Tullett Prebon 's (TLPR) takeover of ICAP 's (IAP) global broking business may be grabbing all the headlines, but management's acquisition plans by no means stop there. As part of what chief executive John Phizackerley calls the group's "grazing" strategy, the interdealer broker is on the look out for bolt-ons to broaden its geographic and product range. Its first-half acquisition of Creditex's US voice broking business from Intercontinental Exchange provides a case in point.
Management continued to identify underperforming areas ripe for cost-cutting, including some traditional broking services. As a result, Tullett's operating margin increased one percentage point to 15.6 per cent, while broker compensation costs in proportion to sales also fell as part of a review on costs.
Last year's acquisition of MOAB Oil has bedded in well, as revenue for energy and commodities trading grew 12 per cent to £118m. Equities trading volumes also benefited from increased volatility during the period, with sales up a quarter to £28m. However, overall broking revenue was flat on the previous year, held down by a fall in demand for interest rate derivatives, fixed income and treasury products.
Analysts at Numis Securities upgraded their EPS estimates following these results and now expect adjusted pre-tax profit of £103m for the year ending December 2016, giving EPS of 34.9p (from £94m and 31.5p in 2015).
TULLETT PREBON (TLPR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 329.4p | MARKET VALUE: | £802m | |
| TOUCH: | 329.3-329.5p | 12-MONTH HIGH: | 416p | LOW: 271p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 34 | |
| NET ASSET VALUE: | 245p* | NET CASH: | £132m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 416 | 111 | 36.2 | 5.6 |
| 2016 | 430 | 36 | 11.9 | 5.6 |
| % change | +3 | -68 | -67 | - |
Ex-div: 1 Sep Payment: 14 Nov *Includes intangible assets of £394m, or 162p a share | ||||
