The market was less than impressed with the interim financial performance of TP ICAP (TCAP), even though the interdealer broker recorded improved volumes of interest-rate swaps and corporate bonds due to the turmoil in markets which unfolded in March.
Broking revenues edged up slightly through the period, with the proportion of revenue retained by the group’s brokers as pay increasing by 70 basis points since the year-end to 53.8 per cent - a positive sign. Revenue per broker also increased appreciably over the period, reflecting a step-up in trades between counterparties. However, there were less favourable outcomes for the foreign-exchange, money markets and emerging-markets segments.
Although the group managed to boost its top-line, net earnings pulled back, the result of a £10m charge on unused holiday leave, though the group said this will reverse over the second half in line with its policy on holiday carry-forward.
Profitability was also constricted by increased reorganisation costs, including those linked to the technological and regulatory challenge of transferring front office operations to those working from home. The group continues in its attempts to incorporate a new holding company in Jersey, but everything is moving a little slower nowadays.
Consensus estimates from FactSet gives adjusted EPS of 36.42p, rising to 38.39p in 2021
| TP ICAP (TCAP) | ||||
| ORD PRICE: | 295p | MARKET VALUE: | £ 1.66bn | |
| TOUCH: | 295-295.6p | 12-MONTH HIGH: | 425p | LOW: 160p |
| DIVIDEND YIELD: | 5.7% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 313p* | NET DEBT: | £60m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 922 | 83.0 | 11.8 | 5.6 |
| 2020 | 990 | 78.0 | 9.70 | 5.6 |
| % change | +7 | -6 | -18 | - |
| Ex-div: | 01 Oct | |||
| Payment: | 06 Nov | |||
| *Includes intangible assets of £1.57bn, or 278p a share. | ||||
