Tp Icap Group Plc · LSE:TCAP
Tp Icap — FY2021 Earnings Presentation
42 slides from Tp Icap's earnings presentation, Mar 15, 2022
Slide 1: Preliminary Results for the 12 months ended 31 December 2021
TP ICAP GROUP PLC Preliminary Results For the 12 months ended 31 December 2021
Slide 2: Nicolas Breteau, CEO
Nicolas Breteau CEO
Slide 3: Agenda
15 March 2022 Agenda 1. Introduction Nicolas Breteau 2. Financials Robin Stewart 3. Strategy Update Nicolas Breteau Preliminary Results Full Year 2021 4. Q&A Nicolas Breteau & Robin Stewart TP ICAP Group plc Preliminary Results for the 12 months ended 31 December 2021 | 3 TP ICAP Classification: Con
Slide 4: 2021 Highlights
15 March 2022 2021 Highlights Despite headwinds, we advanced our transformation to a diversified, electronic business – Significant challenges: • Unusually quiet markets, notably in H1 Broker Productivity • COVID-19 and Brexit 8% increase • Adverse currency movement (Q4 2021 vs. Q4 2020) – Action ta
Slide 5: 2021: Financial Highlights
15 March 2022 2021: Financial Highlights Performance reflects weak market volumes in H1 2021, recovery in H2 2021 Revenue (£m) – Revenue of £1.9bn, 8% higher than the prior year (2020: £1.8bn) on a 1,794 1,865 1,726 constant currency (“CC”) basis; 4% higher on a reported basis 1,086 1,148 1,127 – Ad
Slide 6: Robin Stewart, CFO
RHS of image doesn’t look great Robin Stewart CFO
Slide 7: 2021 Income Statement
15 March 2022 2021 Income Statement £m 2021 2020 Change CC Change Revenue 1,865 1,794 4% 8% Adjusted EBITDA 315 328 (4%) 1% Adjusted EBITDA margin 16.9% 18.3% (1.4%pts) (1.1%pts) Adjusted EBIT 233 272 (14%) (9%) Adjusted EBIT margin 12.5% 15.2% (2.7%pts) (2.3%pts) Net finance costs (56) (49) 16% 16%
Slide 8: Understanding the drivers of broking revenues
15 March 2022 Understanding the drivers of broking revenues Correlation of Global Broking and E&C revenue with secondary market activity1 Rates Credit – Transaction volume drives broking revenue 150 – Publicly available volume data for exchange-traded 150 derivatives (Rates, FX, E&C), cleared OTC sw
Slide 9: Market volume movements impacting broking revenues
15 March 2022 Market volume movements impacting broking revenues Revenue growth outperforming YOY market volume declines 2021 vs 2020 Market Volume Change TP ICAP CC Revenue vs Market Volumes Change London Clearing House notional (14%) Rates (14%) SwapClear dealer volumes1 (9%) TP ICAP Rates Revenue
Slide 10: 2021 revenue breakdown
15 March 2022 2021 revenue breakdown Increasingly diversified revenue base Revenue by Business Division1 Global Broking Revenue by Asset Class £166m £19m £82m -5% 2% +5% -5% £246m +180% 9% 7% £429m £226m -9% 13% +18% 21% 39% 58% 20% £1,105m £370m -2% 16% -1% 15% £179m +2% £170m Global Broking Rates
Slide 11: Adjusted EBIT
15 March 2022 Adjusted EBIT Total cost base held flat to partly offset a mix-driven contribution decline 280 270 16 260 Management & Support costs broadly flat YoY 250 2 240 32 7 6 272 2 230 12 256 256 220 241 236 235 233 233 224 224 TP ICAP cost savings £19m core 210 200 2020 reported FX 2020 const
Slide 12: Global Broking
15 March 2022 Global Broking Outperforming market volume declines across asset classes £m 2021 2020 in CC2 Change – Total revenue £1,105m 2% lower than 2020, in constant currency Rates 429 475 (9%) Credit 82 86 (5%) – Growth in Equities, Emerging Markets offset by FX & Money Markets declines in Rate
Slide 13: Energy & Commodities
15 March 2022 Energy & Commodities Second half volatility created trading opportunities for clients £m 2021 2020 in CC2 Change – Total revenue £370m 1% lower than 2020, which Energy & Commodities 367 372 (1%) included record volumes Inter-division revenue 3 3 - – Growth in environmental markets, oil
Slide 14: Agency Execution ('AE')
15 March 2022 Agency Execution (‘AE’) Performance impacted by YOY decline in global equity market volumes £m 2021 2020 in CC3 Change – Total revenue £246m, driven by Liquidnet AE excl. AE excl. – Total revenue AE (excl. Liquidnet) £87m, 1% lower Liquidnet1 Total Liquidnet Liquidnet – Weaker Relative
