Tp Icap Group Plc · LSE:TCAP
Tp Icap — H1 2024 Earnings Presentation
59 slides from Tp Icap's earnings presentation, Aug 7, 2024
Slide 1: TP ICAP Group PLC
TP ICAP GROUP PLC
Slide 2: Nicolas Breteau
2 Nicolas Breteau
Slide 3: Agenda
7 August 2024 Agenda HY 2024 Highlights Nicolas Breteau, Group CEO HY 2024 Financials Robin Stewart, Group CFO Efficiency Programme Max Spoto, Group COO Global Broking Daniel Fields, CEO, Global Broking Energy & Commodities Andrew Polydor, CEO, Energy & Commodities Liquidnet Mark Govoni, CEO, Liquid
Slide 4: Performance highlights
7 August 2024 Performance highlights ® £ aR sigh Increasing revenue * Revenue +3%! Tight cost control despite inflation * Group management & support (‘M&S’) costs down 4%!? * — Liquidnet M&S costs reduced 18%! Record Group profits + Adjusted EBIT +9%! to £170m * Adjusted EBIT margin 14.9% (H1 2023:
Slide 5: Strategic highlights
7 August 2024 Strategic highlights ® Transformation =, Dynamic capital management New efficiency programme * Third buyback (£30m) announced today * Operational efficiencies: > £50m annualised savings * To follow second £30m buyback completion Fusion + More legal entity consolidation: >£50m surplus c
Slide 6: Robin Stewart
2 Robin Stewart
Slide 7: H1 2024 income statement
7 August 2024 H1 2024 income statement £m HY 2024 HY 2023! CC Change Revenue 1,144 1,132 3% Adjusted EBITDA 206 200 Adjusted EBITDA margin Adjusted EBIT Adjusted EBIT mi Net finance costs (41%) Adjusted profit before tax 10% Tax 15% Effective tax rate 1.4%p' Share of JVs and associates less non-cont
Slide 8: 7 August 2024
7 August 2024 200 180 160 140 120 100 80 60 40 20 0
Slide 9: Significant items
7 August 2024 Significant items £m 12024 H1 2023 Restructuring & related costs 8 20 Property-related (rationalising US footprint) 8 15 Liquidnet integration : 3 Business restructuring (initial costs on operational efficiencies 1 > programme) Remeasurement of employee long term benefits 0) - Disposal
Slide 10: Global Broking
7 August 2024 Global Broking Constant Reported — Currency £m HY 2024 HY 2023'2 Change = Change * Revenue unchanged: Rates 291 299 (3%) 0% — Strong H1 2023 comparator (collapse of US FX & Money Markets 162 159 2% 4% regional banks) Equities 120 7 6%) (4%) — Ql revenue: -7%4; Q2 revenue: +8%4 Credit 6
Slide 11: Energy & Commodities
7 August 2024 Energy & Commodities Constant Reported — Currency * Good momentum from buoyant market conditions £m HY 2024 HY 2023! Change Change Energy & Commodities 242 229 6% 8% © ehuilleting em sirenig) nl) Ares Inter-division revenue 2 2 - * Strong growth across Oil, Gas and Power Total revenue
Slide 12: Liquidnet
7 August 2024 Liquidnet Good Equities momentum Constant Reported = Currency 1 £m Boz 112025! Change Change * Increased equities market share: US and EMEA Total revenue 171 163 5% 8% Equiti 1A d block k = ties revenue : improved block market Contribution 66 62 6% activity MEANS D Were une Contributio
Slide 13: Parameta Solutions
7 August 2024 Parameta Solutions Expanding products, diversifying client base Constant Reported — Currency £m H12024 ~—H12023' Change Change Data & Analytics 95 89 T% 10% Inter-division revenue 2 2 Total revenue 97 91 10% Contribution AT 45 Contribution margin 48.5% 49.5% ( Management and support co
Slide 14: HY 2024 reported cash flow
7 August 2024 HY 2024 reported cash flow £m HY 2024 HY 2023 EBIT reported 1 109 Depreciation, amortisation and other non-cash items 76 73 Change in net Matched Principal and clearing organisation balances 2) (8) Movement in working capital (32) 47 Taxes and interest paid (56) (64) Operating cash flo
Slide 15: Delivering efficiencies, returning capital, paying down debt
7 August 2024 Delivering efficiencies, returning capital, paying down debt What e we achieved so far? Deploying freed up capital £m H12024 12022 _ Diff 2024: 5.25% 2 247 an 2026: 5.25% 251 250 * Post-Redomiciliation to Jersey, we have been able to actively manage our balance sheet 2028: 2.625% ue) 2
