Tp Icap Group Plc · LSE:TCAP
Tp Icap — FY2023 Earnings Presentation
58 slides from Tp Icap's earnings presentation, Mar 12, 2024
Slide 1: Full Year Results
TP ICAP GROUP PLC Full Year Results For the 12 months ended 31 December 2023
Slide 2: Nicolas Breteau, Group CEO
Nicolas Breteau Group CEO
Slide 3: Agenda
12 March 2024 Agenda 2023 Highlights Nicolas Breteau, Group CEO 2023 Financials Robin Stewart, Group CFO TP ICAP GROUP PLC Global Broking Daniel Fields, CEO, Global Broking Full Year Results For the 12 months ended 31 December 2023 Energy & Commodities Andrew Polydor, CEO, Energy & Commodities Liqui
Slide 4: Performance highlights
12 March 2024 Performance highlights Group performance: Uplift in profitability: • Revenue +3%1 • Group adjusted EBIT +8%1 to £300m • Contribution +6%1 • Group adjusted EBIT margin 13.7% Global Broking productivity gains: Dynamic capital management: • Revenue/broker +5%1; • Investing, reducing debt,
Slide 5: Strategic highlights
12 March 2024 Strategic highlights THREE-PILLAR STRATEGY TRANSFORMATION DIVERSIFICATION DYNAMIC CAPITAL MANAGEMENT Transformation through Fusion: Growing Credit1: • Rollout on track, adoption increasing • Consolidated Credit offering, led by Global Broking (GB) • 7 institutions connected across seco
Slide 6: More diverse, top line growing, more cash generative
12 March 2024 More diverse, top line growing, more cash generative Future-proofing Global Broking: Delivering revised 2023 targets • Improving productivity: revenue/broker up 23% since 2021 Growing top line: • Group revenue up on average 5% a year1,2 39.8% GB contribution margin3 Target: 39% to 40%
Slide 7: Robin Stewart, Group CFO
Robin Stewart Group CFO
Slide 8: 2023 income statement
12 March 2024 2023 income statement £m 2023 20221 Change CC Change Revenue 2,191 2,115 4% 3% Adjusted EBITDA 373 357 4% 4% Adjusted EBITDA margin 17.0% 16.9% 0.1%pts 0.1%pts Adjusted EBIT 300 275 9% 8% Adjusted EBIT margin 13.7% 13.0% 0.7%pts 0.6%pts Net finance costs (29) (49) (41%) Adjusted profit
Slide 9: Adjusted EBIT
12 March 2024 Adjusted EBIT £m 350 9 300 2 51 (12) (25) 300 250 277 275 200 150 100 50 0 2022 FX 2022 CC Contribution Liquidnet Management FX: 2023 in-year & support costs1 retranslation of integration cash/net savings financial assets 1 - Including other operating income and depreciation and amorti
Slide 10: Significant items
12 March 2024 Significant items £m 2023 2022 Restructuring & related costs 26 41 Liquidnet property rationalisation (exiting remaining floor space in NYC) 15 16 • £153m post-tax (2022: £91m) Liquidnet integration 9 9 • Increase primarily driven by: Group cost saving programme - 21 Business restructu
Slide 11: Global Broking
12 March 2024 Global Broking Productivity and contribution focus Constant Reported Currency £m 2023 20221 Change Change • Revenue unchanged: Rates 566 567 - - – Exceptional 2022 performance Credit 121 125 (3%) (3%) • Productivity up: 4 FX & Money Markets 312 302 3% 3% – Revenue per broker up 5% 4,5
Slide 12: Energy & Commodities
12 March 2024 Energy & Commodities Strong performance Constant Reported Currency • Buoyant market conditions £m 2023 20221 Change Change Energy & Commodities 455 384 18% 18% • Record revenue/adjusted EBIT growth Inter-division revenue 3 3 - - • Double-digit revenue growth: Oil, Gas and Power Total r
Slide 13: Liquidnet
12 March 2024 Liquidnet1 Good Equities momentum into 2024 Constant Reported Currency £m 2023 20221,2 Change Change • Total revenue broadly stable Total revenue 315 316 - (1%) Contribution5 108 119 (9%) (11%) • Equities revenue declined 9%3, in line with subdued block trading: Contribution margin5 34
Slide 14: Parameta Solutions
12 March 2024 Parameta Solutions Expanding products, diversifying client base Constant Reported Currency £m 2023 20221 Change Change Data & Analytics 185 175 6% 6% • Growing demand for OTC financial market data Inter-division revenue 4 - - - • Revenue up 8%2. Strong H2 performance: up 11%2 Total rev
Slide 15: 2023 targets
12 March 2024 2023 targets Adjusted EBIT Margin Contribution Margin 2023 Revised 2023 Revised • Range of return-related 2023 targets 2023 Reported 2023 Reported Target Target • FY 2022: targets revised (pandemic, Group (incl. Liquidnet) c. 14% 13.7% No Target challenging equity market conditions) -
