Tullett Prebon's shares jumped over 20 per cent after the world's second-largest inter-dealer broker reported a sharp rise in profits in 2008. Once again, volatility in the world's financial markets worked in Tullett's favour, where the group acts as an intermediary between banks trading predominantly in Treasury products, interest rate derivatives and fixed-income products in the so-called over-the-counter market. And customers using Tullett also benefit from anonymity.
Tullett's business model has stood up well to the upheavals of the past year, not least because the group acts as an intermediary - so it doesn't hold any principal trading positions and benefits from volatility. Even the loss of one of its biggest clients, Lehman Brothers, had only a minimal impact on operating profits.
The group's core business centres on traditional voice broking in foreign exchange, interest rate swaps and government bonds, and a third of profits are generated in the US. However, there has been steady progress towards developing the electronic broking side and the setting up of hybrid platforms that allow voice brokers to offer clients a full broking service. Acquisitions made during the year included Primex Energy Brokers and, together with organic growth, the average broker headcount rose 6 per cent, while average revenue per broker rose 13 per cent to £548,000.
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| TULLETT PREBON (TLPR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 164p | MARKET VALUE: | £353m | |
| TOUCH: | 163-164p | 12-MONTH HIGH: | 494p | LOW: 113p |
| DIVIDEND YIELD: | 7.8% | PE RATIO: | 4 | |
| NET ASSET VALUE: | 112p* | NET DEBT: | 7% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 654 | 125 | 39.7 | 11.0 |
| 2007 | 754 | 114 | 34.7 | 12.0 |
| 2008 | 944 | 137 | 44.4 | 12.8 |
| % change | +25 | +20 | +28 | +7 |
Ex-div: 29 Apr Payment: 21 May *Includes intangible assets of £394m, or 183p a share | ||||
