Tullett Prebon PLC Trading Statement (7856E)
November 06 2015 - 2:00AM
UK Regulatory
TIDMTLPR
RNS Number : 7856E
Tullett Prebon PLC
06 November 2015
6 November 2015
Tullett Prebon plc
Trading Statement
Tullett Prebon plc (the "Company") is today issuing a trading
update in relation to the period from 1 July 2015.
Business Update
Our strategic review, the results of which were communicated to
the market in June this year, concluded that the central role
played by interdealer brokers at the heart of the global wholesale
OTC markets remains secure, but that revenue declines were likely
to continue in a number of traditional interdealer broker
products.
Over the summer and through September and October the level of
activity in the wholesale OTC financial markets has continued to be
under pressure from the structural and cyclical factors affecting
the interdealer broker industry. Market volumes continue to be
adversely affected by the more onerous regulatory environment
applicable to many of our bank customers whose trading activity has
been suppressed by the deleveraging of their balance sheets and
lower risk appetite. The continuation of low interest rate
conditions and compressed bond market spreads in Europe has further
dampened activity, particularly in Interest Rate Derivatives and
Fixed Income products.
The strategic review concluded that the Energy and commodities
markets do not currently face all the same pressures as the
traditional interdealer broker product areas, and we have continued
to benefit from the investments we have made in this sector. The
performance of PVM Oil Associates Limited and its subsidiaries
("PVM"), which was acquired in November last year, has continued to
be strong. PVM's main activities are in crude oil and petroleum
products, and the business has continued to benefit from the level
of activity in the oil and related products markets, which picked
up following the significant changes in the oil price experienced
since the start of the second half of 2014.
Revenue in the four months July to October of GBP255m was 9%
higher than the GBP233m reported for the same period last year.
Excluding PVM, revenue in the four months July to October was 5%
lower at constant exchange rates than in the same period last
year.
Year to date (January to October) revenue of GBP671m was 13%
higher than the GBP594m reported for the same period last year.
Excluding PVM, year to date revenue was 3% lower at constant
exchange rates than in the same period last year.
We have continued to invest in the business's capabilities to
identify and implement business initiatives. We have also continued
to roll out our cultural, legal, compliance and risk governance
frameworks to deliver our commitment to instil and embed the
highest standards of conduct. As set out in our interim results
announcement, these investments, increasing regulatory related
costs, and the impact of the areas of business weakness, are
expected to offset the improvement in the operating margin compared
with that delivered last year. The further decline in revenue
during the second half puts further pressure on the operating
margin. The 2015 full year underlying operating profit margin is
now expected to be approximately 1.5% points lower than last
year.
In the light of the further reduction in market volumes since
the end of June, particularly in Europe, further action is being
taken to reduce headcount and fixed costs in the affected areas.
These actions are expected to result in a reduction of around 5% in
the front office headcount in the traditional interdealer product
areas. The cost of these actions will be charged as an exceptional
item in the 2015 accounts.
The Company was voted the number one interdealer broker in
Currency in Risk magazine's 2015 annual interdealer rankings
published in September, and was named Interest Rates Broker of the
Year, and SEF of the Year, in the 2015 GlobalCapital awards.
The Company's financial position remains strong.
Enquiries:
Paul Mainwaring
Finance Director, Tullett Prebon plc
Direct: +44 (0)20 7200 7995
Email: pmainwaring@tullettprebon.com
Stephen Breslin
Group Head of Communications, Tullett Prebon plc
Direct: +44(0)20 7200 7750
Email: sbreslin@tullettprebon.com
Craig Breheny
Brunswick Group LLP
Direct: +44(0)20 7396 7429
Email: cbreheny@brunswickgroup.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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