TIDMTCAP
RNS Number : 3220H
TP ICAP Group PLC
03 August 2021
TP ICAP GROUP PLC ("TP ICAP" or the "Group")
3 August 2021
Trading update for the six months ended 30 June 2021 (the
"Period")
TP ICAP issues a scheduled trading update in relation to the
Period. Commentary on year-on-year performance is on both a
constant currency and a reported basis. Given the extraordinary
trading experienced in Q1 2020, as global markets reacted to the
COVID-19 pandemic, for context, we have included relevant
commentary comparing performance to 2019.
Nicolas Breteau, Chief Executive Officer, TP ICAP said:
"Our revenue performance reflects challenging trading conditions
caused by the combination of very quiet secondary markets and the
ongoing disruption from COVID-19. Against this market backdrop, we
have focused on those areas that we can control: namely, executing
on our strategy and managing costs.
"In terms of corporate development, this has been a busy and
successful period. In February we completed the redomicile of our
holding company from the UK to Jersey and realised tangible capital
benefits as a result. We also completed the Liquidnet acquisition
in March and the subsequent integration is successfully progressing
at pace. We have continued to execute our organic strategy to
electronify our business to improve margins over time, connect
clients with liquidity more efficiently and diversify our revenue
mix. In addition, we have continued to innovate, going live with a
new fully automated Spot FX matching platform and announcing the
launch of a pioneering wholesale trading platform for spot
crypto-assets.
"The Group delivered revenue of GBP936m for the Period, down 1%
on a constant currency basis compared with H1 2020, but up 6% when
compared with H1 2019, again on a constant currency basis. H1 2021
revenue includes GBP55m from Liquidnet. Excluding Liquidnet, Group
revenue for the Period declined 7% on a constant currency basis
compared with H1 2020, but was broadly in line with the equivalent
period of 2019. We anticipate full-year revenue for the Group,
excluding Liquidnet, to be broadly in line with 2020 on a constant
currency basis."
Divisional Reporting
TP ICAP reports H1 2021 revenues in four divisions: Global
Broking; Energy & Commodities; Agency Execution (formerly
Institutional Services and now including Liquidnet); and Parameta
Solutions (formerly Data & Analytics and now including
Post-trade Solutions).
Revenue for the Period:
-- Revenue in the Period of GBP936m, 1% lower than the
equivalent period last year (2020: GBP947m) on a constant currency
basis (5% lower on a reported basis);
-- Revenue decline in the Period reflected quieter markets
compared with the extraordinary volumes seen in March 2020;
-- Excluding Liquidnet's revenue of GBP55m, revenue in the
Period was 7% lower than the prior year on a constant currency
basis (11% lower on a reported basis).
Six-month period ended 30
GBPm June
-------------------------------- --------------------------------
Constant currency
2021 2020 2021 vs 2020
-------------------------------- ----- ----- ------------------
Global Broking(1) 565 609
Inter-division revenues(2) 10 10
-------------------------------- ----- ----- ------------------
Total Global Broking 575 619 -7%
-------------------------------- ----- ----- ------------------
Energy & Commodities 186 205
Inter-division revenues(2) 1 1
-------------------------------- ----- ----- ------------------
Total Energy & Commodities 187 206 -9%
-------------------------------- ----- ----- ------------------
Excluding Liquidnet 48 56 -14%
Liquidnet(3) 55 - n/a
-------------------------------- ----- ----- ------------------
Agency Execution 103 56 +84%
------------------
Data & Analytics 72 65 +11%
Post-trade Solutions 10 12 -17%
-------------------------------- ----- ----- ------------------
Parameta Solutions(1) 82 77 +6%
-------------------------------- ----- ----- ------------------
Inter-division eliminations(2) (11) (11)
-------------------------------- ----- ----- ------------------
Constant Currency Rates 936 947 -1%
-------------------------------- ----- ----- ------------------
Exchange Translation 43 Reported change
-------------------------------- ----- ----- ------------------
Reported 936 990 -5%
-------------------------------- ----- ----- ------------------
Notes:
1. For comparative purposes, in H1 2020, GBP12m revenue on a
constant currency basis (GBP13m on a reported basis) has been
reclassified from Global Broking into Parameta Solutions as a
result of the transfer of our Post-trade Solutions business.
