TIDMTLPR
RNS Number : 9084F
Tullett Prebon PLC
02 August 2016
TULLETT PREBON PLC
Financial and Interim Management Report
For the six months ended 30 June 2016
Tullett Prebon plc (the "Company") today announced its results
for the six months ended 30 June 2016.
Financial Highlights
Underlying, before exceptional and acquisition related items
-- Revenue of GBP430.3m, an increase of 4% on prior period (2015: GBP415.7m)
-- Operating profit GBP67.0m, an increase of 11% on prior period (2015: GBP60.6m)
-- Operating margin of 15.6% (2015: 14.6%)
-- Profit before tax GBP60.3m (2015: GBP52.9m)
-- Basic EPS 21.0p (2015: 17.7p)
Reported, after exceptional and acquisition related items
-- Operating profit GBP45.4m (2015: GBP118.8m*)
-- Profit before tax GBP35.5m (2015: GBP111.1m*)
-- Basic EPS 11.9p (2015: 36.2p*)
*Includes the impact of the GBP64.4m credit relating to major
legal actions.
A table showing Underlying and Reported figures for each period,
detailing the exceptional and acquisition related items is included
in the Financial Review.
The average number of shares used for the basic EPS calculation
for period is 242.7m.
Operational Summary
-- Resilient performance from the broking business in challenging market conditions
-- Strong performance in Energy and Commodities, and Equities products
-- Strong contribution from Information Sales and Risk Management Services ("RMS")
-- Tullett Prebon Information named best data provider for sixth consecutive year
Strategic Developments
-- Planning for the integration of ICAP's global hybrid voice
broking and information business ("IGBB") progressing well
-- The Company continues to pursue strategic partnerships and high quality acquisitions
Dividend
As in previous years, the interim dividend for 2016 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. A 5.6p per share interim dividend will be paid on 14
November 2016 to shareholders on the register at close of business
on 2 September 2016. For more details on future dividend payment
schedules see page 14 of this interim management report.
Commenting on the results, John Phizackerley, Chief Executive of
Tullett Prebon plc, said:
"I am pleased with the financial performance in the first half
of 2016. A resilient performance from the broking business in
challenging markets saw the subdued client demand in some of our
heritage product areas more than offset by the performance of our
Energy and Commodities, and Equities products. Revenue of GBP430m
was 4% higher than in 2015 with underlying operating profit
increasing by 11% to GBP67m.
Our goal is to become the world's most trusted source of
liquidity in hybrid OTC markets and the best operator in global
hybrid voice broking. Our acquisition of IGBB, which provides a
unique opportunity to accelerate the delivery of our strategy, is
on track. We are in advanced planning for the integration of the
two businesses after completion of the transaction, which we expect
will be during the latter part of 2016.
At the same time we continue to look for opportunities to
increase revenues and raise the quality and quantity of earnings.
This will be achieved through further diversification of the client
base, continued expansion into Energy and Commodities, building
scale in the Americas and Asia Pacific, and preserving the
business' 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:
Andrew Baddeley, Chief Financial Officer
Tullett Prebon plc
Direct: +44 20 7200 7995
email: abaddeley@tullettprebon.com
Alexandra Wick, Marketing and Communications Director
Tullett Prebon plc
Direct: +44 20 7200 7579
email: awick@tullettprebon.com
Craig Breheny, Director
Brunswick Group LLP
Direct: +44 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
Our strategic review, the results of which were communicated to
the market in June last year, concluded that the central role
played by interdealer brokers at the heart of the global wholesale
OTC markets remains secure, and that the majority of OTC product
markets, which are not characterised by continuous trading, depend
upon the intervention and support of voice brokers for their
liquidity and effective operation.
We are wholly committed to the hybrid voice broking model, and
to developing the technology and services that support it. This is
where the business is positioned, and we aim to be the best
operator and best provider of liquidity and trusted partner to our
clients.
The review also concluded that revenue declines were likely to
continue in a number of traditional interdealer broker products.
The review concluded that the Energy and Commodities markets do not
currently face all the same pressures. Market conditions in 2015
and the first half of 2016 were consistent with these conclusions.
Activity in many of the traditional interdealer broker products
remained subdued. In contrast, activity in the Energy and
Commodities markets, particularly in oil and oil related financial
products, was buoyant reflecting the significant changes and
volatility in oil prices throughout the period.
We have continued to actively manage the direct cost base to
reflect market conditions. In the light of the reductions in market
volumes in the traditional interdealer broker product areas, cost
improvement action was taken towards the end of 2015 to reduce
headcount and other fixed costs in the products and geographies
most affected by the reduction in market volumes and revenue. The
benefit of these actions has been seen in the improvements achieved
in some of our key expense ratios and the operating margin.
The Information Sales and RMS businesses have also performed
strongly with significant increases in revenues and contribution to
operating profits. The Information Sales business has benefited
from the continued expansion of its client base and geographical
presence, the enhancement of its sales capability and the extension
of the data content it provides to customers.
Revenue of GBP430m in H1 2016 was 4% higher than in H1 2015 with
underlying operating profit increasing by 11% to GBP67m. The
underlying operating profit margin for the six months to 30 June
2016 of 15.6% is 1% point better than in 2015 reflecting the
improvements being made in the business.
Strategy and Business development
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
hybrid voice broking. The Company plans to grow 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.
Progress against our strategic initiatives
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 by: strategically adding
brokers; building out our Energy and Commodities business; winning
new all-to-all client business; and further building out our
Information Sales business. The remaining arrows are focused on
improving the functions in the business that support the revenue
generating divisions by: investing strategically in IT; adopting a
focused and disciplined customer relationship management approach;
developing our acquisition and partnership capabilities; creating a
robust investment framework; developing our HR function; and
marketing and developing our brand.
During the first half of this year work has continued on the
various business optimisation projects and work-streams that flow
from the 10 Arrows and we are making good progress. It is our
intention the 10 Arrows will continue to be implemented, on a
larger platform, after the completion of the acquisition of
IGBB.
Acquisition of IGBB
The Company announced in November 2015 that it had agreed terms
with ICAP for the acquisition by Tullett Prebon of IGBB. The
transaction will position the group as the leading
inter-institutional liquidity provider in OTC products and as a
nexus of product knowledge, broking experience and client
relationships, and provides a unique opportunity to accelerate the
delivery of the Company's strategy.
Since then the Company has worked with the relevant regulatory
authorities to secure approval for the transaction. In June,
following completion of its Phase 1 review, the Competition and
Markets Authority ("CMA") did not find competition concerns in 19
of the 20 product categories it considered. The CMA raised concerns
around the broking of oil products (in EMEA) and as a result the
Company and ICAP have undertaken to divest IGBB's London-based oil
desk within a specified timeframe. The Company remains confident
that clearance from the CMA will be obtained. Clearance has been
obtained from competition authorities in the United States,
Singapore and Australia, and the acquisition of IGBB remains on
track to close in 2016.
The costs of completing the acquisition of IGBB are discussed
below but amount to almost GBP13m (including transaction financing
costs) in the six months ended 30 June 2016. Overall it is expected
that the total costs associated with the transaction to be incurred
in the full year, will comprise approximately GBP19m of transaction
costs, GBP7m of transaction financing costs, and GBP11m of
integration expenses.
While the Company waits for regulatory approval a significant
amount of time and resource has been devoted to integration
planning for the combination of the two businesses. Individual
work-streams have been established across all functional
disciplines and geographies to undertake 'Day 1 integration
planning' and synergy analysis prior to closing the transaction.
Teams have been assigned specific value driver initiatives and are
developing detailed measurable integration plans with budget
accountability. Upon closing the integration work-stream teams will
immediately begin implementing the approved plans to create the
target operating model of the enlarged organisation. We have
developed a well-defined, disciplined and transparent approach to
driving value and tracking synergies which will both minimise the
time required and maximise the value to be realised. As a result
the Company remains confident in its guidance on management and
support cost synergies of at least GBP60m post completion.
Beyond the efforts being made with the IGBB acquisition, we have
made progress in a number of other areas.
Creditex
In July, we signed an agreement to acquire Creditex's US voice
brokerage business from Intercontinental Exchange, a team of 14
brokers that provide voice and hybrid voice broking and trading
services for credit derivatives, with approximately $11m (GBP8m) of
annual revenues. This acquisition, which is subject to FINRA
approval, demonstrates our ability to leverage our scale and
capability in a challenging regulatory climate to pursue our
strategic initiatives.
IT
Later today we will be announcing a strategic IT development
that will represent a critical step forward in the provision of
this function for our business and will be a key part of our
synergy realisation from the IGBB integration.
