ICAP plc Interim Management Statement
London, 1 February 2012 - ICAP plc (IAP.L), the world's leading interdealer broker, today issues its Interim Management Statement for the period from 1 October 2011 to 31 January 2012 and the outlook for ICAP's financial year ending 31 March 2012.
As previously indicated, the third quarter ended 31 December 2011 was less active than the first half with Group revenue from continuing operations for the nine months to 31 December lower by 2% compared with the same period in the previous year. For the third quarter, Group revenue from continuing operations fell by 7% compared with the strong third quarter of 2011.
The continued uncertainty in the Eurozone and constraints on market liquidity, together with customers reducing risk before the year-end, led to more subdued volumes. Our post trade businesses however continued to perform strongly throughout the period.
It is still relatively early in 2012 but we have seen signs of an encouraging recovery in voice broking revenue. Volumes on our electronic platforms however, while up on December, are down 19% compared to a busy January 2011 due mainly to very low volatility in yen and Swiss FX as a result of central bank actions.
In response to market conditions, we have also been realigning our business to match customer demand by reducing headcount in areas of lowered profitability, while investing and hiring in growth areas such as financial futures and commodities. To date we have reduced our cost base by a net £20 million compared to the prior year.
As a result, we expect pre-tax profits for the year to 31 March 2012 to be towards the upper end of the current analyst range of £336 million to £358 million.
The Board has today appointed John Sievwright as its Senior Independent Director.
Outlook:
The global outlook remains uncertain but there are some grounds for cautious optimism. There are indications of improvement in the US economy and European government and institutional activity has improved liquidity conditions. As certainty and confidence return, so will our customers' willingness to transact.
Commenting on the third quarter and outlook, Michael Spencer, Group Chief Executive Officer of ICAP, said: "Like everyone else we saw a significant reduction in risk appetite in November and December. In January we saw encouraging signs of activity starting to return, albeit cautiously in some markets.
"ICAP is well placed to capitalise on the rapidly changing shape of the wholesale financial markets and to serve our customers' needs. The financial strength of our business means we can continue to invest in the technology, markets and products that will drive future growth. Our market-leading electronic fixed income platform, BrokerTec, will benefit from a significant upgrade in March leading to improved processing speed and expanded capacity
"The wholesale markets play a vital part in the efficient flow of capital around the global economy and ICAP will continue to play a leading role in helping our customers manage and mitigate their risks."