2. Inter-division charges have been made by Global Broking and
Energy & Commodities to reflect the value of proprietary data
provided to Parameta Solutions. 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. In H1 2020, GBP1m of revenue has been
reclassified as Inter-division revenue in Global Broking relating
to SEF (Swap Execution Facility) revenue that was charged to
Post-trade Solutions. The reclassified increase in the
inter-division revenue and costs are eliminated upon
consolidation.
3. For H1 2021, GBP55m of revenue has been included within
Agency Execution relating to the Liquidnet acquisition that
completed on 23 March 2021.
Revenue and activity by division for the Period:
-- Global Broking revenue declined 7% compared with the prior
year on a constant currency basis (-11% on a reported basis) in an
environment where H1 2021 wholesale market activity was generally
subdued compared with H1 2020. Performance for the Period was in
line with market activity and we maintained our industry-leading
market share. Across Rates, Credit and FX, we made substantial
progress in advancing our hub strategy to electronify our platforms
and aggregate liquidity across our market leading brands.
-- Energy & Commodities revenue declined 9% on a constant
currency basis (-14% on a reported basis), with the strong prior
year period characterised by the record pandemic-driven oil trading
volumes of the first quarter.
Over the Period, energy markets were less active than in the
same period in 2020. The cadence of energy-related trading activity
followed a similar pattern to most financial asset classes, with
robust first-quarter volume, followed by a weaker Q2.
-- Agency Execution revenue increased by 84% in the Period on a
constant currency basis (+81% on a reported basis), largely due to
the inclusion of Liquidnet. Following its acquisition on 23 March
2021, Liquidnet contributed revenue of GBP55m in the Period.
Excluding Liquidnet, H1 2021 revenue was 14% lower than the
prior year on a constant currency basis (-16% on a reported basis),
reflecting weaker activity in the Relative Value business.
The process to integrate Liquidnet into the Group is progressing
well. We have advanced our plans to realise new revenue streams for
Equities and Credit; we have increased our marketing of the
business in Continental Europe; and we have identified cost
synergies. We will provide a more detailed integration update at
our Interim Results presentation on 7 September 2021.
-- In Parameta Solutions, the Data & Analytics business
achieved double-digit revenue growth (+11% on constant currency
basis, +3% on reported basis) as it continued to benefit from its
strategy to launch new and higher value products, expand
distribution channels and deepen and diversify its client
relationships. Post-trade Solutions revenues declined 17% on a
constant currency basis (-23% on a reported basis) compared with
the prior year due to lower market-wide volumes. Overall, revenue
grew 6% in the Period on a constant currency basis (-1% on a
reported basis).
2021 full year guidance and outlook:
-- Given the subdued trading conditions we have experienced in
the Period, together with continuing uncertainty caused by quiet
markets and the disruption from COVID-19, we anticipate full-year
revenue for the Group, excluding Liquidnet, to be broadly in line
with 2020 on a constant currency basis;
-- The Group reiterates its guidance on investment spending on
its organic strategy and Liquidnet as previously disclosed in our
Capital Markets Day and Preliminary Results;
-- The Group notes that GBP:USD year-on-year appreciation acts
as a headwind against our reported revenues and operating margin.
With GBP strengthening against USD, the average GBP:USD rate in H1
2021 was 1.39 compared with the same period in 2020 average of 1.28
(a change of 8%). 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 FX impact and investment spending on organic strategy and
Liquidnet mentioned above and in our Preliminary Results are
expected to have an adverse impact on operating margin.
2021 Interim Results:
-- The Group will report its 2021 Interim Results on 7 September
2021.
For further information:
Analysts and Investors:
-- Al Alevizakos, Group Head of Investor Relations & Rating Agencies Management
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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