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(Alliance News) - TP ICAP PLC on Tuesday reported a "solid" financial performance against a "difficult" macroeconomic backdrop and reduced secondary volumes in the wider interdealer broker market.
The London-based interdealer broker's 2020 revenue was GBP1.79 billion, down 2.2% from GBP1.83 billion in 2019. This is slightly worse than the broker's guidance in January that 2020 revenue as a whole would be 1% lower, citing subdued trading volumes in the fourth quarter as the reason for the drop.
2020's decrease was reflected in Global Broking revenue falling by 6% on a reported basis, as despite a "strong" first quarter, volumes shrunk as appetite for risk dropped.
TP ICAP's 2020 pretax profit was GBP129 million, up 39% from GBP93 million in 2019. This is partially reflected in 2020 operating costs declining year-on-year following the completion of the integration of ICAP in 2019, it said, resulting in a reduction in significant items.
TP ICAP declared a 2 pence per share final 2020 dividend, resulting in a 6p payout for the full-year. The annual figures is rebased to take into account the bonus element of the rights issue completed last month in order to fund the Liquidnet Holdings Inc deal. The full-year dividend is one-off 50% reduction to help pay for the acquisition of New York-based electronic trading network Liquidnet. For comparison, TP ICAP paid 11.9p in 2019.
Shares in TP ICAP were down 6.7% at 245.03p in London on Tuesday.
First announced in October, the Liquidnet acquisition comprises an upfront consideration of USD525 million on the completion of the deal, and a deferred consideration of USD50 million.
"We delivered a robust 2020 financial performance demonstrating our enhanced operational strength and the benefits of our diversified business model. 2020 was a transformational year for TP ICAP. We set out a new strategy to deliver higher shareholder returns and made good progress in executing initiatives across all of our businesses to advance our strategic pillars of electronification, aggregation and diversification. We strengthened our financial position by re-domiciling our group's holding company and embedding a new risk management framework," said Chief Executive Nicolas Breteau.
Moving to 2021, TP ICAP said revenue per trading day in January and February was marginally higher than a year before. However, March 2020 was a record month for revenue, with "very strong" secondary volumes on record-high volatility, meaning that revenue in the first quarter of 2021 is likely to be lower than 2020's equivalent period.
"For 2021, we forecast full-year revenue to grow at low-single digit rates at constant currency basis. This excludes any positive revenue contribution following the completion of the Liquidnet acquisition," said TP ICAP.
Last month, TP ICAP said it plans to change its name to TP ICAP Ltd "in due course", following the completion of its scheme to reorganise its corporate structure. The broker said at the time the reorganisation would create a corporate structure that would "provide greater financial flexibility for the group".
By Zoe Wickens; zoewickens@alliancenews.com
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