Final Results

19th May 2009 07:00



Preliminary statement for the year ended 31 March 2009

 

London - 19 May 2009

 

ICAP plc (IAP.L), the world's premier interdealer broker, today announced its audited results for the year ended 31 March 2009. 

 

Highlights:

	Year ended 31 March 2009	Year ended 31 March 2008	Increase
	£m	£m
Revenue	1,601	1,304	23%
Net operating expenses1,3	1,240	972	28%
Profit2	346	330	5%
Profit before tax - statutory6	281	275	2%

EPS (basic)6	27.6p	26.4p	5%
EPS (adjusted basic)	34.1p	31.3p	9%
Dividends per share	17.05p	15.65p	9%

 

 

Michael Spencer, Group Chief Executive Officer, said "These are resilient results against the backdrop of the most extraordinary financial upheavals experienced across the globe during the past 12 months. We have consolidated our position as the leading global intermediary in the wholesale over-the-counter (OTC) markets by a clear margin. 

We entered this period of financial instability with a very clear strategy and are well positioned to take advantage of the significant restructuring of the financial services industry that is taking place and the changes that will happen in our customers' business models. Increased focus on reducing the overall level of risk in the global financial markets by improving market infrastructure offers particular opportunities for our post trade business. This environment also creates new opportunities for an un-conflicted, independent agency broker like ICAP in areas such as equities and futures. 

We are keeping our focus on costs and are taking advantage of a number of opportunities to reduce overheads. These savings will partially offset our continuing investment in building our business, both by attracting high quality people and acquiring some assets at attractive prices. The Group continues to be highly cash generative to support these investments and benefits from a strong balance sheet."

Notes

Includes operating expenses net of other income before amortisation and impairment of intangibles arising on consolidation and exceptional items.

Profit is defined as pre-tax profit before amortisation and impairment of intangibles arising on consolidation and exceptional items.

Excludes amortisation and impairment of intangibles arising on consolidation and exceptional items.

Free cash flow is net cash flow from operating activities after deducting capital expenditure and adding dividends received from associates and investments.

Net debt is long and short term borrowings and overdrafts less cash and cash equivalents.

The comparative results have been restated to reflect the unwinding of additional deferred tax liabilities in respect of temporary differences arising on certain intangible assets. This has no impact on cash flow.

There will be a briefing for analysts and investors at 09:30 BST on Tuesday 19 May 2009 at 2 Broadgate, London EC2M 7UR. An audiocast of the presentation made to analysts at 09:30 BST on Tuesday 19 May 2009 will be available on the web site, www.icap.com at 17:00 BST on Tuesday 19 May 2009. It will remain on the web site for six months. A further conference call will be held at 14:30 BST/09:30 EST for investors and analysts based in North America. For dial in details and a copy of the presentation please contact Maitland on +44 (0) 20 7379 5151.

Contacts: 

Michael Spencer	Group Chief Executive Officer	+44 (0) 20 7050 7400
Mike Sheard	Director of Corporate Affairs	+44 (0) 20 7050 7103
Neil Bennett	Maitland	+44 (0) 20 7379 5151

  ICAP plc 

Preliminary statement for the year ended 31 March 2009

Review of operations

These are resilient results against the backdrop of the most extraordinary financial upheavals experienced across the globe during the past 12 months. The Group reports a record profit of £346 million before tax, amortisation and impairment of intangibles arising on consolidation and exceptional items; representing an increase of 5% over the prior year. On a statutory basis, profit before tax was £281 million, an increase of 2% over the prior year.

We continue to believe that profit before tax, amortisation and impairment of intangibles arising on consolidation and exceptional items better reflects the Group's underlying year-on-year performance. This measure is reconciled to profit before tax on the face of the consolidated income statement. 

The majority of ICAP's revenue is US dollar denominated and as such has been positively affected by the strengthening of the dollar against sterling. The impact of this was to increase operating profit1 by £42 million. Should sterling and the Euro continue to trade at $1.50/£1 and €1.10/£1, the year on year impact in 2009/2010 would be an increase in operating profit1 of £65 million.

Strategy

Our goal is to be the leading global intermediary and post-trade services provider in the wholesale OTC markets. We aim to have at least a 35% share of overall interdealer market revenue and generate 50% of our operating profit from electronic broking. 

There are three components to our strategy: 

expanding our leading voice broking business both organically and by acquisition. 

growing our leading electronic broking business both in existing products and by developing new markets.

developing our post-trade businesses to provide innovative services that enable our customers to reduce their costs and risks and increase their efficiency, return on capital and capacity to process trades.

Our strategy has ensured ICAP was well positioned to weather the turbulent markets of the past year. It has also placed us in a good position to take full advantage of the likely restructuring of the financial markets.

Delivering on our strategy

We have identified several markets we believe to have considerable structural growth potential over the next three to five years. It is in those focus areas that we have been investing primarily to expand our voice broking business - emerging markets, credit, cash equities and equity derivatives and commodities, including shipping. We have during the year: 

launched our cash equities business in Europe, North America and Asia

established our domestic Brazilian business

acquired the equity derivatives broker, Link

integrated Capital Shipbrokers, a leading tanker broker

Volumes in electronic broking began to slow in November from the very high levels of the prior year, but overall have stabilised since then. Our market position in both foreign exchange and fixed income remains very strong and there is potential for volumes to grow with increased government bond issuance. Our reported revenue for electronic broking has increased by 19% to £324 million, primarily as a result of the strong performance from post-trade services. The operating profit1 margin was maintained at 39%, despite investing in the development of Traiana, a key component of our post-trade services offering. Over one third of ICAP's operating profit1 is now derived from electronic broking and post-trade services.

 

ICAP is diversifying its revenue base. This year the proportion of ICAP's revenue derived from businesses acquired or started in the previous three years increased again to a very healthy 28%, up from 20% in the previous financial year. We maintained our commitment to the future growth of the business by investing an additional £44 million in new organic initiatives in our focus areas during the year, as well as our acquisitions. We will continue to invest in these and other opportunities in the coming year to support the long-term growth of the business. This has had an impact on margins but we believe the current environment presents an excellent opportunity to accelerate the development of our business. 

We maintained our focus on costs and took advantage of a number of opportunities in both voice and electronic broking to reduce annualised costs by £38 million: costs were reduced during the year by £15 million and in 2009/10 will be reduced by a further £23 million. These savings partially offset the investment in the new focus areas described above, many of which are still in their development phase. 

ICAP and the changing landscape

We believe ICAP is well positioned to take advantage of the trends emerging from the recent financial crises. Very low short-term interest rates and capital rebuilding by the banks will in due course restore confidence in the financial markets. However, the period of turbulence as banks and other financial institutions restructure to reduce costs and reduce leverage is likely to continue through the rest of this year. 

