Tp Icap Group Plc · LSE:TCAP
Tp Icap — FY2020 Earnings Presentation
36 slides from Tp Icap's earnings presentation, Mar 9, 2021
Slide 1: TP ICAP Group plc Preliminary Results
TP ICAP GROUP PLC Preliminary Results For the 12 months ended 31 December 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
Slide 4: Agenda
Agenda Overview Nicolas Breteau Financials Robin Stewart Update Nicolas Breteau Q&A Nicolas Breteau & Robin Stewart TP ICAP Group plc Preliminary Results for the 12 months ended 31 December 2020 | 9 March 2021 4
Slide 5: A transformational year for TP ICAP
A transformational year for TP ICAP Operational strength and diversified portfolio underpin performance • Set out strategy: — Unveiled new strategy: electronification, aggregation and diversification — Executed initiatives across all businesses • Announced a landmark acquisition: Liquidnet. Expect t
Slide 6: 2020: Financial Highlights
2020: Financial Highlights Robust performance in exceptional circumstances • Revenue £1,794m (2019: £1,833m) Revenue2 Adjusted Operating Profit1 • Diversified revenue1 growth 6% (2019: 16%) -2% (-1% const. currency) -3% 1,833 1,794 279 • Adjusted operating profit (EBIT) £272m2 (2019: 272 £279m) +16%
Slide 7: Robin Stewart, CFO
Robin Stewart CFO
Slide 8: 2020 Income Statement
2020 Income Statement £m 2020 2019 Change (%) Revenue 1,794 1,833 -2% Adjusted operating profit (EBIT)1 272 279 -3% Adjusted Operating profit margin1 15.2% 15.2% 0.% pts Net finance costs (49) (49) 0% Adjusted profit before tax 223 230 -3% Tax (55) (55) 0% Effective tax rate 24.7% 23.9% +0.8% pts Sh
Slide 9: 2020 Revenues Breakdown
2020 Revenues Breakdown Revenue by Business Division1 Global Broking Revenue by Product £145m £18m £90m 0% £91m +9% -3% +21% £510m £201m -4% +2% £388 +3% £183m £1170m -12% -5% £186m Global Broking Rates -7% Energy & Commodities FX & Money Markets Institutional Services Emerging Markets Data & Analyt
Slide 10: Divisional Analysis
Divisional Analysis Global Energy & Institutional Data & 2020 (£m) Corp. Centre 1 Group Broking Commodities Services Analytics Revenues 1,188 391 91 145 (21) 1,794 External 1,170 388 91 145 - 1,794 Inter-division 18 3 - - (21) - Total Front-Office costs (734) (261) (69) (71) 21 (1,114) External (734
Slide 11: Regional Analysis
Regional Analysis 2020 (£m) EMEA AMERICAS APAC Group Revenues 888 670 236 1,794 YoY Change (reported) -1% -2% -4% -2% Total Front-Office costs (518) (442) (154) (1,114) Contribution 370 228 82 680 Contribution margin 41.2% 34.0% 34.7% 37.9% Net Management and Support Costs (210) (132) (66) (408) Adj
Slide 12: Adjusted Management and Support Costs
Adjusted Management and Support Costs Breakdown of cost movements: 2020 vs. 2019 £4m year-on-year decrease (£9m lower excluding IT increases due to COVID-19) 4 (5) 5 431 5 (18) 426 (6) (8) 4 10 422 2019 FX 2019 Synergy Acquisitions2 IT Increases Strategic Planned Gross bonus Net cost FX 2020 Reporte
Slide 13: Significant Items
Significant Items £m 2020 2019 Change (%) Amortisation of intangible assets arising on consolidation 39 42 Goodwill impairment 21 24 Pension scheme past service and settlement costs 1 4 Other impairments 2 0 Significant non-cash items 63 70 -10% ICAP Integration Costs - 34 Adjustments to deferred co
Slide 14: Adjusted & Reported EPS and DPS
Adjusted & Reported EPS and DPS £m 2020 2019 Adjusted Earnings 183 189 Significant items (net of tax) (87) (122) Reported Earnings 96 67 Weighted average shares in issue1 557.0m 559.4m Adjusted EPS 32.9p 33.9p Reported EPS 17.2p 12.0p DPS2 6p2 11.9p2 Total dividend 47 94 1. Post year-end, the number
Slide 15: Operating Cash Flow
Operating Cash Flow £m 2020 2019 Adjusted Operating profit (EBIT) 272 279 Share based compensation and pension admin fees 9 6 Depreciation and amortisation on owned assets 33 36 Depreciation on leased assets 23 20 Impairment and amortisation of int. assets on consolidation - 1 Change in initial cont
Slide 16: Balance Sheet
Balance Sheet £m Dec-20 Dec-19 Goodwill & other intangibles 1,521 1,572 Other non-current assets 237 207 Current assets less current and non-current liabilities 10 (52) Cash and financial investments1 783 824 Deferred tax liabilities (79) (83) Interest bearing loans and borrowings1 (725) (689) Right
Slide 17: Cash & Cash Equivalents and Financial Investments
Cash & Cash Equivalents and Financial Investments • Cash held for working capital, regulatory, liquidity and corporate purposes FY 2020 FY 2019 10 • Capital requirements of the regulated 86 25 76 legal entities are generally met by net tangible assets held in cash • This cash is restricted for regul
Slide 18: Debt Profile
Debt Profile £m Dec-20 Dec-19 5.25% Sterling Notes January 2024 431 431 5.25% Sterling Notes May 2026 250 250 Revolving Credit Facility (RCF) - Banks - - Revolving Credit Facility (RCF) – Totan 28 - Overdraft 7 - Unamortised debt issue costs (2) (3) Accrued interest 11 11 Debt1 725 689 Lease liabili
Slide 19: Strengthening our financial position and creating greater capital efficiency