Impact of the UK's proposed exit from the European Union
("Brexit")
The outcome of the UK's referendum on EU membership was a
momentous political event. It has already led to a change in
leadership of the Government and gave rise to exceptional
volatility in the financial markets. Although it is too early to
speculate on the long term impact of Brexit, the Company has in the
immediate aftermath seen little adverse impact and in fact the
increase in volatility has resulted in higher levels of activity
recently. The Company is well positioned to support its clients
during this period and we are grateful that they have continued to
place their confidence in us as a trusted partner.
From an FX perspective a fall in the value of Sterling will
result in a positive impact on reported revenue. In the six months
to 30 June 2016 over 80% of revenue is in non-sterling currencies
of which over 60% is in USD and over 10% is in EUR.
The risks of Brexit have been well publicised in the media and
we believe that the global and diversified nature of our operations
positions us well.
The UK and the EU are now entering uncharted waters. Once a
formal negotiation procedure has been triggered, there is
considerable uncertainty about the outcome that will be achieved.
We are following political events very closely, but any decisions
that we have to make will be based on facts and not speculation. We
have a global business with a wide European footprint, so we will
always be where our clients need us to be.
MiFID II
MiFID II fully comes into effect on 3 January 2018. We are
planning for changes to our business and operations to ensure that
we will be able to meet the regulatory deadlines. Among other
things, we expect that this will involve reconfiguration of part of
our business to make use of the new trading venue, the Organised
Trading Facility, which will attract much of the multilateral
trading currently taking place in Europe's OTC markets. This
presents us with technical and operational challenges, which we
will meet, but also an opportunity to become a leader in voice and
hybrid broking in regulated trading venues, while streamlining our
electronic platforms. For our clients, our investment in technology
and operations, in particular, will lead to greater transparency
and new ways of accessing liquidity in a MiFID II-compliant
environment.
The uncertainty surrounding Brexit has raised questions about
the implementation of MiFID II, but so far the message from
regulators has been to carry on. The implementation of MiFID II has
to take place at least a year before any expected Brexit event, and
in most planning scenarios the UK will maintain alignment with
MiFID II at least for the foreseeable future.
Regulatory matters
The Company is currently under investigation by the FCA in
relation to certain trades undertaken between 2008 and 2011,
including trades which are risk free, with no commercial rationale
or economic purpose, on which brokerage was paid, and trades on
which brokerage may have been improperly charged. As part of its
investigation, the FCA is considering the extent to which during
the relevant period (i) the Company's systems and controls were
adequate to manage the risks associated with such trades and (ii)
whether certain of the Company's managers were aware of, and/or
managed appropriately the risks associated with, the trades. The
FCA is also reviewing the circumstances surrounding a failure in
2011 to discover certain audio files and produce them to the FCA in
a timely manner. As the investigation is ongoing, any potential
liability arising from it cannot currently be quantified.
Financial Performance
Our key financial and performance indicators for the first half
of 2016 are summarised in the table below together with
comparatives from the equivalent period in 2015.
H1 2016 H1 2015** Change
---------- ---------- ----------
Broking Revenue GBP398.5m GBP388.5m -0%*
Information Sales/RMS Revenue GBP31.8m GBP27.2m +15%*
Total Revenue GBP430.3m GBP415.7m +1%*
Underlying Operating profit GBP67.0m GBP60.6m +11%
Underlying Operating margin 15.6% 14.6% +1.0% pt
Average broker headcount 1,713 1,730 -1%
Average revenue per broker (GBP'000) 233 231* +0%*
Broker compensation costs: broking
revenue 53.2% 54.5% -1.3% pts
Period end broker headcount 1,707 1,739 -2%
Period end broking support headcount 815 817 -0%
*At constant exchange rates
**H1 2015 comparative data that relates to headcount and
headcount derived metrics has been restated to ensure consistency
with the current period.
Average broker headcount during the first half of 2016 was 1%
lower than during the first half of 2015, with a 1% increase in
average revenue per broker, resulting in broking revenue being flat
year on year (at constant exchange rates).
Operating Review
The tables below analyse revenue by region and by product group,
and underlying operating profit by region, for the first half of
2016 compared with the equivalent period in 2015.
Revenue
A significant proportion of the group's activity is conducted
outside the UK and the reported revenue is therefore impacted by
the movement in the foreign exchange rates used to translate the
revenue from non-UK operations. The comparative data in the tables
below therefore show revenue for H1 2015 translated at the same
exchange rates as those used for H1 2016, with growth rates
calculated on the same basis. The revenue figures as reported for
H1 2015 are shown in Note 5 to the Condensed Consolidated Financial
Statements.
The commentary below reflects the presentation in the
tables.
Revenue by product group H1 2016 H1 2015 Change
GBPm GBPm
Energy and Commodities 117.6 104.9 +12%
Interest Rate Derivatives 70.2 77.8 -10%
Fixed Income 88.8 96.7 -8%
Treasury Products 94.3 98.6 -4%
Equities 27.6 22.3 +24%
Information Sales and RMS 31.8 27.6 +15%
-------- -------- --------
At constant exchange rates 430.3 427.9 +1%
Exchange translation (12.2)
Reported 430.3 415.7 +4%
======== ======== ========
Revenue in the first half of 2016 was 1% higher than in the
equivalent period in 2015 at constant exchange rates. The growth in
Energy and Commodities, Equities and in Information Sales and RMS,
has been partly offset by lower volumes from subdued activity in
the traditional interdealer broker product groups of Treasury
Products (FX and cash), Interest Rate Derivatives and Fixed Income.
Energy and Commodities continues to be the business's largest
product group by revenue.
Revenue from Energy and Commodities was 12% higher than in H1
2015, reflecting the benefit from the acquisition of MOAB and
higher levels of activity in the oil markets generally, and the
development of our activities in this sector in all three
regions.
Equities revenue was 24% higher than in H1 2015. Our Equities
businesses, which are primarily focused on equity derivatives,
continue to perform well in all three regions where we have
benefited from the higher levels of volatility in equity markets
compared with the same period last year, and from the investments
we have made in broadening our product coverage, including
alternative investments and real estate instruments.
Revenue from Information Sales and RMS was 15% higher than last
year's comparative period. The Information Sales business has
benefited from the growing client demand for independent data for
use in risk management, compliance and valuation, and has increased
revenue by adding new data content sets and through broadening its
customer base, notably in the energy sector. The continuing
investment in sales and marketing in the RMS business has enabled
the business to benefit from increased activity in Asia and the
anticipation of upward momentum in US short rates which has driven
participation in our USD product.
Revenue Underlying Operating
profit
---------------------------------------- ------------------------------------------
GBPm H1 2016 H1 2015 Change H1 2016 H1 2015 Change
Reported Constant Reported Constant
Europe and the
Middle East 234.2 241.9 -3% -5% 47.5 46.3 +3% +4%
Americas 134.1 117.9 +14% +8% 10.8 7.1 +52% +21%
Asia Pacific 62.0 55.9 +11% +6% 8.7 7.2 +21% +6%
-------- -------- --------- --------- -------- ---------- --------- ---------
Reported 430.3 415.7 +4% +1% 67.0 60.6 +11% +7%
======== ======== ========= ========= ======== ========== ========= =========
Underlying Operating margin by region H1 2016 H1 2015
Europe and the Middle East 20.3% 19.1%
Americas 8.1% 6.0%
Asia Pacific 14.0% 12.9%
-------------- ---------------
15.6% 14.6%
============== ===============
Europe and the Middle East
Revenue in Europe and the Middle East was 3% lower than the
comparative period as reported and 5% lower at constant exchange
rates. The broking revenue in the region was 4% lower than last
year as reported (6% lower at constant exchange rates), partly
offset by growth in revenue from Information Sales and RMS.
The broking business in the region continues to face difficult
market conditions in many of the traditional major product areas.
Revenue from government and corporate bonds, and from cash and
interest rate derivatives were all lower than last year.
Revenue from Equities was higher benefiting from volatility in
equity markets. Revenue from Energy and Commodities was slightly up
on the prior period with higher revenues from oil and other
commodities offset by lower revenue in gas products. Energy and
Commodities continues to be the largest product group by revenue in
the region, and accounts for over one third of the region's total
revenue.
Average broker headcount in the region was 3% lower than last
year with average revenue per broker also down 3%. Period end
broker headcount was 790.
