28th Jul 2015 07:22
LONDON (Alliance News) - Tullett Prebon PLC Tuesday reported improved results for the first half of 2015, buoyed by the contribution from its newly acquired oil broker business, PVM, and continued its expansion into energy and commodities with another acquisition.
The FTSE 250 interdealer broker said it has acquired MOAB Oil Inc, a broker of physical and financial instruments in the energy markets. Based in Norwalk, Connecticut, MOAB has 23 brokers and generated USD23.7 million in revenue in 2014. Tullett is paying USD12.3 million for the broker, plus an amount equal to the acquisition's working capital, including cash. Tullett could pay up to USD14.3 million in a deferred sum, depending on MOAB's performance over five years.
Tullett said its underlying pretax profit, which strips out one-off items such as the gain from a settlement of a legal action with rival BGC, increased to GBP52.9 million in the six months ended June 30, compared with GBP43.2 million in the corresponding period the prior year.
Tullett Prebon is aiming to grow revenue and improve the quality of its earnings by diversifying its client base, expanding into energy and commodities, and building scale in the Americas and Asia Pacific. It has been cutting costs to maintain margins against a tough operating environment for interdealer brokers.
Interdealer brokers, which match institutional buyers and sellers of financial instruments, have been under pressure since the financial crisis, which caused the sector's investment bank clients to lower their risk appetite and increase capital strength to meet regulatory requirements.
In addition, there has been generally low volatility in markets. Volatility is usually welcomed by interdealer brokers, as it tends to be accompanied by increased activity in the markets.
Chief Executive John Phizackerley, who is now more than halfway through his first full year in charge, having taken over from Terry Smith in September 2014, said Tullett's efforts in 2014 to develop the business and cut costs aided results.
PVM Oil Associates Ltd, the oil broker acquired for USD112.0 million in shares in November, has performed strongly, boosted by the price fluctuations seen in the oil markets, Phizackerley said, as have Tullett's information sales and risk management services businesses.
"The level of activity in the wholesale OTC (over-the-counter) financial markets has been more stable during the first half than in recent periods although activity has continued to be relatively subdued. There has been higher volatility in some financial markets in 2015 compared with a year ago, but despite the economic and political dramas that have been playing during the first half of the year, volatility and trading volumes in many product areas have continued to be sporadic," Phizackerley said in a statement.
Tullett's interim dividend remains at 5.6 pence per share.
Tullett shares were up 1.4% at 392.10 pence early on Tuesday morning in London.
By Samuel Agini; [email protected]; @samuelagini
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