Tp Icap Group Plc · LSE:TCAP
Tp Icap — H1 2021 Earnings Presentation
34 slides from Tp Icap's earnings presentation, Sep 7, 2021
Slide 1: TP ICAP Group plc Interim Results
TP ICAP GROUP PLC Interim Results For the six months ended 30 June 2021
Slide 2: Nicolas Breteau, CEO
Nicolas Breteau CEO
Slide 3: Agenda
3 7 September 2021 Agenda Introduction Nicolas Breteau Financials Robin Stewart Strategy Execution Update Nicolas Breteau Q&A Nicolas Breteau & Robin Stewart TP ICAP Group plc Interim Results for the 6 months ended 30 June 2021 TP ICAP Classification: Confidential
Slide 4: H1 2021: Business Highlights
4 7 September 2021 H1 2021: Business Highlights Advancing our transformation Ongoing execution of strategy: Cost management: – Global Markets ‘hub strategy’: continued investment and roll – £35 million annualised savings commitment on track out to evolve electronification and aggregation of liquidit
Slide 5: H1 2021: Financial Highlights
5 7 September 2021 H1 2021: Financial Highlights Performance reflects market activity Revenue (£m) – Revenue £936m, 1% lower than the equivalent period last year 990 947 (H1 2020: £947m) on a constant currency basis (£5% lower on reported basis) 936 Liquidnet £55m 346 328 379 – Adjusted EBIT1 £117m,
Slide 6: Robin Stewart, CFO
Robin Stewart CFO
Slide 7: H1 2021 Income Statement
7 7 September 2021 H1 2021 Income Statement £m H1 2021 H1 2020 Change (%) Revenue 936 990 -5% Adjusted EBITDA 155 186 -17% Adjusted EBITDA margin 16.6% 18.8% -2.2%pts Adjusted EBIT 117 159 -26% Adjusted EBIT margin 12.5% 16.1% -3.6%pts Net finance costs (29) (23) 26% Adjusted profit before tax 88 13
Slide 8: Understanding the drivers of broking revenues
8 7 September 2021 Understanding the drivers of broking revenues Correlation of Global Broking and E&C revenue with secondary market activity Rates Credit 150 – Transaction volume drives broking revenue 150 – Publicly available volume data for exchange-traded derivatives 100 (Rates, FX, E&C), cleare
Slide 9: H1 2021 Revenues Breakdown
9 7 September 2021 H1 2021 Revenues Breakdown Constant currency change Revenue by Business Division1 Global Broking Revenue by Asset Class £82m £10m £44m 0% +6% -11% £103m £226m £117m -16% +84% +17% £187m £575m -9% -7% £92m -6% £86m Global Broking Rates -9% Energy & Commodities FX & Money Markets Ag
Slide 10: Divisional Analysis
10 7 September 2021 Divisional Analysis Global Energy & Agency Parameta H1 2021 (£m) Corp/Elim1 Group Broking Commodities Execution Solutions Revenue 575 187 103 82 (11) 936 Contribution 218 64 36 41 - 359 Contribution margin (%) 37.9% 34.2% 35.0% 50.0% n/a 38.4% Management and Support Costs2 (114)
Slide 11: Segmental Analysis
11 7 September 2021 Segmental Analysis Corp. H1 2021 (£m) EMEA AMERICAS APAC Liquidnet3 Group Centre1 Revenue 456 307 118 55 - 936 Contribution 187 102 44 26 - 359 Contribution margin 41.0% 33.2% 37.3% 47.3% n/a 38.4% Management and Support Costs2 (92) (57) (29) (19) (7) (204) Adjusted EBITDA 95 45
Slide 12: Management and Support Costs
12 7 September 2021 Management and Support Costs Breakdown of cost movements: H1 2021 vs. H1 2020 £18m year-on-year decrease £34m investment 255 245 14 235 225 6 5 215 4 32 246 205 2 9 222 195 216 185 175 H1 2020 FX Translation H1 2020 Bonuses 1 Cost savings 2 Net costs 3 Strategic 4 Acquisitions 5
Slide 13: Significant Items
13 7 September 2021 Significant Items £m H1 2021 H1 2020 Change (%) Amortisation of intangible assets arising on consolidation 21 20 Goodwill impairment - 21 Charge relating to business reorganisation 2 - Pension scheme past service and settlement costs 1 - Significant non-cash items 24 41 -41% Busi
Slide 14: EPS and DPS
14 7 September 2021 EPS and DPS £m H1 2021 H1 2020 Adjusted Earnings 75 111 Significant items (net of tax) (74) (57) Reported Earnings 1 54 Weighted average shares in issue1 737.7m 625.3m Adjusted EPS1 10.2p 17.8p Reported EPS1 0.1p 8.6p Reported DPS2 4.0p 5.6p Reported period-end number of shares i
Slide 15: Free Cash Flow
15 7 September 2021 Free Cash Flow £m H1 2021 H1 2020 Adjusted EBITDA 155 186 Share based compensation and pension admin fees 6 4 Change in initial contract prepayments 2 - Working capital movements (55) (14) Interest paid (28) (24) Taxation (25) (37) Adjusted cash flow from Operating activities 55
Slide 16: Debt Profile
16 7 September 2021 Debt Profile £m Jun-21 Dec-20 5.25% Sterling Notes January 2024 431 431 5.25% Sterling Notes May 2026 250 250 Revolving Credit Facility (RCF) – Banks 42 - Revolving Credit Facility (RCF) – Totan 65 28 Overdraft 32 7 Vendor Loan Notes 36 - Unamortised debt issue costs (2) (2) Accr
Slide 17: Liquidnet Cost synergies
