Tp Icap Group Plc · LSE:TCAP
Tp Icap — Tullett Prebon — Investor Day (June 2015)
96 slides from Tp Icap's investor day presentation, Jun 12, 2015
Slide 1: Welcome: Tullett Prebon 2015 Capital Markets Day
© tullett prebon WELCOME Tullett Prebon 2015 Capital Markets Day London Stock Exchange 12" June 2015
Slide 2: Tullett Prebon Capital Markets Day
Tullett Prebon Capital Markets Day 12th June, 2015 John Phizackerley Chief Executive, Tullett Prebon
Slide 3: Agenda for the morning
Agenda for the morning TIME SESSION PRESENTER 08:30 – 09:00 Registration and coffee 09:00 – 09:30 Introduction and general insights John Phizackerley, Chief Executive 09:30 – 09:50 EMEA Angus Wink, CEO, EMEA 09:50 – 10:10 The Americas John Abularrage, CEO and President, The Americas 10:10 – 10:25 As
Slide 4: Macroeconomic background
Macroeconomic background Unemployment rate – Eurozone, UK and US VIX % of total labour force, 2000 - May 2015 PX_LAST, January 2010 - June 2015 14 % 50 12 % Eurozone 40 10 % 8% 30 6% US 20 4% UK 10 2% 0% 0 2000 2002 2004 2006 2008 2010 2012 2014 2010 2011 2012 2013 2014 2015 Real GDP – Eurozone, UK
Slide 5: Bank ROEs
Bank ROEs Average return on equity for a representative sample of Tullett Prebon’s clients1 %, 2005 – 2014 20 % 16 % 12 % 8% 4% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -4 % -8 % 1 UBS, Standard bk, Societe Generale, RBS grp, Nomura, Morgan Stanley, JPMorgan, HSBC, Goldman Sachs, Deutsch
Slide 6: A central role in global markets – against a challenging backdrop
A central role in global markets – against a challenging backdrop Central role Against a challenging backdrop • We are at the heart of the global wholesale • Poor global macroeconomic environment financial system • Flat yield curves and sporadic volatility • We facilitate price discovery and flow of
Slide 7: Industry recognition: awards
Industry recognition: awards Risk Magazine’s 2014 FX Week Best Banks Inside Market Data Annual Interdealer Awards 2014 Awards 2015 Rankings Best Broker for Forward FX Best Data Provider (Broker) More No. 1 positions than any 14th year running 5th year running other single interdealer broker Voted be
Slide 8: Industry recognition: energy awards
Industry recognition: energy awards Risk and Energy Risk Futures and Options GlobalCapital’s 2014 Commodity Rankings 2014 Awards 2014 Global Derivatives Awards Overall Top Broker Commodities Broker Commodity Derivatives in Electricity Products of the Year and Best Interdealer Broker for 6th year run
Slide 9: We identified 7 main trends affecting our industry
We identified 7 main trends affecting our industry Regulatory actions affecting the Changes related to the IDB Impact to the IDB competitive whole financial ecosystem client ecosystem landscape and market structure 1 2 6 IDBs facing “new” Post-crisis regulatory Pressure on sell-side electronic compe
Slide 10: Electronification expected to increase in traditional interdealer markets
In traditional interdealer markets, electronification is expected to increase – but only few are expected to go fully electronic soon Mode of execution expected to predominate in traditional IDB products Products (excl. block trades and Hybrid: Limited Hybrid: Frequent Pure exotic/structured) Voice
Slide 11: Activity to date
Activity to date • Strengthened executive leadership team • Strengthened governance & risk frameworks • Launched performance management process • Increased internal information flow & communications • Rolled out culture & conduct agenda, “Time for Change” 11
Slide 12: 2015 Town halls held in all major regions
2015 Town halls held in all major regions 12
Slide 13: 2015 Strategy Management meeting
2015 Strategy Management meeting 13
Slide 14: 10 arrows
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Slide 15: Implementing the strategy
Implementing the strategy Arrows 10 Projects 42 Workstreams 142 Tasks1 250+ 15 1. Tasks defined as work in progress
Slide 16: 10 arrows
10 arrows 1. Strategically add brokers 2. Build our energy business 3. Win new all-to-all client business 4. Further monetise Tullett Prebon Information 5. Invest strategically in our IT 6. Adopt a focussed and disciplined CRM approach 7. Develop our acquisition and partnership capabilities 8. Creat
Slide 17: Segmenting our global businesses
Segmenting our global businesses Segmented and modelled 71 global business lines by: • Fee pools • Competition • Margins • Regulation • Technology • Macro outlook 17
Slide 18: Market attractiveness
Mapping of brokerage business into 4 cells High 1 2 Transform Maintain/grow Market attractiveness 4 3 Re-prioritise investment Monetise Low Low Ability to compete High 18
