Full Year Results

News Release

ICAP plc - Full-year results for the year ended 31 March 2016

A transformational year

London - 16 May 2016 - ICAP plc (IAP.L), a leading markets operator and provider of post trade risk and information services, announces today its audited results for the year ended 31 March 2016.

Highlights:

Michael Spencer, Group Chief Executive Officer, said: "It has been a transformational year for ICAP and I believe that we are now on the cusp of one of the most exciting eras in the Company's 30-year history. The Transaction to sell our Global Broking and associated information business to Tullett Prebon remains on track to complete later this year.

"Our ambition is to create the world's leading multi-product, global electronic transaction network for OTC products and post trade services. The new electronic markets, post trade and Euclid investments businesses, which we will become once the Transaction completes, will be renamed 'NEX Group plc'; a new name for a new company that intends to lead the market in technology innovation in global financial markets.

 "Trading conditions continue to be challenging as a result of the macro economic environment, historically low and negative interest rates and continued bank deleveraging. These headwinds have naturally impacted our performance during the year. In the US in December 2015, we saw the welcome first step in raising interest rates but in what is likely to be a long and slow journey towards more normal market conditions.

"ICAP has continually invested in electronic platforms and post trade services, developing its products and services to remain at the forefront of our customer's needs. Euclid Opportunities, our early-stage fintech investment incubator, which finds these new investments will play a bigger and more important role as we become NEX Group plc. We recently launched products and functionality which will extend our reach to a wider customer base, particularly the buyside. The most important of these are Forwards on EBS Direct, BrokerTec Direct and triResolve Margin. Euclid Opportunities completed the acquisition of ENSO which provides operational insights and key analytics to many of the world's most successful fund managers, making significant progress towards developing a key new customer base.

"Overall, the size of our existing and new target markets, the quality of our mission critical technology and the strength of customer demand will ensure that NEX Group plc will provide an outstanding opportunity to deliver long-term profitable growth for years to come."

Presentation of information

This document comprises the full year results to 31 March 2016 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 IAS34 Interim Financial Reporting.

Cautionary statement regarding forward-looking statements

This full year 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 briefing

There will be a briefing for analysts and investors at 09:30am (BST) on Monday 16 May 2016 at2 Broadgate, London EC2M 7UR.

Contacts:

About ICAP

ICAP is a leading markets operator and provider of post trade risk mitigation and information services. Group companies provide services that match buyers and sellers in the wholesale markets in interest rates, credit, commodities, FX and money markets, emerging markets and equity derivatives through voice and electronic networks. Our post trade risk and information services help our customers manage and mitigate risks in their portfolios.

For more information go to www.icap.com.

Financial performance

In November 2015, ICAP announced that it had entered into a Transaction which will, when completed, involve the disposal of ICAP's global hybrid voice broking and information business, including its associated technology and broking platforms (including iSwap and Fusion), certain of its joint ventures and its associates (IGBB), to Tullett Prebon. ICAP shareholders and ICAP Newco plc ("Newco") will together own approximately 56% of the issued shared capital of the enlarged Tullett Prebon with 19.9% retained by Newco.

For the year ended 31 March 2016, the Group's performance is therefore reported in the consolidated income statement separately for continuing and discontinued operations (net of tax). Discontinued performance for the year includes IGBB's performance, adjusted for certain provisions in the sale and purchase agreement. The continuing income statement is not reflective of the financials of Newco going forward. The Group expects to receive dividend income for its investment in the enlarged Tullett Prebon, which is expected to be named TP ICAP.

In the review of operations, financial performance is presented on a Group basis, therefore including both continuing and discontinued, unless stated otherwise. Discontinued profit after tax is presented in the income statement on one line. The discontinued income statement is presented in note 4 to the financial statements.

For the year ended 31 March 2016, the Group reported revenue of £1,201 million, 6% below the prior year. On a constant currency basis, revenue from Post Trade Risk and Information was up 5% which was offset by decreases of 4% in Electronic Markets and 5% in Global Broking (excluding closed desks).

