IAP.L Regulatory News (IAP)

1 Oct 2009 07:00



Press Release

ICAP plc Trading Statement 

London - 1 October 2009. ICAP plc (IAP.L), the world's premier interdealer broker, announces the following trading update ahead of the close period following its financial half year ended 30 September 2009.  ICAP expects to announce its results for the half-year ended 30 September 2009 on 17 November 2009. 

Commenting on the half year and outlook, Michael Spencer, Chief Executive of ICAP, said "We made a solid start to the year across many markets ahead of a pronounced seasonal slowdown during the summer. Higher market activity levels have now returned. Group revenue is expected to increase by approximately 6% in the half year ended 30 September 2009 compared with the same period in the previous year. 

Our business is broadly diversified; many of the markets in which we operate are benefiting from the continuing low short-term interest rates, steep yield curves and substantial corporate and government bond issuance. Both credit and equity derivatives have experienced more difficult conditions. Overall activity levels in commodities have remained strong. In electronic broking, markets have been quieter than the very active conditions a year ago; cost reductions and other measures have helped to hold margins. Higher volumes are being reported across the post-trade service business.

Our investment is continuing in new organic initiatives to support the long-term growth of this business and in IT to further enhance the existing competitive advantage of our electronic broking platforms. Revenues from these initiatives continue to grow and are expected to show further growth in the next six months, but the increase in voice broking's portion of the overall business will be reflected in the Group margin this financial year. However, in the current environment they represent an excellent opportunity to accelerate the development of our business.  The Group continues to be highly cash generative to support these investments and benefits from a strong balance sheet.

The cost reduction programme to bring costs down by a further £23 million in 2009/10 has been completed. These savings partially offset the investment in our focus areas, many of which are still in their development phase. 

As a result of the continued investment in new business and the change in the mix of our revenues, profit before tax, amortisation and impairment of intangibles arising on consolidation and exceptional items in the half-year 30 September 2009 is expected to be slightly lower than the same period in the previous year. 

The debate about strengthening financial regulation, supervision and market infrastructure and ensuring efficient, safe and sound OTC derivatives markets is continuing. Both the US and European authorities recognise that competition between different regulated trading venues in the OTC derivatives markets increases market efficiency. The merits of clearing of OTC derivatives are well established and headway has been made to ensure non-discriminatory access between competing trading venues. 

We expect our electronic broking businesses will be substantial beneficiaries of a shift to more efficient and transparent markets arising from increased electronic trading and clearing of standardised contracts. Demand for improvements in market infrastructure will continue to provide major opportunities for our expanding post-trade service business. Voice broking will continue to be required for less liquid products which are unsuitable for electronic broking and clearing. It is the range, depth and value of these opportunities which underpins our significant investment spend in the business.

After continuing to invest significantly in the future growth of the business, profit before tax, amortisation and impairment of intangibles arising on consolidation and exceptional items for the financial year ending 31 March 2010 is anticipated to be in line with current analysts' expectations, assuming that exchange rates remain at today's levels for the remainder of the financial year."

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 2010 is from £309 million to £354 million. This compares with the results for the year to March 2009 when ICAP plc's profit before tax, amortisation and impairment of intangibles arising on consolidation and exceptional items increased by 5% to £346 million. The source of these forecasts is Bloomberg, Reuters and the analysts. 

2.  This document contains forward-looking statements with respect to the financial condition, results and business of ICAP plc. By their nature, forward looking statements involve risk and uncertainty and there may be subsequent variations to estimates. ICAP plc's actual future results may differ materially from the results expressed or implied in these forward-looking statements.

________________________________________________________________________________ 

Contacts: 

About ICAP: ICAP is the world's premier voice and electronic interdealer broker and provider of post trade services. The Group delivers specialist intermediary broking services to trading professionals in the wholesale financial markets. ICAP covers a very broad range of OTC (over-the-counter) financial products and services in commodities, foreign exchange, interest rate, credit and equity markets. ICAP plc was added to the FTSE 100 Index on 30 June 2006. For more information go to www.icap.com