Tullett Prebon plc Annual Report 2010
Asia Revenue increased by 22% in Asia. Year end broker headcount of 357 was little changed on last year, with average revenue per broker up by 13% reﬂecting the strong recovery of market activity in the region due to the return of risk appetite and capital deployed by clients. The increased revenue in 2010 also reﬂects the development of the Risk Management Services business, much of which is operated from Singapore. Much of the business in Asia is focused on Treasury Products and Interest Rate Derivatives and revenue grew strongly in these areas reﬂecting the return of liquidity in regionally based products and market share gains. The business also beneﬁted from investment in the development of other products, including the oil products desks in Singapore and the equity derivatives activity in Tokyo. Although the three largest centres in the region, Singapore, Hong Kong and Tokyo, represented over 80% of the region’s revenue, the business is proﬁtably developing scale in other Asia Paciﬁc ﬁnancial centres, including the joint venture in Shanghai.
Operating proﬁt and operating margin in Europe were both slightly lower than last year, primarily reﬂecting the small decline in revenue. Broker employment costs as a percentage of revenue were little changed compared with 2009, and support costs were also in line with last year. Operating proﬁt in North America nearly halved and the operating margin reduced to 8.7%. The reduction in proﬁtability reﬂects the reduction in the scale of the business following the broker defections, as although support costs in the region reduced, they still represented a higher percentage of revenue in 2010 than in 2009. Broker employment costs as a percentage of revenue were also higher than a year ago reﬂecting the increased costs of employment in the light of competitor action and the initial inefﬁciencies experienced as new hires build up to their full run rate of revenue. The business in Asia Paciﬁc has a relatively high level of operational gearing, and the operating margin in the region more than doubled with operating proﬁt increased to £9.2m, primarily due to the beneﬁt of increased revenue. Broker employment costs as a percentage of revenue were also lower than last year as the inefﬁciencies arising from the lower levels of revenue in 2009 were reduced, and support costs were little changed year on year.
Change 2010 £m 2009 £m Constant Exchange Rates
Operating proﬁt by region Europe North America Asia Paciﬁc Reported
120.7 22.5 9.2 152.4
123.2 44.4 3.2 170.8
-2% -49% +188% -11%
-2% -49% +168% -11%
Operating margin by region Europe North America Asia Paciﬁc
22.5% 8.7% 8.1% 16.8%
22.7% 14.0% 3.7% 18.0%