Slide 19: Our cultural framework underpins everything we do
Our cultural framework underpins everything we do “Time for change” Our culture “We are known in the market for our Honesty, Integrity and Excellence in the provision of services to clients. Above all else, we Respect our clients and each other, without bias.” 19
Slide 20: Our cultural framework
Our cultural framework Principles embedded throughout the business 20
Slide 21: Tullett Prebon EMEA Capital Markets Day
Tullett Prebon EMEA Capital Markets Day 12th June, 2015 London Angus Wink CEO, EMEA
Slide 22: EMEA at a glance
EMEA at a glance Number of brokers 734 Number of clients c3000 Revenues 2014 £405.6m Operating Profit 2014 £80.1m Operating Margin 2014 19.8% 22
Slide 23: EMEA broking revenue by asset class
EMEA broking revenue by asset class1 Equity Derivatives c2% Interest Rate Derivatives c16% c33% Energy & Commodities Treasury Products c25% c25% Fixed Income Note 1: Pro forma including PVM Note 2: Does not equal 100% due to rounding 23
Slide 24: EMEA: products that we cover
EMEA: products that we cover Treasury Products Interest Rate Derivatives Fixed Income Equities Energy & Commodities • Cash Deposits • Basis Swaps • Asset Backed Securities • Alternative Investments • Base Metal Options • Forward FX • Forward Rate Agreements • Convertibles • Equity Options • Biofuels
Slide 25: EMEA: new desks and products
EMEA: new desks and products In the last three years we have added new desks and products to our portfolio: • Nigerian Bonds • MSCI Futures & ETFs • Listed FX Options Derivatives • Hedge Funds and Private Equity • Real Estate Secondaries • Iron Ore 25
Slide 26: EMEA: the platforms we provide
EMEA: the platforms we provide We provide voice, hybrid, electronic volume matching, algorithmic matching, risk mitigation platforms, post trade and risk management services, to satisfy the evolution of the market place. Trading Algorithmic Matching Auction/Volume Matching 26
Slide 27: tpIRODEAL
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Slide 28: EMEA: our electronic offering today
EMEA: our electronic offering today Auctions/Volume Pure Electronic Matching Hybrid Voice Post-trade Services Information Sales Voice Our Trading Spectrum CLIENT CLIENT INTERACTION INTERACTION 28
Slide 29: Case study: FX Options – across the spectrum
Case study: FX Options – across the spectrum Auctions/Volume Pure Electronic Matching Hybrid Voice Post-trade Services Information Sales Voice Embedded auction Client uses platform systems directly In conjunction Reduces chart dated strike with a broker mis-match risk Phone TPI provides pricing & co
Slide 30: EMEA – our customer base
EMEA – our customer base • Regional banks Customer revenue distribution • Commercial banks Other Financials c4% • Energy companies • Insurers and reinsurers Trading Companies • Asset managers c15% • Funds • Trading companies • Corporates Corporations c15% • Commodity trading advisors c66% Banks Core
Slide 31: EMEA: meeting our key challenges
EMEA: meeting our key challenges Regulation Infrastructure 31
Slide 32: EMEA: opportunities
EMEA: opportunities • New entrants as sell side banks reduce their presence; a potential new client base for Tullett Prebon • Deepening our client relationships through rigorous CRM • Hiring talented staff • Clients previously served by banks now seeking our expertise 32
Slide 33: EMEA: achievements
EMEA: achievements TP-AIME – Matching Engine creating Alternative transparency in an opaque world. Investments Only IDB to offer Private Equity, Real Estate and Hedge Funds in one portal MSCI Futures Voice broking service for illiquid and ETFs products in this segment More number one positions than
Slide 34: Key takeaways
Key takeaways 1. We have a big network in Continental Europe, we are very strong in the Middle East and we have a presence in Johannesburg 2. Our range of products makes us a “one stop shop” 3. Clients can interact with us across the full trading spectrum 4. The platforms in EMEA will be ready for M
Slide 35: Tullett Prebon America Capital Markets Day
Tullett Prebon America Capital Markets Day 12th June, 2015 London John Abularrage CEO & President of the Americas
Slide 36: Americas: at a glance
Americas: at a glance Number of brokers 555 Toronto Number of clients 900+ Mexico City Revenues 2014 £201.6m Operating profit 2014 £10.5m New Jersey New York Sāo Paulo Operating profit margin 2014 5.2% Houston, TX 36
Slide 37: Americas: segment analysis
Americas: segment analysis Broking Revenue by Asset Class c10.0% c12.5% c40.0% c17.0% c22.5% Note: Does not equal 100% due to rounding 37
