TP Icap to move client relationships to EU countries as it plans for Brexit

 
Oliver Gill
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Icap's Christmas charity day is well known for attracting top celebrities (Source: Getty)

TP Icap said today it will move client relationships out of the UK as a result of Britain's decision to leave the EU.

The broker revealed the plans as it posted better than expected annual results, with shares in the firm falling two per cent in early trading.

The figures

Tullett Prebon completed its buyout of Icap's global broking and information business at the end of last year, creating the largest interdealer broker in the world.

The group reported two sets of figures, one including the costs of the Icap acquisition and another on an underlying basis, likely to be focus of market attention.

Underlying revenue increased from £796m to £892m with operating profit rising from £108m to £132m.

The group's operating margin rose from 13.6 per cent to 14.8 per cent.

Read more: TP Icap told to go back to the drawing board on exec pay plans

Profit before tax was £122m, up 29 per cent, with earnings per share up from 32.2p to 42.5p.

The board of firm shook up the dividend policy by paying an interim dividend of 6.6p in November and 11.25p dividend in January – with a record date prior to the merger between TP and Icap. So no more dividends were announced but there are plans to announce an interim dividend in August.

Why it's interesting

Today's results narrowly beat forecasts with analysts expecting underlying revenues of £888m. Furthermore, flash results in the first two months of 2017 were looking good with revenues up 11 per cent.

Brexit impact

Britain's exit from the EU will have an impact on how TP Icap will do its business going forwards, chief executive John Phizackerley's said in his annual review:

In the future, we will likely manage more client relationships from within the Eurozone, where we already have a network of offices in Paris, Frankfurt, Madrid and in other locations.

"We have a strategic planning workstream which examines the various Brexit scenarios and how we might want to adapt our business accordingly."

Trump's America

TP Icap also thinks Donald Trump's election as US president will benefit them. It said there is "potential for regulatory reform that could impact markets"

Read more: TP Icap closes first deal of ambitious growth plan

Phizackerley said: "I am confident that TP ICAP will continue to be resilient and successful. A lot of our upside is in our hands."

What the company

Phizackerley added: "We achieved strong progress in our financial performance in 2016 against the backdrop of a challenging trading environment, but one which showed tentative signs of greater activity in the second half of the year.

"We play a pivotal role at the heart of the global financial system and are a vital source of pricing and liquidity in the over the counter markets. We are now integrating the two businesses and extracting the considerable benefits of the combination."

We will continue to look for opportunities to deliver our strategic objective to build revenue and raise the quality and quantity of earnings through further diversification of our client base, investing in technology, expanding into new products, and building scale in the Americas and Asia Pacific, whilst preserving the business’s core franchises.

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