TP ICAP Regulatory News (TCAP)

TP ICAP GROUP PLC ("TP ICAP" or the "Group")

12 May 2021

Trading update for the three months ended 31 March 2021 (the "Period")

TP ICAP issues a scheduled trading update in relation to the Period. Commentary on year on year performance is on constant currency and reported basis. Given the exceptional trading experienced in March 2020, driven by client positioning as global markets reacted to the COVID-19 pandemic, comparators to 2019 have also been included for context.

Nicolas Breteau, Chief Executive Officer, TP ICAP said:

"Following the exceptional revenue performance by the Group in Q1 2020 driven by extreme volatility across all asset classes, these results represent a solid performance for Group in the first quarter of 2021. The Group delivered revenues of £483m for the Period, a reduction of 9% on a constant currency basis compared to Q1 2020. However, when compared to the normalised conditions that prevailed in Q1 2019, the Group grew revenues in Q1 2021 by 6%, which is a testament to the strength and depth of the Group's business mix and the hard work of our employees, still operating under Covid constraints.

Update on Divisional Reporting

TP ICAP today commences the reporting of the two newly renamed divisions: Agency Execution (formerly Institutional Services) and Parameta Solutions (formerly Data and Analytics).

Notes:

1. For Q1 2020, £6.1m of revenues have been reclassified from Global Broking into Parameta Solutions as a result of the transfer of Global Broking's RMS (Risk Management Services) business to Parameta Solutions. This transfer reflects the mechanics of the underlying business. Also, in Q1 2020, £0.5m has been reclassified as Inter-division revenue in Global Broking relating to SEF (Swap Execution Facility) revenue, with a corresponding increase in the revenue elimination upon consolidation.

2. Inter-division charges have been made by Global Broking and Energy & Commodities to reflect the value of proprietary data provided to the Parameta Solutions division. The prior year Period has been restated in line with the new-presentation format. The Global Broking inter-division revenues and Parameta Solutions inter-division costs are eliminated upon the consolidation of the Group's financial results.

3. For Q1 2021, £6.3m of revenue has been included within Agency Execution relating to the Liquidnet acquisition that completed on 23 March 2021.

Revenue for the Period:

§ Revenue in the Period of £483m was 9% lower than the £530m revenue for the equivalent period last year on a constant currency basis (12% lower on a reported basis);

§ The Period's year-on-year lower revenue reflected exceptional volumes in March 2020. This reflected extremely volatile market conditions caused by the emergence of the COVID-19 pandemic in early 2020;

§ Revenue in the Period was 6% higher than the equivalent quarter for 2019 respectively on a constant currency basis, when volumes were more normalised.

Revenue and activity by division for the Period:

§ Global Broking revenue declined 10% in the Period relative to the same quarter in the prior year on a constant currency basis (13% on a reported basis) driven by market-wide lower client volumes across most asset classes. Equities revenues grew significantly, benefiting from higher volumes and diversification from the LCM acquisition;

§ Energy & Commodities revenue declined 12% in the Period relative to the equivalent quarter last year on a constant currency basis (15% on a reported basis). Similar to Global Broking, client activity was down across all asset classes compared to the equivalent exceptional quarter last year;

§ Agency Execution revenue declined by 3% in the Period on a constant currency basis (8% on a reported basis) on market-wide lower volumes;

§ Parameta Solutions revenue grew 11% in the Period on a constant currency basis (5% on a reported basis). The business continues to benefit from strategic initiatives to launch new and higher value products, expand distribution channels and deepen and diversify its client relationships.

Strategic update

Liquidnet acquisition:

§ Liquidnet, a premier technology driven electronic buyside trading network, will transform our future growth prospects:

o It will materially accelerate the delivery of our three strategic pillars of electronification, aggregation and diversification

o Provides immediate growth opportunities: D2C Credit Platform; D2C Rates Platform

§ The acquisition was partially funded by a successful £315m rights issue which closed on 16 February, with a take up of more than 98%, demonstrating the market's strong support for the transaction.

§ The transaction completed on 23 March 2021, and Liquidnet contributed revenue of £6.3m to the Period, reported within the Agency Execution division.

§ The integration of Liquidnet is well underway. The Group will update the market on the integration progress, financial targets and KPIs for Liquidnet at its interim results.

Redomiciliation of Group:

§ On 26 February, the Group's domicile moved from London to Jersey, following overwhelming shareholder support at a Court Meeting and General Meeting on 1 February.

§ The redomiciliation has already delivered tangible capital benefits for TP ICAP and we anticipate it will drive further business opportunities globally.