The operating performance in Europe and the Middle East showed
improvements. Despite a 3% decline in revenue, operating profit
increased by 3% (4% higher at constant exchange rates) as the
operating margin improved to 20.3%. While trading volumes were
down, as commented above, broker compensation was lower as a result
of the cost improvement programme that commenced at the end of
2015, leading to an increased contribution on revenues from the
traditional products. The improved contribution margin together
with foreign exchange movements drove the 1.2% points increase in
operating margin.
Americas
Revenue in the Americas was 14% higher than the comparative
period as reported and 8% higher at constant exchange rates. The
region has benefited significantly from the recent investments in
Energy and Commodities, particularly the acquisition of MOAB in
2015, and Energy and Commodities activities now make up 19% of the
total revenue in the region.
The investments made in the Equities business over the last two
years have resulted in continued revenue growth in that area in the
period and more than offset declines in product areas impacted by
lower levels of market activity where the business is particularly
dependent on serving the traditional interdealer broker client
base, most notably corporate bonds Fixed Income as well as revenue
from Treasury Products (other than Forward FX).
Average broker headcount in the Americas was 3% lower than in
2015, with average revenue per broker 12% higher. Period end broker
headcount in the Americas was 531.
In the Americas broker compensation was reduced following the
cost improvement programme leading to improved contribution. The
MOAB business performed ahead of expectation and this performance
combined with the improved contribution margin in the US business
and favourable foreign exchange movements drove the 52% increase in
operating profit (21% higher at constant exchange rates) and the
2.1% points improvement in operating margin.
Asia Pacific
Revenue in Asia Pacific was 11% higher than last year as
reported and 6% higher at constant exchange rates, reflecting the
benefit of investments made in the region and increased revenue
from the RMS businesses operated from the region.
The broking revenue in the region has benefited from the
investment made in our Fixed Income broking capability, most
notably the hiring of a Hong Kong-based Credit and Bond desk, which
more than offset the negative impact of the continuing trend
towards risk aversion in our core customer base of banks, and the
impact of a low interest rate and flat yield curve environment in
many key markets. We continued to develop our Energy and
Commodities broking activities which now account for more than one
sixth of the region's total broking revenue.
Specific headwinds that faced the Asian business included the
reduction in activity in offshore Chinese markets. However, while
this had a direct negative impact on certain desks, we benefited
from some indirect effects such as volatility in other Asian
currencies. The impact on revenue was partially offset by the
benefit of improved market conditions in Japanese Yen forward
currency products in the first half. Revenue from Interest Rate
Derivatives was lower than last year but there was a pick-up in
Equity derivatives revenue reflecting the benefit of restructuring
of our business in the region.
Average broker headcount in the region was 7% higher than in
2015 with average revenue per broker down 3%. Period end broker
headcount in Asia Pacific was 387. Operating performance showed a
21% improvement in operating profit (6% higher at constant exchange
rates) and the 1.1% points increase in operating margin.
The performance of our Chinese associate, TP Sitico, is also a
key part of our Asian business and its increasingly positive
results are included within the share of results of associates in
the Income Statement.
Financial Review
The results for the first half of 2016 compared with those for
the first half of 2015 are shown in the tables below.
H1 2016
------------------------------------- ------------- ----------------- -----------
Exceptional
Income Statement and acquisition
GBPm Underlying related items Reported
Revenue 430.3 430.3
------------- ----------------- -----------
Operating profit 67.0 67.0
Charge relating to cost improvement
programme (5.2) (5.2)
Acquisition costs related to
IGBB (9.5) (9.5)
Acquisition related share-based
payment charge (5.5) (5.5)
Amortisation of intangible assets
arising on consolidation (0.6) (0.6)
Other acquisition and disposal
items (0.8) (0.8)
Operating profit 67.0 (21.6) 45.4
Net finance expense (6.7) (3.2) (9.9)
------------- ----------------- -----------
Profit before tax 60.3 (24.8) 35.5
Tax (10.8) 2.9 (7.9)
Share of results of associates 1.7 1.7
Minority interests (0.3) (0.3)
------------- ----------------- -----------
Earnings 50.9 (21.9) 29.0
============= ================= ===========
Average number of shares 242.7m 242.7m
Basic EPS 21.0p 11.9p
H1 2015
------------------------------------------------------------------------------------
Exceptional
Income Statement and acquisition
GBPm Underlying related items Reported
Revenue 415.7 415.7
------------- ----------------- -----------
Operating profit 60.6 60.6
Credit relating to major legal
actions 64.4 64.4
Acquisition related share-based
payment charge (5.2) (5.2)
Amortisation of intangible assets
arising on consolidation (0.7) (0.7)
Other acquisition and disposal
items (0.3) (0.3)
Operating profit 60.6 58.2 118.8
Net finance expense (7.7) (7.7)
------------- ----------------- -----------
Profit before tax 52.9 58.2 111.1
Tax (10.8) (12.9) (23.7)
Share of results of associates 1.2 1.2
Minority interests (0.3) (0.3)
------------- ----------------- -----------
Earnings 43.0 45.3 88.3
============= ================= ===========
Average number of shares 243.6m 243.6m
Basic EPS 17.7p 36.2p
Exceptional and acquisition related items
The GBP5.2m charge in H1 2016 relating to the cost improvement
programme is in respect of actions taken during the period that had
been planned but not finalised during 2015. We do not expect to
incur any further costs as part of this programme.
The GBP9.5m charge in H1 2016, relating to acquisition costs of
IGBB, reflects legal and professional costs incurred in relation to
the agreement to acquire ICAP's global hybrid voice broking and
information business.
The Company completed the acquisition of PVM on 26 November
2014. The payment to each individual vendor of their share of up to
$48m of deferred compensation (which is 'consideration' subject to
the achievement of revenue targets in the three years after
completion) is linked to their continued service with the business,
and is therefore charged through the income statement over the
three year period. The charge recognised in H1 2016 is GBP5.5m (H1
2015: GBP5.2m).
Intangible assets other than goodwill of GBP9.5m arising on the
acquisition of PVM relate to the PVM brand and the value of
customer relationships. This amount is being amortised through the
income statement over the estimated useful lives of those assets.
The amortisation charge recognised in H1 2016 is GBP0.6m (H1 2015:
GBP0.7m).
The other acquisition and disposal item in the period is an
adjustment to the deferred consideration for PVM and MOAB.
Net finance expense
The underlying net cash finance charge comprises the GBP7.0m
interest payable on the Sterling Notes, the commitment fees for the
revolving credit facility ("RCF") of GBP1.2m, GBP0.8m of
amortisation of debt issue and arrangement costs, partly offset by
other net interest income of GBP0.9m.
The underlying net non-cash finance income comprises the deemed
interest on the pension scheme net asset of GBP1.6m, partly offset
by the unwinding of discounted provisions of GBP0.2m.
The acquisition related finance expense comprises: GBP3.1m of
commitment fees and amortisation of arrangement costs relating to
the GBP470m bank bridge facility that the Company entered into in
November 2015, and GBP0.1m relating to the unwinding of the
discount on deferred consideration relating to the acquisition of
PVM.
Tax
The effective rate of tax on underlying PBT is 18.0% (H1 2015:
20.5%). The effective rate of tax reflects the estimated effective
rate for the full year. The reduction in the effective rate
reflects the benefit of increased taxable profits in the USA being
sheltered by previously unrecognised tax losses, a change in mix of
taxable profits in the period from lower tax jurisdictions and the
reduction in the UK statutory rate of corporation tax to 20.0% for
2016, 0.25% points lower than for 2015.
The tax charge on exceptional and acquisition related items
reflects the net of tax charges and tax relief recognised on those
items at the relevant rate for the jurisdiction in which the
charges are borne. No tax relief has been recognised on the
exceptional charges and credits arising in the USA in either 2016
or 2015 due to the tax losses available in that jurisdiction.
Basic EPS
The average number of shares used for the basic EPS calculation
of 242.7m reflects the 243.5m shares in issue at the beginning of
the year, less a pro rata element of the 1.7m shares that were
market purchased in March 2016 for the special and deferred equity
awards awarded to senior management plus the 0.3m shares that are
issuable when vested options are exercised, less the 0.2m shares
held throughout the year by the Employee Benefit Trust which has
waived its rights to dividends.
Dividend
In previous years the Company's interim dividend has been set at
a level equal to 50% of the final dividend for the preceding
financial year; this approach is expected to continue for 2016
subject to the mechanism described below.
The acquisition of IGBB is expected to complete towards the end
of 2016 and, therefore, the results for the full year are expected
to include a contribution from IGBB for a short period. The Board
wishes to ensure that the dividends paid to shareholders recognise
their period of ownership of the Company and in this regard notes
that the ICAP shareholders will be receiving new Tullett Prebon
shares issued at the time of completion.
