TP ICAP : Preliminary Results 2022 - Presentation Transcript

TP ICAP

Preliminary Results Webcast

14th March 2023

Classification: Public

TP ICAP

Nicolas Breteau, Group, CEO

Robin Stewart, Group CFO

Daniel Fields, CEO, Global Broking

Andrew Polydor, CEO, Energy & Commodities Mark Govoni, CEO, Liquidnet

Eric Sinclair, CEO, Parameta Solutions Dominic Lagan, Head of Investor Relations

Questions From

Kim Bergoe, Numis Securities

Stuart Duncan, Peel Hunt

Piers Brown, HSBC

Eric Wilson, JP Morgan

Stephen Hayde, Close Brothers

Vivek Raja, Shore Capital

Classification: Public

Introduction & Key Highlights

Nicolas Breteau, Group, CEO

Good morning everyone and thank you for joining us today both in person and online.

Our agenda for the morning is as follows: Robin will take you through our financial performance.

The CEO's of our business divisions - Dan Fields, Andrew Polydor, Mark Govoni and Eric Sinclair - will report on their business. Then I will wrap up before we open up for questions.

But first, the headlines. We delivered a strong performance in 2022. Macro events drove inflation to the highest rate in decades. As a result, Central Banks increased interest rates to levels last seen before the financial crisis.

Against this backdrop revenue grew 7% in constant currency, and 13% on a reported basis.

Global Broking, in particular, benefitted from market volatility, with high single-digit growth, in constant currency, across all asset classes.

Productivity continued to improve: Revenue per broker was up 14%, and contribution per broker grew 20%, before the impact of charges taken as a result of Russian sanctions.

Our high-margin businesses performed well. Revenue in rates, our largest asset class in Global Broking, grew 7%. Parameta Solutions, our Data & Analytics business, was up 8%.

This strong performance increased our adjusted EBIT by 8% to £275m, and our underlying margin to 14.0%, excluding any impact from Russia. Including the Russian charges, our margin was 13.0%.

We are managing our capital dynamically. As we told you last August, we have identified around £100 million of cash which we will free up by the end of 2023 to pay down debt. By the end of 2022 we had released £30 million, and we are on track to deliver the remainder this year.

The Board continues to assess our balance sheet and investment requirements and is committed to returning any potential surplus capital to shareholders.

We are announcing today a final dividend per share of 7.9 pence bringing our total dividend for the year to 12.4 pence, an increase of 31%.

Moving now to our strategic highlights.

We are delivering our transformation at pace, including the roll out of our award-winning electronic platform Fusion. 40% of in-scope Global Broking revenue is now on the platform,

Classification: Public

in line with our target. We are on track to complete our rollout by the end of 2025 which will cover about 55% of total Global Broking revenue.

With the technology already in place across many of our broking desks, client adoption is now a key priority.

Client feedback has been very encouraging and we have a dedicated Sales team to drive adoption which Dan will talk about later.

Despite the challenges of Covid, we are making good progress towards our 2023 targets set out at our Capital Markets Day in 2020, subject to market conditions.

Robin will brief you on the detail in his presentation.

We are also delivering our diversification strategy.

In Energy and Commodities our new institutional platform for spot crypto assets has now obtained FCA registration. Initial client feedback has been positive, and we are planning a full launch later this year. This is an exciting opportunity for the Group.

Liquidnet has had to manage challenges posed by cyclical falls in many stock markets,

and high volatility which impacted block trading. These led to a decline in commission wallet.

The business is actively diversifying its equity proposition and growing in cross border, algo and programme trading.

Fixed Income is a substantial opportunity for both Liquidnet and the Group. We are making good progress on the Primary Markets offering: for example, we have partnered with around 30 syndicate banks.

Our Dealer to Client credit proposition went live as planned last summer. All the client-facing technology is in place; feedback is good; the key issue now is growing liquidity on the platform.

COVID has had a material impact on how dealers and potential clients prioritise the IT development needed to connect to the platform.

We are moving up their priority list and making good progress with the largest bank liquidity providers. But given these realities it will take longer to reach our 3 to 6% target market share.

In Parameta Solutions, we are developing new products, and building new partnerships.

That is why we are announcing today a collaboration with the leading global analytics company Numerix.

Classification: Public

We will combine their analytical expertise with our market data to deliver high quality, independent fair valuations of OTC derivatives.

Finally, we continue to manage our cost base effectively despite inflation.

We have achieved our 2022 savings target of £25 million.

And we are on track to deliver at least £30m of Liquidnet integration synergies, exceeding our previous target of £25m.

Now over to Robin to take you through our financial performance in more detail.

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Financial Review

Robin Stewart, Group CFO

Thank you, Nico, and good morning everyone.

As you have heard, we delivered a strong financial performance in 2022.

I'll start with the income statement, where my comparisons with the prior year are in constant currency.

Total Group revenue increased 7% to 2.1 billion.

Adjusted EBITDA was up 4% at 357 million and adjusted EBITDA margin was slightly lower at 16.9%.

Adjusted EBIT increased 8% to 275 million and the adjusted EBIT margin was marginally higher at 13%.

Excluding the impact of Russian charges, which totalled 21 million net of recoveries, the margin was 14.0%.

Net finance costs of 49 million were 13% lower - slightly below our guidance for the year of 52 million. This is the result of actively managing our cash to benefit from rising interest rates.

Taken together, this resulted in adjusted earnings before significant items of 194 million, up 31%. Adjusted earnings per share grew from 19.5 to 24.9 pence.

Classification: Public