Full Year Results Year to 31 March 2016

Transcription

1 Full Year Results Year to 31 March May 2016

2 Disclaimer These materials do not constitute an offer to sell or the solicitation of an offer to purchase any security. These materials contain "forward-looking statements" as defined in the U.S. Private Securities Litigation Reform Act of These statements are based on current Company expectations and are subject to risks and uncertainties, which could cause actual results to differ materially. Such risks and uncertainties include, but are not limited to: fluctuations in interest rates and foreign currency exchange rates; market acceptance of new trading technologies; global and regional economic conditions and legislative, regulatory and political developments; and domestic and international competition in the Company's global markets. Additional information regarding these and other factors is available in the Company's reports available on request from the Company. This document may not be distributed where to do so would be unlawful. This document may not be distributed in the UK except to persons falling within article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order

3 Michael Spencer Group Chief Executive Officer

4 Highlights The sale of ICAP s voice broking business to Tullett Prebon was announced in November 2015, and approved by shareholders in March It is expected to complete later this year A year of good progress and positive change despite ongoing challenging market conditions Investment in new products and technology is delivering the creation of long-term value for shareholders Acquisition of ENSO Financial Analytics, a Euclid Opportunities investment, widening our customer base 4

5 Stuart Bridges Group Finance Director

6 Financial highlights Group revenue down 6% as markets remain challenging; down 3% excluding closed desks and on a constant currency basis 96 million invested in new product initiatives (2014/15: 60m) Trading profit before tax is 203 million (2014/15: 229m), impacted by 7 million FX loss Trading EPS (basic) 24.6p (2014/15: 28.7p) Final dividend payment of 15.4p per share, maintaining full year dividend at 22.0p per share Free cash flow conversion rate of 96% in the year (2014/15: 121%) 6

7 Financial impact of transaction In November 2015 we entered into a Transaction to dispose of ICAP s global hybrid voice-broking and information business, including our associated technology and broking platforms (including iswap and Fusion), and certain of ICAP s joint ventures and associates ( IGBB ), to Tullett Prebon ( TP ). ICAP shareholders and Newco will together own approximately 56% of the issued shared capital of the enlarged TP ( TP ICAP ) with 19.9% retained by ICAP Newco plc. Under the accounting standards, the Group income statement presents IGBB performance separately from the remaining businesses Financials in this presentation are split down as follows: Continuing relates to Newco remaining business 1. On completion, Newco will receive dividend income as a result of the 19.9% stake in TP ICAP 2. On completion, Newco will receive 330 million of cash from TP ICAP and will recognise an investment equal to the fair value of its stake in TP ICAP 3. Design of Newco s organisational structure is underway Discontinued relates to IGBB, adjusted for certain provisions in the sale and purchase agreement ( SPA ) Total relates to the full ICAP Group The assets and liabilities attributable to IGBB are presented as held for sale assets and liabilities on the face of the balance sheet 7

8 Group income statement Headline results 2015/ /15 m m Total Revenue 1,201 1,276 Less Discontinued (741) (808) Continuing revenue Total Trading operating profit Less Discontinued (82) (98) Continuing trading operating profit Highlights Group revenue down 6% as markets remain challenging; down 3% excluding closed desks and on a constant currency basis Trading PBT is down 11% due to reduced revenue, and increased investment Foreign exchange 2015/16: 7m loss (2014/15: 4m gain) Final dividend payment of 15.4p per share, maintaining full year dividend at 22.0p per share Total Trading Profit before tax Less Discontinued (93) (107) Continuing Trading Profit before tax Full year dividend 22.0p 22.0p Trading EPS (basic) 24.6p 28.7p 8

9 Investment in major new initiatives 96m spent on new product initiatives 25% % of Electronic Markets / PTRI revenue from new products / customers 23% Income statement 2015/ m 20% 18% 12% 2014/ m Electronic Markets PTRI 15% 10% 8% 12% 6% 9% m Capex 4% 5% 11% 5% 9% 3% 6% 4% 2% 0% 2011/ / / / /16 All new products/customers since FY2010/ / /15 m m m Electronic Markets PTRI Global Broking 9

