9th Jun 2015 16:28
ICAP plc (the "Company")
The Company has issued to shareholders the Annual Report and financial statements for the year ended 31 March 2015, the notice of 2015 annual general meeting and the form of proxy. These have been uploaded to the National Storage Mechanism at www.hemscott.com/nsm.do and copies of the Annual Report and financial statements and the notice of 2015 annual general meeting are available to view or download from the Company's website, www.icap.com.
The Company's annual general meeting will be held on Wednesday 15 July 2015 at 11.00 am at 2 Broadgate, London, EC2M 7UR.
The Company announced its full-year results for the year ended 31 March 2015 on 19 May 2015. A condensed set of financial statements formed part of that announcement and included an indication of the important events that occurred during the year together with a responsibility statement regarding the Annual Report and the financial statements. Certain further information in relation to the Annual Report and financial statements is provided in full unedited text as required under the Disclosure and Transparency Rules in the appendices to this announcement. This announcement should be read together with the full-year results announcement.
9 June 2015
ENDS
Appendices:
The following appendices should be read in conjunction with, and not as a substitute for, reading the full Annual Report and financial statements for the year ended 31 March 2015. Note references and definitions in the text below are as in the Annual Report and financial statements for the year ended 31 March 2015.
Appendix A: Principal risks
The following table summarises those risks of principal importance to ICAP over the financial period, their key drivers, Group appetite and key mitigating actions.
Importance to ICAP | Key drivers | Mitigation | |
Strategic risk | |||
The risk arising from inappropriate strategic decisions that fail to reflect the full business operating environments, and full impacts on execution, or fail to adequately or timely identify changes to the business model. | To ensure ICAP remains competitive in its chosen strategic markets, identifying and optimising commercial opportunities requires ICAP to assess the risks, rewards and costs associated with each. Strategic risks generally manifest over a medium timeframe allowing corrective proactive management. Appetite ICAP will innovate and grow through considered initiatives and acquisitions that are scalable, experience positive switching/network effects or show a competitive advantage. | Regulatory landscape impacting our business or our customers' businesses. Commercial/market conditions. Internal business/operating model.
| Business case and risk assessment of significant business initiatives. Defined product, country, client strategies. Surveillance of market, regulatory landscape and customer demand. Risk scenario contingency planning.
|
Operational risk | |||
The risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. | ICAP's reputation is built on strong execution of service. ICAP actively identifies, monitors and controls the risk that its people, process or systems fails leading to a reduction in the quality of service to our customers and an increase in our operating costs. Operational risks could manifest themselves across any timeframe. Appetite ICAP will take measures to identify and proportionally manage operational risk to a desired level through mitigating systems, processes and controls, but recognises operational risk is inherent in its business activities. | Internal business/operating model. External threats. Market conditions.
| ICAP maintains an operational risk framework, with independent risk function oversight. Timely escalation and mitigation of risk events. Provision of training and guidance. Information security breach monitoring. Critical technology performance monitoring. Risk scenario contingency planning.
|
Liquidity risk | |||
The risk that the Group or any of its entities does not have sufficient liquid resources or is unable to deploy such resources to meet its actual or potential obligations in a timely manner as they fall due. | ICAP has short-term liquidity requirements arising from settlement and clearing arrangements, in the form of collateral and margin requirements for clearing houses or financial institutions providing clearing access. It is possible large liquidity demands can arise on the same or next day, due to reasons beyond ICAP's direct control. The Group ensures adequate liquidity resources are maintained to meet these requirements in support of its trading activities. Longer-term requirements arise in relation to the timing of the Group's operating cash inflows against outflows, principally for capital expenditure and dividends. The Group maintains a diversified funding base with sufficient committed headroom to forecast requirements. Appetite ICAP will have sufficient and accessible financial resources so as to meet financial obligations as they fall due. | Operational risk. Credit risk (events). Internal business/operating model.
