Tp Icap Group Plc · LSE:TCAP
Tp Icap — Tullett Prebon — H1 2015 Earnings Presentation
31 slides from Tp Icap's earnings presentation, Jul 28, 2015
Slide 1: Interim Results 2015
Tullett Prebon plc Interim Results 2015 28 July 2015
Slide 2: John Phizackerley, Chief Executive
John Phizackerley Chief Executive
Slide 3: H1 2015 Financial highlights
H1 2015 Financial highlights H1 2015: Good performance in subdued market conditions • Revenues up in every geography • Revenue up 15% to £415.7m (2014: £360.3m) • Operating profit up 20% to £60.6m (2014: £50.3m) • Operating margin 14.6% (2014: 14.0%) • Profit before tax £52.9m (2014: £43.2m) • Basic
Slide 4: H1 2015 Operational highlights
H1 2015 Operational highlights • Outstanding result from PVM • Acquisition of MOAB reinforces US energy franchise • Resilient performance from core broking business • Strong contribution from Information Sales & Risk Management Services • TPI named Best Data Provider (Broker) at Inside Market Data A
Slide 5: Awards
Awards Tullett Prebon Information: Best Data Provider at Inside Market Data Awards for 5th year running 5
Slide 6: H1 2015 Overview: Market themes
H1 2015 Overview: Market themes Main themes • Overall markets mixed despite some evidence of stabilising • Trading activity remains subdued • Little sign of increase in risk appetite among core bank client base • H1 volatility events did not generally translate to higher volumes • H1 energy sector v
Slide 7: Paul Mainwaring, Finance Director
Paul Mainwaring Finance Director
Slide 8: Revenue
Revenue £m H1 2015 H1 2014 Change Excluding PVM - Broking 336.5 337.4 -3%* - Information Sales/RMS 26.9 22.9 +16%* 363.4 360.3 -1%* PVM 52.3 - - Total revenue 415.7 360.3 +15% *At constant exchange rates 8
Slide 9: Revenue by product group
Revenue by product group £m (2014 at constant exchange rates) H1 2015 H1 2014 Change Treasury Products 96.0 99.4 -3% Interest Rate Derivatives 76.2 71.6 +6% Fixed Income 93.6 105.6 -11% Equities 21.5 21.6 -0% Energy 101.2 47.3 +114% Info Sales/Risk Management Services 27.2 23.2 +17% 415.7 368.7 +13%
Slide 10: Revenue by region
Revenue by region Change Change £m (2014 at constant exchange rates) H1 2015 H1 2014 incl. PVM excl. PVM Europe and the Middle East 241.9 208.1 +16% -4% Americas 117.9 110.9 +6% +1% Asia Pacific 55.9 49.7 +12% +5% 415.7 368.7 +13% -1% Exchange translation - (8.4) - - 415.7 360.3 +15% +1% 10
Slide 11: Underlying operating profit and margin by region
Underlying operating profit and margin by region Underlying operating profit Margin £m H1 2015 H1 2014 Change H1 2015 H1 2014 Europe and the Middle East 46.3 43.0 +8% 19.1% 20.6% Americas 7.1 2.7 +163% 6.0% 2.6% Asia Pacific 7.2 4.6 +57% 12.9% 9.5% 60.6 50.3 +20% 14.6% 14.0% 11
Slide 12: Costs
Costs Change in fixed broker employment costs (H1 2015 vs H1 2014 excl. PVM): • Europe and the Middle East : -10% • North America : -17% • Asia Pacific : -8% • Total : -11% Broker compensation costs as % of broking revenue: • H1 2015 : 55.6% (55.7% incl. PVM) • H1 2014 : 56.7% • H1 2013 : 58.2% 12
Slide 13: Underlying profit & loss
Underlying profit & loss £m H1 2015 H1 2014 Revenue 415.7 360.3 Operating profit 60.6 50.3 Net finance expense (7.7) (7.1) Profit before tax 52.9 43.2 Tax (10.8) (9.3) Associates 1.2 1.2 Minorities (0.3) (0.2) Earnings 43.0 34.9 Weighted average shares in issue 243.6m 217.8m Basic EPS 17.7p 16.0p 13
Slide 14: Exceptional and acquisition related items
Exceptional and acquisition related items £m H1 2015 H1 2014 Credit/(charge) relating to major legal actions 64.4 (4.4) Amortisation of acquisition deferred consideration (5.2) - Amortisation of intangible assets arising on acquisition (0.7) - Loss on disposal of subsidiary (0.3) - Cost improvement
Slide 15: Operating cash flow
Operating cash flow £m H1 2015 H1 2014 Underlying operating profit 60.6 50.3 Share-based compensation and other non-cash items 0.3 0.5 Depreciation/amortisation 7.4 6.7 EBITDA 68.3 57.5 Capital expenditure (6.3) (4.0) (Increase)/decrease in initial contract prepayment (2.2) 7.4 Other working capital