The Board has declared a first interim dividend of 5.6p to be
paid on 14 November to the shareholders on the register at close of
business on 2 September.
The Board announces its intention to declare a second interim
dividend as soon as the date of completion can be determined with
reasonable certainty. The second interim dividend will be paid on
the earlier of 17 days after completion and 12 May 2017 (being the
anticipated date for payment of the final dividend in respect of
the current financial year), with a record date being at the close
of business on the earlier of the last eligible business day
preceding completion, and 28 April 2017 (being the anticipated
record date for this year's final dividend). The amount of the
second interim dividend will be based on the expected annual
dividend for the current financial year of 16.85p but apportioned
so as to reflect the proportion of the financial year that has
elapsed prior to completion, less the amount of the first interim
dividend.
The Board expects that the final dividend for the year will be
16.85p less the amounts of the first and second interim dividends,
and will be paid on 12 May 2017.
Exchange rates
The income statements and balance sheets of the Group's
businesses whose functional currency is not GBP are translated into
sterling at average and period end exchange rates respectively. The
most significant exchange rates for the group are the US dollar,
the Euro, the Singapore dollar and the Japanese Yen. Average and
period end exchange rates used in the preparation of the financial
statements are shown below.
Average Period End
---------------------------- ----------------------------
H1 2016 H1 2015 H2 2015 30 Jun 31 Dec 30 Jun
2016 2015 2015
US dollar $1.44 $1.53 $1.54 $1.34 $1.47 $1.57
Euro EUR1.30 EUR1.36 EUR1.40 EUR1.20 EUR1.36 EUR1.41
Singapore dollar S$2.00 S$2.06 S$2.14 S$1.80 S$2.09 S$2.12
Japanese Yen Yen164 Yen183 Yen188 Yen137 Yen177 Yen192
Cash flow
H1 2016 H1 2015
GBPm GBPm
Underlying Operating profit 67.0 60.6
Share-based compensation and other non-cash
items 2.9 0.3
Depreciation and amortisation 7.8 7.4
EBITDA 77.7 68.3
Capital expenditure (net of disposals) (5.1) (6.3)
Decrease/(increase) in initial contract
prepayment 0.6 (2.2)
Other working capital (28.8) (13.7)
-------- --------
Operating cash flow 44.4 46.1
Exceptional items - cost improvement programme (17.0) -
2015
Exceptional items - cost improvement programme
2014 (0.6) (3.8)
Exceptional items - restructuring 2011/2012 (0.2) (0.2)
Exceptional items - major legal actions
net cash flow - 64.4
Acquisition costs related to IGBB (9.5) -
Share award purchases (6.2) -
Interest (1.9) (2.1)
Taxation (10.7) (4.6)
Dividends received from associates/(paid) 1.9 -
to minorities
Acquisition consideration/investments
(net of disposals) - (0.5)
Cash flow 0.2 99.3
======== ========
Capital expenditure of GBP5.1m includes the development of
electronic platforms and 'straight through processing' technology,
and investment in IT and communications infrastructure.
Initial contract payments in 2016 were broadly in line with the
amortisation charge.
The working capital outflow reflects the higher level of trade
receivables and settlement balances at June compared with the level
at the previous year end, due to the higher level of business
activity towards the end of the half year compared with that
towards the year end, and the reduction in bonus accruals which are
at their highest at the year end.
During the first half of 2016 the group made GBP17.0m of cash
payments relating to actions taken under the 2015 cost improvement
programme, GBP0.6m relating to the 2014 cost improvement programme,
and GBP0.2m relating to the 2011/12 restructuring programme.
The GBP9.5m of costs relating to the acquisition of IGBB are in
line with the charge in the income statement.
The Company incurred GBP6.2m of costs relating to the purchase
of its own shares to satisfy deferred equity awards made to senior
management in the period.
Tax payments in the period of GBP10.7m include GBP8.7m paid in
the UK, an increase compared with the prior year largely due to the
phasing of payments relating to the BGC receipt in 2015. Tax
payments in the United States continue to be at low levels
reflecting the use of tax losses.
The movement in cash and debt is summarised below.
GBPm Cash Debt Net
At 31 December 2015 379.2 (220.2) 159.0
Cash flow 0.2 - 0.2
Dividends (27.2) - (27.2)
Bank facility fees (2.9) - (2.9)
Amortisation of debt issue costs - (0.3) (0.3)
Effect of movement in exchange
rates 20.7 - 20.7
At 30 June 2016 370.0 (220.5) 149.5
======= ======== =======
Debt Finance
The composition of the group's outstanding debt is summarised
below.
At 30 At 31 At 30
Jun Dec Jun
GBPm 2016 2015 2015
7.04% Sterling Notes July 2016 141.1 141.1 141.1
5.25% Sterling Notes June 2019 80.0 80.0 80.0
Unamortised debt issue costs (0.6) (0.9) (1.1)
220.5 220.2 220.0
====== ====== ======
The Company drew down GBP140m of its GBP250m committed RCF in
July to repay the GBP141.1m Sterling Notes on their maturity. This
drawing will be repaid when the acquisition of IGBB completes, at
which time the Company will draw down the committed GBP470m bank
bridge facility which it entered into in November 2015. The bank
bridge facility will also be used to repay the GBP330m debt that
will be acquired with IGBB.
The GBP250m revolving credit facility matures in April 2019 and
the bank bridge facility has a final maturity in December 2017.
Outlook
We achieved a good overall financial performance in the first
half of 2016 against the backdrop of a trading environment that
continues to be challenging and subdued client demand. Our
strategic review concluded that the central role played by
interdealer brokers at the heart of the global wholesale OTC
markets remains secure, but a number of our traditional product
areas continue to show declines.
It is not possible to predict when the structural and cyclical
factors currently adversely affecting the interdealer broker
industry will ease, or when the level of activity in the wholesale
OTC financial markets may increase. Our recent performance has
benefited from the investment we have made in the Energy and
Commodities sectors where we serve a more diverse and larger client
base and where markets, particularly in oil and oil related
financial instruments, have remained buoyant but this level of
activity may not persist.
We will continue to invest in the business' capabilities to
identify and implement business initiatives and roll out our
cultural, legal, compliance and risk governance frameworks to
deliver on our commitment to instil the highest standards of
conduct. These investments coupled with increasing regulatory costs
continue to bring pressure on our margins. However, we believe they
make us a more robust and attractive service provider for our
clients.
We will look to invest in opportunities to grow our revenue and
raise the quality and quantity of our earnings through
diversification of the client base. We continue to pursue our goal
to become the world's most trusted source of liquidity in hybrid
OTC markets and the best operator in global hybrid voice broking.
The agreement for the acquisition of IGBB provides a unique
opportunity to accelerate the delivery of our strategy, and we are
in the process of planning the integration of the two businesses to
be implemented after completion of the transaction which we expect
will be later this year.
