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Ex divi wed 27th June (16p)

StockMarketWire.com
ICAP's broking activity in the first quarter was subdued as the ongoing eurozone crisis, the Queen's Jubilee and regulatory uncertainty reduced trading volumes.

But ICAP says it has seen strong growth in its post trade services division.

Overall, group revenue for the first quarter was 9% lower compared with last year.

ICAP says it is making substantial progress on its structural review of recurring costs.

It now expects to achieve the full run rate savings in excess of £50m per annum by the end of the current financial year.

This was originally targeted for the end of financial year 2013-14 and therefore the figure for the next financial year will be substantially higher.

These savings exclude the impact of reduced trading on brokers' variable compensation.

ICAP to create Global Broking Division
London and New York, 16th August 2012 - ICAP plc (IAP.L), the world's leading interdealer broker and provider of post trade risk and information services, is today announcing an internal reorganisation which will for the first time create a single, global voice broking division to reflect the changing nature of its business and serve customers more effectively.

Until now ICAP has operated its broking business on a regional basis in the Americas, EMEA and Asia Pacific. The reorganisation mirrors the way ICAP's Electronic and Post Trade divisions are already run on a global basis and will enable the group to execute a global strategy for voice and hybrid broking services. The division will also be renamed "Global Broking" from "Voice" as it better describes ICAP's broking interface to markets and the significant and increasing electronic component.

The new division will be run by David Casterton, most recently CEO of the EMEA voice business, as CEO Global Broking. He will have three regional heads reporting to him: Hugh Gallagher who remains CEO of Asia Pacific and a member of ICAP's Global Executive Management Group (GEMG), and Gary Smith and Dan Flannery, who are promoted to be the Head of EMEA Broking and Head of Americas Broking, respectively.

Doug Rhoten becomes Chairman of ICAP Americas, a role that gives him direct responsibility for a number of our most senior customer relationships, also for managing ICAP's Brazilian operations as well as strategy and leadership of ICAP's responses to upcoming regulatory changes.

Commenting on the reorganisation, Michael Spencer, Group CEO, said: "The markets we operate in are undergoing unprecedented change. One of ICAP's great skills is its ability to innovate and adapt to market conditions and exploit new opportunities. In 26 years we have grown from a company of four people to one with more than 5,000 in more than 50 countries. As we develop, it is vital that our structure reflects our business and our customer needs. The changes we are announcing today will give us a clear global structure that will ensure our continued success and enable us to serve our existing and potential customers on a worldwide basis."

Morgan Stanley downgrades ICAP from equal weight to underweight, target price cut from 415p to 312p.

StockMarketWire.com
Interdealer broker ICAP said performance across its voice and electronic businesses has remained more muted than anticipated at the time of the AGM in July 2012.

Activity in the global capital markets remained subdued due to the Eurozone crisis and the well-recorded difficulties faced by the global economy.

There has been, however, some improvement in trading volumes in September. As a result, Group revenue in the six months to end-September is expected to be around 14% lower than the previous year.

The Group continues to make good progress with its structural review of recurring costs, and is on schedule to deliver at least £50 million per annum of run-rate savings by the end of the current financial year.

Notwithstanding the more recent pick up in volumes, activity levels remain difficult to predict and it is not yet clear whether signs of improved confidence are sustainable. Due to the successful cost reduction programme, the Group anticipates that if volumes in the second half remain at current depressed levels, then pre-tax profits1 for the year to 31 March 2013 will be within the current analyst range of £307 million to £346 million.

Michael Spencer, Group CEO, said: "The macroeconomic environment remains difficult and it's too early to judge if recent actions by the Federal Reserve and the European Central Bank will result in a sustained improvement in market confidence. In any event, we will continue to take the necessary action to constrain our cost base as well as position ICAP optimally for upcoming financial regulatory reform."

"We have a strong balance sheet and continue to convert profit very efficiently into cash. Our diversified business, together with multiple initiatives in our electronic and post trade businesses, will ensure that we benefit from regulatory and market changes and build on our position as the industry leader."

