30th Sep 2014 07:40
LONDON (Alliance News) - ICAP PLC Tuesday said it expects first-half revenue to be 10% lower at constant currency and 15% lower on a reported basis, while the interdealer broker also expects full-year profit to be more heavily weighted to the second half than in previous years because of the way it will realise costs savings targeted from the restructuring of its global broking division.
In addition, ICAP said Finance Director Iain Torrens has quit to join TalkTalk Group PLC, where he will replace Steve Makin, who according to TalkTalk will leave the business at the end of December. ICAP said it has begun to search for his replacement, and has appointed executive search and recruitment company Spencer Stuart to seek a successor. Torrens will remain with the group to ensure a smooth transition, ICAP said.
In a statement, ICAP Chief Executive Michael Spencer blamed low volatility levels and a focus by its clients on costs and regulation for suppressed execution volumes, though there have been some signs of a pick-up.
"There was some good improvement to client activity in September, as central bank actions led to an increase in foreign exchange and interest rate volatility pushing average daily volumes on EBS to more than USD100 billion per day for the first time in twelve months," Spencer said in a statement.
"While I do not expect a linear recovery, this provides a basis to be guardedly optimistic about future market activity," the CEO added.
ICAP also said the restructuring of its global broking division remains on track to create a more focused business, as well as more than GBP60.0 million in annualised savings. Of that amount, GBP40.0 million will be realised in the current year's income statement, principally in the second half of the year.
"Accordingly, the phasing of full-year profits is expected to be more heavily weighted to the second half than in comparison to prior years," ICAP said.
In total, the cost saving programme will result in an estimated one-off charge of GBP35.0 million to GBP45.0 million, which will be treated as an exceptional item.
The global broking division's revenue is expected to decline by 16% on a constant currency basis and 20% on a reported basis in the first half despite a "modest uptick" in trading in September, according to ICAP.
ICAP also reported double-digit revenue growth of 11% in its post trade risk and information division, helped by its TriOptima business.
Revenue generated by the electronic markets division is expected to fall by 6%.
"Over the last six months, we have significantly restructured the cost base across global broking providing increased leverage and focus. However, we continue to invest heavily in new product initiatives across our leading, electronic markets and post trade divisions, which already contribute more than 70% of the group's operating profit," Spencer said.
"We are now starting to see a return on investment in the form of the strong performance of TriOptima and the EBS Direct service, which in September achieved average daily volumes of USD19 billion per day in less than a year from its launch, which is a very impressive achievement, he added.
ICAP shares were Tuesday quoted down 1.6% at 389.40 pence.
By Samuel Agini; [email protected]; @samuelagini
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