ICAP plc 2014 Half-Yearly Financial Report Financial Report ...
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ICAP plcICAP plcICAP plcICAP plc 2012012012014444 HalfHalfHalfHalf----YYYYearly early early early Financial ReportFinancial ReportFinancial ReportFinancial Report
For the six months ended
30 September 2014
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
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ContentsContentsContentsContents
Page
Summary 3
Interim Management Report 5
Directors’ Statement of Responsibilities 19
Financial Statements 20
Notes on the Financial Statements 25
Independent Auditor’s Review Report 34
Presentation of informationPresentation of informationPresentation of informationPresentation of information
This document comprises the half year results to 30 September 2014 for ICAP plc (‘ICAP’) and its subsidiary
undertakings (together ‘ICAP’ or ‘the Group’). It contains the Interim Management Report, Directors’
Statement of Responsibilities and Financial Statements together with the Independent Auditor’s Review
Report, as required by the Financial Conduct Authority’s (‘FCA’) Disclosure and Transparency Rules (‘DTR’).
The Financial Statements and related notes are prepared in accordance with IAS 34, Interim Financial
Reporting.
Cautionary statement regarding forwardCautionary statement regarding forwardCautionary statement regarding forwardCautionary statement regarding forward----looking statementslooking statementslooking statementslooking statements
This Half-Yearly Financial Report contains certain forward-looking statements with respect to the financial
condition, results of operations and business of the Group.
Certain statements that are not historical facts, including statements about the Group’s beliefs and
expectations, are forward-looking statements. Words such as ‘expects’, ‘anticipates’, ‘intends’, ‘plans’,
‘believes’, ‘seeks’, ‘estimates’, ‘potential’ and ‘reasonably possible’, variations of these words and similar
expressions are intended to identify forward-looking statements. These statements are based on current
plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-
looking statements speak only as of the date they are made, and it should not be assumed that they have
been revised or updated in the light of new information or subsequent events.
Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number
of factors could cause actual results to differ, in some instances materially, from those anticipated or implied
in any forward-looking statement.
Analysts and investors briefingAnalysts and investors briefingAnalysts and investors briefingAnalysts and investors briefing
There will be a briefing for analysts and investors at 9:30am (GMT) on Wednesday 19 November 2014 at
2 Broadgate, London EC2M 7UR. A webcast of the presentation made to analysts will be available at
www.icap.com
ContactsContactsContactsContacts
Serra Balls Group Head of Communications +44(0)20 7050 7103
Alex Dee Head of Investor Relations +44(0)20 7050 7123
Neil Bennett Maitland +44(0)20 7379 5151
About ICAPAbout ICAPAbout ICAPAbout ICAP
ICAP is a leading markets operator and provider of post trade risk mitigation and information services. The
Group matches buyers and sellers in the wholesale markets in interest rates, credit, commodities, FX,
emerging markets and equity derivatives through electronic and voice networks. Through our post trade
risk and information services ICAP helps its customers manage and mitigate risks in their portfolios. For
more information go to www.icap.com
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SummarySummarySummarySummary
£m£m£m£m Half year to 30 Half year to 30 Half year to 30 Half year to 30
September September September September 2014201420142014
(‘H1 2014/15’)(‘H1 2014/15’)(‘H1 2014/15’)(‘H1 2014/15’)
Half year to 30
September 2013
(‘H1 2013/14’)
(restated)*
Change (%)
Revenue 666620202020 726 (15)
Trading** operating profit 101010100000 151 (34)
Trading profit before tax (‘PBT’) 88886666 139 (38)
Profit before tax 36363636 40 (10)
Trading EPS (basic) 10.1p 16.2p (38%)
EPS (basic) 4.5p 3.0p 50%
Interim dividend per share 6.60 p6.60 p6.60 p6.60 p 6.60p -
* restated for changes in accounting standards. See note 1 to the financial statements.
**before acquisition and disposal costs and exceptional items.
Key points for the period
• Group revenue decreased by 9% on a constant currency basis (15% on a reported basis) to £620
million.
• 46% increase in TriOptima’s revenue (on a constant currency basis) drove the 12% revenue growth
(on a constant currency basis) to £108 million in the Post Trade Risk and Information division.
• £12 million investment in EBS Direct resulting in exceptional volume growth, with a daily volume high
so far of $28 billion.
• The restructuring programme remains on-track to deliver annualised savings in excess of £60 million.
Of this, £43 million will be realised in the current year’s income statement, principally in the second half of the year.
• Electronic Markets and Post Trade Risk and Information generated 83% of the Group’s trading
operating profit in the period (69% for the year ended 31 March 2014).
• Group trading operating profit margin decreased by 5ppt to 16% and trading PBT was 38% down at
£86 million, reflecting a combination of on-going investment in new businesses, weaker trading volumes and
the adverse impact from FX movements.
• Trading EPS (basic) down 38% to 10.1p; EPS (basic) increased by 50% to 4.5p due to lower
acquisition and disposal costs and exceptional items.
• Interim dividend payment to shareholders maintained at 6.60p per share (H1 2013/14 - 6.60p per
share).
Michael Spencer, Group Chief Executive Officer, said: “Our first half results reflect a market environment
that has remained relatively fragile; despite this, we are cautiously optimistic that we have started to see
some welcome signs of activity and more positive sentiment returning in recent weeks. Having experienced
multi-year lows over the past year, FX volatility recovered in September and continued into October with
EBS recording its highest trading day in three years on 31 October with traded spot volume of $250 billion.
Meanwhile, in October BrokerTec had record single day US Treasury volumes of $471 billion.
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“We are already seeing some benefits of our restructuring programme, although the bulk of the cost savings
from it will come through in the second half of the year. Our Global Broking business has been broadly
reshaped to reflect the structural changes taking place in the market place. We continue to deliver both new
and enhanced product and technology solutions which are now producing strong results: triResolve has nearly
doubled its number of subscriber firms compared to a year ago and EBS Direct reached a new high of $28
billion per day in October.
We continue to see significant medium term opportunities for focused growth across a number of
businesses. The investments we have made over many years mean our prospects as a markets operator and
infrastructure provider are stronger than ever and give us a unique ability to meet customer and market
demands.”
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Interim Interim Interim Interim Management ReportManagement ReportManagement ReportManagement Report
Review of operationsReview of operationsReview of operationsReview of operations
Revenue for the six months to 30 September 2014 was down 9% on a constant currency basis, 15% on a
reported basis, to £620 million. On a constant currency basis, revenue in Post Trade Risk and Information
was up 12%, which was offset by a 5% decrease in Electronic Markets and a 15% decrease in Global
Broking.
During the period, the Group continued to experience challenging market conditions with the combination of
low and stable interest rates and historically low levels of volatility in foreign exchange markets resulting in
subdued trading volumes across Global Broking and EBS. By contrast, the comparative period to 30
September 2013 included heightened volatility as a result of the impact of the commencement of the
Federal Reserve tapering debate and monetary policy in Japan. As a result, Global Broking revenues in the
first six months were 15% lower on a constant currency basis, and 19% on a reported basis. Similarly,
Electronic Markets revenue, because of weak EBS volumes, were down 5% on a constant currency basis and
13% on a reported basis.
September saw an increase in volatility, stimulated by the Scottish referendum and the ECB rate cut, which
resulted in a stronger close to the period, a trend which has continued into October. As a result, EBS Market
once again achieved average daily volumes (ADV) in excess of $100 billion/day and an all-time daily record
of $471 billion in US Treasuries was recorded on BrokerTec.
Trading operating profit for the six months was £100 million, down 26% on a constant currency basis and
34% on a reported basis, reflecting a combination of weaker trading volumes and the on-going investment
in new initiatives. During the period the Group invested £29 million (including £8 million capitalised; £7 million
in the prior year) in new business lines including EBS Direct, ICAP SEF, triCalculate and Traiana Limithub, an
increase of £10 million compared to the same period last year. These new businesses have started to make
significant progress, with EBS Direct seeing volumes reach a single day high at $28 billion in late September.
In addition, TriOptima grew triResolve clients to more than 1,250 from 670 a year ago and Traiana extended
CreditLink services for buy-side firms trading on SEFs; successfully launched CCP Connect for Equities and
expanded TR Connect to cover multiple reporting jurisdictions. Investment in these initiatives is expected to
continue over the remainder of the financial year, albeit at a slower rate.
The Group has responded to the challenging market conditions in Global Broking by restructuring the
business, redesigning compensation packages and retrenching from business lines which had limited growth
potential.
Profit before tax was £86 million, down 38% on the prior year with a strong performance by the Group’s
associates and joint ventures offsetting the slightly higher finance costs as a result of refinancing the €300
million Eurobond ahead of its redemption in July.
Statutory profit before tax was £36 million, net of £22 million of exceptional costs related to the
restructuring programme.
RestructuringRestructuringRestructuringRestructuring programmeprogrammeprogrammeprogramme
The cost saving programme initiated over the last three financial years has taken £165 million of cumulative
annualised savings out of the business.
