TIDMTCAP
RNS Number : 2947Y
TP ICAP Group PLC
12 May 2021
TP ICAP GROUP PLC ("TP ICAP" or the "Group")
12 May 2021
Trading update for the three months ended 31 March 2021 (the
"Period")
TP ICAP issues a scheduled trading update in relation to the
Period. Commentary on year on year performance is on constant
currency and reported basis. Given the exceptional trading
experienced in March 2020, driven by client positioning as global
markets reacted to the COVID-19 pandemic, comparators to 2019 have
also been included for context.
Nicolas Breteau, Chief Executive Officer, TP ICAP said:
"Following the exceptional revenue performance by the Group in
Q1 2020 driven by extreme volatility across all asset classes,
these results represent a solid performance for Group in the first
quarter of 2021. The Group delivered revenues of GBP483m for the
Period, a reduction of 9% on a constant currency basis compared to
Q1 2020. However, when compared to the normalised conditions that
prevailed in Q1 2019, the Group grew revenues in Q1 2021 by 6%,
which is a testament to the strength and depth of the Group's
business mix and the hard work of our employees, still operating
under Covid constraints.
Update on Divisional Reporting
TP ICAP today commences the reporting of the two newly renamed
divisions: Agency Execution (formerly Institutional Services) and
Parameta Solutions (formerly Data and Analytics).
GBPm Three-month period ended 31 March
-------------------------------- ---------------------------------------------
Constant currency change
-------------------------------- ------- -------
2021 2021
Revenues 2021 2020 vs 2020 vs 2019
-------------------------------- ------- ------- ------------- ------------
Global Broking(1) 307 343 -10% -1%
Inter-division revenues(2) 5 5 +0% +25%
-------------------------------- ------- -------
Total Global Broking 312 348 -10% -1%
-------------------------------- ------- -------
Energy & Commodities 100 114 -12% +14%
Inter-division revenues(2) 1 1 +0% -50%
-------------------------------- ------- -------
Total Energy & Commodities 101 115 -12% +12%
-------------------------------- ------- -------
Agency Execution(3) 34 35 -3% +79%
Parameta Solutions(1) 42 38 +11% +17%
Inter-division eliminations(2) (6) (6) +0% +20%
-------------------------------- ------- -------
Constant Currency
Rates 483 530 -9% +6%
-------------------------------- ------- -------
Exchange Translation 17 Reported change
Reported 483 547 -12% +3%
-------------------------------- ------- -------
Notes:
1. For Q1 2020, GBP6.1m of revenues have been reclassified from
Global Broking into Parameta Solutions as a result of the transfer
of Global Broking's RMS (Risk Management Services) business to
Parameta Solutions. This transfer reflects the mechanics of the
underlying business. Also, in Q1 2020, GBP0.5m has been
reclassified as Inter-division revenue in Global Broking relating
to SEF (Swap Execution Facility) revenue, with a c orresponding
increase in the revenue elimination upon consolidation.
2. Inter-division charges have been made by Global Broking and
Energy & Commodities to reflect the value of proprietary data
provided to the Parameta Solutions division. The prior year Period
has been restated in line with the new-presentation format. The
Global Broking inter-division revenues and Parameta Solutions
inter-division costs are eliminated upon the consolidation of the
Group's financial results.
3. For Q1 2021, GBP6.3m of revenue has been included within
Agency Execution relating to the Liquidnet acquisition that
completed on 23 March 2021.
Revenue for the Period:
-- Revenue in the Period of GBP483m was 9% lower than the
GBP530m revenue for the equivalent period last year on a constant
currency basis (12% lower on a reported basis);
-- The Period's year-on-year lower revenue reflected exceptional
volumes in March 2020. This reflected extremely volatile market
conditions caused by the emergence of the COVID-19 pandemic in
early 2020;
-- Revenue in the Period was 6% higher than the equivalent
quarter for 2019 respectively on a constant currency basis, when
volumes were more normalised.
Revenue and activity by division for the Period:
-- Global Broking revenue declined 10% in the Period relative to
the same quarter in the prior year on a constant currency basis
(13% on a reported basis) driven by market-wide lower client
volumes across most asset classes. Equities revenues grew
significantly, benefiting from higher volumes and diversification
from the LCM acquisition;
-- Energy & Commodities revenue declined 12% in the Period
relative to the equivalent quarter last year on a constant currency
basis (15% on a reported basis). Similar to Global Broking, client
activity was down across all asset classes compared to the
equivalent exceptional quarter last year;
-- Agency Execution revenue declined by 3% in the Period on a
constant currency basis (8% on a reported basis) on market-wide
lower volumes;
-- Parameta Solutions revenue grew 11% in the Period on a
constant currency basis (5% on a reported basis). The business
continues to benefit from strategic initiatives to launch new and
higher value products, expand distribution channels and deepen and
diversify its client relationships.
Strategic update
Liquidnet acquisition:
-- Liquidnet, a premier technology driven electronic buyside
trading network, will transform our future growth prospects:
o It will materially accelerate the delivery of our three
strategic pillars of electronification, aggregation and
diversification
o Provides immediate growth opportunities: D2C Credit Platform;
D2C Rates Platform
-- The acquisition was partially funded by a successful GBP315m
rights issue which closed on 16 February, with a take up of more
than 98%, demonstrating the market's strong support for the
transaction.
-- The transaction completed on 23 March 2021, and Liquidnet
contributed revenue of GBP6.3m to the Period, reported within the
Agency Execution division.