Condensed Consolidated Income Statement
for the six months ended 30 June 2016
Six months ended Underlying Exceptional Total
30 June 2016 (unaudited) and acquisition
related
items
Notes GBPm GBPm GBPm
Revenue 5 430.3 - 430.3
---------------------------------- ------ ----------- ----------------- --------
Administrative expenses (365.4) (21.6) (387.0)
---------------------------------- ------ ----------- ----------------- --------
Other operating income 7 2.1 - 2.1
---------------------------------- ------ ----------- ----------------- --------
Operating profit 5,6 67.0 (21.6) 45.4
---------------------------------- ------ ----------- ----------------- --------
Finance income 8 2.7 - 2.7
---------------------------------- ------ ----------- ----------------- --------
Finance costs 9 (9.4) (3.2) (12.6)
---------------------------------- ------ ----------- ----------------- --------
Profit before tax 60.3 (24.8) 35.5
---------------------------------- ------ ----------- ----------------- --------
Taxation (10.8) 2.9 (7.9)
---------------------------------- ------ ----------- ----------------- --------
Profit of consolidated companies 49.5 (21.9) 27.6
---------------------------------- ------ ----------- ----------------- --------
Share of results of associates 1.7 - 1.7
---------------------------------- ------ ----------- ----------------- --------
Profit for the period 51.2 (21.9) 29.3
================================== ====== =========== ================= ========
Attributable to:
---------------------------------- ------ ----------- ----------------- --------
Equity holders of the parent 50.9 (21.9) 29.0
---------------------------------- ------ ----------- ----------------- --------
Minority interests 0.3 - 0.3
---------------------------------- ------ ----------- ----------------- --------
51.2 (21.9) 29.3
================================== ====== =========== ================= ========
Earnings per share
---------------------------------- ------ ----------- ----------------- --------
- Basic 10 21.0p 11.9p
---------------------------------- ------ ----------- ----------------- --------
- Diluted 10 20.1p 11.5p
---------------------------------- ------ ----------- ----------------- --------
Six months ended Underlying Exceptional Total
30 June 2015 (unaudited) and acquisition
related
items
Notes GBPm GBPm GBPm
Revenue 5 415.7 - 415.7
---------------------------------- ------ ----------- ----------------- --------
Administrative expenses (358.2) (8.9) (367.1)
---------------------------------- ------ ----------- ----------------- --------
Other operating income 7 3.1 67.1 70.2
---------------------------------- ------ ----------- ----------------- --------
Operating profit 5,6 60.6 58.2 118.8
---------------------------------- ------ ----------- ----------------- --------
Finance income 8 1.9 - 1.9
---------------------------------- ------ ----------- ----------------- --------
Finance costs 9 (9.6) - (9.6)
---------------------------------- ------ ----------- ----------------- --------
Profit before tax 52.9 58.2 111.1
---------------------------------- ------ ----------- ----------------- --------
Taxation (10.8) (12.9) (23.7)
---------------------------------- ------ ----------- ----------------- --------
Profit of consolidated companies 42.1 45.3 87.4
---------------------------------- ------ ----------- ----------------- --------
Share of results of associates 1.2 - 1.2
---------------------------------- ------ ----------- ----------------- --------
Profit for the period 43.3 45.3 88.6
================================== ====== =========== ================= ========
Attributable to:
---------------------------------- ------ ----------- ----------------- --------
Equity holders of the parent 43.0 45.3 88.3
---------------------------------- ------ ----------- ----------------- --------
Minority interests 0.3 - 0.3
---------------------------------- ------ ----------- ----------------- --------
43.3 45.3 88.6
================================== ====== =========== ================= ========
Earnings per share
---------------------------------- ------ ----------- ----------------- --------
- Basic 10 17.7p 36.2p
---------------------------------- ------ ----------- ----------------- --------
- Diluted 10 17.4p 35.8p
---------------------------------- ------ ----------- ----------------- --------
Condensed Consolidated Income Statement
for the six months ended 30 June 2016
Year ended Underlying Exceptional Total
31 December 2015 and
acquisition
related
items
Notes GBPm GBPm GBPm
Revenue 5 796.0 - 796.0
---------------------------------- ------ ----------- ------------- --------
Administrative expenses (693.9) (53.3) (747.2)
---------------------------------- ------ ----------- ------------- --------
Other operating income 7 5.8 67.3 73.1
---------------------------------- ------ ----------- ------------- --------
Operating profit 5,6 107.9 14.0 121.9
---------------------------------- ------ ----------- ------------- --------
Finance income 8 4.1 - 4.1
---------------------------------- ------ ----------- ------------- --------
Finance costs 9 (18.3) (2.0) (20.3)
---------------------------------- ------ ----------- ------------- --------
Profit before tax 93.7 12.0 105.7
---------------------------------- ------ ----------- ------------- --------
Taxation (17.5) (7.5) (25.0)
---------------------------------- ------ ----------- ------------- --------
Profit of consolidated companies 76.2 4.5 80.7
---------------------------------- ------ ----------- ------------- --------
Share of results of associates 2.6 - 2.6
---------------------------------- ------ ----------- ------------- --------
Profit for the year 78.8 4.5 83.3
================================== ====== =========== ============= ========
Attributable to:
---------------------------------- ------ ----------- ------------- --------
Equity holders of the parent 78.4 4.5 82.9
---------------------------------- ------ ----------- ------------- --------
Minority interests 0.4 - 0.4
---------------------------------- ------ ----------- ------------- --------
78.8 4.5 83.3
================================== ====== =========== ============= ========
Earnings per share
---------------------------------- ------ ----------- ------------- --------
- Basic 10 32.2p 34.0p
---------------------------------- ------ ----------- ------------- --------
- Diluted 10 31.5p 33.3p
---------------------------------- ------ ----------- ------------- --------
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
(unaudited) (unaudited)
GBPm GBPm GBPm
------------------------------------- --- ------------- ------------- --------------
Profit for the period 29.3 88.6 83.3
------------------------------------------ ------------- ------------- --------------
Items that will not be reclassified
subsequently to profit or loss:
------------------------------------- --- ------------- ------------- --------------
Remeasurement of the defined
benefit pension scheme 26.4 (6.0) 24.5
------------------------------------------ ------------- ------------- --------------
Taxation (charge)/credit relating
to items not reclassified (9.2) 2.1 (8.6)
------------------------------------------ ------------- ------------- --------------
17.2 (3.9) 15.9
----------------------------------------- ------------- ------------- --------------
Items that may be reclassified
subsequently to profit or loss:
------------------------------------- --- ------------- ------------- --------------
Revaluation of investments 0.8 0.4 0.1
------------------------------------------ ------------- ------------- --------------
Effect of changes in exchange
rates on translation of foreign
operations 34.3 (5.3) 8.8
------------------------------------------ ------------- ------------- --------------
Taxation charge relating to items
that may be reclassified (0.2) (0.4) (0.5)
------------------------------------------ ------------- ------------- --------------
34.9 (5.3) 8.4
----------------------------------------- ------------- ------------- --------------
Other comprehensive income for
the period 52.1 (9.2) 24.3
------------------------------------------ ------------- ------------- --------------
Total comprehensive income for
the period 81.4 79.4 107.6
========================================== ============= ============= ==============
Attributable to:
------------------------------------- --- ------------- ------------- --------------
Equity holders of the parent 80.9 79.2 107.1
------------------------------------------ ------------- ------------- --------------
Minority interests 0.5 0.2 0.5
------------------------------------------ ------------- ------------- --------------
81.4 79.4 107.6
========================================= ============= ============= ==============
Condensed Consolidated Balance Sheet
as at 30 June 2016
30 June 30 June 31 December
2016 2015 2015
(unaudited) (unaudited)
GBPm GBPm GBPm
--------------------------------------- --- ------------- ------------- --------------------------
Non-current assets
--------------------------------------- --- ------------- ------------- --------------------------
Intangible assets arising on
consolidation 372.1 334.3 357.4
-------------------------------------------- ------------- ------------- --------------------------
Other intangible assets 22.0 19.7 22.1
-------------------------------------------- ------------- ------------- --------------------------
Property, plant and equipment 26.7 28.3 27.4
-------------------------------------------- ------------- ------------- --------------------------
Interest in associates 6.2 5.9 6.0
-------------------------------------------- ------------- ------------- --------------------------
Investments 9.9 8.5 8.5
-------------------------------------------- ------------- ------------- --------------------------
Deferred tax assets 3.6 2.2 2.4
-------------------------------------------- ------------- ------------- --------------------------
Defined benefit pension scheme 115.8 56.9 88.2
-------------------------------------------- ------------- ------------- --------------------------
556.3 455.8 512.0
------------------------------------------- ------------- ------------- --------------------------
Current assets
--------------------------------------- --- ------------- ------------- --------------------------
Trade and other receivables 12,919.0 10,161.3 2,639.2
-------------------------------------------- ------------- ------------- --------------------------
Financial assets 17.7 16.6 20.3
-------------------------------------------- ------------- ------------- --------------------------
Cash and cash equivalents 352.3 348.0 358.9
-------------------------------------------- ------------- ------------- --------------------------
13,289.0 10,525.9 3,018.4
------------------------------------------- ------------- ------------- --------------------------
Total assets 13,845.3 10,981.7 3,530.4
============================================ ============= ============= ==========================
Current liabilities
--------------------------------------- --- ------------- ------------- --------------------------
