19th Mar 2019 08:16
LONDON (Alliance News) - Interdealer broker TP ICAP PLC on Tuesday reported "resilient" results in a "mixed" 2018 as the company continued its integration programme and prepares for "all Brexit eventualities".
In 2018, TP ICAP's pretax profit decreased 14% to GBP62 million from GBP72 million. The company's revenue was flat at GBP1.76 billion.
Underlying profit increased 5.2% to GBP245 million from GBP233 million in 2017. The adjusted figures remove acquisition, disposal & integration costs, and exceptional items.
TP ICAP declared a final dividend of 11.25 pence per share, along with an interim dividend of 5.6p, gives a total dividend for 2018 of 16.85p, in line with the year before.
"Since I took over as chief executive officer, a key priority has been successfully completing the Tullett Prebon and ICAP Global Broking business integration to secure the enlarged platform from which to grow our business," said Chief Executive Nicolas Breteau.
"This combination enables the deepest and broadest pools of liquidity in the over-the-counter market, which is a source of real value to our clients and our business. Whilst there is more work to do, real progress has been made with the integration in the past year. When this is complete, I am confident we will be in a position to enhance that value as we aggregate liquidity and the data it provides across all our brands and regions."
Breteau said TP ICAP delivered a "resilient" performance in a "mixed market environment" in 2018.
The company's Global Broking revenue was broadly flat at GBP1.28 billion, but this was offset by a 3.5% slip in Energy & Commodities revenue to GBP331 million. TP ICAP's Data & Analytics revenue saw a 4.5% rise to GBP117 million.
In Global Broking, TP ICAP said markets were "mixed" in 2018, with certain products - Rates and Equities - benefiting from "favourable conditions", while others - Credit and FX and Money Markets - faced "more challenging conditions".
The total contribution from the company's 2,727 brokers was GBP679 million in 2018, 1.3% higher than in 2017. TP ICAP ended 2018 with 115 fewer brokers than it started the year with, resulting in the average revenue per broker rising 4.4% to GBP604,000.
In June 2016, Tullett Prebon and ICAP, now known as NEX Group PLC, agreed for Tulett to acquire the ICAP voice broking and information business. The deal was completed at the end of December 2016. During 2018, TP ICAP carried out a review into the merger in an attempt to cut costs.
TP ICAP said its integration programme is on track with synergy savings of GBP71 million per annum achieved. By the end of 2018, TP ICAP has spent about GBP130 million on the integration process and expects the total cost of integration to be GBP160 million.
The company said completing the integration process in 2019 is one of its key priorities.
Looking towards Brexit, TP ICAP said 90% of its broking revenue will be "largely unaffected" by the UK leaving the EU but it "still remains a significant regulatory and operational challenge for the group".
The firm carries out business for EU clients in Europe. As a result, TP ICAP has relocated its iSwap unit to the Netherlands.
Secondly, TP ICAP has EU clients through its UK units. In a 'No Deal Brexit', TP ICAP said this business is unlikely to continue after March 29 in the way it currently does. To combat this, the company has moved extra broking staff to the EU to cover the change in workflow.
TP ICAP expects the UK to remain a "major centre" for financial, energy and commodities markets but the distribution of its brokers will ultimately be decided by client needs.
The company said: "We have put in place contingency plans for a no deal Brexit and we are working hard to minimise the impact but it is difficult to gauge the scale of any impact at this stage."
Breteau added: "The political and economic environment continues to present us with both opportunities and challenges. However, I am confident that with a renewed strategy, founded on our strategic pillars, and renewed sense of purpose we are in a good position to navigate these successfully, and make the most of the many opportunities we have to grow."
The stock was up 0.8% in London at 306.00 pence early Tuesday.
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