Tp Icap Group Plc · LSE:TCAP
Tp Icap — H1 2017 Earnings Presentation
34 slides from Tp Icap's earnings presentation, Aug 8, 2017
Slide 1: TP ICAP plc interim results
TP ICAP plc interim results For the six months ended 30 June 2017 8 August 2017
Slide 2: John Phizackerley, Chief Executive
John Phizackerley Chief Executive TP ICAP plc interim results for the six months ended 30 June 2017 | 8 August 2017 2
Slide 3: Agenda
Agenda Introduction John Phizackerley H1 2017 highlights John Phizackerley Key financials Andrew Baddeley Business and operational update John Phizackerley Q&A TP ICAP plc interim results for the six months ended 30 June 2017 | 8 August 2017 3
Slide 4: H1 2017 highlights
H1 2017 highlights TP ICAP plc interim results for the six months ended 30 June 2017 | 8 August 2017 4
Slide 5: H1 2017 – robust financial performance in a mixed global market environment
H1 2017 – robust financial performance in a mixed global market environment • Diverse global product portfolio combined with financial strength • Revenues and operating profit margin increased in H1 2017 • Revenue per broker increased in every region • Rates and oil businesses performed strongly, wh
Slide 6: H1 2017 financial highlights
H1 2017 financial highlights Good start to life as TP ICAP Revenues £925m • Revenue £925m (H1 2016*: £828m) £828m • Operating profit £144m 891.5 (H1 2016: £117m) 803.7 • Operating margin 15.6% (H1 2016: 14.1%) H1 2016 H1 2017 • Profit before tax £129m (H1 2016: £111m) • Basic EPS 18.3p (H1 2016: 16.
Slide 7: H1 2017 integration highlights
H1 2017 integration highlights • Integration on schedule • £8m of synergies recognised – ahead of plan • On track to deliver plan • Single regional heads in the Americas and APAC • Single global business division heads • Single global heads for all corporate support functions • Continued management
Slide 8: H1 2017 integration highlights
H1 2017 integration highlights • IT decommissioning more than 50% of the combined 490 TP ICAP systems • Rationalising our office footprint and co-locating teams • Moving to new US HQ in Lower Manhattan • Moving to single Frankfurt and Singapore offices • Harmonisation of policies – phase 1 complete
Slide 9: H1 2017 operational highlights
H1 2017 operational highlights • Kept up momentum in our business • Second firmwide employee survey due out shortly • Regional and brand variations • EMEA - outperforms • Americas - relatively bigger and positive outlook • APAC - Australia important centre • Hiring experienced talent and managing ou
Slide 10: Andrew Baddeley, Chief Financial Officer
Andrew Baddeley Chief Financial Officer TP ICAP plc interim results for the six months ended 30 June 2017 | 8 August 2017 10
Slide 11: Key financials
Key financials TP ICAP plc interim results for the six months ended 30 June 2017 | 8 August 2017 11
Slide 12: Revenue by division
Revenue by division £m (2016 at constant exchange rates) H1 2017 H1 2016 Change Global Broking 670 657 +2% Energy & Commodities 182 186 -2% Institutional Services 16 4 +300% Data & Analytics 57 52 +10% Revenue at constant exchange rates 925 899 +3% Exchange translation (71) Revenue as reported 925 8
Slide 13: Revenue by product – Global Broking
Revenue by product – Global Broking £m (2016 at constant exchange rates) H1 2017 H1 2016 Change Rates 279 268 +4% Credit 65 69 -6% FX & Money Markets 111 110 +1% Emerging Markets 120 116 +3% Equities 95 94 +1% Global Broking revenue at constant exchange rates 670 657 +2% Exchange translation (53) Gl
Slide 14: Revenue by region
Revenue by region £m (2016 at constant exchange rates) H1 2017 H1 2016 Change EMEA 462 436 +6% Americas 333 336 -1% Asia Pacific 130 127 +2% Revenue at constant exchange rates 925 899 +3% Exchange translation (71) Revenue as reported 925 828 +12% TP ICAP plc interim results for the six months ended
Slide 15: Underlying operating profit and margin by region
Underlying operating profit and margin by region Underlying operating profit Margin £m (at reported rates) H1 2017 H1 2016 Change H1 2017 H1 2016 EMEA 92 74 +24% 19.9% 17.5% Americas 39 31 +26% 11.7% 10.6% Asia Pacific 13 12 +8% 10.0% 10.7% 144 117 +23% 15.6% 14.1% TP ICAP plc interim results for th
Slide 16: Progress on integration
Progress on integration • Integration is on track with guidance remaining the same • £8m of synergy savings recognised in the H1 2017 P&L • IT infrastructure • Belfast centre • Legal entity consolidation TP ICAP plc interim results for the six months ended 30 June 2017 | 8 August 2017 16
Slide 17: H1 2017 income statement
H1 2017 income statement £m H1 2017 H1 20161 Revenue 925 828 Operating profit 144 117 Operating profit margin 15.6% 14.1% Finance income 3 5 Finance costs (18) (11) Profit before tax 129 111 Tax (33) (26) Effective tax rate 26% 23% Share of JVs and associates less non-controlling interests 5 4 Net i
Slide 18: Exceptional and acquisition related items
Exceptional and acquisition related items £m H1 2017 H1 2016 ICAP acquisition related costs - (5) ICAP integration costs (28) (5) Acquisition related share-based payment charge (5) (5) Amortisation of intangible assets arising on acquisition (20) (1) Cost improvement programmes (5) (5) Other acquisi