Slide 38: Americas: products that we cover
Americas: products that we cover Treasury Interest Rate Fixed Income Equities Energy & Products Derivatives Commodities • Cash Deposits • Basis Swaps • Agency Bonds • Cash Equities • Crude Oil Options • Forward FX • Cross Currency Swaps • Asset Backed • Equity Options • Emissions • FX Options • Forw
Slide 39: Americas: platforms we provide
Americas: platforms we provide We provide voice, hybrid, electronic volume matching, algorithmic matching, risk mitigation platforms, post trade and risk management services, to satisfy the evolution of the market place. Trading Algorithmic Matching Auction/Volume Matching 39
Slide 40: Case study: emerging market bonds – through the spectrum
Case study: emerging market bonds – through the spectrum Auctions/Volume Matching Hybrid Voice Pure Electronic Information Voice Sales Embedded auction systems In conjunction Client uses platform with a broker directly Broker provides client with added value Client can purchase market data CLIENT CL
Slide 41: Americas: our customer base
Americas: our customer base Customer revenue distribution 1% • Investment & commercial banks 3% 6% • Energy companies 6% Bank • Insurers and reinsurers Hedge Fund / Asset Manager • Asset managers Trading Company • Hedge funds Corporation • Trading companies Other Financial 84% • Corporations 41
Slide 42: Creating scale
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Slide 44: Changing regulation brings opportunities
Changing regulation brings opportunities • Compliance costs have increased significantly since Dodd Frank • Smaller firms struggle to afford the additional overheads • Many are seeking a good parent • Our reputation as a good home is strong • There are a number of strategic opportunities for us to e
Slide 45: Opportunities
Opportunities ‘HIGH TOUCH’ • Diversify traditional revenue streams and client base SERVICES • Trusted content provider • Risk management services NEW PRODUCTS • Expand Energy and complementary product areas • Significant distribution network allows for cross-selling of higher touch services NEW BUSI
Slide 46: Achievements
Achievements Municipal Bonds, Corporate Credit, Agency Revenue growth each Chapdelaine Bonds and Mortgages year since acquisition Revitalization of Addition of 40 brokers TP America is now Fixed Income from Murphy & Durieu the market leader in Business in January 2015 U.S. credit Significantly reduc
Slide 47: Key takeaways: performance turnaround in the Americas
Key takeaways Performance turnaround in the Americas £250.0m 10.0% £236.9m £233.9m • 2014 operating profit was up £201.6m £8.1m versus 2012 £200.0m 8.0% Revenue & Operating Profit • Turnaround achieved through Operating Margin £150.0m 6.0% effective cost management, 5.2% 4.4% reduction in broker com
Slide 48: Tullett Prebon Asia Pacific Capital Markets Day
Tullett Prebon Asia Pacific Capital Markets Day 12th June, 2015 London Angus Wink CEO, EMEA
Slide 49: Asia Pacific: regional presence
Asia Pacific: regional presence Seoul Associates Percentage Holdings Beijing 364 brokers Tokyo • Tullett Prebon (Philippines) Inc. – 51% Shanghai in our wholly and Mumbai majority owned offices • PT. Inti Tullett Prebon Indonesia – 57% Hong Kong in Asia Pacific. A total • Wall Street Tullett Prebon
Slide 50: Asia Pacific: at a glance
Asia Pacific: at a glance Revenues by asset class • Diverse customer base: includes all major Energy & regional based banks and international Commodities Equities c.4% financial institutions Fixed c.4% Income • Experienced, cohesive regional management c.6% group with over 200 years of industry expe
Slide 51: Asia Pacific: the products that we cover
Asia Pacific: the products that we cover HONG KONG SHANGHAI TOKYO SINGAPORE SYDNEY MUMBAI HK$ Depo Money Market Yen Forwards Spot FX Int’l Depo FX Forwards Int’l Depo IRS Yen IRS SG Depo Forward FX Government Bonds HK$ Forwards Fixed Income Yen IRO Int’l Depo IRO Corporate Bonds Int’l Forwards FX Sw
Slide 52: Asia Pacific: our platforms
Asia Pacific: our platforms Trading Algorithmic Matching Auction/Volume Matching Seoul Tokyo Shanghai Hong Kong Singapore Sydney 52
Slide 53: Partnerships across the region
Partnerships across the region China: Shanghai International Trust Co. • Parent company: state owned Shanghai International Group (SIG) • SIG’s total assets US$27 billion and total AUM of US$290 billion • Investments in banking, finance and asset management Indonesia: Salim Group • Leading conglomer
Slide 54: Opportunities