In May a new plan was announced, aimed at removing a further £100 million of annualised costs over the
next two years, through a combination of business restructuring and compensation reductions making the
operation of the business simpler, more efficient and automated.
While the scope of this review is companywide, given the scale of the Global Broking franchise and on-going
investment in Electronic Markets and Post Trade and Information Services, the majority of the savings
achieved in the last six months came from Global Broking and corporate infrastructure, where the Group is
currently executing on a plan to save at least £60m of annualised costs, net of an estimated £20 million of
revenue losses. Of the total expected savings, £6 million was recognised in the period and £37 million is
expected in the next six months, giving a total of £43 million this financial year and the balance coming
through in financial year 2016.
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Interim Management ReportInterim Management ReportInterim Management ReportInterim Management Report continued Restructuring programme continued Restructuring programme continued Restructuring programme continued Restructuring programme continued
The new programme has been wide ranging and has resulted in a 13% reduction in broker headcount, with
a net 261 brokers leaving the firm worldwide and the ratio of broker compensation to revenue being cut by
3ppt on an annualised basis. The benefit is largely cash and the reduction in broker payout ratios will reduce
the Group’s variable costs. For the financial year 2016, based on current business mix, it is expected that the
ratio will be circa 53% - 54%, down from 56% in the current period and from 57% from the year-ended 31
March 2014.
In parallel the Group has been reviewing the way it operates, investing in technology to automate workflows,
expanding the global business services divisions and simplifying the corporate and business structure. The
Group has also reduced infrastructure headcount by 149.
The restructuring also focused on the growth potential for individual business units within the Group, and in
total 21 desks were closed and Global Broking further reduced its presence in credit. This part of the
programme will continue into the second half as discussions conclude on various peripheral geographies and
businesses and the Group re-adjusts its property portfolio.
The cost of achieving these savings for the first half of the year was £22 million, which was recognised in
the period as an exceptional item. The total restructuring cost is expected to be higher as the restructuring programme completes in the second half of the year.
OutlookOutlookOutlookOutlook
Over the course of the last two months, the Group has seen macro economic factors contribute to increased
volatility in FX and medium term interest rate markets, which has in turn contributed to increased activity
across the Group’s FX and rates franchises. Management’s expectations for the full year remain unchanged
as it remains too early to predict whether current activity levels will persist. However, through the on-going
programme of investment in the Electronic Markets and Post Trade Risk and Information Services businesses,
the Group remains uniquely positioned to respond to its customer and market demands.
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Interim Management Report Interim Management Report Interim Management Report Interim Management Report continued Electronic MarketsElectronic MarketsElectronic MarketsElectronic Markets
ICAP operates BrokerTec and EBS, the world’s leading electronic trading platforms in fixed income and FX.
These platforms offer efficient and effective trading solutions to more than 2,800 customers in over 50
countries across a range of instruments including spot FX, US Treasuries, European government bonds and
EU and US repo. These electronic platforms are built on ICAP’s bespoke networks connecting participants in financial markets.
£m H1 2014/15 H1 2013/14 Change (%)
Revenue
BrokerTec 62 69 (10)
EBS 56 67 (17)
Other 4 5 (16)
Total revenue -reported 122 141 (13)
-constant currency 132 (5)
Trading operating profit 41 55 (26)
Trading operating profit margin (%) 34 39 (5ppt)
Combined ADVs for the BrokerTec and EBS platforms for the six months ended 30 September 2014 were
$710 billion, a decrease of 4% on the previous year reflecting historically low FX volatility in G3 currencies and a strong performance by BrokerTec in the prior year.
For the six months ended 30 September 2014, Electronic Markets revenue decreased by 5% on a constant
currency basis and by 13% on a reported basis to £122 million (H1 2013/14 – £141 million). The overall
trading operating profit margin declined by 5 percentage points to 34% as a result of lower revenue and
increased investment in EBS Direct. The trading operating profit margin is expected to improve in the second half of the year as FX volumes recover from their cyclical lows and lower investment.
BrokerTecBrokerTecBrokerTecBrokerTec
BrokerTec is a leading global electronic platform for the trading of US Treasuries, European government
bonds and EU and US repo. BrokerTec facilitates both automated and manual trading for institutions, banks and non-bank professional trading firms.
For the six months ended 30 September 2014, revenue was broadly flat on a constant currency basis and
decreased by 10% on a reported basis to £62 million (H1 2013/14 – £69 million), with a stronger
performance in EU Repo and European Government Bond markets offsetting a modest decline in US Treasury
volumes, where despite continued speculation over the timing of a Federal Reserve rate increase, signs of a
US recovery and a number of geopolitical events, volumes decreased by 3% to $156 billion following
heightened activity in the comparative period. Market share on BrokerTec remains strong, as the platform
remains the central source of liquidity. In October BrokerTec had a record single day of $471 billion in US Treasuries.
The repo market is pivotal to the effective functioning of almost all financial markets and provides an efficient
source of collateralised money market funding. Activity in repo has remained subdued as regulations
requiring banks in the US to hold higher amounts of capital to support their repo businesses are phased in resulting in a 2% decrease in US repo ADVs to $217 billion.
In Europe, the ECB move into negative interest rate territory back in June, coupled with increased capital
requirements, has meant trading activity remains range bound. BrokerTec has benefitted from an
improvement in market share as well as an increased interest in trading term repo electronically as
participants look for more efficiencies and cost savings while satisfying increased regulatory oversight. The combination of these factors has resulted in a 2% increase in European repo ADVs to $254 billion.
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Interim Management Report Interim Management Report Interim Management Report Interim Management Report continued
Electronic MarketsElectronic MarketsElectronic MarketsElectronic Markets continued
BrokerTecBrokerTecBrokerTecBrokerTec continued
European government bond volumes remained buoyant, with strong issuance and good secondary market
turnover. Volatility in the shorter end of the curve, particularly in the periphery markets in the Eurozone,
benefitted the platform. BrokerTec has implemented a series of initiatives to capture increased flow from
primary dealers and continues to make gains across multiple markets. The addition of new customers is also
helping to add new flow and interest in these periphery markets.
EBSEBSEBSEBS
EBS, ICAP’s electronic FX business, is a reliable and trusted source of orderly, executable and genuine liquidity
across all major and emerging market currencies. It has responded to changing market dynamics through
enhancements to EBS Market, the exchange-like central limit order book platform and the launch of EBS
Direct, the disclosed liquidity platform.
Historically low FX volatility has resulted in a 22% decrease in ADVs on EBS to $82 billion during the period.
As a result, revenue for the six months ended 30 September 2014 decreased by 7% on a constant currency
basis and by 17% on a reported basis to £56 million (H1 2013/14 - £67 million). More recently, September
was characterised by a significant increase in volatility and improved trading conditions across all regions
which has continued into October.
EBS Market has maintained its position as the primary interbank venue for the trading of the world’s most
actively traded currency pairs including euro/dollar and dollar/yen. Consistent with the strategy to expand
into new markets there was significant growth in EM currency pairs traded on the EBS Market platform. The
dollar/offshore Chinese renminbi is now the fifth most actively traded currency pair on EBS Market and ADVs
has grown by more than 200% during the period. Dollar/ruble volumes increased despite the recent
tightening of sanctions in Russia.
Over the past year EBS Market has continued to invest in new product functionality and cost efficiencies.
For example, EBS Iceberg Orders, which was launched in October 2013 and has been successfully adopted
by the manual trading community, has allowed traders to minimise their market impact by displaying only a
portion of their overall order.
EBS Direct, the disclosed liquidity service which was launched in November 2013, has demonstrated
exceptional growth over the period. By October 2014, ADVs on EBS Direct increased to $19 billion ($11
billion in June) and subsequently reached a single day record of $28 billion. EBS Direct leverages EBS’s
extensive customer base, global networks and geographic reach. This scalable platform provides direct
access to an enlarged customer base. Since its launch, adoption of the platform has exceeded expectations
with over 17 liquidity providers and 268 liquidity consumers using the service (including 35 non-bank
institutions). EBS Direct is providing ICAP with new incremental revenue opportunities, for example more
than one third of the volume on EBS Direct was transacted in Commonwealth currencies. This has also
supported an increase in Commonwealth activity on EBS Market.
EBS Direct is expected to remain in an investment phase over the next 12 months as additional functionality
and services are added to the platform including aggregation, trade execution enhancements and the launch
of FX Forwards (FX Swaps and Outright Forwards). In addition, EBS announced this week the launch of EBS
Select, an anonymous, segmented, bilateral liquidity pool which will further enhance EBS's multi-product
offering. Through the integration of MyTreasury, ICAP’s electronic money market platform for corporate
treasury investors, into EBS Direct, it will offer FX products to its existing customer base. During the period
£12 million was invested in EBS Direct of which £3 million has been capitalised (H1 2013/14 - £9 million
invested of which £4 million capitalised). During the second half, investment spend is expected to be at the
same level as the prior year.
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Post Trade Risk and InformationPost Trade Risk and InformationPost Trade Risk and InformationPost Trade Risk and Information
The Post Trade Risk and Information business operates the leading market infrastructure for post trade
processing and risk management across asset classes and enables users of financial products to reduce
operational and system-wide risks. The services offered by the Post Trade Risk and Information business
enable customers to increase the efficiency of trading, clearing and settlement and facilitate the effective management of capital and associated cost.
