Interdealer broker TP ICAP PLC (LON:TCAP) said on Tuesday it has chosen Paris to be its headquarters in the European Union after Brexit as it posted a 50% drop in first-half pre-tax profit.
Pre-tax profit fell to £34mln in the first six months of the year from £71mln and revenues dropped 2% to £910mln as investors exercised more caution amid economic and political uncertainty.
READ: Tullett Prebon to buy ICAP's global broking arm for £1.1bn
The company said costs stemming from Brexit, new EU rules on market transparency and cyber security also dragged on its performance.
TP ICAP said conditions in the energy and commodities division remained challenging during the period, with revenue down 3% to £167mln at constant exchange rates due to weaker US energy markets and lower coal and iron ore revenue.
The Global Broking division delivered a 5% increase in revenue to £672mln at constant currencies, boosted by increased volatility in financial markets following US interest rate hikes, the proposed end to the European Central Bank’s quantitative easing programme and the Italian election.
TP ICAP said its new EU headquarters in Paris will run when UK exits the EU in March 2019.
Electronic trading platform iSwap, which TP ICAP is a major shareholder of, is expected to choose Amsterdam as its EU hub.
New CEO takes 'realistic approach' to business appraisal
Last month, TP ICAP fired its chief executive John Phizackerley and issued a profit warning, blaming costs related to Brexit and new regulations.
READ: TP ICAP plunges as CEO quits amid warning that Brexit-related costs will see it missing 2018 profit expectations
Phizackerley’s successor Nicolas Breteau said he has taken a “realistic approach in the appraisal of the integration programme, our operational capabilities, and the cost headwinds we expect going into 2019”.
“Some of these costs are one-off in nature, and not within our control, but we remain committed to ensuring that resources are allocated correctly and that we spend shareholder's money in the most efficient way possible for the long-term success of the group,” he said.
ShoreCap upgrades TP ICAP to 'hold'
Shore Capital raised its rating to ‘hold’ from ‘sell’, saying the interims were in line with expectations.
“Our view has been that that this is a business capable of generating low single digit revenue growth and, if the new CEO can do a better job of controlling costs than his predecessor, profit growth may be slightly higher,” ShoreCap said.
“We can’t quite bring ourselves to upgrade to a ‘buy’, despite some potential for further near-term upside (and weak sterling providing a tailwind to forecasts). We therefore move from ‘sell’ to ‘hold’ and await further detail from the results presentation.”
TP ICAP was formed in 2016 following Tullett Prebon’s acquisition of the voice-broker business of its former rival ICAP for £1.28bn.