Strong revenue growth and further strategic progress
H1 2021 |
H1 2020 |
Change |
H2 2020 |
Change |
|
| Net Revenue | 259.0 | 214.4 | 21% | 190.0 | 36% |
| Adjusted Operating PBT | 34.6 | 39.4 | -12% | 22.1 | 57% |
| Margin | 13.4% | 18.4% | -500bps | 11.6% | +180bps |
| Total Capital Ratio | 16.6% | 14.2% | 16.1% | ||
| Solvency Ratio | 123% | 109% | 120% |
Highlights
- Net revenue up 21% year-on-year reflecting continued acquisitive and organic growth
- Adjusted Operating PBT in-line with expectations, margins lower year-on-year reflecting lower interest rates during the period and continued development of the business
- $50 million subordinated debt issued in June 2021, increasing our Tier 2 capital
- Strong balance sheet maintained and capital position improved; liquidity headroom increased to $223 million, total capital ratio increased to 16.6% and solvency ratio increased to 123%
- Credit rating affirmed by S&P Global and Long-Term Default Rating assigned by Fitch (BBB / BBB-)
- Completed the acquisition of Starsupply (physical energy broking business), M&A pipeline remains robust
- Expectations for 2021 unchanged, the Group expects to deliver double-digit growth in revenue and adjusted operating profit before tax for the full year
Trading
The Group continues its strong growth trajectory, with reported net revenues up 21% at $259.0 million (2020: $214.4 million) compared to the first half of 2020, primarily reflecting the benefit of recent growth investments, including XFA trading which was acquired in November 2020.
On an organic basis, net revenues were up 10%, reflecting the strong performance of both Marex Solutions and our UK focused mid-cap equities Market Marking franchise, which more than offset the impact of lower levels of client activity in certain markets and lower interest income during the period.
Adjusted operating profit before taxation declined 12%, as expected, to $34.6 million (2020: $39.4 million) due to a combination of lower interest rates and investment in our systems and processes to support future growth. Adjusted for the impact of lower interest rates, adjusted operating PBT in the period would have been slightly ahead of H1 2020.
Balance Sheet
The Group continues to maintain a strong balance sheet and conservative approach to risk and liquidity.
During the period the Group issued $50 million 10-year subordinated debt, further strengthening its Tier 2 capital position. As a result, our solvency ratio improved to 123% (December 2020: 120%) and our liquidity headroom increased to $233 million as at June 2021 (December 2020: $210 million).
We also received positive updates from credit rating agencies in the period. S&P Global Ratings affirmed its BBB long-term and A-2 short-term issuer credit ratings on Marex Financial and BBB- long-term and A-3 short-term issuer credit rating on Marex Group plc. Additionally, Fitch Ratings has now assigned Marex Group plc a Long-Term Issuer Default Rating of ‘BBB-‘ with a Stable Outlook.
Executing our growth strategy
We are making good progress executing our growth strategy and continue to explore a significant pipeline of growth opportunities to further expand and develop our business.
During the period we benefitted from strong performance in some our key growth businesses, including strong double-digit growth in both Marex Solutions and our new UK-focused equities franchise.
We also successfully completed the integration of XFA, the fast-growing exchange-traded derivatives execution broker in North America, which was acquired in November 2020 and we are pleased with how this business is performing. The acquisition broadens our product range and further strengthens our presence in North America.
In addition, since the period end, we have signed agreements to acquire Arfinco, an execution-only broker of Matif grains, and Volcap, a multi-asset business with offices in London and Paris which further expands the Group’s presence in structured products and commodities.
Outlook
The Group continues to benefit from its diversification, across geographies, client groups and products, enabling us to deliver a strong performance in the first half of the year against a backdrop of lower client activity in certain markets and lower interest rates.
Based on the performance delivered in the first half, current trading significantly ahead of the second half of 2020 and positive momentum in key growth businesses, the Group expects to deliver double-digit growth in revenues and profitability for the full year 2021.
Ian Lowitt, Marex CEO, commented:
“These results reflect the ongoing execution of our growth strategy and the energy and dedication of our people, and I am pleased that we are delivering on the commitments we made earlier this year. Marex is reaping the benefits of the strategic diversification of our revenues, across products and markets and our ongoing expansion into new, value-add areas which complement our core businesses. This means that we are able to offer our clients a compelling one-stop-shop solution and grow our market share. This is an exciting time for our firm. We have a lot of positive momentum, and we are well-positioned to continue to expand through further acquisition and ongoing organic growth. We look to the future with confidence.”