TP ICAP Regulatory News (TCAP)

9 May 2014

Tullett Prebon plc

AGM Statement and Interim Management Statement

Tullett Prebon plc (the "Company") is today issuing its Interim Management Statement in relation to the period from 1 January 2014. This statement will be delivered to those attending the Annual General Meeting today.

Business Update

We reported in the announcement of our results for 2013 that the overall level of activity in the financial markets that we serve had been subdued for the last eighteen months reflecting persistently low volatility, the more onerous regulatory environment for our customers, and the considerable uncertainty over the impact of new regulations covering the OTC derivatives markets, particularly in the United States. 

Since the beginning of 2014 the level of activity in the financial markets has remained subdued, and market conditions have therefore continued to be challenging. Consistent with the trend reported for the first two months of 2014, revenue in the four months to April of £248m was 12% lower at constant exchange rates than in the equivalent period last year. At reported exchange rates revenue for the four months was 15% lower.

Consequently, in the light of the continuation of difficult market conditions a number of actions are being taken to further reduce headcount and other fixed costs. It is currently anticipated that this cost improvement programme will reduce annual fixed costs by around £20m. The cost of the actions, currently estimated to be around £20m, half of which is expected to be non-cash, will be charged as an exceptional item in the 2014 accounts.

As detailed in a separate announcement made by the Company today, agreement has been reached to acquire PVM Oil Associates Limited and its subsidiaries ("PVM"), a leading independent broker of oil instruments. PVM's business is focused entirely on Energy products, and has a long history as an international crude oil and products broker covering OTC swaps, forwards and physical crude oil and refined products, and exchange traded instruments including WTI, Brent and Gasoil futures. PVM's customers are major oil companies, independent refiners and producers, government agencies, trading houses, banks, investment funds and corporations.

The acquisition of PVM will increase the scale of the Group's activities in the Energy sector and will give the Group a significant presence in broking crude oil and petroleum products complementing its existing activities in these areas. Crude oil is the world's most actively traded commodity. The acquisition will also allow Tullett Prebon Information to expand its data offering to include the current and historical oil price data generated from the PVM business and to offer this data to a broader set of customers.

Legal action continues to be pursued against BGC and former employees in the USA in response to the raid on the business by BGC in the second half of 2009. The outcome of the FINRA arbitration on the claim brought by the subsidiary companies in the United States directly affected by the raid is expected to be determined imminently. The separate action being pursued by the Company and the directly affected subsidiaries in the New Jersey Superior Court, alleging, among other causes of action, violations under the NJ RICO Act, is now expected to go to trial in the autumn of this year. Since 1 January, £3.1m of costs have been incurred in relation to these actions. Consistent with the treatment adopted in previous years, these costs will be recognised as an exceptional charge in the 2014 accounts.

The Company's financial position remains strong.

Enquiries:

Nigel Szembel, Head of Communications, Tullett Prebon plc

Direct: +44 (0)20 7200 7722