Slide 16: 2024 full year guidance
7 August 2024 2024 full year guidance [4 Group net finance expense al Dividend policy o °c. £25m ZN * 2x adjusted post tax earnings dividend cover; pay-out range of 30-40% of H1 adjusted post-tax earnings with balance paid in final dividend Effective tax rate on adjusted earnings — Significant items
Slide 17: Max Spoto
2 Max Spoto
Slide 18: Investing for the future
7 August 2024 Investing for the future ee Three-pronged approach C1) Engineering Excellence 2) Operational Excellence 3) Capital Efficiencies * Technology Consolidation & * Target Operating Model * Legal entity consolidation Data Strategy * RealEstate Optimisation * Cloud Expansion & Partnership ¢ P
Slide 19: Five levers to simplify and enhance client experience
7 August 2024 Five levers to simplify and enhance client experience Significant savings and cash release over the next three years 1 2 3 4 5 q Procurement aA Technology and Target Operating & Vendor Real Estate Legal entities Data Model Optimisation rationalisation Management * Ways of working * Geo
Slide 20: Daniel Fields
2 Daniel Fields
Slide 21: Global Broking
7 August 2024 Global Broking Executing strategy to transform, whilst maintaining market-leading franchise World’s largest OTC liquidity venue, source of OTC data Market-leading brands Industry-leading market share Market Share! Revenue Mix Inter-Divisional Revenue 1% 1 Revenuemotker share vs listed
Slide 22: HY 2024: Macro environment and strategic actions
7 August 2024 HY 2024: Macro environment and strategic actions Macro Environment * Rates and FX Rate expectations (%) Strategic Actions * Developing client franchises: 55 - Inflationary pressure easing, but 53 - Rates and FX: maintain leadership central banks remain cautious 54 - Credit: globally al
Slide 23: Update on Fusion
7 August 2024 Update on Fusion Product * Clients’ gateway to liquidity * Transforms ability to deploy products and protocols * On track to complete in-scope desk roll out by end of 2025 * Beyond 2025: ongoing development Increase hybrid capa Global Deployment ty and-client penetra Client of in-scope
Slide 24: H2 outlook and priorities
7 August 2024 H2 outlook and priorities Outlook Strategic priorities * Potential increase in volatility: + Invest in client franchises: * Interest rates: timing / quantum * Support and enhance best-in-class broking teams * Uncertain geopolitical landscape * Expand coverage: products and regions * Br
Slide 25: Andrew Polydor
2 Andrew Polydor
Slide 26: Energy & Commodities
7 August 2024 Energy & Commodities Leading global OTC broker Ss EnergyRisk Commodity broker = Awards 2024 of the year <<.) Winner Tullett Prebon Our Strategy H1 2024 Highlights Continued revenue growth: up 8% on a record 2023 Well positioned: * Demand for Oil & Gas growing * Tullett Prebon: Commodit
Slide 27: Market volumes and outlook: Oil, Power and Gas
7 August 2024 Market volumes and outlook: Oil, Power and Gas Oil ICE Oil & Gas, # of contracts * ICE volumes: +26%; Outlook: ° * Growing demand (Goldman Sachs)! 55 50 Gas 45 * ICE volumes: +35%; 0 Outlook: 8 45 * Positive H2 outlook = * LNG demand growing 50% by 20402 30 25 Power 20 * ICE volumes: +
Slide 28: Energy Transition strategy
7 August 2024 Energy Transition strategy A fast-growing sector Current levers * Norwegian/Australian Renewable Certificates * Voluntary emissions New levers * Battery Metals desk - cobalt, lithium * US Renewable Energy Credits * Data monetisation with Parameta Solutions One global liquidity pool * A
Slide 29: H2 outlook and priorities
7 August 2024 H2 outlook and priorities Outlook * Demand for Oil, Gas, Power * Geopolitical risks / potential volatility * Growing demand for Energy Transition products... * anew commodities Supercycle * Competition for brokers Priorities * Grow revenue from traditional products * Leverage the Energ
Slide 30: Mark Govoni
e Mark Govoni
Slide 31: 7 August 2024
7 August 2024 • • • • (11%) • • (41%) (44%) (45%) • (59%) •
Slide 32: Equities market