The portfolio risk services businesses comprise Reset and TriOptima which identify, neutralise, reconcile and
remove risk within portfolios of derivatives transactions; Traiana, which provides pre trade risk and post trade processing solutions; and the information and data sales business.
£m
Revenue
H1 2014/15 H1 2013/14
(restated)
Change (%)
Reset 20 21 (5)
TriOptima 29 21 38
Traiana 25 24 2
Information Services 34 37 (8)
Total revenue -reported 108 103 5
-constant currency 96 12
Trading operating profit 42 43 (3)
Trading operating profit margin (%) 39 42 (3ppt)
For the six months ended 30 September 2014, revenue increased by 12% on a constant currency basis and
by 5% on a reported basis to £108 million (H1 2013/14 - £103 million) reflecting strong revenue growth
in TriOptima. Trading operating profit marginally decreased to £42 million resulting in a 3 percentage point
decrease in the trading operating profit margin to 39% as a result of increased investment in TriOptima and
Traiana and reduction in revenue in EBS data and Reset.
ResetResetResetReset
Reset is the market leading provider of risk mitigation services that reduce the basis risk within portfolios
from fixings in the interest rate, FX and inflation markets and also address structural imbalances within trading
portfolios. Basis risk results from the structure of the instruments traded and a mismatch of exposure over
time.
Reset’s revenue is correlated to the movement in both actual and forecast short term interest rates which
remain at a cyclical low. For the six months ended 30 September 2014, revenue increased by 7% on a
constant currency basis and decreased by 5% on a reported basis to £20 million (H1 2013/14 - £21 million)
as episodic interest rate volatility and flat short-term yield curves constrained activity levels during the
period.
TriOptimaTriOptimaTriOptimaTriOptima
TriOptima, through triReduce and triResolve, is the market leader in risk termination and risk mitigation
solutions for OTC derivatives, primarily through the elimination and reconciliation of outstanding transactions.
TriOptima is well positioned to benefit from the new regulatory landscape as its products are strategically
aligned with the G20 policy objective of reducing risk in the financial system.
For the six months ended 30 September 2014, revenue increased by 46% on a constant currency basis and
by 38% on a reported basis to £29 million (H1 2013/14 - £21 million) driven by increased participation in
triReduce portfolio compression cycles and the uptake of the portfolio reconciliation service, triResolve.
During the period £4 million was invested in new product initiatives in TriOptima of which £2 million has been
capitalised (H1 2013/14 - £2 million invested of which £1 million capitalised).
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Post Trade Risk and InformationPost Trade Risk and InformationPost Trade Risk and InformationPost Trade Risk and Information continued
TriOptimaTriOptimaTriOptimaTriOptima continued
During the period triReduce terminated $61 trillion of gross notional outstanding (H1 2013/14 - $17
trillion). The more stringent leverage ratio included within the Basel III rules has increased the demand from
banks for the triReduce compression service. Since its launch in 2003, triReduce has eliminated more than
$510 trillion in total notional volume from the OTC derivatives market for more than 240 legal entities,
including both bank and non-bank institutions.
triReduce continues to offer new services and in October eliminated $284 billion in gross notional
outstanding in the first SwapClear compression cycle for cleared South African rand (ZAR) interest rate
swaps. With the completion of the ZAR cycle, triReduce now offers multilateral compression cycles in 10
currencies for cleared swaps based on a sophisticated methodology which allows for the elimination of trades
beyond simple end-date netting offered by some clearing houses. For non-cleared swaps triReduce covers
27 currencies. triReduce is working with multiple clearing houses to facilitate portfolio compression for
cleared trades.
Strong demand for triResolve was driven by the introduction of the EMIR requirements for regular
reconciliation of derivative portfolios. triResolve has benefitted from a significant increase in the number of
customers using the service, increasing from 670 to more than 1,250 sell and buy-side firms over the past
year that now participate in more than 283,000 party-to-party reconciliations each month.
triCalculate, the counterparty credit risk analytics service based on an innovative new methodology, is now
in its pilot phase and is expected to go into commercial launch in the next calendar year.
TrTrTrTraaaaiiiianaanaanaana
Traiana operates the leading market infrastructure for pre trade risk management and post trade processing
across multiple asset classes. Its robust and proven product suite automates trade processing across the life
cycle for FX, cash equities, equity swaps, futures, OTC derivatives and fixed income. Traiana’s Harmony
network connects more than 550 global banks, broker/dealers, buy side firms and trading platforms.
For the six months ended 30 September 2014, revenue increased by 8% on a constant currency basis and
by 2% on a reported basis to £25 million (H1 2013/14 – £24 million). The increase is primarily attributable
to subscription based revenue in products such as CreditLink and cross-asset regulatory reporting. As a
result of low FX volatility, the Harmony platform saw a decline in the number of FX transactions processed.
While FX remains the largest revenue segment, Traiana continues to innovate, grow and diversify its business
into other asset classes delivering networked based solutions for all financial market participants. There is
particular investment in real-time credit management and allocation systems and the expansion of regulatory
reporting into multiple jurisdictions. Regulatory approval was recently received from three separate
regulatory bodies and three pan-European clearing houses for the launch of Equity CCP Connect, a clearing
service which provides banks immediate expense and risk reduction through the netting and clearing of OTC
Equity transactions.
InformationInformationInformationInformation ServicesServicesServicesServices
ICAP Information Services (IIS) delivers independent OTC data solutions to financial professionals creating
the transparency that is essential for market participants. ICAP Indices, the index arm of IIS, develops and
publishes a range of transaction-backed indices.
For the six months ended 30 September 2014, revenue decreased by 2% on a constant currency basis and
by 8% on a reported basis to £34 million (H1 2013/14 - £37 million) as it was impacted by the reduction
in EBS-related data sales arising from lower underlying volumes. Excluding EBS-related sales, IIS’s revenue
was flat on a constant currency basis and decreased by 5% on a reported basis.
The IIS product offering has been expanded to incorporate innovative services and advanced solutions. These
include the recent launch of an ICAP Equity Derivatives product and continued expansion of ICAP’s flagship
Interest Rate Derivatives package.
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Post Trade Risk and InformationPost Trade Risk and InformationPost Trade Risk and InformationPost Trade Risk and Information continued
Other Post Other Post Other Post Other Post Trade Risk and Information investmentsTrade Risk and Information investmentsTrade Risk and Information investmentsTrade Risk and Information investments
ICAP’s Post Trade Risk and Information business invests in new companies developing innovative technology-
led offerings via Euclid Opportunities which is majority owned by ICAP. Investment has been made in Duco,
an on-demand reconciliation provider; OpenGamma, a real-time market risk analytics provider, and Enso
Financial, a provider of analytics and counterparty intelligence to fund managers. In October 2014, ICAP
made a further investment into Enso Financial designed to assist the firm’s expansion plans.
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Global BrokingGlobal BrokingGlobal BrokingGlobal Broking
The Global Broking business is active in wholesale markets across all asset classes as shown below:
Revenue by asset classes
£m
H1 2014/15 H1 2013/14
(restated)
Change (%)
Rates 133 172 (23)
Commodities 72 87 (17)
Emerging markets 70 87 (20)
Equities 51 61 (16)
FX and money markets 36 41 (11)
Credit 28 34 (17)
Total revenue -reported 390 482 (19)
-constant currency 459 (15)
Trading operating profit 17 53 (67)
Trading operating profit margin (%) 4 11 (7 ppt)
For the six months ended 30 September 2014, the trading performance of Global Broking was impacted by
a combination of structural and cyclical factors. Historically low interest rates and FX volatility, flat yield
curves, bank deleveraging and the impact of the introduction of the SEF in the US continued to limit trading
activity. There was moderate improvement in activity in September and October primarily across FX and
Rates.
Against the backdrop outlined above, revenue for the six months ended 30 September 2014 decreased by
15% on an constant currency basis and by 19% on a reported basis to £390 million (H1 2013/14 - £482
million), reflecting a year-on-year decline of 24% in the first quarter of the year followed by a 15% decline
in the second quarter. In contrast, the revenue decline during the period was 6% on a constant currency basis
when compared to the second half of 2013/14. The improvement seen in the second quarter commenced
in late August and has continued into September.
Trading operating profit reduced by £36 million to £17 million resulting in a fall in the overall trading operating
margin to 4%. This reflects the impact of fixed costs, a decline in trading activity in higher margin products
and the investment in ICAP’s SEF. The margin is expected to improve in the second half of the year as the
benefits of the restructuring programme are realised. The cost base has been actively lowered across all
business lines, primarily through the reduction of headcount, employee compensation and the streamlining
of the product offerings. Restructuring of the Global Broking division remains on-track to deliver a more
focused business and annualised savings in excess of £60 million.
