A drop in pre-tax profits at the half year doesn't really give the full picture for Icap, the world's largest inter-dealer broker. In fact, adding back exceptional items and amortisation of intangible assets and underlying profits from continuing operations actually rose 2 per cent to £183m.
This may seem modest, but the improvement came against a backdrop of generally quieter markets. Despite this, Icap managed to increase turnover in all three of the group's operations, and while core voice broking remains the biggest single income source, non-voice broking profits now account for nearly half group profits.
Icap matches buyers and sellers in the wholesale markets covering interest rates, credit, commodities, foreign exchange and equities through voice and electronic networks, and it was the electronic network that showed the most impressive growth. Operating profits here grew by 16 per cent to £62m, with average daily volumes handled through its trading platforms reaching $750bn (£472bn), a year-on-year increase of 26 per cent. And in September, the group launched its own euro interest rate swap platform which has already generated trading volumes of €110bn (£94bn).
Numis Securities is forecasting full-year pre-tax profits of £353m and EPS of 35.5p (2010: £333m/32.3p), rising to £405m and 41.9p, respectively, in 2012.
| ICAP (IAP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 470p | MARKET VALUE: | £3.1bn | |
| TOUCH: | 470-471p | 12-MONTH HIGH: | 502p | LOW: 291p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 181p* | NET DEBT: | 15% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 794 | 150 | 16.0 | 5.11 |
| 2010 | 867 | 116 | 14.5 | 5.27 |
| % change | +9 | -23 | -9 | +3 |
Ex-div: 5 Jan Payment: 18 Feb *Includes intangible assets of £1.48bn, or 225p a share | ||||
