Icap half-year results 'saved' by voice disposal

Icap, which through its NewCo holding company will be left with a large minority stake in rival interdealer broker Tullett Prebon after the disposal, said its post trade risk and information division increased revenues by 8% on a constant currency basis and electronic markets saw a rise of 1%, which was offset by a decrease of 14% in the outgoing global broking arm.

Excluding the outgoing voice business, Icap's continuing businesses increased revenue by 4%, or by 1% on a constant currency basis.

But as the group stood in the six months ended 30 September, revenues fell 4% to £595m, though trading operating profits, which exclude acquisition and disposal costs and exceptional items, rose 10% to £110m and trading profit before tax leapt 17% to £101m.

Electronic markets and post trade risk and information generated 77% of group trading operating profit.

At the bottom line, underlying earnings per share swelled 29% to 13.0p, with statutory EPS up 167% to 12.0p. A lower than expected tax rate meant that while operating profit was rather light of expectations, EPS was closer.

Icap declared an interim dividend of 6.6p per share.

Within the portfolio risk business, TriOpta delivered a 35% sales increase on a constant currency basis, which drove the Post Trade Risk and Information division to a total of £119m.

Electronic forex trading saw relatively mixed volumes in G7 currencies due to the lack of central bank policy changes during the period. In contrast volatility in emerging markets currencies benefited from macro instability over the period.

Demand for Post Trade Risk and Information products was driven by increased participation in portfolio compression cycles and the uptake of the portfolio reconciliation service. The division's performance continues to be held back by Reset as flat short-term yield curves continued to restrain activity levels.

The voice disposal will be put to a shareholder vote scheduled for the first quarter of next year.

Analysts at Bank of American Merrill Lynch said overall the results were "more good than bad", though the half-year was below its recently lowered expectations due to voice margin being squeezed.

"We think the merger agreement has saved what would otherwise have been a difficult H1. The deal terms look positive for Icap.

"We continue to see voice as a difficult business, but expect the merged entity to have scale benefits. NewCo should be a relatively high multiple company, with a material weighting to post trade."

Icap shares were 6% higher at 500p by 0915 on Wednesday.