REG - TP ICAP Group plc - Half-year Report
07/08/2024 07:00
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RNS Number : 4504Z TP ICAP Group plc 07 August 2024
7 August 2024
TP ICAP Group plc ('TP ICAP' or the 'Group')
Interim management report for the six months ended 30 June 2024
Nicolas Breteau, CEO of the Group, said:
"Group revenue increased by 3% in constant currency (+1% in reported
currency), building on last year's strong performance. We delivered record H1
profits with adjusted EBIT up 9% (+4% in reported currency). Our focus on
diversification is paying off. Liquidnet's enhanced operational gearing,
coupled with market share gains, enabled the division to generate £24m of
EBIT or 14% of Group EBIT. Parameta Solutions, our market-leading OTC data
business, and E&C, the largest energy broker, delivered 10% (+7% in
reported currency) and 8% (+6% in reported currency) revenue growth
respectively.
We are announcing today, and commencing shortly, our third £30m buyback in
twelve months. The Group is committed to generating more cash to return to
shareholders, reduce debt, and invest in the business. We are launching a
three-year programme to release at least £50m of surplus cash through more
legal entity consolidations, and generate at least £50m of annualised savings
through a range of operational efficiency initiatives.
We are progressing strategic options in relation to Parameta Solutions, as
previously announced. They include a potential offering, which might entail a
listing in the United States, with the Group maintaining a majority stake.
There is, of course, no certainty about either a public offering or its
location. We will update on progress, as and when appropriate".
Financial highlights
Adjusted results (excluding significant items - see income statement on page
13):
HY 2024 HY 2023 HY 2023 Reported change Constant currency change
constant currency
Revenue £1,144m £1,132m £1,106m 1% 3%
EBITDA £206m £200m £192m 3% 7%
EBIT £170m £163m £156m 4% 9%
EBIT Margin 14.9% 14.4% 14.1% n/a n/a
Adjusted profit before tax £160m £146m 10%
Attributable earnings £123m £117m 5%
Basic EPS 16.2p 15.0p 8%
Weighted average shares in issue (basic) 761.5m 781.3m (2%)
Statutory results:
Revenue £1,144m £1,132m 1%
EBIT £131m £109m 20%
EBIT margin 11.5% 9.6% n/a
Profit before tax £120m £91m 32%
Attributable earnings £91m £66m 38%
Basic EPS 12.0p 8.4p 43%
Total dividend per share 4.8p 4.8p -
Weighted average shares in issue (basic) 761.5m 781.3m (2%)
A table reconciling Reported to Adjusted figures is included in the Financial
and Operating Review. The percentage movements referred to in the highlights
and CEO Review are in constant currency (unless stated otherwise). This is to
reflect the underlying performance of the business, before the impact of
foreign exchange movements year-on-year. Constant currency refers to prior
year comparatives being retranslated at current year foreign exchange rates.
Approximately 60% of the Group's revenue and approximately 40% of costs are US
Dollar denominated.
Good revenue performance, diversification delivering, tight fixed cost
management
· Revenues up 3% on H1 2023 (+1% in reported currency);
· Global Broking ('GB') revenue unchanged on H1 2023 (-2% in
reported currency); strong Q2 (+8%), maintained market-leading position,
highest revenue per broker(1);
· Record E&C revenues: up 8% on H1 2023 (+6% in reported
currency). Strong growth across Oil, Power, and Gas;
· Liquidnet revenues up 8% on H1 2023 (+5% in reported currency).
Strong Equities performance, biggest part of division, with revenue up 14%.
Rest of division down 1%;
· Continued growth at Parameta Solutions: revenues up 10% on H1
2023 (+7% in reported currency) (H2 2023: +11%);
· Tight fixed cost control. At £279m, H1 2024 Group management
& support costs(2) down 4% on H1 2023, despite inflation.
Increased margins, greater contribution from non-broking businesses, higher
profitability
· Group adjusted EBIT up 9% (+4% in reported currency) to £170m
(H1 2023: £156m). Includes a £24m contribution from Liquidnet (H1 2023:
£9m);
· Diversification paying off. Liquidnet and Parameta Solutions
accounts for 37% of Adjusted EBIT, compared to 23% in FY 2022;
· Adjusted EBIT margin increased to 14.9% (H1 2023: 14.1%);
· Reported EBIT grew 20% to £131m (H1 2023: £109m); reported EBIT
margin of 11.5% (H1 2023: 9.6%).
Dynamic capital management
· Third buyback programme of £30m in twelve months launching soon,
following completion of second £30m buyback;
· Interim dividend unchanged at 4.8p, in line with dividend policy;
· Leverage ratio(3) of 1.6x (FY 2023: 1.9x).
1. Using total Group front office employees and total Group revenue as the
numerator and denominator respectively, to ensure a like-for-like comparison,
across the 3 listed IDB peers.
2. Including Foreign Exchange gains and losses.
3. Total debt (excluding finance lease liabilities) divided by adjusted EBITDA as
defined by our rating agency, Fitch.
Strategic highlights
Dynamic capital management
· Generating more cash in medium term: revenue growth, capital
optimisation, and operational efficiencies;
· Announcing a three-year programme (legal entity and operational
efficiencies) to respectively generate at least:
o £50m in surplus cash/capital;
o £50m of annualised cost savings, with c. £70m to be invested to deliver
efficiencies.
· Surplus cash shared with shareholders through buybacks, or other
capital returns, alongside targeted M&A, where appropriate, and
maintaining investment grade rating.
Diversification delivering
Parameta Solutions
· Focused on optimal shareholder value creation, including a
potential offering, whilst retaining majority ownership of the asset;
· Listing on a U.S. stock exchange one option being considered. No
certainty about listing or likely location;
· Silvina Aldeco-Martinez appointed CEO of Parameta Solutions in
March; Eric Sinclair, CEO since 2017, now Chair. Silvina joined from PitchBook
Data where she was CEO of Leveraged Commentary and Data;
· Further data monetisation opportunities underpinned by long-term,
exclusive Market Data Licensing Agreements (MDLAs) with GB and E&C.
Liquidnet
· Growing market share in US and EMEA. Number one share in EMEA 5x
LIS ('Large-in-Scale')(4) market;
· Executed largest dark pool trade ever in Europe;
· Revenue diversification progressing well: Programme and
high-touch trading up 45% on H1 2023;
· New SuperBlock™ proposition aimed at large/illiquid trades, a
growing segment;
· Enhanced operational gearing, total management & support
costs reduced by 18% on H1 2023.
4. The European Securities and Markets Authority (ESMA) defines "Large in Scale"
(LIS) as thresholds that exempt large trades from certain pre-trade
transparency requirements under MiFID II. For highly liquid stocks, the
threshold is typically set at €100k or more; for less liquid stocks, the
threshold is typically €500k or more.
Energy & Commodities ('E&C')
· Battery materials desk launched led by sector's leading broker. A
key driver of Energy Transition;
· Acquired Aotearoa Energy, a New Zealand-based Gas, Power, and
Carbon broker. Complements market-leading Australian Power & Gas brokerage
business;
· Enhanced bench strength. David Silbert, formerly Head of
Commodities at Deutsche, leading US business. Joachim Emmanuelson, former
partner at SCB, heading up EMEA.
Transforming Broking
Fusion on track
· Fusion on >50% of Global Broking desks that are in-scope;
· On track to complete rollout across in-scope desks by end 2025.
Outlook
As ever, our second half outlook is largely subject to market conditions.
Ongoing geopolitical uncertainty should continue to drive volatility that is
supportive for Global Broking and Energy & Commodities, while the prospect
of some interest rate reductions should be positive for Liquidnet. Parameta
Solutions will continue to benefit from the growing demand for OTC pricing
data.
The Board is comfortable with current market expectations for adjusted EBIT,
our preferred measure, subject to FX movements, especially the Sterling/US
Dollar rate.
Against this backdrop, we are focused on executing our strategy, and are well
placed to deliver sustainable shareholder value over the medium-term.
HY 2024 results presentation
The Group will hold an in-person presentation and Q&A at 09:30 BST today
in the Peel Hunt auditorium at 100 Liverpool Street, London, EC2M 2AT. For
those unable to attend in person, the presentation will also be broadcast via
a live video webcast.
A recording of the presentation will also be available via playback on our
website after the event at
https://tpicap.com/tpicap/investors/reports-and-presentations
(https://tpicap.com/tpicap/investors/reports-and-presentations) .
Forward looking statements
This document contains forward looking statements with respect to the
financial condition, results and business of the Group. By their nature,
forward looking statements involve risk and uncertainty and there may be
subsequent variations to estimates. The Group's actual future results may
differ materially from the results expressed or implied in these
forward-looking statements.
Enquiries:
Group Company Secretary
Vicky Hart
Email: companysecretarial@tpicap.com (mailto:companysecretarial@tpicap.com)
Analysts and investors
Dominic Lagan
Direct: +44 (0) 20 3933 0447
Email: dominic.lagan@tpicap.com (mailto:dominic.lagan@tpicap.com)
Media
Richard Newman
Direct: +44 (0) 7469 039 307
Email: richard.newman@tpicap.com (mailto:richard.newman@tpicap.com)
About TP ICAP
· TP ICAP connects buyers and sellers in global financial, energy
and commodities markets.
· We are the world's leading wholesale market intermediary, with a
portfolio of businesses that provide broking services, data & analytics
and market intelligence, trusted by clients around the world.
· We operate from more than 60 offices across 28 countries,
supporting brokers with award-winning and market-leading technology.
CEO REVIEW
Introduction
Our objective is to deliver sustainable shareholder value. We do so through
delivering our strategy, enhancing the value of our strategic assets, and
maximising cash generation.
Alongside updating stakeholders about the delivery of our strategic priorities
- dynamic capital management, diversification, and transformation - I will
explain how we are seeking to maximise the value of our strategic assets,
including Parameta Solutions, our market-leading OTC data business. More
broadly, our diversification strategy is delivering; we are making substantial
progress in this regard, which I cover later on (see Diversification section
below).
We are a world-leading provider of market infrastructure and data-led
solutions. Across our four main divisions - Global Broking, Energy &
Commodities, Liquidnet, and Parameta Solutions - we see significant
opportunities to grow and generate more shareholder value.
Market Developments
As I noted earlier this year, the easy money era is over. The "higher for
longer" mantra has proved apposite. Central banks are concerned about services
inflation. Interest rates remain at 16- and 23-year highs in the UK and US
respectively. Markets have limited expectations about the number of base rate
reductions this year. Interest rate movements - up or down - are an important
driver of activity for Rates, our biggest Global Broking business.
Energy markets are experiencing profound change. Three factors are driving
this change. Firstly, geopolitical developments like the war in Ukraine.
Secondly, growing demand for oil and gas. Thirdly, the major changes unleashed
by climate change. Demand for critical metals, a key enabler of the Energy
Transition, could more than double by 2030, according to the IEA. We are the
preeminent OTC broker with strong market positions in Oil, Power, and Gas. We
are ready to capitalise on any commodities Supercycle and have recruited the
leading metals broker to lead our push into Battery Materials.
Institutions, it would appear, are beginning to return to equity markets: a
welcome development for Liquidnet. We see that in the turnaround in the
division's profitability announced today. The institutional commission wallet
is increasing. McLagan data reported Q1 2024 global commissions grew by 11%
compared with Q4 2023. There is more road to run, however. Sticky inflation
means that central banks are reluctant to cut interest rates, an important
consideration for equity markets.
In an uncertain world, with ever growing regulatory requirements, the need for
institutions to utilise robust data to underpin decision making, and their
risk systems, is ever more pressing. Recent research found that global spend
on financial markets data increased by 12% last year with survey participants
anticipating more growth in 2024(5). We believe Parameta Solutions, is well
positioned to capitalise on this market phenomenon.
5. Source: Burton Taylor International Consulting, April 2024 Financial Market
Data Benchmark report.
Business Performance
Growing revenues
Group revenues grew by 3% (+1% in reported currency), building on last year's
performance.
E&C, which reported record revenue growth in 2023, posted an 8% increase
with strong growth in Oil, Power, and Gas. Liquidnet capitalised on better
equity markets and the reshaping of its business. The division's overall
revenues were up 8%. Equities, the biggest part of the Liquidnet franchise,
reported a substantial increase. Parameta Solutions generated 10% revenue
growth, following a strong second half last year.
Global Broking revenue was unchanged. In Q1 (-7%), trading was impacted by the
absence of the exceptional levels of volatility following the collapse of
Silicon Valley Bank in the previous year and other financial institutions. In
Q2 (+8%) momentum returned: it was a strong quarter. The division maintained
its market-leading position and its focus on broker productivity. Over the
last three years, average annual revenue growth per broker was 8%. At the same
time (see below), the Fusion rollout continued and is now live on over 50% of
in-scope desks. Fusion is a key tool to maintain our position as the
inter-dealer broker with the highest revenue per broker(6).
We believe Parameta Solutions is the biggest player in OTC data, and has an
attractive business model, historically characterised by 97% subscription
revenue and high client renewal rates (98%). Liquidnet, a leading agency
execution specialist, has recorded growth for five consecutive quarters in its
key Equities business. The division ranked number one by market share in the
important EMEA 5x LIS ('Large-In-Scale')(7) segment, and 2(nd) in the US
Agency Alternative Trading Systems ('ATS') market.
Increased profitability, tight fixed cost management
The Group adjusted EBIT margin increased to 14.9% (H1 2023: 14.1%). Adjusted
EBIT was up 9%, or 4% in reported currency, to £170m. These are our highest
ever H1 adjusted profits. At the reported level (including significant items),
Group EBIT grew by 20% to £131m (H1 2023: £109m), with the reported EBIT
margin increasing to 11.5% (H1 2023: 9.6%). Three factors underpin the growth
in profits: continued revenue growth, tight fixed cost control, and the
turnaround at Liquidnet. At £279m, Group management and support costs(8) were
down 4% on last year (H1 2023: £290m) despite ongoing business investment and
inflation. Liquidnet delivered a substantial increase in profitability driven
by enhanced operational gearing, growing revenues, and market share gains.
The division generated £24m of EBIT in the first half (H1 2023: £9m) or 14%
of Group adjusted EBIT.
6. Using total Group front office employees and total Group revenue as the
numerator and denominator respectively, to ensure a like-for-like comparison,
across the 3 listed IDB peers.
7. The European Securities and Markets Authority (ESMA) defines "Large in Scale"
(LIS) as thresholds that exempt large trades from certain pre-trade
transparency requirements under MiFID II. For highly liquid stocks, the
threshold is typically set at €100k or more; for less liquid stocks, the
threshold is typically €500k or more.
8. Including Foreign Exchange gains and losses.
Dynamic capital management
A year ago, we launched our first ever buyback programme for £30m (then
announced another £30m buyback at our FY 2023 results). We have also paid
down c. £100m of debt, achieving our target which we announced at our H1 2022
results. Today, we are announcing another £30m buyback which will soon
commence, following the completion of the second buyback. We will also pay an
interim dividend of 4.8 pence, unchanged on last year and in line with our
dividend policy, to eligible shareholders on 8 November 2024, with an
ex-dividend and record date of 3 October 2024 and 4 October 2024,
respectively. Our shareholders value this combination of dividends and capital
returns.
The Group is committed to releasing more cash for further capital returns,
debt reduction, and ongoing business investment, including targeted M&A,
where appropriate. We expect to generate more cash from revenue growth over
time, capital optimisation, and more operational efficiencies.
Our Jersey re-domiciliation enabled the generation of a series of specific
opportunities to free up cash. We learnt a great deal from that process.
Similarly, we have been successful in generating a series of operational
efficiencies at the Group level, through a range of initiatives. Accordingly,
we are launching a new three-year programme to release at least £50m of
surplus cash through more legal entity consolidations, and generate at least
£50m of annualised cost savings through more operational efficiency
initiatives.
The legal entity consolidation component of the programme builds on the work
to date, following the Jersey re-domiciliation. It is designed to free up at
least £50m of surplus cash over three years, through another substantial
reduction in the number of our legal and regulated entities.
The other component of the programme is a major operational and IT excellence
initiative expected to deliver at least £50m in annualised cost savings after
three years. We will concentrate on key levers like real estate optimisation,
technology consolidation, procurement, and vendor management. This
initiative, which includes a c. £70m investment over three years, will
transform our processes. They will be more simplified and more agile.
Diversification
Our diversification strategy is about broadening our client base, moving into
different asset classes and geographies, and delivering more non-broking
revenue and profits. The strategy is delivering. Adjusted EBIT from Liquidnet
and Parameta Solutions accounted for 37% of Group adjusted EBIT, compared to
23% in FY 2022. Our diversified businesses provide the Group with high quality
earnings and reduces earnings volatility.
Liquidnet
Liquidnet is a multi-asset, technology-driven, agency execution specialist
operating in 57 equity markets. The division provides the Group with client
(buyside) and product (cash equities, listed derivatives and credit markets)
diversification.
Our Liquidnet strategy is about (a) enhanced operational leverage through
rightsizing the cost base, (b) enhancing and diversifying the core Cash
Equities franchise, and (c) growing the multi-asset agency execution
proposition.
Enhanced operational leverage and greater profitability
We have reshaped Liquidnet's cost base and diversified its Equities franchise.
The 18% reduction in the management & support cost base was accompanied by
market share gains and revenue growth. The division's enhanced operational
leverage came through in an increase in the adjusted EBIT margin from 5.7% to
14.0%.
Enhancing, and diversifying, the Equities franchise
Liquidnet is pursuing an "all weathers" strategy. This means reinforcing the
market-leading block trading and dark pool equities franchise, and expanding
in programme trading and algorithmic trading. Equities revenue increased by
14%. In January 2024, we completed the largest Dark Pool trade ever conducted
in Europe, a testament to our connectivity, expertise, and client-centred
technology.
There are signs fund managers are returning to equity markets. Bank of America
recently reported the lowest average cash weighting by institutions since
2021. Against that encouraging backdrop, Liquidnet continues to innovate on
behalf of its clients. A good example is SuperBlock™, a new solution for
clients who wish to trade large, illiquid blocks in a controlled environment,
which we launched earlier this year in all three regions.
Growing the multi-asset agency execution proposition
The multi-asset (non-cash equity) segment is expanding, driven by the growth
of multi-asset hedge funds. Barclays has found that multi-asset funds have
grown by an average of almost 19% a year compared with about 3% for hedge
funds in general. Liquidnet offers a full suite of services ranging from
Relative Value through to Rates and FX based on aggregated liquidity at the
best price. Our multi-asset business generated over 40% of Liquidnet's H1 2024
revenues, a substantial contribution. As investment banks withdraw from this
area, we intend to grow through a range of actions, including a follow-the-sun
model, leveraging the Group's existing geographical footprint to build out
capability, and entering new markets.
Parameta Solutions
The financial data market is large ($50 billion in 2023) and growing (8% a
year from 2018 to 2023)(9). Within this ecosystem, with an estimated 70% share
of the OTC inter-dealer broker data market(9), Parameta Solutions is well
positioned.