Opportunities China and Hong Kong Asia FX and Rates • Continued growth in the use of off-shore renminbi, not only in trade but also financing • Our strong position in CNH will enable the Group to seize opportunities as they arise Commodities • Exploring opportunities to build our presence • Singapor
Slide 55: Tullett Prebon Asia Pacific: awards
Tullett Prebon Asia Pacific: awards Asia Risk Rankings 2014 Individual Categories Interest Rate Products #1 Interest Rate Products – USD (Asia Time Zone) #1 Interest Rate Products – EUR (Asia Time Zone) #1 Interest Rate Products – RMB (Chinese Renminbi) #1 Interest Rate Products – HKD (Hong Kong $)
Slide 56: Key takeaways
Key takeaways • Tullett Prebon’s strong regional footprint is a competitive advantage: – Well balanced presence in the region – Experienced management team • Asian commodity and energy markets offer growth prospects • Tullett Prebon is well placed to benefit from China-related growth – Established a
Slide 57: Coffee Break
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Slide 58: Tullett Prebon Energy Capital Markets Day
Tullett Prebon Energy Capital Markets Day 12th June, 2015 London Andrew Polydor Global Head of Energy and Commodities
Slide 59: Energy: at a glance
Energy: at a glance OIL GAS POWER RENEWABLES FERROUS METALS BASE METALS PRECIOUS METALS SOFT COMMODITIES COAL 59
Slide 60: Energy: consistent performer
Energy: consistent performer Revenue (£m) Full year 200 including PVM 169 106 106 106 101 102 £100 100 82 63 0 1 2007 2 2008 3 2009 4 2010 5 2011 6 2012 7 2013 8 2014 60
Slide 61: PVM
PVM 61
Slide 62: Energy: where we are
Energy: where we are London Geneva New York Houston Hoboken Singapore 62
Slide 63: Energy: broad customer distribution
Energy: broad customer distribution Asset • Commodity producers Managers Insurance Companies • Commodities consumers Government/ • Energy companies Local Corporations Authorities • Fund managers • Hedge funds • Municipals • Power producers • Professional traders Trading • Risk managers in oil and Co
Slide 64: Energy: our client interaction spectrum
Energy: our client interaction spectrum Auctions/Volume Pure Electronic Matching Hybrid Voice Post-trade Services Information Sales Voice Our Trading Spectrum CLIENT CLIENT INTERACTION INTERACTION 64
Slide 65: Physical oil products require the human touch
Physical oil products require the human touch • We broke physical oil and that market is exotic in nature • Each trade is specifically structured • Each cargo has a specific chemical composition • Many specifications to be agreed before a trade reaches conclusion • These are bespoke trades that requ
Slide 66: Physical energy broking trade: sample deal ticket
Physical energy broking trade: sample deal ticket Highly bespoke products requiring broker skill and detailed knowledge • Each deal ticket is bespoke • It shows all the different specifications in one shipment 66
Slide 67: Screen-facilitated broking suits some clients and products
Screen-facilitated broking suits some clients and products • Clients like the combination of screen and broker: a symbiotic relationship • Power, gas, emissions and coal • Screens provide pricing information 67
Slide 68: Screen-facilitated trade flow diagram
Screen-facilitated trade flow diagram 68
Slide 69: Physical trading volumes driven by difficult-to-predict factors
Physical trading volumes driven by difficult-to-predict factors Many factors influence the formation of physical trading volumes energy prices SUPPLY PHYSICAL BALANCING DEMAND Affected by current conditions Affected by current conditions and future expectations for: • Inventories and future expectat
Slide 70: Energy sector trends
Energy sector trends • Deregulation of retail energy markets in the US • Longer term, deregulation of energy in some parts of the Asia • Demand in fast growing economies in Asia could drive growth in physical and derivative energy products • Regulation of energy derivative products in some areas, su
Slide 71: Opportunities
Opportunities • Americas’ revenue is mainly in power. There are opportunities for us to diversify • Scope to expand in Asia • Tactically optimise our business through targeted broker desk augmentation • Expand PVM by utilising the strength of the brand developing offering beyond core oil business •
Slide 72: Our energy research and training courses
Our energy research and training courses Highly respected in the sector 72
Slide 73: Recognition from our customers
Recognition from our customers 73
Slide 74: Key takeaways