10 Growth Product launches Acquisitions 2002 Strong track record of innovation 30% stake in TriOptima Acquisition of BrokerTec Acquisition of EBS, Reset 25% stake 2006 Acquisition of Traiana Acquisition of MyTreasury Remainder of Reset in 3 tranches 2009 Remaining stake in TriOptima, and stake in AcadiaSoft 2010 Investment in Duco 2011 Banks invest in Traiana with implied valuation of 185m Investment in OpenGamma Launch of EBS Direct Further investment in Duco & AcadiaSoft, investment in Abide Financial Investments in Enso TriOptima expands compression to CME, JSCC & FX forwards Acquisition of Enso and investments in Cloud9 and Digital Asset Holdings 2016 Launch of BrokerTec Direct TriOptima launches bilateral compression Launch of triresolve TriOptima launches CCP compression Launch of Traiana CreditLink Launch of EBS efix EBS Direct for FX forwards / corporates Launch of EBS Select drivers (1) BTEC / EBS growth in algorithmic trading / non-bank customers Growth of FX prime brokerage underpins growth of Traiana Basel III / SLR drives increased demand for compression EMIR requirements for portfolio reconciliation underpins triresolve Market share gains / migration from voice drives growth of EM currencies on EBS (1) Ranges are an approximation for the estimated start of each respective trend 10

11 Electronic Markets 2015/ /15 m m Total Revenue Less Discontinued (4) (5) Continuing revenue Total Trading operating profit Headline Less Discontinued 8 9 Highlights Revenue up 1%, down 4% on a constant currency basis Margins impacted by continued investment in new products, EBS Direct and BrokerTec Direct EBS ADV decreased by 9%, as higher trading activity following central bank actions in the previous year were not repeated Revenue from innovation has increased by 31% YoY, accounting for 22% of EBS/BrokerTec revenue (2014/15: 16%) Revenue mix Continuing trading operating profit / % 2% Total Trading operating profit margin 30% 36% 2014/ Continuing trading operating profit margin 33% 40% m EBS BrokerTec Other 11

12 Post Trade Risk and Information 2015/ /15 m m Total Revenue Less Discontinued (51) (41) Continuing revenue Total Trading operating profit Less Discontinued (27) (27) Continuing trading operating profit Headline Highlights Revenue growth underpinned by increased demand for compression and reconciliation in TriOptima, and by a change to directly billing some customers in Information, increasing both revenue, and the related operating expenses Discontinued includes the voice division of ICAP Information Services (IIS) Investment in new products, and acquisition of ENSO Continuing Transaction v Subscription split 2015/16 50%/50% (2014/15: 52%/48%) Revenue mix 2015/ Total Trading operating profit margin 40% 43% 7% 20% 0% 5% Continuing trading operating profit margin 36% 37% 2014/ m TriOptima Information Traiana Reset 12

13 Global Broking 2015/ /15 m m Total Revenue Less Discontinued (686) (762) Continuing revenue 8 27 Total Trading operating profit Headline Less Discontinued (63) (80) Highlights Excluding closed desks, revenue is down 3% on a reported basis and down 5% on a constant currency basis Continuing revenue includes shipping. Discontinued is IGBB Margins have been impacted by challenging market conditions throughout the year, FX and investment in Fusion and e-commerce Continuing trading operating profit includes 14m of group costs which will not transfer under the SPA Revenue mix Continuing trading operating loss (17) (18) 2015/ Total Trading operating profit margin 7% 8% 2014/15 2% 10% 10% 6% 7% 4% Continuing trading operating profit margin n/m n/m m Commodities Credit Emerging markets Equities FX & MM Rates Figures are shown excluding closed desks 13

14 Earnings total operations Headline Continuing Discontinued Total Continuing Discontinued Total 2015/ / / / / /15 m m m m m m Revenue , ,276 Operating Profit Net Interest charge (29) 4 (25) (32) 1 (31) JVs and Associate Trading Profit before tax Tax (23) (20) (43) (26) (18) (44) Trading Profit after tax Acquisition and disposal costs, net of tax (58) - (58) (41) (3) (44) Exceptional items, net of tax (7) (27) (34) (15) (42) (57) Profit for the period Acquisition and disposal costs include 38m of amortisation charges on acquired intangibles, 9m write down on reclassification of the shipping business to held for sale, and 25m impairment charges relating to our investments in certain non-core associates Discontinued exceptional items relate to IGBB disposal costs including separation costs but excluding contingent costs, continuing exceptional costs mainly relate to a write down of intangible assets 14