Strengthening our financial position and creating greater capital efficiency • New risk management framework — Successfully embedded in 2020; should enable us to release significant amount of regulatory capital • Redomiciliation — Redomiciliation of TP ICAP completed on 26 February 2021 — Creates a
Slide 20: 2021 Guidance
2021 Guidance Revenue Contribution Margin Low single-digit growth Expected at c.38% at constant currency Net finance expense Tax rate c.£50m in 2021 Expected at c.25%, absent any major changes outside the UK Strategic IT Investments Total Capex c.£30m of cash investments in 2021 Expected to be c.£50
Slide 21: Nicolas Breteau, CEO
Nicolas Breteau CEO
Slide 22: Our strategy
Our strategy To drive higher returns for shareholders Three Strategic Pillars Electronification Aggregation Diversification Increase the proportion of low-touch activity and Provide clients with access Build out earnings from buy-side, improve client connectivity to aggregated liquidity from corpora
Slide 23: Divisional Initiatives
Divisional Initiatives Executing our plan Strategic Initiatives "Hub" strategy Global Broking Rates Hub FX Hub Credit Hub - Electronification of activity - Aggregation of liquidity - Enriched, more efficient client experience - Institutionalisation of volume/client Energy & Commodities Energy Hub re
Slide 24: Global Broking
Global Broking Challenging markets; strategic delivery • The largest provider of OTC marketplaces in the wholesale financial markets: — Revenues down 5% YoY1 — Very strong Q1 followed by a material softening — Performance in line with global markets infrastructure players • 2020 strategy execution -
Slide 25: Energy & Commodities
Energy & Commodities World leading franchise • Continues to outperform OTC energy & commodities markets: — Revenues up 3%1 YoY — Growth across most major product areas — Contribution and operating profit margin up driven by higher revenues and cost discipline • 2020 strategy execution - milestones i
Slide 26: Institutional Services
Institutional Services Agency execution model builds scale • Strong growth across products, expanding clientele and enhancing tools: — Revenues up 21%1 driven by investment in people, product and geographic coverage — Core products and strategies showed strong growth: o Exchange traded derivatives,
Slide 27: Data & Analytics
Data & Analytics Growth strategy in action despite tough markets • D&A continues to grow strongly despite tough markets: — Revenue grew 9%1 YoY against a very strong comparative period — Outperformed the industry in 2020FY2 Global Data revenues are expected to marginally grow — Post a slower H1, D&A
Slide 28: Liquidnet: An accelerator of strategy
Liquidnet An accelerator of strategy • Will materially accelerate strategy execution and transform growth prospects: — Provides substantial electronic trading and workflow connectivity to more the buy-side — Diversifies our asset expertise into cash equities — Offers substantial growth opportunities
Slide 29: Summary
Summary Transforming TP ICAP to provide higher, sustainable returns • 2020 achievements transformed our outlook: — Right strategy, right timing — Executed strategic initiatives across all businesses — Enhanced strategic enablers: redomiciliation, risk framework — Liquidnet acquisition • 2021 has sta
Slide 30: Financial Targets for TP ICAP and Liquidnet
Financial Targets for TP ICAP and Liquidnet 20201 Medium Term c.4% Revenue CAGR Target Revenue Liquidnet TP ICAP standalone 2020 2023 Target Medium Term TP ICAP & Liquidnet: c.23% TP ICAP & Liquidnet: Adjusted c.18% Operating 15.2% Margin c.20% c.17% 1. 2020 pro-forma including Liquidnet TP ICAP Gro
Slide 31: Questions & Answers
Questions & Answers
Slide 32: Appendix
Appendix
Slide 33: Understanding the drivers of broking revenues
Understanding the drivers of broking revenues Correlation with secondary market activity • Transaction volumes through the secondary markets drive broking revenues Rates Credit • Our revenues are highly correlated with secondary 120 140 market volumes, with exchanges and electronic 100 115 platforms
Slide 34: Administrative Expenses
Administrative Expenses £m 2020 2019 Change Reported (%) Cons. Cur. (%) Broker compensation 902 900 2 0% +1% Other Front Office costs 162 193 (31) -16% -14% Data & Analytics costs 50 46 4 +9% +9% Total Front Office Costs1 1,114 1,139 (25) -2% -1% Other employment costs 224 215 9 +4% +5% Technology a
Slide 35: Net Funds /(Debt)
Net Funds /(Debt) Cash & cash Financial Total Debt Lease Liabilities Net £m equivalents investments funds At 31 December 2019 676 148 824 (689) (140) (5) Reported net cash flow from operating activities 144 - 144 - - 144 Net cash flow from investment activities (53) (18) (71) - - (71) Dividends paid
Slide 36: Pro-forma EPS
Pro-forma EPS £m 2020 2019 Adjusted Earnings 183 189 Significant items (net of tax) (87) (122) Reported Earnings 96 67 Weighted average shares in issue1 557.0m 559.4m Adjusted EPS 32.9p 33.9p Reported EPS 17.2p 12.0p Shares in issue pre-rights 556.7m n/a New rights shares 225.3m n/a Shares in issue