Unlock this StockReport nowClick to Unlock

TP ICAP News Story

TCAP 294.5p 5.4  1.9%
19/08/19 7.50k
StockRank


« All News

TP ICAP PLC - Annual Financial Report

Announcement: Tue 9th April, 2019 4:30pm
RNS Number : 6690V
TP ICAP PLC
09 April 2019
 

9 April 2019

 

TP ICAP plc 2018 Annual Report and Notice of 2019 Annual General Meeting

TP ICAP plc (the 'Company') has today published its 2018 Annual Report and circular to shareholders incorporating the Notice of the 2019 Annual General Meeting. Both documents can be viewed at or downloaded from www.tpicap.com/investors.

Copies of both these documents, together with the Form of Proxy, will shortly be available for inspection via the National Storage Mechanism at www.morningstar.co.uk/uk/nsm.do.

The following disclosures comply with Disclosure and Transparency Rule 6.3.5. The Company's full year results announcement on 19 March 2019 contained a management report and condensed financial information derived from the Group's audited statutory accounts. A description of risks and uncertainties, details of related party transactions and the Directors' Responsibility Statement, extracted in full unedited text from the 2018 Annual Report, are set out below. This information should be read in conjunction with, and not as a substitute for, reading the full 2018 Annual Report. Page numbers and notes in the following appendices refer to page numbers and notes in the Company's 2018 Annual Report.

Appendix A: Principal Risks

The Board has conducted a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity.

 

In undertaking this assessment on behalf of the Board, the Risk Committee has considered a wide range of information, including regulatory requirements, reports provided by the Group Risk function, presentations by senior management and the findings from the Group's risk assessment processes.

 


 

Risk

Adverse change to regulatory framework

 

Description

The Group is exposed to the risk of a fundamental change to the regulatory framework which has a material adverse impact on its business and economic model.

 

Potential impact

Reduction in broking activity

Reduced earnings and profitability

Material change in applicable regulatory rules and their interpretation including loss of consolidation waiver

 

Change in risk exposure since 2017

No change

 

Mitigation

Close monitoring of regulatory developments

Active involvement in consultation and rule setting processes

 

Key risk indicator

Key regulatory changes

Status of regulatory change initiatives

 

Related strategic objectives

Build and sustain our technology offering

Enhance our operational excellence

Diversify customers and services

 

 


 

Risk

Deterioration in the commercial environment

 

Description

The risk that due to adverse macro-economic conditions or geopolitical developments, market activity is suppressed leading to reduced trading volumes.

 

The impact of Brexit is addressed separately below.

 

Potential impact

Reduction in broking activity

Pressure on brokerage

Reduced earnings and profitability

 

Change in risk exposure since 2017

No change

 

Mitigation

Clearly defined business development strategy to maintain geographical and product diversification

 

Key risk indicator

Operating profit

Revenues by region

Trade volumes

Revenue forecast

Stress testing scenario outcomes

 

Related strategic objectives

Diversify customers and services

 

 


 

Risk

The impact of Brexit

 

Description

The risk that Brexit leads to a macro-economic downturn and a consequential reduction in trading

volumes and revenue.

 

The risk that the Group is unable to obtain the necessary permissions and implement an appropriate legal structure to preserve cross-border broking between UK and EU clients, resulting in a fragmentation of liquidity and reduced trading volumes.

 

Potential impact

Reduction in broking activity

Loss of market share

Reduced earnings and profitability

 

Change in risk exposure since 2017

Increase

 

Mitigation

Adoption of a Brexit plan which would accommodate a range of potential Brexit scenarios (including a 'no deal Brexit')

Incorporation of a new EU subsidiary to hold EU-based business

Proactive engagement with European regulators and clients

 

Key risk indicator

Key regulatory changes

Brexit plan tracking

 

Related strategic objectives

Build and sustain our technology offering

Enhance our operational excellence

Diversify customers and services

 

 


 

Risk

Failure to respond to client requirements

 

Description

The risk that the Group fails to respond to rapidly changing customer requirements, including the demand for enhanced electronic broking solutions for certain asset classes.