7 August 2024 Equities market Positive momentum, market share up 5x LIS? Market Share (EMEA)* ncouraging star * Higher equities allocations boosted institutional block market activity * Lowest allocation to cash since 2021! * Commission wallet up 11% in Q1 242 * Improved large block volumes: aE * US
Slide 33: Executing our strategy
7 August 2024 Executing our strategy Equities platform * SuperBlock™ matching initiative launched: large / illiquid trades * Average daily algo users up 22% in H1 2024 * Programme / High Touch trading up 45% Exp multi sset agency b * Building critical mass: * FXO desk in US, building APAC expertise
Slide 34: H2 outlook and priorities
7 August 2024 H2 outlook and priorities Outlook Priorities * More supportive macro environment * Expand liquidity pool * Expectations for a reduction in global interest rates * Growth in algo, programme and inter-region trading * _...risk of inflationary pressures from heightened * Expand multi-asse
Slide 35: Silvina Aldeco-Martinez
e Silvina Aldeco-Martinez
Slide 36: Parameta Solutions
7 August 2024 Parameta Solutions Leading provider of proprietary, scarce OTC data (| £97M Revenue H1 2024 Revenue * 10% Growth YoY revenue growth, constant currency ES 97% Recurring H1 2024 subscription- based revenue @Q 104% Retention H1 2024 net revenue retention vs 2023 year-end! |-Net revenue re
Slide 37: Sustained growth, well-diversified client base
7 August 2024 Sustained growth, well-diversified client base Continue to win across sectors 25 new clients: high growth in number of buyside & corporate clients Parameta Solutions, EAC supporting OTC ecosystem 1,000+ clients, 60+ countries Post-trade A. Buysid = tcl Iph H1 24 revenue by client! H1 2
Slide 38: Proprietary, multi-asset solutions supporting decision making and regulatory compliance
7 August 2024 Proprietary, multi-asset solutions supporting decision making and regulatory compliance [seveloped, growing * Indicative Price Data: global coverage, multi-asset, expanding * New product launches * Interest Rate Options for APAC EM * Iron Ore & Base Metal Options, Australia Green Certi
Slide 39: Leveraging third party distribution channels, growing direct delivery
7 August 2024 Leveraging third party distribution channels, growing direct delivery Price reporting * 21% revenue from direct distribution agencies Data vendors * More Buyside, Corporate clients powered via our Cloud partnerships with major providers e.g. AWS Index Providers * Fusion, our newest dir
Slide 40: H2 outlook and priorities
7 August 2024 H2 outlook and priorities Outlook * Positive Secular tailwinds: * Increased regulation, surveillance driving new use cases on sell-side * Sell-side capital optimisation * Cloud adoption enabling clients to access more complex datasets * Customers deepening analytics: more focus on quan
Slide 41: Nicolas Breteau
2 Nicolas Breteau
Slide 42: Delivering sustainable shareholder value
7 August 2024 Delivering sustainable shareholder value Dynamic capital management Enhancing strategic assets Investing to grow Organic investment Ongoing debt reduction Growing dividend Returning capital Parameta Solutions: * Options to unlock value * Possible U.S. listing * Retaining majority owner
Slide 43: Q&A
Slide 44: Appendix
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Slide 45: HY 2024 revenue breakdown
7 August 2024 HY 2024 revenue breakdown Revenue by business division’ Global Broking revenue by asset class! Parameta Solutions Inter-division £97m revenues £11 +10% Equities 0. m £120m % -4% Liquidnet Division £171m 8% Global Broking Rates £647m £291m Ox 0% FX & Mone; Energy & Markets . Commodities
Slide 46: Divisional Analysis - reported basis
7 August 2024 Divisional Analysis - reported basis 1 Energy & Liquidnet Parameta HY 2024 (£m) Global Broking Commodities Division Solutions Corp/Elim Group Revenue 647 244 171 oT (15) 1,144 Contribution 255 17 66 AT 445 Contrib margin 39.4% 31.6% 38.6% 48.5% 0% 38.9% Management and support costs! (1
