TP ICAP registers slight increase in revenue in H1 2023
TP ICAP Group plc (LON:TCAP) today posted its financial report for the six months to end June 2023.
In the first six months of 2023, the Group delivered a good financial performance, with continued business momentum. Group revenue increased 5% to £1,132m from increased market volatility (1% in constant currency).
Global Broking continued to benefit from volatility during the first half driven by strong secondary market volumes. Rates had another strong period benefiting from market volatility, interest rate rises and the high inflationary backdrop in the first six months.
In Energy & Commodities, the first half reflected improved market conditions following a challenging 2022. European gas and power prices normalised during the period which lowered client margin requirements resulting in improved trading volumes.
In Liquidnet, the Equities platform experienced a continuation of the challenging market conditions encountered last year with revenue declining in line with the market. The high interest rate environment has kept investors underweight in equities resulting in low activity levels in block trading: Liquidnet’s key market segment. The relative value business performed strongly.
Parameta Solutions delivered strong revenue growth leveraging increased demand for high quality financial markets data. The comparative period included substantial one-off revenue items relating to client data audits.
The Group’s management and support costs (excluding FX losses) remained broadly flat compared to prior period, with the impact of the ongoing inflationary pressures largely offset by the delivery of further cost synergy savings on the integration of Liquidnet into the Group. TP ICAP has now delivered £38m of annualised integration cost synergies since the acquisition of Liquidnet, exceeding its target of at least £30m, six months ahead of schedule.
The Group’s adjusted EBIT margin increased from 13.1% to 14.4% in reported currency. The Group reported EBIT of £109m increased by 10% from £99m in H1 2022 benefitting from the strength of its broking franchise.
The Group incurred significant items of £55m pre-tax (H1 2022: £44m), of which around two thirds are non-cash, in reported earnings.
The Group has freed up c.£100m of cash, six months ahead of schedule, that will be used to reduce debt. The Board has also announced its intention to implement an ordinary share buyback programme of up to £30m which will commence today. In addition, the Board is announcing an interim ordinary dividend of 4.8 pence per share, up 7% that will be paid to shareholders on 3 November 2023.
Nicolas Breteau, CEO of the Group, said:
“Our focus on productivity, contribution, and tight cost management, generated an uplift in profit and EBIT margin. Energy & Commodities delivered a strong performance, as energy markets normalised. Overall, Group revenue increased by 1%, following a strong performance last year, when the revenue base was up 7% (excluding the Liquidnet acquisition).
Our transformation, and diversification, initiatives are going well. The rollout of Fusion, our award-winning electronic platform, is on track, with an increasing focus on client adoption. Liquidnet now has two major banks connected to the Dealer-to-Client Credit proposition, with a third in the final stages. Parameta Solutions has launched energy-related indices, in partnership with General Index, a leader in this sector. Energy & Commodities is growing in Environmentals; there are more opportunities in the provision of energy-related data to Parameta Solutions, and voluntary and mandatory carbon credits.
Dynamic capital management is a key element of our strategy. The £100m of cash we targeted in the first half last year has been freed up 6 months ahead of schedule; it will be used to pay down debt. We are also announcing, starting today, a share buyback programme of £30m, and will continue to assess opportunities to free up cash to further invest in the business, pay down more debt, and/or return more capital to shareholders. An interim dividend of 4.8 pence per share, up 7%, will be paid to shareholders on 3 November 2023.”