Group revenue (excluding the recent Link acquisition) grew by 15% in the quarter ended 30 June 2008 compared with the same period in the previous year. ICAP has a broadly diversified revenue base and in many markets the Group benefited from higher than average levels of volatility. The increase in electronic broking revenue was particularly strong, especially in foreign exchange.
ICAP's newer business activities contributed significantly during the quarter. Revenue growth in post-trade services, where the group has recently been investing, was noteworthy. There was also a strong performance from equity derivatives compared with the same period last year. ICAP strengthened these activities during the quarter with the acquisition of Link on 7 April 2008 (see below).
ICAP's increasingly diversified business now operates in 50 countries, covering a broad range of products and servicing an extensive customer base where no single customer accounts for more than 5% of revenues.
In the medium term ICAP's markets are expected to continue to display strong structural growth with an underlying industry revenue growth rate estimated to be at least 10% per annum. This structural growth rate covers both periods when volatility and volumes in the wholesale financial markets can be very high and also quieter periods when these markets are more subdued. In the previous financial year there were several months of high levels of volatility from June 2007 onwards. The resulting increase in activity in ICAP's markets led to revenue growth that was significantly above the underlying, medium term growth rate for the industry.
At this early stage in this financial year, taking into account the effects of more uncertain market conditions on our customers and their balance sheets, we continue to expect industry revenue during the year to achieve the underlying medium term growth rate.
ICAP's profit before tax, amortisation and impairment of intangibles arising on consolidation and exceptional items for the financial year ending 31 March 2009 is anticipated to be broadly in line with the current average of analysts' forecasts.
Commenting on the first quarter and outlook, Michael Spencer, Chief Executive of ICAP, said "ICAP has continued to benefit from higher than average levels of volatility as well as the investment we have made in recent years to broaden our business. We remain very positive about the outlook for the business. As a result of this volatility, activity levels in interest rates (particularly in Europe), foreign exchange and energy markets continued to be high during this period. By contrast, emerging market revenues are slightly down on the exceptional strong quarter in the previous year. Growth in the credit derivatives market has slowed, but revenue in the corporate bond markets has increased."
"ICAP's electronic broking business grew very strongly, particularly in foreign exchange and post trade services. Traiana, which we acquired in late 2007, is performing in line with our high growth expectations."