Slide 19: Balance sheet
Balance sheet £m Jun-17 Dec-16 Goodwill & other intangibles 1,749 1,783 Other non-current assets 155 166 Current assets less current and non-current liabilities (78) (168) Cash and financial assets 759 786 Pension assets / obligations 54 97 Deferred tax liabilities (174) (197) Interest bearing loans
Slide 20: Debt profile, refinancing and interest cost
Debt profile, refinancing and interest cost £m Jun-17 Dec-16 Jun-16 7.04% Sterling notes July 2016 - - 141 5.25% Sterling notes June 2019 80 80 80 5.25% Unsecured sterling notes January 2024 500 470 - Unamortised issue costs (3) (3) (1) 577 547 220 Net interest costs • Net interest costs of £15m inc
Slide 21: Net funds
Net funds Movement in net funds Cash and financial assets £42m £239m £74m £(9)m £(27)m £(18)m £(3)m £182m £759m £643m Net funds Dec Cash flow Dividends Mvt in FX Bridge Facility Net funds Jun 2016 Fee 2017 Regulated entities Non-regulated entities Corporate TP ICAP plc interim results for the six mo
Slide 22: Business and operational update
Business and operational update TP ICAP plc interim results for the six months ended 30 June 2017 | 8 August 2017 22
Slide 23: The TP ICAP proposition
The TP ICAP proposition Revenue Capital Conduct Synergies Diversity Efficiency and Culture Legal Human Broker Pay Compliance Resources Strong Grazing Offshoring IT Operations Financial Performance Diverse Institutional Yield Curve Customer Services Base Reputed Regulatory Data Balance Sheets Brands
Slide 24: Technology is part of our DNA
Technology is part of our DNA • We provide voice, hybrid, electronic volume matching, algorithmic matching, risk mitigation platforms, post trade and risk management services, to satisfy the evolution of the marketplace • We provide business-critical intelligence and services to clients, through our
Slide 25: There will always be a need for brokers
There will always be a need for brokers “Voice communication is very or extremely “72% of participants said trading bonds critical to trading workflow, and we don’t with a notional size of greater than $15m see it going away.” was difficult.” The Voice of Trading The Voice of Trading Greenwich Assoc
Slide 26: TP ICAP global business lines
TP ICAP global business lines Global Broking • Hybrid voice business operating across all major asset classes • 5 product lines: Rates, FX and Money Markets, Emerging Markets, Equities and Credit • Hybrid platforms with rich functionality and variety of execution methods • Post trade risk mitigation
Slide 27: Global Broking Revenues - £670m
Global Broking Revenues - £670m • Record months in our volume matching sessions ⎯ Particular success in US emerging markets bonds ⎯ Launched index synthetics and rolls in financials and sovereign bonds • Investment in sales efforts in our post-trade business ⎯ Traction in Asia ⎯ Record volumes trans
Slide 28: Energy & Commodities Revenues - £182m
Energy & Commodities Revenues - £182m • Natural Gas Liquids (NLG) desk in US, which links in with our global Liquefied Petroleum Gas desk in EMEA • Expansion of Liquefied Natural Gas (LNG) desk in EMEA • Expanding customer base by successfully pitching to funds in coal and iron ore • 35 new hires ma
Slide 29: Data & Analytics Revenues - £57m
Data & Analytics Revenues - £57m • Sales capability reorganised, adding resource in London, NY, Singapore and Tokyo, with strong pipeline of new business emerging • New European corporate bond package for over 2,000 Eurobonds in more than 40 countries, sourced from our Global Broking business, with
Slide 30: Institutional Services Revenues - £16m
Institutional Services Revenues - £16m • Completed strategic review to validate and articulate new business proposition • Large fee pool potential as institutions seek new service providers – modest revenues to date • Extensively canvassed and interviewed our target client base • Added expertise and
Slide 31: H1 key workstreams
H1 key workstreams • Continuing focus on conduct and culture, increasingly differentiates • MiFID II readiness —Major workstream —Partnership with Bloomberg —On schedule • Brexit —Dedicated workstream —Extensive client feedback —Existing EU footprint —Dialogue with regulators —Political uncertainty
Slide 32: Market outlook
Market outlook • Continued political uncertainty (US, UK, North Korea, China, Middle East) • Marked economic disparities • European economies remain fragile, US more buoyant, Asia continues to grow • Period of ultra-low interest rates is coming to an end, but not imminently • Energy & Commodities ma
Slide 33: Summary
Summary • Good start to life as TP ICAP – urgency on integration • Diversity of our business is helpful • Data & Analytics and Institutional Services are growth areas • Integration on track • We are well-placed to: ⎯ Deliver synergies ⎯ Build the business ⎯ Deliver value to shareholders • Capital Ma
Slide 34: Q&A
Q&A TP ICAP plc interim results for the six months ended 30 June 2017 | 8 August 2017 34