In their recent results, the major banks have demonstrated that the high volume "flow" markets have provided strong revenues. Furthermore, banks and their customers continue to use derivatives as the most efficient way to manage their risks. It is these flow and derivatives markets that form the core of ICAP's business. Our continued investment in both the voice business and electronic broking platforms is designed to capture the benefits of this trend.

On both sides of the Atlantic, politicians and regulators are examining changes to the operation and regulation of the OTC markets to ensure that the infrastructure is as robust as possible. They are calling for a stronger regulatory framework for the OTC derivatives markets, improved access to information for regulators, increased efficiency and the reduction of credit risk through the expansion of clearing.

 

The solution to current problems in financial markets does not lie in attempting to mandate the transfer of OTC trading on to exchanges, as politicians and regulators understand. Clearing houses already operate very effectively in many OTC markets and OTC markets themselves play a different role to exchange traded markets. They are much larger than exchange markets and provide vital, flexible risk management tools, their use benefiting governments, corporations, investors and individuals worldwide. Furthermore, a mandated exchange solution needlessly grants the exchange a monopoly on trade execution, and often clearing, to the detriment of the market as a whole. 

We welcome the further development of central counterparties/clearing houses for those OTC markets that do not already operate in such a manner. Approximately 60% of ICAP's transaction volume derives from markets where clearing already exists. Historically, we have seen volumes increase substantially in markets where clearing is introduced, mainly as a result of the reduction in the costs and risk of doing business. ICAP is an equal member of a consortium of a number of leading financial institutions that has collectively made a cash offer for LCH.Clearnet Group Limited. Discussions are continuing. 

The majority of OTC derivatives are already traded using standardised documentation and the US Department of Treasury has called for the movement of these trades onto regulated transparent electronic trade execution systems and regulated exchanges. We firmly believe the migration of trading of interest-rate swaps, credit-default swaps and other OTC derivatives markets to electronic execution platforms would be a great step forward; we have proven systems to take these markets electronic, improve market efficiency and audit-ability. ICAP is a regulated business and we have many years' experience of operating electronic trading systems in global markets, integrated with independent clearing and settlement facilities. We fully expect to have competition in electronic trade execution of OTC derivatives; but given our previous investment in installing these technologies we are in a strong position to be successful.

The demand for improvements in the efficiency of post-trade processing and for reductions in the capital allocated to existing positions are providing significant opportunities for ICAP to expand our range of post-trade processing and risk management services. 

A valuable illustration was our announcement, just after the end of the financial year, of our new joint venture with CLS Group using technology provided by our subsidiary Traiana Inc, through its Harmony Network. The new business addresses the back office strains created by the rapid increase of trading volumes in FX by a widening group of hedge funds, algorithmic traders, retail and institutional market participants. It will provide trade aggregation services to reduce operational risk, rationalise and consolidate legacy post-trade processes and reduce post-trade costs. A group of banks have committed support to the joint venture including Citigroup, Deutsche Bank, J.P.Morgan and The Royal Bank of Scotland. 

By our estimates the size of ICAP's available market, excluding markets like global cash equities and the financial futures markets, has grown by 3% to $12.6 billion. On this basis ICAP currently estimates its share of this market to be 21% - 23%. 

Technology developments 

The extreme volatility caused by the crisis in the financial markets has meant that our technology and, in particular, our OTC broking platforms, have been put to the test more than ever before. Our platforms performed well in these most challenging conditions. Global average deal completion time on the EBS platform for spot FX continues to drop and is down 80% from two years ago. 

During the last year we spent 11% of our revenue on the development of our technology. This is a significant investment but is essential to ensure that our technology - both voice and electronic remains competitive. ICAP now has a global IT network of over 630 IT professionals based in EMEA, the Americas and Asia Pacific.

Risk

The directors believe that robust risk management is a fundamental part of ICAP's business. The significant risks of the Group are continually monitored, assessed and managed at the relevant level. 

The Group has classified its exposures into eight risk types: operational, credit, market, liquidity, financial, regulatory, reputational and strategic. 

As a broker, intermediating flow between trading counterparties, the Group does not take proprietary risk positions and is therefore not structurally exposed to either significant market or related credit risk. The principal risks which it identified and for which it prepared have indeed proven to be the ones it faced during the worst dislocation of financial markets in recent years. The effective management of these risks resulted in ICAP suffering no significant loss during this exceptional period.

While ICAP's approach to risk has been proven over the past 18 months, the firm nevertheless constantly seeks to improve the maturity, robustness and sustainability of its Group-wide risk management framework and to promote enhanced risk management discipline across all businesses and supporting functions.

Divisional performance

Voice broking

	£m	Headline growth	Underlying growth¹
Revenue	1,225	24%	4%
Operating profit¹	212	4%	(9)%

Our voice broking division had strong revenue growth, particularly in EMEA, as the dislocations in global financial markets and extreme volatility made the price discovery mechanism and the depth of the liquidity pools provided by our voice brokers more valuable. There has been a structural shift in the markets "back to basics", with the focus of global trading moving to simple "plain vanilla" products. ICAP's voice broking businesses benefited strongly from this shift, the traditional flow businesses - interest rate swaps, options, government bonds, FX and commodities - were the primary drivers of growth. The interest rate markets have been affected by historically low short-term interest rates, steep yield curves and a substantial increase in corporate and government bond issuance. Longer maturity interest rate products, such as swaps, have seen particularly strong growth and spreads in general widened. Corporate bonds reported a strong performance as market uncertainty about companies' credit positions continued and spreads widened. This offset weaker volumes in the credit derivative market in Europe. In America we have been investing in building our credit derivative business and saw a good revenue performance.

Equities and equity derivatives continued to experience difficult conditions and our growth in this market was driven primarily by ICAP's acquisition of equity derivatives broker Link and the development of our cash equities business. Equity derivatives was one of the businesses that we identified as having strong structural growth potential and the acquisition of Link was an important further step in building our overall capability in the equity market. 

Commodities had a record performance, particularly in the oil, natural gas and carbon emissions markets, and ICAP expanded into soft commodities. In the shipping market our dry bulk rates and volumes collapsed with the fall in the Baltic Dry Index, although there are signs recently that these are beginning to recover. Tanker rates and volumes were more resilient due to the stronger market position of tanker clients (principally major oil companies), however these softened as the oil price fell further. ICAP Shipping continues to gain market share in physical shipbroking and sale and purchase. 

In the emerging markets, the European business reported good growth through the year; however this was offset by softer markets in Asia.

