Icap revenue and profits drop in "fragile" market

Source: Icap

ICAP plc (IAP.L), a leading markets operator and provider of post trade risk mitigation and information services, announces today its results for the six months ended 30 September 2014.

Key points for the period:

Group revenue decreased by 9% on a constant currency basis (15% on a reported basis) to £620 million.
46% increase in TriOptima’s revenue (on a constant currency basis) drove the 12% revenue growth (on a constant currency basis) to £108 million in the Post Trade Risk and Information division.
£12 million investment in EBS Direct resulting in exceptional volume growth, with a daily volume high so far of $28 billion.
The restructuring programme remains on-track to deliver annualised savings in excess of £60 million. Of this, £43 million will be realised in the current year’s income statement, principally in the second half of the year.
Electronic Markets and Post Trade Risk and Information generated 83% of the Group’s trading operating profit in the period (69% for the year ended 31 March 2014).
Group trading operating profit margin decreased by 5ppt to 16% and trading PBT was 38% down at £86 million, reflecting a combination of on-going investment in new businesses, weaker trading volumes and the adverse impact from FX movements.
Trading EPS (basic) down 38% to 10.1p; EPS (basic) increased by 50% to 4.5p due to lower acquisition and disposal costs and exceptional items.
Interim dividend payment to shareholders maintained at 6.60p per share (H1 2013/14 - 6.60p per share).

Michael Spencer, Group Chief Executive Officer, said: “Our first half results reflect a market environment that has remained relatively fragile; despite this, we are cautiously optimistic that we have started to see some welcome signs of activity and more positive sentiment returning in recent weeks. Having experienced multi-year lows over the past year, FX volatility recovered in September and continued into October with EBS recording its highest trading day in three years on 31 October with traded spot volume of $250 billion. Meanwhile, in October BrokerTec had record single day US Treasury volumes of $471 billion.

“We are already seeing some benefits of our restructuring programme, although the bulk of the cost savings from it will come through in the second half of the year. Our Global Broking business has been broadly reshaped to reflect the structural changes taking place in the market place. We continue to deliver both new and enhanced product and technology solutions which are now producing strong results: triResolve has nearly doubled its number of subscriber firms compared to a year ago and EBS Direct reached a new high of $28 billion per day in October.

“We continue to see significant medium term opportunities for focused growth across a number of businesses. The investments we have made over many years mean our prospects as a markets operator and infrastructure provider are stronger than ever and give us a unique ability to meet customer and market demands.”
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