make further acquisitionsand fund the development of the Group using both its existing financialresources and if necessary by raising additional debt financing. As a result ofa waiver from its consolidated regulatory capital requirements ICAP is able tomake acquisitions using debt without affecting its regulatory capital headroom. In the medium term, if ICAP does not require its financial resources to continuethe expansion of the business, then it will identify the best method ofreturning excess cash to shareholders. * Underlying revenue excludes the impact of foreign exchange, acquisitions,disposals and discontinued businesses. For the year ended 31 March 2007, ICAP'seffective dollar/sterling exchange rate was $1.89. Assuming current exchangerates prevail ($2.04) the effective exchange rate for the year ended 31 March2008 would be $2.03. ____________________________________________________ Contacts: Michael Spencer Group Chief Executive + 44 (0) 20 7050 7400Mike Sheard Director of Corporate Affairs + 44 (0) 20 7050 7103Neil Bennett Maitland + 44 (0) 20 7379 5151 About ICAP: ICAP is the world's largest interdealer broker with a daily average transactionvolume in excess of $1.5 trillion, more than 50% of which is electronic. TheGroup is active in the wholesale markets in interest rates, credit, energy,foreign exchange and equity derivatives. ICAP plc was added to the FTSE 100Index 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