With the acquisition of Icap’s voice broking business under its belt, TP Icap (TCAP) spent the first six months of the year building out its commodities and institutional businesses and rationalising its estate. It reduced its broker and support staff by around 7 per cent and has taken steps to scale down offices in some locations. It realised £8m in cost synergies and expects total savings of £16m for the full year, ahead of the £10m initially anticipated.
Revenue was up across all four divisions. The core global broking business grew revenue 2 per cent to £670m on a pro-forma, constant-currency basis. The rates business led the way, benefiting from increases in US interest rates and the gradual shift in the inflationary outlooks of the European Central Bank and Bank of England. However, restrictions on clients’ balance sheets hurt credit broking sales, which declined 6 per cent to £65m.
Broker headcount was increased at the energy and commodities division, particularly in liquefied natural gas. A new LNG business was launched in Houston and the related Emea desk was expanded. However, a weaker performance in gas, power and other commodities offset better trading in oil. Institutional services sales quadrupled to £16m, benefiting from the appointed representative agreement with Coex, a specialist broker.
Analysts at Numis expect pre-tax profit of £257m during the 12 months to December 2017, giving EPS of 35.3p (from £122m and 41p in 2016).
| TP ICAP (TCAP) | ||||
| ORD PRICE: | 492.7p | MARKET VALUE: | £2.73bn | |
| TOUCH: | 492.7-493p | 12-MONTH HIGH: | 502p | LOW: 330p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 337p* | NET CASH: | £111m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016** | 430 | 35 | 11.9 | 5.6 |
| 2017 | 925 | 71 | 10.3 | 5.6 |
| % change | +115 | +103 | -13 | - |
| Ex-div: | 12 Oct | |||
| Payment: | 10 Nov | |||
*Includes intangible assets of £1.7bn, or 303p a share **Prior to Icap voice broking acquisition | ||||