| Periodic reviews including going concern assessments. Use of financial institutions for clearing access. $250 million of committed liquidity held centrally for same and next day utilisation. Contingency funding arrangements and procedures in place. |
Reputational risk | |||
The risk that the Group fails to meet expectations of stakeholders, is unable to build or sustain relationships with customers, incurs regulatory censure or experiences more costly access to funding sources. | ICAP remains focused on maintaining and constantly strengthening relationships with shareholders, customers, regulators, lenders, clearing and settlement providers, market infrastructure providers and employees. Reputation risk can manifest over the near term with long-term impacts. Appetite ICAP will adhere to its core values and fulfil its corporate responsibilities by ensuring it acts responsibly, ethically and with integrity. | Operational risk. Regulatory risk - conduct risk. Strategic risk.
| Active assessment via investor relationship surveys, media surveys, employee statistics. Culture and conduct training and monitoring. |
Credit risk | |||
The risk of a financial loss due to the failure of a customer to meet its obligation to settle outstanding amounts. | While ICAP enters into transactions only when executing on behalf of customers, providing customer access to clearing or provides additional fee-based services, there does exist short-term credit exposure prior to clearing and settlements, and outstanding receivables risk that ICAP manages. Appetite ICAP will engage only in activities which it believes will not result in loss due to credit risk. | Market conditions. Counterparty credit worthiness. | Counterparty due diligence. Credit limits. Risk scenario and stress contingency planning. |
Legal and compliance risk | |||
Legal risk arises from defective transactions, failing to take appropriate measures to protect assets, changes in law and/or breach of law or acceptable practice and claims resulting in a liability or loss to a company/ies within the Group. Compliance risk is the risk of material loss, regulatory sanctions or reputational damage arising from the failure to comply with relevant regulatory requirements. | ICAP operates in multiple jurisdictions and remains focused on ensuring they recognise and respect the rules and laws to which they are held. ICAP also recognises that the conduct of the Group and its employees is of paramount importance to its strategic aims and reputation. Legal and compliance risk can manifest over the near and long term. Appetite ICAP will ensure it has in place the necessary processes, controls and frameworks in order to comply with legal and regulatory requirements; ICAP will use appropriate external legal advisors for contentious matters and litigation. For the avoidance of doubt, ICAP has no appetite for legal or regulatory breaches. | Multiple and dynamic regulatory regimes. Regulatory risks - conduct risk. | ICAP has internal legal and compliance departments which act as independent advisory and investigation functions to enable and defend the Group's strategic aims. Both legal policies and compliance risk management frameworks strengthen this defence. Advice is regularly taken from appropriately qualified external advisors and professionals. Training is provided to staff on an ongoing basis. Culture and conduct training and monitoring. |
In addition to the principal risks the Group also recognises and actively manages the following Group risks:
Other Group risks | Importance to ICAP | Key drivers | Mitigation |
Cross-risk | |||
The risk that the Group and its divisions fails to maintain its commercial targets due to either internal or external factors. | In support of achieving its commercial targets, ICAP works diligently with all stakeholders to identify all threats and opportunities. Appetite ICAP will monitor its internal and external environment in order to maintain stable and robust financial performance over the long term. | ICAP's credit worthiness. Market competition. | Predictability of earnings - discipline is applied to existing performance and new business proposals. Maintenance of ICAP's external credit rating. |
Financial risk | |||
The risk that the Group is exposed to significant losses due to adverse movements in interest and exchange rates. | Interest rate risk from the Group's exposure to rate fluctuations on cash balances and borrowings. Currency translation risk arising from the conversion of foreign currency needed to pound sterling for the preparation of ICAP plc's consolidated financial statements. Currency risk for the Group's entities arising from transactions, assets or liabilities denominated in a foreign currency for an individual entity. Appetite ICAP will manage its financial risks in accordance with approved policies for the Group. | Market rates. Trading volume. Geographic profile. Regulatory and working capital requirements. | Details of the Group's management of interest rate and currency risks are contained in notes 9 and 28 to the financial statements. Established Group policies for the management of interest rate and currency exposures. Long-term debt raised with fixed rates with the option to swap to variable rates. Quarterly review of currency exposures and hedging levels. |
Market risk | |||
Risk of losses in on and off-balance sheet positions arising from adverse movements in market prices. | ICAP does not actively take market risk. Where it does arise this is due to failures in our expected business processes, systems or human error. As such it is identified and treated as operational risk. Appetite ICAP will not engage in proprietary trading or actively seek market exposure and will actively reduce any incidental market exposure resulting from its activities as soon as reasonably practicable. | Volume and complexity of trade booking. Market movements/liquidity. | Monitoring and timely mitigation of unmatched positions. Exposure modelling. |
Appendix B: Related party transactions
Group
(a) IPGL
IPGL is a company controlled by Michael Spencer, the Group Chief Executive Officer of ICAP plc. During the year, a number of transactions took place between IPGL and its subsidiaries and the Group and these are detailed below.
