Tp Icap Group Plc · LSE:TCAP
Tp Icap — H1 2022 Earnings Presentation
61 slides from Tp Icap's earnings presentation, Aug 10, 2022
Slide 1: Interim Results for the 6 months ended 30 June 2022
TP ICAP GROUP PLC Interim Results For the 6 months ended 30 June 2022
Slide 2: Agenda
10 August 2022 Agenda Group 1 H1 2022 Highlights Nicolas Breteau, Group CEO 2 H1 2022 Financials Robin Stewart, Group CFO Business Divisions 3 Global Broking Daniel Fields, CEO, Global Broking 4 Energy & Commodities Andrew Polydor, CEO, Energy & Commodities 5 Agency Execution and Liquidnet Mark Govo
Slide 3: H1 2022 business performance highlights
10 August 2022 H1 2022 business performance highlights Strong first half performance High single digit revenue growth Margin uplift • Group revenue up 7% excl. Liquidnet1 • Adjusted EBIT margin 16.1% excl. Russian impact; 13.1% including impact (H1 21: 12.8%1) • Up 12% incl. Liquidnet1 Global brokin
Slide 4: H1 2022 strategic highlights
10 August 2022 H1 2022 strategic highlights Delivering our strategy Continued Fusion rollout in Global Broking Parameta Solutions consensus pricing solution • On track to meet 2022 rollout targets • ClearConsensus: a market-leading initiative Launched Liquidnet D2C credit proposition to small number
Slide 5: Robin Stewart, Group CFO
Robin Stewart Group CFO
Slide 6: Financial highlights
10 August 2022 Financial highlights Group revenue1 Revenue growth across Adjusted EBIT margin2 On track to deliver: +12% all four business divisions 16.1% Group targeted savings of vs H1 2021 (12.8%3 H1 2021) £25m for 2022 Liquidnet synergies of £25m by end of 2023 1. In constant currency, including
Slide 7: H1 2022 Income Statement
10 August 2022 H1 2022 Income Statement H1 2021 £m in H1 2022 Change CC Change (reported) Revenue 1,080 936 15% 12% Adjusted EBITDA 185 155 19% 14% Adjusted EBITDA margin 17.1% 16.6% 0.5%pts 0.3%pts Adjusted EBIT 142 117 21% 15% Adjusted EBIT margin 13.1% 12.5% 0.6%pts 0.3%pts Net finance costs (26)
Slide 8: Impact of exposure to Russian sanctions
10 August 2022 Impact of exposure to Russian sanctions £m Year to date Movement to Year to date 11 March 2022 30 June 2022 30 June 2022 • P&L charges have increased by £18m since 11 March Realised losses 4 - 4 2022: Unrealised losses 9 17 26 • Unrealised losses £17m – whole portfolio Trade debtors w
Slide 9: Market volumes compared to broking revenues
10 August 2022 Market volumes compared to broking revenues Asset class Market volumes vs TP ICAP revenue1 Rates (18%) Clarus USD dealer to dealer Interest Rate Swap volume 19% London Clearing House notional SwapClear dealer volumes2 8% TP ICAP Rates revenue Credit (17%) MarketAxess Eurobonds volumes
Slide 10: Adjusted EBIT
10 August 2022 Adjusted EBIT £m 160 150 140 32 (32) 16 130 (2) (2) 7 120 6 110 100 142 90 123 117 80 70 60 1 H1 2021 FX H1 2021 CC Contribution Russian exposure Management & Strategic Liquidnet FX H1 2022 support costs 1 investment 1. Excluding Liquidnet TP ICAP Group plc Preliminary Results for the
Slide 11: Capital and liquidity management
10 August 2022 Capital and liquidity management Capital management Liquidity management • Review undertaken following successful redomiciliation • Renewed Revolving Credit Facility (RCF) for a further three years • Freed-up cash for debt repayment • Additional providers added • Increase investment g
Slide 12: Business divisions: Global Broking
10 August 2022 Business divisions: Global Broking £m H1 2022 H1 20211 Change1 • Benefited from increased market volatility Rates2 286 266 8% • Growth in all asset classes Credit2 61 55 11% • Strong performance in Rates, largest asset class by revenue FX & Money Markets2 149 136 10% • Revenue per bro
Slide 13: Business divisions: Energy & Commodities
10 August 2022 Business divisions: Energy & Commodities £m H1 2022 H1 20211 Change1 • Growth in environmental markets, oil and bulk commodities Energy & Commodities 195 192 2% • High levels of volatility in Q1. Clients took risk off position in Q2 Inter-division revenue 2 1 0% • European Gas impacte
Slide 14: Business divisions: Agency Execution (AE)
10 August 2022 Business divisions: Agency Execution (AE) H1 2022 H1 20211 Change1 £m AE excl. Liquidnet Total AE excl. Liquidnet2 Total • Liquidnet revenue in line with market Liquidnet Liquidnet activity, which was mixed Total revenue 54 114 168 48 58 106 58% • Volumes declined in US and Asia but g
Slide 15: Business divisions: Parameta Solutions
