The picture at Tullett Prebon (TLPR) is not as gloomy as the headline numbers suggest, but even adding back restructuring costs, legal costs and goodwill impairment left operating profits at the inter-dealer broker down 15 per cent at £126m, while operating margins were squeezed from 16.3 per cent down to 14.8 per cent.
Turnover was hit by a combination of low volatility and customers becoming more risk averse, as well as uncertainty over the impact of new regulations set to govern the over-the-counter market. Predictably, management moved to reduce the cost base, reducing the head count by 220, giving a projected annual reduction in fixed costs of £30m.
Nearly all product groups experienced a decline in revenue, including Treasury products down 11 per cent at £226.8m - mainly as a result of lower foreign exchange and cash market activity in the US - while fixed income was 12 per cent lower at £224.2m. On a brighter note, revenue from information sales and risk management services grew by 17 per cent to £45.8m.
Analysts at Numis Securities are forecasting underlying pre-tax profits for the coming year of £95.4m and EPS of 34.4p (from 114.7m and 40.5p in 2012).
| TULLETT PREBON (TLPR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 269p | MARKET VALUE: | £585m | |
| TOUCH: | 268-269p | 12-MONTH HIGH: | 357p | LOW: 219p |
| DIVIDEND YIELD: | 6.3% | PE RATIO: | na | |
| NET ASSET VALUE: | 170p* | NET CASH: | £56m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 944 | 137 | 44.4 | 12.8 |
| 2009 | 948 | 157 | 51.8 | 15.0 |
| 2010 | 909 | 141 | 50.5 | 15.8 |
| 2011 | 910 | 119 | 41.3 | 16.5 |
| 2012 | 851 | -34.7 | -27.1 | 16.9 |
| % change | -7 | - | - | +2 |
Ex-div: 24 Apr Payment: 16 May *Includes intangible assets of £300m, or 138p a share | ||||