 

Potential impact

Loss of market share

Reduced earnings and profitability

 

Change in risk exposure since 2017

No change

 

Mitigation

Proactive engagement with clients through customer relationship management process

Clearly defined business development strategy which continues to enhance the Group's service offering

 

Key risk indicator

Operating profit

Trade volumes

Revenues by region

New business initiatives

Client satisfaction surveys

 

Related strategic objectives

Build and sustain our technology offering

Enhance our operational excellence

Diversify customers and services

 

 


 

Risk

Failure to deliver integration

 

Description

The risk that the Group fails to achieve the targeted operational efficiencies due to a failure to successfully integrate the ICAP business, or that the cost to complete the integration programme is too high.

 

Potential impact

Double running costs leading to reduced profitability

Lack of investor confidence

 

Change in risk exposure since 2017

Decrease

 

Mitigation

Clearly defined integration plan

Robust integration governance structure

Management of synergies released and monitoring of integration costs

 

Key risk indicator

Integration plan tracking (status)

 

Related strategic objectives

Build and sustain our technology offering

Enhance our operational excellence

Develop our people

Diversify customers and services

 

 


 

Risk

Failure to retain and recruit talent

 

Description

The Group operates in a highly competitive market and is exposed to the risk that it fails to retain or recruit the employees required to deliver its strategy.

 

Potential impact

Potential loss of expertise and client relationships

Increase in employee costs as the Group seeks to counter aggressive competitor activity

 

Change in risk exposure since 2017

No change

 

Mitigation

Proactive management of broker contracts

Competitive remuneration and performance management

Early Careers Programme

 

Key risk indicator

Staff turnover

Revenue per broker

Performance appraisal ratings

 

Related strategic objectives

Develop our people

 


 

Risk

Cyber-security and data protection

 

Description

The risk that the Group fails to adequately protect itself against cyber-attack and/or to adequately secure the data it holds, resulting in loss of operability as well as potential loss of critical business or client data.

 

Potential impact

Loss of revenue

Remediation costs

Damage to reputation

Regulatory sanctions

Payment of damages/compensation

 

Change in risk exposure since 2017

No change

 

Mitigation

Monitor and assess the evolving, and increasingly sophisticated, cyber-threat landscape

Ensure the Group's control framework to address the potential cyber-threats to which it is exposed is appropriate

 

Key risk indicator

System outages

Data loss events

Cyber-security events/losses

Vulnerability monitoring

 

Related strategic objectives

Build and sustain our technology offering

 


 

Risk

Operational failure

 

Description

The Group is exposed to operational risk in nearly every facet of its role as an interdealer broker, including from its dependence on:

 

the accurate execution of a large number of processes, including those required to execute, clear and settle trades; and

a complex IT infrastructure.

 

Potential impact

Financial loss which could, in extreme cases, impact the Group's solvency and liquidity

Damage to the Group's reputation as a reliable market intermediary

 

Change in risk exposure since 2017

No change

 

Mitigation

Appropriate control framework to manage operational risk within risk appetite

Reverse stress tests to identify key risks that could undermine the Group's viability

Effective business continuity plans and capability

Incident and crisis management plans

 

Key risk indicator

Risk events

Execution failure

Settlement fails

Margin calls

 

Related strategic objectives

Build and sustain our technology offering

Enhance our operational excellence

 


 

Risk

Failure to protect proprietary data

 

Description

The risk that the Group fails to protect unauthorised dissemination of Group's proprietary data leading to loss of potential revenue streams.

 

Potential impact

Failure to achieve future revenue growth targets due to non-contractual use of our market information

Damage to reputation

 

Change in risk exposure since 2017

New

 

Mitigation

Periodic audit of licences

Appropriate legal remedies incorporated within licence agreements

 

Key risk indicator

Coverage against defined data audit plan

Data audit findings

 

Related strategic objectives

Diversify customers and services

 


 

Risk

Breach of legal and regulatory requirements

 

Description

The Group operates in a highly regulated environment and is subject to the laws and regulatory frameworks of numerous jurisdictions.