IPGL
The Group collected revenue on behalf of IPGL of £156 (2013/14 - £2,786). During the year, the Group charged IPGL £144 (2013/14 - £841) in respect of employees of the Group who provided services to IPGL and its investments and £nil (2013/14 - £1,727) in respect of other services. As at 31 March 2015, IPGL owed the Group £6,113 (2013/14 - £6,125).
Exotix Holdings Limited (Exotix)
As part of the disposal of Exotix to IPGL in 2007, the Group loaned employees of Exotix Limited, a subsidiary of Exotix, £1.5m to enable them to purchase a shareholding. Interest of £5,069 (2013/14 - £924) has been charged on these loans during the year. The Group collected revenue of £8,439,804 (2013/14 - £6,970,687) on behalf of Exotix and recharged Exotix £230,049 (2013/14 - £255,210) for clearing-related services and £25,063 (2013/14 - £288,435) for other services provided during the year. As at 31 March 2015, there was a balance due to Exotix from the Group of £10,169,250 (2013/14 - £356,119). The Group holds £1.9m (2013/14 - £1.9m) as collateral from Exotix on deposit.
City Index Limited
During the year the Group has charged FXSolutions (an indirect subsidiary of IPGL) £nil (2013/14 - £15,000) for the provision of FX data from its EBS platform. As at 31 March 2015 there was £nil balance outstanding with the Group (2013/14 - £nil).
(b) TFS-ICAP LLC, TFS-ICAP Australia, TFS-ICAP Japan, TFS-ICAP Limited and TFS-ICAP Singapore
The Group invoices and collects revenue on behalf of TFS-ICAP LLC. During the year, the Group invoiced and collected £nil (2013/14 - £90,736) for which it did not receive a fee. During the year the Group recharged the various joint ventures a fee as compensation for overheads and IT support costs as follows: TFS-ICAP LLC - £nil (2013/14 - £123,527); TFS-ICAP Limited - £11,247 (2013/14 - £25,475). As at 31 March 2015 the outstanding balance from all the joint ventures to the Group was £533,494 (2013/14 - £1,175,713 due from the Group).
(c) BSN Capital Partners Limited (BSN)
The Group provides BSN, an associate undertaking, with office space and facility services. During the year, the Group charged BSN £74,268 (2013/14 - £144,627) for these services. The Group also has a preferred brokerage agreement with BSN and has recognised revenue of £87,657 (2013/14 - £188,257) during the year. As at 31 March 2015 the outstanding balance was £497,824 (2013/14 - £385,822).
(d) Shanghai CFETS-ICAP International Money Broking Co Limited (CFETS-ICAP)
The Group provides CFETS-ICAP, an associate company based in China, with office space and facilities services. During the year, the Group charged the company £nil (2013/14 - £nil) for these services. The Group also invoiced and collected revenue of £163,145 for CFETS-ICAP in the year (2013/14 - £201,703). As at 31 March 2015 there was a balance due to CFETS-ICAP from the Group of £369,773 (2013/14 - £1,500,949).
(e) Capital Shipbrokers Limited
The Group collected revenue on behalf of Capital Shipbrokers Limited, an associate based in Hong Kong, of £6,542 (2013/14 - £2,024,346). The Group also recharged Capital Shipbrokers Limited £2,642 (2013/14 - £143,649) for overheads and wrote off bad debt provisions of £309,023. The total outstanding balance due to the Group was £808,123 (2013/14 - £1,028,590 due from the Group).
(f) ICAP Holdings South Africa Pty Limited
In a prior year, the Group loaned some minority shareholders of ICAP Holdings South Africa Pty Limited, a subsidiary company, £629,558 in order to acquire 140,800 shares in the company from the Group. Interest of £7,247 (2013/14 - £11,078) was charged on the loan during the year. As at 31 March 2015, the outstanding balance due on the loan was £57,462 (2013/14 - £94,085).
Related Shares:
IAP.L