The division's financial results historically have been driven by
subscriptions. The OTC market's average daily volumes ('ADV') are expected to
grow to $26tn by 2032(10), from around $20tn today. Parameta Solutions
products are designed to allow its clients to generate insights about highly
complex, low transparency OTC transactions. Clients, in turn, use those
insights to inform alpha identification strategies, risk management processes
and regulatory compliance.
Strategic developments
A key part of our strategy is to maximise the value of our strategic assets.
The Group is progressing strategic options in relation to Parameta Solutions.
They include a potential offering, which might entail a U.S. listing, with the
Group maintaining a majority stake. There is, of course, no certainty about
either a public offering or its location. We will update on our progress, as
and when appropriate, to the extent we are able to do so within applicable
legal constraints.
Business developments
The division is pursuing a three-pronged approach. Firstly, enhancing
distribution of its data with more third parties and direct delivery,
alongside developing the pricing framework. Secondly, moving up the value
chain with products in key areas like Evidential Data Solutions, Managed
Technology Services, OTC Indices, and Energy and Commodities. Parameta
Solutions is working closely with E&C to generate more indicative pricing
data, including real-time pricing. Thirdly, expanding its client base to
include more buyside players, including asset owners, asset managers, global
macro hedge funds and corporates.
Long term, exclusive Market Data Licensing Agreements underpin the
relationship with both Global Broking and E&C. They will be important as
we generate more data insights for the division to deliver to its clients.
9. Source: Burton Taylor International Consulting, April 2024 Financial Market
Data Benchmark report.
10. BIS Triennial Survey as of April 2022, Business Research Insights as of May
2024.
Energy & Commodities ('E&C')
Growing demand for energy
E&C is the leading OTC broker. The division provides services to its
clients through three key brands: Tullett Prebon, ICAP and PVM.
E&C's strategy entails (a) growing revenue across the current main
businesses (Oil, Gas, and Power), (b) leveraging the Energy Transition e.g.
renewables, and (c) monetising data. Delivering these priorities is enabled by
the rollout of leading technology for our brokers.
As the leading broker, we expect to benefit from the growth in demand for Oil,
Gas, and Power. Shell expects global LNG demand to grow by 50% by 2040 - gas
is an important enabler of the Energy Transition.
Leveraging the Energy Transition
The IEA expects renewables to power 50% of the world's electricity by 2030.
One third of our clients are trading environmental products serviced by our
brokers who typically cover both traditional and new energy sources.
We are well positioned. E&C is developing an aggregated liquidity pool
encompassing all our renewable products. Our deep liquidity, and the
receptiveness of the renewables market to electronic platforms, make this a
compelling proposition. Product development is another focus. Alongside
existing products like Norwegian and Australian Renewable Certificates, we are
developing tools to generate more liquidity in US Renewable (and Voluntary)
Energy Credits. This is a growing US market driven by significant legislative
changes overseen by the U.S. government.
The switch to renewables is metals intensive. The move, for example, from
coal-fired power stations to wind power entails a six-fold increase(11) in
metals usage to create the necessary infrastructure. We see significant
opportunities in this segment and have recruited the leading metals broker to
launch our Battery Materials proposition, which is now in place in London and
Singapore.
Monetising data
Demand for energy-related data is increasing. The market is now worth
approximately $3.8bn and is growing at around 7% a year(12).
E&C and Parameta Solutions have an exclusive, long-term partnership, based
on a Market Data License Agreement, to grow energy-related data revenues. In
addition, new products will be developed in key areas like Power and Gas such
as real time data. More indices will be developed to complement existing
initiatives like the LNG indices, launched last year.
11. Source: JP Morgan Asset Management Insights, February 2024.
12. Source: Burton Taylor International Consulting, April 2024 Financial Market
Data Benchmark report.
Transformation
Fusion
Fusion is our market-leading electronic platform providing connectivity for
our clients, via a single portal, to our deep liquidity pools. The rollout of
Fusion - focused on Rates, Credit, and FX - is well advanced; it is live on
more than 50% of in-scope desks. A granular action plan is in place to drive
completion of the rollout by the end of 2025. We are on track to do so.
API connectivity in particular, to ensure a seamless client experience, is
important. We see, based on our client engagement, more opportunities to
deploy Fusion to assist them with regulatory surveillance. Fusion also
generates more data-led insights which Global Broking will share with Parameta
Solutions through their Market Data Licencing Agreement.
Liquidnet Fixed Income
Liquidnet Fixed Income, as previously announced, is now led by Global Broking
('GB'), and organised by asset class. This brings immediate benefits,
including GB's highly developed sell-side relationships and connectivity. The
Fixed Income proposition encompasses both Primary and Secondary Markets, and a
full range of trading protocols, including Request For Quote (RFQ) and Dark
Pool.
Our recently-launched Targeted Axe protocol enables dealers to send their
highest priority axes, or buy/sell interests, to a target client list and
negotiate a trade using our RFQ workflow. A number of our offerings are now
available on Fusion, Global Broking's electronic platform.
Current initiatives include the accelerated rollout of Fusion for dealers,
Bond Auction Partnership, and Global EM Rebalance. Liquidity is increasing.
More dealers are engaged and there is growing institutional participation. We
are partnering in Primary Markets with Boltzbiz, the leading AI solutions
specialist. This enables us to deploy AI to receive, process, and display
newly announced bond data in a matter of seconds.
Enhanced bench strength driving our transformation
Across our divisions, we seek to enhance our bench strength as we transform
the Group.
Silvina Aldeco-Martinez was appointed CEO of Parameta Solutions in March.
Silvina joined from PitchBook Data, a Morningstar division, where she was CEO
of Leveraged Commentary and Data. At the same time, Eric Sinclair, who has led
the division since 2017, stepped up to become Chair. Silvina's significant
experience in data and analytics complements Eric's market expertise, strong
relationships, and track record of growing the business.
In Energy & Commodities, David Silbert joined us to lead our US business
having previously, amongst other senior roles, been Global Head of Commodities
at Deutsche Bank. Joachim Emanuelsson, a founding partner at SGB, the leading
environmental markets brokerage, is now heading up our EMEA franchise.
Nicolas Breteau
Executive Director and Chief Executive Officer
7 August 2024
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Financial and operating review
All percentage movements quoted in the analysis of financial results that
follows are in reported currency, unless otherwise stated. Reported currency
refers to prior year comparatives translated using prior year foreign exchange
rates.
Introduction
The Group delivered record H1 profits in the first six months of 2024 with a
modest 1% increase in revenue to £1,144m, building on last year's strong
performance. Revenue was up 3% in constant currency, compared with the first
half of 2023.
Liquidnet reported a 5% increase in revenue (+8% in constant currency),
leveraging improved equity markets, and a growing market share. A 23%
reduction in management & support costs (excluding depreciation &
amortisation), coupled with the revenue increase, has significantly enhanced
the operational leverage, resulting in an adjusted EBIT of £24m, more than
double the number we reported twelve months ago.
Parameta Solutions, a leader in OTC data and analytics, saw a 7% revenue
growth (+10% in constant currency), continuing the momentum from a strong
second half last year. We are progressing a range of strategic options,
including a potential offering.
Global Broking revenue, accounting for 57% of the Group's total revenue,
declined by 2% (flat in constant currency) following a strong H1 2023. Energy
& Commodities, the leading energy broker, delivered 6% revenue growth (+8%
in constant currency), building on last year's record performance, with
revenue increasing across its major asset classes, Oil, Power, and Gas.
Our emphasis on cost management, enhancing broker productivity (with an
average revenue increase per broker of +1%) and diversification (with
Liquidnet contributing 14% of the Group's adjusted EBIT), has increased
Group's adjusted EBIT to £170m and improved the margin to 14.9% (H1 2023:
£163m and 14.4%).
The Group incurred significant items costs of £40m pre-tax (H1 2023: £60m),
of which around 80% were non-cash, in reported earnings. Consequently, the
Group's reported EBIT grew 20% to £131m (H1 2023: £109m).
As part of our focus on enhanced cash generation, we have announced a new
three-year programme to release at least £50m of surplus cash through
removing inefficiencies in our regulated entity structure building on the
Jersey re-domiciliation, and generate at least £50m of annualised cost
savings through more operational efficiency initiatives. We will focus on key
levers like real estate optimisation, technology consolidation, procurement
and vendor management. The programme will require an investment of c.£70m
over three years, and is set to transform our processes, making them more
agile and streamlined.
Our leverage ratio(1) is now 1.6 times, compared with 1.9 times reported in
full year 2023 results. Through strategic financial management, we have
achieved c.£100m reduction in group debt and financing obligation over the
past two years contributing to lower net finance costs and enhanced our
investment grade headroom. Additionally, we announced a third share buyback
programme of £30m, which will follow the completion of the second programme.
In line with our dividend policy, the Board is proposing an interim H1 2024
dividend of 4.8p, consistent with H1 2023, to be paid to shareholders on 8
November 2024, with an ex-dividend and record date of 3 October 2024 and 4
October 2024, respectively.
Robin Stewart
Executive Director and Chief Financial Officer
7 August 2024
1. Total debt (excluding finance lease liabilities) divided by
last 12 months adjusted EBITDA as defined by our Rating Agency.
Key financial and performance metrics
£m H1 2024 H1 2023 H1 2023 Reported Constant Currency change
Reported Currency(2) Constant Currency change
Currency(2)
Revenue 1,144 1,132 1,106 1% 3%
Reported
- EBITDA 194 180 177 8% 10%
- EBIT 131 109 106 20% 24%
- EBIT margin 11.5% 9.6% 9.6% 1.9%pts 1.9%pts
Adjusted (3)
- Contribution 445 453 442 (2%) 1%
- Contribution margin 38.9% 40.0% 40.0% (1.1%pts) -
- EBITDA 206 200 192 3% 7%
- EBIT 170 163 156 4% 9%
- EBIT margin 14.9% 14.4% 14.1% 0.5%pts 0.8%pts
Average:
- Broker headcount(1) 2,525 2,571 2,571 (2%) (2%)
- Revenue per broker(1) (£'000) 377 372 364 1% 4%
- Contribution per broker(1) (£'000) 139 142 139 (2%) -
Period end:
- Broker headcount(1) 2,536 2,542 2,542 - -
- Total headcount 5,184 5,170 5,170 - -
1. Revenue per broker and contribution per broker are
calculated as external revenue and contribution of Global Broking, Energy
& Commodities and Liquidnet (excluding the acquired Liquidnet platform)
divided by the average broker headcount for the year. H1 2023 broker headcount
restated to include Liquidnet Credit platform to reflect the Credit platform
merger with Global Broking.
2. Prior year numbers have been restated to reflect £14m
reclassification of technology costs from front office costs to management
& support costs to better reflect the nature and management of these costs
and align with the classification of similar costs within the Group.
3. 'Adjusted' is one of the alternative performance measures
('APM') which is useful to enhance the understanding of business performance.
Refer Income statement below for details.
Income statement
Whilst not a substitute for IFRS, management believe adjusted figures provide
relevant information to better understand the underlying business performance.
These adjusted measures, and other alternative performance measures ('APMs'),
are also used by management for planning purposes and to measure the Group's
performance.
H1 2024 Adjusted Significant Reported
Items(1)
£m
Revenue 1,144 - 1,144
Employment, compensation and benefits (718) (1) (719)
General and administrative expenses (224) (11) (235)
Depreciation and impairment of PPE and ROUA (21) (6) (27)
Amortisation and impairment of intangible assets (15) (21) (36)
Operating expenses (978) (39) (1,017)
Other operating income 4 - 4
EBIT 170 (39) 131
Net finance expense (10) (1) (11)
Profit before tax 160 (40) 120
Tax (46) 8 (38)
Share of net profit of associates and joint ventures 11 - 11
Non-controlling interests (2) - (2)
Attributable Earnings 123 (32) 91
Basic average number of shares (millions) 761.5 - 761.5
Basic EPS (pence per share) 16.2p 12.0p
Diluted average number of shares (millions) 782.8 782.8
Diluted EPS (pence per share) 15.7p 11.6p
H1 2023 Adjusted Significant Reported
items(1)
£m
Revenue 1,132 - 1,132
Employment, compensation and benefits (697) (3) (700)
General and administrative expenses (239) (19) (258)
Depreciation and impairment of PPE and ROUA (22) (12) (34)
Amortisation and impairment of intangible assets (15) (22) (37)
Operating expenses (973) (56) (1,029)
Other operating income 4 2 6
EBIT 163 (54) 109
Net finance expense (17) (1) (18)
Profit before tax 146 (55) 91
Tax (40) 9 (31)
Share of net profit of associates and joint ventures 12 - 12
Impairment of associates - (5) (5)
Non-controlling interests (1) - (1)
Attributable Earnings 117 (51) 66
Basic average number of shares (millions) 781.3 781.3
Basic EPS (pence per share) 15.0p 8.4p
Diluted average number of shares (millions) 796.0 796.0
Diluted EPS (pence per share) 14.7p 8.3p
1. Significant items are categorised, as per details in the
Significant items section.
All percentage movements quoted in the analysis of financial results that
follows are in constant currency, unless otherwise stated. Constant currency
refers to prior year comparatives being retranslated at current year foreign
exchange rates to support comparison on an underlying basis.
Revenue by division
Total Group revenue in the first half of 2024 reached £1,144m, a 3% increase
over the prior year (1% rise in reported currency). Global Broking's revenue
remained consistent with the prior period. Trading in Global Broking was
impacted in the first quarter due to the non-recurrence of extraordinary
volatility that occurred in the prior period, but the second quarter saw a
resurgence in momentum with 8% higher revenue. Energy & Commodities
revenue increased by 8%, building on the strong momentum from the second half
of 2023, particularly in Oil, Power and Gas. Liquidnet's revenue was up 8% as
it benefitted from the recovery in equity markets. Parameta Solutions
revenue was up 10%, driven by increasing demand for greater access to data for
price discovery opportunities.
£m H1 2024 H1 2023 H1 2023 Reported Constant
(restated (restated currency currency
Reported constant Change change
currency)(2) currency) (2)
By Business Division
Rates 291 299 291 (3%) -
FX & Money Markets 162 159 156 2% 4%
Equities 120 127 125 (6%) (4%)
Credit(2) 63 66 65 (5%) (3%)
Inter-division revenue(1) 11 11 11 - -
Global Broking 647 662 648 (2%) -
Energy & Commodities 242 229 224 6% 8%
Inter-division revenue(1) 2 2 2 - -
Energy & Commodities 244 231 226 6% 8%
Liquidnet(2) 171 163 159 5% 8%
Data & Analytics 95 89 86 7% 10%
Inter-division revenue(1) 2 2 2 - -
Parameta Solutions 97 91 88 7% 10%
Inter-division eliminations(1) (15) (15) (15) - -
Total Revenue 1,144 1,132 1,106 1% 3%
1. Inter-division revenue has been recognised in Global
Broking, Energy & Commodities and Parameta Solutions to reflect the value
of proprietary data provided to Parameta Solutions and services it supplies to
the other divisions. The inter-division revenue and inter-division costs are
eliminated upon the consolidation of the Group's financial results.
2. Liquidnet Credit is reported as part of Global Broking
following a commercial decision to merge the Group's Credit activities in H2
2023. H1 2024 disclosures are on this basis, with £6m of H1 2023 reported
revenue restated to ensure a like-for-like comparison year-on-year.
Operating expenses
The table below sets out operating expenses, divided principally between front
office costs and management and support costs. Front office costs tend to have
a large variable component directly linked to the output of our brokers. The
largest element of this is broker compensation and other front office costs,
which include travel and entertainment, telecommunications and information
services, clearing and settlement fees as well as other direct costs. The
remaining cost base represents the management and support costs of the Group.
£m H1 2024 H1 2023 H1 2023 Reported Constant
(restated (restated currency currency
Reported constant change change
currency)(1) currency)(1)
Front office costs
- Global Broking(3) 390 393 383 (1%) 2%
- Energy & Commodities 167 152 150 10% 11%
- Liquidnet(3) 105 101 99 4% 6%
- Parameta Solutions 37 33 32 12% 16%
Total front office costs(2) 699 679 664 3% 5%
Management and support costs
- Employment costs 172 166 163 4% 6%
- Technology and related costs 45 47 47 (4%) (4%)
- Premises and related costs 14 13 13 8% 8%
- Depreciation and amortisation 36 37 36 (3%) -
- Other administrative costs 9 23 23 (61%) (61%)
Total management & support costs 276 286 282 (3%) (2%)
- FX losses 3 8 8 n/a n/a
Total management & support costs (incl. FX losses) 279 294 290 (5%) (4%)
Total adjusted operating costs 978 973 954 1% 3%
Significant items 39 56 54 (30%) (28%)
Total operating expenses 1,017 1,029 1,008 (1%) 1%
1. Prior year H1 numbers have been restated to reflect £14m
reclassification of technology costs from front office costs to management
& support costs to better reflect the nature of these costs and align with
the classification of similar costs within the Group. The reclassification
impacts Liquidnet, Global Broking and the Group.
2. Includes all front office costs, including broker compensation,
sales commission, travel and entertainment, telecommunications, information
services, clearing and settlement fees as well as other direct costs.
3. Liquidnet Credit is reported as part of Global Broking following a
commercial decision to merge the Group's Credit activities in H2 2023. H1 2024
disclosures are on this basis, with £9m of reported H1 2023 front office
restated to ensure a like-for-like comparison year-on-year.
Total front office costs of £699m increased by 5% (3% on a reported currency
basis) compared with H1 2023, in line with the increase in revenue. Total
management & support costs, excluding foreign exchange (FX) losses,
decreased to £276m from £282m despite inflationary pressures and ongoing
business investments, reflecting our commitment to stringent cost control. The
FX loss of £3m from the retranslation of monetary assets and liabilities
improved from £8m loss in H1 2023.
Total operating expenses increased slightly (by 1%) to £1,017m (1% decline in
reported currency) driven by the increase in front office costs, which are
variable with revenue.
Strategic IT investments amounted to £20m (H1 2023: £10m). This included
£7m in operating expenses and £13m in capital expenditure. (H1 2023: £3m
operating expenses and £7m capital expenditure).
The Group's focus on cost management is poised to drive sustained value
creation through operational efficiency. Initiatives (see Introduction section
above) are projected to deliver at least £50m in annualised cost savings
after three years with strategic initiatives targeting technology
consolidation, real estate optimisation and enhanced procurement and vendor
management. This will require an investment of around £70m over three years.
Capital and liquidity management
Capital management
The Group is committed to releasing more cash for further capital returns,
debt reduction, and ongoing business investment, including targeted M&A,
where appropriate.
Following the successful completion of our first buyback programme in January
2024, we launched a second programme in February, which is nearing completion.
Today, we have announced a third buyback programme of £30m, which will
commence once the second buyback completes.
To create more value through transformational initiatives, we aim to release
at least £50m of surplus cash and liquidity requirements across the group,
from further legal entity consolidation.
