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 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.


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.


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 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.



14


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.



15

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 (%)


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.



16


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.



17


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.



18


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.



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



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


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



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)



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



23

Consolidated statement of changes in equity


£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


£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



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



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



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.


£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:


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



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)


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 operating profit margin (%) 39% 42% 11% 21%

Reconciliation to the consolidated income statement:


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



28


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



29


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



30


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



31


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


(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



32


b.b.b.b. Cash informationCash informationCash informationCash information by businessesby businessesby businessesby businesses

As at 30 September 2014


Post Trade Risk and


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


Post Trade Risk and


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



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



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


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.

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