TP ICAP reports 13% Y/Y increase in 2022 revenue
TP ICAP Group plc (LON:TCAP) today posted its financial report for the year ended 31 December 2022.
Group revenue increased 13% to £2,115m on a reported basis (7% ahead in constant currency). Markets were heavily impacted by geopolitical events, and substantial monetary tightening by Central Banks all around the world. Against this backdrop, market volatility increased during the year, driving higher revenue.
Global Broking benefitted from this increased volatility delivering high single digit revenue growth across all asset classes and an uplift in overall contribution. Energy and Commodities (E&C) also initially benefitted from market volatility.
During the year, TP ICAP took a P&L charge, net of recoveries, of £21m on Russian exposures, primarily in Global Broking. These unsettled trades resulted from the imposition of sanctions in February 2022 against Russian clients and counterparties.
In the new combined Liquidnet division (comprising of the acquired Liquidnet platform, COEX Partners, ICAP Relative Value and MidCap Partners), market conditions for the Liquidnet platform (predominantly Equities) were very challenging. Equity indices declined significantly across the US and Europe, accompanied by high volatility levels. This reduced trading activity of larger blocks in these markets where Liquidnet has a leading position. The planned investment in the Dealer-to-Client (D2C) Credit proposition also impacted profitability.
The remaining Liquidnet division performed well, driven by the growth in the Relative Value business as well as in Rates, Futures and FX.
Parameta Solutions, TP ICAP’s division providing neutral OTC data, delivered strong revenue growth. The division continues to leverage the increased demand for high quality financial markets data.
Average revenue per broker (productivity) increased by 17% in 2022 compared with 2021 (+11% in constant currency). The average contribution per broker increased by 17% (+11% in constant currency).
The Group reported EBIT of £163m increased by 68% from £97m in 2021 benefitting from diversification and strength of the core franchise.
The Group incurred significant items of £113m pre-tax (2021: £153m), of which around 80% are non-cash, in reported earnings. This is broadly in line with TP ICAP’s previous guidance of £110m.
The Group is on track to generate or free up approximately £100m of cash by the end of 2023, to reduce debt.
The Board is recommending a final dividend for 2022 of 7.9p, which, when added to the interim dividend of 4.5p, results in a total dividend for the year of 12.4p, an increase of 31% from prior year. This aligns to the Group’s dividend policy which targets a dividend cover of approximately two times on adjusted post-tax earnings.
The dividend distribution during the year is typically based on a pay-out range of 30-40% of H1 adjusted post-tax earnings with the balance paid in the final dividend. The final dividend will be paid on 23 May 2023 to shareholders on the register at close of business on 14 April 2023. The ex-dividend date will be 13 April 2023.
The Company offers a Dividend Reinvestment Plan (DRIP), where dividends can be reinvested in further TP ICAP Group plc shares. The DRIP election cut-off date will be 28 April 2023.