RatesRatesRatesRates
The rates business comprises interest rate derivatives, government bonds, repos and financial futures. Rate
products contribute the largest share of Global Broking’s revenue (34%) of which interest rate derivatives
represents the most significant component. Trading was restrained by the ongoing low interest rate
environment, bank customer’s reduced risk appetite and the impact of regulatory changes as customers
become familiar with the new SEF environment resulting in a 23% decrease in revenue for the six months
ended 30 September 2014.
Trading activity in interest rate derivatives in the US and Europe was muted over the first five months of the
year, in part, due to uncertainty around the introduction of the new SEF regime. Volatility improved in late
August and September, driven by central bank actions and the uncertainty created in the UK by the Scottish
independence referendum. Off-the-run US treasuries were negatively impacted by the migration of voice
broking to electronic platforms. As part of the restructuring project, ICAP assessed the ongoing viability of
the global financial futures model and concluded that a streamlined, regionally focused offering was better
suited to serving ICAP’s customers on cost effective terms.
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Global BrokingGlobal BrokingGlobal BrokingGlobal Broking continued
RatesRatesRatesRates continuedcontinuedcontinuedcontinued
During the period in order to bridge the CFTC’s SEF rules with the financial services regulation of the United
Kingdom and European Economic Area, ICAP launched the first global SEF in order to mitigate the risk of
liquidity fragmentation. This dually regulated entity, ICAP Global Derivatives Limited, allows market
participants from all key jurisdictions to participate in the same global liquid pool for G3 rate products. The
ICAP SEF saw additional growth in market share with material increases in activity in butterflies, switches and
outrights and is now a leading hybrid platform in dollar rates using i-Swap technology. During the period, £8
million was invested in the SEF of which £2 million was capitalised (H1 2013/14 - £1 million, which was
capitalised).
CommoditiesCommoditiesCommoditiesCommodities
The commodities business comprises energy (including electricity, crude oil, refined products, natural gas,
coal, and alternative fuels), environmental markets, shipping, metals, agriculture and soft commodities.
For the six months ended 30 September 2014, revenue decreased by 17% reflecting a lack of volatility
across the range of products and increased capital requirements resulting in a number of banks leaving or
reducing exposure to this sector. The restructuring of the commodities business has led to 10 desk closures
which generated total revenue of £3 million in the period.
Despite recent volatility in the price of oil, the collapse of the differential between European and US
benchmarks has reduced wholesale trading volumes. Volatility in North American natural gas prices continues
to be impacted by oversupply from fracking. The impact of natural gas displacing coal has resulted in lower
and less volatile electricity prices consequently impacting trading volumes. In Europe, volatility in the
electricity market has remained low as a consequence of milder temperatures and an excess of generation
from renewable sources.
ICAP is in discussions with Howe Robinson Group Pte Ltd to combine their ship broking businesses to create
a global business operating across multiple locations. The merged business is expected to be operational in
the second calendar quarter of 2015.
EmeEmeEmeEmerging Marketsrging Marketsrging Marketsrging Markets
ICAP is active in emerging markets across Asia Pacific, Latin America, Central and Eastern Europe and Africa.
Emerging market revenue includes domestic activity in local markets and cross border activity in globally
traded emerging market money and interest rate products.
For the six months ended 30 September 2014, revenue decreased by 20% (unchanged on constant
currency basis from H2 2013/14) reflecting a weak performance across all regions. An increase in NDF
volumes in Latin America as a result of the fallout from the Argentinean sovereign default was offset by low
interest rate volatility and the World Cup in Brazil adversely impacted trading volumes. In addition revenue
from non-deliverable products associated with Asian emerging markets decreased due to the migration of
activity to EBS and geopolitical events. The liberalisation of renminbi as a settlement currency continues to
drive growth in those related products.
EquitiesEquitiesEquitiesEquities
The equities business principally comprises equity derivatives. For the six months ended 30 September
2014, revenue decreased by 16% (unchanged on constant currency basis from H2 2013/14) due to very
low levels of market volatility as equities markets for the most part traded in very narrow ranges. Market
share during the period remained stable.
FX and money marketsFX and money marketsFX and money marketsFX and money markets
The FX and money markets business comprises spot, forwards and cash products. For the six months ended
30 September 2014, revenue decreased by 11% reflecting difficult market conditions as FX volumes in spot
and forwards declined as a result of reduced exchange rate volatility, the low interest rate environment and
bank internalisation of FX flows. This was compounded by a lower risk appetite and increased commission
pressure.
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
14
Interim Management Report Interim Management Report Interim Management Report Interim Management Report continued
Global BrokingGlobal BrokingGlobal BrokingGlobal Broking continued
CreditCreditCreditCredit
The credit business comprises corporate bonds (representing approximately 90% of total credit revenue)
and credit derivatives and contributes the smallest share of Global Broking’s revenue (7%). The credit
business is being restructured and product offerings have been streamlined. For the six months ended 30
September 2014, revenue decreased by 17%. The restructuring of the Credit business has led to 11 desk
closures in the period.
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
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Interim Management ReportInterim Management ReportInterim Management ReportInterim Management Report continued
Summary consolidated income statementSummary consolidated income statementSummary consolidated income statementSummary consolidated income statement
£m H1 2014/15 H1 2013/14
(restated)
Change (%)
Trading operating profit 100 151 (34)
Net finance cost (18) (16) 13
Profit from associates 2 2 -
Profit from joint ventures 2 2 -
Trading PBT 86 139 (38)
Tax on Trading PBT (21) (35) (40)
Trading PAT 65 104 (38)
Acquisition and disposal costs, net of tax (21) (20) 5
Exceptional items, net of tax (15) (65) (77)
Profit for the period 29 19 53
Trading PBTTrading PBTTrading PBTTrading PBT
Trading PBT for the six months ended 30 September 2014 decreased by 38% to £86 million reflecting a decrease in the trading operating profit across all segments and adverse FX movements. Net finance expense for the period increased by £2 million on the prior year largely due to double running interest expense on the €350 million senior notes issued in March 2014 and the €300 million senior notes up to their maturity in July 2014. Going forward, the €350 million senior notes will provide £6 million annualised savings in interest expense. Net finance expense for the year ending 31 March 2015 is expected to be £32 million. Profit from associates and joint ventures remained in line with the prior year. See note 1 to the financial statements for further details on the change in accounting method for joint ventures. TaxTaxTaxTax
The Group manages its tax affairs in accordance with the tax strategy, the objectives of which were to deliver shareholder value by complying with tax obligations and being open and transparent with the relevant tax authorities. The Group’s trading effective tax rate (‘ETR’) for the six months to 30 September 2014 is 24% (year ended 31 March 2014 – 22%), based on the estimated full year trading ETR. The trading ETR of 24% compares to the UK statutory tax rate of 21%. The increase in the Group ETR over the prior year primarily results from certain one-off adjustments in the prior year, offset by the reduction in the UK corporation tax rate. The effective tax rate continues to be driven by geographical mix of profits and changes in tax legislation. The full year trading ETR is expected to fall in the range 23% to 25%. Trading EPSTrading EPSTrading EPSTrading EPS
Trading EPS (basic) declined by 38% to 10.1p reflecting a decrease in the trading profit for the period. EPS (basic) increased to 4.5p (30 September 2013 – 3.0p).
DividendDividendDividendDividend
Consistent with previous practice, ICAP’s interim dividend per share has been calculated at 30% of the prior year’s full year dividend. An interim dividend of 6.60p per share (H1 2013/14 - 6.60p per share) covering the six month period to 30 September 2014 will be paid on 6 February 2015 to shareholders on the register at 4 January 2015. The shares will be quoted ex-dividend from 8 January 2015.
Acquisition and Acquisition and Acquisition and Acquisition and disposal costsdisposal costsdisposal costsdisposal costs
In line with the prior period, the Group’s acquisition and disposal costs of £28 million (£21 million net of tax) are primarily driven by the amortisation of intangibles arising on consolidation.
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
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Interim Management Report Interim Management Report Interim Management Report Interim Management Report continued
Exceptional itemsExceptional itemsExceptional itemsExceptional items
The Group’s policy is to disclose separately items in its income statement as exceptional which are non-recurring and material in both size and nature. For the six months to 30 September 2014, exceptional items before tax were £22 million (£15 million net of tax), relating to the Group’s restructuring programme. The exceptional cost for the full year ending 31 March 2015 is expected to be higher as the restructuring programme completes in the second half of the year. Free cash flowFree cash flowFree cash flowFree cash flow
ICAP is cash generative and it is expected that over the medium term free cash flow and post-tax trading profit will converge. Historically, the first half cash conversion has always been lower due to seasonality as short-term positive movements in working capital, which are primarily related to infrastructure, Electronic Markets and PTRI bonuses in the preceding second half, reverse.
£m H1 2014/15
H1 2013/14
(restated)
Cash generated from operating activities 66 98
Interest and tax (30) (63)
Cash flow from trading activities 36 35
Capital expenditure (27) (30)
Dividends from associates and investments 5 7
Trading free cash flow 14 12
Free cash flow conversion (%) 22% 12%
Trading free cash flow generated during the period was £14 million, a conversion rate of 22% (H1 2013/14: 12%) representing a shortfall of £51 million on the trading profit after tax for the period of £65 million. Free cash flow for the 12 months ended 30 September 2014 is 90% (30 September 2014: 112%) as the seasonality impact is eliminated.