Our strategic financial management has led to a c.£100m reduction in group
debt and other financing obligations, over the last two years. This has helped
lower our net finance costs and improved our investment grade headroom.
Our gross debt to EBITDA leverage ratio is now 1.6 times, a reduction of 0.3
from the 1.9 times reported in our full year 2023 results.
Liquidity management
The Group has successfully extended the £350m syndicated Revolving Credit
Facility ('RCF') to May 2027. Additionally, in March 2024, the Yen RCF with a
Japanese strategic partner was doubled from ¥10bn to ¥20bn and extended to
February 2026, enhancing our liquidity management and financial flexibility.
Significant items
Significant items distort comparisons due to their size, nature or frequency
and are therefore excluded in order to provide better understanding,
comparability and predictability of the underlying trends of the business, to
arrive at adjusted operating and profit measures.
Significant items are categorised as below:
Restructuring and related costs
Restructuring and related costs arise from initiatives to reduce the ongoing
cost base and improve efficiency to enable the delivery of our strategic
priorities. These initiatives are significant in size and nature to warrant
exclusion from adjusted measures. Costs for other smaller scale restructuring
are retained within both reported and adjusted results.
Disposals, acquisitions and investments in new businesses
Costs and any income related to disposals, acquisitions and investments in new
business are transaction dependent and can vary significantly year-on-year,
depending on the size and complexity of each transaction. Amortisation of
purchased and developed software is contained in both the reported and
adjusted results as these are considered to be core to supporting the
operations of the business.
Impairment
The Group conducts its goodwill, intangible asset and investments in
Associates and Joint Ventures impairment test annually in September, or more
frequently if indicators of impairment exist. Impairment assessments are
performed by comparing the carrying amount of assets or cash generating units
('CGU's'), with its recoverable amount. Judgement is involved in estimating
the future cash flows and the rates used to discount these cash flows.
Legal and regulatory matters
Costs, and recoveries, related to certain legal and regulatory cases are
treated as significant items due to their size and nature. Management
considers these cases separately due to the judgements and estimation
involved, the costs and recoveries of which could vary significantly
year-on-year.
The table below shows the significant items in H1 2024 vs H1 2023, of which
around 80% of the total H1 2024 costs are non-cash.
H1 2024 H1 2024 H1 2024 H1 2023 H1 2023 H1 2023
£m Gross Expense Tax Relief Net Amount Gross Expense Tax Relief Net Amount
Restructuring & related costs
- Property rationalisation(1) 8 (2) 6 15 (2) 13
- Liquidnet integration - - - 3 (1) 2
- Business restructuring(2) 1 - 1 2 - 2
Subtotal 9 (2) 7 20 (3) 17
Disposals, acquisitions and investment in new business
- Amortisation of intangible assets arising on consolidation 21 (5) 16 22 (5) 17
- Liquidnet acquisition related - - - 6 (1) 5
- Foreign exchange losses 1 - 1 (2) - (2)
- Adjustment to deferred consideration - - - (5) - (5)
- Strategic project costs 2 (1) 1 - - -
Subtotal 24 (6) 18 21 (6) 15
Legal & regulatory matters(3) - Subtotal 7 - 7 13 - 13
Other significant items (4) (1) - (1) - - -
Total pre-financing cost 39 (8) 31 54 (9) 45
- Financing interest expense on Vendor Loan Notes, amortisation of discount on 1 - 1 1 - 1
deferred consideration and GIP provision
Total post-financing cost 40 (8) 32 55 (9) 46
Associate impairment - - - 5 - 5
Total 40 (8) 32 60 (9) 51
1. £6m Property rationalisation costs (net of tax) include
costs to rationalise our US property footprint.
2. £1m of Business restructuring costs (net of tax) include
initial costs on the operational efficiencies programme.
3. £7m Legal & regulatory matters includes costs related
to proceedings and regulatory matters.
4. £1m of Other significant items (net of tax) include costs
related to the remeasurement of the employee group income protection ('GIP')
provision.
Net finance expense
The adjusted net finance expense of £10m in H1 2024 (reported expense of
£11m), comprised of £22m of interest expense and £8m of net interest on
finance leases, offset by £20m of interest income. This represents a £7m
reduction from the £17m adjusted net finance expense in H1 2023. The decrease
is mainly attributed to:
· £8m increase in interest income leveraging higher average cash
balances and a favourable interest rate environment; partially offset by:
· £1m net increase in interest expense due to the full impact of
the 2030 Sterling Notes issued in 2023 at a higher rate of 7.875%, compared
with the 2024 Sterling Notes at 5.25%. This was partially offset by the
repayment of the remaining 2024 Sterling Notes at maturity.
Tax
The effective rate of tax on adjusted profit before tax is 28.8% (H1 2023:
27.4%). The effective rate of tax on reported profit before tax is 31.7% (H1
2023: 34.1%). The increase in the effective rate of tax on adjusted profit
compared to H1 2023 is primarily due to the increase in the UK corporation tax
rate to 25% from 1 April 2023.
Basic EPS
The average number of shares used for the H1 2024 basic EPS calculation is
761.5m (H1 2023: 781.3m). This is based on:
- 788.7m shares in issue as at 31 December 2023
- plus 3.2m of time-apportioned movements in issued shares,
- less 10.5m shares held by the Group's Employee Benefit Trusts
('EBTs') adjusted for time-apportioned movements in 2024, and
- less 19.9m treasury shares acquired through the share buyback
programme, adjusted for time-apportioned movements in treasury shares during
2024 acquired under the same programme.
The Group's EBTs have waived its rights to dividends.
The reported Basic EPS for H1 2024 was 12.0p (H1 2023: 8.4p) and adjusted
Basic EPS for H1 2024 was 16.2p (H1 2023: 15.0p).
Dividend
The Board is recommending an interim dividend of 4.8 pence per share, in line
with H1 2023. The interim dividend will be paid to eligible shareholders on 8
November 2024, with an ex-dividend and record date of 3 October 2024 and 4
October 2024, respectively. This aligns to the Group's dividend policy which
targets a dividend cover of approximately two times adjusted post-tax
earnings. The interim dividend is typically based on a pay-out range of 30-40%
of H1 adjusted post-tax earnings with the balance paid in the final dividend.
The Company offers a Dividend Reinvestment Plan ('DRIP'), where dividends can
be reinvested in further TP ICAP Group plc shares. The DRIP election cut-off
date will be 18 October 2024.
Guidance for 2024
The Group maintains the guidance provided at the FY 2023 results announcement,
with the exception of significant items.
Significant items excluding potential income and costs associated with legal
and regulatory matters are estimated to exceed our previous guidance for FY
2024 of c.£65m (pre-tax) to c.£90m (pre tax). This increase is largely due
to the expenses arising from the operational efficiencies programme and
potential costs related to strategic transactions.
Performance by Primary Operating Segment (divisional basis)
The Group presents below the results of its business by Primary Operating
Segment with a focus on revenue and APMs used to measure and assess
performance.
H1 2024
Corp/
£m GB E&C LN PS Elim Total
Revenue:
- External 636 242 171 95 - 1,144
- Inter-division(1) 11 2 - 2 (15) -
647 244 171 97 (15) 1,144
Total front office costs:
- External (390) (167) (105) (37) - (699)
- Inter-division(1) (2) - - (13) 15 -
(392) (167) (105) (50) 15 (699)
Contribution 255 77 66 47 - 445
Contribution margin 39.4% 31.6% 38.6% 48.5% n/a 38.9%
Net management and support costs:
- Management and support costs (130) (39) (37) (7) (30) (243)
- Other operating income 1 - - - 3 4
Adjusted EBITDA 126 38 29 40 (27) 206
Adjusted EBITDA margin 19.5% 15.6% 17.0% 41.2% n/a 18.0%
- Depreciation and amortisation (16) (5) (5) (1) (9) (36)
Adjusted EBIT 110 33 24 39 (36) 170
Adjusted EBIT margin 17.0% 13.5% 14.0% 40.2% n/a 14.9%
Average broker headcount 1,798 594 133 - - 2,525
Average sales headcount - - 107 - - 107
Revenue per broker (£'000)(2) 354 407 556 - - 377
Contribution per broker (£'000)(2) 142 130 150 - - 139
H1 2023 (reported currency)
Corp/
£m GB(3) E&C LN(3) PS(3) Elim(3) Total(3)
Revenue:
- External 651 229 163 89 - 1,132
- Inter-division(1) 11 2 - 2 (15) -
662 231 163 91 (15) 1,132
Total front office costs:
- External (393) (152) (101) (33) - (679)
- Inter-division(1) (2) - - (13) 15 -
(395) (152) (101) (46) 15 (679)
Contribution 267 79 62 45 - 453
Contribution margin 40.3% 34.2% 38.0% 49.5% n/a 40.0%
Net management and support costs:
- Management and support costs (129) (37) (48) (6) (37) (257)
- Other operating income 1 - - - 3 4
Adjusted EBITDA 139 42 14 39 (34) 200
Adjusted EBITDA margin 21.0% 18.2% 8.6% 42.9% n/a 17.7%
- Depreciation and amortisation (14) (4) (5) (1) (13) (37)
Adjusted EBIT 125 38 9 38 (47) 163
Adjusted EBIT margin 18.9% 16.5% 5.5% 41.8% n/a 14.4%
Average broker headcount 1,827 599 145 - - 2,571
Average sales headcount - - 110 - - 110
Revenue per broker (£'000)(2) 356 382 531 - - 372
Contribution per broker (£'000)(2) 146 132 131 - - 142
H1 2023 (constant currency)
Corp/
£m GB(3) E&C LN(3) PS(3) Elim(3) Total(3)
Revenue:
- External 637 224 159 86 - 1,106
- Inter-division(1) 11 2 - 2 (15) -
648 226 159 88 (15) 1,106
Total front office costs:
- External (383) (150) (99) (32) - (664)
- Inter-division(1) (2) - - (13) 15 -
(385) (150) (99) (45) 15 (664)
Contribution 263 76 60 43 - 442
Contribution margin 40.6% 33.6% 37.7% 48.9% n/a 40.0%
Net management and support costs:
- Management and support costs (128) (35) (46) (5) (40) (254)
- Other operating income 1 - - - 3 4
Adjusted EBITDA 136 41 14 38 (37) 192
Adjusted EBITDA margin 21.0% 18.1% 8.8% 43.2% n/a 17.4%
- Depreciation and amortisation (14) (4) (5) (1) (12) (36)
Adjusted EBIT 122 37 9 37 (49) 156
Adjusted EBIT margin 18.8% 16.4% 5.7% 42.0% n/a 14.1%
Average broker headcount 1,827 599 145 - - 2,571
Average sales headcount - - 110 - - 110
Revenue per broker (£'000)(2) 349 374 517 - - 364
Contribution per broker (£'000)(2) 144 127 124 - - 139
GB = Global Broking; E&C = Energy & Commodities; LN = Liquidnet; PS
= Parameta Solutions, Corp/Elim = Corporate Centre, eliminations and other
unallocated costs.
1. Inter-division charges have been made by Global Broking and Energy &
Commodities to reflect the value of proprietary data provided to the Parameta
Solutions division. The Global Broking inter-division revenue and Parameta
Solutions inter-division costs are eliminated upon the consolidation of the
Group's financial results.
2. Revenue per broker and contribution per broker are calculated as external
revenue and contribution of Global Broking, Energy & Commodities and
Liquidnet (excluding the acquired Liquidnet platform) divided by the average
brokers for the year. The Group revenue and contribution per broker excludes
revenue and contribution from Parameta Solutions and Liquidnet Division.
3. Prior year numbers have been restated to reflect £14m reclassification of
technology costs from front office costs to management & support costs to
better reflect the nature of these costs and align with the classification of
similar costs within the Group. The reclassification impacts Liquidnet, Global
Broking and the Group. In addition, Liquidnet Credit is reported as part of
Global Broking following a commercial decision to merge the Group's Credit
activities in H2 2023. H1 2024 disclosures are on this basis, with H1 2023
results restated to ensure a like-for-like comparison with H1 2023 reported
currency Contribution: GB (£3)m, Liquidnet +£17m, Group +£14m; H1 2023
reported currency Adjusted EBITDA: GB £(8)m, Liquidnet +£4m, Corporate
+£4m. H1 2023 reported currency Adjusted EBIT: GB £(8)m, Liquidnet +£8m.
Global Broking(1)
Global Broking's revenue of £647m (accounting for 57% of total Group revenue)
was in line with the prior period (2% lower in reported currency). The first
quarter experienced a decline in trading activity, due to the absence of the
extraordinary volatility seen in the previous period following the collapse of
SVB and other financial institutions. However, the second quarter saw a
resurgence of momentum.
Rates, generated revenue of £291m, which represents 45% of Global Broking
revenue and 25% of Group. The asset class maintained performance in line with
H1 2023, as market opportunities remained in Asia and Europe, but Americas
region was impacted by absence of exceptional levels of volatility present in
the prior period. FX & Money Markets revenue increased by 4% driven by
strong growth in Asia and Europe. Equities and Credit revenues declined by 4%
and 3% respectively, due to subdued markets in Europe and Americas.
Front office costs were 2% higher (1% lower in reported currency) mainly due
to higher broker deferred equity based compensation charges resulting from a
rise in the share price. Consequently, the contribution margin dropped to
39.4% from 40.6%. (H1 2023: 40.3%)
Revenue per broker increased by 1%, mirroring the year-on-year revenue with 2%
reduction in brokers. However, contribution per broker fell by 1% mainly due
to higher broker deferred equity based compensation charges referred to above.
Going forward, the share price volatility will no longer affect the income
statement, as the share award component of brokers' deferred compensation was
restructured in the second quarter, resulting in a change to the accounting
treatment of those awards.
Management and support costs, including depreciation and amortisation and net
of other operating income, increased by 3% to £145m, driven by increased
investment in the deployment of our electronic platform, Fusion.
Adjusted EBIT was £110m, with a margin of 17.0% (H1 2023: £122m, 18.8% in
constant currency, £125m and 18.9% in reported currency).
1. Liquidnet Credit is reported as part of Global Broking following a commercial
decision to merge the Group's Credit activities in H2 2023. H1 2024
disclosures are on this basis, with H1 2023 results restated, to ensure a
like-for-like comparison year-on-year.
Energy & Commodities
Energy & Commodities revenue reported a notable increase to £244m,
accounting for 21% of total Group revenue. This 8% increase over the prior
period (6% higher in reported currency) was driven by gains across its major
asset classes, Oil, Power, and Gas. The EMEA region saw a significant 14%
revenue increase compared to the prior period, while the Americas and Asia
businesses achieved a 1% increase.
Front office costs increased by 11% to £167m leading to a decrease in the
contribution margin to 31.6% from 33.6% in the prior period driven by
increased staff costs in a highly competitive environment for the sector.
Revenue per broker rose by 9% and Contribution per broker increased by 1%.
Management and support costs, including depreciation and amortisation and net
of other operating income, of £44m increased by 13% driven by investment in
the deployment of our electronic platform, Fusion. As a result, the adjusted
EBIT fell by 11% to £33m, achieving a margin of 13.5% (H1 2023: £37m, 16.4%
in constant currency and £38m, 16.5% in reported currency).
Liquidnet(1)
Liquidnet's revenue of £171m, representing 15% of total Group revenue, was 8%
higher (5% higher in reported currency). A strong performance in Equities, and
the Relative Value businesses, was partially offset by subdued performance
in the COEX (Rates, FX and Exchange Traded Derivatives) and MidCap businesses.
The Equities business, in particular, capitalised on the momentum from the
second half of 2023, with institutions returning to equity markets leading to
a 14% increase in revenues. Block markets volumes have risen across all
regions, with the Large-in-Scale market in EMEA up by 23% and the US block
market by 7%, primarily driven by a lower inflationary environment and
anticipated interest rate cuts. Market share was up in EMEA and the US.
Front office costs of £105m were 6% higher than prior period, reflecting the
strong performance in Equities and Relative Value businesses. The contribution
margin for Liquidnet improved to 38.6% from 37.7% .
Management and support costs, including depreciation and amortisation, net of
other operating income, of £42m reduced by 18% driven by the targeted cost
reduction initiatives and tight cost management.
This enhanced operational leverage resulted in the adjusted EBIT and margin
more than doubling to £24m and 14.0% compared with £9m and 5.7% (£9m and
5.5% in reported currency) in the prior period.
1. Liquidnet Credit is reported as part of Global Broking following a commercial
decision to merge the Group's Credit activities in H2 2023. H1 2024
disclosures are on this basis, with H1 2023 results restated, to ensure a
like-for-like comparison year-on-year.
Parameta Solutions
Parameta Solution's revenue of £97m, which constitutes 8% of total Group
revenue, increased by 10% (7% in reported currency), continuing the positive
momentum from the second half of last year. Subscription-based recurring
revenue accounts for 97% of the total revenue.
In the first half of 2024, the division expanded and diversified its client
base, adding 25 new clients, including 9 buyside clients, primarily macro
hedge funds. Parameta Solutions also launched new products focused on Energy
& Commodity datasets, such as Australian Green Certificates, Iron Ore
Options and, US Domestic Crude data. In Managed Technology, a leading Asian
financial institution contracted to extend AI enabled Trading Analytics to
cover Interest Rate Swaps
Management and support costs, including depreciation and amortisation, net of
other operating income increased by £2m to £8m. The adjusted EBIT was £39m,
achieving a margin of 40.2% (H1 2023: adjusted EBIT £37m, EBIT margin 42.0%
in constant currency).
As we progress with establishing Parameta as an independent entity to enable
us to create compelling value for our shareholders, we are experiencing an
increase in certain cost recharges from the group. These costs are part of the
broader support and shared services essential to enhance and drive the
performance, efficiency, and profitability of our operations.
Cash flow
The table below shows the changes in cash and debt for the period ending 30
June 2024 and 30 June 2023.
H1 2024 H1 2023
(restated)
EBIT reported 131 109
Depreciation, amortisation, and other non-cash items 76 73
Change in Net Matched Principal balances (2) (8)
Movement in working capital (32) 47
Taxes and interest paid (56) (64)
Operating cash flow 117 157
Capital expenditure (30) (23)
Receipt UK pension surplus - 30
Deferred consideration paid on prior acquisitions (50) (1)
Sale of financial assets 12 4
Interest received 19 10
Other investing activities 22 4
Investing activities (27) 24
Dividend paid to shareholders (76) (62)
Share Buyback (17) -
Sterling Note issuance - 249
Repayment of January 2024 Sterling Notes (37) (210)
Repayment of Vendor Loan Notes (39) -
Other financing activities (23) (21)
Financing activities (192) (44)
Change in cash (102) 137
Foreign exchange movements (4) (46)
Cash at the beginning of the period 1,019 888
Cash at the end of the period 913 979
The Group's net cash balance of £913m, decreased from £1,019m at the
beginning of the year as a result of usual seasonal working capital outflows,
together with the payout of outstanding consideration for Liquidnet and the
repayment of the remaining 2024 Sterling Notes due in Q1.
