Tp Icap Group Plc · LSE:TCAP
Tp Icap — H1 2020 Earnings Presentation
33 slides from Tp Icap's earnings presentation, Aug 7, 2020
Slide 1: TP ICAP plc Interim Results
TP ICAP plc Interim Results For the six months ended 30 June 2020
Slide 2: Disclaimer
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 property of one of th
Slide 3: Nicolas Breteau, CEO
Nicolas Breteau CEO TP ICAP plc Interim Results for the six months ended 31 July 2020 | 7 August 2020 3
Slide 4: Agenda
Agenda Introduction Nicolas Breteau Financials Robin Stewart Update Nicolas Breteau Q&A Nicolas Breteau & Robin Stewart TP ICAP plc Interim Results for the six months ended 30 June 2020 | 7 August 2020 4
Slide 5: Overview: Readiness and Resilience
Overview: Readiness and Resilience Operational strength, scale, and diversified portfolio underpin strong revenue performance • COVID 19 – Took swift action to protect staff and ensure continuous client service: o Well placed to ride the wave of volatility and volume that peaked in March o Helped ma
Slide 6: H1 2020: Financial Highlights
H1 2020: Financial Highlights Record revenues, improved underlying profitability, interim dividend • Revenue £990m Revenues (H1 2019: £922m) +7% • Underlying Operating Profit £159m1,2 891.5 (H1 2019: £158m) 803.7 • Underlying Operating Margin 16.1%1,2 £922 £990 (H1 2019: 17.1%) H1 2019 H1 2020 • Und
Slide 7: COVID-19 Response Readiness
COVID-19 Response Readiness Took swift action to reengineer our operations globally • Demonstrated operational agility to manage unprecedented market conditions: — Pioneered cloud solution: 2,000 telephone lines transferred; digital dealer boards installed for more than 500 brokers; solution sourced
Slide 8: Robin Stewart, CFO
Robin Stewart CFO TP ICAP plc Interim Results for the six months ended 31 July 2020 | 7 August 2020 8
Slide 9: H1 2020 Income Statement
H1 2020 Income Statement £m H1 2020 H1 2019 Change (%) Revenue 990 922 +7% Underlying Operating profit 1,2 159 158 +1% Underlying Operating profit margin 1,2 16.1% 17.1% -1% pts Net finance costs (23) (24) -4% Underlying Profit before tax 136 134 +1% Tax (34) (33) +9% Effective tax rate 25.3% 24.6%
Slide 10: H1 2020 Revenues Breakdown
H1 2020 Revenues Breakdown Revenue by Global Broking Revenue by Region Business Division1 Revenue by Product £70m £9m £57m £51m 0% £126m +8% +50% +2% +2% £105m +1% £488m +6% £217m +15% £103m -4% £376m +9% £290m £656m +6% +2% £98m -3% Global Broking Rates EMEA Energy & Commodities FX & Money Markets
Slide 11: Divisional Contribution and Underlying Op. Profit
Divisional Contribution and Underlying Op. Profit Global Energy & Institutional Data & Corp. H1 2020 (£m) Group Broking Commodities Services Analytics Centre 1 Revenues 656 217 57 70 (10) 990 External 647 216 57 70 - 990 Inter-division 9 1 - - (10) - Total Front-Office costs (396) (144) (41) (37) 3
Slide 12: Management and Support Costs
Management and Support Costs Breakdown of cost movements: H1 2020 vs. H1 2019 £9m year-on-year increase (£3m excluding COVID-19 impact) 6 (6) 222 6 3 1 3 213 (6) 212 4 H1 2019 FX H1 2019 Synergy Net Unused COVID-19 Planned Planned FX H1 2020 Reported Constant Savings1 Cost Annual Related New Incr.4
Slide 13: Underlying Operating Profit and Margin by Region
Underlying Operating Profit and Margin by Region Underlying operating profit Margin £m H1 2020 H1 2019 Change H1 2020 H1 2019 EMEA 93 96 -3% 19.1% 21.0% Americas 56 49 +14% 14.9% 14.4% Asia Pacific 10 13 -23% 7.9% 10.5% Group 159 158 +1% 16.1% 17.1% TP ICAP plc Interim Results for the six months end
Slide 14: Exceptional and Acquisition Related Items
Exceptional and Acquisition Related Items £m H1 2020 H1 2019 ICAP integration costs - 20 Amortisation of intangible assets arising on consolidation 20 21 Impairment of intangible assets arising on consolidation 21 - Charge relating to business redomiciliation 9 - Net charge relating to legal settlem
Slide 15: Earnings EPS and Dividends
Earnings EPS and Dividends £m H1 2020 H1 2019 Underlying Earnings 111 108 Exceptional and acquisition-related items (net of tax) (57) (42) Reported Earnings 54 66 Weighted average shares in issue 557.3m 560.0m Underlying EPS 1 19.9p 19.3p Reported EPS 9.7p 11.8p • A 5.6p per share interim dividend (
Slide 16: Operating Cash Flow
Operating Cash Flow H1 2020 H1 2019 £m Underlying Cash flow Underlying Cash flow Underlying Operating profit 159 158 Share based compensation and pension admin fees 4 3 Depreciation and amortisation 15 18 Depreciation of right-of-use assets 12 11 EBITDA 190 190 Unused annual leave 10 - Change in ini
Slide 17: Balance Sheet
Balance Sheet £m Jun-20 Dec-19 Goodwill & other intangibles arising on consolidation 1,567 1,572 Other non-current assets 214 207 Current assets less current and non-current liabilities (24) (52) Cash and financial investments 886 824 Deferred tax liabilities (78) (83) Interest bearing loans and bor