In addition to historical phasing as noted above, the low conversion rate for the period is driven by short-term timing differences as movement in restricted funds and initially unsettled trades at the balance sheet date had an aggregate adverse impact on free cash flow of £30 million, reducing the conversion rate by 46 ppt.
During the period, net interest payment was £22 million, largely consistent with prior period payment of £21 million. The year-on-year decrease in the cash outflow relating to interest and tax is driven by a lower net tax payment in the period (H1 2014/15 - £8 million; H1 2013/14 – £42 million). The lower net tax payment reflected refunds received in the period relating to the prior year.
ICAP continues to invest heavily in new product initiatives across Electronic Markets and PTRI, as represented by an investment of its cash flows from trading activities in capital expenditures in those divisions.
BBBBalance sheetalance sheetalance sheetalance sheet
The Group’s net assets at 30 September 2014 were £929 million, £54 million lower than the 31 March 2014 position (£983 million) principally reflecting the payment of the 2013/14 final dividend of £99 million, which was partially offset by £29 million profit for the period, £9 million gain from retranslation of foreign currency net assets, driven by the strengthening of dollar against sterling during the period, and additional £7 million gain from other increases in equity.
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
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Interim Management Report Interim Management Report Interim Management Report Interim Management Report continued
Net debtNet debtNet debtNet debt
£m As at 30 September
2014
As at 31 March
2014
As at 30 September
2013
(restated) (restated)
Long-term borrowings 422 540 298
Short-term borrowings 198 247 301
Total gross borrowings 620 787 599
Cash and cash equivalents 416 698 503
Net debt (204) (89) (96)
Restricted funds 47 39 52
The Group’s overall funding position remains strong given the maturity profile of its committed financings,
the manageable level of gross debt and the committed undrawn headroom under its core credit facility.
Net debt at 30 September 2014 of £204 million has increased by £115 million on the 31 March 2014
position of £89 million. Gross debt of £620 million is 2.1 times (30 September 2013: 1.7 times) of Trading
EBITDA for the twelve months ended 30 September 2014.
The increase in the net debt position resulted from usual seasonality of major cash flows including the
dividend payment of £99 million in July 2014, cash payment of £26 million for exceptional items (which
includes an £8 million payment on final settlement with the SEC relating to their investigation on Link Brokers
Derivatives LLC). Trading free cash flow for the period of £14 million partially offset the adverse movement
on the net debt position.
At 30 September 2014, the Group had committed undrawn headroom under its core credit facility of £411
million (31 March 2014 - £425 million; 30 September 2013 - £379 million). Short-term borrowings is
comprised of $193 million (equivalent of £119 million) subordinated loan notes which mature in June 2015;
the JPY 10 billion Japanese yen loan (equivalent to £56 million), which matures in March 2015 and £23
million overdrafts related to short-term timing differences on trade settlements. The Group will review its
options in the public and private debt markets to consider the most appropriate refinancing of the US dollar
and Japanese yen denominated short term borrowings.
As at 30 September 2014 the Group’s long-term issuer default rating on senior debt remained unchanged
from 31 March 2014 at BBB (stable) with Fitch and Baa2 (negative) with Moody’s.
RegulaRegulaRegulaRegulatory capital tory capital tory capital tory capital
ICAP currently operates its business under an investment firm waiver which was granted by the FSA under
the EU Capital Requirements Directive in 2011 and runs until April 2016. The waiver modifies the basis on
which regulatory capital is calculated for the Group, and at 30 September ICAP had £0.8bn of headroom on
this basis.
The effect of the waiver is to exclude goodwill and other intangibles from the calculation and, in so doing,
allows the Group to undertake acquisitions using debt rather than equity finance. In the event that the waiver
was not renewed in 2016, applying a consolidated approach to credit and market risks would give an
incremental regulatory capital requirement of approximately £0.6 billion, which in line with recent precedent
would most likely be eliminated through retained profits over time.
ICAP operates approximately 40 regulated subsidiaries globally. Each is locally capitalised and regulated.
Together these entities hold £410 million of cash (including restricted funds) of which £345 million is held
by the Global Broking businesses. Electronic Markets and PTRI hold £53 million and £12 million respectively.
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
18
Interim Management Report Interim Management Report Interim Management Report Interim Management Report continued
RiskRiskRiskRisk
Details of Group’s approach to risk management and its risk profile were set out on pages 42 to 49 of the
Group’s 2014 Annual Report. As of 30 September 2014, the directors have reviewed the Group’s risk profile
in the context of current market conditions and the outlook for the remaining six months of the financial
year. In addition, they have reconsidered previous statements made on risk appetite, risk governance and internal controls and do not consider there to be any significant changes since the report.
The Group continues to consider strategic, operational and liquidity to be the principal risks to which it is exposed.
RiskRiskRiskRisk RatingRatingRatingRating AppetiteAppetiteAppetiteAppetite HalfHalfHalfHalf----yearly updateyearly updateyearly updateyearly update
Strategic High Proactive Whilst Dodd Frank and other regulatory changes have had a
material effect on certain activities of the financial markets
and other significant global Regulatory tightening such as CRD
IV, MiFiD etc are in progress, we have yet to alter our
fundamental view of the nature of these risks on the Group.
They are, however, clearly influencing our clients and the
operating environment more broadly. Despite these
challenges, our appetite for taking strategic risk remains unchanged.
Operational High Cautious The fundamental risks inherent in our people, processes, and
systems remain the same. We continue to improve our control
environment and management of operational risk which is a structural part of our activities and environments.
Liquidity High Cautious Our liquidity risk profile remains broadly unchanged.
Risk outlook
ICAP is clearly subject to the changing financial market environment resulting from global regulatory reforms,
challenges in the real economy and continued regulatory enforcements actions, including against many of
the Group’s largest bank customers. As this moving legislative background influences our clients, markets
and operating approaches, it is clear that these changes play a part in the strategic direction of the Group.
Our overall risk profile remains fundamentally unchanged. ICAP retains its belief in the level of strategic risk
to which the Group is exposed is materially unaltered and the Group continues to proactively look for
strategic opportunities in these dynamic environments.
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
19
Directors’ Directors’ Directors’ Directors’ sssstatement tatement tatement tatement of of of of rrrresponsibilitiesesponsibilitiesesponsibilitiesesponsibilities
The directors confirm that, to the best of their knowledge, this condensed set of financial statements has been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as adopted by the European Union, and that the interim management report and the condensed set of financial statements herein includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
• an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
• material related-party transactions in the first six months of the financial year and any material changes in the related party transactions described in the last Annual Report.
Going concern basis
The financial statements are prepared on the going concern basis, as the directors are satisfied that the Group has the resources to continue in business for the foreseeable future. In making this assessment, the directors have considered a wide range of information relating to present and future conditions, including the Group’s profitability, liquidity requirements, plans and financing arrangements.
Changes in directors
As announced on 30 September 2014, Iain Torrens, the Group Finance Director, will be leaving the Group. The search for his replacement is underway and an announcement will be made in due course.
A list of current directors is maintained on the ICAP plc website www.icap.com.
