4th Mar 2014 15:22
LONDON (Alliance News) - Interdealer broker Tullett Prebon PLC Tuesday said it swung to a 2013 pretax profit after the previous year's result was hit by massive writedowns on its North American business, but profits fell excluding those writedowns as markets remained subdued and regulatory changes caused its customers uncertainty.
Tullett Prebon, which acts as an intermediary between buyers and sellers of bonds, swaps and other products, said it swung to an GBP84.4 million pretax profit, from a GBP38.1 million pretax loss in 2012 because results that year were hit by exceptional items such as a GBP123.0 million writedown on the value of its North American business.
Excluding the exceptional items, Tullett Prebon's pretax profit fell to GBP99.6 million, from GBP111.3 million, as revenues declined to GBP803.7 million, from GBP850.8 million in 2012. Its operating margin fell marginally to 14.4%, from 14.8%, as the impact was mostly offset by a reduction in administrative expenses to GBP714.5 million, from GBP881.7 million.
The company has been struggling with a number of regulatory changes and a sustained period of low volatility in financial markets.
Activity in the markets is generally higher during periods of volatility. As Tullett makes its revenue from commissions on facilitating and executing customer orders, lower volatility results in lower revenues.
Chief Executive Terry Smith said market conditions worsened over the course of 2013 and said he expects them to continue to be challenging.
The market for over-the-counter derivatives, one of Tullett Prebon's areas of business, has faced a number of reforms since the financial crisis, with regulators seeking to reduce risk and push transactions to electronic platforms, with central clearing in order to prevent investors building up dangerous positions that could spark another crisis.
The uncertainty over new regulations has caused big players, such as investment banks, to reduce their risk appetite and work on building their capital levels in order to meet regulators' demands.
Tullett Prebon will pay a full-year dividend of 16.85 pence, unchanged from 2012.
The interdealer broker's shares were Tuesday quoted at 326.00 pence, down 0.5%.
By Samuel Agini; [email protected]; @samuelagini
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
TLPR.L