Operating cash inflow of £117m (H1 2023: £157m inflow) was impacted by a
higher working capital outflow of £32m (H1 2023: £47m inflow) due to
normalisation of collections of other receivables and prepayments and an
increase in stock lending activity. Tax and interest payments of £56m were
lower compared with £64m in H1 2023 mainly due to the accelerated tax paid in
H2 2023 reversing in 2024.
The investing activities outflow of £27m (H1 2023 inflow of £24m) was driven
by the £50m Liquidnet deferred consideration and higher spend on strategic
technology investments, partly offset by £19m inflow on interest received
benefitting from higher average cash balances and favourable interest rates
and £20m inflow of dividends received from investment in associates and joint
ventures.
The financing activities outflow of £192m includes the £37m repayment of the
2024 Sterling Note, £39m repayment of the Liquidnet Vendor Loan Notes and
£17m for share buybacks in the period.
The strengthening of GBP against the USD and EUR in 2024, has resulted in a
retranslation loss of £4m (H1 2023: £46m loss).
Debt finance
The composition of the Group's outstanding debt is summarised below.
At At 31 December At 30
30 June 2023 June
2024 £m 2023
£m £m
5.25% £247m Sterling Notes January 2024(1) - 37 37
5.25% £250m Sterling Notes May 2026(1) 251 250 250
2.625% £250m Sterling Notes November 2028(1) 249 249 249
7.875% £250m Sterling Notes April 2030(1) 251 251 251
Sub Total 751 787 787
Loan from strategic partner (RCF with Totan) - - -
Revolving credit facility drawn - banks - - -
3.2% Liquidnet Vendor Loan Notes - 40 40
Overdrafts 20 10 4
Debt (used as part of net (funds)/debt) 771 837 831
Lease liabilities 233 251 261
Total debt 1,004 1,088 1,092
1. Sterling Notes are reported at their par value net of discount and
unamortised issue costs and including interest accrued at the reporting date.
The Group's gross debt, excluding lease liabilities, reduced to £771m from
£837m as at 31 December 2023. The repayment of the remaining £37m of the
2024 Sterling Notes and the Liquidnet Vendor Loan Notes in January and March
2024 respectively, contributed to this reduction.
As at 30 June 2024, the Group's £350m main bank revolving credit facility,
set to mature in May 2027 and the ¥20bn Totan facility, maturing in February
2026 were both undrawn.
Excluding the temporary overdraft of £20m relating to a trade fail at the
period end, the group's debt and other financing obligations is now c.£100m
lower than that reported as at 30 June 2022.
Exchange rates
The income statements and balance sheets of the Group's businesses whose
functional currencies are not GBP are translated into GBP at average and
period end exchange rates respectively. The most significant currencies for
the Group are the USD and the Euro. The Group does not enter into formal
hedging of translation exposures, except for short-term borrowing currency
exposure. The financial statements for H1 2024 were prepared using the average
and period end exchange rates listed below.
In H1 2024, foreign exchange translation negatively impact the Group's
P&L. The average exchange rate for USD and EUR against GBP were higher
than 2023, adversely affecting the Group's trading performance, with around
60% of Group revenue and 40% of costs in USD. The overall strengthening of GBP
over the six month period resulted in a £3m loss in the P&L (H1 2023:
£8m loss). This loss reflects the retranslation of non-GBP cash, financial
assets, and operating assets net of liabilities at the period end.
Average Period End
H1 2024 H1 2023 FY 2023 H1 2024 H1 2023 FY 2023
US Dollar $1.27 $1.23 $1.24 $1.26 $1.27 $1.27
Euro €1.17 €1.14 €1.15 €1.18 €1.17 €1.15
Regulatory capital
Group level regulation falls under the Jersey Financial Services Commission.
The FCA is the lead regulator of the Group's UK businesses, for which the
capital adequacy requirements under the Investment Firms Prudential Regime
('IFPR') apply. This sub-group maintains an appropriate excess of financial
resources.
All of the Group's regulated broking entities are obliged to meet the
prudential regulatory requirements imposed by the local regulator of the
jurisdiction in which they operate. The Group maintains an appropriate excess
of financial resources in such regulated entities to support capital,
liquidity & credit needs.
Climate change considerations
We are committed to the ongoing assessment and management of climate risks and
opportunities. As part of this work, we incorporate climate change
considerations into our financial planning processes to monitor the impacts of
climate-related issues on our financial performance and position. In 2023, we
completed a detailed qualitative, and quantitative, climate scenario analysis
to deepen our understanding of how climate-related issues could affect the
Group and its finances. The analysis concludes that the Group is not expected
to be materially impacted financially by climate change over the timeframes
and climate scenarios considered. We will keep this analysis under review in
line with regulatory and stakeholder expectations.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Condensed Consolidated Income Statement
for the six months ended 30 June 2024
Notes Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December
(unaudited) (unaudited) 2023
£m £m (audited)(1)
£m
Revenue 5 1,144 1,132 2,191
Employment, compensation and benefits 6 (719) (700) (1,360)
General and administrative expenses 6 (235) (258) (511)
Depreciation of property, plant and equipment and ROUA(2) 6 (21) (22) (45)
Impairment of property, plant and equipment and ROUA(2) 6 (6) (12) (11)
Amortisation of intangible assets(2) 6 (36) (37) (72)
Impairment of Intangible assets(2) 6 - - (86)
Total operating costs 6 (1,017) (1,029) (2,085)
Other operating income 7 4 6 22
Earnings before interest and tax 131 109 128
Finance income 8 20 12 34
Finance costs 9 (31) (30) (66)
Profit before tax 120 91 96
Taxation (38) (31) (40)
Profit after tax 82 60 56
Share of results of associates and joint ventures 11 7 25
Impairment of associates - - (5)
Profit for the period 93 67 76
Attributable to:
Equity holders of the parent 91 66 74
Non-controlling interests 2 1 2
93 67 76
Earnings per share
- Basic 10 12.0p 8.4p 9.5p
- Diluted 10 11.6p 8.3p 9.3p
1. Extracted from the Group's 2023 Annual Report and Accounts.
2. Expanded for comparability with 2023 year-end presentation.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2024
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)(1)
£m £m £m
Profit for the period 93 67 76
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit pension schemes (1) 46 46
Equity investments at FVTOCI 4 (1) -
- net change in fair value
Taxation - (16) (16)
3 29 30
Items that may be reclassified subsequently to profit or loss:
Loss on translation of foreign operations (11) (93) (83)
Taxation - 2 2
(11) (91) (81)
Other comprehensive loss for the period (8) (62) (51)
Total comprehensive income for the period 85 5 25
Attributable to:
Equity holders of the parent 85 5 24
Non-controlling interests - - 1
85 5 25
1. Extracted from the Group's 2023 Annual Report and Accounts.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Condensed Consolidated Balance Sheet
as at 30 June 2024
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)(1)
Notes £m £m £m
Non-current assets
Intangible assets arising on consolidation 12 1,583 1,711 1,605
Other intangible assets 118 96 110
Property, plant and equipment 89 103 92
Investment properties - 12 12
Right-of-use assets 125 143 136
Investment in associates 45 45 51
Investment in joint ventures 32 40 38
Other investments 18 22 19
Deferred tax assets 32 12 41
Retirement benefit assets 24 2 - 3
Trade and other receivables 13 29 33 33
2,073 2,217 2,140
Current assets
Trade and other receivables 13 3,298 1,949 2,279
Financial assets at fair value through profit or loss 14 492 367 569
Financial investments 19 174 169 189
Cash and cash equivalents 19 933 983 1,029
4,897 3,468 4,066
Total assets 6,970 5,685 6,206
Current liabilities
Trade and other payables 15 (3,282) (1,961) (2,372)
Financial liabilities at fair value through profit or loss 14 (462) (351) (541)
Loans and borrowings 16 (26) (87) (93)
Lease liabilities 17 (30) (37) (28)
Current tax liabilities (40) (38) (35)
Provisions 20 (17) (16) (14)
(3,857) (2,490) (3,083)
Net current assets 1,040 978 983
Non-current liabilities
Loans and borrowings 16 (745) (744) (744)
Lease liabilities 17 (203) (224) (223)
Deferred tax liabilities (46) (76) (51)
Provisions 20 (32) (34) (31)
Other long-term payables (2) (6) (5)
Retirement benefit obligations 24 (4) (2) (4)
(1,032) (1,086) (1,058)
Total liabilities (4,889) (3,576) (4,141)
Net assets 2,081 2,109 2,065
Equity
Share capital 23 199 197 197
Other reserves 23 (990) (939) (963)
Retained earnings 23 2,855 2,834 2,814
Equity attributable to equity holders of the parent 2,064 2,092 2,048
Non-controlling interests 23 17 17 17
Total equity 2,081 2,109 2,065
1. Extracted from the Group's 2023 Annual Report and Accounts.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2024
Equity attributable to equity holders of the parent (Note 23)
Share Re- Re- Hedging Treasury shares Own Retained Total Non- Total
capital organisation reserve valuation and shares earnings controlling equity
reserve translation interests
£m £m £m £m £m £m £m £m £m £m
Six months ended 30 June 2024 (unaudited)
Balance at 197 (946) 3 29 (29) (20) 2,814 2,048 17 2,065
1 January 2024
Profit for the period - - - - - - 91 91 2 93
Other comprehensive - - 4 (9) - - (1) (6) (2) (8)
income/(loss) for the period
Total comprehensive - - 4 (9) - - 90 85 - 85
Income for the period
Transfer of gain on disposal of equity instruments at FVTOCI - - (3) - - - 3 - - -
Transactions with owners in their capacity as owners:
Shares issued 2 - - - - - (2) - - -
Dividends paid - - - - - - (76) (76) - (76)
Own shares acquired/share buyback - - - - (17) - - (17) - (17)
Share settlement of equity settled share-based awards - - - - - 4 (4) - - -
Dividend equivalents paid on equity settled share-based awards - - - - - - (2) (2) - (2)
Own shares acquired for employee trusts - - - - - (6) - (6) - (6)
Credit arising on equity settled share-based awards - - - - - - 14 14 - 14
Credit arising on the exchange of cash to equity settled share-based awards - - - - - - 18 18 - 18
(Note 25)
Balance at 199 (946) 4 20 (46) (22) 2,855 2,064 17 2,081
30 June 2024
Six months ended 30 June 2023 (unaudited)
Balance at 197 (946) 5 109 - (22) 2,800 2,143 18 2,161
1 January 2023
Profit for the period - - - - - - 66 66 1 67
Other comprehensive - - (1) (90) - - 30 (61) (1) (62)
income/(loss) for the period
Total comprehensive - - (1) (90) - - 96 5 - 5
Income for the period
Transactions with owners in their capacity as owners:
Dividends paid - - - - - - (62) (62) (1) (63)
Share settlement of equity settled share-based awards - - - - - 8 (8) - - -
Dividend equivalents paid on equity settled share-based awards - - - - - - (1) (1) - (1)
Own shares acquired for employee trusts - - - - - (2) - (2) - (2)
Credit arising on equity settled share-based awards - - - - - - 9 9 - 9
Balance at 197 (946) 4 19 - (16) 2,834 2,092 17 2,109
30 June 2023
Equity attributable to equity holders of the parent (Note 23)
Share Re- Re- Hedging Treasury shares Own Retained Total Non- Total
capital organisation reserve valuation and shares earnings controlling equity
reserve translation interests
£m £m £m £m £m £m £m £m £m £m
Year ended 31 December 2023 (audited)(1)
Balance at 197 (946) 5 109 - (22) 2,800 2,143 18 2,161
1 January 2023
Profit for the year - - - - - - 74 74 2 76
Other comprehensive - - - (80) - - 30 (50) (1) (51)
income for the year
Total comprehensive (loss)/income for the year - - - (80) - - 104 24 1 25
Transfer of gain on disposal of equity instruments at FVTOCI - - (2) - - - 2 - - -
Transactions with owners in their capacity as owners:
Dividends paid - - - - - - (99) (99) (2) (101)
Share settlement of equity settled share-based awards - - - - - 9 (9) - - -
Dividend equivalents paid on equity settled share-based awards - - - - - - (1) (1) - (1)
Own shares acquired for employee trusts - - - - - (7) - (7) - (7)
Own shares acquired/share buyback - - - - (29) - - (29) - (29)
Credit arising on equity settled share-based awards - - - - - - 17 17 - 17
Balance at 197 (946) 3 29 (29) (20) 2,814 2,048 17 2,065
31 December 2023
1. Extracted from the Group's 2023 Annual Report and Accounts.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Condensed Consolidated Cash Flow Statement
for the six months ended 30 June 2024
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)(1)
(restated)(2) (restated)(2)
Notes £m £m £m
Cash flow from operating activities 18 173 221 438
Income taxes paid (24) (33) (89)
Fees paid on bank and other loan facilities - (1) (1)
Interest paid (24) (22) (46)
Interest paid - finance leases (8) (8) (16)
Net cash flow from operating activities(2) 117 157 286
Investing activities:
Sale/(purchase) of financial investments(3) 19 12 4 (19)
Interest received 19 10 30
Dividends from associates and joint ventures 20 9 22
Expenditure on intangible fixed assets (27) (17) (43)
Purchase of property, plant and equipment (3) (6) (12)
Deferred consideration paid (50) (1) (1)
Sale of other investments 3 - 3
Investment in associates - (5) (5)
Disposal of associates and joint ventures - - 10
Acquisition consideration paid (1) - -
Receipt of pension scheme surplus(4) 24 - 46 46
Income taxes paid on receipt of pension scheme surplus(2,4) - (16) (16)
Net cash flows from investment activities(2) (27) 24 15
Financing activities:
Dividends paid 11 (76) (62) (99)
Dividends paid to non-controlling interests - (1) (2)
Own shares acquired/share buyback (17) - (29)
Own shares acquired for employee trusts (6) (2) (7)
Dividend equivalent paid on equity share-based awards (2) (1) (1)
Net borrowing of bank loan and other loans(5) - - -
Repayment of Vendor Loan Note 16 (39) - -
Funds received from issue of Sterling Notes 16 - 249 249
Repayment/repurchase of Sterling Notes 16 (37) (210) (210)
Bank facility arrangement fees and debt issue costs (1) (2) (2)
Payment of lease liabilities 19 (14) (15) (29)
Net cash flows from financing activities (192) (44) (130)
Net (decrease)/increase in cash and (102) 137
cash equivalents (net of overdrafts) 19 171
Cash and cash equivalents (net of overdrafts) 1,019 888 888
at the beginning of the period
Effect of foreign exchange rate changes 19 (4) (46) (40)
Cash and cash equivalents (net of overdrafts) 19 913 979 1,019
at the end of the period
Cash and cash equivalents 19 933 983 1,029
Overdrafts 19 (20) (4) (10)
913 979 1,019
1. Extracted from the Group's 2023 Annual Report and Accounts.
2. Net cash flows from operating activities and net cash flows from investing
activities have been restated as a result of the reclassification of the £16m
tax associated with the repayment of the UK pension scheme surplus (see 4
below) from operating to investing activities.
3. Sales and purchases of financial assets are reported net and classified as
investing activities reflecting the requirement of the Group to hold
structural financial assets in support of business requirements.
4. Represents the cash inflow resulting from the repayment of the UK pension
scheme surplus by the Trustees. This has been classified as investing
activities reflecting the realisation of the underlying investments held
within the scheme prior to the proceeds being transferred to the Group, rather
than an operational return of historic contributions. £16m of associated tax
was incurred.
5. The Group utilises credit facilities throughout the year, entering into
numerous short term bank and other loans where maturities are less than three
months. The turnover is quick and the volume is large and resultant flows are
presented net. Further details are set out in Note 16.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Notes to the Condensed Consolidated Financial Statements
for the six months ended 30 June 2024
1. General information
The condensed consolidated financial information for the six months ended 30
June 2024 should be read in conjunction with the statutory Group Financial
Statements of TP ICAP Group plc for the year ended 31 December 2023 (the '2023
Group Financial Statements') which were prepared in accordance with
International Financial Reporting Standards ('IFRSs') as adopted by the United
Kingdom ('UK-IFRS'). Those financial statements also comply with IFRSs as
adopted by the European Union ('EU-IFRS'). UK-IFRS and EU-IFRS differ in
certain respects from each other, however, the differences have no material
impact for the relevant reporting periods. Companies (Jersey) Law 1991 permits
financial statements to be prepared in accordance with EU-IFRS.
The Group Financial Statements have been reported on by the Company's former
auditor, Deloitte LLP, and have been delivered to the Registrar of Companies.
The report of the auditor on those financial statements was unqualified, did
not draw attention to any matters by way of emphasis and did not contain a
statement under Article 113A of the Companies (Jersey) Law 1991.
PricewaterhouseCoopers LLP were appointed as Company auditor at the Annual
General Meeting held on 15 May 2024.
The interim information, together with the comparative information contained
in this report for the year ended 31 December 2023, does not constitute
statutory financial statements within the meaning of Article 105 of the
Companies (Jersey) Law 1991. The financial information is unaudited but has
been reviewed by the Company's auditor, PricewaterhouseCoopers LLP, and their
report appears at the end of the Interim Management Report.
2. Basis of preparation
(a) Basis of accounting
The condensed consolidated financial information for the six months ended 30
June 2024 has been prepared in accordance with the Disclosure and Transparency
Rules ('DTR') of the Financial Conduct Authority, with IAS 34 'Interim
Financial Reporting' as adopted by both the United Kingdom ('UK') and the
European Union ('EU') and the Companies (Jersey) Law 1991, and has been
prepared using accounting policies consistent with the 2023 Group Financial
Statements.
The Condensed Consolidated Financial Statements have been prepared on the
historical cost basis, except for the revaluation of certain financial
instruments and investment properties held at fair values at the end of each
reporting period.
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
Accordingly, the going concern basis continues to be used in preparing these
Condensed Consolidated Financial Statements.
The Condensed Consolidated Financial Statements are rounded to the nearest
million pounds (expressed as £m), except where otherwise indicated.
(b) Basis of consolidation
The Group's Condensed Consolidated Financial Statements incorporate the
financial information of the Company and entities controlled by the Company
made up to each reporting period. Under IFRS 10 control is achieved where the
Company exercises power over an entity, is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to
use its power to affect the returns from the entity.
(c) Accounting policies
The accounting policies applied in these Condensed Consolidated Financial
Statements are the same as those applied in the Group's Consolidated Financial
Statements as at and for the year ended 31 December 2023.
The following new Standards and Interpretations have been endorsed by the UK
Endorsement Board for UK-IFRS and EFRAG for EU-IFRS and are effective from 1
January 2024 but they do not have a material effect on the Group's financial
statements:
Ø Amendments to IAS 7 'Statement of Cash Flows' and IFRS 7 'Financial
Instruments: Disclosures': Supplier Finance Arrangements;
Ø Amendments to IAS 1 'Presentation of Financial Statements', Classification
of Liabilities as Current or Non-Current; and;
Ø Amendments to IFRS 16 'Leases', Lease Liability in a Sale and Leaseback.
