Tp Icap Group Plc · LSE:TCAP
Tp Icap — FY2019 Earnings Presentation
37 slides from Tp Icap's earnings presentation, Mar 10, 2020
Slide 1: TP ICAP plc Preliminary Results
TP ICAP plc Preliminary Results For the twelve months ended 31 December 2019
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 Preliminary Results for the twelve months ended 31 December 2019 | 10 March 2020 3
Slide 4: Agenda
Agenda Introduction Nicolas Breteau Key financials Robin Stewart Update Nicolas Breteau Q&A Nicolas Breteau & Robin Stewart TP ICAP plc Preliminary Results for the twelve months ended 31 December 2019 | 10 March 2020 4
Slide 5: FY 2019 Financial highlights
FY 2019 Financial highlights • Revenue £1,833m Revenues (2018: £1,763m) +4% • Underlying Operating profit £279m*, ** 891.5 (2018: £276m) 803.7 • Underlying Operating margin 15.2%* £1,763m £1,833m (2018: 15.7%) 2018 2019 • Underlying Profit before tax £230m* (2018: £245m) Underlying Operating Profit
Slide 6: Delivered four immediate priorities
Delivered four immediate priorities Laid foundations for long-term growth • Integration completed • Management and governance strengthened • Risk management framework implemented • Prepared for Brexit TP ICAP plc Preliminary Results for the twelve months ended 31 December 2019 | 10 March 2020 6
Slide 7: Completed Integration
Completed Integration Laid foundations for long-term growth • Delivered synergies of £80m, above revised target • Management, property and systems are now integrated • Gives us a platform that is scalable, efficient and capable of future innovation TP ICAP plc Preliminary Results for the twelve mont
Slide 8: Strengthened management and governance
Strengthened management and governance Laid foundations for long-term growth • Built senior team with capability needed to implement future strategy plans • Responsibility for revenue generation from regions moved to four business divisions • This change is reflected in our reporting for first time
Slide 9: Implemented new risk management framework
Implemented new risk management framework Laid foundations for long-term growth • Designed and implemented new Enterprise Risk Management Framework in 2019 • Now being embedded across the organisation • Significant enabler for discharge of responsibilities under Senior Managers Regime • New framewor
Slide 10: Prepared for Brexit
Prepared for Brexit Laid foundations for long-term growth • Plans in place to continue serving client in all scenarios, including no deal; 90% of broking revenues are largely unaffected • As a result of our preparations, we now have a stronger footprint in Europe — New legal entity in Paris, TP ICAP
Slide 11: Robin Stewart, CFO
Robin Stewart CFO TP ICAP plc Preliminary Results for the twelve months ended 31 December 2019 | 10 March 2020 11
Slide 12: 2019 income statement
2019 income statement Overall operating profit increase £m 2019* 2018 Change (%) Revenue 1,833 1,763 +4% Underlying Operating profit 279 276 +1% Underlying Operating profit margin 15.2% 15.7% -0.5% pts Net finance costs (49) (31) +58% Underlying Profit before tax 230 245 -6% Tax (55) (63) -13% Effec
Slide 13: 2019 Revenues Breakdown
2019 Revenues Breakdown Global Energy & Institutional Data & Corporate £m Group Broking Commodities Services Analytics Centre Revenues 1,262 382 75 135 (21) 1,833 External 1,244 379 75 135 1,833 Inter-division 18 3 - - (21) - Revenue by Global Broking Revenue by Region Business Division Revenue by P
Slide 14: Divisional Contribution and Underlying Operating Profit
Divisional Contribution and Underlying Operating Profit Global Energy & Institutional Data & Corporate 2019 (£m) Group Broking Commodities Services Analytics Centre Revenues 1,262 382 75 135 (21) 1,833 External 1,244 379 75 135 1,833 Inter-division 18 3 - - (21) - Total Front-Office costs (775) (261
Slide 15: Management and support costs
Management and support costs Breakdown of cost movements: 2018 vs 2019 £9m year-on-year increase 8 7 13 431 7 422 10 7 2 415 2018 FX 2018 Synergy Net Planned Planned FX IFRS16 2019 Reported Constant Savings(1) Cost New Incr.(2) Loss Reported Currency Decreases Investments(2) (1) £80m of total synerg
Slide 16: Underlying operating profit and margin by region
Underlying operating profit and margin by region Underlying operating profit Margin £m 2019 2018 Change 2019 2018 EMEA 164 173 -5% 18.2% 19.5% Americas 94 81 +16% 13.7% 12.7% Asia Pacific 21 22 -5% 8.5% 9.1% Group 279 276 +1% 15.2% 15.7% TP ICAP plc Preliminary Results for the twelve months ended 31
Slide 17: Exceptional and acquisition related items
Exceptional and acquisition related items £m 2019 2018 ICAP integration costs 34 44 Amortisation of intangible assets arising on consolidation 42 40 Impairment of intangible assets arising on consolidation 24 68 Net charge relating to legal settlements 10 3 Charge relating to employee long-term bene
Slide 18: Earnings EPS and dividends
Earnings EPS and dividends Maintenance of full year dividend throughout integration £m 2019 2018 Underlying Earnings 189 191 Exceptional and acquisition-related items (net of tax) (122) (159) Reported Earnings 67 32 Weighted average shares in issue 559.4m 558.5m Underlying EPS 33.8p 34.2p Reported E
Slide 19: Operating cash flow
Operating cash flow Increased cash from operations 2019 2018 £m Underlying Cash flow Underlying Cash flow Underlying Operating profit 279 276 Share based compensation and pension admin fees 6 6 Depreciation and amortisation 36 35 Depreciation of right-of-use assets 20 - Non-Cash items 1 - EBITDA 342
