16th Nov 2016 07:53
LONDON (Alliance News) - Interdealer broker ICAP PLC said Wednesday its revenue and trading profit in the first half of its financial year were hit by cyclical factors, and outlined details of its planned transition to a new structure and brand.
ICAP reported a pretax profit for the six months to September 30 of GBP66 million, up from GBP37 million in the same period the prior financial year. However, the company noted its pretax trading profit for the six months dropped by 7.0% to GBP51.0 million from GBP55.0 million year-on-year.
Revenue was up by 11% year-on-year for ICAP, at GBP254.0 million from GBP229.0 million, but ICAP noted that, on a constant currency basis, revenue was flat. A 6.0% increase in its Post Trade Risk & Information revenue was partly offset by a 2.0% decrease in Electronic Markets revenue.
"The group's continuing trading performance was impacted by the ongoing combination of structural and cyclical factors including historically low and negative interest rates, low levels of volatility and bank deleveraging resulting in reduced risk appetite from bank customers. This was partly offset by the increase in trading activity in emerging market currency pairs on EBS Market, and a greater demand for post trade products such as triReduce and triResolve," said ICAP.
ICAP declared an interim dividend per share of 6.6 pence, maintained from the prior financial year, and said that barring unforeseen circumstances in intends to maintain its full year dividend at 22p per share.
The company also outlined certain details of its plans for a transition to a new structure and rebranding as NEX Group PLC, after the ongoing sale of its voice-broking business to mid-cap rival Tullett Prebon PLC completes. The rebranded company will have a progressive dividend policy with an initial base of 40% to 50% of NEX's post-tax trading profit, said the company.
Spending on technology in NEX will focus around the Post-Trade Risk & Information business, said ICAP, noting its level of spend on Electronic Markets has now peaked.
"While we continue along the slow journey to more normal market conditions I am confident that the fundamental strengths of the business will provide an excellent platform for NEX Group PLC's long term growth and success," said Michael Spencer, chief executive officer.
By Adam Clark; [email protected]
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