Slide 16: Delivering sustainable value creation
12 March 2024 Delivering sustainable value creation Reducing Group debt Returning capital Increasing dividends to shareholders • £30m buyback completed: • Debt paydown of £88m: 2023 • Final 2023 dividend up 27% purchased 16.9m shares leverage ratio1 1.9x (2022: 2.0x) • Total 2023 dividend up 19% • S
Slide 17: Strong free cash flow generation and cash conversion
12 March 2024 Strong free cash flow generation and cash conversion £m 20 Conversion 450 (57) ratio1: 400 104 124% 350 (32) 86 (20) 300 (33) (55) 250 200 140 150 281 100 50 128 0 Working Net Periodic Accelerated Change in net Net interest CAPEX 2023 Depreciation, Liquidnet Capital dividends tax paid
Slide 18: Cash & cash equivalents and financial investments
12 March 2024 Cash & cash equivalents and financial investments 31 December 2022 31 December 2023 Cash held for: £1,208m Working capital / liquidity purposes 47 36 c. £950m Regulatory / other capital purposes £1,062m £1,208m c. £250m Existing near-term commitments 1,015 1,172 Near-term commitm
Slide 19: 2024 full year guidance
12 March 2024 2024 full year guidance Group net finance expense Significant items • c. £25m: reduction of £4m compared with 2023 • c. £65m (pre-tax), excluding: - Potential income and costs associated with legal and regulatory matters Effective tax rate on adjusted earnings Dividend policy % • c. 29
Slide 20: Daniel Fields, CEO, Global Broking
Daniel Fields CEO, Global Broking
Slide 21: Global Broking: Market-leading franchise
12 March 2024 Global Broking Market-leading franchise World’s largest OTC liquidity venue 2023 Highlights Industry-leading market share • Revenue performance in line with exceptional comparator Market-leading brands Best-in-class brokers and technology • Productivity up: contribution per broker +12%
Slide 22: 2023: Global Macro Environment
12 March 2024 2023: Global Macro Environment Uncertainty and volatility • Rates: • FX / Money Markets: - Rising rates (Q1 to Q3) to combat inflation; Q4 pause, as - Movements in interest rates and local currencies inflation eased - Enhanced volatility caused clients to choose voice / hybrid vs. - Ma
Slide 23: Fusion: client-led, digital platform
12 March 2024 Fusion: client-led, digital platform A seamless service for clients Client Broker Clients interact directly (UI or API) or via a Broker TP ICAP Group plc Preliminary Results for the 12 months ended 31 December 2023 23
Slide 24: Driving Fusion rollout and adoption
12 March 2024 Driving Fusion rollout and adoption Meeting clients’ changing needs: Live on • API integration and STP: 44% - Client ‘stickiness’ of in-scope - Future platform enhancements desks easier Adoption rate increasing: Smart ‘plug and play’ API’s: Adoption: • New protocols, enhanced functiona
Slide 25: Broker productivity increasing
12 March 2024 Broker productivity increasing Rates: Revenue / broker 2023 quarterly average Broker Productivity1 Strategy Y1 £681k 220 £255k 1,971 Non-Fusion enabled £650k 170 £191k Fusion enabled 120 1,908 £552k 1,815 70 20 2021 2022 2023 Average number of brokers Revenue per broker Adjusted 15.1%2
Slide 26: 2024 outlook and priorities
12 March 2024 2024 outlook and priorities Outlook Strategic priorities • Interest rate volatility: timing / quantum • Drive profitable growth • Uncertain geopolitical landscape • Enhance market share • Broadly supportive global macro environment • Attract and retain talent • Fusion: institutionalise
Slide 27: Andrew Polydor, CEO, Energy & Commodities
Andrew Polydor CEO, Energy & Commodities
Slide 28: Energy & Commodities: Leading global OTC broker
12 March 2024 Energy & Commodities Leading global OTC broker Leading global broker in Oil, Gas and Power 2023 Highlights Market-leading brands • Buoyant market conditions: Diversified revenue and client base - Record performance: revenue +18%1, adjusted EBIT +45%1 Growth opportunities: Energy Transi
Slide 29: Market volumes and outlook: Oil, Gas and Power