During the course of the year, the Group's trading performance was impacted by the ongoing combination of structural and cyclical factors including historically low and negative interest rates, low levels of volatility and bank deleveraging resulting in reduced risk appetite from bank customers. This was partly offset by the increase in trading activity in emerging market currency pairs on EBS Market, and greater demand for risk mitigation products such as triReduce and triResolve.

Consistent with the Group's growth strategy, ICAP continues to make significant investment in all divisions. During the year the Group invested £96 million in new business lines including Forwards on EBS Direct, BrokerTec Direct and triResolve Margin.

The Group reported a trading operating profit of £221 million, 12% down on the prior year. The Group's trading operating profit margin reduced to 18% (2014/15: 20%). The decrease in the trading operating profit includes the negative impact of the year-on-year adverse movement from FX losses of £11 million. Excluding the FX loss, the trading operating profit reduced by 8% on the prior year. Additionally, the synergies achieved in the year from the 2014/15 cost savings programme were reinvested during the year in the development of new products and technological solutions across the businesses.

The proportion of the Group's trading operating profit generated from the Electronic Markets and Post Trade Risk and Information divisions increased to 79%, reflecting a 4 percentage point increase on the prior year.

Group trading profit before tax of £203 million and trading EPS (basic) of 24.6p were 11% and 14% down on the prior year respectively. Profit before tax was £89 million (2014/15: £95 million).

An evolving marketplace

The global regulatory effort to improve the transparency, risk management and resilience of participants in the world's financial markets continues to impact the structure of our marketplace. The strategies and business models of ICAP's traditional bank customer base have changed in response to the requirements of Basel III, the Dodd-Frank Act in the US, EMIR in Europe and will continue to evolve with MiFiD II and other new regulations as they come into force. Banks and other market participants are turning to technology to help them manage these challenges and the additional costs associated with them. Electronic trading is increasingly prevalent in both interbank and bank to customer markets and our customers are looking to use technology throughout the trade life cycle. Against this background of structural changes within wholesale financial markets and increased regulatory oversight and disclosure, ICAP's customers are seeking innovative products, greater liquidity and the best-in-class platforms and services. This presents an enormous opportunity for the business. At the same time, the issues created by over-capacity in the voice broking market have been apparent for a while and were a key driver behind the Transaction with Tullett Prebon.

Divestment - creating two strengthened and streamlined businesses

ICAP has a market-leading voice broking business. The roots of the Company are in voice broking which has been a driver of ICAP's success for more than 30 years. The volume of voice broking business across the market has, however, been shrinking for a number of years and the costs involved have escalated: it has been obvious for some time that the voice broking industry needs consolidation. That process began with the merger of BGC and GFI last year. The sale of ICAP's voice broking business to Tullett Prebon is a logical and a natural next step. The voice businesses have complementary strengths and the Transaction will create the largest global hybrid voice broking business by revenue. This is the right move for our customers and for the future of the voice broking industry as a whole.

The Transaction will create a focused financial technology business. Electronic trading and post trade services provided the vast majority of the Group's operating profit this year, which is indicative of how the business and the wider marketplace have evolved. ICAP's future is as a financial technology company, focused on electronic markets and post trade services. Its leading portfolio of products and businesses sit at the heart of financial market infrastructure and will be ideally placed to meet customers' changing requirements. The Group will be better positioned to go into new market segments with innovation and product development and will benefit from the increased demand made by regulators for post trade risk mitigation and electronic trading. For some time ICAP has been progressively diversifying from voice broking.

Since 2002, when ICAP first invested in TriOptima, it has made strategic investments to develop the next generation of financial technology for the trading community. BrokerTec was one of the earliest of these investments back in 2003 and is now the world's leading electronic trading platform for fixed income markets. EBS is a leading electronic FX trading business with significant market share in many currencies. Euclid Opportunities was established specifically to nurture the growth of early-stage financial technology companies and the Euclid programme is going to be an increasingly important part of the Group's future. The aim is to create the world's leading multi-product global electronic transaction network for OTC products and post trade services.