10 August 2022 Business divisions: Parameta Solutions £m H1 2022 H1 20211 Change1 Data & Analytics (D&A) 83 75 11% • Continued double digit revenue growth in D&A Post Trade Solutions (PTS) 8 11 (27%) • 96% of total D&A revenue subscription-based and therefore recurring Total revenue 91 86 6% Contrib
Slide 16: Significant items
10 August 2022 Significant items £m H1 2022 H1 2021 • £36m post-tax (H1 2021: £74m) Cash Non-Cash Total Total • Includes £21m of non-cash amortisation of intangible Restructuring & related costs 13 11 24 17 assets1 Property related 2 8 10 4 • Decrease primarily driven by: Liquidnet integration 2 1 3
Slide 17: Strong first half performance
10 August 2022 Strong first half performance Group revenue1 Higher profitability On track to deliver: c. £100m +12% from strong Rates performance Group targeted savings of of cash to be vs H1 2021 generated or freed £25m up by end of 2023 for 2022 Liquidnet synergies of £25m by end of 2023 1. In con
Slide 18: Daniel Fields, CEO, Global Broking
Daniel Fields CEO, Global Broking
Slide 19: Introducing Daniel Fields
10 August 2022 Introducing Daniel Fields Background Why I’m here My priorities • 30 years in capital markets • Markets and clients’ needs are evolving • Accelerate evolution of Global Broking • Senior leadership roles in markets, sales, • Excited to help develop a global liquidity • The hallmarks of
Slide 20: Global Broking
10 August 2022 Global Broking Largest IDB in the world, evolving from a position of strength Industry leading market share Revenue mix2 Market share3 One of the world’s largest operator of venues Inter-division revenues 2% 5 million deals with a notional value of £217 trillion1 Credit Peer 2 10% Wor
Slide 21: Current market conditions: Rates
10 August 2022 Current market conditions: Rates Well placed to capitalise on improving backdrop US Yield Curve (as at 4 August 2022)1 • Largest and most profitable asset class • Unprecedented rates environment: - Many traders not experienced a rate hike - Tapering of QE driving higher demand for liq
Slide 22: Current market conditions: Other major asset classes
10 August 2022 Current market conditions: Other major asset classes Revenue broadly tracking transaction volumes Credit Equities FX • Good levels of issuance at the start of the year fell • High volumes in Q1 as clients adjusted portfolios • Strong performance in Central Europe (CZK, PLN, away as ma
Slide 23: Fusion: meeting our clients' needs
10 August 2022 Fusion: meeting our clients’ needs Clients need Fusion delivers Ease and choice of connectivity • Single sign-on access via browser / application • Direct connectivity to central clearers via API / chat Improved STP and real-time tasks • Full electronic workflow and post-trade STP Aut
Slide 24: Fusion in action
10 August 2022 Fusion in action Rates desk matching session. 250+ orders from 30+ different traders in <50 minutes Processing this volume of activity is unachievable in the voice market Demonstrates the quality and power of the Fusion platform TP ICAP Group plc Interim Results for the 6 months ended
Slide 25: Strategic priorities
10 August 2022 Strategic priorities Support Deliver Fusion Continue to broker productivity technology rollout accompany our clients with clients On track to meet 2022 rollout target Building on our inherent strengths Well placed in these market conditions TP ICAP Group plc Interim Results for the 6
Slide 26: Andrew Polydor, CEO, Energy & Commodities
Andrew Polydor CEO, Energy & Commodities
Slide 27: Setting the scene
10 August 2022 Setting the scene The leading global OTC broker Our strategy • Leading broker in global Oil, Gas and Power markets through Tullett Prebon, ICAP Electronification and aggregation and PVM • Complete rollout of internal Order Management System in 2022 • Diversified revenue; deep relation
Slide 28: H1 market trends demonstrating our economics
10 August 2022 H1 market trends demonstrating our economics Oil, Gas and Power market drivers Clients sustain risk off position after macro market shocks Subdued market activity in Q2 2022 Positives 4,500,000 260 • Sustained market volatility 4,100,000 240 3,700,000 220 • Macro risk events 3,300,000
Slide 29: Broker for the energy transition
10 August 2022 Broker for the energy transition Clients’ carbon neutral agenda is driving significant Our Environmentals revenue growth outperforming market volumes market change • Natural gas the “transition fuel” 50 • Growth of renewable energy sources 40 • New wholesale markets e.g. hydrogen, bat
Slide 30: Our Digital Assets proposition
10 August 2022 Our Digital Assets proposition 1 2 Rationale Broking crypto currency financial instruments since Fusion Digital Assets 2019 • Targeted entry • Clients have access to institutional grade liquidity in • Combines our market infrastructure expertise with • Not taking any positions of our
