Tp Icap Group Plc · LSE:TCAP
Tp Icap — FY2022 Earnings Presentation
57 slides from Tp Icap's earnings presentation, Mar 14, 2023
Slide 1: Preliminary Results for the 12 months ended 31 December 2022
TP ICAP GROUP PLC Preliminary Results For the 12 months ended 31 December 2022
Slide 2: Agenda
14 March 2023 Agenda 1 2022 Highlights Nicolas Breteau, Group CEO 2 2022 Financials Robin Stewart, Group CFO 3 Global Broking Daniel Fields, CEO Global Broking 4 Energy & Commodities Andrew Polydor, CEO Energy & Commodities 5 Liquidnet Mark Govoni, CEO Liquidnet 6 Parameta Solutions Eric Sinclair, C
Slide 3: 2022 business performance highlights
14 March 2023 2022 business performance highlights Strong Group revenue performance Uplift in profitability • Group revenue up 7%1 to £2.1bn • Adjusted EBIT increased 8%1 to £275m; Adjusted EBIT margin 13.0% • +13% in reported currency • 14.0% excl. Russia impact (2021: 12.9%1) Global Broking delive
Slide 4: Delivering our strategy
14 March 2023 Delivering our strategy Fusion rollout on track in Global Broking Liquidnet diversification • 40% of in-scope revenue now on Fusion – in line with target • Equities: Expanding in cross-border, algo and programme trading • On track to complete rollout (55% of total revenue) by end 2025
Slide 5: Robin Stewart, Group CFO
Robin Stewart Group CFO
Slide 6: 2022 Income Statement
14 March 2023 2022 Income Statement £m 2022 2021 (reported) Change CC Change Revenue 2,115 1,865 13% 7% Adjusted EBITDA 357 315 13% 4% Adjusted EBITDA margin 16.9% 16.9% - (0.1%pts) Adjusted EBIT 275 233 18% 8% Adjusted EBIT margin 13.0% 12.5% 0.5%pts 0.1%pts Net finance costs (49) (56) (13%) Adjust
Slide 7: Adjusted EBIT
14 March 2023 Adjusted EBIT £m 310 (21) 40 260 (27) 3 25 22 210 275 160 255 233 110 60 2021 FX 2021 CC Contribution Russian exposure Management & Strategic FX 2022 support costs1 investment 1. Including other operating income and depreciation and amortisation. TP ICAP Group plc Preliminary Results f
Slide 8: Global Broking
14 March 2023 Global Broking Strong performance: All asset classes delivered high single digit growth £m 2022 20211,2,3 Reported Constant Change Currency • Macro/geopolitical driven volatility: Change - Rising interest rates/inflation Rates1,2 566 509 11% 7% Credit1 118 102 16% 8% - Strong performan
Slide 9: Energy & Commodities
14 March 2023 Energy & Commodities Challenging market conditions. Revenue decline in line with exchange volumes £m 2022 20211 Reported Constant Change Currency • Unprecedented market conditions in European Power & Gas Change - Price rises and volatility Energy & Commodities 384 367 5% (2%) Inter-div
Slide 10: Liquidnet
14 March 2023 Liquidnet1 Significant stock market declines. Challenging H2 larger block market conditions £m 2022 20213 Reported Constant Change Currency • Liquidnet platform revenue from March 2021 onwards (completion Change date) Total revenue2 325 261 25% 18% • Proforma platform revenue declined
Slide 11: Parameta Solutions
14 March 2023 Parameta Solutions High single digit revenue growth. Expanding partnerships for future growth £m 2022 20211,2 Reported Constant Change Currency • 95% recurring, predictable, subscription-based revenue: Change - c. 97% USD-based revenue Total revenue 177 149 19% 8% - Diversified, growin
Slide 12: Significant items
14 March 2023 Significant items £m 2022 2021 Restructuring & related costs 41 42 • £113m pre tax (2021: £153m) – broadly in line with guidance Property rationalisation 16 25 Liquidnet integration 9 7 • c. 80% of total 2022 costs are non-cash Group cost saving programme 21 5 • Includes £45m of non-ca
Slide 13: Reported cash flow
14 March 2023 Reported cash flow £m 2022 2021 • Operating cash flow: EBIT reported 163 97 Depreciation, amortisation and other non-cash items 178 165 - Increase in payables, partly offset by higher receivables Change in Net Matched Principal balances and balances with clearing 27 (36) organisations
Slide 14: Reported revenue and margins: 2018 to 2022
14 March 2023 Reported revenue and margins: 2018 to 2022 Global Broking Energy & Commodities Parameta Solutions Revenue (£m) Contribution Margin (%) EBIT Margin (%) Revenue (£m) Contribution Margin (%) EBIT Margin (%) Revenue (£m) Contribution Margin (%) EBIT Margin (%) 4-yr revenue CAGR: 0% 4-yr re