Transaction structure

In November 2015, ICAP announced that it had entered into a Transaction which will, when completed, involve the disposal of its global hybrid voice broking and information business, including its associated technology and broking platforms (including i-Swap and Fusion), certain of its joint ventures and our associates (IGBB), to Tullett Prebon.

Benefits of the Transaction for ICAP shareholders

The ambition for Newco is to be the world's leading electronic platform for OTC transactions and post trade services to all parties: corporates, investment banks, universal banks, asset managers, hedge funds, high frequency traders, sovereign wealth funds and central banks. ICAP's revenue from electronic trading and post trade services is already well diversified, with an increasing proportion coming from recurring business: 62% of post trade revenue came from subscriptions this year.

Newco will continue this strategy as it expands the potential market for these services through product development and greater penetration of geographic markets and customer segments.

On completion, it is expected that Newco will cease to be subject to consolidated regulatory capital requirements. The ICAP Group currently operates under a waiver from those requirements but, absent the Transaction, it is expected that the FCA would require significant capital to be retained or raised over a period of years to eliminate the consolidated capital deficit that otherwise exists. Based on an assessment of the information (including on legal advice) provided to the FCA by ICAP in relation to the projected balance of financial and non-financial business in Newco, the FCA has indicated that, following the Transaction, Newco will not be subject to prudential consolidation requirements.

During the negotiations both ICAP and Tullett Prebon found that they have much in common culturally, which will help with the integration of the two businesses. TP ICAP will have the scale required to deliver good margins while continuing to invest in its people and technology. It will benefit from products ICAP has developed which include i-Swap, Fusion and Scrapbook. TP ICAP announced that it expected the savings from combining the two businesses to exceed £60 million annually.

Dividend

The directors recommend a final dividend of 15.4p per share which will result in a full-year dividend of 22p per share (2014/15: 22.0p per share). If approved, the final dividend will be paid on 22 July 2016 to shareholders on the register at the close of business on 1 July 2016. The shares will be quoted ex-dividend from 30 June 2016.

Outlook

Despite ongoing subdued market conditions this has been a year of good progress and positive strategic change for ICAP. Trading activity since the start of the new financial year, however, continues to be challenging. The ICAP board is confident that the transformation of the Group and the continued investment in new products and technology will result in long-term growth and improvement in profitability driving sustained shareholder value creation.

Review of operations

Electronic Markets

EBS BrokerTec is a leading electronic trading business in FX and fixed income. These platforms offer efficient and effective trading venues to customers in more than 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.

The table above is presented on a total Group basis and, therefore, includes continuing and discontinued operations. See note 2 to the financial statements for a breakdown between continuing and discontinued operations.

For the year ended 31 March 2016, Electronic Markets' revenue decreased by 4% on a constant currency basis and increased by 1% on a reported basis to £262 million (2014/15: £259 million). The trading operating profit fell to £78 million (2014/15: £93 million) and the trading operating profit margin decreased to 30% from 36% as £54 million (2014/15: £25 million) investment in the development of new products and functionality on the electronic trading platforms were charged to the income statement.

BrokerTec

BrokerTec is a global electronic platform for the trading of US Treasuries, European government bonds and EU and US repo. It facilitates trading for banks and non-bank professional trading firms.

For the year ended 31 March 2016, revenue decreased by 4% on a constant currency basis and increased by 2% on a reported basis to £130 million (2014/15: £128 million). This performance reflects a 3% increase in US Treasury average daily volume to $168 billion, a 3% decrease in US repo to $212 billion and a 3% decrease in European repo to €175 billion.

