Low trading volumes are the bane of traders' lives and, for Tullett Prebon (TLPR), it is volatility that drives trades. While market volatility has recently picked up, the effect of low volatility was very evident in Tullett's interim results and the impact on profits was compounded by ongoing increases in regulatory costs. So after adjusting for exceptional items, profits in the first half fell 5 per cent to £62.8m.
Over the half-year, revenue fell or was flat in five of Tullett's six product areas. Fixed-income trading, which accounted for 28 per cent of first-half revenue, was hardest hit, reporting a 7 per cent drop. It had to cope with lower sales of credit products in Europe and lower demand from banks for corporate bonds. In Treasury products - 26 per cent of revenues - the 6 per cent sales fall was largely due to lack of demand for counterparty services to deal in non-convertible currencies such as the renminbi. Once again, though, a thirst for data increased information sales, which rose 5 per cent to £24.5m - 5.6 per cent of revenues.
But every cloud has a silver lining. In Tullett's case this was not having to pay big bonuses, which led to a dramatic improvement in cash flow, turning last year's £45.9m net outflow into a £19.1m net inflow. In the short term, Tullett is expanding by opening new offices around the world.
| TULLETT PREBON (TLPR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 331p | MARKET VALUE: | £721m | |
| TOUCH: | 331-332 | 12-MONTH HIGH: | 372p | LOW: 219p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | NA | |
| NET ASSET VALUE: | 190p* | NET CASH: | £19.5m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 455 | 44.7 | 16.30 | 5.60 |
| 2013 | 440 | 52.5 | 18.50 | 5.60 |
| % change | -3 | +17 | +13 | - |
Ex-div: 23 Oct Payment: 14 Nov *Includes intangible assets of £305m, or 140p a share | ||||