(d) Use of estimates and judgements
For the year ended 31 December 2023 the Group's critical accounting estimates
and judgements, which are stated on pages 103 and 156 to 157 of the Annual
Report and Accounts 2023, were those that relate to provisions for
liabilities, the disclosure of contingent liabilities, and the impairment of
goodwill and intangible assets. These remain the critical estimates and
judgements for the reporting period.
3. Related party transactions
The total amount included in trade receivables due from related parties as at
30 June 2024 was £4m (31 December 2023: £4m) and the amount included in
trade payables due to related parties as at 30 June 2024 was £5m (31 December
2023: £3m).
4. Principal risks and uncertainties
Robust risk management is fundamental to the achievement of the Group's
objectives. The Group identifies the risks to which it is exposed as a
result of its business objectives, strategy and operating model, and
categorises those risks into five 'risk objectives': Financial position,
Operational effectiveness and resilience, Regulatory standing, Reputation, and
Business strategy. The risks identified within each of these categories,
along with an explanation of how the Group seeks to manage or mitigate these
risk exposures can be found on pages 58 to 63 of the latest Annual Report
which is available at www.tpicap.com (http://www.tpicap.com) . The Directors
do not consider that the principal risks and uncertainties have changed since
the publication of the Annual Report for the year ended 31 December 2023.
Risks and uncertainties which could have a material impact on the Group's
performance over the remaining six months of the financial year are discussed
in the Interim Management Report.
5. Segmental analysis
Products and services from which reportable segments derive their revenues
The Group has a matrix management structure. The Group's Chief Operating
Decision Maker ('CODM') is the Executive Committee ('ExCo') which operates as
a general executive management committee under the direct authority of the
Board. The ExCo members regularly review operating activity on a number of
bases, including by business division and by legal ownership which is
structured geographically reflecting individual entities region of
incorporation.
The balance of the CODM review of operating activity and allocation of the
Group's resources is primarily focused on business division and this is
considered to represent the most appropriate view for the assessment of the
nature and financial effects of the business activities in which the Group
engages.
Whilst the Group's Primary Operating Segments are by business division,
individual entities and the legal ownership of such entities continue to
operate with discrete management teams and decision making and governance
structures. Each regional sub-group has its own independent governance
structure including CEOs, board members and sub-group regional Conduct and
Governance Committees with separate autonomy of decision making and the
ability to challenge the implementation of Group level strategy and
initiatives within its region. In the EMEA regional sub-group, in particular,
there are also independent non-executive directors on the regional Board of
directors that further strengthen the independence and judgement of the
governance framework.
Information regarding the Group's primary operating segments is reported
below:
Analysis by primary operating segment
Six months ended 30 June 2024 Global Broking Energy & Commodities Liquidnet Parameta Solutions Corporate Total
£m £m £m £m £m £m
Revenue
- External 636 242 171 95 - 1,144
- Inter-division 11 2 - 2 (15) -
647 244 171 97 (15) 1,144
Total front office costs
- External (390) (167) (105) (37) - (699)
- Inter-division (2) - - (13) 15 -
(392) (167) (105) (50) 15 (699)
Contribution 255 77 66 47 - 445
Net management and support costs (130) (39) (37) (7) (30) (243)
Other operating income 1 - - - 3 4
Adjusted EBITDA 126 38 29 40 (27) 206
Depreciation and amortisation expense (16) (5) (5) (1) (9) (36)
Adjusted EBIT 110 33 24 39 (36) 170
Six months ended 30 June 2023 Global Broking (restated) Energy & Commodities Liquidnet (formerly Agency Execution) Parameta Solutions Corporate Total
(restated) (restated) (restated)
£m £m £m £m £m £m
Revenue
- External(3) 651 229 163 89 - 1,132
- Inter-division 11 2 - 2 (15) -
662 231 163 91 (15) 1,132
Total front office costs
- External(1,3) (393) (152) (101) (33) - (679)
- Inter-division (2) - - (13) 15 -
(395) (152) (101) (46) 15 (679)
Contribution(4) 267 79 62 45 - 453
Net management and support costs(1,2,3) (129) (37) (48) (6) (37) (257)
Other operating income 1 - - - 3 4
Adjusted EBITDA(4) 139 42 14 39 (34) 200
Depreciation and amortisation expense(2) (14) (4) (5) (1) (13) (37)
Adjusted EBIT(4) 125 38 9 38 (47) 163
June 2023 divisional results have been restated to reflect the divisional
groupings and changes to management's internal financial reporting disclosed
in the Group's 2023 Annual Report. Liquidnet Credit became managed and
operated within the Global Broking division resulting in the following
restatements:
1. Liquidnet front office staff and associated costs of £14m were
reclassified to management and support costs to align with the classification
of similar costs within the Group.
2. Recharged divisional depreciation and amortisation of PPE and ROUA
for Liquidnet decreased by £4m and Corporate increased by £4m. Recharged net
management and support costs for Corporate decreased by £4m and Liquidnet
increased by £4m. There is no restatement of Group depreciation and
amortisation.
3. Subsequently Liquidnet Credit, previously reported in Liquidnet,
transferred to Global Broking:
> Revenue for Global Broking increased by £6m, Liquidnet reduced by £6m.
> Front office costs for Global Broking increased by £9m, Liquidnet
reduced by £9m.
> Net management and support costs for Global Broking increased by £5m,
Liquidnet decreased by £5m.
4. As a result of 1,2 and 3 above,
> Contribution for Global Broking decreased by £3m, Liquidnet increased by
£17m. Total contribution increased by £14m.
> Adjusted EBITDA for Global Broking decreased by £8m, Liquidnet increased
by £4m, Corporate increased by £4m. There is no restatement to the
consolidated Group Adjusted EBITDA.
> Adjusted EBIT for Global Broking decreased by £8m, Liquidnet increased
by £8m. There is no restatement to the consolidated Group Adjusted EBIT.
Year ended 31 December 2023 Global Broking Energy & Commodities Liquidnet Parameta Solutions Corporate Total
£m £m £m £m £m £m
Revenue
- External 1,236 455 315 185 - 2,191
- Inter-division 22 3 - 4 (29) -
1,258 458 315 189 (29) 2,191
Total front office costs
- External (761) (304) (207) (71) - (1,343)
- Inter-division (4) - - (25) 29 -
(765) (304) (207) (96) 29 (1,343)
Contribution 493 154 108 93 - 848
Net management and support costs (259) (75) (87) (14) (54) (489)
Other operating income 3 1 - - 10 14
Adjusted EBITDA 237 80 21 79 (44) 373
Depreciation and amortisation expense (31) (9) (11) (2) (20) (73)
Adjusted EBIT 206 71 10 77 (64) 300
Analysis of significant items
Significant items that distort comparisons due to their size, nature or
frequency, are reviewed separately by management. They are excluded from
divisional results in order to provide additional understanding, comparability
and predictability of the underlying trends of the business, to arrive at
adjusted operating and profit measures.
Six months ended 30 June 2024 Restructuring Disposals, acquisitions and investment in new businesses Legal and regulatory matters Other significant items Total
and other related costs
£m £m £m £m £m
Employment, compensation and benefits - 1 - - 1
Premises and related costs 1 - - - 1
Charge relating to significant legal and regulatory settlements - - 7 - 7
Net foreign exchange and derivative losses - 1 - - 1
Other general and administration costs 2 1 - (1) 2
Total included within general and administrative costs 3 2 7 (1) 11
Impairment of PPE and ROUA 6 - - - 6
Amortisation of intangible assets - 21 - - 21
Total included within operating costs 9 24 7 (1) 39
Included in finance expense - 1 - - 1
Total significant items before tax 9 25 7 (1) 40
Taxation of significant items (8)
Total significant items after tax 32
Impairment of investment in associates -
Total significant items 32
Restructuring and related costs
Restructuring and related costs arise from initiatives to reduce the ongoing
cost base and improve efficiency to enable the delivery of our strategic
priorities. These initiatives are significant in size and nature to warrant
exclusion from adjusted measures. Costs for other smaller scale restructuring
are retained within both reported and adjusted results.
Disposals, acquisitions and investments in new businesses
Costs, and any related income, related to disposals, acquisitions and
investments in new business are transaction dependent and can vary
significantly year-on-year, depending on the size and complexity of each
transaction. Amortisation of purchased and developed software is contained in
both the reported and adjusted results as these are considered to be core to
supporting the operations of the business.
Legal and regulatory matters
Costs, and recoveries, related to certain legal and regulatory cases are
treated as significant items due to their size and nature. Management
considers these cases separately due to the judgements and estimation
involved, the costs and recoveries of which could vary significantly
year-on-year.
Other significant items
Costs and remeasurements of provisions held in respect of obligations for
employee long-term absence benefits. Treated as significant items as
management considers these cases separately due to the judgements and
estimation involved, the costs and amendments to which could vary
significantly over an extended duration and year-on-year.
Six months ended 30 June 2023 Restructuring Disposals, acquisitions and investment in new businesses Legal and regulatory matters Total
and other related costs
£m £m £m £m
Employment, compensation and benefits 3 - - 3
Premises and related costs 3 - - 3
Deferred consideration - (5) - (5)
Charge relating to significant legal and regulatory settlements - - 15 15
Net foreign exchange gains - (2) - (2)
Other general and administration costs 2 6 - 8
Total included within general and administrative costs 5 (1) 15 19
Impairment of PPE and ROUA 12 - - 12
Amortisation of intangible assets - 22 - 22
Total included within operating costs 20 21 15 56
Other operating income - - (2) (2)
Net finance cost - 1 - 1
Total significant items before tax 20 22 13 55
Taxation of significant items (9)
Total significant items after tax 46
Impairment of investment in associates (included within Share of results of 5
associates and joint ventures)
Total significant items 51
Year ended 31 December 2023 Restructuring Disposals, acquisitions and investment in new businesses Impairment of intangible assets Legal and regulatory matters Total
and other related costs arising on consolidation
£m £m £m £m £m
Employment, compensation and benefits 4 2 - - 6
Premises and related costs 3 - - - 3
Deferred consideration - (3) - - (3)
Charge relating to significant legal and regulatory settlements - - - 19 19
Net foreign exchange losses - (2) - - (2)
Other general and administration costs 8 8 - - 16
Total included within general and 11 3 - 19 33
administrative costs
Impairment of PPE and ROUA 11 - - - 11
Amortisation of intangible assets - 44 - - 44
Impairment of intangible assets - - 86 - 86
Total included within operating costs 26 49 86 19 180
Other operating income - - - (8) (8)
Included in finance income 1 2 - - 3
Total significant items before tax 27 51 86 11 175
Taxation of significant items (27)
Total significant items after tax 148
Impairment of associates 5
Total significant items after tax 153
Adjusted profit reconciliation
Six months ended 30 June 2024 Adjusted Significant items Reported
£m £m £m
Earnings before interest and taxation 170 (39) 131
Net finance costs (10) (1) (11)
Profit before tax 160 (40) 120
Taxation (46) 8 (38)
Profit after tax 114 (32) 82
Share of profit from associates and joint ventures 11 - 11
Profit for the period 125 (32) 93
Six months ended 30 June 2023 Adjusted Significant items Reported
£m £m £m
Earnings before interest and taxation 163 (54) 109
Net finance costs (17) (1) (18)
Profit before tax 146 (55) 91
Taxation (40) 9 (31)
Profit after tax 106 (46) 60
Share of profit from associates and joint ventures 12 (5) 7
Profit for the period 118 (51) 67
Year ended 31 December 2023 Adjusted Significant items Reported
£m £m £m
Earnings before interest and taxation 300 (172) 128
Net finance costs (29) (3) (32)
Profit before tax 271 (175) 96
Taxation (67) 27 (40)
Profit after tax 204 (148) 56
Share of profit from associates and joint ventures 25 (5) 20
Profit for the period 229 (153) 76
Revenue by type
Six months ended 30 June 2024 Global Broking Energy & Commodities Liquidnet Parameta Solutions Eliminations Total
£m £m £m £m £m £m
Name Passing brokerage 487 216 8 - - 711
Executing Broker brokerage 7 24 39 - - 70
Matched Principal brokerage 142 2 76 - - 220
Introducing Broker brokerage - - 48 - - 48
Data & Analytics price information fees 11 2 - 97 (15) 95
647 244 171 97 (15) 1,144
Six months ended 30 June 2023 Global Broking Energy & Commodities Liquidnet Parameta Solutions Eliminations Total
(restated) (restated
£m £m £m £m £m £m
Name Passing brokerage(1,2) 487 200 8 - - 695
Executing Broker brokerage(2) 10 26 43 - - 79
Matched Principal brokerage(1,2) 154 3 69 - - 226
Introducing Broker brokerage - - 43 - - 43
Data & Analytics price information fees 11 2 - 91 (15) 89
662 231 163 91 (15) 1,132
Divisional Revenue by type for June 2023 has been restated to be comparable
with 2024's divisional groupings. Liquidnet Credit is now managed and operated
within the Global Broking division, divisional revenue by type has been
restated as follows:
1. Name Passing brokerage: Global Broking increased by £3m, Liquidnet
decreased by £3m. Matched Principal brokerage: Global Broking increased by
£3m, Liquidnet decreased by £3m.
2. As a result of revenue reclassifications within Global Broking, Name
Passing brokerage increased by £4m, Matched Principal brokerage increased by
£10m and Executing Broker brokerage reduced by £14m.
Year ended 31 December 2023 Global Broking Energy & Commodities Liquidnet Parameta Solutions Eliminations Total
£m £m £m £m £m £m
Name Passing brokerage 944 400 17 - - 1,361
Executing Broker brokerage 18 50 80 - - 148
Matched Principal brokerage 276 5 136 - - 417
Introducing Broker brokerage - - 82 - - 82
Data & Analytics price information fees 20 3 - 189 (29) 183
1,258 458 315 189 (29) 2,191
6. Operating costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
(restated)
£m £m £m
Broker compensation costs(1) 518 510 986
Other staff costs(1) 181 177 340
Share-based payment charge 20 13 34
Employment, compensation and benefits 719 700 1,360
Technology and related costs 115 107 220
Premises and related costs 14 17 29
Adjustments to deferred consideration - (5) (3)
Charge relating to significant legal and regulatory settlements 7 15 19
Remeasurement of long-term employee benefits (1) - -
Impairment losses on trade receivables 1 - 5
Trade receivables expected credit loss adjustment - - (1)
Net foreign exchange loss/(gains) - 3 2
Net loss on FX derivative instruments 3 3 4
Other administrative costs(2) 96 118 236
General and administrative expenses 235 258 511
Depreciation of property, plant and equipment 10 11 22
Depreciation of right-of-use assets 11 11 23
Depreciation of property, plant and equipment and ROUA 21 22 45
Impairment of property, plant and equipment 1 5 5
Impairment of right-of-use assets 5 7 6
Impairment of property, plant and equipment and ROUA 6 12 11
Amortisation of other intangible assets 15 15 28
Amortisation of intangible assets arising on consolidation 21 22 44
Amortisation of intangible assets 36 37 72
Impairment of intangible assets arising on consolidation - goodwill - - 47
Impairment of intangible assets arising on consolidation - customer - - 39
relationships
Impairment of intangible assets - - 86
1,017 1,029 2,085
1. Broker compensation cost and Other staff costs for June 2023 have
been decreased and increased by £21m respectively, reflecting a
reclassification of Parameta Solutions staff cost as non-broking.
2. Other administrative costs include £46m (June 2023: £46m) of
clearing and settlement costs, £21m (June 2023: £20m) of travel and
entertainment, professional fees including audit of £12m (June 2023: £16m)
and other miscellaneous costs of £17m (June 2023: £36m).
7. Other operating income
Other operating income comprises:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Business relocation grants 1 1 2
Employee-related insurance receipts 1 1 2
Employee contractual receipts - - 4
Management fees from associates 1 1 1
Legal settlement receipts - 2 8
Other receipts 1 1 5
4 6 22
8. Finance income
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Interest receivable and similar income 19 11 32
Interest receivable on finance lease receivables 1 1 2
20 12 34
9. Finance costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Fees on bank and other loan facilities 1 1 3
Interest on bank and other loans - - 1
Interest on Sterling Notes January 2024 - 4 5
Interest on Sterling Notes May 2026 7 7 13
Interest on Sterling Notes November 2028 3 3 7
Interest on Sterling Notes April 2030 10 4 14
Interest on Liquidnet Vendor Loan Notes 1 1 1
Other interest - 1 3
Amortisation of debt issue and bank facility costs 1 1 3
Borrowing costs 23 22 50
Interest on lease liabilities 8 8 16
31 30 66
10. Earnings per share
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
Basic 12.0p 8.4p 9.5p
Diluted 11.6p 8.3p 9.3p
The calculation of basic and diluted earnings per share is based on the
following number of shares:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
No. (m) No. (m) No. (m)
Basic weighted average shares 761.5 781.3 777.7
Contingently issuable shares 21.3 14.7 16.5
Diluted weighted average shares 782.8 796.0 794.2
The earnings used in the calculation of basic and diluted earnings per share
are set out below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Earnings for the period/year 93 67 76
Non-controlling interests (2) (1) (2)
Earnings attributable to equity holders of the parent 91 66 74
11. Dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Amounts recognised as distributions to
equity holders in the period:
Final dividend for the year ended 31 December 2022 - 62 62
of 7.9p per share
Interim dividend for the year ended 31 December 2023 - - 37
of 4.8p per share
Final dividend for the year ended 31 December 2023 76 - -
of 10.0p per share
76 62 99
An interim dividend of 4.8 pence will be paid to eligible shareholders on 8
November 2024, with an ex-dividend and record date of 3 October 2024 and 4
October 2024, respectively.
During the period, the Trustees of the TP ICAP plc EBT and the TP ICAP Group
plc EBT waived their rights to dividends. Dividends are not payable on shares
held in Treasury on the relevant record dates.
12. Intangible assets arising on consolidation
Goodwill Other Total
£m £m £m
As at 1 January 2024 1,156 449 1,605
Recognised with acquisitions 1 - 1
Amortisation of acquisition related intangibles - (21) (21)
Effect of movements in exchange rates (1) (1) (2)
As at 30 June 2024 1,156 427 1,583
As at 30 June 2024 the gross cost of goodwill and other intangible assets
arising on consolidation amounted to £1,453m and £812m respectively (31
December 2023: £1,453m and £812m). Cumulative amortisation and impairment
charges amounted to £297m for goodwill and £385m for other intangible assets
arising on consolidation (31 December 2023: £297m and £363m).
