A look Into Operational Performance Of LSE Listed Evraz Plc And TP ICAP Plc

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Evraz Plc

Evraz Plc is a Russian Steel production giant. It has interests in steel, vanadium and mining & minerals, with business operations in the countries of the Russian Federation, the United States, Kazakhstan Canada, the Czech Republic, Ukraine, Italy, and South Africa. The company’s principal activities include iron ore mining, iron ore beneficiation and steel smelting apart from producing vanadium-based products and also trading and logistics activities relating to these products. The company also has holding interests in energy producing companies, shipping and railways transport companies.

The shares of the company have a listing on the London Stock Exchange where trading on its shares happen with the ticker name EVR. The shares of the company also form part of the FTSE 100 Index.

Results Update

On 8 August 2019 the company came out with its interim six-month result for the period ending on 30 June 2019.

• The Free cash flow generated by the company remained strong at US$692 million (for first half of 2018 the Free cash flow generated stood at US$661 million).
• The total debt of the company dropped by US $112 million to stand at US $4,526 million (For Financial Year 2018 the figure stood at  US$4,638 million), while the net debt of the company increased by US$79 million to be at US$3,650 million (For financial year 2018 it stood at  US$3,571 million) due to the new IFRS 16 recognition under Leases standard on the balance sheet for operating leases which were not recognised as a liability previously
• The Consolidated EBITDA of the company totaled US$1,482 million, down by 22.2 per cent from US$1,906 million, in first half of 2018, driving the EBITDA margin down to 24.1 per cent from 30.0 per cent due to lower vanadium, coal and steel product prices.
• The Net profit of the company stood at US$344 million, compared to US$1,145 million in first half of 2018.
• The company has declared an interim dividend for 2019 of US$508.17 million (US$0.35 per share), reflecting the Board's confidence in the company’s financial position and business outlook.

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What to expect.

The company had finished the first half of 2019 with a set of rather healthy numbers, backed by healthy trends in the key markets of its products. In Russia in particular, the company witnessed a recovery in the construction industry and, because of which, there was an increase in the consumption of most of the company’s products.

On the CAPEX front, the company has spent US$309 million. Major investment projects of the company were at that time in the equipment supplier selection stage or in the engineering phase. Overall in the development CAPEX during the first half of 2019, the company funded US$79 million.

During the second half of the year, the company expects the markets to be volatile. The financial performance of the company would draw from the strength of the Russian steel market, the high level of its vertical integration, and its continuing efforts in efficiency improvements.

The company is expected to give a good financial performance in the second half of the year.

TP ICAP Plc

TP ICAP Plc is an inter-dealer brokerage company which was formerly known as Tullett Prebon Plc, which is United Kingdom domiciled. The company acts as an intermediary in the wholesale business of over-the-counter financial products and exchange traded financial markets and commodity markets. It facilitates particularly the commercial and investment banking businesses in trading related activities. The company has its operations in Continental Europe, in the Middle East, In the Americas, and in the Asia Pacific region. The company’s offerings have more than five product verticals: Fixed Income Securities and their derivatives; Treasury Products; Interest Rate Derivatives; Equities and Energy.

The shares of the company have a listing on the London Stock Exchange where they trade using the ticker name TCAP. The shares of the company form part of the FTSE 250 Index.

Trading Update

The company on 11 October 2019 came out with announcement that, with respect to an investigation conducted by it in relation to certain trades undertaken by the subsidiary between the years 2008 and 2011, its subsidiary company , Tullett Prebon (Europe) Limited ("TPEL") has arrived at a settlement with the Financial Conduct Authority (FCA) of the United Kingdom

The investigation also related to the circumstances surrounding a failure by TPEL to discover certain audio files and produce them to the FCA in a timely manner in 2011, together with the account given by TPEL to the FCA as to how those files were discovered.

The Financial Conduct Authority (FCA) observed that TP ICAP Plc's Compliance Department failed to act with due skill, diligence and care and found that certain former managers of TP ICAP's Global Broking Division were at fault. They also came to the conclusion that there were inappropriate controls and systems in place to deal with the risk of unprofessional conduct by the brokers during that time.

TPEL has on its part has admitted the claim and has entered into a Settlement Agreement with the FCA and agreed to pay a total sum of £15.4 million. The settlement amount will be reported as an exceptional item in the 2019 full year financial statement of TP ICAP Plc.

What to Expect

While Commenting on the settlement, CEO of TP ICAP Plc,Nicolas Breteau, pronounced:

"The company is pleased to put behind this historical matter. None of the involved individuals in the broking activities remain with the firm. Â The company has since taken the initiative to enhance its controls and systems to comply with guidelines of the regulators."

The settlement amount has to be recognised by the company in its next results statement and will surely put a dent on its financial performance ensuing an appropriate market response.