Slide 31: Strategic priorities
10 August 2022 Strategic priorities Continued rollout Drive broker Supporting clients Leverage strong Launch the Digital Fusion Energy productivity and through market position in Assets spot platform margin improvement volatility (particularly Environmentals. Help (pending FCA by hiring and European
Slide 32: Mark Govoni, CEO, Agency Execution
Mark Govoni CEO, Agency Execution
Slide 33: Introducing Mark Govoni
10 August 2022 Introducing Mark Govoni Background An exciting time to join My priorities • Capital markets and execution services • A trusted, technology led business for over 20 years • Liquidnet’s buyside expertise and client • Complete integration of Liquidnet and TP • Dedicated focus on financia
Slide 34: Market dynamics
10 August 2022 Market dynamics Equities Fixed Income • Global cash equities commission wallet elevated vs. pre Covid-19. • Electronic trading volumes continue to grow Proportion in low touch electronic channels near all-time highs • Trading protocols still in early stage innovation • EMEA dark volum
Slide 35: Integration into TP ICAP on track to complete by 2023
10 August 2022 Integration into TP ICAP on track to complete by 2023 On track to meet Integrating Liquidnet and Leveraging TP ICAP’s Combining Liquidnet’s £25m TP ICAP liquidity. Preserving strict physical extensive geographic footprint to expand entrepreneurial culture with TP ICAP’s rigour synergi
Slide 36: Strengthening core Equities franchise
10 August 2022 Strengthening core Equities franchise Strategic progress to date Strategic priorities • Development of Programme Trading business through new hires • Develop US Equities franchise • Growth of cross-border business • Further penetrate APAC market • Continued geographical expansion in G
Slide 37: Growing Fixed Income offering
10 August 2022 Growing Fixed Income offering Strategic progress to date Strategic priorities Primary market offering • Deeper integration to more investors in more geographies • Launched trading platform to clients in September 2021 • Complete roll out to full TP ICAP network of dealers while mainta
Slide 38: Accelerating growth and driving revenue
10 August 2022 Accelerating growth and driving revenue Focus on our core Collaborate with our Deliver on our strengths clients strategy TP ICAP Group plc Interim Results for the 6 months ended 30 June 2022 | 38 TP ICAP Classification: Confidential
Slide 39: Eric Sinclair, CEO, Parameta Solutions
Eric Sinclair CEO, Parameta Solutions
Slide 40: Data & Analytics key attributes and priorities
10 August 2022 Data & Analytics key attributes and priorities Unique solutions Focused strategy Highly valuable My priorities Scarce, neutral OTC data Executing in high growth Double-digit growth with • Innovative products on an unmatched scale sectors sticky, high margin revenues • Client diversifi
Slide 41: A major value opportunity
10 August 2022 A major value opportunity Financial market data overview: a $43bn industry IDB Benchmarks Pricing, Our current growth market Expanding into high growth segments $0.3 bn & Indices Reference • IDBs data – c.$343m market with 7% 7% CAGR $5 bn & • Targeting fastest growing segments. YoY g
Slide 42: Pricing, Reference and Valuation
10 August 2022 Pricing, Reference and Valuation Introducing ClearConsensus What is ClearConsensus? A win-win Pricing, Reference • Independently aggregates data to help banks determine fair • TP ICAP’s unique observable value of their assets trade data & Valuation $6 bn • A partnership with: • Evalua
Slide 43: Benchmarks and Indices
10 August 2022 Benchmarks and Indices Leveraging our independent position Why target Benchmarks and Indices? Progress update Benchmark s & Indices • Independent, conflict-free global OTC data • Authorised FCA Benchmark $5 bn Administrator 14% CAGR Creation of Benchmarks and Indices • Structured prod
Slide 44: More multichannel distribution for our clients
10 August 2022 More multichannel distribution for our clients Direct Delivery Channel Partners Public Cloud • Bloomberg • Data Share • Data Feeds • Refinitiv/LSEG • Streamer • Internet Display • ICE Data Service • Web Socket Objectives More direct relationships with Expand channel partner Access new
Slide 45: Strategic priorities
10 August 2022 Strategic priorities New products and Work with partners to Diversify our client Execute our opportunities leverage our base multichannel collective strengths distribution strategy Outperform the industry TP ICAP Group plc Interim Results for the 6 months ended 30 June 2022 | 45 TP IC