17 7 September 2021 Liquidnet Cost synergies Identified synergies: – We have identified cost synergies of c. £20m annualised. Around half is headcount related and half is non-compensation expense – Cost to achieve the synergies around 1x synergy savings – Cost synergies are more than 10% of annualis
Slide 18: 2021 Full Year Guidance
18 7 September 2021 2021 Full Year Guidance Revenue (exc. Liquidnet) Liquidnet Revenue (post acquisition) Broadly in line with prior year at constant currency c£160-180m FX Impact Full year Group EBIT margin GBP:USD strengthening is a headwind on our revenue and Expected to be lower than 2020 full y
Slide 19: Nicolas Breteau, CEO
Nicolas Breteau CEO
Slide 20: Our Strategy
20 7 September 2021 Our Strategy Transform the Group to drive sustainable earnings growth Three Strategic Pillars Electronification Aggregation Diversification Increase the proportion Provide clients with access Build out earnings from buy-side, of low-touch activity and to aggregated liquidity from
Slide 21: Hub Strategy to Drive Electronification and Aggregation
21 7 September 2021 Hub Strategy to Drive Electronification and Aggregation Across Rates, FX, Credit and Energy Illustration of Hubs Multi-year transformation Hub Features Clients Banks – Single login to access multiple liquidity pools in a given asset class, across all instrument types and all bran
Slide 22: Executing our Hub Strategy
22 7 September 2021 Executing our Hub Strategy Comprehensive plan to achieve target state Rates FX Inflation Forwards Swaps Non-Deliverable Forwards Cross Currency FX Options Government Bonds FX Spot Interest Rate Options Credit Energy & Commodities Credit Default Swaps Crude Oil Credit Default Swap
Slide 23: H1 2021 Progress
23 7 September 2021 H1 2021 Progress Milestones achieved, results delivered Rates Hub TP IRO Platform Revenue (% total revenue) Q3'21 currently tracking higher — Continued expansion of Interest Rates Option platform coverage/functionality 20% • Target end-state platform now live in EMEA, US, APAC (J
Slide 24: Liquidnet Equities
24 7 September 2021 Liquidnet Equities Protect and enhance position as a leading agency execution specialist Current Position – Established Business Trusted for its execution solutions, liquidity sourcing >1,000 Buy-side client network with offerings across all techniques and advanced analytics thro
Slide 25: Liquidnet Credit: Launch of Liquidnet Primary Markets
25 7 September 2021 Liquidnet Credit Launch of Liquidnet Primary Markets Liquidnet Primary Markets Workflow Why Primary? – Primary market has not been electronified Traders PMs – New bond issue process is manual, inefficient, error-prone, Bank Bank time consuming High-touch – Liquidnet primary marke
Slide 26: Liquidnet Credit
26 7 September 2021 Liquidnet Credit Execution programme well underway Primary Market Secondary Market Develop New Offerings Develop New Offerings Enhance Existing Offering Market New Issue Trading - RFQ (D2C) Dark Pool (incl. grey market) - Streaming Prices Potential for growth Strategy – 500 activ
Slide 27: Parameta Solutions
27 7 September 2021 Parameta Solutions Focused strategic delivery Parameta Solutions rebrand: Data & Analytics revenue (£m) – New distinct identity will accelerate strategic execution 75 10% CAGR 70 Right strategy, effective execution, delivering results: 65 – Product: Progressively launch higher-va
Slide 28: Summary
28 7 September 2021 Summary Executing our strategy to advance our transformation Global Markets Hub Strategy – Achieved notable deliveries, which are already starting to yield results Liquidnet – Clear growth plan for both Equities and Credit – Integration progressing well, with meaningful cost syne
Slide 29: Questions & Answers
Questions & Answers 7s mm” WA WH HH a
Slide 30: Appendix
Appendix
Slide 31: Balance Sheet
31 7 September 2021 Balance Sheet £m Jun-21 Dec-20 Goodwill & other intangibles 1,857 1,521 Other non-current assets 271 237 Current assets less current and non-current liabilities (14) 10 Cash and financial investments1 910 783 Deferred tax liabilities (107) (79) Interest bearing loans and borrowin
Slide 32: Cash & Cash Equivalents and Financial Investments
32 7 September 2021 Cash & Cash Equivalents and Financial Investments – Cash held for working capital, H1 2021 FY 2020 regulatory, liquidity and corporate 10 10 purposes 70 86 – Capital requirements of the regulated legal entities are generally met by net tangible assets held in cash – This cash is
Slide 33: Net Funds / (Debt)
33 7 September 2021 Net Funds / (Debt) Cash & cash Financial Total Debt Lease Liabilities Net £m equivalents investments Funds At 31 December 2020 649 127 776 (718) (212) (154) Reported net cash flow from operating activities 24 - 24 - - 24 Net cash flow from investment activities (262) (9) (271) -
Slide 34: Disclaimer
34 7 September 2021 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 p