StockMarketWire.com
ICAP has sold a 12% stake in Traiana to seven of its leading customers, giving the business a valuation of $300m.

Collectively, the investors also have an opportunity under certain conditions to acquire in the future an additional 20% equity in Traiana for a price of up to $82.5m.

Traiana provides global banks, broker/dealers, buy side firms and trading platforms with services to automate post-trade processing and risk management of financial transactions in listed and over-the-counter trading markets.

The banks that invested in Traiana are: BofA Merrill Lynch, Barclays, Citi, Deutsche Bank, JP Morgan, Nomura, and the Royal Bank of Scotland.

As part of the agreement, Traiana created a new board of directors, led by Traiana founder and executive chairman, Gil Mandelzis. The board includes Traiana's chief executive, Andy Coyne, and a representative from each of the investing banks. ICAP will continue to consolidate Traiana as a subsidiary.

StockMarketWire.com
Citigroup has downgraded its recommendation on ICAP (LON:IAP) to "neutral" from "buy" believing there to be insufficient upside potential to justify a continued buy recommendation. The City broker has increased its share price target slightly to 330 pence from 320 pence. Broker Forecasts consensus data highlights that 75 per cent of brokers have a neutral rating on the stock with 17 per cent at buy and 8 per cent at sell. Analysts at Citigroup commented: "ICAP shares have re-rated in the recent market rally up 10% since the beginning of December 2012. We continue to view ICAP as the best structurally positioned IDB. However, at ~10x 13E, considering the limited earnings growth in a low visibility volume environment, we think the upside is not adequate.

StockMarketWire.com
ICAP (LON:IAP) notes recent press coverage. As previously disclosed, ICAP has been asked to provide information to various agencies investigating the setting of Libor and is cooperating with those inquiries.

As part of the FSA's inquiries, one of ICAP's interdealer broker subsidiaries has been notified that it is the subject of an FSA investigation. The investigation is confidential, accordingly no further comment will be made at this stage.

StockMarketWire.com
Interdealer broker ICAP said trading conditions for the quarter to end- December remained challenging with a pronounced slowdown volumes in December.

For the third quarter, Group revenue was 13% lower compared with the same quarter the previous year.

Activity levels in January, however, improved across the business, including a 17% year-on-year increase in electronic broking volumes.

The cost saving programme remains on track to deliver more than £50 million in the current financial year and at least £60 million of annualised cost savings by the year end. Consequently, ICAP expects pre-tax profits for the year to 31st March 2013 to be within the current analyst range of £280 million to £305 million.

Michael Spencer, Group CEO, said: "While December was even slower than expected, we've seen a marked improvement in trading volumes since the beginning of January across our entire business, although it is premature to tell if this is the start of a more sustained upturn. Our balance sheet remains strong and our cost reduction programme remains on track. Despite the challenging market environment we continue to innovate and develop our business. Next week we will launch i-Swap, our electronic interest rate swap platform, in the US. This will build on the success of our market leading Euro platform. We have received positive feedback from customers on the many changes we've made at EBS and our new service, EBS Direct, is progressing well. In Post Trade, we've successfully expanded our customer base and product portfolio with a number of new initiatives.

"We remain well positioned for the opportunities that regulatory changes in the market landscape will bring. The push towards more electronic trading and risk mitigation of OTC derivatives plays to our strengths as we have invested in developing the services and technology that our customers will need to meet the new regulatory requirements."

Numis note today:
"The Department of Justice and the CFTC are looking at the role of ICAP and RP Martin in relation to LIBOR. People close to the investigation say. "While neither firm has been accused of wrongdoing, regulators allege that some of their employees were crucial in helping specific traders rig submissions by banks of estimated borrowing costs in different currencies." (Wall Street Journal). We cannot know if either ICAP or any of its employees have done anything wrong. We continue to believe that it is unlikely that ICAP will have to cut its dividend. While we see no evidence so far that the LIBOR scandal will materially negatively impact ICAP until this is resolved we can see no reason to own the shares which are valued at our top of the range profit estimate at a forward multiple of 10.6x earnings.