Key takeaways • Energy & Commodities is an increasingly important part of the business • We have the relevant skill sets • Part of our client diversification strategy • With PVM, we have shown that we can acquire well, in line with our overall strategy • Global growth sector • Opportunity to build a
Slide 75: Tullett Prebon Information Capital Markets Day
Tullett Prebon Information Capital Markets Day 12th June, 2015 Frank Desmond CEO, Tullett Prebon Information
Slide 76: Introduction to Tullett Prebon Information
Introduction to Tullett Prebon Information 76
Slide 77: At a glance: Tullett Prebon Information
At a glance: Tullett Prebon Information Independent, impartial pricing across the financial and energy sectors and their derivative markets Global Customers fintech/ Multi asset in over fifty information class countries business Resilient Award technology winning 77
Slide 78: Revenues: Information Sales and RMS
Revenues: Information Sales and RMS Revenue by year (£m) 50 45.8 47.0 46.4 40 39.0 32.8 30 25.1 20 18.81 14.71 10 0 2007 2008 2009 2010 2011 2012 2013 2014 1 Information Sales only, as Risk Management Services was not established until 2009 78
Slide 79: Awards
Awards Tullett Prebon Information: Best Data Provider at Inside Market Data Awards for fifth year running 79
Slide 80: Market ecosystem and segments 2013
Market ecosystem and segments 2013 2013 Estimated global revenue Finance GRC US$40.8bn US$43.0bn 3.6% YoY growth 5.5% YoY growth Segment leaders Segment leaders 35% • Altegrity • Bloomberg LP 37% • LexisNexis Risk Solutions • Thomson Reuters US$116.3bn Total market Credit Legal and regulatory US$12.
Slide 81: Market environment
Market environment Our customers Banks Corporates Buy-side 81
Slide 82: The data business: commercial flexibility
The data business TPI OWNED PROPRIETARY CONTENT Rates | Money | IROs | Commodities | Energy | FX | Fixed Income | Equity | FXOs | Inflation | Credit Real time Intra day End of day Historical Licensing models Commercial flexibility Customer support Application Desktop Optional service Enterprise Besp
Slide 83: Diversity of customer types
Diversity of customer types Market infrastructure Government/supranational providers Regulatory authorities Vendor aggregators Banks Corporates Buy-side Asset owners 83
Slide 84: Data collection, quality assurance and delivery
Data collection, quality assurance and delivery Data gathered from global offices, covering over 50 Problems All data countries, and the full range fixed monitored of asset classes against set parameters Live data MARKETPLACE publishing Global pricing Rates team Interest Rate Options Money Markets E
Slide 85: Global business
Global business London Vienna New York Tokyo Dubai Shanghai Singapore Product Sales Support Sydney Development Buenos Aires 85
Slide 86: Expanding product coverage
Expanding product coverage Solvency II US treasury pricing Nuclear fuel pricing Bio fuel Equity derivatives Oil 86
Slide 87: Data used for a range of purposes
Data used for a range of purposes Price discovery Valuation-mark to market Risk management Scenario modelling/ Index, exchange, clearing Stress testing and derived data usages Regulatory compliance 87
Slide 88: Sales cycle
Sales cycle Increasing customer engagement Opportunity Test phase Customer Commercial Close identified with client internal negotiation to validate technical data quality approval Very strong process customer retention 2 – 3 months 2 – 3 months 2 months 2 months Timeline 7-12 Months Sales cycle time
Slide 89: Growth - evolving market conditions
Growth - evolving market conditions Improved market Increased customer transparency sophistication Pricing Complex derivatives Application usage More stringent Greater regulation trading complexity Compliance Risk management 89
Slide 90: Opportunities
Opportunities Regulation 90 (©) tullett prebon
Slide 91: Key takeaways
Key takeaways • Award-winning content business • Great customer retention • Expanding market supported by global regulation • Growth business 91
Slide 92: Tullett Prebon Capital Markets Day
Tullett Prebon Capital Markets Day 12th June, 2015 John Phizackerley Chief Executive, Tullett Prebon
Slide 93: Reshaping our business
Reshaping our business Our client profile Will become more diversified, less concentrated Energy We will continue to grow our energy franchise The Americas We will build scale through targeted hires and acquisitions Asia We will increase our presence in fast-growing economies Data information We wil
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Slide 95: The best operator in the hybrid voice sector
Tullett Prebon The best operator in the hybrid voice sector 95
Slide 96: Q&A
>) tullett prebon Q&A