Revenue per voice broker is a key performance indicator in this division and our average annual revenue per broker rose 12% to £560,000. 

Electronic broking 

	£m	Headline growth	Underlying growth¹
Revenue	324	19%	2%
Operating profit¹	126	18%	5%

Electronic broking, including post-trade services, had another strong year in terms of revenue and operating profit1. Despite seeing short-term fallout from the dislocations in the credit markets as hedge funds deleveraged and bank proprietary trading was reduced, the business performed well. The fixed income and FX businesses remain very strong and are well positioned to benefit from increased government and corporate bond issuance and currency volatility. ICAP has retained its market share in both the spot FX and US Treasury markets; market participants are focusing their trading activities on the ICAP platforms as the central source of liquidity in each market.

Average daily electronic broking volumes for the 12 months ended 31 March 2009 were $736.4 billion, down 14% from the previous 12 months which were exceptional. From November 2008 onwards volumes in electronic broking began to slow from the very high levels of the prior year, but overall have stabilised since then. Average daily volume in fixed income products (US Treasury products, US repo and EU repo) for the first three months of 2009 was $406.6 billion and average daily electronic broking volume on the EBS platform was $149.9 billion. While absolute volumes have declined, the proportion of total volume accounted for by customers using prime broking has increased.

To support our customers' evolving trading requirements and desire for new trading opportunities, ICAP Electronic Broking continues to be committed to ongoing product innovation and has rolled out new currency pairs and trading connectivity. We also continue to invest in the expansion and development of the Group's electronic systems. 

Post-trade services 

Demand for improvements in the efficiency of post-trade processing and for reductions in the capital allocated to existing positions continued to provide opportunities for ICAP's range of post-trade processing, portfolio compression and reconciliation and risk management services - Traiana, TriOptima and Reset. Pressure from global regulatory authorities to ensure the robustness of the infrastructure behind the OTC markets increased dramatically and the banks responded positively to that pressure. 

From next year we will change our segmentation of our business and post-trade services will be shown separately from electronic broking. To give an indication of scale, including ICAP's 40% share of its associate TriOptima's revenue and operating profit1, ICAP's pro-forma* revenue and operating profit1 relating to post-trade services amounted to £87 million and £43 million respectively.* 

TriOptima, the leading provider of portfolio compression and reconciliation services, has been at the forefront of the reduction of risk in the credit default and interest rate swap markets. In 2008 TriOptima's portfolio compression service, triReduce, eliminated $30.2 trillion of CDS contracts. In the first three months of 2009, TriOptima eliminated a further $5.5 trillion in CDS contracts.

In March 2009 derivative dealers reduced $3.27 trillion in interest rate swap contracts using TriOptima. With the largest elimination in interest rate exposure so far, the 20 participating banks demonstrated that they were meeting their commitments to the regulators to accelerate compression activity for interest rate swaps in 2009.

In April 2009 ICAP announced that it was entering into a joint venture with CLS Group, the global industry standard for FX settlement services, to provide a trade aggregation service in the FX market. This service will leverage Traiana's technology and aims to reduce operational risk and increase capacity in this market.

(*Note: under IFRS these are not included in ICAP's revenue and operating profit as TriOptima is accounted for as an associate. As such ICAP only includes its share of TriOptima's post-tax profit.)

Information division

	£m	Headline growth	Underlying growth¹
Revenue	52	30%	13%
Operating profit¹	23	5%	0%

ICAP is also the source of market information, research and commentary for professionals in the global financial markets. ICAP Information Services offers real-time, end-of-day and historic market data sourced from our global interdealer broking platforms and post-trade businesses, providing authoritative and comprehensive market information across a broad range of asset classes. A significant part of the revenue of this division is sourced from ICAP's electronic broking business. During the year there has been significant investment in the information division's systems and processes to improve the efficiency and breadth of its offering, resulting in reduced margins.

ICAP Information Services has continued to build out its offering, expanding its data distribution relationship with Thomson Reuters by offering data including EBS Ticker data, historical data and real-time content. In 2008 ICAP also signed an agreement integrating ICAP market data into the Xinhua product and service offering. Xinhua is the People's Republic of China's largest news and information provider. 

Markets

To provide investors with a broader understanding of the growth drivers to its business, ICAP provides an additional analysis of its revenue by market. These markets are interest rates, credit, commodities, FX, equities, emerging markets and information and reflect the way ICAP's customers manage their businesses. As a result ICAP is able to explain the drivers of performance more clearly. The revenue growth rates per market are outlined below.

Revenue £m	2009	2008	Growth
Interest rates	654	546	20%
Credit	194	159	22%
Commodities	159	131	21%
FX	215	197	9%
Equities	202	108	87%
Emerging markets	125	123	2%
Information	52	40	30%
Total	1,601	1,304	23%

Geographic performance

EMEA was once again ICAP's most profitable market with the highest operating profit margin. The region delivered a very strong performance driven primarily by interest rates, equities and commodities. Markets in the Americas remained unsettled as banks restructured and reallocated leverage and government fiscal easing continued. Reset, our post-trade business based in Singapore, has performed very well. This has offset the impact on our Asian voice broking business of the global reduction in risk appetite.

ICAP has been investing selectively in the emerging markets, notably in Brazil. ICAP agreed to acquire Arkhe, a leading independent broker in Brazil, in November 2008. We expect to complete this transaction in mid 2009.

Europe Middle East & Africa (EMEA) 

	£m	Headline growth	Underlying growth¹
Revenue	729	20%	8%
Operating profit¹	173	4%	3%

The Americas 

	£m	Headline growth	Underlying growth¹
Revenue	644	22%	(4)%
Operating profit¹	138	7%	(13)%

Asia Pacific 

	£m	Headline growth	Underlying growth¹
Revenue	228	37%	12%
Operating profit¹	50	39%	9%

Impact of investing for future growth

Our strategy is to continue to invest in growth areas and new opportunities in our markets. The changing landscape has provided even greater investment opportunities, which we have taken advantage of and will continue to do so. In addition we have made some significant acquisitions during the year; their integration costs have not been treated as exceptional.

The impact of this was to reduce margins by approximately two percentage points in 2009; our investment programme will continue to depress margins in the year to March 2010. In addition, the majority of investment expenditure has been on building new broking teams and this has an adverse effect on our staff compensation ratio, which has increased from 56% of revenue in 2008 to 59% in 2009.

Balance sheet and cash flow

During the year, ICAP generated free cash flow of £296 million (2008 - £232 million). This represents another year where ICAP's free cash flow exceeds its post tax profit. £106 million was distributed to shareholders via dividends and £77 million utilised to finance a combination of small bolt-on acquisitions and deferred consideration arising from previous acquisitions, principally Reset. Post year end, ICAP bought the remaining 15% share in Reset for $43 million.