Trade and other payables (12,927.6) (10,161.9) (2,666.7)
-------------------------------------------- ------------- ------------- --------------------------
Interest bearing loans and borrowings (141.1) - (140.9)
-------------------------------------------- ------------- ------------- --------------------------
Current tax liabilities (15.0) (30.5) (17.3)
-------------------------------------------- ------------- ------------- --------------------------
Short term provisions (9.6) (3.6) (21.3)
-------------------------------------------- ------------- ------------- --------------------------
(13,093.3) (10,196.0) (2,846.2)
------------------------------------------- ------------- ------------- --------------------------
Net current assets 195.7 329.9 172.2
============================================ ============= ============= ==========================
Non-current liabilities
--------------------------------------- --- ------------- ------------- --------------------------
Interest bearing loans and borrowings (79.4) (220.0) (79.3)
-------------------------------------------- ------------- ------------- --------------------------
Deferred tax liabilities (43.1) (22.0) (33.2)
-------------------------------------------- ------------- ------------- --------------------------
Long term provisions (7.3) (8.5) (7.8)
-------------------------------------------- ------------- ------------- --------------------------
Other long term payables (24.6) (14.6) (22.2)
-------------------------------------------- ------------- ------------- --------------------------
(154.4) (265.1) (142.5)
------------------------------------------- ------------- ------------- --------------------------
Total liabilities (13,247.7) (10,461.1) (2,988.7)
============================================ ============= ============= ==========================
Net assets 597.6 520.6 541.7
============================================ ============= ============= ==========================
Equity
--------------------------------------- --- ------------- ------------- --------------------------
Share capital 60.9 60.9 60.9
-------------------------------------------- ------------- ------------- --------------------------
Share premium account 17.1 17.1 17.1
-------------------------------------------- ------------- ------------- --------------------------
Merger reserve 178.5 178.5 178.5
-------------------------------------------- ------------- ------------- --------------------------
Other reserves (1,136.6) (1,178.6) (1,165.1)
-------------------------------------------- ------------- ------------- --------------------------
Retained earnings 1,475.6 1,441.0 1,448.6
-------------------------------------------- ------------- ------------- --------------------------
Equity attributable to equity
holders of the parent 595.5 518.9 540.0
-------------------------------------------- ------------- ------------- --------------------------
Minority interests 2.1 1.7 1.7
-------------------------------------------- ------------- ------------- --------------------------
Total equity 597.6 520.6 541.7
============================================ ============= ============= ==========================
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2016
Equity attributable to equity holders of the parent
Share Reverse Re- Hedging
Share premium Merger acquisition valuation and Own Retained Minority Total
capital account reserve reserve reserve translation shares earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
30 June 2016
(unaudited)
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Balance at
1 January
2016 60.9 17.1 178.5 (1,182.3) 1.4 15.9 (0.1) 1,448.6 540.0 1.7 541.7
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Profit for the
period - - - - - - - 29.0 29.0 0.3 29.3
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Other
comprehensive
income for
the
period - - - - 0.8 33.9 - 17.2 51.9 0.2 52.1
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Total
comprehensive
income for
the
period - - - - 0.8 33.9 - 46.2 80.9 0.5 81.4
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Purchase of
own
shares - - - - - - (6.2) - (6.2) - (6.2)
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Dividends paid - - - - - - - (27.2) (27.2) (0.1) (27.3)
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Credit arising
on
share-based
payment
awards - - - - - - - 8.0 8.0 - 8.0
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Balance at
30 June 2016 60.9 17.1 178.5 (1,182.3) 2.2 49.8 (6.3) 1,475.6 595.5 2.1 597.6
=============== ======== ======== ======== ============ ========= =========== ====== ========== ======= ========== =======
30 June 2015
(unaudited)
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Balance at
1 January
2015 60.9 17.1 178.5 (1,182.3) 1.4 7.6 (0.1) 1,378.8 461.9 1.6 463.5
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Profit for the
period - - - - - - - 88.3 88.3 0.3 88.6
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Other
comprehensive
income for
the
period - - - - 0.4 (5.6) - (3.9) (9.1) (0.1) (9.2)
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Total
comprehensive
income for
the
period - - - - 0.4 (5.6) - 84.4 79.2 0.2 79.4
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Dividends paid - - - - - - - (27.4) (27.4) (0.1) (27.5)
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Credit arising
on
share-based
payment
awards - - - - - - - 5.2 5.2 - 5.2
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Balance at
30 June 2015 60.9 17.1 178.5 (1,182.3) 1.8 2.0 (0.1) 1,441.0 518.9 1.7 520.6
=============== ======== ======== ======== ============ ========= =========== ====== ========== ======= ========== =======
31 December
2015
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Balance at
1 January
2015 60.9 17.1 178.5 (1,182.3) 1.4 7.6 (0.1) 1,378.8 461.9 1.6 463.5
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Profit for the
year - - - - - - - 82.9 82.9 0.4 83.3
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Other
comprehensive
income for
the
year - - - - - 8.3 - 15.9 24.2 0.1 24.3
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Total
comprehensive
income for
the
year - - - - - 8.3 - 98.8 107.1 0.5 107.6
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Dividends paid - - - - - - - (41.0) (41.0) (0.4) (41.4)
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Credit arising
on
share-based
payment
awards - - - - - - - 12.0 12.0 - 12.0
--------------- -------- -------- -------- ------------ --------- ----------- ------ ---------- ------- ---------- -------
Balance at
31 December
2015 60.9 17.1 178.5 (1,182.3) 1.4 15.9 (0.1) 1,448.6 540.0 1.7 541.7
=============== ======== ======== ======== ============ ========= =========== ====== ========== ======= ========== =======
Condensed Consolidated Cash Flow Statement
for the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
(unaudited) (unaudited)
Notes GBPm GBPm GBPm
--------------------------------------- ------ -------------------- -------------------- --------------------
Net cash from operating activities 12 7.3 105.2 144.0
--------------------------------------- ------ -------------------- -------------------- --------------------
Investing activities
--------------------------------------- ------ -------------------- -------------------- --------------------
Sale/(purchase) of financial
assets 5.7 (6.8) (10.7)
--------------------------------------- ------ -------------------- -------------------- --------------------
Sale/(purchase) of investments 0.1 (0.4) (0.4)
--------------------------------------- ------ -------------------- -------------------- --------------------
Interest received 1.1 0.8 1.8
--------------------------------------- ------ -------------------- -------------------- --------------------
Dividends from associates 2.0 0.1 1.5
--------------------------------------- ------ -------------------- -------------------- --------------------
Expenditure on intangible assets (3.6) (3.1) (9.3)
--------------------------------------- ------ -------------------- -------------------- --------------------
Purchase of property, plant and
equipment (1.5) (3.2) (4.6)
--------------------------------------- ------ -------------------- -------------------- --------------------
Investment in subsidiaries (0.1) - (11.6)
--------------------------------------- ------ -------------------- -------------------- --------------------
Cash acquired with acquisitions - - 1.7
--------------------------------------- ------ -------------------- -------------------- --------------------
Cash sold with subsidiaries - (0.3) (0.3)
--------------------------------------- ------ -------------------- -------------------- --------------------
Net cash arising from investment
activities 3.7 (12.9) (31.9)
--------------------------------------- ------ -------------------- -------------------- --------------------
Financing activities
--------------------------------------- ------ -------------------- -------------------- --------------------
Dividends paid 11 (27.2) (27.4) (41.0)
--------------------------------------- ------ -------------------- -------------------- --------------------
Dividends paid to minority interests (0.1) (0.1) (0.4)
--------------------------------------- ------ -------------------- -------------------- --------------------
Purchase of own shares (6.2) - -
--------------------------------------- ------ -------------------- -------------------- --------------------
Debt issue and bank facility
arrangement costs (1.7) (1.7) (4.3)
--------------------------------------- ------ -------------------- -------------------- --------------------
Net cash used in financing activities (35.2) (29.2) (45.7)
--------------------------------------- ------ -------------------- -------------------- --------------------
Net (decrease)/increase in cash
and cash equivalents (24.2) 63.1 66.4
--------------------------------------- ------ -------------------- -------------------- --------------------
Cash and cash equivalents at
the beginning of the period 358.9 287.1 287.1
--------------------------------------- ------ -------------------- -------------------- --------------------
Effect of foreign exchange rate
changes 17.6 (2.2) 5.4
--------------------------------------- ------ -------------------- -------------------- --------------------
Cash and cash equivalents at
the end of the period 13 352.3 348.0 358.9
======================================= ====== ==================== ==================== ====================
Notes to the Condensed Consolidated Financial Statements
for the six months ended 30 June 2016
1. General information
The condensed consolidated financial information for the six
months ended 30 June 2016 has been prepared in accordance with the
Disclosure and Transparency Rules ('DTR') of the Financial Conduct
Authority and with IAS 34 'Interim Financial Reporting' as adopted
by the European Union ('EU'). This condensed financial information
should be read in conjunction with the statutory Group Financial
Statements for the year ended 31 December 2015 which were prepared
in accordance with International Financial Reporting Standards
('IFRSs') as adopted by the EU.