-- The integration of Liquidnet is well underway. The Group will
update the market on the integration progress, financial targets
and KPIs for Liquidnet at its interim results.
Redomiciliation of Group:
-- On 26 February, the Group's domicile moved from London to
Jersey, following overwhelming shareholder support at a Court
Meeting and General Meeting on 1 February.
-- The redomiciliation has already delivered tangible capital
benefits for TP ICAP and we anticipate it will drive further
business opportunities globally.
2021 full year guidance and outlook:
-- Our full year guidance of low single-digit revenue growth on
a constant currency basis, excluding Liquidnet revenues, remains
unchanged;
-- The Group reiterates its investment spending as previously
disclosed in our Capital Markets Day and our Preliminary
Results;
-- The Group notes that GBP:USD year-on-year appreciation acts
as a headwind against our reported revenues and EBIT. With GBP
strengthening against USD, the average GBP:USD rate in Q1 was 1.38
compared with the full year 2020 average of 1.29 (a change of 7%).
Around 60% of Group revenues and 40% of expenses are USD. The Group
is not engaged in any active currency hedging for reporting
purposes;
-- The Group notes that trading activity in April 2021 has
returned to more normal levels compared with levels seen in prior
years and is in line with the Group's full year guidance.
2020 AGM:
-- The Group will host its Annual General Meeting later
today.
Parameta Solutions Investor seminar:
-- The Group plans to host an Investor Seminar for Parameta
Solutions - the Group's Data & Analytics and Post Trade
Solutions division - during the second half of 2021. We will
provide a date in due course.
Additional Chief Executive Officer Commentary :
"Throughout the Period, the Group's core businesses have
continued to successfully diversify and electronify their
activities. In Global Broking we have continued the implementation
of our hub strategy across Rates, FX and Credit and continue to
expand our hybrid and electronic matching technology offering. In
Parameta Solutions, our Data & Analytics division, (the world's
leading provider of OTC market data), posted double digit revenue
growth relative to Q1 2020. Our Post Trade Services division has
been restructured and is now within Parameta Solutions in order to
deliver more focused client products. The Group's Energy &
Commodities division has successfully responded to its clients'
decarbonisation agenda and I am particularly proud that
approximately 40% of revenues of this division now come from
positive, transitional or carbon neutral products. In our Agency
Execution division (formerly Institutional Services) we have
continued our strategy of adding more asset classes, deepening
geographic reach and further electronification.
"The Group has also achieved a number of strategic successes
this quarter. In February, we completed the redomicile of our
corporate head office outside of the UK which has delivered
tangible capital benefits for the Group and we anticipate will
drive further business opportunities globally. In the same month we
successfully completed the GBP315m rights issue to fund the
Liquidnet acquisition, which we completed on 23 March. Liquidnet
delivers further diversification for the Group and represents a
core component of the Group's strategy we articulated to investors
last December. Liquidnet's integration into our Agency Execution
division has started well and we will provide a more detailed
update on progress and financial performance at the half year. I am
happy to report that the Liquidnet acquisition, the rights issue
and the redomiciliation were achieved with overwhelming support and
approval from our shareholders.
"We are positive about the prospects of our Group. Across the
board, our client franchises remain very strong as we continue to
diversify and transform our business, invest in our people and
technology, whilst maintaining cost discipline. As a result, the
Group is well placed to meet changing client needs, the demands of
increased market regulation and the continued evolution of global
market infrastructure."
For further information:
Analysts and Investors:
-- Al Alevizakos, Group Head of Investor Relations
Direct: +44 (0) 20 3933 3040
Mobile: +44 (0) 79 9991 2672
E-mail: Alevizos.Alevizakos@tpicap.com
Media:
-- William Baldwin-Charles, Group Media Relations Director
Direct: +44 (0) 20 7200 7124
Mobile: +44 (0) 78 3452 4833
E-mail: William.Baldwin-Charles@tpicap.com
-- Neil Bennett, Maitland
Direct: +44 (0) 20 7379 5151
E-mail: tpicap-maitland@maitland.co.uk
About TP ICAP Group plc
TP ICAP Group plc is a diversified global markets infrastructure
and data solutions provider. The Group operates a portfolio of
separate and competing brands to deliver intermediary services,
contextual insights and intelligence, trade execution, pre- and
post-trade services, and data-led solutions. We are formed of four
business divisions:
-- Global Broking : the largest Interdealer Broker in the world
operating under the ICAP, Tullett Prebon and Louis Capital brands
servicing clients in Rates, FX, Credit and Equities. We match
buyers and sellers, facilitate price discovery, liquidity,
execution and risk management.
-- Energy & Commodities : the world's leading OTC energy and
commodities broker operating under the ICAP, PVM and Tullett Prebon
brands. Active in all major commodities markets including oil, gas,
power, renewables, ferrous metals, base metals, precious metals and
soft commodities.
-- Agency Execution : serving the buy side operating under the
Liquidnet and COEX Partners brands. We provide trading services for
a broad range of asset classes, serving a sophisticated client base
of asset managers, asset owners and hedge funds.
-- Parameta Solutions: a world leading OTC data provider
operating under the Parameta Solutions brand offering unbiased data
products and solutions that facilitate trading, enhance
transparency, reduce risk and improve operational efficiency,
complemented by a broad range of post trade solutions.
Further information on the company and its activities is
available on the Company's website: www.tpicap.com
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END
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