Slide 16: Net cash flow
Net cash flow £m H1 2015 H1 2014 Operating cash flow 46.1 27.8 Exceptional and acquisition related items - Cost improvement programme 2014 (3.8) (3.8) - Restructuring 2011/2012 (0.2) (0.7) - Major legal actions 64.4 (4.4) - Acquisition costs - (1.3) Interest (2.1) (2.4) Taxation (4.6) (9.9) Net divi
Slide 17: Movement in cash and debt
Movement in cash and debt £m Cash Debt Net At 31 December 2014 297.8 (219.7) 78.1 Cash flow 99.3 - 99.3 Dividends (27.4) - (27.4) Debt and bank facility arrangement fees (1.7) - (1.7) Amortisation of debt issue costs - (0.3) (0.3) Cash sold with subsidiaries (0.3) - (0.3) Effect of movement in excha
Slide 18: Balance sheet
Balance sheet £m June 2015 December 2014 June 2014 Intangible assets arising on acquisition 334.3 336.6 274.4 Deferred consideration (6.5) (6.4) (0.9) Associates/investments 14.4 10.2 10.5 Operating assets/(liabilities) 35.7 20.4 43.9 Interest/facility fees (8.9) (4.7) (9.8) Tax (30.0) (11.1) (12.2)
Slide 19: Strategy, Business Development and Outlook
John Phizackerley Chief Executive Strategy, Business Development and Outlook
Slide 20: MOAB: Expands our US energy presence
MOAB: Expands our US energy presence MOAB Oil, Inc. is a market-leading brokerage firm with deep expertise in the brokerage of physical and financial instruments in the energy and commodities markets. It was established in 2003 and has 23 brokers. Acquisition adds expertise in: Gasoline & Blendstock
Slide 21: Costs
Costs Broker compensation: • Improvement delivered • Continued focus Compliance, Risk Management and HR: • Competitive advantage • Capital requirements • Hired Global Chief Risk Officer • Appointed Chair of Board Risk Committee Support costs: • Optimise for the medium term • IT 3 year strategic revi
Slide 22: Continuing to evolve our cultural framework
Continuing to evolve our cultural framework “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.” 22
Slide 23: 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 24: Looking forward
Looking forward • Markets remain challenging for traditional IDB business • Investing in Energy and commodities • Investing in the organisation • Diversifying the client base • Investing in growth opportunities • Deliver the strategy to increase revenue and earnings for the medium and long term 24
Slide 25: The best operator in the hybrid voice sector
“The best operator in the hybrid voice sector” 25
Slide 26: Appendices
© tullett prebon Appendices
Slide 27: Net finance expense
Net finance expense £m H1 2015 H1 2014 Interest receivable on cash balances 0.8 0.7 Payable on Sterling notes (7.0) (7.3) RCF commitment fee (0.8) (0.8) Amortisation of debt issue and bank facility costs (1.1) (0.6) Other interest (0.2) (0.2) Cash interest and fees (8.3) (8.2) Deemed pension scheme
Slide 28: Debt profile
Debt profile £m June 2015 December 2014 June 2014 6.52% Sterling notes August 2014 - - 8.5 7.04% Sterling notes July 2016 141.1 141.1 141.1 5.25% Sterling notes June 2019 80.0 80.0 80.0 Unamortised issue costs (1.1) (1.4) (1.7) 220.0 219.7 227.9 28
Slide 29: Operating assets/(liabilities)
Operating assets/(liabilities) £m June 2015 December 2014 June 2014 Fixed assets 48.0 49.5 47.4 Trade receivables 92.2 87.8 77.9 Net settlement balances 2.0 1.8 1.7 Other debtors/prepayments 39.5 38.0 38.6 Payables/accruals (133.9) (140.4) (112.2) Provisions (12.1) (16.3) (9.5) 35.7 20.4 43.9 Gross
Slide 30: Pension scheme surplus
Pension scheme surplus £m June 2015 December 2014 June 2014 Scheme assets 257.9 255.7 237.0 IAS19 valuation of liabilities (201.0) (193.6) (182.0) Accounting surplus 56.9 62.1 55.0 Related deferred tax liability (19.9) (21.7) (19.2) 37.0 40.4 35.8 Discount rate applied 3.6% 3.7% 4.2% 30
Slide 31: Major shareholders as at July 2015
Major shareholders as at 9 July 2015 Investor Holding % 1. Schroder Investment Management 28,668,670 11.77 2. Jupiter Asset Management 21,341,496 8.76 3. Allianz KAG Frankfurt 13,813,666 5.67 4. Oppenheimerfunds 12,896,985 5.30 5. Majedie Asset Management 11,740,453 4.82 6. Invesco Trimark 11,494,08