By order of the board
Michael Spencer Michael Spencer Michael Spencer Michael Spencer Iain Torrens Iain Torrens Iain Torrens Iain Torrens Group Chief Executive Officer Group Finance Director
19 November 2014
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
20
Consolidated Consolidated Consolidated Consolidated iiiincome ncome ncome ncome sssstatementtatementtatementtatement
Half year to 30 September 2014
Note Trading
£m
Acquisition
and disposal costs
£m
Exceptional items
£m
Total
£m
Revenue 2 620 - - 620
Operating expenses (521) (28) (22) (571)
Other income 1 - - 1
Operating profit 100 (28) (22) 50
Finance income 3 - - 3
Finance costs (21) - - (21)
Share of profits of associates after tax 2 - - 2
Share of profits of joint ventures after tax 2 - - 2
Profit before tax 86 (28) (22) 36
Tax 7 (21) 7 7 (7)
Profit for the period 65 (21) (15) 29
Attributable to:
Owners of the Company 66 (21) (15) 30
Non-controlling interests (1) - - (1)
65 (21) (15) 29
Earnings per ordinary share 5
– basic 10.1 4.5
– diluted 9.9 4.4
Half year to 30 September 2013
Note
Trading (restated)
£m
Acquisition
and disposal costs
£m
Exceptional items
£m
Total (restated)
£m
Revenue 2 726 – – 726
Operating expenses (580) (36) (68) (684)
Other income 5 – – 5
Operating profit 151 (36) (68) 47
Finance income 3 5 – 8
Finance costs (19) – – (19)
Share of profits of associates after tax 2 – – 2
Share of profits of joint ventures after tax 2 – – 2
Profit before tax 139 (31) (68) 40
Tax 7 (35) 11 3 (21)
Profit for the period 104 (20) (65) 19
Attributable to:
Owners of the Company 104 (20) (65) 19
Non-controlling interests – – – –
104 (20) (65) 19
Earnings per ordinary share 5
– basic 16.2 3.0
– diluted 15.9 2.9
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
21
Consolidated statement of comprehensive income
Half year to 30
September 2014
£m
Half year to 30
September 2013
(restated) £m
Profit for the period 29 19
Items that will be reclassified subsequently to profit or loss when specific
conditions are met:
Cash flow hedges - 7
Exchange differences 9 (89)
Income taxes - (5)
Other comprehensive income/ (loss) for the period, net of tax 9 (87)
Total comprehensive income/(loss) for the period 38 (68)
Total comprehensive income/(loss) attributable to:
Owners of the Company 39 (68)
Non-controlling interests (1) –
38 (68)
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
22
The consolidated Financial Statements, including accompanying notes, were approved by the board on 19 November 2014 and were signed on its behalf by:
Michael Spencer Michael Spencer Michael Spencer Michael Spencer Iain Torrens Iain Torrens Iain Torrens Iain Torrens Group Chief Executive Officer Group Finance Director
Consolidated balance sheet
Note
As at 30
September 2014
£m
As at 31
March 2014 (restated)
£m
As at 30 September
2013 (restated)
£m
Assets Non-current assets Intangible assets arising on consolidation 919 933 996
Intangible assets arising from development expenditure 101 95 82
Property and equipment 41 44 48
Investment in joint ventures 12 10 12 Investment in associates 63 65 64
Deferred tax assets 3 11 21
Trade and other receivables 4 6 8
Available-for-sale investments 17 18 19
1,160 1,182 1,250
Current assets Trade and other receivables 20,713 22,935 17,945 Restricted funds 8 47 39 52
Cash and cash equivalents 8 416 698 503
21,176 23,672 18,500
Total assets 22,336 24,854 19,750
Liabilities
Current liabilities Trade and other payables (20,619) (22,912) (17,933) Borrowings 9 (198) (247) (301)
Tax payable (72) (66) (111)
Provisions (2) (10) (10)
(20,891) (23,235) (18,355)
Non-current liabilities
Trade and other payables (18) (9) (17)
Borrowings 9 (422) (540) (298)
Deferred tax liabilities (64) (74) (68)
Retirement benefit obligations (4) (4) (4)
Provisions (8) (9) (13)
(516) (636) (400)
Total liabilities (21,407) (23,871) (18,755)
Net assets 929 983 995
Equity
Capital and reserves
Called up share capital 66 66 66
Share premium account 454 454 454 Other reserves 86 86 85
Translation (35) (44) 2
Retained earnings 314 379 335
Equity attributable to owners of the Company 885 941 942
Non-controlling interests 44 42 53
Total equity 929 983 995
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
23
Consolidated statement of changes in equity
Half year to 30 September 2014
£m Share capital
Share premium
Other reserves Translation
Retained earnings
Attributable to owners of the Company
Non-controlling interests Total
Balance at 1 April 2014 66 454 86 (44) 379 941 42 983
Profit for the period - - - - 30 30 (1) 29
Other comprehensive
income/(expense) (net of
tax)
Exchange differences - - - 9 - 9 - 9
Total comprehensive
income/(expense) for the
period - - - 9 30 39 (1) 38
Treasury shares awarded - - - - 1 1 - 1
Share-based payments - - - - 3 3 - 3
Other movements in non-
controlling interests - - - - - - 3 3
Dividends paid in the
period - - - - (99) (99) - (99)
Balance at 30 September
2014 66 454 86 (35) 314 885 44 929
Half year to 30 September 2013
£m Share capital
Share premium
Other reserves Translation
Retained earnings
Attributable to owners of the Company
Non-controlling interests Total
Balance at 1 April 2013 66 454 78 91 414 1,103 53 1,156
Profit for the period - - - - 14 14 - 14
Other comprehensive
income/(expense) (net of
tax)
Cash flow hedges - - 7 - - 7 - 7
Exchange differences - - - (89) - (89) - (89)
Total comprehensive
income/(expense) for the
period - - 7 (89) 14 (68) - (68)
Treasury shares awarded - - - - 4 4 - 4
Share-based payments - - - - 1 1 - 1
Other movements in non-
controlling interests - - - - 1 1 - 1
Dividends paid in the
period - - - - (99) (99) - (99)
Balance at 30 September
2013 66 454 85 2 335 942 53 995
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
24
Consolidated statement of cash flow
£m
Note Half year to 30
September 2014
Half year to 30
September 2013 (restated)
Cash flows from operating activities 8 10 30
Cash flows from investing activities
Dividends received from associates 4 4
Dividends received from joint ventures 1 1
Other equity dividends received - 2
Payments to acquire property and equipment (5) (7)
Intangible development expenditure (22) (23)
Proceeds from sale of business net of cash disposed - 3
Acquisition of associates - (4)
Net cash flows from investing activities (22) (24)
Cash flows from financing activities
Dividends paid to non-controlling interest - (1)
Proceeds from exercise of share options - 3
Dividends paid to owners of the Company (99) (99)
Repayment of borrowings (259) (71)
Funds received from borrowing, net of fees 70 108
Net cash flows from financing activities (288) (60)
Net decrease in cash and cash equivalents (300) (54)
Net cash and cash equivalents at beginning of period 698 592
FX adjustments (5) (35)
Net cash and cash equivalents at end of period 393 503
Net cash and cash equivalents consists of:
Cash and cash equivalents 416 503
Overdraft (23) -
Net cash and cash equivalents at end of period 393 503
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
25
Notes to the Financial StatementsNotes to the Financial StatementsNotes to the Financial StatementsNotes to the Financial Statements
(a) Basis of preparation(a) Basis of preparation(a) Basis of preparation(a) Basis of preparation
The condensed consolidated financial statements for the half year to 30 September 2014 do not
constitute statutory financial information as defined in section 434 of the Companies Act 2006. The
condensed consolidated financial statements are unaudited but have been reviewed by the auditors,
PricewaterhouseCoopers LLP, and their report is set out at the end of this document. The Annual
Report for the year ended 31 March 2014 has been filed with the Registrar of Companies. The report
of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
The condensed consolidated financial statements for the half year to 30 September 2014 have been
prepared in accordance with the DTR4.2 of the FCA and with IAS34 ‘Interim Financial Reporting’ as
issued by the International Accounting Standards Board (‘IASB’) and endorsed by the European Union
(EU). These condensed consolidated Financial Statements should be read in conjunction with the Annual
Report for the year ended 31 March 2014 which was prepared in accordance with IFRSs as issued by
the IASB and endorsed by the EU at that date.
During the period, the Group adopted the following new accounting standards:
• IFRS10 Consolidated Financial Statements (replaced IAS 27 Consolidated and Separate
Financial Statements),
• IFRS11 Joint Arrangements (replaced IAS 31 Joint Ventures),
• IFRS12 Disclosure of Interests in Other Entities,
• IAS27 Separate Financial Statements (replaced IAS 27 Consolidated and Separate Financial
Statements); and
• IAS28 Investments in Associates and Joint Ventures (replaced IAS 28 Investments in Associates).
All other accounting policies in the preparation of the Half-yearly financial statements remained
consistent with those applied in the preparation of the Annual Report for the year ended 31 March 2014.
The adoption of IFRS11 Joint Arrangements and IAS28 Investments in Associates and Joint ventures
had a material effect on these consolidated financial statements as the Group’s joint ventures are now
accounted for using the equity accounting method under IAS28. Income statement and balance sheet
line items for the prior year comparatives have been restated. The impact of the retrospective adoption
on the profit after tax was for the six months ended 30 September 2014 was nil, but restated revenue
and operating expenses for the six months ended 30 September 2013 were £10m and £7m lower, respectively. The balance sheet impact was immaterial.
The adoption of other standards had no material impact on the financial statements for the half year ended 30 September 2014.
The preparation of financial information requires the use of estimates and assumptions about future
conditions. The use of available information and the application of judgement are inherent in the
formation of estimates; actual results in the future may differ from those reported. The significant
judgements and estimates applied by the Group in these consolidated Financial Statements have been applied on a basis consistent with the Annual Report for the year ended 31 March 2014.
Presentation of primary statements
The Group maintains a columnar format for the presentation of its consolidated income statement.
The columnar format enables the Group to continue its practice of improving the understanding of its
results by presenting trading profit for the period. This is the profit measure used to calculate trading EPS and is considered to be the most relevant as it better reflects the Group’s underlying cash earnings.
Profit before acquisition and disposal costs and exceptional items are reconciled to profit before tax
on the face of the consolidated income statement. On the face of the consolidated income statement basic and diluted EPS have been disclosed.
1111 Basis of preparationBasis of preparationBasis of preparationBasis of preparation
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
26
Notes to the Financial StatementsNotes to the Financial StatementsNotes to the Financial StatementsNotes to the Financial Statements
(b) Future accounting developments(b) Future accounting developments(b) Future accounting developments(b) Future accounting developments
At 30 September 2014, the following standards have been issued by the IASB which are not
effective for these consolidated financial statements.