Slide 15: 2023 Capital Markets Day Targets
14 March 2023 2023 Capital Markets Day Targets Contribution margin Adjusted EBIT margin • Global Broking 2023 targets: - Contribution Margin: expected to be close to target 2023 2023 2023 2023 expectation1 expectation1 - Adjusted EBIT Margin: expected to be relatively close to target Global Broking2
Slide 16: 2023 full year guidance
14 March 2023 2023 full year guidance Effective tax rate on adjusted earnings Liquidnet integration cost synergies • c. 28.0% in 2023 • At least £30m Group net finance expense Dividend policy • Broadly in line with 2022 (c. £49m) • 2x adjusted post tax earnings dividend cover • Typically based on pa
Slide 17: Daniel Fields, CEO, Global Broking
Daniel Fields CEO, Global Broking
Slide 18: Global Broking: Building our franchise as market leader
14 March 2023 Global Broking Building our franchise as market leader Our 2023 priorities One of the world’s largest venue operators Industry-leading market share • Enhancing position as leading liquidity provider • Revenue quality and productivity: underpinning strong margin Market-leading brands •
Slide 19: Rates: 2022 and 2023 outlook
14 March 2023 Rates: 2022 and 2023 outlook US Yield Curve 2022 market conditions • Marked shift from low interest rate environment: - Many clients never seen a rate hike • Significant Central Bank tightening: - Concentration in short-dated • Quantitative Tapering (QT) created more demand for liquidi
Slide 20: Credit, Equities and FX: 2022 and 2023 outlook
14 March 2023 Credit, Equities and FX: 2022 and 2023 outlook Credit Equities FX 2022 market conditions 2022 market conditions 2022 market conditions • Increased CDS activity: political instability, high • Strong volumes on medium/long-term index • USD strength vs all currencies drove volumes inflati
Slide 21: Fusion: Award-winning, client-led, electronic platform
14 March 2023 Fusion: Award-winning, client-led, electronic platform What is Fusion? • Key tool for clients and brokers • Facilitates full trade life cycle • FusionMarkets: - Single portal to global aggregated liquidity - Price discovery • FusionConnect: - Automated connectivity and workflow Broker
Slide 22: Delivering Fusion
14 March 2023 Delivering Fusion Rollout target On track 2022 highlights Key 2023 launches • 55% Global Broking revenue • On desks comprising 40% of • TP and ICAP inflation and • Credit in-scope revenue (FY21: interest rate swaps 20%) • TP and ICAP Sterling IRS: • TP and ICAP EUR inflation: Volume Ma
Slide 23: Fusion: Driving client adoption
14 March 2023 Fusion: Driving client adoption Dedicated • Fusion Sales team • Client feedback on ease of use Feedback loop • Acting on feedback focus • Sales team engaging with clients/new leads • Portal tracking client usage, Active Monitoring & orders and trades • Promotional materials: demos, bro
Slide 24: Priorities and outlook for 2023
14 March 2023 Priorities and outlook for 2023 Strategic priorities 2023 outlook • Revenue quality, productivity, and contribution • Rising interest rates supportive of secondary market volumes • Leveraging position as leading liquidity provider • More demand for liquidity • Rollout of Fusion: client
Slide 25: Andrew Polydor, CEO, Energy & Commodities
Andrew Polydor CEO, Energy & Commodities
Slide 26: Energy & Commodities: Leading global OTC broker
14 March 2023 Energy & Commodities Leading global OTC broker Leading broker in global Oil, Gas and Power Our 2023 priorities Market-leading brands • Underpin market-leading position • Ready for any switch back to ‘risk-on’ market conditions Diversified revenue and client base • Delivering relatively
Slide 27: 2022 market conditions
14 March 2023 2022 market conditions Subdued Oil volumes, significant volatility in European Gas & Power European Gas & Power • Most challenging market conditions in some time • Big margin requirements and sharp volume contraction: OTC Execution Netherlands TTF - Day ahead price - ICE Gasoil average
Slide 28: The energy transition opportunity