Goodwill
Goodwill arising through business combinations is allocated to groups of
cash-generating units ('CGUs'), reflecting the lowest level at which the Group
monitors and tests goodwill for impairment purposes. The CGU groupings are as
follows:
30 June 31 December 2023
2024
£m £m
Goodwill allocated to CGU grouping
Global Broking 554 555
Energy & Commodities 151 150
Parameta Solutions 333 334
Liquidnet - Agency Execution 42 41
Liquidnet - Equities 76 76
1,156 1,156
The Group's annual impairment testing of its CGUs is undertaken each
September. Between annual tests the Group reviews each CGU for impairment
triggers that could adversely impact the valuation of the CGU and, if
necessary, undertakes additional impairment testing. As at 30 June 2024 no
such impairment triggers were identified.
Other intangible assets
Other intangible assets at 30 June 2024 represent customer relationships,
business brands and trademarks that arise through business combinations.
13. Trade and other receivables
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Non-current receivables
Finance lease receivables 25 26 27
Other receivables 4 7 6
29 33 33
Current receivables
Trade receivables 332 348 304
Amounts due from clearing organisations 31 54 37
Deposits paid for securities borrowed 2,733 1,375 1,776
Finance lease receivables 4 5 3
Other debtors 52 45 41
Accrued income 10 12 11
Owed by associates and joint ventures 4 4 4
Prepayments 126 102 98
Corporation tax 6 4 5
3,298 1,949 2,279
Deposits paid for securities borrowed arise on collateralised stock lending
transactions. Such trades are complete only when both the collateral and stock
for each side of the transaction are returned. The above analysis reflects the
receivable side of such transactions. Corresponding deposits received for
securities loaned are shown in 'Trade and other payables'. The Group measures
loss allowances for these balances under the general approach reflecting the
probability of default based on the credit rating of the counterparty together
with an assessment of the loss, after the sale of collateral, that could arise
as a result of default. As at 30 June 2024, the provision for expected credit
losses amounted to less than £1m (31 December 2023: less than £1m).
The Group measures the loss allowance for trade receivables at an amount equal
to the lifetime expected credit loss. The expected credit losses on trade
receivables are estimated using a provision matrix by reference to past
default experience of the debtor and an analysis of the debtor's current
financial position, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current as well as
the forecast direction of conditions at the reporting date.
14. Financial assets and financial liabilities at fair value
through profit or loss
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Financial assets at fair value through profit or loss
Matched Principal financial assets 33 19 24
Fair value gains on unsettled Matched Principal transactions 459 348 545
492 367 569
Financial liabilities at fair value through profit or loss
Matched Principal financial liabilities (7) (2) -
Fair value losses on unsettled Matched Principal transactions (455) (349) (541)
(462) (351) (541)
£m £m £m
Notional contract amount of unsettled Matched Principal transactions
(restated)
Unsettled Matched Principal Sales(1) 110,396 44,850 125,673
Unsettled Matched Principal Purchases(1) 110,366 44,834 125,645
1. The notional contract amounts in respect of June 2023 were previously
reported in aggregate. The restatement separates sales and purchases and
restates those balances for items previously netted. Unsettled purchases and
sales both increase by £1,324m and unsettled sales increased by a further
£14m.
Fair value gains and losses on unsettled Matched Principal transactions
represent the price movement between trade date and the reporting date on
regular way transactions prior to settlement. Matched Principal transactions
arise where securities are bought from one counterparty and simultaneously
sold to another counterparty. Settlement of such transactions is primarily on
a delivery vs. payment basis and typically take place within a few business
days of the transaction date according to the relevant market rules and
conventions.
The notional contract amounts of unsettled Matched Principal transactions
indicate the aggregate value of buy and sell transactions outstanding at the
balance sheet date. They do not represent amounts at risk.
15. Trade and other payables
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Trade payables 48 44 40
Amounts due to clearing organisations 18 25 6
Deposits received for securities loaned 2,721 1,361 1,773
Deferred consideration - 49 51
Other creditors 107 93 85
Accruals(1) 354 359 384
Owed to associates and joint ventures 5 4 3
Tax and social security 26 23 28
Deferred income 3 3 2
3,282 1,961 2,372
1. Comprises amounts accrued in respect of estimated front and back
office bonuses together with unbilled professional fees and other services
incurred.
16. Loans and borrowings
Current Non-current Total
30 June 2024 £m £m £m
Overdrafts 20 - 20
Sterling Notes May 2026 1 250 251
Sterling Notes November 2028 1 248 249
Sterling Notes April 2030 4 247 251
26 745 771
30 June 2023
Overdrafts 4 - 4
Sterling Notes January 2024 37 - 37
Liquidnet Vendor Loan Notes March 2024 40 - 40
Sterling Notes May 2026 1 249 250
Sterling Notes November 2028 1 248 249
Sterling Notes April 2030 4 247 251
87 744 831
31 December 2023
Overdrafts 10 - 10
Sterling Notes January 2024 37 - 37
Liquidnet Vendor Loan Notes March 2024 40 - 40
Sterling Notes May 2026 1 249 250
Sterling Notes November 2028 1 248 249
Sterling Notes April 2030 4 247 251
93 744 837
All amounts are stated after unamortised transaction costs.
Settlement facilities and overdrafts
Where the Group purchases securities under matched principal trades but is
unable to complete the sale immediately, the Group's settlement agents finance
the purchase through the provision of an overdraft secured against the
securities and any collateral placed at the settlement agents. As at 30 June
2024, overdrafts for the provision of settlement finance amounted to £20m (31
December 2023: £10m).
Bank credit facilities and bank loans
The Group has a £350m committed revolving facility that matures in May 2027.
Facility commitment fees of 0.7% on the undrawn balance are payable on the
facility. Arrangement fees of £3m are being amortised over the maturity of
the facility.
As at 30 June 2024, the revolving credit facility was undrawn. During the
period, the maximum amount drawn was £50m (30 June 2023: £40m), and the
average amount drawn was £3m (30 June 2023: £4m). The Group utilises the
credit facility throughout the period, entering into numerous short-term bank
loans where maturities are less than three months. The turnover is quick and
the volume is large and resultant flows are presented net in the Group's cash
flow statement in accordance with IAS 7 'Cash Flow'. As at the reporting
date, the Group is in compliance with the covenants applicable to the
facility.
Interest and facility fees of £1m were incurred to 30 June 2024 (30 June
2023: £1m).
Credit facility and loans
The Group has a Yen 20bn committed facility with The Tokyo Tanshi Co., Ltd,
which matures in February 2026. Facility commitment fees of 0.64% on the
undrawn balance are payable on the facility. Arrangement fees of less than
£1m are being amortised over the maturity of the facility.
As at 30 June 2024, the Yen 20bn committed facility equated to £98m and was
undrawn. During the period, the maximum amount drawn was Yen 20bn, £98m at
June closing rates (30 June 2023: Yen 8bn, £44m at June 2023 closing rates),
and the average amount drawn was Yen 6bn, £29m at June closing rates (30 June
2023: Yen 6.8bn, £37m at June 2023 closing rates). The Group utilises the
credit facility throughout the year, entering into numerous short-term bank
loans where maturities are less than three months. The turnover is quick and
the volume is large and resultant flows are presented net in the Group's cash
flow statement in accordance with IAS 7 'Cash Flow'. As at the reporting
date, the Group is in compliance with the covenants applicable to the
facility.
Interest and facility fees of less than £1m were incurred in 2024 (30 June
2023: less than £1m).
Sterling Notes: Due January 2024
In January 2017 the Group issued £500m unsecured Sterling Notes due January
2024. The Notes had a fixed coupon of 5.25% payable semi-annually, subject to
compliance with the terms of the Notes. In May 2019, the Group repurchased
£69m of the Notes, in November 2021 the Group repurchased £184m of the
Notes, in April 2023 the Group repurchased £210m and in January 2024 the
remaining £37m were settled at maturity.
Interest of less than £1m was incurred in the period (30 June 2023: £4m).
Liquidnet Vendor Loan Notes Due March 2024
In March 2021, as part of the purchase consideration of Liquidnet, the Group
issued $50m unsecured Loan Notes due March 2024. The Notes had a fixed coupon
of 3.2% paid annually. In March 2024 the Notes were settled at maturity.
Interest of less than £1m was incurred in the period (30 June 2023: £1m).
Sterling Notes: Due May 2026
In May 2019 the Group issued £250m unsecured Sterling Notes due May 2026. The
Notes have a fixed coupon of 5.25% paid semi-annually, subject to compliance
with the terms of the Notes.
Interest of £7m was incurred in 2024 (30 June 2023: £7m). The amortisation
expense of issue costs in 2024 and 2023 was less than £1m.
At 30 June 2024 accrued interest amounted to £1m and unamortised issue costs
were less than £1m.
At 30 June 2024 the fair value of the Notes (Level 1) was £246m (31 December
2023: £242m).
Sterling Notes: Due November 2028
In November 2021 the Group issued £250m unsecured Sterling Notes due November
2028. The Notes were issued at a discount of £1m, raising £249m before issue
costs. The Notes have a fixed coupon of 2.625% paid semi-annually, subject to
compliance with the terms of the Notes.
Interest of £3m was incurred in 2024 (30 June 2023: £3m). The amortisation
expense of discount and issue costs in 2024 was £1m (2023 was less than
£1m).
At 30 June 2024 accrued interest amounted to £1m and unamortised discount and
issue costs were £2m.
At 30 June 2024 the fair value of the Notes (Level 1) was £215m (31 December
2023: £210m).
Sterling Notes: Due April 2030
In April 2023 the Group issued £250m unsecured Sterling Notes due April 2030.
The Notes were issued at a discount of £1m, raising £249m before issue
costs. The Notes have a fixed coupon of 7.875% paid semi-annually, subject
to compliance with the terms of the Notes.
Interest of £10m was incurred in 2024 (30 June 2023: £4m). The amortisation
expense of discount and issue costs in 2024 was £1m (2023 was less than
£1m).
At 30 June 2024 accrued interest amounted to £645m and unamortised discount
and issue costs were £3m.
At 30 June 2024 the fair value of the Notes (Level 1) was £268m (31 December
2023: £269m).
17. Lease liabilities
The maturity analysis of lease liabilities is as follows:
30 June 30 June 31 December 2023
2024 2023
£m £m £m
Gross amounts payable:
- Year 1 46 38 44
- Year 2 46 37 42
- Year 3 39 36 40
- Year 4 32 34 32
- Year 5 31 29 29
- Onwards 129 155 142
323 329 329
Less: future interest expense (90) (68) (78)
Balance sheet carrying value 233 261 251
Included in current liabilities 30 37 28
Included in non-current liabilities 203 224 223
233 261 251
18. Reconciliation of profit before tax to cash flow from
operating activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Profit before tax 120 91 96
Add back: finance costs 31 30 66
Deduct: finance income (20) (12) (34)
Earnings Before Interest and Taxation ('EBIT') 131 109 128
Adjustments for:
- Share-based payment charge 12 9 17
- Depreciation of property, plant and equipment 10 11 22
- Impairment of property, plant and equipment 1 5 5
- Fair value movements on investment properties 1 - -
- Depreciation of right-of-use assets 11 11 23
- Impairment of right-of-use assets 5 7 6
- Amortisation of intangible assets 15 15 28
- Amortisation of intangible assets arising on consolidation 21 22 44
- Impairment of intangible assets arising on consolidation - - 39
- Impairment of goodwill - - 47
- Remeasurement of deferred consideration - (5) (3)
- Unrealised foreign exchange (gain)/loss of Vendor Loan Notes - (2) (2)
Operating cash flow before movement in working capital 207 182 354
(Increase)/decrease in trade and other receivables (69) 28 69
Increase in net Matched Principal related balances (2) (8) (20)
Decrease in net balances with Clearing Organisations 18 1 -
Increase in net stock lending balances (8) (13) (4)
Increase in trade and other payables 22 20 33
Increase in provisions 5 11 6
Cash flow from operating activities 173 221 438
19. Analysis of net funds including lease liabilities
1 January Cash Non-cash Exchange 30 June
2024 flow items differences 2024
£m £m £m £m £m
Cash and cash equivalents 1,029 (92) - (4) 933
Overdrafts (10) (10) - - (20)
1,019 (102) - (4) 913
Financial investments 189 (12) - (3) 174
Sterling Notes January 2024(1) (37) 37 - - -
Sterling Notes May 2026(2) (250) 7 (8) - (251)
Sterling Notes November 2028(2) (249) 3 (3) - (249)
Sterling Notes April 2030(2) (251) 10 (10) - (251)
Liquidnet Vendor Loan Notes(3) (40) 39 - 1 -
Total debt excluding leases liabilities (827) 96 (21) 1 (751)
Lease liabilities(4) (251) 22 (4) - (233)
Total financing liabilities (1,078) 118 (25) 1 (984)
Net funds 130 4 (25) (6) 103
1. Cash flow relates to principal repaid of £37m reported as cash flow
from financing activities.
2. Cash flows relates to interest paid reported as a cash outflow from
operating activities.
3. Cash flow relates to the repayment of the Liquidnet Vendor Loan Notes
reported as cash flow from financing activities.
4. Cash flows relates to interest paid of £8m reported as cash outflow
from operating activities and principal paid of £14m reported as a cash
outflow from financing activities.
Cash and cash equivalents comprise cash at bank and other short term highly
liquid investments with an original maturity of three months or less. As at
30 June 2024 cash and cash equivalents, net of overdrafts, amounted to £913m
(31 December 2023: £1,019m) of which £118m (31 December 2023: £105m)
represent amounts subject to restrictions and are not readily available to be
used for other purposes within the Group. Cash at bank earns interest at
floating rates based on daily bank deposit rates. Short term deposits are
made for varying periods of between one day and three months depending on the
immediate cash requirements of the Group, and earn interest at the respective
short term deposit rates.
Financial investments comprise government debt securities, term deposits and
restricted funds held with banks and clearing organisations.
Non-cash items represent interest expense, the amortisation of discount and
debt issue costs, and the recognition and derecognition of lease liabilities.
20. Provisions
Property Re-structuring Legal Total
and other
£m £m £m £m
At 1 January 2024 12 5 28 45
Charge to income statement 1 4 4 9
Utilisation of provisions (1) (3) (1) (5)
Effect of movements in exchange rates - - - -
At 30 June 2024 12 6 31 49
Included in current liabilities 17
Included in non-current liabilities 32
49
Property provisions outstanding as at 30 June 2024 relate to provisions in
respect of building dilapidations and represent the estimated cost of making
good dilapidations and disrepair on various leasehold buildings.
Restructuring provisions outstanding as at 30 June 2024 relate to termination
and other employee related costs. It is expected that these obligations will
be discharged during 2024.
Legal and other provisions include provisions for legal claims brought against
subsidiaries of the Group together with provisions against obligations for
certain long-term employee benefits and non-property related onerous
contracts. At present the timing and amount of any payments are uncertain
and provisions are subject to regular review. It is expected that the
obligations will be discharged over the next 18 years.
Commodities and Futures Trading Commission-Bond issuances investigation
ICAP Global Derivatives Limited ('IGDL'), ICAP Energy LLC ('Energy'), ICAP
Europe Limited ('IEL'), Tullett Prebon Americas Corp. ('TPAC'), tpSEF Inc.
('tpSEF'), Tullett Prebon Europe Limited ('TPEL') Tullett Prebon (Japan)
Limited ('TPJL') and Tullett Prebon (Australia) Limited ('TPAL') are currently
responding to an investigation by the CFTC in relation to the pricing of
issuances utilising certain of TP ICAP's indicative broker pricing screens and
certain recordkeeping matters including in relation to employee use of
personal devices for business communications and other books and records
matters. The investigation remains open and the Group is co-operating with
the CFTC in its enquiries. Whilst it is not possible to predict the ultimate
outcome of the investigation, the Group has made a provision reflecting
management's best estimate as at this date of the cost of settling the
investigation. The Group has not disclosed the amount provided as it is
considered to be prejudicial to reaching a settlement. The actual outcome
may differ significantly from management's current estimate. As the relevant
matters occurred prior to the Group's acquisition of the ICAP Global Broking
Business ('IGBB') the Group reached a related settlement with ICAP's successor
company, NEX Group Limited, under the terms of the purchase agreement, and on
confidential terms.
Securities Exchange Commission - Liquidnet investigation
In October 2022, Liquidnet Inc. ("Liquidnet") received an inquiry from the
Securities and Exchange Commission relating to, among other things, compliance
with SEC Rule 15c3-5 and audit trail and access permissions to its ATS
platforms. Whilst it is not possible to predict the ultimate outcome of the
investigation, the Group has made a provision reflecting management's best
estimate as at this date of the cost of settling the investigation. The
Group has not disclosed the amount provided as it is considered to be
prejudicial to reaching a settlement. The actual outcome may differ
significantly from management's current estimate.
21. Contingent liabilities
Contingent liabilities represent material cases, investigations or other
matters where the Group considers the risk of a material outflow is possible,
but not probable, or where the Group assesses and reports the risk to be
probable, but are unable to make a reliable estimate to establish a
provision. Quantification of potential liability is not given, nor provided
for, where it is not practicable to predict the outcome or resolution of the
relevant matter, or estimate an amount to be provided.
Labour claims - ICAP Brazil
ICAP do Brasil Corretora De Títulos e Valores Mobiliários Ltda ('ICAP
Brazil') is a defendant in 4 (31 December 2023: 7) pending lawsuits filed in
the Brazilian Labour Court by persons formerly associated with ICAP Brazil
seeking damages under various statutory labour rights accorded to employees
and in relation to various other claims including wrongful termination, breach
of contract and harassment (together the 'Labour Claims'). The Group estimates
the maximum potential aggregate exposure in relation to the Labour Claims,
including any potential social security tax liability, to be BRL 8.3m (£1.2m)
(31 December 2023: BRL 39.0m (£6.4m)). The Group is the beneficiary of an
indemnity from NEX in relation to any liabilities in respect of one of the 4
Labour Claims insofar as they relate to periods prior to completion of the
Group's acquisition of ICAP Global Broking Business. The Labour Claims are at
similar and final stages of their respective proceedings and are pending the
court's decision on appeal. The Group intends to contest liability in each of
these matters and to vigorously defend itself. Unless otherwise noted, it is
not possible to predict the ultimate outcome of these actions.
Flow case - Tullett Prebon Brazil
In December 2012, Flow Participações Ltda and Brasil Plural Corretora de
Câmbio, Títulos e Valores ('Flow') initiated a lawsuit against Tullett
Prebon Brasil Corretora de Valores e Câmbio Ltda. and Tullett Prebon Holdings
do Brasil Ltda alleging that the defendants have committed a series of unfair
competition misconducts, such as the recruitment of Flow's former employees,
the illegal obtainment and use of systems and software developed by the
plaintiffs, as well as the transfer of technology and confidential information
from Flow and the collusion to do so in order to increase profits from
economic activities. The amount currently claimed is BRL 419m (£59.7m) (31
December 2023: BRL 400m (£64.1m)). The Group intends to vigorously defend
itself but there is no certainty as to the outcome of these claims. Currently,
the case is in an early expert testimony phase.