• In July 2014, IASB issued IFRS9 Financial Instruments, which will replace IAS39 Financial Instruments: Recognition and Measurement. The standard will be effective for annual periods beginning on or after 1 January 2018. ICAP will adopt IFRS9 for its financial statements for
the year ended 31 March 2019.
• In May 2014, IASB issued IFRS15 Revenue from contracts with customers, which will replace IAS18 Revenue and IAS11 Construction Contracts and other related interpretations on revenue recognition. The standard will become effective for annual periods beginning on or
after 1 January 2017. ICAP will adopt IFRS15 for its financial statements for the year ended
31 March 2018.
The basis of identifying segments and measuring segmental results is set out on page 107 of the ICAP plc Annual Report for the year ended 31 March 2014.
Half year to 30 September 2014
£m Electronic Markets
Post Trade Risk and Information Global Broking Group
Revenue 122 108 390 620
Trading operating profit 41 42 17 100
Profit from associates - (1) 3 2
Profit from JVs - - 2 2
Trading EBIT* 41 41 22 104
Trading depreciation and amortisation 12 4 9 25
Trading EBITDA** 53 45 31 129
Net finance cost*** - - - (18)
Trading profit before tax 86
Trading operating profit margin (%) 34% 39% 4% 16%
Reconciliation to the consolidated income statement:
Trading profit before tax 86
Acquisition and disposal costs (28)
Exceptional items (22)
Profit before tax 36
Tax (7)
Profit for the period 29
Other segmental information
Capital expenditure**** 11 6 9 27
* Trading EBIT is the trading profit before deducting net finance cost and tax.
** Trading EBITDA is the trading profit before deducting net finance cost, tax and amortisation and depreciation charges.
Segments’ trading EBITDA best represents the cash generated from their ongoing operations.
*** Given the Group’s debt financing arrangements are managed centrally through a treasury function, ICAP plc Board does
not incorporate net finance cost in the assessment of the segments’ performance.
**** Total capital expenditure for the Group includes £1m investment made to develop corporate intangible assets, which are
not segment specific.
1111 Basis of preparationBasis of preparationBasis of preparationBasis of preparation continued
2222 Segmental Segmental Segmental Segmental iiiinformationnformationnformationnformation
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
27
Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements continued
Half year to 30 September 2013 (restated)
£m Electronic Markets
Post Trade Risk and
Information Global Broking Group
Revenue 141 103 482 726
Trading operating profit 55 43 53 151
Profit from associates - (1) 3 2
Profit from JVs - - 2 2
Trading EBIT* 55 42 58 155
Trading depreciation and amortisation 11 3 6 20
Trading EBITDA** 66 45 64 175
Net finance cost*** - - - (16)
Trading profit before tax 139
Trading operating profit margin (%) 39% 42% 11% 21%
Reconciliation to the consolidated income statement:
Trading profit before tax 139
Acquisition and disposal costs (31)
Exceptional items (68)
Profit before tax 40
Tax (21)
Profit for the period 19
Other segmental information
Capital expenditure**** 12 6 9 30
* Trading EBIT is the trading profit before deducting net finance cost and tax.
** Trading EBITDA is the trading profit before deducting net finance cost, tax and amortisation and depreciation charges.
Segments’ trading EBITDA best represents the cash generated from their ongoing operations.
*** Given the Group’s debt financing arrangements are managed centrally through a treasury function, ICAP plc Board does
not incorporate net finance cost in the assessment of the segments’ performance.
**** Total capital expenditure for the Group includes £3m investment made to develop corporate intangible assets, which
are not segment specific.
2222 SegSegSegSegmental mental mental mental iiiinformationnformationnformationnformation continuedcontinuedcontinuedcontinued
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
28
Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements continued
The table below shows the actual impact on the Group’s results for the six months ended 30
September 2014 compared to the previous half year of the movement of the dollar and euro
exchange rates in terms of transactional and translational exposure.
£m Half year to 30 September 2014 Half year to 30 September 2013
Dollar Euro Total Dollar Euro Total
Group Trading operating profit (13) (1) (14) 3 (3) -
The principal exchange rates which affected the Group, expressed in currency per pound sterling,
are shown below:
Closing rate Average rate
As at 30
September
2014
As at 30
September
2013
Half year to 30
September
2014
Half year to 30
September
2013
Dollar 1.62 1.62 1.67 1.54
Euro 1.28 1.20 1.24 1.17
The table below shows the impact on the Group’s half-year results of a 10 per cent appreciation,
which the Group considers to be an appropriate sensitivity measure, in the dollar and euro in terms of
transitional and transactional exposure.
£m Dollar Euro Total
Trading operating profit 6 1 7
In response to the prevailing market conditions, the Group has embarked on a further programme of restructuring aimed at simplifying systems, processes and legal entity structures and increasing workforce productivity. The programme covers all of the group's activities, with a particular focus on the global broking division, where revenue fell 15% during the period, and infrastructure. In the 6 months to 30 September 2014, 261 brokers and 149 infrastructure staff left the firm, which resulted in one off cost of restructuring the staff cost £18m. Other is primarily driven by restructuring costs including the impairment of technology assets and the legal and professional fees connected with the group reorganisation.
3333 FX exposuresFX exposuresFX exposuresFX exposures
4444 Exceptional itemsExceptional itemsExceptional itemsExceptional items
£m Half year to 30
September 2014
Half year to 30
September 2013
Exceptional items before tax
Staff termination 18 -
Other 4 -
Regulatory matters - 68
Total exceptional items before tax 22 68
Tax credit (7) (3)
Total exceptional items after tax 15 65
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
29
Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements continued
The Group continues presents trading earnings per share measurement ratios as it believes that it is
the most appropriate measurement since it better reflects the Group’s underlying cash earnings.
Earnings per shareEarnings per shareEarnings per shareEarnings per share Half year to 30 September 2014 Half year to 30 September 2013
Trading basic and diluted Earnings
£m Shares millions
Earnings per share
pence Earnings
£m Shares millions
Earnings per share
pence
Trading basic 65 644 10.1 104 641 16.2
Dilutive effect of share options - 13 (0.2) – 12 (0.3)
Trading basic (diluted) 65 657 9.9 104 653 15.9
Half year to 30 September 2014 Half year to 30 September 2013
Basic and diluted Earnings
£m Shares millions
Earnings per share
pence Earnings
£m Shares millions
Earnings per share
pence
Basic 29 644 4.5 19 641 3.0
Dilutive effect of share options - 13 (0.1) – 12 (0.1)
Basic (diluted) 29 657 4.4 19 653 2.9
£m Half year to 30
September 2014 Half year to 30
September 2013
Amounts recognised as distributions to equity holders in the period
Final dividend for the year ended 31 March 2014 of 15.40p per share
(2013 – 15.40p) 99 99
The final dividend for the year ended 31 March 2014 was satisfied with a cash payment of £99m.
On 19 November 2014, the board approved an interim dividend for the half year ended 30 September
2014 of 6.60p per share (30 September 2013 – 6.60p). The dividend will be satisfied in cash.
5555 Earnings per shareEarnings per shareEarnings per shareEarnings per share
6666 DividendsDividendsDividendsDividends
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
30
Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements continued
Tax charged to the income statement in the period:
£m Half year to 30
September 2014
Half year to 30
September 2013
Current tax
Current period 14 33
Adjustment to prior periods - (9)
14 24
Deferred tax
Current period (8) (7)
Adjustments to prior periods 1 2
Deferred tax impact of changes in tax rates - 2
(7) (3)
Total tax charged to consolidated income statement 7 21
The Group’s share of profit of joint ventures and associates in the income statement is shown net of tax of £2m (30 September 2013 (restated) – £2m).
Legislation to reduce the main rate of UK Corporation Tax from 21% to 20% from 1 April 2015 was enacted at the balance sheet date and its effect on deferred tax is included in the tax charge for the period.
The principal movement in deferred tax relates to the release of the deferred tax liability on the amortisation of intangibles arising on consolidation.
£m Half year to 30
September 2014
Half year to 30
September 2013
Tax on trading profit
Total tax charged to the consolidated income statement 7 21
Tax credit on acquisition and disposal costs 7 11
Tax credit on exceptional items 7 3
Total tax charged on trading profit 21 35
The Group’s effective tax rate on trading profit for the half year to 30 September 2014 was 24% (half
year to 30 September 2013 – 25%). The Group’s trading effective tax rate is higher than the
applicable statutory rate in the UK primarily due to higher rates applying to profits in overseas jurisdictions and items of expenditure that are not deductible for tax purposes.
