TIDMTLPR
RNS Number : 2295U
Tullett Prebon PLC
28 July 2015
TULLETT PREBON PLC
Financial and Interim Management Report
For the six months ended 30 June 2015
Tullett Prebon plc (the "Company") today announced its results
for the six months ended 30 June 2015.
Operational Summary
-- Revenue up 15%, Operating profit up 20%
-- Outstanding performance from PVM
-- Acquisition of MOAB strengthens Energy in the Americas
-- Resilient performance from the broking business
-- Strong contribution from Information Sales and RMS
-- Tullett Prebon Information named best data provider for fifth consecutive year
Financial Highlights
Underlying, before exceptional and acquisition related items
-- Revenue GBP415.7m (2014: GBP360.3m)
-- Operating profit GBP60.6m (2014: GBP50.3m)
-- Operating margin 14.6% (2014: 14.0%)
-- Profit before tax GBP52.9m (2014: GBP43.2m)
-- Basic EPS 17.7p (2014: 16.0p)
Reported, after exceptional and acquisition related items
-- Profit before tax GBP111.1m (2014: GBP8.9m)
-- Basic EPS 36.2p (2014: 1.3p)
A table showing Underlying and Reported figures for each period
detailing the exceptional and acquisition related items is included
in the Financial Review.
Dividend
As in previous years, the interim dividend for 2015 has been set
at a level equal to 50% of the final dividend paid for the previous
year. This approach to setting the interim dividend is expected to
continue.
The 5.6p per share interim dividend will be paid on 12 November
2015 to shareholders on the register at close of business on 23
October 2015.
John Phizackerley, Chief Executive of Tullett Prebon plc,
commented:
"The actions that were taken during 2014 to develop the business
and to better align the cost base with the lower level of activity
have resulted in a 15% increase in revenue to GBP415.7m and a 20%
increase in underlying operating profit to GBP60.6m.
The performance of PVM since the completion of the acquisition
in November last year has been strong. The Company's Information
Sales and Risk Management Services businesses have also performed
strongly. The level of activity in the wholesale OTC 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.
The Company's goal is to become the world's most trusted source
of liquidity in hybrid OTC markets and the best operator in global
voice broking. The Company's plan is to build revenue and raise the
quality and quantity of earnings through further diversification of
the client base, continued expansion into Energy and commodities,
and building scale in the Americas and Asia Pacific, whilst
preserving the business's core franchises."
Forward-looking statements:
This document contains forward-looking statements with respect
to the financial condition, results and business of the Company. By
their nature, forward-looking statements involve risk and
uncertainty and there may be subsequent variations to estimates.
The Company's actual future results may differ materially from the
results expressed or implied in these forward-looking
statements.
Enquiries:
Stephen Breslin, Head of Communications
Tullett Prebon plc
Direct: +44 (0)20 7200 7750
email: sbreslin@tullettprebon.com
Craig Breheny, Director
Brunswick Group LLP
Direct: +44 (0) 20 7396 7429
email: cbreheny@brunswickgroup.com
Further information on the Company and its activities is
available on the Company's website: www.tullettprebon.com
Overview
The actions that were taken during 2014 to develop the business
and to better align the cost base with the lower level of activity
have resulted in a 15% increase in revenue to GBP415.7m and a 20%
increase in underlying operating profit to GBP60.6m.
The performance of PVM Oil Associates Limited and its
subsidiaries ("PVM") since the completion of the acquisition in
November last year has been strong. The business's main activities
are in crude oil and petroleum products, and the business has
benefited from the higher level of activity in the oil and related
products markets due to the significant changes in the oil price
experienced since the start of the second half of 2014. PVM's
revenue in the first six months of 2015 was 35% higher than in the
equivalent period in 2014.
The Company's Information Sales and Risk Management Services
businesses have also performed strongly, with revenue in the first
half up 17% to GBP27.2m. The Information Sales business has
benefited from the expansion of its geographical presence, the
enhancement of its sales capability and the extension of the data
content it provides to customers, including the crude, refined and
middle distillates data generated by PVM.
The level of activity in the wholesale OTC financial markets has
been more stable during the first half than in recent periods,
although activity has continued to be relatively subdued reflecting
the structural and cyclical factors affecting the interdealer
broker industry. Market volumes continue to be adversely affected
by the more onerous regulatory environment applicable to many of
our bank customers whose trading activity has been suppressed by
the deleveraging of their balance sheets and lower risk appetite.
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. Revenue has picked up in Asia Pacific and in some
products in the Americas, but the continuation of the low interest
rate conditions and compressed bond market spreads in Europe has
further dampened activity in many markets in our largest region.
Broking revenue, excluding PVM, in the first half of the year of
GBP336.5m was 3% lower than in the first half of 2014 at constant
exchange rates.
The benefits of the actions taken during 2014 to reduce
headcount and other fixed costs which were designed to preserve the
variable nature of broker compensation and to reduce it as a
percentage of broking revenue have been reflected in an improvement
in the business's contribution margin in the first half of the
year. Broker compensation as a percentage of revenue, excluding
PVM, has reduced by 1.1% points to 55.6%.
The investments being made in strategy and business development
and in the implementation of enhanced cultural, compliance, and
risk governance frameworks have resulted in an increase in
management and support costs and one-off project costs in the first
half which has partly offset the benefit of the improvement in
contribution margin. The underlying operating profit margin
achieved in the first half of 2015 of 14.6% is 0.6% points higher
than in the equivalent period last year.
Strategy and Business Development
Following the conclusion of the global strategic review that was
initiated last year the Company hosted a Capital Markets Day for
institutional investors and analysts in June. The presentation
materials are available on the Company's website. John
Phizackerley, Chief Executive, articulated the Company's goal to
become the world's most trusted source of liquidity in hybrid OTC
markets and the best operator in global voice broking; and the
Company's plan to build revenue and raise the quality and quantity
of earnings through further diversification of the client base,
continued expansion into Energy and commodities, and building scale
in the Americas and Asia Pacific, whilst preserving the business's
core franchises.
One of the outputs of the strategic review was the launch of ten
key initiatives, the "10 Arrows", each of which has a number of
projects and work streams which are designed to optimise the
existing business and to pursue opportunities to add new high
quality revenue and earnings to the group.
The first four arrows are focused on building revenue in the
most attractive areas of our markets.
- We will seek to add brokers to maintain and grow our presence
in those products with high relative market attractiveness and
where we have a high relative ability to compete, and to invest in
those products that have high market attractiveness but where our
presence can be developed.
- We will seek to continue to build our activities in Energy and commodities.
- The financial markets are evolving and we will look to extend
our broking offering to service clients who have not traditionally
been served by the interdealer brokers in those products where the
market is receptive to a broadening of the client base.
- We will continue to develop our Information Sales business
where our product suite and delivery channels can be further
developed.
The remaining arrows are focused on improving the functions in
the business that support the revenue generating divisions.
- We will invest in our technology including both front office
and back office systems and realign the mix between owned and
outsourced platforms to maximise our own intellectual property to
seek to ensure that the hybrid voice broking business and
Information Sales have the technology richness and capability that
customers seek.
- We will invest in our client relationship management function
and introduce new focus and discipline to how we target and cover
existing and new clients to seek to broaden and institutionalise
client relationships.
- We will develop our capability to source, execute and integrate acquisitions.
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