ICAP downgraded profit expectations for the year to March to between £295m and £315m, having as recently as September reassured the market that consensus estimates of £311m-£347m would be met. Investors reacted with predictable dismay, with the shares being marked down 18 per cent at 300p.
The world's largest inter-dealer broker blamed the warning on indications that some of the newer businesses that the group has invested in will take longer than expected to achieve a profitable return. What's more, uncertainty over possible regulatory changes to the broking business has taken its toll on market volume. ICAP maintains that its voice broking business - which accounts for around two-thirds of group turnover - will become a substantial beneficiary of the shift to more transparent markets.
However, investors have not surprisingly taken a rather dim view of the fact that Michael Spencer, ICAP's founder and chief executive and also party treasurer for the Conservative Party, last month received more than £14.5m from the sale of 3.31m ICAP shares. What's more, IPGL, a privately-owned company controlled by Mr Spencer, recently sold 7m shares at 440p each. Mr Spencer retains around 17.4 per cent in ICAP.
When: 04/01/08
Price: 665p