Slide 18: Debt Profile and Refinancing
Debt Profile and Refinancing £m Jun-20 Dec-19 5.25% Sterling Notes January 2024 431 431 5.25% Sterling Notes May 2026 250 250 £270m Revolving credit facility drawn down 40 - Unamortised debt issue costs (2) (3) Accrued interest 11 11 Debt1 730 689 Lease liabilities 216 140 Total Debt 946 829 1 Relev
Slide 19: Net Funds /(Debt)
Net Funds /(Debt) Cash & cash Financial Total Lease £m equivalents investments funds Debt Liabilities Net At 31 December 2019 676 148 824 (689) (140) (5) Reported net cash flow from operating 106 - 106 - - 106 activities Net cash flow from investment (29) 8 (21) - - (21) activities Dividends paid (6
Slide 20: 2020 Guidance
2020 Guidance Revenue Broker compensation Low single-digit growth Expected at c.54% Net finance expense Tax rate c.£50m in 2020 Expected to be 25% Strategic IT Incremental Investments Total Capex c.£15m of cash investments in 2020 Expected to be c.£45m (including £8m Strategic (c.£7m of opex) Tech I
Slide 21: Nicolas Breteau, CEO
CEO Nicolas Breteau CEO TP ICAP plc Interim Results for the six months ended 31 July 2020 | 7 August 2020 21
Slide 22: Clear Strategy in Place
Clear Strategy in Place Commenced measured execution Aggregation Electronification Diversification Increase the proportion Provide clients with of low-touch activity, Build out earnings from access to aggregated improve client buyside, corporates, liquidity from across connectivity, post-trade data
Slide 23: Global Broking
Global Broking Cementing leadership by launching new platforms • The largest provider of OTC marketplaces in the wholesale financial markets: — Voice, hybrid and electronic platforms — Revenues grew 2% YoY1 supported by heightened Q1 volatility and higher volumes, before activity cooled in May and J
Slide 24: Energy & Commodities
Energy & Commodities The leading broker in OTC energy & commodities • Continued to outperform OTC energy & commodities markets: — Revenues grew 15%1 YoY, supported by heightened Q1 volatility and higher volumes — Double-digit growth across all major product lines, including power, gas and oil — Cont
Slide 25: Institutional Services
Institutional Services Agency Execution model gains momentum • Clients embrace agency execution business model: — Core element of diversification strategy — Revenue grew 50%1 YoY, driven by client appetite and increased capacity to service new accounts — Growing scale drove higher profitability marg
Slide 26: Data & Analytics
Data & Analytics Solid growth in unprecedented markets • D&A continues to grow despite tough markets: — Revenue grew 8%1 YoY against a very strong comparative period — Outperformed the industry in a market where 2020FY2 Global Data revenues are expected to contract — Headcount increased 15% YoY to s
Slide 27: Outlook
Outlook Remain cautious as economic uncertainty continues • Continue to focus on service excellence, cost discipline and developing client-led solutions to grow market share and improve margins • Brexit: well prepared for all outcomes • New Group Holding Company will create greater financial flexibi
Slide 28: Questions & Answers
Questions & Answers TP ICAP plc Interim Results for the six months ended 31 July 2020 | 7 August 2020 28
Slide 29: Appendix
Appendix TP ICAP plc Interim Results for the six months ended 31 July 2020 | 7 August 2020 29
Slide 30: Key performance indicators (KPI)
Key performance indicators (KPI) Underlying (exc. Unused annual Change H1 2020 (£m unless stated) unused annual Underlying leave (%) leave) Revenue 990 990 0% Front Office costs (608) (7) (615) +1% Contribution 382 (7) 375 -2% Net Management & Support costs (213) (3) (216) +1% Underlying Operating P
Slide 31: Cash & Cash Equivalents and Financial Investments
Cash & Cash Equivalents and Financial Investments H1 2020 FY 2019 • Cash held for working capital, regulatory, liquidity £8m £25m and corporate purposes £80m £76m • Capital requirements of the regulated legal entities are generally met by net tangible assets held in cash £886m £824m • This cash is r
Slide 32: CRD IV Compliance
CRD IV Compliance • FCA has granted TP ICAP ten year waiver (six and a half years remaining) from supervision under CRD IV on a consolidated basis • The Group has to comply with Financial Holding Company Test and the conditions of the waiver • Currently we have a deficit under the Consolidated Super
Slide 33: Administrative Expenses
Administrative Expenses £m H1 2020 H1 2019 Change Reported (%) Cons. Cur. (%) Broker compensation 495 451 44 +10% +9% Unused annual leave 7 - 7 +100% +100% Other Front Office costs 86 88 (2) -2% -3% Data & Analytics costs 27 21 6 +29% +29% Total Front Office Costs 615 560 55 +10% +9% Support Staff c