It is understandable with hindsight why ICAP (IAP) boss Michael Spencer was so keen six months ago to rebuff suggestions that the interdealer broker would sell its electronic trading services. Instead, shareholders have been presented with a transformative deal to sell its core global broking business and brand to rival Tullett Prebon (TLPR). This means ICAP - which has yet to chose a new brand name - will transform itself into a financial technology business closer in nature to the London Stock Exchange Group (LSE).
These half-year numbers, if unspectacular, do support the case for transformation. Constant-currency revenue increases at the residual divisions of post-trade risk and information services, which grew by 8 per cent, and electronic markets, which grew by 1 per cent, were offset by continuing declines in traditional broking. The stand-out performance came from the group's TriOptima division, which helps banks to reconcile outstanding over-the-counter derivative deals and thus shrink their notional exposure to these obscure securities.
Investment here and in the currency-trading platforms amounted to £39m over the period - an increase of £10m over last year's first-half figure. Expect more weird and wonderful financial products to begin to make their mark. "We have no shortage of ideas," says chief executive Michael Spencer.
The average adjusted EPS forecast for the year to March 2016 is 29.4p for the undivided business, according to Bloomberg consensus, compared with 28.7p in FY2015.
| ICAP (IAP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 500p | MARKET VALUE: | £3.26bn | |
| TOUCH: | 500-502p | 12-MONTH HIGH: | 573p | LOW: 382p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 146p* | NET DEBT: | 13% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 620 | 36 | 4.5 | 6.6 |
| 2015 | 595 | 83 | 12 | 6.6 |
| % change | -4 | +131 | +167 | - |
Ex-div: 7 Jan Payment: 5 Feb *Includes intangible assets of £1bn, or 155p a share | ||||