Slide 47: Divisional Analysis - constant currency basis
7 August 2024 Divisional Analysis - constant currency basis Energy & Liquidnet Parameta HY 2024 (£m) Global Broking Commodities Division Solutions Corp/Elim Group Revenue 647 244 171 oT (15) 1,144 Contribution 255 17 66 AT 445 Contrib margin 39.6% 31.7% 38.0% 48.5% 0% 38.9% Management and support co
Slide 48: Market volumes compared to broking revenues
7 August 2024 Market volumes compared to broking revenues Asset class Market volumes vs TP ICAP revenue! Clarus USD dealer to dealer Interest Rate Swap volume [2% Rates | 10% London Clearing House notional SwapClear dealer volumes? | o% TP ICAP Rates revenue 7 Po 18% US corporate bond trading volume
Slide 49: Correlation of Global Broking and E&C revenue with secondary market activity
7 August 2024 Correlation of Global Broking and E&C revenue with secondary market activity! * Transaction volume drives broking revenue * Publicly available volume data for exchange-traded derivatives (Rates, FX, E@C), cleared OTC swaps (Rates), and corporate bonds (Credit) are typically correlated
Slide 50: Liquidnet division revenue
7 August 2024 Liquidnet division revenue Constant Reported Currency £m H12024 H12023' Change Change Total division revenue 171 163 5% 8% - Liquidnet Cash Equities 100 89 12% 14% - Liquidnet Listed Derivatives? 1 1 - - - Rest of the division? 70 73 (4%) (1%) 1. tnreported cureney.2- Excutionofeqity&
Slide 51: Cash & cash equivalents and financial investments
7 August 2024 Cash & cash equivalents and financial investments 31 December 2023 30 June 2024 leq 55 £1,208m 1,032 m Regulated entities m Non-regulated entities * Capital requirements of regulated entities generally met by net tangible assets in cash, funded by the bond portfolio Cash held for: £1,0
Slide 52: Balance Sheet
7 August 2024 Balance Sheet £m June 2024 Dec 2023 Goodwill & other intangibles 1,702 1,716 Other non-current assets 247 289 Current assets less current and nor-current liabilities (50) (155) Cash and financial instruments 1,107 1,218 Deferred tax liabilities (46) (61) Interest bearing loans and borr
Slide 53: Net Funds/(Debt)
7 August 2024 Net Funds/(Debt) a “Cavivolents Investments Subt=tal Overdraft Totalfunds Debt coities fund Cdebe) At 1 January 2024 1029 189 1,218 (10) 1,208 (827) (251) 130 Reported net cash flow from operating activities! 127 - 127 (10) 17 24 8 149 Net cash flow from investment activities (27) (12)
Slide 54: Debt Finance June 2024
1 7 August 2024 Debt Finance June 2024 £m Jun 2024 Jun 2023 Dec 2023 5.25% £247m Sterling Notes January 2024! 37 37 5.25% £250m Sterling Notes May 2026! 251 250 250 2.625% £250m Sterling Notes November 2028! 249 249 249 7.875% £250m Sterling Notes April 2030" 251 251 251 Subtotal 751 787 787 Loan fr
Slide 55: Debt Maturity Profile
7 August 2024 Debt Maturity Profile The Group’s core debt (EMTN bonds) comprises: * 5.25% £250m Sterling Notes maturing May 2026 * 2.625% £250m Sterling Notes maturing November 2028 * 7.875% £250m Sterling Notes maturing April 2030 The Group’s Revolving Credit Facilities (RCFs) comprise: * ¥20bn RCF
Slide 56: OTC data key part of financial ecosystem
7 August 2024 OTC data key part of financial ecosystem OTC markets are large, have low transparency, are highly complex * Proprietary, scarce OTC data from exclusive, long-term relationship * Data expertise, technology solutions to monetise at scale * Competitive advantage across growth opportunitie
Slide 57: 7 August 2024
7 August 2024 1 2 3 • • • • • • • • • • • • • • •
Slide 58: Early stages of a commodities Supercycle
7 August 2024 Early stages of a commodities Supercycle What is a Supercycle? * Structural bull/bear cycle >10 years Main drivers * Robust demand for traditional energy - LNG, Oil etc. * Growing demand for metals to power Energy Transition * Switch to solar, wind, EVs - very metals intensive Four com
Slide 59: Disclaimer
7 August 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