12 March 2024 Market volumes and outlook: Oil, Gas and Power Oil YoY % change: # ICE contracts traded • WTI volumes: 5 record months in 2023; 50% • ICE volumes: +19%; Outlook: 35% • Global demand to rise c. 6% from 2022 - 20281 Gas 20% • ICE volumes: +16% YoY (UK and Dutch gas: + 60%) Outlook: 5% •
Slide 30: Energy Transition
12 March 2024 Energy Transition Well positioned in a growing sector Substantial medium-term opportunity • Well positioned: carbon credits, biofuels, renewable energy, battery metals • Fusion live in green certificates, voluntary carbon, renewables/gas CME Battery Metals (# contracts) markets (Austra
Slide 31: 2024 outlook and priorities
12 March 2024 2024 outlook and priorities Outlook Strategic priorities • Ongoing geopolitical risks • Maintain/grow market-leading position • Growing demand for traditional and renewable energy • Monetise rich data sources with Parameta: real-time Oil products pricing, indices • Increasing competiti
Slide 32: Mark Govoni, CEO, Liquidnet
Mark Govoni CEO, Liquidnet
Slide 33: A leading, tech-driven, agency execution specialist
12 March 2024 A leading, tech-driven, agency execution specialist Global, multi-asset, technology-driven businesses 2023 Highlights 20+ years’ experience delivering trusted, efficient, liquidity solutions • £43m annualised integration cost synergies, exceeding 2023 target (£30m) Execution across 49
Slide 34: Division in profile
12 March 2024 Division in profile Breadth of multi-asset offerings 2023 total revenue by asset class (£m)1 Multi-asset2: growing revenue and margins Adjusted EBIT 9.8%4 13.4% 9 9 margin 160 27 £138m 140 £125m 9 9 120 8 3 £98m 14 Total 177 100 £89m 27 93 revenue: 1 14 25 £315m 80 13 13 15 93 60 19 78
Slide 35: Equity markets
12 March 2024 Equity markets 4 Challenging market environment in 2023… 5x LIS Market Share (EMEA) 5% • Commission wallet lowest in 9+ years1 8% Liquidnet • Subdued large block trading: Market 36% Venue 1 share up 18% - US Agency ATS2: -13% YoY Venue 2 160 bps YoY - EMEA 5x LIS2 volumes: -15% YoY Ven
Slide 36: Strategic levers in Equities
12 March 2024 Strategic levers in Equities Diversifying equities Tight cost management1 • “All weathers” strategy: - Programme Trading revenue + 26% Cost- income 59% 52% 45% - Average daily algo users +16% ratio2 140 - Entry into listed derivatives M&S costs - 100 new equities clients declining at 2
Slide 37: 2024 outlook and priorities
12 March 2024 2024 outlook and priorities Outlook Strategic priorities • Improving block market conditions, depending on • Positioning for growth: win market share/wallet share geopolitics, inflation, monetary policy • Expand global liquidity network • Rotation out of cash, return of more active equ
Slide 38: Eric Sinclair, CEO, Parameta Solutions
Eric Sinclair CEO, Parameta Solutions
Slide 39: Parameta Solutions
12 March 2024 Parameta Solutions World’s leading provider of scarce, neutral OTC data High growth/high margin 2023 Highlights 96% recurring, subscription revenue; 98% client retention • New indices launched: Significant revenue, contribution, operating profit growth - Interest Rate Swap Volatility (
Slide 40: Driving revenue growth
12 March 2024 Driving revenue growth Data, partnerships, multi-channel distribution expanding client penetration Direct distribution driving Meeting clients’ regulatory needs Partnerships driving growth client acquisition Consensus Public cloud Evidential pricing: Pricing Data Independent valuation
Slide 41: Significant E&C data monetisation opportunities
12 March 2024 Significant E&C data monetisation opportunities Rapidly growing demand • Rapidly growing demand for data: • Traditional / transition markets • New environmental products • E&C collaboration: Weather Derivatives, Voluntary Carbon, Battery Metals E&C • Helping clients navigate regulatory
Slide 42: 2024 outlook and priorities
12 March 2024 2024 outlook and priorities Outlook Strategic priorities • Continued growth in market data industry • New products to assist clients with capital optimisation and regulatory compliance • Growing demand for regulatory capital efficiency • New indices: Fuel Oil, Carbon Credits, Inflation