2021 full year guidance and outlook:

§ Our full year guidance of low single-digit revenue growth on a constant currency basis, excluding Liquidnet revenues, remains unchanged;

§ The Group reiterates its investment spending as previously disclosed in our Capital Markets Day and our Preliminary Results;

§ The Group notes that GBP:USD year-on-year appreciation acts as a headwind against our reported revenues and EBIT. With GBP strengthening against USD, the average GBP:USD rate in Q1 was 1.38 compared with the full year 2020 average of 1.29 (a change of 7%). Around 60% of Group revenues and 40% of expenses are USD. The Group is not engaged in any active currency hedging for reporting purposes;

§ The Group notes that trading activity in April 2021 has returned to more normal levels compared with levels seen in prior years and is in line with the Group's full year guidance.

2020 AGM:

§ The Group will host its Annual General Meeting later today.

Parameta Solutions Investor seminar:

§ The Group plans to host an Investor Seminar for Parameta Solutions - the Group's Data & Analytics and Post Trade Solutions division - during the second half of 2021. We will provide a date in due course.

Additional Chief Executive Officer Commentary:

"Throughout the Period, the Group's core businesses have continued to successfully diversify and electronify their activities. In Global Broking we have continued the implementation of our hub strategy across Rates, FX and Credit and continue to expand our hybrid and electronic matching technology offering. In Parameta Solutions, our Data & Analytics division, (the world's leading provider of OTC market data), posted double digit revenue growth relative to Q1 2020. Our Post Trade Services division has been restructured and is now within Parameta Solutions in order to deliver more focused client products. The Group's Energy & Commodities division has successfully responded to its clients' decarbonisation agenda and I am particularly proud that approximately 40% of revenues of this division now come from positive, transitional or carbon neutral products. In our Agency Execution division (formerly Institutional Services) we have continued our strategy of adding more asset classes, deepening geographic reach and further electronification.

"The Group has also achieved a number of strategic successes this quarter. In February, we completed the redomicile of our corporate head office outside of the UK which has delivered tangible capital benefits for the Group and we anticipate will drive further business opportunities globally. In the same month we successfully completed the £315m rights issue to fund the Liquidnet acquisition, which we completed on 23 March. Liquidnet delivers further diversification for the Group and represents a core component of the Group's strategy we articulated to investors last December. Liquidnet's integration into our Agency Execution division has started well and we will provide a more detailed update on progress and financial performance at the half year. I am happy to report that the Liquidnet acquisition, the rights issue and the redomiciliation were achieved with overwhelming support and approval from our shareholders.

"We are positive about the prospects of our Group. Across the board, our client franchises remain very strong as we continue to diversify and transform our business, invest in our people and technology, whilst maintaining cost discipline. As a result, the Group is well placed to meet changing client needs, the demands of increased market regulation and the continued evolution of global market infrastructure."

For further information:

Analysts and Investors:

· Al Alevizakos, Group Head of Investor Relations Direct: +44 (0) 20 3933 3040

Mobile: +44 (0) 79 9991 2672

E-mail: Alevizos.Alevizakos@tpicap.com 

Media:

· William Baldwin-Charles, Group Media Relations DirectorDirect: +44 (0) 20 7200 7124

Mobile: +44 (0) 78 3452 4833

E-mail: William.Baldwin-Charles@tpicap.com

· Neil Bennett, Maitland

Direct: +44 (0) 20 7379 5151

E-mail: tpicap-maitland@maitland.co.uk

About TP ICAP Group plc

TP ICAP Group plc is a diversified global markets infrastructure and data solutions provider. The Group operates a portfolio of separate and competing brands to deliver intermediary services, contextual insights and intelligence, trade execution, pre- and post-trade services, and data-led solutions. We are formed of four business divisions:

· Global Broking: the largest Interdealer Broker in the world operating under the ICAP, Tullett Prebon and Louis Capital brands servicing clients in Rates, FX, Credit and Equities. We match buyers and sellers, facilitate price discovery, liquidity, execution and risk management.

· Energy & Commodities: the world's leading OTC energy and commodities broker operating under the ICAP, PVM and Tullett Prebon brands. Active in all major commodities markets including oil, gas, power, renewables, ferrous metals, base metals, precious metals and soft commodities. 

· Agency Execution: serving the buy side operating under the Liquidnet and COEX Partners brands. We provide trading services for a broad range of asset classes, serving a sophisticated client base of asset managers, asset owners and hedge funds.

· Parameta Solutions: a world leading OTC data provider operating under the Parameta Solutions brand offering unbiased data products and solutions that facilitate trading, enhance transparency, reduce risk and improve operational efficiency, complemented by a broad range of post trade solutions.

Further information on the company and its activities is available on the Company's website: www.tpicap.com