Yen LIBOR Class actions
The Group is currently defending the following LIBOR related actions:
(i) Stichting LIBOR Class Action
On 15 December 2017, the Stichting Elco Foundation, a Netherlands-based claim
foundation, filed a writ initiating litigation in the Dutch court in Amsterdam
on behalf of institutional investors against ICAP Europe Limited ('IEL'), ICAP
plc, Cooperative Rabobank U.A., UBS AG, UBS Securities Japan Co. Ltd, Lloyds
Banking Group plc, and Lloyds Bank plc. The litigation alleges manipulation by
the defendants of the JPY LIBOR, GBP LIBOR, CHF LIBOR, USD LIBOR, EURIBOR,
TIBOR, SOR, BBSW and HIBOR benchmark rates, and seeks a declaratory judgment
that the defendants acted unlawfully and conspired to engage in improper
manipulation of benchmarks. If the plaintiffs succeed in the action, the
defendants would be responsible for paying costs of the litigation, but each
allegedly impacted investor would need to prove its own actual damages. It is
not possible at this time to determine the final outcome of this litigation,
but IEL has factual and legal defences to the claims and intends to defend the
lawsuit vigorously. A hearing took place on 18 June 2019 on Defendants motions
to dismiss the proceedings. On 14 August 2019 the Dutch Court issued a ruling
dismissing ICAP plc from the case entirely but keeping certain claims against
IEL relating solely to JPY LIBOR. On 9 December 2020, the Dutch Court issued a
final judgement dismissing the Foundation's claims in their entirety. In
March 2024, the Appellate Court reversed the majority of the claims that the
lower Court had dismissed. In April 2024, defendants filed an application
for an immediate appeal of the Appellate Court's decision to the Dutch Supreme
Court. This application remains pending decision. The Group is covered by an
indemnity from NEX in relation to any outflow in respect of the ICAP entities
with regard to these matters. It is not possible to estimate any potential
financial impact in respect of this matter at this time.
Yen LIBOR Class actions
(ii) Euribor Class Action
On 13 August 2015, ICAP Europe Limited, along with ICAP plc, was named as a
defendant in a Fourth Amended Class Action Complaint filed in the United
States District Court by lead plaintiff Stephen Sullivan asserting claims of
Euribor manipulation. Defendants briefed motions to dismiss for failure to
state a claim and lack of jurisdiction, which were fully submitted as of 23
December 2015. On 21 February 2017, the Court issued a decision dismissing a
number of foreign defendants, including the ICAP Europe Limited and NEX
International plc (previously ICAP plc now NEX International Limited), out of
the lawsuit on the grounds of lack of personal jurisdiction. Because the
action continued as to other defendants, the dismissal decision for lack of
personal jurisdiction has not yet been appealed. However, the plaintiffs
announced on 21 November 2017 that they had reached a settlement with the two
remaining defendants in the case. As a part of their settlement, the two bank
defendants have agreed to turn over materials to the plaintiffs that may be
probative of personal jurisdiction over the previously dismissed foreign
defendants. The remaining claims in the litigation were resolved by a
settlement which the Court gave final approval to on 17 May 2019. Plaintiffs
filed a notice of appeal on 14 June 2019, appealing the prior decisions on the
motion to dismiss and the denial of leave to amend. Defendants filed a
cross-notice of appeal on 28 June 2019 appealing aspects of the Court's prior
rulings on the motion to dismiss that were decided in the Plaintiffs' favour.
These appeals have been stayed since August 2019 pending a ruling in an
unrelated appellate matter involving similar issues. In December 2021, the
unrelated appeal was decided and the stay of the appeal and cross appeal was
lifted and commencing in May 2022 a briefing schedule was implemented. The
motions have been fully briefed but the appeal and cross appeal are not
anticipated to be ruled upon until sometime in late 2024 or later. It is
not possible to predict the ultimate outcome of this action or to provide an
estimate of any potential financial impact. The Group is covered by an
indemnity from NEX in relation to any outflow in respect of the ICAP entities
with regard to these matters.
ICAP Securities Limited, Frankfurt branch - Frankfurt Attorney General
administrative proceedings
On 19 December 2018, ICAP Securities Limited, Frankfurt branch ('ISL') (now TP
ICAP Markets Limited) was notified by the Attorney General's office in
Frankfurt notifying ISL that it had commenced administrative proceedings
against ISL and criminal proceedings against former employees and a former
director of ISL, in respect of aiding and abetting tax evasion by Rafael Roth
Financial Enterprises GmbH ('RRFE'). It is possible that a corporate
administrative fine may be imposed on ISL and earnings derived from the
criminal offence confiscated. ISL has appointed external counsel and is in the
process of investigating the activities of the relevant desk from 2006-2009.
This investigation is complicated as the majority of relevant records are held
by NEX and NEX failed to disclose its engagement with the relevant authorities
prior to the sale of ICAP to Tullett Prebon in 2016. The Group issued
proceedings against NEX in respect of breach of warranties under the sale and
purchase agreement in connection with the IGBB acquisition in relation to
these matters. The claim against NEX has been settled on confidential terms.
Since the Frankfurt proceedings are at an early stage, details of the alleged
wrongdoing or case against ISL are not yet available, and it is not possible
at present to provide a reliable estimate of any potential financial impact on
the Group.
ICAP Securities Limited and The Link Asset and Securities Company Limited -
Proceedings by the Cologne Public Prosecutor
On 11 May 2020, TP ICAP learned that proceedings have been commenced by the
Cologne Public prosecutor against ICAP Securities Limited ('ISL') (now TP ICAP
Markets Limited) and The Link Asset and Securities Company Ltd ('Link') in
connection with criminal investigations into individuals suspected of aiding
and abetting tax evasion between 2004 and 2012. It is possible that the
Cologne Public Prosecutor may seek to impose an administrative fine against
ISL or Link and confiscate the earnings that ISL or Link allegedly derived
from the underlying alleged criminal conduct by the relevant individuals. ISL
and Link have appointed external lawyers to advise them. The Group issued
proceedings against NEX in respect of breach of warranties under the sale and
purchase agreement in connection with the IGBB acquisition in relation to
these matters. The claim against NEX has been settled on confidential terms.
Since the Cologne proceedings are at an early stage, details of the alleged
wrongdoing or case against ISL and Link are not yet available, and it is not
possible at present to provide a reliable estimate of any potential financial
impact on the Group.
Portigon Ag and others v. TP ICAP plc
TP ICAP plc (now TP ICAP Finance plc) is a defendant in an action filed by
Portigon AG in July 2021 in the Supreme Court of the State of New York County
of Nassau alleging losses relating to certain so called "cum ex" transactions
allegedly arranged by the Group between 2005 and 2007. In June 2022, the
Court dismissed the action for lack of personal jurisdiction. In July 2022,
the plaintiffs filed a motion with the Court for reconsideration as well as a
notice of appeal. The plaintiff's motion for reconsideration was denied and
the plaintiffs have appealed the dismissal of its claims. Portigon's appeal
has been fully briefed and the parties are awaiting a date for oral argument
from the court in late 2024. The Group intends to contest liability in the
matter and to vigorously defend itself. It is not possible to predict the
ultimate outcome of this action or to provide an estimate of any potential
financial impact.
MM Warburg AG and others v TP ICAP Markets Limited, The Link Asset and
Securities Company Limited and others
TP ICAP Markets Limited ('TPIM') and Link are defendants in a claim filed in
Hamburg by Warburg on 31 December 2020, but which only reached TPIM and Link
on 26 October 2021. The claim relates to certain German "cum-ex" transactions
that took place between 2007 and 2011. In relation to those transactions
Warburg has refunded EUR 185 million to the German tax authorities and is
subject to a criminal confiscation order of EUR 176.5 million. It has also
been ordered to repay a further EUR 60.8 million to the German tax authorities
and is subject to a related civil claim for EUR 48.8 million. Warburg's claims
are based primarily on joint and several liability (Warburg having now dropped
claims initially advanced in tort and most of the claims initially advanced in
contract). TPIML/Link filed their defence in April 2022 and received Warburg's
reply to the defence in September 2022. TPIML/Link filed their rejoinder in
response to Warburg's reply to TPIML/Link's defence on 6 December 2023. A
hearing took place on 13 May 2024 with final submissions due late July 2024
and an expected date for final judgment in October 2024. TPIM and Link are
contesting liability in the matter and the Group considers it is able to
vigorously defend itself. Whilst it is not possible to predict the ultimate
outcome of this action, the Group does not expect a material adverse financial
impact on the Group's results or net assets as a result of this case.
General note
The Group operates in a wide variety of jurisdictions around the world and
uncertainties therefore exist with respect to the interpretation of complex
regulatory, corporate and tax laws and practices of those territories.
Accordingly, and as part of its normal course of business, the Group is
required to provide information to various authorities as part of informal and
formal enquiries, investigations or market reviews. From time to time the
Group's subsidiaries are engaged in litigation in relation to a variety of
matters. The Group's reputation may also be damaged by any involvement or the
involvement of any of its employees or former employees in any regulatory
investigation and by any allegations or findings, even where the associated
fine or penalty is not material.
Save as outlined above in respect of legal matters or disputes for which a
provision has not been made, notwithstanding the uncertainties that are
inherent in the outcome of such matters, currently there are no individual
matters which are considered to pose a significant risk of material adverse
financial impact on the Group's results or net assets.
The Group establishes provisions for taxes other than current and deferred
income taxes, based upon various factors which are continually evaluated, if
there is a present obligation as a result of past events, it is probable that
an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate of the amount of the obligation can be
made.
In the normal course of business, certain of the Group's subsidiaries enter
into guarantees and indemnities to cover trading arrangements and/or the use
of third-party services or software.
The Group is party to numerous contractual arrangements with its suppliers
some of which, in the normal course of business, may become subject to dispute
over a party's compliance with the terms of the arrangement. Such disputes
tend to be resolved through commercial negotiations but may ultimately result
in legal action by either or both parties.
22. Financial instruments
(a) Categorisation of financial assets and liabilities
FVTOCI
equity instruments
FVTPL FVTOCI Total
Financial Assets trading instruments debt instruments Amortised carrying
cost amount
30 June 2024 £m £m £m £m £m
Non-current financial assets
measured at fair value
Equity securities - - 16 - 16
Corporate debt securities - 2 - - 2
Non-current financial assets not measured at fair value
Finance lease receivables - - - 25 25
Other receivables - - - 4 4
- 2 16 29 47
Current financial assets
measured at fair value
Matched Principal financial assets 33 - - - 33
Fair value gains on unsettled Matched Principal transactions 459 - - - 459
Government debt securities - 66 - - 66
Current financial assets
Not measured at fair value(1)
Term deposits - - - 108 108
Other debtors - - - 52 52
Accrued income - - - 10 10
Owed to associates and joint ventures - - - 4 4
Trade receivables - - - 332 332
Amounts due from clearing organisations - - - 31 31
Deposits paid for securities borrowed - - - 2,733 2,733
Finance lease receivables - - - 4 4
Cash and cash equivalents - - - 933 933
492 66 - 4,207 4,765
Total financial assets 492 68 16 4,236 4,812
1. The Directors consider that the carrying value of assets not measured
at fair value approximate to their fair values.
FVTOCI
equity instruments
FVTPL FVTOCI Total
Financial Assets trading instruments debt instruments Amortised carrying
cost amount
30 June 2023 £m £m £m £m £m
Non-current financial assets
measured at fair value
Equity securities - - 20 - 20
Corporate debt securities - 2 - - 2
Non-current financial assets not measured at fair value
Finance lease receivables - - - 26 26
Other receivables - - - 7 7
- 2 20 33 55
Current financial assets
measured at fair value
Matched Principal financial assets 19 - - - 19
Fair value gains on unsettled Matched Principal transactions 348 - - - 348
Government debt securities - 102 - - 102
Current financial assets
Not measured at fair value(1)
Term deposits - - - 67 67
Other debtors - - - 45 45
Accrued income - - - 12 12
Owed to associates and joint ventures - - - 4 4
Trade receivables - - - 348 348
Amounts due from clearing organisations - - - 54 54
Deposits paid for securities borrowed - - - 1,375 1,375
Finance lease receivables - - - 5 5
Cash and cash equivalents - - - 983 983
367 102 - 2,893 3,362
Total financial assets 367 104 20 2,926 3,417
1. The Directors consider that the carrying value of assets not measured
at fair value approximate to their fair values.
FVTOCI
equity instruments
FVTPL FVTOCI Total
Financial Assets trading instruments debt instruments Amortised carrying
cost amount
31 December 2023 £m £m £m £m £m
Non-current financial assets
measured at fair value
Equity securities - - 17 - 17
Corporate debt securities - 2 - - 2
Non-current financial assets not measured at fair value
Finance lease receivables - - - 27 27
Other receivables - - - 6 6
- 2 17 33 52
Current financial assets
measured at fair value
Matched Principal financial assets 24 - - - 24
Fair value gains on unsettled Matched Principal transactions 545 - - - 545
Government debt securities - 92 - - 92
Current financial assets
Not measured at fair value(1)
Term deposits - - - 97 97
Other debtors - - - 41 41
Accrued income - - - 11 11
Owed to associates and joint ventures - - - 4 4
Trade receivables - - - 304 304
Amounts due from clearing organisations - - - 37 37
Deposits paid for securities borrowed - - - 1,776 1,776
Finance lease receivables - - - 3 3
Cash and cash equivalents - - - 1,029 1,029
569 92 - 3,302 3,963
Total financial assets 569 94 17 3,335 4,015
1. The Directors consider that the carrying value of assets not measured
at fair value approximate to their fair values.
Financial Liabilities Mandatorily at FVTPL Other financial liabilities Total
carrying amount
Non-current Current Non-current Current
30 June 2024 £m £m £m £m £m
Financial liabilities
measured at fair value
Matched Principal financial liabilities - 7 - - 7
Fair value losses on unsettled Matched Principal transactions - 455 - - 455
- 462 - - 462
Financial liabilities
Not measured at fair value(2)
Overdrafts - - - 20 20
Sterling Notes May 2026 - - 250 1 251
Sterling Notes November 2028 - - 248 1 249
Sterling Notes April 2030 - - 247 4 251
Other creditors - - - 107 107
Accruals(1) - - 2 90 92
Owed to associates and joint ventures - - - 5 5
Trade payables - - - 48 48
Amounts payable to clearing organisations - - - 18 18
Deposits received for - - - 2,721 2,721
securities loaned
Lease liabilities - - 203 30 233
- - 950 3,045 3,995
Total financial liabilities - 462 950 3,045 4,457
1. Accruals of £264m, representing employment related obligations at
the reporting date, are not recorded as financial liabilities.
2. The Directors consider that the carrying value of financial
liabilities not measured at fair value, excluding lease liabilities and loans
and borrowings, approximate to their fair values. Amounts payable under lease
liabilities are disclosed in Note 17, and the fair values of loans and
borrowings are disclosed in Notes 16.
Financial Liabilities Mandatorily at FVTPL Other financial liabilities Total
carrying amount
Non-current Current Non-current Current
30 June 2023 £m £m £m £m £m
Financial liabilities
measured at fair value
Matched Principal financial liabilities - 2 - - 2
Fair value losses on unsettled Matched Principal transactions - 349 - - 349
Deferred consideration 1 49 - - 50
1 400 - - 401
Financial liabilities
Not measured at fair value(2)
Overdrafts - - - 4 4
Liquidnet Vendor loan Notes - - - 40 40
Sterling Notes January 2024 - - - 37 37
Sterling Notes May 2026 - - 249 1 250
Sterling Notes November 2028 - - 248 1 249
Sterling Notes April 2030 - - 247 4 251
Other creditors - - - 93 93
Accruals(1) - - 2 108 110
Owed to associates and joint ventures - - - 4 4
Trade payables - - - 44 44
Amounts payable to clearing organisations - - - 25 25
Deposits received for - - - 1,361 1,361
securities loaned
Lease liabilities - - 224 37 261
- - 970 1,759 2,729
Total financial liabilities 1 400 970 1,759 3,130
1. Accruals of £249m, representing employment related obligations at
the reporting date, are not recorded as financial liabilities.
2. The Directors consider that the carrying value of financial
liabilities not measured at fair value, excluding lease liabilities and loans
and borrowings, approximate to their fair values. Amounts payable under lease
liabilities are disclosed in Note 17, and the fair values of loans and
borrowings are disclosed in Notes 16.
Financial Liabilities Mandatorily at FVTPL Other financial liabilities Total
carrying amount
Non-current Current Non-current Current
31 December 2023 £m £m £m £m £m
Financial liabilities
measured at fair value
Fair value losses on unsettled Matched Principal transactions - 541 - - 541
Deferred consideration - 51 - - 51
- 592 - - 592
Financial liabilities
Not measured at fair value(2)
Overdrafts - - - 10 10
Liquidnet Vendor Loan Notes - - - 40 40
Sterling Notes January 2024 - - - 37 37
Sterling Notes May 2026 - - 249 1 250
Sterling Notes November 2028 - - 248 1 249
Sterling Notes April 2030 - - 247 4 251
Other creditors - - - 85 85
Accruals(1) - - - 97 97
Owed to associates and joint ventures - - - 3 3
Trade payables - - - 40 40
Amounts payable to clearing organisations - - - 6 6
Deposits received for - - - 1,773 1,773
securities loaned
Lease liabilities - - 223 28 251
- - 967 2,125 3,092
Total financial liabilities - 592 967 2,125 3,684
1. Accruals of £287m, representing employment related obligations at
the reporting date, are not recorded as financial liabilities.
2. The Directors consider that the carrying value of financial
liabilities not measured at fair value, excluding lease liabilities and loans
and borrowings, approximate to their fair values. Amounts payable under lease
liabilities are disclosed in Note 17, and the fair values of loans and
borrowings are disclosed in Notes 16.
(b) Maturity profile of financial liabilities
As at 30 June 2024, the contractual maturities, including future interest
obligations, of the Group's financial liabilities were as follows:
Contractual maturities of financial and lease liabilities Between Between Total
Less than 3 and 12 1 and 5 Over contractual
3 months months years 5 years cash flows
30 June 2024 £m £m £m £m £m
Matched Principal financial liabilities 7 - - - 7
Settlement of open Matched Principal purchases(1) 110,366 - - - 110,366
Deposits received for 2,721 - - - 2,721
securities loaned
Trade payables 48 - - - 48
Amount due to clearing organisations 18 - - - 18
Other creditors 107 - - - 107
Accruals 90 - 2 - 92
Owed to associates and joint venture 5 - - - 5
Lease liabilities 11 35 148 129 323
Overdrafts 20 - - - 20
Sterling Notes May 2026 - 13 263 - 276
Sterling Notes November 2028 - 7 273 - 280
Sterling Notes April 2030 - 20 78 270 368
113,393 75 764 399 114,631
30 June 2023 (restated)
Matched Principal financial liabilities 2 - - - 2
Settlement of open Matched Principal purchases(1,2) 44,834 - - - 44,834
Deposits received for 1,361 - - - 1,361
securities loaned
Trade payables 44 - - - 44
Amount due to clearing organisations 25 - - - 25
Other creditors 93 - - - 93
Accruals 108 - 2 - 110
Owed to associates and joint venture 4 - - - 4
Lease liabilities 10 28 136 155 329
Overdrafts 4 - - - 4
Liquidnet Vendor Loan Notes - 41 - - 41
Sterling Notes January 2024 - 38 - - 38
Sterling Notes May 2026 - 13 276 - 289
Sterling Notes November 2028 - 7 26 253 286
Sterling Notes April 2030 - 20 79 289 388
Deferred consideration - 49 1 - 50
46,485 196 520 697 47,898
1. Settlement of open Matched Principal purchases represents the payment
in exchange for Matched Principal financial assets pending their onward
sale. The onward sale results in inflows from the settlement of related open
Matched Principal sales.