At 31 March 2009, the Group had net debt of £126 million up £67 million on the prior year as a result of borrowings to finance the acquisition of Link being partially offset by strong cash generation in the year.

Debtors and creditors under IFRS have been grossed up by £31 billion to reflect the treatment of some of our matched principal businesses. Net assets increased by £284 million during the year and, as at 31 March 2009, were £1,140 million. This reflects the impact of foreign exchange and current year retained earnings.

As announced at the Interim Results, ICAP has extended the tenor of some of its facilities and has no refinancing requirement for over a year.

Dividend

Our business is highly cash generative and the post-tax profit tends to equate to free cash flow. As a result we are able to continue to invest in the growth and development of the Group and to increase the dividend paid to shareholders: the directors recommend a final dividend of 12.35p per share to be paid on 21 August 2009 to shareholders on the register on 17 July 2009 making a total dividend of 17.05p per share for the year, an increase of 9%.

In order to give shareholders greater flexibility and the opportunity to elect to receive new ordinary shares in ICAP, we will be seeking authority at the annual general meeting to introduce a scrip dividend scheme. The scrip dividend scheme gives shareholders the opportunity to elect to receive a share alternative to any cash dividend declared by the Company including this year's final dividend. 

Outlook

We entered this period of financial instability with a very clear strategy and are well positioned to take advantage of the significant restructuring of the financial services industry that is taking place and the changes that will happen in our customers' business models. Increased focus on reducing the overall level of risk in the global financial markets by improving market infrastructure offers particular opportunities for our post-trade business. This environment also creates new opportunities for an un-conflicted, independent agency broker like ICAP in areas such as equities and futures. 

It seems likely that developments in the global financial markets this year will continue to be dominated by regulators and the banks; as the former demand increased oversight of the wholesale financial markets, clearing of OTC derivatives and improved transparency and the latter reallocate the risk capital committed to both their buy-side and sell-side business. The extra regulatory oversight should enable improvements in both the operational and capital efficiency of the infrastructure that supports trading, resulting in reduced costs and other commercial benefits.

We operate in a robust competitive environment in all of our markets worldwide and expect these conditions to prevail. There is potential for further consolidation of market share among interdealer brokers as traders concentrate their business in the largest, deepest and most reliable liquidity pools.

We are keeping our focus on costs and are taking advantage of a number of opportunities to reduce overheads. These savings will partially offset our continuing investment in opportunities to build our business, both by attracting high quality people and acquiring some assets at attractive prices.  The Group continues to be highly cash generative to support these investments and benefits from a strong balance sheet.

1Operating profit excludes amortisation and impairment of intangibles arising on consolidation and exceptional items. Underlying additionally excludes the impact of foreign exchange and acquisitions.

-------------------------------------------

Notes to editors:

About ICAP

ICAP is the world's premier interdealer broker and provider of post trade services. The Group matches buyers and sellers in the wholesale markets in interest rates, credit, commodities, foreign exchange, equities and equity derivatives through voice and electronic networks. ICAP has an average daily transaction volume in excess of $2.3 trillion, more than 40% of which is electronic. ICAP is also the source of global market information and research for professionals in the international financial markets. ICAP plc was added to the FTSE 100 Index on 30 June 2006. For more information go to www.icap.com

 

  Consolidated income statement

Year ended 31 March 2009

	Note	Before amortisation and impairment of intangibles arising on consolidation and exceptional items £m	Amortisation and impairment of intangibles arising on consolidation £m	Exceptional items £m	Total £m
Revenue	2	1,601	-	-	1,601
Operating expenses		(1,263)	(63)	-	(1,326)
Other income		23	-	-	23
Operating profit	2	361	(63)	-	298
Finance income	2	19	-	-	19
Finance costs	2	(43)	-	-	(43)
Share of profit of associates after tax	2	9	(2)	-	7
Profit before tax	2	346	(65)	-	281
Tax	3	(117)	22	-	(95)
Profit for the year		229	(43)	-	186
Attributable to:
Equity holders of the parent		216	(41)	-	175
Minority interests		13	(2)	-	11
		229	(43)	-	186
Earnings per ordinary share
- basic	5				27.6p
- diluted	5				26.9p

Consolidated income statement continued

Year ended 31 March 2008

	Note	Before amortisation and impairment of intangibles arising on consolidation and exceptional items £m	Amortisation and impairment of intangibles arising on consolidation £m	Exceptional items £m	Total £m
Revenue	2	1,304	-	-	1,304
Operating expenses		(988)	(42)	(26)	(1,056)
Other income		16	-	15	31
Operating profit	2	332	(42)	(11)	279
Finance income	2	23	-	-	23
Finance costs	2	(30)	-	-	(30)
Share of profit of associates after tax	2	5	(2)	-	3
Profit before tax	2	330	(44)	(11)	275
Tax	3	(117)	16	4	(97)
Profit for the year	2	213	(28)	(7)	178
Attributable to:
Equity holders of the parent		199	(24)	(7)	168
Minority interests		14	(4)	-	10
		213	(28)	(7)	178
Earnings per ordinary share
-basic (restated - note 1(b))	5				26.4p
-diluted (restated - note 1(b))	5				25.8p

The comparative results have been restated to reflect the unwinding of additional deferred tax liabilities in respect of temporary differences arising on certain intangible assets (note 1(b)).

Consolidated statement of recognised income and expense

	Year ended 31 March2009 £m	Year ended 31 March2008 £m
Revaluation of available-for-sale investments	(1)	1
Net movement on cash flow hedges	(26)	(23)
Actuarial losses on retirement benefit obligations	(1)	-
Exchange adjustments on net investments in overseas subsidiaries	221	2
Revaluation gains realised in the year	(3)	(11)
Net current tax on items recognised in equity	43	3
Net deferred tax on items recognised in equity	(3)	1
Income and expense recognised directly in equity	230	(27)
Profit for the year - as restated (note 1(b))	186	178
Total recognised income and expense for the year	416	151
Total recognised income and expense for the year attributable to:
Equity holders of the parent - as restated (note 1(b))	397	141
Minority interests	19	10
	416	151

The comparative results have been restated to reflect additional deferred tax liabilities in respect of temporary differences arising on certain intangible assets (note 1(b)).