LIBOR: The group has net debt of £82m before any fines are imposed. We assume this won’t happen but if the regulator decides that there is operational risk within ICAP it could call the CRD waiver into question. A worst case scenario would be the removal of the CRD waiver and that could mean a rights issue before the capital needs for a SEF. In this scenario ICAP have said that they could move their domicile to Singapore. This would not remove the requirement for an increased amount of capital to be held in their UK and US subsidiaries. The UK and the US businesses are key to ICAP. Their business is strategically important and conducted with the too big to fail banks in both markets. We are not sure that regulators demanding capital to protect against operational risk would be satisfied by just moving the head office.

Outlook: We continue to believe that the trading environment has improved for ICAP and the revenue comps for ICAP are easy going forward. Regulation will require ICAP to inject cash into its SEF and the full impact of Basle III will not impact banks until 2019. Consequently, the banks are expected to continue to shed prop trading (client facilitation) activity. The point ICAP becomes a Buy (LIBOR aside) is when you believe US interest rates will be expected to go up, which looks to be coming closer. At that point we believe every income line of the group will see substantial growth. Unfortunately that still appears to be some way off but it is now not unreasonable for the market to be looking in that direction. We believe ICAP remains a key part of the global financial plumbing and consequently do not believe that the model is broken."

StockMarketWire.com
Interdealer broker ICAP said trading conditions remain extremely challenging. Revenue for the year to end-March is expected to be 13% below the prior year.

The start to the year benefitted from increased levels of issuance and volatility, with changes in Japanese monetary policy helping to drive higher electronic FX volumes. The increased activity levels seen in January and February have not continued at the same rate in March. The cost savings programme remains on track to deliver at least £60 million of annualised savings by the year end. Group revenue for the year ending 31 March 2013 is expected to be 13% below the previous year. Consequently, ICAP expects pre-tax profits for the year to 31st March 2013 to be around £280 million, in line with the lower end of the guidance provided in the Interim Management Statement on 7th February 2013.

Michael Spencer, Group CEO, said: "While we had a better start to the fourth quarter, we are not yet seeing a sustained upturn with market activity remaining fragile and unpredictable. This is caused, in part, by the continued lack of clarity around new regulatory requirements and the impact they may have. Our cost savings programme has delivered as we had forecast. ICAP today is a more efficient organisation than a year ago. We also continue to invest in new platforms, products and services which I believe will drive our growth over the next two years."

Results for the year ending 31st March 2013 will be released on 14th May 2013.

StockMarketWire.com
Interdealer broker ICAP said group revenue decreased by 12% to £1.472bn in the year to end-March, with profit before tax down 20% to £284m.

Electronic Markets and Post Trade Risk and Information contributed 66% of operating profit.

Key developments include the creation of the Global Broking division, the strengthening of EBS and the launch of i-Swap in US dollars.

£60m cost savings were delivered this year, £10m more than previously announced. Equates to £80m annualised, £20m higher than previously announced.

Group operating profit margin was 21% (2011/12 - 22%).

EPS (adjusted basic) was down 18% to 33.0p; Statutory EPS (basic) down 68% to 6.7p.

Ongoing free cash flow was £274m (2011/12 - £268m), representing a profit conversion of 130% resulting in net cash of £25m (2011/12 - net debt £82m).

ICAP proposed a final dividend of 15.4p per share. The full-year dividend of 22.0p per share (2011/12 - 22.0p), reflects the continuing strong cash generation and confidence in ICAP's medium-term prospects.

Michael Spencer, Group CEO, said: "This has been an extraordinarily tough year in the wholesale financial markets. Trading activity across all asset classes was negatively affected by a combination of cyclical and structural factors including the depressed global economy, a low interest rate environment and lack of clarity around some aspects of regulatory reform. ICAP's financial performance reflects these extremely challenging conditions.

