Net income dropped to 89.4 million pounds ($142 million) from 108.5 million pounds in the year-earlier period as compensation costs for brokers ate up a bigger share of revenue, the London-based company said in a statement today. Revenue increased 0.2 percent to 910 million pounds.
Average revenue per broker fell 3 percent to 524,000 pounds, while the number of brokers working for Tullett Prebon increased 4 percent to 1,667 last year, the company said. Broker employment costs made up 59.6 percent of the operation’s revenue, a 1.1 percentage point increase from the year-earlier period. The number of employees who support the firm’s brokers increased 10 percent to 750.
“Actions have been taken to reduce costs and to maintain flexibility in the cost base, although the business does face increased costs relating to electronic platform developments and impending regulatory changes,” Smith said in the statement.
The stock fell 3.7 percent to 317.6 pence in London trading for a market value of about 691 million pounds. The shares have dropped about 25 percent in the past 12 months.
Tullett will eliminate some front-office and support employees in the first half of 2012 at a cost of about 7 million pounds, the broker said.
Underlying pretax profit slipped to 136.1 million pounds from 149 million pounds a year earlier, the inter-dealer broker said. Revenue in the first two months of 2012, at constant exchange rates and excluding the acquisitions of Convencao and Chapdelaine, was 1 percent down on the same period last year, the firm said today.
“Market and competitive conditions are expected to continue to be challenging,” Smith said. “The business has made a reasonable start to the year.”
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