15 Balance sheet highlights Net Assets Headline As at 31 March As at 31 March m m Intangible assets arising on consolidation Cash and cash equivalents Short-term borrowings (145) (163) Long-term borrowings (519) (386) Restricted cash Other net assets Total net assets 1,018 1,018 As at 31 March As at 31 March m m Highlights Electronic Markets and PTRI businesses represent 826m (91%) of intangible costs arising on consolidation The increase in trade receivables and payables is principally due to a change in clearing arrangements for certain US treasuries within BrokerTec In short-term borrowings 81m of the overdrafts arose due to short-term timing differences from unsettled matched principal trades which reversed shortly after year end Transaction impact Receivables Continuing 59,322 - Held for sale 20,788 25,351 Total receivables 80,110 25,351 Payables Continuing 59,322 - Held for sale 20,738 23,307 Total payables 80,060 23, m of cash to be received as part of the transaction Newco s 19.9% stake in TP ICAP is to be recognised in the balance sheet as an investment Net assets of 1,018m include 532m relating to IGBB 15

16 EBS BrokerTec

17 EBS BrokerTec the traditional business Transaction revenue Ongoing headwinds within the traditional transactional business Continued decline in overall banking trading activity Low interest rates Low FX volatility Fixed revenue Significant fixed/ subscription revenues Traditional fixed revenues stabilised Access revenues stabilised after period of decline Data revenues are growing again Strategy for growth Closely manage costs Focus on execution, expanding the addressable market New product initiatives/ innovation driving revenue growth Maximising the benefit of our unique global networks Leading electronic trading business in FX and fixed income 17

18 Apr-13 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Apr-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Proven track record of success growth since April 2013 ADV $bn 6 NDF ADV $bn 9 CNH ADV $bn 1.2 HKD ADV $bn 25 Direct Spot ADV $bn 1.6 efix ADV $bn 0.7 Scandi More innovation going live, with no further increase in investment 18

19 EBS BrokerTec an exciting transformation Innovation Growth engines beginning to deliver significant revenues EBS Traditional (Core), Innovation & Fixed Revenue as % of total Revenue Transformed from a product to client focused business Introduced new services to an expanded customer base Global banks, regional banks, hedge funds, buy-side, corporates, government institutions, proprietary trading Now offer complete OTC FX product suite Spot, forwards, NDFs, options, precious metals Widest product offering to suit customers executional needs Now a scalable technology company Strong team Investment in new capabilities Reduced time and cost to market Comprehensive suite of products, robust platforms, unique networks 19

20 EBS BrokerTec product innovation and expansion New products and functionality roadmap BrokerTec Direct EBS Institutional EBS Direct: Spot e-fix: EBS Market EBS Treasury: FX EBS Direct: Forwards EBS Direct: Options EBS Treasury: Commercial Paper SGX Block Futures on EBS Market Iceberg Orders: EBS Market Streaming prices: EBS Direct New front-end Full Amount: EBS Direct RFQ: ADV EBS Direct/ EBS Treasury Streaming market data: EBS Market One month against fix: EBS Market Regional Banks Hedge Funds Corporates Forwards traders Asset Managers Government Institutions e-fix 260% growth ($290mn to $1.0bn ADV) CNH 55% growth ($3.8bn to $5.9bn ADV) NDFs 54% growth ($2.9bn to $4.4bn ADV) EBS Direct Spot 27% growth ($13.8bn to $17.5bn ADV) 20

21 Post Trade Risk and Information

22 Post Trade Risk and Information Ecosystem Buy-side Transaction Portfolio Data Analytics Portfolio Portfolio Compression & Valuation Portfolio Portfolio Reconciliation & Margining Portfolio Risk Mitigation Data Sell-side Trade Aggregation and Confirmation Order and Trade Data Networks Custodians (2) Regulatory reporting specialist (2) Reconciliation on-demand (2) (2) CCPs Collateral processing (2) Cloud-based voice trading platform (2) Developer of Distributed Ledger Technology Risk analytics CSDs (1) A cohesive group of businesses providing complementary solutions to clients across the transaction life cycle (1) Central Securities Depositories (2) Minority strategic investments under Euclid Opportunities 22