Consolidated balance sheet

	Note	As at 31 March2009 £m	As at 31 March2008 £m
Assets
Non-current assets
Intangible assets arising on consolidation		1,404	959
Intangible assets arising from development expenditure		54	36
Property, plant and equipment		77	55
Investment in associates		38	34
Deferred tax assets		40	47
Trade and other receivables		14	10
Available-for-sale investments		36	22
		1,663	1,163
Current assets
Trade and other receivables		31,739	38,036
Available-for-sale investments		5	12
Cash and cash equivalents		433	384
		32,177	38,432
Total assets		33,840	39,595
Liabilities
Current liabilities
Trade and other payables		(31,807)	(38,078)
Short-term borrowings and overdrafts		(289)	(346)
Tax payable		(85)	(84)
Short-term provisions		(20)	(15)
		(32,201)	(38,523)
Non-current liabilities
Trade and other payables		(57)	(18)
Long-term borrowings		(270)	(97)
Tax payable		(4)	(4)
Retirement benefit obligations		(2)	(1)
Deferred tax liabilities		(164)	(95)
Long-term provisions		(2)	(1)
		(499)	(216)
Total liabilities		(32,700)	(38,739)
Net assets		1,140	856
Equity
Capital and reserves
Called up share capital		65	65
Share premium account		398	398
Other reserves		(18)	12
Retained earnings		680	368
Equity attributable to equity holders of the parent	7	1,125	843
Minority interests	7	15	13
Total equity	7	1,140	856

The comparative results have been restated to reflect additional deferred tax liabilities in respect of temporary differences arising on certain intangible assets (note 1(b)).

Approved by the board on 19 May 2009 and signed on its behalf by:

Michael Spencer Matthew LesterGroup Chief Executive Officer Group Finance Director

Consolidated cash flow statement 

	Note	Year ended 31 March2009 £m	Year ended 31 March2008 £m
Cash flows from operating activities	9	354	268
Cash flows from investing activities
Dividends received from associates		4	4
Other equity dividends received		1	3
Payments to acquire property, plant and equipment		(36)	(19)
Intangible development expenditure		(28)	(24)
Receipts from sale of property, plant and equipment		1	1
Net receipts/(payments) on disposal/(acquisition) of available-for-sale investments		4	-
Acquisition of interests in businesses net of cash acquired		(197)	(196)
Acquisition of associates and joint ventures		(3)	(8)
Net cash flows from investing activities		(254)	(239)
Cash flows from financing activities
Dividends paid to minority interests		(16)	(13)
Equity dividend paid		(106)	(83)
Payments to acquire Treasury Shares		(9)	(9)
Payments to acquire own shares for employee benefit trusts		(22)	(13)
Proceeds from issue of ordinary shares		13	7
Payments in relation to net investment hedges		(32)	-
Repayment of borrowings		(144)	(183)
Funds received from borrowing, net of fees		264	327
Net cash flows from financing activities		(52)	33
Exchange adjustments		6	3
Net increase in cash and cash equivalents		54	65
Net cash and cash equivalents at beginning of the year		365	300
Net cash and cash equivalents at end of the year		419	365
Net cash and cash equivalents consists of:
Cash and cash equivalents		433	384
Bank overdrafts		(14)	(19)
Net cash and cash equivalents at end of the year		419	365

Notes to the financial statements

1 Basis of preparation

(a) Basis of preparation

The financial statements have been prepared in accordance with IFRS adopted by the EU, IFRIC interpretations and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS and therefore comply with Article 4 of the EU IAS Regulation. The financial statements have also been prepared under the historical cost convention, as modified to include the fair value of certain financial instruments in accordance with IFRS. The financial statements are prepared in sterling, which is the functional currency of the parent company, ICAP plc, and presented in millions.

The Group maintains a columnar format for the presentation of its consolidated income statement. This enables the Group to continue its practice of improving the understanding of its results by presenting profit for the year before amortisation and impairment of intangibles arising on consolidation and exceptional items. This is the profit measure used to calculate adjusted EPS and is considered to be the most appropriate as it better reflects the Group's underlying cash earnings. Profit before amortisation and impairment of intangibles arising on consolidation and exceptional items is reconciled to profit before tax on the face of the income statement.

Items which are of a non-recurring nature and material, when considering both size and nature, are disclosed separately to give a clearer presentation of the Group's results. These are shown as "exceptional items" on the face of the income statement.

Intangible assets arising on consolidation represent goodwill and other separately identifiable intangible assets on business combinations since 1 April 2004. The amortisation of separately identifiable intangible assets and any impairment of goodwill together with the unwind of related deferred tax liabilities are included in the income statement within the column "amortisation and impairment of intangibles arising on consolidation".

(b) Prior-year adjustment - Group

Following a review of the accounting for recent acquisitions, the Group has determined that additional deferred tax liabilities should have been recognised in respect of temporary differences arising on certain intangible assets. The consequence of recognising such deferred tax liabilities is to recognise goodwill of an equivalent amount. Comparative amounts for the prior year have been restated.

The impact of the change on the consolidated income statement for the year ended 31 March 2008 is to reduce the taxation expense and hence increase profit for the year by £12m: both basic and diluted earning per share increased by 1.9p as a result. The impact on the consolidated balance sheet as at 31 March 2008 is to increase goodwill by £116m, increase investment in associates by £2m, increase deferred tax liabilities by £95m and increase retained earnings by £23m. The impact on the opening balances as at 1 April 2007 is to increase net assets and retained earnings by £11m. The changes have no impact on the Group's cash flow and profit before tax before amortisation and impairments on intangible assets arising on consolidation and exceptional items.

2 Segmental information

(a) Analysis by geographic segment 

	Year ended 31 March 2009
	Americas £m	EMEA £m	Asia Pacific £m	Total £m
Revenue	644	729	228	1,601
Operating profit before amortisation and impairment of intangibles arising on consolidation and exceptional items	138	173	50	361
Amortisation and impairment of intangibles arising on consolidation	(28)	(16)	(19)	(63)
Exceptional items	-	-	-	-
Operating profit	110	157	31	298
Net finance income/(cost)	(22)	(3)	1	(24)
Share of post-tax profit of associates	-	5	2	7
Profit before tax	88	159	34	281

 

	Year ended 31 March 2008
	Americas £m	EMEA £m	Asia Pacific £m	Total £m
Revenue	528	610	166	1,304
Operating profit before amortisation and impairment of intangibles arising on consolidation and exceptional items	129	167	36	332
Amortisation and impairment of intangibles arising on consolidation	(17)	(15)	(10)	(42)
Exceptional items	4	(20)	5	(11)
Operating profit	116	132	31	279
Net finance income/(cost)	(2)	(6)	1	(7)
Share of post-tax profit of associates	-	1	2	3
Profit before tax	114	127	34	275