The statutory Group Financial Statements for the year ended 31
December 2015 have been reported on by the Company's auditors,
Deloitte LLP, and have been delivered to the Registrar of
Companies. The report of the auditors on those financial statements
was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
The condensed consolidated financial information for the six
months ended 30 June 2016 has been prepared using accounting
policies consistent with IFRSs. The interim information, together
with the comparative information contained in this report for the
year ended 31 December 2015, does not constitute statutory
financial statements within the meaning of section 434 of the
Companies Act 2006. The financial information is unaudited but has
been reviewed by the Company's auditor, Deloitte LLP, and their
report appears at the end of the Interim Management Report.
2. Accounting policies
The Condensed Consolidated Financial Statements have been
prepared on the historical cost basis, except for the revaluation
of certain financial instruments. The Group has adequate financial
resources to meet the Group's ongoing obligations. Accordingly, the
going concern basis continues to be used in preparing these
Condensed Consolidated Financial Statements. The Condensed
Consolidated Financial Statements are rounded to the nearest
hundred thousand pounds (expressed as millions to one decimal place
- GBPm), except where otherwise indicated.
The same accounting policies, presentation and methods of
computation have been followed in the Condensed Consolidated
Financial Statements as applied in the Group's latest annual
audited Group Financial Statements for the year ended 31 December
2015, except as described below.
The Group has adopted Amendments to IAS 1 'Presentation of
financial statements' regarding disclosures, the Annual
Improvements to IFRSs (2012-2014 Cycle), the Amendments to IAS 16
and IAS 38 regarding the clarification of acceptable methods of
depreciation and amortisation, and the Amendments to IFRS 11
regarding the accounting for acquisition of interests in Joint
Operations. The adoption of these amendments has had no impact on
the Condensed Consolidated Financial Statements.
3. Related party transactions
Related party transactions are described in Note 36 to the 2015
statutory Group Financial Statements. There have been no material
changes in the nature or value of related party transactions in the
six months ended 30 June 2016.
4. Principal risks and uncertainties
Robust risk management is fundamental to the achievement of the
Group's objectives. The Group identifies the risks to which it is
exposed as a result of its business objectives, strategy and
operating model, and categorises those risks into three overarching
risk categories: Operational Risk, Financial Risk, and Strategic
and Business Risk. The risks identified within each of these
categories, along with an explanation of how the Group seeks to
manage or mitigate these risk exposures can be found on pages 21 to
24 of the latest Annual Report which is available at
www.tullettprebon.com. The Directors do not consider that the
principal risks and uncertainties have changed since the
publication of the Annual Report for the year ended 31 December
2015. Risks and uncertainties which could have a material impact on
the Group's performance over the remaining six months of the
financial year are discussed in the Interim Management Report.
5. Segmental analysis
Products and services from which reportable segments derive
their revenues
The Group is organised by geographic reporting segments which
are used for the purposes of resource allocation and assessment of
segmental performance by Group management. These are the Group's
reportable segments under IFRS 8 'Operating Segments'.
Each geographic reportable segment derives revenue from Energy
and Commodities, Interest Rate Derivatives, Fixed Income, Treasury
Products, Equities, and Information Sales and Risk Management
Services.
Information regarding the Group's operating segments is reported
below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Revenue
Europe and the Middle East 234.2 241.9 455.3
Americas 134.1 117.9 234.5
Asia Pacific 62.0 55.9 106.2
----------- ----------- -------------
430.3 415.7 796.0
=========== =========== =============
Operating profit
Europe and the Middle East 47.5 46.3 81.2
Americas 10.8 7.1 14.9
Asia Pacific 8.7 7.2 11.8
----------- ----------- -------------
Underlying operating profit 67.0 60.6 107.9
Exceptional and acquisition related
items (Note 6) (21.6) 58.2 14.0
Reported operating profit 45.4 118.8 121.9
Finance income 2.7 1.9 4.1
Finance costs (12.6) (9.6) (20.3)
Profit before tax 35.5 111.1 105.7
Taxation (7.9) (23.7) (25.0)
----------- ----------- -------------
Profit of consolidated companies 27.6 87.4 80.7
Share of results of associates 1.7 1.2 2.6
----------- ----------- -------------
Profit for the period 29.3 88.6 83.3
=========== =========== =============
There are no inter-segment sales included in segment
revenue.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Revenue by product group GBPm GBPm GBPm
Energy and Commodities 117.6 101.2 204.3
Interest Rate Derivatives 70.2 76.2 135.3
Fixed Income 88.8 93.6 171.2
Treasury Products 94.3 96.0 185.0
Equities 27.6 21.5 46.3
Information Sales and Risk Management
Services 31.8 27.2 53.9
----------- ----------- -------------
430.3 415.7 796.0
=========== =========== =============
Other segmental information
30 June 30 June 31 December
2016 2015 2015
Segment assets GBPm GBPm GBPm
Europe and the Middle East - UK 7,711.2 5,071.0 1,436.8
Europe and the Middle East - Other 99.2 40.1 26.7
Americas 5,937.3 5,793.2 1,987.9
Asia Pacific 97.6 77.4 79.0
--------- --------- ------------
13,845.3 10,981.7 3,530.4
========= ========= ============
30 June 30 June 31 December
2016 2015 2015
Segment liabilities GBPm GBPm GBPm
Europe and the Middle East - UK 7,305.3 4,693.3 1,059.2
Europe and the Middle East - Other 94.3 37.5 21.6
Americas 5,801.9 5,690.9 1,867.0
Asia Pacific 46.2 39.4 40.9
--------- --------- ------------
13,247.7 10,461.1 2,988.7
========= ========= ============
Segmental assets and liabilities exclude all inter-segment
balances.
6. Exceptional and acquisition related items
Exceptional and acquisition related items comprise:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Net credit relating to major legal
actions - 64.4 64.4
Charge relating to cost improvement
programmes (5.2) - (25.7)
----------- ----------- -------------
(5.2) 64.4 38.7
Acquisition costs relating to IGBB (9.5) - (12.1)
Other acquisition costs - - (0.5)
Acquisition related share-based payment
charge (5.5) (5.2) (10.5)
Amortisation of intangible assets
arising on consolidation (0.6) (0.7) (1.2)
Loss on disposal of subsidiary undertakings - (0.3) (0.6)
Adjustments to acquisition consideration (0.8) - 0.2
----------- ----------- -------------
(21.6) 58.2 14.0
Finance costs (Note 9) (3.2) - (2.0)
----------- ----------- -------------
(24.8) 58.2 12.0
=========== =========== =============
7. Other operating income
Other operating income represents receipts such as rental
income, royalties, insurance proceeds, settlements from competitors
and business relocation grants. Costs associated with such items
are included in administrative expenses.
8. Finance income
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Interest receivable and similar income 1.1 0.8 1.8
Deemed interest arising on the defined
benefit pension scheme surplus 1.6 1.1 2.3
2.7 1.9 4.1
=========== =========== =============
9. Finance costs
Underlying Acquisition Six months Six months
related ended ended
30 June 30 June
2016 2015
GBPm GBPm GBPm GBPm
Interest and fees payable
on bank facilities 1.2 1.4 2.6 0.8
Interest payable on Sterling
Notes July 2016 4.9 - 4.9 4.9
Interest payable on Sterling
Notes June 2019 2.1 - 2.1 2.1
Other interest payable 0.2 - 0.2 0.2
Amortisation of debt issue
and bank facility costs 0.8 1.7 2.5 1.1
----------- ------------ ----------- -----------
Total borrowing costs 9.2 3.1 12.3 9.1
Unwind of discounted liabilities
and provisions 0.2 0.1 0.3 0.5
9.4 3.2 12.6 9.6
=========== ============ =========== ===========
Underlying Acquisition Year
related ended
31 December
2015
GBPm GBPm GBPm
Interest and fees payable
on bank facilities 1.6 0.6 2.2
Interest payable on Sterling
Notes July 2016 9.9 - 9.9
Interest payable on Sterling
Notes June 2019 4.2 - 4.2
Other interest payable 0.4 - 0.4
Amortisation of debt issue
and bank facility costs 1.8 1.1 2.9
----------- ------------ -------------
Total borrowing costs 17.9 1.7 19.6
Unwind of discounted liabilities
and provisions 0.4 0.3 0.7
18.3 2.0 20.3
=========== ============ =============
10. Earnings per share
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Basic - underlying 21.0p 17.7p 32.2p
Diluted - underlying 20.1p 17.4p 31.5p
Basic earnings per share 11.9p 36.2p 34.0p
Diluted earnings per share 11.5p 35.8p 33.3p
The calculation of basic and diluted earnings per share is based
on the following number of shares:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
No. (m) No. (m) No. (m)
Basic weighted average shares 242.7 243.6 243.6
Contingently issuable shares 9.4 3.3 5.1
Issuable on vesting of share-based 1.0 - -
deferred bonus plans
----------- ----------- -------------
Diluted weighted average shares 253.1 246.9 248.7
=========== =========== =============
The earnings used in the calculation of underlying, basic and
diluted earnings per share are set out below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Profit for the period 29.3 88.6 83.3
Minority interests (0.3) (0.3) (0.4)
----------- ----------- -------------
Earnings 29.0 88.3 82.9
Exceptional and acquisition related
items (Note 6) 24.8 (58.2) (12.0)
Tax on exceptional and acquisition
related items (2.9) 12.9 7.5
----------- ----------- -------------
Underlying earnings 50.9 43.0 78.4
=========== =========== =============
11. Dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Amounts recognised as distributions
to
equity holders in the period:
Final dividend for the year ended
31 December 2015
of 11.25p per share 27.2 - -
Interim dividend for the year ended
31 December 2015
of 5.6p per share - - 13.6
Final dividend for the year ended
31 December 2014
of 11.25p per share - 27.4 27.4
27.2 27.4 41.0
=========== =========== =============
The Board has recommended the payment of interim dividends to
shareholders, the basis for which is set out on page 14.