Slide 46: Nicolas Breteau, Group CEO
Nicolas Breteau Group CEO
Slide 47: Summary
10 August 2022 Summary Performing and transforming High single digit Continuing our Continued focus on Active capital Well positioned revenue growth transformation diversification management in current market conditions Increase in profitability Rollout of Fusion on track Innovation within Parameta
Slide 48: Q&A
Q&A
Slide 49: Appendix
Appendix
Slide 50: H1 2022 revenue breakdown
10 August 2022 H1 2022 revenue breakdown Revenue by business division1 Global Broking revenue by asset class Inter-division revenues £10m, +0% Parameta Solutions £91m +6% Agency Equities Execution £130m, +7% £168m, +58% Global Broking Rates £636m, +8% £286m, +8% Energy & Commodities FX and Money £19
Slide 51: Correlation of Global Broking and E&C revenue with secondary market activity
10 August 2022 Correlation of Global Broking and E&C revenue with secondary market activity1 Rates Credit • Transaction volume drives broking revenue 150 150 • Publicly available volume data for exchange-traded derivatives (Rates, FX, E&C), cleared OTC swaps (Rates), and corporate bonds 100 100 (Cre
Slide 52: Divisional analysis
10 August 2022 Divisional analysis Global Energy & Agency Parameta H1 2022 (£m) Corp/Elim1 Group Broking Commodities Execution Solutions Revenue 636 197 168 91 (12) 1,080 Contribution 224 64 55 44 - 387 Contribution margin 35.2% 32.5% 32.7% 48.4% - 35.8% Management and support costs 2 (103) (34) (33
Slide 53: Divisional analysis
10 August 2022 Divisional analysis Global Energy & Agency Parameta H1 2022 (£m) Corp/Elim1 Group Broking Commodities Execution Solutions Revenue 636 197 168 91 (12) 1,080 Contribution 224 64 55 44 - 387 Contribution margin 35.2% 32.5% 32.7% 48.4% - 35.8% Management and support costs 2 (103) (34) (33
Slide 54: Balance Sheet
10 August 2022 Balance Sheet £m Jun 2022 Dec 2021 Goodwill & other intangibles 1,902 1,853 Other non-current assets 294 285 Current assets less current and non current liabilities 154 3 Cash and financial instruments 920 899 Deferred tax liabilities (97) (107) Interest bearing loans and borrowings (
Slide 55: Net funds/(debt)
10 August 2022 Net funds/(debt) £m Cash and cash Financial Total funds Debt1 Lease Net equivalents1 investments liabilities funds/(debt) At 31 December 2021 767 115 882 (839) (286) (243) Reported net cash flow from operating activities2 (27) - (27) 1 - (26) Net cash flow from investment activities (
Slide 56: Debt finance
10 August 2022 Debt finance £m Jun 2022 Jun 2021 Dec 2021 5.25% £247m Sterling Notes January 20241 252 440 252 5.25% £250m Sterling Notes May 20261 250 250 250 2.625% £250m Sterling Notes November 20281 248 - 248 Loan from related party (RCF with Totan) - 65 51 Revolving Credit Facility drawn - bank
Slide 57: Debt maturity profile
10 August 2022 Debt maturity profile 400 The Group’s core debt (EMTN bonds) comprises: • 5.25% £247m Sterling Notes maturing January 2024 350 • 5.25% £250m Sterling Notes maturing May 2026 ¥10bn 300 • 2.625% £250m Sterling Notes maturing November 2028 • 3.2% vendor loan notes of $50m (£41m) were iss
Slide 58: H1 2022 reported cash flow
10 August 2022 H1 2022 reported cash flow £m Jun 2022 Jun 2021 EBIT reported 99 57 Depreciation, amortisation and other non-cash items 92 68 Change in Matched Principal and clearing org balances (153) (1) Movements in working capital (20) (48) Taxes and interest paid (45) (52) Operating cash flow (2
Slide 59: Cash & Cash Equivalents and Financial Investments
10 August 2022 Cash & Cash Equivalents and Financial Investments • Cash held for working capital, regulatory, liquidity and corporate purposes H1 2022 FY 2021 • Capital requirements of the regulated entities are generally met by net tangible assets held in cash, funded by our bond portfolio 1 10 • T
Slide 60: 2022 Full Year Guidance
10 August 2022 2022 Full Year Guidance Group adjusted EBIT margin FY22 Significant items • Slight improvement in Group adjusted EBIT margin, assuming a similar revenue • Expected to be approximately £110m (pre-tax), excluding potential income and profile as 2021 costs associated with legal and regul
Slide 61: Disclaimer
10 August 2022 Disclaimer This communication and all information contained in or attached to it (including, but not limited to market prices/levels and market commentary) (the "Information") is for informational purposes only, is confidential, may be legally privileged and is the intellectual proper