23 Transaction lifecycle management our services today Analytics & Data Repurposing Referential Data Regulatory Reporting Themes driving opportunity Regulation Order Management System Risk Reduction & Mitigation Electronification Structural trends driving change Standardisation Limit Management Clearing & Settlement Themes driving opportunity Matching & Confirmation Margin & Collateral Management Reconciliations 23

24 Highlights Financials Clients Products Investments trireduce terminated $168 trillion of gross notional outstanding, up 12% on prior year Double digit revenue growth and strong demand in triresolve reconciliation services Traiana non-fx revenues grew 20% primarily driven by CFDs and Equities Over 1,650 institutions using triresolve service with a 22% growth on prior year Information Services signed over 500 clients across a diversified segment population Traiana client base of Regional Banks, Hedge Funds and Asset Managers grew 20% Launch of inflation swap compression and new CCP partners Eurex and NASDAQ Traiana alliance with Trax offering an interoperable Repo matching service Reset expanded its risk mitigation capabilities to equity derivatives Acquisition of ENSO Financial Analytics Investments in Abide Financial, Duco, Digital Asset Holdings and Cloud9 Technologies 24

25 Areas of growth looking ahead ENSO Financial Analytics triresolve Margin A leading provider of a data analytics platform for hedge funds and prime brokers Provides operational insight on counterparty credit risk, collateral management, portfolio financing and treasury functions A web-based, end-to-end margin processing solution in collaboration with AcadiaSoft Assists clients in meeting challenges posed by new margin regulatory requirements Calculates margin required using reconciled trade and collateral balance data Communicates automated margin calls through AcadiaSoft s MarginSphere MiFID II/MiFIR suite of services Leverage Traiana s existing functionality and connectivity to deliver suite of regulatory services offering cross-asset reporting and processing solutions Creation of PTRI s own Approved Publication Arrangement service Collaboration with Abide Financial to offer an Approved Reporting Mechanism Suite of services to include: Global connectivity for multiple asset classes to multiple venues Pre/Post Trade Limit Checking Trade and transaction reporting 25

26 Single User Interface and Data Analytics Transformation transaction lifecycle management Bank / Client All Transactions Traiana Digitalized Secure Contract Traiana Matching Transactions Bank / Client (Unique Identifiers) Operational... Client... Risk... e.g Financial... Transaction Vault Golden records exposing transactions to PTRI Market Place Services e.g Valuation... Settlement Compression Reporting... Client Internal Systems Data feed Single Master Services Agreement Distribute / Publish / Display CCP Trade Repository Regulator Data feed Single Master Services Agreement Bank Internal Systems 26

27 Euclid Opportunities

28 Trends, mandate & investment criteria Macro trends Market structure transformation Significant growth in number of FinTech companies Market trends Electronification Regulation Standardisation Mandate Agile & innovative solutions to customer needs Deep understanding of emerging industry trends Next generation, scalable platforms, models or technology Long term strategic value creation Complimentary to existing PTRI offerings Criteria Significant domain expertise Substantial growth prospects Extraordinary founders & DNA mix Differentiation & network effects Value creation New markets New products Synergies for ICAP New technology Status Product partnerships 7 equity investments Lab & source code agreements 28

29 Strategic alignment New Architecture Distributed Ledger Technology Themes driving opportunity Settlement Regulation Collateral Management Structural trends driving change Risk Reduction and Mitigation Electronification Standardisation Reconciliations Themes driving opportunity Regulatory Reporting Referential Data 29

30 Examples of value creation Distributed Ledger = in use at ICAP Enso Control MiFID II OTC margining services tricalculate = Product collaboration Customers ICAP Innovators New platforms & models New products & technology Continuous innovation Long term shareholder value Consolidation opportunities Market intelligence Platform to scale Domain & operational expertise Incubation & leverage 30

31 Appendix

32 Segmentals 2015/ /15 Electronic Markets PTRI Global Broking Total Electronic Markets PTRI Global Broking Total m m m m m m m m Total Revenue , ,276 Less Discontinued (4) (51) (686) (741) (5) (41) (762) (808) Continuing revenue Total Trading operating profit Less Discontinued 8 (27) (63) (82) 9 (27) (80) (98) Continuing operating profit/(loss) (17) (18) 154 Total Trading operating profit margin (%) Continuing trading operating profit margin (%) n/m (67) 33 32

33 ICAP plc 2 Broadgate, London EC2M 7UR +44 (0) Investor Relations: Alex Dee +44 (0) alex.dee@icap.com