TP ICAP Regulatory News (TCAP)

9 November 2012

Tullett Prebon plc

Interim Management Statement

Tullett Prebon plc (the "Company") is today issuing its Interim Management Statement in relation to the period from 1 July 2012.

Business Update

Market conditions have continued to be challenging and the overall level of market activity has remained subdued. Since the half year the level of market activity has been lower than in the same period last year, which benefited from some periods of more heightened activity, particularly in August.

Revenue in the four months July to October of £276m was 12% lower than reported for the same period last year. At constant exchange rates, and excluding the acquisitions of Convenção and Chapdelaine, revenue was 15% lower. This reflects a particularly slow July and August period compared with the prior year. Revenue in July/August, at constant exchange rates and excluding the acquisitions, was 19% lower than in the prior year. Revenue in September/October, at constant exchange rates and excluding the acquisitions, was 10% lower than in the prior year, including the adverse effect of Hurricane Sandy on activity in North America in the last few days of the period.

Year to date (January to October) revenue of £731m was 5% lower than that reported for the same period last year. Using constant exchange rates, and excluding the acquisitions, year to date revenue was 9% lower. 

Action was taken during the first half of the year and at the end of 2011 to reduce fixed costs and to maintain flexibility in the cost base through the exit or restructuring of contracts of individual brokers. These actions, which were designed to ensure that the business was well positioned to respond to less favourable market conditions by preserving the variable nature of broker compensation costs in relation to broking revenue, have been effective. 

The Company has been ranked as the overall number one interdealer broker in Risk magazine's 2012 annual interdealer rankings published in September. Dealers across the global wholesale banking market voted Tullett Prebon first place in 36 product categories, more than any other broker. This is the second time in three years that the Company has been ranked as the overall number one in the industry, and reflects the business's delivery of flexible and innovative products, as well as best in class service.

The business has continued to develop its electronic broking capabilities through the development and launch of platforms to provide clients with the flexibility to transact either entirely electronically or via the business's comprehensive voice execution broker network. This hybrid model is consistent with the nature and operation of the majority of OTC product markets which are not characterised by continuous trading, and which therefore depend upon the intervention and support of voice brokers for their liquidity and effective operation.

In the United States, the final rules relating to Swap Execution Facilities (SEF) have not yet been published. We are continuing to prepare for the implementation of these rules, and we are confident that we will qualify as a SEF.

Since 30 June, £7.0m of costs have been incurred in relation to the legal action between the Company and BGC relating to the raid on the business by BGC in the second half of 2009, taking the year to date exceptional charge for major legal actions to £13.9m.

The Company's financial position remains strong.

Enquiries:

Nigel Szembel, Head of Communications, Tullett Prebon plc

Direct: +44 (0)20 7200 7722