Slide 15: Parameta Solutions
15 March 2022 Parameta Solutions Continued double-digit revenue growth in Data & Analytics £m 2021 2020 in CC2 Change – Total revenue of £166m, 5% higher Data & Analytics (‘D&A’) 149 136 10% – 10% growth in D&A, continues to benefit from: Post Trade Solutions (‘PTS’)1 17 22 (23%) – Launch of higher
Slide 16: Significant Items
15 March 2022 Significant Items Incurring one-off costs to generate future savings £m 2021 2020 – Significant items increased by £56m (post-tax): Cash Non-Cash Total Total £87m to £143m; £84m non-cash, £69m cash Restructuring & related costs 25 17 42 20 - Property related 9 16 25 4 – Restructuring c
Slide 17: Cost savings achieved and additional savings targeted
15 March 2022 Cost savings achieved and additional savings targeted Notable progress in reducing our cost base – £35m programme successfully completed Incremental P&L savings Cumulative (estimated) (annualised) – £31m of incremental P&L savings in 2021 2020 2021 2022 - 2024 2020 - 2024 – £19m core G
Slide 18: Reported Cash Flow
15 March 2022 Reported Cash Flow Increase in cash driven by rights issue proceeds £m 2021 2020 EBIT 97 178 Depreciation, amortisation and other non-cash items 165 129 Working capital movements (53) (37) Taxation and interest paid (98) (126) Operating cash flow 111 144 Capital expenditure (58) (53) A
Slide 19: Cash & Cash Equivalents and Financial Investments
15 March 2022 Cash & Cash Equivalents and Financial Investments Bond portfolio supports regulatory capital requirements – Cash held for working capital, regulatory, FY 2021 FY 2020 liquidity and corporate purposes 10 10 – Capital requirements of the regulated 51 86 legal entities are generally met b
Slide 20: Debt Profile
15 March 2022 Debt Profile Successful debt refinancing reduces future finance costs £m Dec-21 Dec-20 5.25% £247m Sterling Notes January 20241 252 431 5.25% £250m Sterling Notes May 20261 250 250 2.625% £250m Sterling Notes November 20281 248 - Revolving Credit £270m Facility (RCF) – Banks - - Revolv
Slide 21: 2022 Full Year Guidance
15 March 2022 2022 Full Year Guidance Current trading Impact of Russian sanctions (as of 11 March 2022) Group revenue YTD until 11 March 2022 was approximately 4% higher • Russian clients accounted for c.0.5% of 2021 revenue than the corresponding period in 2021 (excluding Liquidnet, in constant cur
Slide 22: Nicolas Breteau, CEO
Nicolas Breteau CEO
Slide 23: Our Strategy
15 March 2022 Our Strategy Transforming our Group with state-of-the-art technology as the driving force Three Strategic Pillars Electronification Aggregation Diversification Increase the proportion One central point of access to Build out earnings from different of low-touch activity multiple liquid
Slide 24: Global Broking
15 March 2022 Global Broking Advancing electronic connectivity and deepening liquidity pools – Global Broking Fusion strategy – objectives & rationale: Electronification Drives Margin Expansion Select Awards • What? – Deployment of Fusion throughout pre-to-post-trade workflow; shifting activity Inte
Slide 25: Energy & Commodities (E&C)
15 March 2022 Energy & Commodities (E&C) The world’s leading E&C broking franchise – E&C Fusion strategy – objectives & rationale • What? – Progressive migration to low touch broker/client workflows. Internal OMS & client-facing – Fusion Energy targeted across segments comprising c. 60%1 of 2021 rev
Slide 26: Liquidnet Equities
15 March 2022 Liquidnet Equities Leveraging Liquidnet’s leading global platform capabilities to do more for clients – Strategy – build on leadership positions; address areas of opportunity: Liquidnet is a leader in Europe/UK Large-in-Scale (LIS) Transactions • Liquidnet is a global leader in large-s
Slide 27: Liquidnet Credit
15 March 2022 Liquidnet Credit Well-advanced on the building blocks critical to success; high client/dealer engagement – Reiterating market commitments: Increased Client Engagement and Activity • Targeting 3-6% of corporate bond trading market share by post-completion Year 3 Buyside Firm logins Cumu
Slide 28: Primary Markets Offering
