TP ICAP HY Revenues Up 3% At CER, But Down 2% On Reported Basis

TP ICAP plc (IAPLF.PK,IAPLY.PK,IAP.L) said that revenues for the six months to 30 June were 3% higher than the prior year at constant exchange rates and 2% lower as reported. It was consistent with 2018 full year revenue guidance provided in March, which remains unchanged. Both the Tullett Prebon and ICAP businesses continue to contribute to Group revenue growth.

The company noted that actions taken in the first half of the year have delivered additional synergy savings of around 5 million pounds in the period and we have exited H1 at an annualised run rate of around 65 million pounds.

As a result the Group is reducing its synergy target from 100 million pounds to 75 million pounds by the end of 2019 on an annualised basis.

Underlying operating profit for 2018 will be impacted by additional ongoing cost headwinds of around 10 million pounds, relating to Brexit, MIFID II, regulatory and legal costs and IT security. Market forces are expected to increase broker compensation in 2018 from 50.5% in FY 2017 to at least 51%.

Near-term additional UK regulatory capital requirements and the refinancing of the revolving credit facility (RCF) are likely to increase finance costs in 2018 to around £35m. As a result, earnings per share for 2018 are expected to be slightly below the bottom-end of the range of analyst expectations.

The company noted that 2019 will see the cost associated with Brexit, regulatory and legal, and IT security increase from the above-mentioned 10 million pounds in 2018 to 25 million pounds. In addition, the Group plans to make strategic organic investments of around 15 million pounds in Global Broking, Energy & Commodities and the Data & Analytics divisions to accelerate the future growth of the TP ICAP business. The increased finance costs will increase to around 40 million pounds in 2019.

In addition, TP ICAP said that John Phizackerley is leaving his post as Chief Executive and as a member of the Board with immediate effect and has been replaced by Nicolas Breteau, subject to FCA approval. Nicolas joined Tullett Prebon in 2016 as Chief Commercial Officer and currently leads TP ICAP's largest business, Global Broking.

In addition, Robin Stewart has been appointed as Chief Financial Officer on a permanent basis, subject to FCA approval. Robin joined Collins Stewart Tullett Plc in 2003 as Head of Tax and has been acting as the Company's Interim Chief Financial Officer since November 2017.

Both Nicolas and Robin will become members of the Board with immediate effect.

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