Icap reported lower profits in the year to March as the world's largest inter-dealer broker was affected by continued uncertainty in the eurozone and constraints on market liquidity. However, costs have been trimmed by £20m, and strong cash conversion allowed a healthy increase in the dividend. But, with many banks restricting their trading activities, and the onset of fresh legislation, Icap will continue to face significant headwinds.
The group's voice broking side, which accounts for 70 per cent of revenue, suffered revenue falls across all regions as volumes came under pressure in credit and rates markets and all asset classes apart from foreign exchange saw revenues decline. As a result the unit's operating profits fell back 11 per cent to £154m. However, the shortfall was made up by Icap's higher-margin electronic broking side, which raised profits by 4 per cent to a record £127m, and by the group's post trade risk and information services business. Operating profits there rose 15 per cent to £91m to account for a quarter of the total.
Trading activity since the year-end has been slow, and Icap is implementing a structural overhaul that is expected to deliver annual cost savings of around £50m by March 2014.
Analysts at Numis expect current year underlying pre-tax profits of £358m and EPS of 38.2p (2012: £354m/40.1p).
| ICAP (IAP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 331p | MARKET VALUE: | £2.1bn | |
| TOUCH: | 330-331p | 12-MONTH HIGH: | 502p | LOW: 311p |
| DIVIDEND YIELD: | 6.6% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 181p* | NET DEBT: | 7% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.30 | 330 | 26.4 | 15.7 |
| 2009 | 1.60 | 346 | 27.6 | 17.1 |
| 2010 | 1.61 | 247 | 25.5 | 17.6 |
| 2011 | 1.74 | 233 | 28.1 | 20.0 |
| 2012 | 1.68 | 217 | 21.1 | 22.0 |
| % change | -3 | -7 | -25 | +10 |
Ex-div: 27 Jun Payment: 20 Jul *Includes intangible assets of £1.26bn, or 194p a share | ||||