14 March 2023 The energy transition opportunity Well positioned Transition dynamics Substantial medium term opportunity Natural Gas: • Designated low-emission energy source (COP27) “Renewables to become the largest source of global electricity • Power is backbone for any zero carbon energy infrastru
Slide 29: Fusion Digital Assets
14 March 2023 Fusion Digital Assets • Institutional marketplace for spot crypto assets: - FCA registration - Launching in 2023 • Client access via Fusion for order matching and execution • Segregated model: - Independent safekeeping of clients’ inventories and settlement service • Liquidity streamin
Slide 30: 2023 outlook and priorities
14 March 2023 2023 outlook and priorities Strategic priorities 2023 outlook • Underpinning margin • Macro-event driven market • Growth opportunities in Environmental products/Digital Assets • Continuing client demand for Environmental products • Fusion Energy rollout • Growing Digital Assets as inst
Slide 31: Mark Govoni, CEO, Liquidnet
Mark Govoni CEO, Liquidnet
Slide 32: Liquidnet: Leading technology-driven agency execution specialist
14 March 2023 Liquidnet1 Leading technology-driven agency execution specialist Trusted brand, strong market position Our 2023 priorities Buyside partner for 20+ years – unique liquidity, quality execution • Complete integration and deliver targeted cost synergies • Equities: Growing and diversifying
Slide 33: Equity market conditions in 2022
14 March 2023 Equity market conditions in 2022 • Highly challenging market environment: LIS Market Share (EMEA)3 Agency ATS block volume - S&P 500: -19% (worst performance since 2008) market share (US)4 - Stoxx 600: -13% (worst performance since 2018) - US mutual Fund outflows (worst year on record1
Slide 34: Building the Equities franchise
14 March 2023 Building the Equities franchise Diversifying business model for different market conditions Priorities Highlights Grow client base Grow client base • Enhanced Trade Coverage • Global simplified match workflow roll-out • Source differentiated liquidity • 80 new clients • Expansion of cl
Slide 35: Growing Fixed Income: Primary/Secondary market offering
14 March 2023 Growing Fixed Income: Primary/Secondary market offering The next generation electronic Fixed Income marketplace Primary markets platform Secondary markets platform • Partnered with 30 syndicate banks for New Issues • Traditional Liquidnet Dark Pool had more than twice traded volume of
Slide 36: D2C Credit rollout
14 March 2023 D2C Credit rollout Update • Substantial opportunity “Liquidnet offers a unique platform … they adhere to being a true dark • Client-facing tech built and in place pool … refreshing to see Liquidnet focus on its strengths” • Proposition live; good feedback Credit trader • Covid-19: subs
Slide 37: 2023 priorities and outlook
14 March 2023 2023 priorities and outlook Strategic priorities 2023 outlook • Growing and diversifying equities franchise • Sentiment driven by macro uncertainty/geopolitical events • D2C Credit: deliver action plan • Elevated levels of volatility, until inflation pressures ease • Complete integrati
Slide 38: Eric Sinclair, CEO, Parameta Solutions
Eric Sinclair CEO, Parameta Solutions
Slide 39: Parameta Solutions: World's leading provider of OTC pricing data
14 March 2023 Parameta Solutions World’s leading provider of scarce, neutral OTC pricing data High growth/high margin sectors Our 2023 priorities Significant revenue, contribution and operating profit growth • Building products, increasing addressable market size • Growing direct and multi-channel d
Slide 40: Parameta Solutions: Unique solutions, focused strategy
14 March 2023 Parameta Solutions Unique solutions, focused strategy Products Distribution Client Leveraging partnerships for value-added Expanding multi-channel distribution Diversifying client base products Predictive Corp. Analytics Government E&C 1% Other Agencies 5% • Data Share 2% 2% Derivative
Slide 41: Significant partnership opportunities driving growth
41 14 March 2023 Significant partnership opportunities driving growth ClearConsensus Derivatives Valuations Benchmarks & Indices Partnership with PeerNova Partnership with Numerix Partnership with General Index • Silicon Valley cloud-based data • Global leader in quantitative analytics management an
Slide 42: 2023 priorities and outlook