7777 TaxTaxTaxTax
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
31
Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements continued
a.a.a.a. Reconciliation of profit before tax to net cash flow from operating activitiesReconciliation of profit before tax to net cash flow from operating activitiesReconciliation of profit before tax to net cash flow from operating activitiesReconciliation of profit before tax to net cash flow from operating activities
£m
Half year to 30
September 2014
Half year to 30 September 2013
(restated)
Profit before tax 36 40
Operating exceptional items 22 68
Amortisation of intangible assets arising on consolidation 28 35
Net finance expense 18 16
Amortisation and impairment of intangible assets arising from
development expenditure 17 13
Depreciation and impairment of property and equipment 8 9
Other acquisition and disposal costs - (5)
(Decrease)/Increase in provisions (1) 2
Share of operating profits of associates after tax (2) (2)
Share of operating profits of joint ventures after tax (2) (2)
Loss on disposal of assets - 1
Share-based payments 3 1
Operating cash flows before movements in working capital 127 176
Decrease in trade and other payables (57) (78)
Decrease in trade and other receivables 26 13
Net impact of trade fails and unsettled trades (22) 2
Increase in restricted funds (8) (15)
Cash generated by operations before exceptional items paid 66 98
Operating exceptional items paid* (26) (5)
Cash generated by operations 40 93
Interest received 2 2
Interest paid (24) (23)
Tax paid (8) (42)
Net cash flow from operating activities 10 30
*Operating exceptional items paid includes £18m relating to the Group restructuring costs and £8m relating to
the final settlement with the SEC in relation to its investigations into Link Brokers Derivatives LLC. This was recorded as provision at 31 March 2014.
The movement in trade and other receivables and trade and other payables excludes the impact of the
gross-up of matched principal trades as permitted by IAS7 ‘Statement of cash flows’. The gross-up
has no impact on the cash flow or net assets of the Group. The cash flow movement in trade and other
receivables includes the net movement on matched principal transactions and deposits for securities
borrowed/loaned. The movement for the half year to 30 September 2014 is an outflow of £22m (six months to 30 September 2013 - inflow of £2m).
8888 Cash Cash Cash Cash
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
32
Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements continued
b.b.b.b. Cash informationCash informationCash informationCash information by businessesby businessesby businessesby businesses
As at 30 September 2014
£m Electronic Markets
Post Trade Risk and
Information Global Broking Group
functions Group
Cash and cash equivalents 56 21 332 7 416
Restricted funds 3 - 43 1 47
Total Cash 59 21 375 8 463
As at 31 March 2014
£m Electronic Markets
Post Trade Risk and
Information Global Broking Group
functions Group
Cash and cash equivalents 55 30 367 246 698
Restricted funds 2 - 36 1 39
Total Cash 57 30 403 247 737
At 31 March 2014, the Group held cash of £257m in the central treasury function from the €350m
senior notes issued in March 2014 to finance the repayment of the €300m senior notes in July 2014.
a)a)a)a) LongLongLongLong----term term term term borrowingsborrowingsborrowingsborrowings
£m As at 30
September 2014
As at 31
March 2014
As at 30
September 2013
Retail bond repayable 2018 124 124 124
Subordinated loan notes repayable 2015 - 117 119
RCF repayable 2016 15 - 43
Ten-year senior notes repayable 2023 12 11 12
Five-year senior notes repayable 2019 271 288 -
422 540 298
b)b)b)b) ShortShortShortShort----term borrowingsterm borrowingsterm borrowingsterm borrowings
£m As at 30
September 2014
As at 31
March 2014
As at 30
September 2013
Five-year senior notes repayable 2014 - 246 251
Subordinated loan notes repayable 2015 119 - -
Japanese yen loan 56 - -
Term loan facility - - 50
Overdrafts 23 1 -
198 247 301
On 28 July 2014, €300m of senior notes was repaid at par.
In April 2014, a new JPY10 billion loan was entered into with The Tokyo Tanshi Co. Limited. This loan
matured in September 2014 when it was refinanced under similar terms and is due to mature in March
2015.
8888 Cash Cash Cash Cash continued
9999 BorrowingsBorrowingsBorrowingsBorrowings
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
33
Notes to the Financial StatementsNotes to the Financial StatementsNotes to the Financial StatementsNotes to the Financial Statements continued
b)b)b)b) ShortShortShortShort----term borrowingsterm borrowingsterm borrowingsterm borrowings continued
The subordinated loan notes will mature for repayment in July 2015 and therefore have been re-
classed from long-term borrowings at 31 March 2014 to short-term borrowings at 30 September
2014.
c)c)c)c) Net debtNet debtNet debtNet debt
£m As at 30
September 2014
As at 31 March
2014 (restated)
Gross debt (620) (787)
Cash and cash equivalents 416 698
Net debt (204) (89)
Restricted funds 47 39
Net debt adjusted for restricted funds (157) (50)
10101010 Contingent liabilitiesContingent liabilitiesContingent liabilitiesContingent liabilities
Further to disclosure in page 128 in ICAP plc Annual Report for the year ended 31 March 2014, the
Company and its subsidiaries continue to cooperate with government agencies in Europe and in the US
relating to their investigations into the setting of yen Libor, on which matter ICAP has responded to a
Statement of Objection issued by the EU Commission. The Company continues to defend the claims
made in the US civil litigation against various yen Libor and Euroyen Tibor setting banks, where the
Company is a named defendant. It is not practicable to predict the ultimate outcomes of these investigations and litigations or to provide an estimate of any potential financial impact on the Group.
ICAP continues to co-operate with inquiries by US agencies into the setting of USD ISDAFIX rates.
During the period, civil lawsuits were filed in the US against USD ISDAFIX setting banks, where a
subsidiary of the Company is also a named defendant. Those suits have now been consolidated into a
single action. The Company intends to defend these litigation claims. It is not practicable to predict the
ultimate outcomes of these inquiries and litigation or to provide an estimate of any potential financial impact on the Group.
From time to time the Group is engaged in litigation in relation to a variety of matters, and is required
to provide information to regulators and other government agencies as part of informal and formal
inquiries. Additionally, in the normal course of business, certain Group companies enter into guarantees
and indemnities to cover trading arrangements and/or the use of third party services or software. It
is not possible to quantify the extent of any potential liabilities, but there are none currently expected to have a material adverse impact on the Group’s consolidated results or net assets.
11111111 Related party transactionsRelated party transactionsRelated party transactionsRelated party transactions
The nature of the various services provided to some of the Group’s joint ventures and associates are
similar to those for the year ended 31 March 2014 and there have been no material transactions
during the period to 30 September 2014.
The basis of remuneration of key management personnel remains consistent with that disclosed in the
Annual Report for the year ended 31 March 2014.
11112222 Post balance sheet eventsPost balance sheet eventsPost balance sheet eventsPost balance sheet events
On 1 October 2014, ICAP plc, through its subsidiaries, made additional investment in Enso Financial, a
buy side analytics and intelligence provider. The additional investment increased the Group’s
shareholding in Enso by 16.5% to 39.4%. The Group will continue to account for investment in Enso
as an associate.
9999 BorrowingsBorrowingsBorrowingsBorrowings continuedcontinuedcontinuedcontinued
ICAP plc ICAP plc ICAP plc ICAP plc
2014 Half-Yearly Financial Report
34
Independent review report of ICAP plcIndependent review report of ICAP plcIndependent review report of ICAP plcIndependent review report of ICAP plc
Our ConclusionOur ConclusionOur ConclusionOur Conclusion
We have reviewed the condensed consolidated interim financial statements, defined below, in the Half-Yearly
Financial Report of ICAP Plc for the six months ended 30 September 2014. Based on our review, nothing has
come to our attention that causes us to believe that the condensed consolidated interim financial statements are
not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
This conclusion is to be read in the context of what we say in the remainder of this report.
What we have reviewed What we have reviewed What we have reviewed What we have reviewed
The condensed consolidated interim financial statements, which are prepared by ICAP plc, comprise:
• the condensed consolidated balance sheet as at 30 September 2014;
• the consolidated income statement and statement of comprehensive income for the period then ended;
• the condensed consolidated statement of cash flows for the period then ended;
• the condensed consolidated statement of changes in equity for the period then ended; and
• the explanatory notes to the condensed consolidated interim financial statements.
As disclosed in note 1, the financial reporting framework that has been applied in the preparation of the full annual
financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
The condensed consolidated interim financial statements included in the Half-Yearly Financial Report have been
prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the
European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
What a review What a review What a review What a review of condensed consolidated financial statements involvesof condensed consolidated financial statements involvesof condensed consolidated financial statements involvesof condensed consolidated financial statements involves We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland)
2410, ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued by the
Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half-Yearly Financial Report and considered whether it
contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements
IIIICAP plc CAP plc CAP plc CAP plc
2014 Half-Yearly Financial Report
35
Independent review report of ICAP plcIndependent review report of ICAP plcIndependent review report of ICAP plcIndependent review report of ICAP plc continuedcontinuedcontinuedcontinued
Our responsibilities and those of the directorsOur responsibilities and those of the directorsOur responsibilities and those of the directorsOur responsibilities and those of the directors The Half-Yearly Financial Report, including the condensed consolidated interim financial statements, is the
responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Half-
yearly Financial Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial
statements in the Half-Yearly Financial Report based on our review. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying with the Disclosure and Transparency Rules
of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLPPricewaterhouseCoopers LLPPricewaterhouseCoopers LLPPricewaterhouseCoopers LLP Chartered Accountants London
19 November 2014
Notes:
I. The maintenance and integrity of the ICAP website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the half-yearly financial report since it was initially presented on the website.
II. Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.