TP ICAP revenue grows as it faces Q4 challenges

TP ICAP updated the market on its third quarter on Friday, reporting revenue of £420m in the three months to 30 September - 3% higher than the £406m pro forma revenue in the same period last year and 2% higher at constant exchange rates.

The FTSE 250 company said year-to date revenue at £1.345bn was 9% higher than the £1.234bn pro forma revenue for the same time last year, and 3% higher at constant exchange rates.

It said revenue had shown “modest growth” in the quarter despite mixed market conditions, marked by ongoing low levels of volatility.

Global broking revenue for the quarter was said to be in line with the prior year, and 1% higher year-to-date on a constant currency basis.

Energy and commodities revenue was 1% lower than the prior year period, and 1% lower year-to-date on a constant currency basis, with market conditions said to remain “particularly challenging” for its power and commodities businesses.

TP ICAP’s data and analytics business grew 6% in the quarter, while its institutional services business continued to see what the board described as “strong growth”.

The outlook for fourth quarter revenue remained challenging, the board explained, which reflected current trading conditions compared with the strong performance in the last quarter of 2016, which was driven by US political and economic developments.

In addition, TP ICAP said chief financial officer Andrew Baddeley was stepping down from the board with immediate effect.

The board has asked him to stay with the company until the end of the year to ensure a “smooth transition” can be made, as a search begins for his replacement.

Robin Stewart, currently the deputy CFO, would take up the role on an interim basis.

“Despite mixed market conditions our revenue growth to date demonstrates the value of our diversified portfolio,” said chief executive John Phizackerley.

“Looking ahead we expect comparatively subdued market conditions for the fourth quarter of 2017 although we are well-placed to benefit from any interest rate rises in the US and Europe.”

Phizackerley said the company’s top priority has been delivering the integration of TP ICAP, with which it continued to make “good” progress.

“Integration is on track and in line with the guidance we gave at the half year.

“We have also made significant one-off and long term investments in areas such as MiFID II, broker surveillance systems, cyber security, Belfast and our institutional services division.

“Finally, revenue per broker has increased once more as we continue to improve the efficiency of our workforce.”

Phizackerley also added that the board was “sad” to see Andrew Baddeley go, wishing him “the best” for the future.

“He has overseen the finance function at an intense period of change and growth for the group, and was responsible for putting in place the integration process for the two companies, which is now well underway, and on track.

“He has done this while helping us deliver a good financial performance in challenging market conditions.”