15 March 2022 Primary Markets Offering Recent achievements & near-term rollout objectives Achievements Near-term deliverables • Market leading innovation: • Expand universe of tradeable securities: ✓ Buyside trader workflow tool, which allows automated order/execution ✓ Sovereigns, covered bonds, su
Slide 29: Secondary Markets Offering
15 March 2022 Secondary Markets Offering Recent achievements & near-term rollout objectives Achievements Near-term deliverables • Making dark pool trading protocol work more effectively for clients: • Dark pool: ✓ New “on behalf of” functionality allows trade cover personnel to use ✓ Simplify tradin
Slide 30: Parameta Solutions
15 March 2022 Parameta Solutions A world-leading provider of OTC market data-driven products – Focused strategy: Consistently Strong Financial Performance 1. Grow higher-value products 2. Diversify client base (buy-side, corporates etc.) D&A Revenue D&A Contribution (£m, Constant Currency) (£m, Cons
Slide 31: Digital Assets
15 March 2022 Digital Assets Providing robust and reliable access to the cryptoasset class – Global cryptoasset working group established in 2017 – five years of development and collaboration Current Offering Mid-2022 – Experienced team leveraging entire TP ICAP network for new All-to-All market Cry
Slide 32: Summary & Outlook
15 March 2022 Summary & Outlook Strategic execution firmly on track Performance ➢ Delivered a resilient revenue performance in challenging market conditions Efficiency ➢ Operational improvements delivering cost efficiencies and building a platform for growth Strategy ➢ 5-year transformation strategy
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Slide 34: Appendix
Appendix
Slide 35: Divisional Analysis
15 March 2022 Divisional Analysis Global Energy & Agency Parameta 2021 (£m) Corp/Elim1 Group Broking Commodities Execution Solutions Revenue 1,105 370 246 166 (22) 1,865 Contribution 411 122 85 84 - 702 Contribution margin 37.2% 33.0% 34.6% 50.6% n/a 37.6% Management and Support Costs2 (209) (66) (6
Slide 36: Divisional Analysis
15 March 2022 Divisional Analysis Global Energy & Agency Parameta 2021 (£m) Corp/Elim1 Group Broking Commodities Execution Solutions Revenue 1,105 370 246 166 (22) 1,865 Contribution 411 122 85 84 - 702 Contribution margin 37.2% 33.0% 34.6% 50.6% n/a 37.6% Management and Support Costs2 (209) (66) (6
Slide 37: Segmental Analysis
15 March 2022 Segmental Analysis Corp. 2021 (£m) EMEA AMERICAS APAC Liquidnet3 Group Centre1 Revenue 872 605 229 159 - 1,865 Contribution 352 198 84 68 - 702 Contribution margin 40.4% 32.7% 36.7% 42.8% n/a 37.6% Management and Support Costs2 (150) (102) (53) (48) (34) (387) Adjusted EBITDA 202 96 31
Slide 38: Segmental Analysis
15 March 2022 Segmental Analysis Corp. 2021 (£m) EMEA AMERICAS APAC Liquidnet3 Group Centre1 Revenue 872 605 229 159 - 1,865 Contribution 352 198 84 68 - 702 Contribution margin 40.4% 32.7% 36.7% 42.8% n/a 37.6% Management and Support Costs2 (150) (102) (53) (48) (34) (387) Adjusted EBITDA 202 96 31
Slide 39: Balance Sheet
15 March 2022 Balance Sheet £m Dec-21 Dec-20 Goodwill & other intangibles 1,853 1,521 Other non-current assets 285 237 Current assets less current and non-current liabilities 3 10 Cash and financial investments 899 783 Deferred tax liabilities (107) (79) Interest bearing loans and borrowings (856) (
Slide 40: Net Funds / (Debt)
15 March 2022 Net Funds / (Debt) Cash & cash Financial Total Net Funds / Debt1 Lease Liabilities £m equivalents1 investments Funds (Debt) At 31 December 2020 649 127 776 (718) (212) (154) Reported net cash flow from operating activities2 111 - 111 2 - 113 Net cash flow from investment activities (28
Slide 41: Debt Maturity Profile
15 March 2022 Debt Maturity Profile 400 – The Group’s core debt (EMTN bonds) comprises: 350 – £247m 5.25% Sterling Notes maturing January 2024 ¥10bn – £250m 5.25% Sterling Notes maturing May 2026 300 – £250m 2.625% Sterling Notes maturing November 2028 250 – 3.2% vendor loan notes of $50m (£37m) wer
Slide 42: Disclaimer
15 March 2022 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