Inter-dealer broker Tullett Prebon did well to maintain turnover in the first six months of the year, particularly as significant economic headwinds sapped investor confidence and risk appetite. But profits were down sharply in the face of rising regulatory and development costs, and with little improvement expected in the economic climate in the short term, the shares' lowly rating is justified.
Revenue by product group showed a fall across interest rate derivatives, fixed income, equities and Treasury products, but these declines were partially offset by another strong performance from information sales and risk management services, where revenue rose 21 per cent to £23m, and a £17.3m contribution from recently acquired New York-based broker Chapdelaine and Brazilian inter-dealer broker Convencao. Even so, like-for-like average revenue per broker fell 4 per cent to £256,000, and underlying profit margins fell from 17.5 per cent to 16.2 per cent. Indeed, steps have been taken to reduce the cost base, with another 140 redundancies taking the total since the end of last year to 220, which is expected to save £30m a year.
Peel Hunt expects full-year adjusted pre-tax profits of £134.3m and EPS of 45.4p (from £136.2m and 45.8p in 2011).
| TULLET PREBON (TLPR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 272p | MARKET VALUE: | £592m | |
| TOUCH: | 271-272p | 12-MONTH HIGH: | 390p | LOW: 254p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 221p* | NET DEBT: | nil | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 455 | 74.6 | 24.8 | 5.25 |
| 2012 | 455 | 46.6 | 16.8 | 5.60 |
| % change | - | - | - | +7 |
Ex-div: 24 Oct Payment: 15 Nov *Includes intangible assets of £424m, or 195p a share | ||||
