TP ICAP plc Interim Results

Commentary on year-on-year performance is on a reported and constant currency basis. Despite the unprecedented macroeconomic backdrop, characterised by the emergence of the COVID-19 pandemic, the Group took rapid and effective action to safeguard its staff and operations. In so doing, the Group delivered continuous service to its clients, essential liquidity to the markets and strong revenue growth.
 
Nicolas Breteau, CEO of TP ICAP plc, said: 
"Against the COVID-19 backdrop, our primary focus has been to protect the wellbeing of our staff and ensure continuity of service excellence for our clients. We achieved this by deploying new technology and workflows that enabled the majority of our staff to work from home while maintaining seamless, global client coverage.

Despite the challenges posed by the pandemic, we have grown revenues and underlying profitability whilst advancing our strategic priorities of aggregating liquidity across our brands, increasing electronification and diversifying our revenue streams. We paid our full year dividend and have declared an interim dividend. Our performance is a testament to our operational strength, scale and diversified business portfolio, as well as the hard work and dedication of our teams.

We will update the market on our strategic priorities and medium-term growth plan at our Investor Update on 8 October 2020."

Response to COVID-19 pandemic

• The Group fundamentally re-engineered its operations during lockdown to maintain continuous global client service and liquidity across all asset classes and desks. 
• Tactical deployment of new digital solutions and new workflows enabled the vast majority of the Group's employees to work from home effectively.
• Re-engineering the business presented significant technological, management and regulatory challenges, coming as it did during a period of extremely high volatility and a sharp increase in volumes.  The Group demonstrated readiness and resilience to continue to serve clients and provide essential liquidity in the markets.
• The Group has not furloughed or reduced its permanent workforce as a consequence of COVID-19, nor has it requested any government aid in any of its global locations.
• The Group paid its final 2019 dividend and has declared an interim dividend for 2020.

The Group increased its underlying profits in the period, despite incurring a £10m charge due to an increase in unused annual leave as at 30 June ("impact from unused annual leave"), as employees chose not to use their annual leave due to the lockdown enforced in most jurisdictions where the Company operates. This charge will reverse in H2 2020 in line with Group policy on holiday carry-forward.

Financial highlights

Underlying (before acquisition, disposal and integration costs, and exceptional items)

Statutory (after acquisition, disposal and integration costs, and exceptional items)

A table showing Underlying and Statutory figures for each period, detailing acquisition, disposal and integration costs, and exceptional items is included in the Financial Review.

The average number of shares used for the basic H1 2020 EPS calculation for the period is 557.3m (H1 2019: 560m).

Operational highlights

• The Group's performance reflected our operational and technological resilience and the benefits of a diversified portfolio.
• Revenue of £990m grew 7% on a reported basis (7% at constant currency).
• Underlying operating profitability was 1% higher (7% higher excluding the impact of unused annual leave, 6% lower on a statutory basis) on higher revenues and tight cost discipline, offset by measured strategic investments.
• Global Broking revenue increased 2% on a reported basis (2% at constant currency), as stronger Rates were partially offset by weaker FX & Money Markets and Emerging Markets businesses.
• Energy & Commodities revenue increased 15% on a reported basis (15% at constant currency) with strong organic growth in oil and non-oil products, boosted by strategic hires and favourable markets.
• Institutional Services revenue increased 50% on a reported basis (50% at constant currency),  as the division benefited from increased client appetite, increased capacity to service new accounts, and strategic hires.
• Data & Analytics revenue increased 9% on a reported basis (8% at constant currency), against a strong prior year comparative period as the business continued to benefit from strategic initiatives to launch new, higher-value products and deeper client relationships.  The minor slowdown reflects some COVID-19-driven reduction in clients' overall spend appetite.

Strategic highlights

• Provided continuous global client service, whilst maintaining strong financial position and liquidity.
• Furthered earnings diversification through continued strong growth in non-Global Broking businesses.
• Expanded our customer base, range of services and geographic profile, especially in our newest divisions.
• Enhanced the synergies and links between our business divisions to maximise cross-selling opportunities.
• Modernised our technology infrastructure by investing in cloud capabilities, enabling the majority of our front-office employees to maintain full working capability remotely. The Group expects that this agility could lead to future property footprint savings, as it will require a smaller number of recovery sites.
• Continued the measured execution of our strategy, investing in core long-term projects aligned to our three defined strategic themes of electronification, liquidity aggregation and diversification.

Dividend

A 5.6p per share interim dividend (2019: 5.6p) will be paid on 6 November 2020 to shareholders on the register at close of business on 2 October 2020.

2020 full year guidance and outlook

• July trading activity has slowed down and is materially lower than 2019 levels. Consequently our full year guidance of low single-digit revenue growth remains unchanged.  We will continue to monitor the impact of the COVID-19 pandemic on TP ICAP and its customers through the remainder of the year.
• The targeted investment spend we guided to in March will be partially deferred as we manage resources prudently in response to the ongoing uncertainty caused by COVID-19. We will prioritise investment projects based on business needs. We aim to invest c£15m of cash  in 2020, of which c£7m will be expensed.

Investor update and redomiciling timetable

• The Group plans to host its Investor Update on 8 October 2020.
• The Group maintains its intention to incorporate a new holding Company in Jersey and the Group is currently in the process of seeking the relevant regulatory approvals.  This has taken longer than originally anticipated due to COVID-19.  The Group will in due course seek shareholder approval and currently expects to post shareholder documentation by the end of 2020 with completion following shortly thereafter.