ICAP Annual Report 2009
Measuring our performance
Key performance indicators
In this section we describe the key financial performance indicators and other important measures that management uses to measure the progress we are making towards our strategic goals; to be the leading global intermediary and post-trade services provider in the wholesale OTC markets with at least a 35% share of overall market revenues and 50% of our profit derived from electronic broking.
By our estimates, the size of ICAP’s available market, excluding global cash equities and the financial futures markets, but including shipping and post-trade services, has grown by 3% to $12.6 billion. On this basis, our overall share of global OTC market by revenue was 21%–23%, up from 20%–22% in the previous financial year.
In 2008/09, 35% of our operating profit1 came from our electronic broking business, including post-trade services, an increase of three percentage points.
ICAP continues to innovate and diversify its business organically and by acquisition. In order to measure our performance in this area we measure the percentage of our revenue derived from businesses acquired or started during the previous three years. During the year 28% of our revenue was derived from new businesses, up from 20% in the previous financial year. As EBS and Reset will no longer be in this category we expect a decline in this indicator in 2009/10.
In our voice broking division we consider revenue per voice broker a key performance indicator. In the past financial year this increased from £499,000 to £560,000.
Overall staff compensation increased to 59% of revenue, from 56% in the prior year, largely due to our investment in new business areas. As we continue to invest in new areas we do not expect this to decrease in 2009/10. Voice brokers work on a commission basis, with an extremely high percentage of their remuneration variable with performance. This variable commission as a percentage of overall remuneration decreased slightly from 63% to 62% compared to the previous year.
ICAP is a provider of electronic broking platforms so it is essential that we continue to invest in our technology in order to remain competitive. Accordingly we measure our technology spend as a percentage of revenue. During the year this percentage decreased from 12% to 11% and we expect this to remain at similar levels going forward. We achieve significant economies of scale by leveraging internally developed and externally acquired trading platforms in a global IT network of over 630 IT professionals based in EMEA, the Americas and Asia Pacific.
- Excludes amortisation and impairment of intangibles arising on consolidation and exceptional items.
- 60% of ICAP’s information division’s operating profit is derived from electronic broking.
- Revenue derived from businesses acquired or started in the previous three years.