 (b) Analysis by business segment 

	Year ended 31 March 2009
	Voice division £m	Electronic division £m	Information division £m	Holding companies £m	Total £m
Revenue	1,225	324	52	-	1,601
Operating profit before amortisation and impairment of intangibles arising on consolidation and exceptional items	212	126	23	-	361
Amortisation and impairment of intangibles arising on consolidation	(22)	(41)	-	-	(63)
Exceptional items	-	-	-	-	-
Operating profit	190	85	23	-	298

	Year ended 31 March 2008
	Voice division £m	Electronic division £m	Information division £m	Holding companies £m	Total £m
Revenue	991	273	40	-	1,304
Operating profit before amortisation and impairment of intangibles arising on consolidation and exceptional items	203	107	22	-	332
Amortisation and impairment of intangibles arising on consolidation	(13)	(29)	-	-	(42)
Exceptional items	2	(13)	-	-	(11)
Operating profit	192	65	22	-	279

3 Tax

Tax charged to the income statement in the year

	Year ended 31 March 2009 £m	Year ended 31 March 2008 £m
Current tax
UK Corporation Tax at 28% (2008 - 30%)
- Current year	43	44
- Double tax relief	(1)	(1)
- Adjustment to prior years	-	5
Overseas tax
- Current year	52	65
- Adjustment to prior years	(10)	(3)
	84	110
Deferred tax	11	(1)
As previously disclosed	95	109
Prior year adjustment (note 1(b))	-	(12)
Total tax charged to income statement - as restated (note 1(b))	95	97
Tax charged to the income statement can be analysed as follows:
Total tax charged to the income statement	95	97
Tax credit on amortisation and impairment of intangible assets arising on consolidation	22	16
Tax credit on exceptional items	-	4
Tax on profit before amortisation and impairment of intangible assets arising on consolidation	117	117

4 Dividends

Amounts recognised as distributions to equity holders in the year:	Year ended 31 March 2009 £m	Year ended 31 March 2008 £m
Final dividend for the year ended 31 March 2008 of 11.95p per ordinary share (2007 - 9.3p)	76	59
Interim dividend for the year ended 31 March 2009 of 4.7p per ordinary share (2008 - 3.7p)	30	24
Total dividend recognised in year	106	83

The directors have proposed a final dividend of 12.35p per share for the year ended 31 March 2009. This has not been recognised as a liability of the Group at the year end as it has not yet been approved by shareholders. Based on the number of shares in issue at the year end, the total amount payable would be £78m.

The right to receive dividends has been waived in respect of the Treasury Shares and shares held in employee trusts.

5 Earnings per ordinary share

The Group is required to disclose basic and diluted EPS on the face of the income statement. The Group continues to calculate adjusted EPS, disclosed below, as it believes that it is the most appropriate measurement since it better reflects the business's underlying cash earnings.

Basic earnings per share is calculated by dividing the profit for the year attributable to the equity holders of the parent of £175m (2008 restated - £168m) by the weighted average number of ordinary shares in issue during the year of 634m shares (2008 - 635m).

The weighted average number of ordinary shares in issue excludes the weighted average number of shares held as Treasury Shares of 1m (2008 - 2m) and those owned by employee benefit trusts relating to employee share schemes on which dividends have been waived, being 14m shares (2008 - 12m). 

Diluted EPS takes into account the dilutive effect of share options outstanding under the Company's employee share schemes.

	Year ended 31 March 2009						Year ended 31 March 2008
	Earnings £m	Shares millions	Earnings per share pence			Earnings £m		Shares millions	Earnings per share pence
Basic - as previously reported	175	634	27.6			156		635	24.5
Prior year adjustment (note 1(b))						12		-	1.9
Basic - as restated (note 1(b))						168		635	26.4
Dilutive effect of share options	-	16	(0.7)			-		17	(0.6)
Diluted basic	175	650	26.9			168		652	25.8

Adjusted earnings per share is based on earnings before amortisation and impairment of intangibles arising on consolidation and exceptional items (and their tax effects). 

	Year ended 31 March 2009						Year ended 31 March 2008
	Earnings £m	Shares millions	Earnings per share pence			Earnings £m		Shares millions	Earnings per share pence
Basic - as restated (note 1(b))	175	634	27.6			168		635	26.4
Amortisation and impairment of intangibles arising on consolidation net of tax and minority interest - as restated (note 1(b))	41	-	6.5			24		-	3.8
Exceptional items net of tax	-	-	-			7		-	1.1
Adjusted basic	216	634	34.1			199		635	31.3
Dilutive effect of share options	-	16	(0.9)			-		17	(0.8)
Adjusted diluted	216	650	33.2			199		652	30.5

The adjusted basic and adjusted diluted EPS values are unaffected by the prior year adjustment.

6 Acquisitions

(a) Subsidiaries - current year

Link

On 7 April 2008, the Group completed the acquisition of Link, a global equity derivatives broker for an initial consideration of £135m. Consideration of £21m has also been paid for their surplus net assets. Contingent deferred consideration based on the profit after tax for the year ended 31 March 2010 of Link plus certain complementary existing businesses of the Group will be paid in April 2009 and June 2010; currently this is estimated to be £26m, with a net present value at acquisition of £23m of which £14m was paid in April 2009. Total consideration is capped at £250m, excluding the amount paid for the surplus net assets. The fair value of the assets acquired is given below. 

The fair value adjustments include the recognition of intangible assets arising on consolidation of £110m, the majority of which is in respect of customer relationships that are being amortised over ten years, a related deferred tax provision of £31m, and other provisions of £17m. The Group considers that the fair value of £91m for the goodwill is reasonable and relates to the value of the future growth potential of the business, its liquidity, and the assembled workforce. These assets are not separately identifiable.

In the period from acquisition to 31 March 2009, the Link business was integrated with certain complementary Group businesses. The combined Link businesses contributed £100m to revenue and £13m to profit before tax before amortisation of intangibles arising on consolidation and exceptional items, but after restructuring costs and the impact of the unwinding of discount on the contingent deferred consideration. If the acquisition had been completed on the first day of the financial year, the results would not be materially different.

ICAP Equities and others 

On 1 April 2008, the Group acquired 78% of ICAP Equities Limited (ICAP Equities) for a £1m initial consideration. The remaining 22% of the share capital consists of two classes of share capital - "B" shares represent 21% and include put/call option arrangements and "C" shares the remaining 1% which provide the holders with a right to offer the shares for sale to the Group. ICAP Equities is a newly incorporated UK company involved in the voice broking of pan-European cash equities.

ICAP Equities acquired 91.5% of ICAP Equities Asia Limited (ICAP Equities Asia), a Hong Kong company involved in a similar business for Asia Pacific cash equities. Of the remaining shares in ICAP Equities Asia, 7.5% are "B" shares and 1% are "C" shares both classes have similar rights to the equivalent shares in ICAP Equities. 

A put/call option arrangement exists for the Group to acquire the minority interest in the "B" shares of both companies, the consideration for which is based on business performance. The options allow the minority to put up to one third of their equity annually from 2012 to the Group and for the Group to call the equity after 2012. The cost of the acquisition of ICAP Equities is capped at £220m and for the ICAP Equities Asia is capped at 4.99% of the Group's market capitalisation. In addition, the "C" shareholders of both companies, have the right to offer the shares for sale to the Group annually from 2012.

The expected acquisition of the minority interest in the "B" shares of both companies is treated as contingent deferred consideration and the Group has recognised a liability of £20m with a net present value at acquisition of £12m. A fair value adjustment to recognise intangible assets arising from development expenditure of £1m has been recognised on the acquisition of ICAP Equities, and £12m of goodwill has been recognised on the acquisition of both companies. The Group considers this to be a reasonable value and relates to the assembled workforce and future growth potential of the business. These assets are not separately identifiable. 

In the period from acquisition to 31 March 2009, ICAP Equities and ICAP Equities Asia contributed £15m to revenue and a loss before tax before amortisation of intangibles arising on consolidation and exceptional items, but after the impact of the unwind of discount on contingent deferred consideration of £3m.

In December 2008, the Group acquired the remaining 50% stake in Skaarup Shipbrokers Inc (Skaarup) that it did not previously own by acquiring Bulk Ocean Chartering Inc, a shipbroking company based in the US, for £2m, and the remaining 50% it did not previously own of ICAP Shipping (Hong Kong Limited (formerly ICAP Hyde (China) Limited), a shipbroking company based in China, for £0.2m. There were no fair value adjustments on these investments and goodwill of £2m has been recognised on the acquisition of Skaarup. Negative goodwill of £0.1m arising on the acquisition of ICAP Shipping (Hong Kong) Limited has been recognised immediately in the income statement. The Group now owns 75% of these companies through its investment in ICAP Shipping International Limited. In the period since acquisition, these companies contributed £0.8m in revenue and £0.3m in profit before tax before amortisation of intangibles arising on consolidation and exceptional items. If the acquisition had been carried out on 1 April 2008 it is estimated the contribution would have been £2.2m to revenue and £0.8m in profit before tax before amortisation of intangibles arising on consolidation and exceptional items.

In August 2008, the Group acquired Escorfin SA (Escorfin), a Mexican broker of mutual funds, for £3m ($4m). There were no fair value adjustments required on this acquisition and goodwill of £3m has been recognised on the transaction. In the period since acquisition Escorfin has contributed £0.5m to revenue and £0.3m to profit before tax before amortisation of intangibles arising on consolidation and exceptional items. If the acquisition had been completed on 1 April 2008, it is estimated Escorfin would have contributed £0.6m to revenue and £0.3m to profit before tax before amortisation of intangibles arising on consolidation and exceptional items.

In July 2008, the Group acquired Moving Pictures and Television LLC (Moving Pictures), a US company involved in broking media content, for an initial payment of £0.3m ($0.4m) with contingent deferred consideration of up to £1m ($2m) payable within three years. The Group has the option to resell the company back to the original owners after three years at an amount equal to that originally paid. No fair value adjustments were required on the transaction and goodwill of £1m ($2m) has been recognised on the acquisition.  In the period since acquisition Moving Pictures has contributed £0.4m to revenue and a loss before tax before amortisation of intangibles arising on consolidation and exceptional items of £0.1m. If the acquisition had been completed on 1 April 2008, it is estimated Moving Pictures would have contributed £0.4m to revenue and a loss before tax before amortisation of intangibles arising on consolidation and exceptional items of £0.1m.

	Link			ICAP Equities and others		Total
	Book value £m	Fair value £m	Book value £m		Provisional fair value £m	Book value £m	Provisional fair value £m
Net assets acquired
Intangible assets arising on consolidation	-	110	-		-	-	110
Deferred tax liability	-	(31)	-		-	-	(31)
Intangible assets arising from development expenditure	-	-	-		1	-	1
Property, plant and equipment	1	1	-		-	1	1
Cash and cash equivalents	33	33	1		1	34	34
Trade and other receivables	3,278	3,278	1		1	3,279	3,279
Trade and other payables	(3,284)	(3,301)	(1)		(1)	(3,285)	(3,302)
	28	90	1		2	29	92
Goodwill		91			18		109
Consideration		181			20		201
Satisfied by:
Cash		156			6		162
Acquisition costs capitalised		2			-		2
Contingent deferred consideration		23			14		37
		181			20		201

(b) Subsidiaries - prior years

Reset

In January 2009, the Group made the final contingent deferred consideration payment of $95m (£64m) to acquire 21.25% of Reset. 

In March 2009, the remaining minority shareholder exercised their option to require ICAP to acquire the remaining 15% of Reset. The cost of acquisition is expected to be $43m (£30m) plus costs. As at 31 March 2009, the Group has recognised 100% of Reset in its balance sheet, with a corresponding liability of $43m (£30m) in other payables (note 19). Additional goodwill of $40m (£27m) has been recognised on this acquisition.

Other

The Group has derecognised the minority holdings in ICAP Shipping International Limited and ICAP New Zealand Limited during the year and, in line with the single credit method, now recognises contingent deferred consideration of £4m instead, with a corresponding increase in goodwill.

(c) Associates and joint ventures

The Group acquired a 20% stake in Blockcross Holdings LLC (Blockcross), a company incorporated in the US involved in the development of software for trading platforms, for a consideration of £3m. As the Group has significant influence on the operating and financial policies of Blockcross, this investment is recognised as an associate of the Group.

(d) Contingent deferred consideration 

A number of acquisitions made by the Group are satisfied in part by contingent deferred consideration. The Group has re-estimated the amounts due as contingent deferred consideration where necessary, with any corresponding adjustments being made to goodwill where the transaction is regarded as a business combination.

Included within contingent deferred consideration are amounts which are exercisable at certain dates in the future on put options written over shares held by minorities where the Group considers it highly likely that these options will be exercised

	Year ended 31 March 2009
	Reset £m	Link £m	ICAP Shipping £m	ICAP Equities £m	Total £m
Contingent deferred consideration outstanding as at 1 April 2008	41	-	9	-	50
Acquisitions in the year	-	23	-	-	23
Amount recognised for options over minority interests	-	-	3	12	15
Cash consideration paid in the year	(66)	-	(3)	-	(69)
Unwinding of discount	2	2	1	1	6
Adjustments to goodwill during the year	7	-	(2)	-	5
Exchange adjustments	16	-	-	-	16
Contingent deferred consideration outstanding as at 31 March 2009	-	25	8	13	46

The contingent deferred consideration consists of cash only. Contingent deferred consideration has also been recognised for ICAP New Zealand Limited (£0.4m) and Moving Pictures and Television LLC (£1.4m).

	Year ended 31 March 2008
	ETL and Reset £m	BSN £m	ICAP Shipping £m	Total £m
Contingent deferred consideration outstanding as at 1 April 2007	37	6	-	43
Acquisition in the year	-	-	9	9
Cash consideration paid in the year	(50)	(6)	-	(56)
Unwinding of discount	3	-	-	3
Adjustments to goodwill during the year	49	-	-	49
Exchange adjustments	2	-	-	2
Contingent deferred consideration outstanding as at 31 March 2008	41	-	9	50

The contingent deferred consideration consists of cash only.

(e) Acquisitions announced but not completed

On 7 November 2008, the Group entered into an agreement to acquire 100% of the issued share capital of Arkhe Distribuidora De Titulos E Valores Mobiliarios SA (Arkhe), a broker in Brazil, for an initial consideration of $10m (£7m), plus contingent deferred consideration payable three years after closing dependent on future business performance. This agreement is subject to the regulatory approval of the Banco Central do Brasil. As this approval has not been received at the balance sheet date, the Group has not recognised the acquisition in the current year's results. The Group expects to receive approval and recognise the acquisition in the year ending 31 March 2010. 

7 Capital and reserves

Consolidated Statement of changes in shareholders' equity

	Year ended 31 March 2009 £m	Year ended 31 March 2008 £m
As at 1 April	843	781
Prior year adjustment - note 1(b)	-	11
As at 1 April - restated	843	792
Ordinary shares issued	-	1
Own shares acquired for employee trusts	(10)	(11)
Total recognised income for the year	397	141
Dividends paid in the year	(106)	(83)
Share-based payments in the year	8	6
Treasury Shares acquired in the year	(9)	(9)
Shares issued from Treasury in the year	2	6
As at 31 March	1,125	843
Minority interests	15	13
Total equity	1,140	856

8 Contingent liabilities

 (a) The highly regulated nature of the Group's business means that from time to time the Group is subject to regulatory enquiries and investigations, particularly in the US. The Group is currently involved in a number of these. Some of these regulatory enquiries and investigations are broad and tend to be interdealer industry wide in nature. 

In February 2006,in the US, the SEC issued a formal order of investigation to ICAP Securities USA LLC, a wholly-owned subsidiary of the Group, and other interdealer brokers in government and other fixed income securities. In addition, the SEC has issued several requests for information relating to ICAP Securities USA LLC's voice mortgage-backed securities desk. The mortgage aspect of the investigation has been in progress since April 2008. ICAP Securities USA LLC continues to co-operate with the enquiry. 

Although ICAP Securities USA LLC has not received notice of an intention by the SEC to bring any charges against ICAP Securities USA LLC or its executives, the potential range of penalties generally available to the SEC include, among other things, financial penalties, disgorgement, fines, actions against individuals, and injunctive and other remedial relief. Such matters are inherently subject to many uncertainties and the Group cannot predict their outcomes. However, there are no issues which are currently expected to have a material adverse financial impact on the Group's results or net assets.

(b) In 2004, the National Australia Bank (NAB) announced that it incurred FX trading losses of AUD360 million. NAB subsequently alleged in correspondence sent to ICAP plc, that one of the Group's subsidiaries helped NAB traders mask these losses. The Group does not accept any responsibility for NAB's losses, and has not received any correspondence from NAB since October 2006.

(c) From time to time the Group is engaged in litigation in relation to a variety of matters. It is not possible to quantify the extent of any potential liabilities, but there are none currently expected to have a material adverse financial impact on the Group's consolidated results or net assets.

(d) 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.

9 Cash flow

Reconciliation of profit before tax to net cash flow from operating activities

	Year ended 31 March 2009  £m	Year ended 31 March 2008  £m
Profit before tax	281	275
Operating exceptional items	-	11
Share of operating profits of associates after tax	(7)	(5)
Amortisation and impairment of intangible assets arising on consolidation	63	44
Amortisation and impairment of intangible assets arising from development expenditure	18	14
Depreciation of property, plant and equipment	23	22
Other amortisation and impairments	3	1
Share-based payments	8	6
Profit on disposal of available-for-sale investments	(4)	-
Net finance expense	24	6
Operating cash flows before movements in working capital	409	374
Decrease/(increase) in trade and other receivables	55	(59)
(Decrease)/increase in trade and other payables	(8)	58
Net receipts in respect of financial assets held at fair value	(1)	1
Cash generated by operations before exceptional items	455	374
Operating exceptional items paid	-	(11)
Cash generated by operations	455	363
Interest received	15	16
Interest paid	(34)	(21)
Tax paid	(82)	(90)
Net cash flow from operating activities	354	268

10 Post balance sheet events and related party transactions

The Group paid the vendors of Link £14m in April 2009 as an on account amount of the contingent deferred consideration due. A final payment to be determined by the financial results of Link in the year ending 31 March 2010 is payable in June 2010 (note 6).

The Group paid the minority shareholders of Reset $41m (£29m) in April 2009 as a result of them exercising their option to require the Group to acquire their 15% share in the Reset business (note 6). 

There were no material or unusual related party transactions during the year. Related party transactions are disclosed in full in the Group's Annual Report.

11 Exchange rates

The principal exchange rates which affect the Group, expressed in currency per £, are shown below:

	Closing rate as at 31 March 2009	Closing rate as at 31 March 2008	Average rate year ended 31 March 2009	Average rate year ended 31 March 2008
Dollar	1.43	1.99	1.72	2.01
Euro	1.08	1.25	1.21	1.42
Yen	141.6	197.8	174.7	228.9

Statement of directors' responsibilities for the Annual Report

The directors are responsible for preparing the Annual Report, the remuneration report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Company and Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. The financial statements are required by law to give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.

In preparing those financial statements, the directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and estimates that are reasonable and prudent;

- state that the financial statements comply with IFRSs as adopted by the EU.

The directors are also required by the Disclosure and Transparency Rules of the FSA to include a management report containing a fair review of the business and a description of the principal risks and uncertainties facing the Company and the Group.

The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and the Group which enable them to ensure that the financial statements and the remuneration report comply with the Companies Act 1985 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' statement pursuant to the Disclosure and Transparency Rules

The directors confirm that, to the best of each person's knowledge and belief:

- the financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and results of the Company and the Group; and

- the management report contained in the business review includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that they face.

ENDFR UWSKRKORVAAR

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