"Despite the current climate, we're keeping our focus on the long term, delivering on our strategic goals and priorities. We're investing, innovating and adapting the business to ensure it will thrive in the new financial landscape that is being shaped by profound regulatory changes. Wholesale financial markets are vital to the global economy and ICAP plays a critical role in increasing the transparency and efficiency of the markets and reducing risk.

"ICAP continues to benefit from its diversified business and global reach. Our electronic, post trade risk and information businesses now contribute 66% of operating profit. We have deepened our relationships and aligned our interests with our customers by partnering with them in i-Swap and Traiana.

"We have exceeded our annualised cost savings target by £20 million, resulting in expected annualised run-rate savings of £80 million and a more flexible cost base going forward. ICAP remains a profitable and a very cash generative business with a strong balance sheet. Today we are a more efficient and collaborative business than we were a year ago and this will stand us in good stead for the future.

"We (UBS) upgrade ICAP to Neutral on valuation grounds and as we see upside to volumes. The stock has significantly underperformed financials and exchanges by 36% and 30% over the past year. This underperformance has been driven by a relative de-rating and weak earnings momentum.
We see risks to the upside on both fronts as the FICC volume cycle is noticeably improving (Our IDB volume proxy is up 9% m/m and 6% y/y in May and investment banks have been positive).
We remain cautious on the IDBs as we expect structural pressures on banks and thus on intermediaries to remain elevated. (1) OTC clearing is live in the US since March and goes live in Europe in Q2-14; this will increase the cost of trading swaps materially and also lead to volumes moving to futures, (2) European banks still have 5-10% deleveraging to do, (3) consolidation in FICC is set to continue among I-Banks which will reduce the need for intermediation.
We increase our EPS estimates by 2% in FY14E and by 2% in FY15E mostly to reflect a better cyclical outlook. Although we see further upside risks should volumes continue to improve.
We increase our SOTP-based PT to 340p to reflect higher earnings expectations and a better mix of earnings. We value voice broking on 8x P/E and the electronic/post trade businesses on 13x (vs 7x and 12x previously).

StockMarketWire.com
ICAP - a leading markets operator and provider of post trade risk mitigation and information services - has signed a £425m multi-currency revolving credit facility, incorporating an $200m swingline facility.

The facility has a final maturity date of 1 December 2016 and will be used for general corporate purposes, including the refinancing of the existing $880m facility.

Banc of America Securities and HSBC Bank were appointed to arrange and coordinate the syndication of the facility. In addition to the two coordinating banks, ICAP further strengthened its banking group by mandating J.P. Morgan, Lloyds Banking Group, The Royal Bank of Scotland, Commerzbank and Citibank as mandated lead arrangers and bookrunners. Bank of New York Mellon was an arranger.

Going Ex. divi this week, paying an impressive 15.4p-4.04%.

Some drop on Ex.divi with this one 33.20p.. nearly 9%!

Canaccord note today:
"ICAP’s 1Q trading statement reveals:
1Q revenue up 2% on last year. Encouraging start but trading conditions remain challenging (e.g. BrokerTec volumes rose 13% but the uplift in revenue reflected volume discounts). Mixed performance across ICAP’s businesses (e.g. strong performance from financial futures and options; fall in CDS and commodities).
Management’s current expectations for the full year remain unchanged. The default Quest value of 279p a share reflect the cash return on invested capital over the past decade and consensus forecasts, which are in our view unnecessarily pessimistic. At 400p a share ICAP shares are up 30% year-to-date and are trading on a dividend yield of 5.5%. While this is attractive and ICAP’s cash generation is strong, the payout ratio is high. We see the dividend as being sustainable but see little prospects for growth.
We maintain our 300p price target (set in November 2012) and change our recommendation from hold to SELL

Fined 54 Million http://www.bbc.co.uk/news/business-24250750

Ex-divi wed 2nd July 2014 (15.4p).

Just gone long on IAP ICAP, lovely break through downtrend channel and coming off a recentish bottom.