Slide 43: Nicolas Breteau, Group CEO
Nicolas Breteau Group CEO
Slide 44: Delivering sustainable shareholder value
12 March 2024 Delivering sustainable shareholder value Investing Maximising Dynamic to grow strategic assets capital management Fusion: Organic investment Parameta Solutions: • Rollout / adoption • Exploring options to Ongoing debt E&C: unlock value for reduction • Energy transition shareholders Gro
Slide 45: Q&A
Q&A
Slide 46: Appendix
Appendix
Slide 47: FY 2023 revenue breakdown
12 March 2024 FY 2023 revenue breakdown Revenue by business division1 Global Broking revenue by asset class Parameta Solutions Inter-division £189m revenues +8% Equities £22m £237m 0% -4% Liquidnet Division £315m - 1% Global Broking Rates Total: £1,258m Total: £566m £2,191m2 0% £1,258m 0% +3% Flat F
Slide 48: Divisional Analysis – reported basis
12 March 2024 Divisional Analysis – reported basis Energy & Liquidnet Parameta 2023 (£m) Global Broking Commodities Division Solutions Corp/Elim Group Revenue 1,258 458 315 189 (29) 2,191 Contribution 493 154 108 93 - 848 Contribution margin 39.2% 33.6% 34.3% 49.2% 0% 38.7% Management and support co
Slide 49: Divisional Analysis – constant currency basis
12 March 2024 Divisional Analysis – constant currency basis Energy & Liquidnet Parameta 2023 (£m) Global Broking Commodities Division Solutions Corp/Elim Group Revenue 1,258 458 315 189 (29) 2,191 Contribution 493 154 108 93 - 848 Contribution margin 39.2% 33.6% 34.3% 49.2% 0% 38.7% Management and s
Slide 50: Market volumes compared to broking revenues
12 March 2024 Market volumes compared to broking revenues Asset class Market volumes vs TP ICAP revenue1 Clarus USD dealer to dealer Interest Rate Swap volume (1)% Rates 15% London Clearing House notional SwapClear dealer volumes2 (0)% TP ICAP Rates revenue MarketAxess Eurobonds volumes3 ($) 14% Cre
Slide 51: Correlation of Global Broking and E&C revenue with secondary market activity
12 March 2024 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 100 100 derivatives (Rates, FX, E&C), cleared OTC swaps (Rates), and corporate bonds (Cred
Slide 52: Liquidnet division revenue
12 March 2024 Liquidnet division revenue Constant Reported Currency £m 2023 20221,2 Change Change Total division revenue3 315 316 - (1%) - Liquidnet Cash Equities 175 191 (8%) (9%) - Liquidnet Listed Derivatives4 2 - - - - Rest of the division5 138 125 10% 10% 1. In previous reporting, Parameta Solu
Slide 53: 2023 reported cash flow
12 March 2024 2023 reported cash flow £m 2023 2022 • Operating cash flow: EBIT reported 128 163 Depreciation, amortisation and other non-cash items 140 158 - Liquidnet impairment Impairment of goodwill and acquired customer relationships 86 20 - Higher matched principal, clearing balances Change in
Slide 54: Balance Sheet
12 March 2024 Balance Sheet £m Dec 2023 Dec 2022 Goodwill & other intangibles 1,716 1,877 Other non-current assets 289 297 Current assets less current and non-current liabilities (155) (82) Cash and financial instruments 1,218 1,062 Deferred tax liabilities (51) (85) Interest bearing loans and borro
Slide 55: Net Funds/(Debt)
12 March 2024 Net Funds/(Debt) Cash and cash Financial Lease Net £m Subtotal Overdraft Total funds Debt1 equivalents Investments liabilities funds/(debt) At 1 January 2023 888 174 1,062 - 1,062 (794) (279) (11) Reported net cash flow from operating activities 1 280 - 280 (10) 270 47 (27) 290 Net cas
Slide 56: Debt Finance
12 March 2024 Debt Finance £m Dec 2023 Dec 2022 5.25% £247m Sterling Notes January 20241 37 253 5.25% £250m Sterling Notes May 20261 250 250 2.625% £250m Sterling Notes November 20281 249 248 7.875% £250m Sterling Notes April 20301 251 - Subtotal 787 751 Loan from related party (RCF with Totan) 2 -
Slide 57: Debt Maturity Profile
12 March 2024 Debt Maturity Profile The Group’s core debt (EMTN bonds) comprises: 700 • 5.25% £247m Sterling Notes maturing January 2024: £37m remaining 600 ¥10bn • 5.25% £250m Sterling Notes maturing May 2026 500 • 2.625% £250m Sterling Notes maturing November 2028 £250m • 7.875% £250m Sterling Not
Slide 58: Disclaimer
12 March 2024 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 propert