 

Failure to comply with applicable legal and regulatory requirements could result in enforcement

action being taken.

 

See Notes 24 and 33 to the Consolidated Financial Statements.

 

Potential impact

Regulatory and legal enforcement action including censure, fines or loss of operating licence

Severe damage to reputation

 

Change in risk exposure since 2017

No change

 

Mitigation

Group compliance function to ensure that staff are aware of regulatory requirements, and for monitoring compliance with these requirements

Cultural framework to implement the Group's core values and principles

Comprehensive compliance training programme

 

Key risk indicator

Policy breaches

Regulatory and legal enforcement action

 

Related strategic objectives

Enhance our operational excellence

 


 

Risk

Counterparty credit risk

 

Description

The Group is exposed to counterparty credit risk arising from brokerage receivables owed by clients, unsettled Matched Principal trades held with clients and from cash deposit counterparties.

 

Potential impact

Financial loss which could, in extreme cases, impact the Group's solvency and liquidity

 

Change in risk exposure since 2017

No change

 

Mitigation

Counterparty exposures managed against threshold, calibrated to reflect counterparty creditworthiness

Exposure monitoring and reporting by independent credit risk function

Exposure concentration limits to prevent excessive exposure to one institution

 

Key risk indicator

Matched Principal trade exposure

Name Passing receivables

Group cash peak exposure

 

Related strategic objectives

Enhance our operational excellence

Diversify customers and services

 


 

Risk

FX exposure

 

Description

There is a risk that the Group suffers loss as a result of a movement in FX rates whether through transaction risk or translation risk.

 

Potential impact

Financial loss which could, in extreme cases, impact the Group's solvency and liquidity

 

Change in risk exposure since 2017

New

 

Mitigation

Ongoing monitoring of Group's FX positions

 

Key risk indicator

Net currency position

FX exposure

 

Related strategic objectives

Enhance our operational excellence

 


 

Risk

Liquidity risk

 

Description

The Group is exposed to potential margin calls from clearing houses and correspondent clearers. The Group also faces liquidity risk through being required to fund Matched Principal trades which fail to settle on settlement date.

 

Potential impact

Reduction in the Group's liquidity resources which could, in extreme cases, impact the Group's liquidity

 

Change in risk exposure since 2017

No change

 

Mitigation

Broking limits that restrict potential margin exposure

Group maintains significant cash resources in each operating centre to ensure immediate access to funds

Committed £270m revolving credit facility ('RCF')

 

Key risk indicator

Unplanned intra-Group funding calls

RCF draw-down

Level of margin call

 

Related strategic objectives

Enhance our operational excellence

Diversify customers and services

 

 

Appendix B: Related party transactions

 

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this Note.

 

The total amounts owed to and from associates and joint ventures at 31 December 2018, which also represent the value of transactions during the year, are set out below:

 


Amounts owed by related parties

Amounts owed to related parties


2018

£m

2017

£m

2018

£m

2017

£m

Associates

Joint Ventures

 

3

1

 

3

1

 

-

(2)

 

-

(2)

 

 

The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been made for doubtful debts in respect of the amounts owed by related parties.

 

Directors

Costs in respect of the Directors who were the key management personnel of the Group during the year are set out below in aggregate for each of the categories specified in IAS 24 'Related Party Disclosures'. Further information about the individual Directors is provided in the audited part of the Report on Directors' Remuneration on pages 85 to 93.

 


2018

£m

2017

£m

Short term benefits

3

4

Social security costs

-

1


3

5

 

 

Appendix C: Directors' Responsibility Statement

 

The Directors confirm that to the best of their knowledge:

 

the Financial Statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

the Strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

the Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position, performance, business model and strategy.

 

 

Enquiries:

 

Richard Cordeschi, Group Company Secretary

TP ICAP plc

Direct: +44 (0)20 7200 7331

email: richard.cordeschi@tpicap.com 

 

Media

 

William Baldwin-Charles, Media Relations & Internal Communications Director

TP ICAP plc

Direct: +44 (0)20 7200 7124

email: william.baldwin-charles@tpiap.com

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
ACSLLFLESRIAIIA



 
Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis