Revenue, earnings down as ICAP reveals new name

Group revenue took a 6% hit at ICAP in the year to 31 March, it reported on Monday, to £1.2bn as the dealer broker described markets at challenging.

Excluding closed desks and on a constant currency basis, revenue was down 3%.

The FTSE 250 company reported a trading operating profit of £221m, down from £252m, and a trading profit before tax of £203m, down from £229m.

ICAP’s profit before tax was £89m, against £95m, and its basic earnings per share fell to 10.5p from 13p.

Group chief executive officer Michael Spencer described it as a “transformational year for ICAP and I believe that we are now on the cusp of one of the most exciting eras in the Company's 30-year history.

“The transaction to sell our Global Broking and associated information business to Tullett Prebon remains on track to complete later this year,” Spencer said on the company’s ongoing disposal and transition.

During the year, ICAP invested £96m in new product initiatives, and reported a free cash flow conversion rate of 96% on Monday, down from 121% last year.

Its final dividend was confirmed at 15.4p, maintaining a full-year dividend of 22p per share.

Spencer said the company’s ambition to create the world’s leading multi-product, global electronic transaction network for OTC products and post-trade services.

“The new electronic markets, post trade and Euclid investments businesses, which we will become once the transaction completes, will be renamed 'NEX Group plc'; a new name for a new company that intends to lead the market in technology innovation in global financial markets,” Spencer confirmed.

ICAP’s board said NEXT Group will be a focused electronic markets and post-trade business with a portfolio at the heart of the financial market infrastructure, positioned for growth across all services.

“The new name encompasses the spirit of an agile and innovative company that is robust, resilient and trusted,” the board said in a statement.

On the year’s trading, Spencer said conditions continued to be challenging as a result of the macroeconomic environment, historically low and negative interest rates and ongoing bank deleveraging.

“These headwinds have naturally impacted our performance during the year.

“In the US in December 2015, we saw the welcome first step in raising interest rates but in what is likely to be a long and slow journey towards more normal market conditions.”

ICAP has constantly invested in electronic platforms and post trade services, Spencer explained, developing its products and services to remain at the forefront of customer needs.

The company’s early-stage fintech investment incubator, Euclid Opportunities, will play a bigger and more important role as it becomes NEX Group.

“We recently launched products and functionality which will extend our reach to a wider customer base, particularly the buy side.”

"Overall, the size of our existing and new target markets, the quality of our mission critical technology and the strength of customer demand will ensure that NEX Group plc will provide an outstanding opportunity to deliver long-term profitable growth for years to come,” Spencer said.