14 March 2023 2023 priorities and outlook Strategic priorities 2023 outlook • New higher value products: • Continued double digit growth in Adjusted EBIT - Partnerships to leverage collective strengths • Energy & Commodities data monetisation opportunity • Execute multi-channel distribution strategy
Slide 43: Nicolas Breteau, Group CEO
Nicolas Breteau Group CEO
Slide 44: Summary
14 March 2023 Summary Delivering value for shareholders Strong franchise High single digit Continuing our Diversified Dynamic capital revenue growth transformation business management Market-leading positions Operational leverage Rollout and adoption of E&C: Freeing up c. £100m cash by Fusion on tra
Slide 45: Q&A
Q&A
Slide 46: Appendix
Appendix
Slide 47: 2022 revenue breakdown
14 March 2023 2022 revenue breakdown Revenue by business division1 Global Broking revenue by asset class Inter-division revenues £22m, +10% Parameta Solutions £177m Liquidnet Equities Division +8% £243m £325m +7% +18% Global Rates £566m Broking £1,251m FX and Money +7% Energy & Commodities +7% Marke
Slide 48: Mixed market volumes across asset classes
14 March 2023 Mixed market volumes across asset classes Asset class Market volumes vs TP ICAP revenue1 Rates (8%) Clarus USD dealer to dealer Interest Rate Swap volume 14% London Clearing House notional SwapClear dealer volumes2 7% TP ICAP Rates revenue Credit (17%) MarketAxess Eurobonds volumes3 ($
Slide 49: Correlation of Global Broking and E&C revenue with secondary market activity
14 March 2023 Correlation of Global Broking and E&C revenue with secondary market activity1 Rates Credit • Transaction volume drives broking revenue • Publicly available volume data for exchange-traded derivatives (Rates, FX, E&C), cleared OTC swaps (Rates), and corporate bonds (Credit) are typicall
Slide 50: Divisional analysis
14 March 2023 Divisional analysis Global Energy & Parameta 2022 (£m) Liquidnet Corp/Elim1 Group Broking Commodities Solutions Revenue 1,251 387 325 177 (25) 2,115 Contribution 471 124 79 89 - 763 Contribution margin 37.6% 32.0% 24.3% 50.3% - 36.1% Management and support costs2 (222) (65) (78) (8) (3
Slide 51: Divisional analysis
14 March 2023 Divisional analysis Global Energy & Parameta 2022 (£m) Liquidnet Corp/Elim1 Group Broking Commodities Solutions Revenue 1,251 387 325 177 (25) 2,115 Contribution 471 124 79 89 - 763 Contribution margin 37.6% 32.0% 24.3% 50.3% - 36.1% Management and support costs2 (222) (65) (78) (8) (3
Slide 52: Balance sheet
14 March 2023 Balance sheet £m Dec 2022 Dec 2021 Goodwill & other intangibles 1,877 1,853 Other non-current assets 297 285 Current assets less current and non current liabilities (82) 3 Cash and financial instruments 1,062 899 Deferred tax liabilities (85) (107) Interest bearing loans and borrowings
Slide 53: Net funds/(debt)
14 March 2023 Net funds/(debt) £m Cash and cash Financial investments Total funds Debt1 Lease liabilities Net funds/(debt) equivalents At 31 December 2021 767 115 882 (839) (286) (243) Reported net cash flow from operating activities1 324 - 324 (2) - 322 Net cash flow from investment activities (78)
Slide 54: Debt finance
14 March 2023 Debt finance £m Dec 2022 Dec 2021 5.25% £247m Sterling Notes January 20241 253 252 5.25% £250m Sterling Notes May 20261 250 250 2.625% £250m Sterling Notes November 20281 248 248 Loan from related party (RCF with Totan) - 51 Revolving Credit Facility drawn - banks - - 3.2% Liquidnet Ve
Slide 55: Debt maturity profile
14 March 2023 Debt maturity profile 400 The Group’s core debt (EMTN bonds) comprises: • 5.25% £247m Sterling Notes maturing January 2024 350 • 5.25% £250m Sterling Notes maturing May 2026 ¥10bn 300 • 2.625% £250m Sterling Notes maturing November 2028 • 3.2% vendor loan notes of $50m (£42m) were issu
Slide 56: Cash & Cash Equivalents and Financial Investments
14 March 2023 Cash & Cash Equivalents and Financial Investments • Cash held for working capital, regulatory, liquidity and corporate 2022 2021 purposes • Capital requirements of the regulated entities are generally met by net 2 1 tangible assets held in cash, funded by our bond portfolio 45 37 • Thi
Slide 57: Disclaimer
14 March 2023 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 propert