As at 30 June 2016 the Tullett Prebon plc Employee Benefit Trust
2007 held 1,927,575 ordinary shares (2015: 202,029 ordinary shares)
and has waived its rights to dividends.
12. Reconciliation of operating result to net cash from operating activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Operating profit 45.4 118.8 121.9
Adjustments for:
- Share-based compensation expense 2.5 - 1.5
- Pension scheme's administration
costs 0.4 0.3 0.7
- Depreciation of property, plant
and equipment 3.9 3.8 7.7
- Amortisation of intangible assets 3.9 3.6 7.3
- Acquisition related share-based
payment charge 5.5 5.2 10.5
* Amortisation of intangible assets arising on
consolidation 0.6 0.7 1.2
* Loss on disposal of property, plant and equipment - - 0.2
* Loss on derecognition of intangible assets - - 0.1
- Loss on disposal of subsidiary
undertaking - 0.2 0.2
- Remeasurement of deferred consideration 0.8 - 0.4
(Decrease)/increase in provisions
for liabilities and charges (14.1) (4.3) 11.5
Decrease in non-current liabilities (0.2) (0.5) (0.8)
----------- ----------- -------------
Operating cash flows before movement
in working capital 48.7 127.8 162.4
(Increase)/decrease in trade and
other receivables (8.9) (10.8) 0.1
(Increase)/decrease in net settlement
balances (4.1) (0.4) 1.3
(Decrease)/increase in trade and
other payables (13.6) (3.9) 16.5
----------- ----------- -------------
Cash generated from operations 22.1 112.7 180.3
Income taxes paid (10.7) (4.6) (19.5)
Interest paid (4.1) (2.9) (16.8)
Net cash from operating activities 7.3 105.2 144.0
=========== =========== =============
13. Analysis of net funds
1 January Cash Non-cash Exchange 30 June
2016 flow items differences 2016
GBPm GBPm GBPm GBPm GBPm
Cash 296.7 (18.7) - 14.3 292.3
Cash equivalents 60.2 (5.5) - 3.3 58.0
Client settlement
money 2.0 - - - 2.0
Cash and cash equivalents 358.9 (24.2) - 17.6 352.3
Financial assets 20.3 (5.7) - 3.1 17.7
---------- ------- --------- ------------- --------
Total funds 379.2 (29.9) - 20.7 370.0
========== ======= ========= ============= ========
Notes due within
one year (140.9) - (0.2) - (141.1)
Notes due after one
year (79.3) - (0.1) - (79.4)
---------- ------- --------- ------------- --------
(220.2) - (0.3) - (220.5)
========== ======= ========= ============= ========
Total net funds 159.0 (29.9) (0.3) 20.7 149.5
========== ======= ========= ============= ========
Cash and cash equivalents comprise cash at bank and other short
term highly liquid investments with an original maturity of three
months or less. Cash at bank earns interest at floating rates based
on daily bank deposit rates. Short term deposits are made for
varying periods of between one day and three months depending on
the immediate cash requirements of the Group, and earn interest at
the respective short term deposit rates.
Financial assets comprise short term government securities and
term deposits held with banks and clearing organisations.
14. Regulatory matters
The Company is currently under investigation by the FCA in
relation to certain trades undertaken between 2008 and 2011,
including trades which are risk free, with no commercial rationale
or economic purpose, on which brokerage is paid, and trades on
which brokerage may have been improperly charged. As part of its
investigation, the FCA is considering the extent to which during
the relevant period (i) the Company's systems and controls were
adequate to manage the risks associated with such trades and (ii)
whether certain of the Company's managers were aware of, and/or
managed appropriately the risks associated with, the trades. The
FCA is also reviewing the circumstances surrounding a failure in
2011 to discover certain audio files and produce them to the FCA in
a timely manner. As the investigation is ongoing, any potential
liability arising from it cannot currently be quantified.
15. Allocation of other comprehensive income within Equity
Equity attributable to equity holders of the parent
Re- Hedging
valuation and Own Retained Minority Total
reserve translation shares earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Six months ended 30 June
2016
(unaudited)
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Revaluation of investments 0.8 - - - 0.8 - 0.8
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Effect of changes in exchange
rates on translation of
foreign operations - 34.1 - - 34.1 0.2 34.3
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Remeasurement of the defined
benefit pension scheme - - - 26.4 26.4 - 26.4
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Taxation charge on components
of other comprehensive
income - (0.2) - (9.2) (9.4) - (9.4)
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Other comprehensive income
for the period 0.8 33.9 - 17.2 51.9 0.2 52.1
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Six months ended 30 June
2015
(unaudited)
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Revaluation of investments 0.4 - - - 0.4 - 0.4
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Effect of changes in exchange
rates on translation of
foreign operations - (5.2) - - (5.2) (0.1) (5.3)
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Remeasurement of the defined
benefit pension scheme - - - (6.0) (6.0) - (6.0)
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Taxation (charge)/credit
on components of other
comprehensive income - (0.4) - 2.1 1.7 - 1.7
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Other comprehensive income
for the period 0.4 (5.6) - (3.9) (9.1) (0.1) (9.2)
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Year ended 31 December
2015
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Revaluation of investments 0.1 - - - 0.1 - 0.1
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Effect of changes in exchange
rates on translation of
foreign operations - 8.7 - - 8.7 0.1 8.8
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Remeasurement of the defined
benefit pension scheme - - - 24.5 24.5 - 24.5
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Taxation charge on components
of other comprehensive
income (0.1) (0.4) - (8.6) (9.1) - (9.1)
------------------------------- ---------- ------------ ------- ----------- ------ ----------- --------
Other comprehensive income
for the year - 8.3 - 15.9 24.2 0.1 24.3
=============================== ========== ============ ======= =========== ====== =========== ========
16. Events after the balance sheet date
In July 2016, the Group announced the acquisition of Creditex's
US hybrid voice brokerage business. Under the agreement, deferred
contingent consideration is payable through to the third
anniversary of completion. The amount of deferred contingent
consideration is dependent upon the performance of the business
over the three year period and has an initial fair value estimated
to be US$3.5m (GBP2.7m). The initial fair value of the net assets
acquired is negligible which would result in the recognition of
US$3.5m (GBP2.7m) of intangible assets arising on
consolidation.
Directors' Responsibility Statement
The Directors confirm, to the best of their knowledge, that the
condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union, and that the Interim Management Report herein
includes a fair review of the information required by DTR 4.2.7R
and DTR 4.2.8R.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial information differs from
legislation in other jurisdictions.
By order of the Board
Andrew Baddeley
Chief Financial Officer
2 August 2016
Independent Review Report to Tullett Prebon plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half year report for the six months
ended 30 June 2016 which comprises the Condensed Consolidated
Income Statement, the Condensed Consolidated Statement of
Comprehensive Income, the Condensed Consolidated Balance Sheet, the
Condensed Consolidated Statement of Changes in Equity, the
Condensed Consolidated Cash Flow Statement and related Notes 1 to
16. We have read the other information contained in the half year
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity' issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half year report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the half year report in accordance with the Disclosure
and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
As disclosed in Note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half year report has been prepared in accordance with
International Accounting Standard 34 'Interim Financial Reporting',
as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half year report
based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half year report for the six months ended 30 June 2016 is
not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, UK
2 August 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
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