Slide 20: Balance sheet
Balance sheet £m Dec-19 Dec-18 Goodwill & other intangibles arising on consolidation 1,572 1,663 Other non-current assets 207 197 Current assets less current and non-current liabilities (52) (117) Cash and financial investments 824 800 Pension assets / obligations - 52 Deferred tax liabilities (83)
Slide 21: Debt profile and refinancing
Debt profile and refinancing £m Dec-19 Dec-18 5.25% Sterling Notes June 2019 - 80 5.25% Sterling Notes January 2024 431 500 5.25% Sterling Notes May 2026 250 - Revolving credit facility draw down - 52 Unamortised debt issue costs (3) (2) Accrued interest 11 12 Gross Debt pre-IFRS 16 689 642 IFRS 16
Slide 22: Cash & cash equivalents and financial investments
Cash & cash equivalents and financial investments FY 2019 FY 2018 • Cash held for working capital, regulatory, liquidity £25m £3m and corporate purposes 76m £94m • Capital requirements of the regulated legal entities are generally met by net tangible assets held in cash £824m £800m • This cash is re
Slide 23: Net funds /(debt)
Net funds /(debt) Cash & cash Financial Total £m equivalents investments funds Debt Net At 31 December 2019 667 133 800 (642) 158 Reported net cash flow from operating activities 148 - 148 - 148 Net cash flow from investment activities (55) 20 (35) - (35) Dividends paid (94) - (94) - (94) Net repaym
Slide 24: CRD IV Compliance
CRD IV Compliance • FCA has granted TP ICAP ten year waiver from supervision under CRD IV on a consolidated basis • The Group now only has to comply with Financial Holding Company Test • Currently we have a deficit under the Consolidated Supervision Test, as Goodwill is not eligible capital under CR
Slide 25: 2020 guidance
2020 guidance Revenue Broker compensation Low single digit growth Expected to be at least 53% Net finance expense Tax rate c.£50m in 2020 Expected to be 25% Strategic Incremental Investments Total Capex £45m of cash investments in 2020 Expected to be c£80m (including Strategic (£15m opex, £30m capex
Slide 26: Nicolas Breteau, CEO
Nicolas Breteau CEO TP ICAP plc Preliminary Results for the twelve months ended 31 December 2019 | 10 March 2020 26
Slide 27: Strategic themes
Strategic themes From a position of strength to long-term growth • We start from a position of strength as we are the world’s largest IDB • Industry is changing rapidly, with fast-moving market structures, regulation and clients looking for new ways to transact • Our strategy has three key themes to
Slide 28: Global Broking: Cross-Product Hubs
Global Broking: Cross-Product Hubs Aggregation Electronification • TP ICAP is the world’s largest IDB Each screen — Strong market positions across key products, regions has a different look & feel — Operator of more than 10 regulated venues (MTF, OTF, SEF) Current State • Core customers are the Tier
Slide 29: E&C: Oils Hub & Machine-learning
E&C: Oils Hub & Machine-learning Aggregation Electronification Diversification • TP ICAP is a leader in OTC energy markets Revenue mix — European, UK, US power Oil — European, UK, US gas Power — Global oils & oil products Gas Other energy Other • Customer universe is well-diversified — Low concentra
Slide 30: Institutional Services: Agency Expansion
Institutional Services: Agency Expansion Aggregation Electronification Diversification • IS is a buyside-facing agency broker — Focus on liquid markets — Low- and high- touch services — Multi-dealer/multi-venue • Our customer base comprises some of the largest buyside firms — We focus on large hedge
Slide 31: D&A: Clients, Product, Channels
D&A: Clients, Product, Channels Diversification • TP ICAP is a leading global provider of OTC data Expanding the Base & — Wide asset class coverage Building the Pyramid — Indicative, Order, Trade, and Historical — Multiple distribution channels • Our client universe is diverse — Banks (front & middl
Slide 32: Strategic growth themes
Strategic growth themes Long-term outcomes 1 Aggregation 2 Electronification 3 Diversification Increase the proportion of Provide clients with access Build out earnings from low-touch activity and to aggregated liquidity buyside, corporates, data improve client connectivity from across our brands bu
Slide 33: Questions & answers
Questions & answers TP ICAP plc Preliminary Results for the twelve months ended 31 December 2019 | 10 March 2020 33
Slide 34: Appendix
Appendix TP ICAP plc Preliminary Results for the twelve months ended 31 December 2019 | 10 March 2020 34
Slide 35: Strengthened management and governance
Strengthened management and governance Laid foundations for long-term growth Nicolas Breteau Group CEO Business Line CEOs Functional Heads John Abularrage Global Broking Robin Stewart Joanna Nader David Goodchild Group CFO Group Strategy Group CRO Andrew Polydor Energy & Commodities Philip Price Sue
Slide 36: Administrative expenses
Administrative expenses Change (%) 2019 (£m) 2019 2018 Change Reported Constant Currency Broker compensation 900 859 41 +5% +2% Other front office Costs 193 183 10 +5% +3% Data & Analytics Costs 46 42 4 +10% +7% Total front office Costs 1,139 1,084 55 +5% +2% Support Staff Costs 215 226 (11) -5% -6%
Slide 37: Impact of IFRS 16 on the income statement
Impact of IFRS 16 on the income statement IFRS 16 reduced underlying basic EPS 2019 2019 £m Pre-IFRS 16 IFRS 16 Reported 2018 Change Revenue 1,833 - 1,833 1,763 +4% Net administrative expenses (1,561) 7 (1,554) (1,487) +4% Underlying operating profit 272 7 279 276 +1% Underlying operating profit mar