2. June 2023 has been restated to include £1,324m previously netted
against open Matched Principal sales (Note 14).
Contractual maturities of financial and lease liabilities Between Between Total
Less than 3 and 12 1 and 5 Over contractual
3 months months years 5 years cash flows
31 December 2023 £m £m £m £m £m
Settlement of open Matched Principal purchases(1) 125,645 - - - 125,645
Deposits received for 1,773 - - - 1,773
securities loaned
Trade payables 40 - - - 40
Amount due to clearing organisations 6 - - - 6
Other creditors 85 - - - 85
Accruals 97 - - - 97
Owed to associates and joint venture 3 - - - 3
Lease liabilities 7 37 143 142 329
Overdrafts 10 - - - 10
Liquidnet Vendor Loan Notes 40 - - - 40
Sterling Notes January 2024 37 - - - 37
Sterling Notes May 2026 - 13 270 - 283
Sterling Notes November 2028 - 7 276 - 283
Sterling Notes April 2030 - 20 79 279 378
Deferred consideration 51 - - - 51
127,794 77 768 421 129,060
1. Settlement of open Matched Principal purchases represents the payment
in exchange for Matched Principal financial assets pending their onward
sale. The onward sale results in inflows from the settlement of related open
Matched Principal sales.
(c) Fair value measurements recognised in the statement of
financial position
The following table provides an analysis of the financial instruments that are
measured subsequent to initial recognition at fair value, grouped into Levels
1 to 3 based on the degree to which the fair value is observable:
Ø Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities;
Ø Level 2 fair value measurements are those derived from inputs other than
quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices); and
Ø Level 3 fair value measurements are those derived from valuation techniques
that include inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Level 1 Level 2 Level 3 Total
30 June 2024 £m £m £m £m
Financial assets
measured at fair value
Matched Principal financial assets 33 - - 33
Fair value gains on unsettled Matched Principal transactions 459 - - 459
Equity instruments - 9 7 16
Corporate debt securities - - 2 2
Government debt securities 66 - - 66
Financial liabilities
measured at fair value
Matched Principal financial liabilities (7) - - (7)
Fair value losses on unsettled Matched Principal transactions (455) - - (455)
96 9 9 114
30 June 2023
Non-financial assets measured at fair value
Investment properties - - 12 12
Financial assets
measured at fair value
Matched Principal financial assets 19 - - 19
Fair value gains on unsettled Matched Principal transactions 348 - - 348
Equity instruments - 11 9 20
Corporate debt securities - - 2 2
Government debt securities 102 - - 102
Financial liabilities
measured at fair value
Matched Principal financial liabilities (2) - - (2)
Fair value losses on unsettled Matched Principal transactions (349) - - (349)
Deferred consideration - - (50) (50)
118 11 (27) 102
Level 1 Level 2 Level 3 Total
31 December 2023 £m £m £m £m
Non-financial assets measured at fair value
Investment properties - - 12 12
Financial assets
measured at fair value
Matched Principal financial assets 24 - - 24
Fair value gains on unsettled Matched Principal transactions 545 - - 545
Equity instruments - 8 9 17
Corporate debt securities - - 2 2
Government debt securities 92 - - 92
Financial liabilities
measured at fair value
Fair value losses on unsettled Matched Principal transactions (541) - - (541)
Deferred consideration - (51) - (51)
120 (43) 23 100
Reconciliation of Level 3 fair value movements:
Investment properties (at FVTPL) Equity instruments Debt securities Total
(at FVTOCI) (at FVTOCI)
£m £m £m £m
Balance as at 1 January 2024 12 9 2 23
Amounts settled during the period - - - -
Modification/ remeasurement (11) - - (11)
Net change in fair value(1) (1) (2) - (3)
Effect of movements in exchange rates - - - -
Balance as at 30 June 2024 - 7 2 9
1. Included in 'administrative expenses' for items at FVTPL.
The modification/remeasurement of investment properties reflects a
corresponding reduction in the related finance lease liability that was
modified during the period. The investment properties were subsequently fair
valued by an independent valuer not connected with the Group. Fair value was
determined based on the present value of the estimated future cash flows
related to the properties, resulting in a change in fair value of £1m.
No offsets have been made in the disclosure of the fair values of financial
assets and financial liabilities.
23. Reconciliation of shareholders' funds
(a) Share capital
The following table shows an analysis of the changes in share capital
attributable to the equity shareholders of TP ICAP Group plc.
Share capital
£m
Balance as at 1 January 2024 197
Issuance of new ordinary shares 2
Balance as at 30 June 2024 199
During the period 6,720,000 ordinary shares were issued at par out of retained
earnings. The shares were transferred to TP ICAP Group plc EBT to be used for
the settlement of eligible equity settled share-based payment awards.
(b) Other reserves
Re-organisation reserve Revaluation reserve Hedging and translation Treasury shares Own shares Total
£m £m £m £m £m £m
Balance as at 1 January 2024 (946) 3 29 (29) (20) (963)
Exchange differences on translation of foreign operations - - (9) - - (9)
Equity investments at FVTOCI - 4 - - - 4
- net change in fair value
Taxation on components of other comprehensive income - - - - - -
Total comprehensive income/(loss) - 4 (9) - - (5)
Disposal of equity investments at FVTOCI - (3) - - - (3)
Own shares acquired/share buyback - - - (17) - (17)
Share settlement of equity settled share-based awards - - - - 4 4
Own shares acquired for employee trusts - - - - (6) (6)
Balance as at 30 June 2024 (946) 4 20 (46) (22) (990)
Treasury shares
During the period, as part of the Group's share buyback programmes announced
in August 2023 and March 2024, the Group repurchased 8,028,403 ordinary shares
(2023:16,634,112 ordinary shares), representing 1.0% (2023: 2.1%) of the
shares in issue, at a cost of £17m (2023: £29m).
At 30 June 2024 the shares held had not been cancelled and had a fair value of
£49m.
(c) Total equity
Attributable to the equity holders of the parent
Total from 23(a) Total from 23(b) Retained earnings Total Non-controlling interests Total equity
£m £m £m £m £m £m
Balance as at 1 January 2024 197 (963) 2,814 2,048 17 2,065
Profit for the period - - 91 91 2 93
Remeasurement of defined benefit pension schemes - - (1) (1) - (1)
Exchange differences on translation of foreign operations - (9) - (9) (2) (11)
Equity investments at FVTOCI - 4 - 4 - 4
- net change in fair value
Taxation on components of other comprehensive income - - - - - -
Total comprehensive income/(loss) - (5) 90 85 - 85
Shares issued 2 - (2) - - -
Dividends paid - - (76) (76) - (76)
Disposal of equity investments at FVTOCI - (3) 3 - - -
Own shares acquired/share buyback - (17) - (17) - (17)
Share settlement of equity settled share-based awards - 4 (4) - - -
Dividend equivalents paid on equity settled share-based awards - - (2) (2) - (2)
Own shares acquired for employee trusts - (6) - (6) - (6)
Credit arising on equity settled share-based awards - - 14 14 - 14
Credit arising on the exchange of cash to equity settled share-based - - 18 18 - 18
awards (Note 25)
Balance as at 30 June 2024 199 (990) 2,855 2,064 17 2,081
24. Retirement benefits
(a) Defined benefit schemes
The Group operates a small number of non-UK defined benefit schemes which are
not significant in the context of the Group. The Group's UK defined benefit
pension scheme was wound up during 2023
30 June 30 June 31 December 2023
Overseas schemes 2024 2023
Balance Sheet £m £m £m
Retirement benefit assets 2 - 3
Retirement benefit obligations (4) (2) (4)
(b) UK Defined benefit scheme
The Group's UK defined benefit scheme, the Tullett Prebon Pension Scheme (the
'Scheme'), was wound up in 2023. The Trustee repaid a net £30m to the
Group, representing £46m of remaining Scheme assets less applicable taxes at
35%, amounting to £16m.
25. Share-based awards
Global Equity Plan
During the period the Group introduced a new equity-settled award plan, the
Global Equity Plan ('GEP'), for eligible brokers. This plan was introduced
to replace relevant awards previously made under the Group's Global Equity
Linked Plan ('GELP'), a cash-settled award scheme. Under the GEP, eligible
brokers with performance bonuses and initial contract payments over agreed
financial values receive a proportion of their payment in deferred shares.
The deferred shares will be settled in equity and are subject to the
completion of service conditions of between three to five years, and the
fulfilment of other conduct requirements. The fair value of the shares
equates to the monetary value of the awards at grant date and includes the
value of dividends that will accrue to the beneficiaries.
The cancellation of the GELP awards and their replacement with matching GEP
awards has been accounted for as a modification in accordance with IFRS 2
'Share based payments'. The liability held in respect of the GELP awards at
the time of the modification has been transferred to equity, resulting in a
credit to Retained Earnings of £18m. As there were no differences between
the fair values of the awards when modified no additional charge to the Income
Statement has been recorded.
26. Events after the balance sheet date
On the 7 August 2024 the Group announced a further £30m share buy back.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Statement of Directors' Responsibilities
Each of the Directors who are Directors as at the date of this Statement of
Directors' Responsibilities confirm to the best of their knowledge that:
· the condensed set of financial statements has been prepared in
accordance with UK and EU adopted IAS 34 'Interim Financial Reporting';
· the condensed set of financial statements gives a true and fair
view of the assets, liabilities, financial position and profit or loss of the
Group as required by DTR 4.2.4R; and
· the Interim Management Report herein includes a fair review of
the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
- an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
- material related-party transactions in the first six months and any
material changes in the related-party transactions described in the last
annual report.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial information differs from legislation in other jurisdictions.
By order of the Board
Robin Stewart
Chief Financial Officer
7 August 2024
TP ICAP Group plc
22 Grenville Street
St Helier
Jersey
JE4 8PX
TP ICAP Group plc is a company registered in Jersey with registered number
130617.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Independent review report to TP ICAP Group plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed TP ICAP Group plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Interim management
report of TP ICAP Group plc for the 6 month period ended 30 June 2024 (the
"period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting' as adopted by the European Union, UK adopted
International Accounting Standard 34, 'Interim Financial Reporting', and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
The interim financial statements comprise:
· the Condensed Consolidated Balance Sheet as at 30 June 2024;
· the Condensed Consolidated Income Statement for the period then
ended;
· the Condensed Consolidated Statement of Comprehensive Income for the
period then ended;
· the Condensed Consolidated Cash Flow Statement for the period then
ended;
· the Condensed Consolidated Statement of Changes in Equity for the
period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim management report of
TP ICAP Group plc have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting' as adopted by the
European Union, UK adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Interim management report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim management report, including the interim financial statements, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the Interim management report in accordance with
the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. In preparing the Interim management
report, including the interim financial statements, the directors are
responsible for assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim management report based on our review. Our
conclusion, including our Conclusions relating to going concern, is based on
procedures that are less extensive than audit procedures, as described in the
Basis for conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
7 August 2024
PricewaterhouseCoopers LLP, 7 More London Riverside, London SE1 2RT
T: +44 (0) 20 7583 5000, F: +44 (0) 20 7212 7500, www.pwc.co.uk
PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH.PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for designated investment business and by the Solicitors Regulation Authority for regulated legal activities.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
GLOSSARY
APM
ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures ('APMs') are complementary to measures
defined within International Financial Reporting Standards ('IFRS') and are
used by management to explain the Group's business performance and financial
position. They include common industry metrics, as well as measures management
and the Board consider are useful to enhance the understanding of its
performance and allow meaningful comparisons between periods, Regions and
Business Segments. The APMs reported are monitored consistently across the
Group to manage performance on a monthly basis.
APMs, defined below, are considered important in measuring the delivery of the
Group's strategic priorities. Detailed reconciliations of APMs to their
nearest IFRS Income Statement equivalents and adjusted APMs can be found in
this section, if not readily identifiable elsewhere within this Interim
Statement.
The APMs the Group uses are:
Term Definition
Adjusted attributable earnings Earnings attributable to the equity holders of the parent less significant
items and taxation on significant items.
Adjusted earnings Reported earnings less significant items and taxation on significant items.
Used interchangeably with Adjusted profit for the period or Adjusted post-tax
earnings
Adjusted earnings per share Adjusted earnings less earnings attributable to non-controlling interests,
divided by the weighted number of shares in issue.
Adjusted EBIT Earnings before net interest, tax significant items and share of equity
accounted investments' profit after tax. Used interchangeably with adjusted
operating profit.
Adjusted EBIT margin Adjusted EBIT margin is adjusted EBIT expressed as a percentage of reported
revenue and is calculated by dividing adjusted EBIT by reported revenue for
the period.
Adjusted EBITDA Earnings before net interest, tax, depreciation, amortisation of intangible
assets, significant items and share of equity accounted investments' profit
after tax.
Adjusted net finance expense Net finance expense excluding finance income and finance costs included as
significant items.
Adjusted performance Measure of performance excluding the impact of significant items.
Attributable Earnings Earnings attributable to the equity holders of the parent, being total
earnings less earnings attributable to non-controlling interests.
Constant Currency Comparison of current period results with the prior period will be impacted by
movements in foreign exchange rates versus GBP, the Group's presentation
currency. In order to present an additional comparison of underlying
performance in the period, the Group retranslates foreign denominated prior
period results at current period exchange rates.
Contribution Contribution represents revenue less the direct costs of generating that
revenue. Contribution is calculated as the sum of Broking contribution and
Parameta Solutions contribution.
Contribution margin Contribution margin is contribution expressed as a percentage of reported
revenue and is calculated by dividing contribution by reported revenue.
Divisional contribution Represents Divisional revenues less Divisional front office costs, inclusive
of the revenue and front office costs internally generated between Global
Broking, Energy & Commodities and Parameta Solutions.
Divisional contribution margin Divisional contribution margin is Divisional contribution expressed as a
percentage of Divisional revenue and is calculated by dividing Divisional
contribution by Divisional revenue.
Earnings Used interchangeably with Profit for the period or year.
EBIT Earnings before net interest and tax.
EBIT margin EBIT margin is EBIT expressed as a percentage of reported revenue and is
calculated by dividing EBIT by reported revenue for the period.
EBITDA Earnings before net interest, tax, depreciation, amortisation of intangible
assets and share of equity accounted investments' profit after tax.
Leverage ratio Total debt, excluding finance lease liabilities, divided by an external Rating
Agency's definition of adjusted EBITDA, being profit before tax adding back
borrowing costs, depreciation and amortisation, and adjusting for significant
items and other adjustments (share of results of associates and joint ventures
and share based payment expense).
Net finance expense Reported finance income less reported finance costs.
Significant Items Items that distort year-on-year and operating-to-operating segment
comparisons, which are excluded in order to provide additional understanding,
comparability and predictability of the underlying trends of the business, to
arrive at adjusted operating and profit measures.
Significant items include the amortisation of acquired intangible assets as
similar charges on internally generated assets are not included within the
reported results as these cannot be capitalised under IFRS. This is despite
the adjusted measure including the revenue related to the acquired
intangibles.
Significant items do not include the amortisation of purchased and developed
software and is retained in both the reported and adjusted results as these
are considered to be core to supporting the operations of the business. This
is because there are similar comparable items included from purchased and
developed software in the reported results for ongoing businesses as well as
the acquired items.
A.1 Operating costs by type
H1 2024 IFRS Significant Adjusted Allocated as Allocated as
Reported items Front Office Support
£m £m £m £m £m
Employment costs 719 (1) 718 546 172
General and administrative expenses 235 (11) 224 153 71
954 (12) 942 699 243
Depreciation of PPE and ROUA 21 - 21 - 21
Impairment of PPE and ROUA 6 (6) - - -
Amortisation of intangible assets 36 (21) 15 - 15
1,017 (39) 978 699 279
H1 2023 IFRS Significant Adjusted Allocated as Allocated as
Reported items Front Office Support
(restated) (restated)
£m £m £m £m £m
Employment costs 700 (3) 697 531 166
General and administrative expenses(1) 258 (19) 239 148 91
958 (22) 936 679 257
Depreciation of PPE and ROUA 22 - 22 - 22
Impairment of PPE and ROUA 12 (12) - - -
Amortisation of intangible assets 37 (22) 15 - 15
Operating expenses(2) 1,029 (56) 973 679 294
June 2023 divisional operating expenses have been restated to reflect the
divisional changes reported in the 2023 Annual Report. The restatements are as
follows:
1. General and administrative expenses for front office decreased by
£14m and for support increased by £14m.
2. Total operating expenses for front office decreased by £14m and for
support increased by £14m.
Year end 2023 IFRS Significant Adjusted Allocated as Allocated as
Reported items Front Office Support
£m £m £m £m £m
Employment costs 1,360 (6) 1,354 1,035 319
General and administrative expenses 511 (33) 478 308 170
1,871 (39) 1,832 1,343 489
Depreciation of PPE and ROUA 45 - 45 - 45
Impairment of PPE and ROUA 11 (11) - - -
Amortisation of intangible assets 72 (44) 28 - 28
Impairment of intangible assets 86 (86) - - -
Operating expenses 2,085 (180) 1,905 1,343 562
A2. Adjusted earnings per share
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Adjusted profit (Note 5) 125 118 229
Non-controlling interests (2) (1) (2)
Adjusted earnings 123 117 227
Weighted average number of shares (for Basic EPS - Note 10) 761.5 781.3 777.7
Adjusted Basic EPS 16.2p 15.0p 29.2p
Weighted average number of shares (for Diluted EPS - Note 10) 782.8 796.0 794.2
Adjusted Diluted EPS 15.7p 14.7p 28.6p
A3. Adjusted EBITDA and Contribution
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Adjusted EBIT (Note 5) 170 163 300
Add: Depreciation of PPE and ROUA (Note 6 and A1) 21 22 45
Add: Amortisation of intangibles (Note 6 and A1) 15 15 28
Adjusted EBITDA 206 200 373
Less: Operating income (Note 7) (4) (6) (22)
Add: Operating income reported as significant items (Note 5) - 2 8
Add: Management and support costs (A1) 243 257 489
Contribution 445 453 848
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