Despite a buoyant comparable period, trading activity in on-the-run US Treasuries increased as a number of macroeconomic events in global financial markets drove activity in the US Treasury market. These included the Chinese government's intervention in its local stock market, a large drop in the oil price and the speculation of a Federal Reserve rate rise. Nevertheless, the revenue benefit was partly offset by the BrokerTec tariff structure which provides for volume-based tiered pricing.

Trading activity in the secondary market for European government bonds has improved from the lows experienced at the end of the previous calendar year. Increasingly, activity is focused around new bond issuance as banks continue to hold less inventory and as the ECB quantitative easing programme has reduced bond availability.

Structural change in the form of new regulations continues to impact the US repo market and therefore further adjustments to bank balance sheet funding will be necessary. In the last quarter of 2015/16, trading activity in the European repo market benefited from increased volatility, demand for good quality collateral and a lack of supply from the buy side.

EBS BrokerTec continues to innovate and recently beta launched a new service, BrokerTec Direct, which provides relationship-based, disclosed liquidity to the fixed income market. BrokerTec Direct delivers increased trading opportunities by enabling liquidity providers to stream tailored prices directly to liquidity consumers in a disclosed environment. The service initially offers US Treasury actives and will extend to other fixed income products as well as other countries in the near future. BrokerTec Direct initially on-boarded four leading liquidity providers and more than 40 liquidity consumers to the platform. Additional market makers are in the process of being integrated.

EBS

EBS, an electronic FX platform, is a reliable and trusted source of executable and genuine liquidity across major and emerging market currencies. It has responded to changing market dynamics by transitioning from a business with a single offering to one that can support multiple execution methods and numerous ways of trading through a common distribution network.

For the year ended 31 March 2016, revenue decreased by 5% on a constant currency basis and increased by 2% on a reported basis to £126 million (2014/15: £124 million). Despite episodic volatility in G3 currency pairs and high volatility in emerging markets, average daily volume decreased by 9% to $90 billion as higher trading activity following central bank actions in the previous year was not repeated.

EBS Market, the exchange-like central limit order book, remains the benchmark for the professional FX trading community, connecting buyers and sellers of currencies in more than 50 countries. EBS Market's strategic efforts to gain early traction and create liquidity in both offshore Chinese renminbi (CNH) and Non-Deliverable Forwards (NDFs) has proved successful with average daily volume growing by more than 55% in both instruments compared with the previous year. As a result dollar/ offshore Chinese renminbi is now the third most actively traded currency pair on the platform after euro/ dollar and dollar/ yen.

In February, EBS Market announced that it is redesigning its premium FX market data service, EBS Live, and will move to streaming real-time market data. The EBS Live Ultra feed will provide significantly improved price discovery and transparency. The new service is in response to demand and consultation with customers who continue to work with EBS because of its deep liquidity.

EBS eFix, the matching service that enables customers to execute Fix interest electronically on the EBS Market platform has continued to demonstrate significant growth. Average daily volume has increased by more than 260% over the previous year to more than $1 billion matched per day.

EBS Direct, which launched in November 2013, is a platform that allows liquidity providers to stream tailored prices directly to liquidity consumers. Interest in the platform continues to grow and the platform has more than 33 liquidity providers and 460 liquidity consumers using the service, compared with 17 and 268 respectively last year. Average daily volume on the platform increased to $20 billion in the last quarter of 2015/16 compared to $15 billion in the same period last year. In December, FX forwards and swaps was launched in beta, a significant part of the FX market in which EBS has never previously participated, which delivers the ability to attract corporates and asset managers onto the platform.

Post Trade Risk and Information

The Post Trade Risk and Information division (PTRI) operates leading market infrastructures for post trade processing and risk management across a number of asset classes and enables users of financial products to reduce operational and system-wide risks. The services offered by the PTRI division 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 business comprises 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.

During the year, PTRI invested £17 million in development in order to offer new products and enhance the functionality of existing services, of which £9 million was charged to the income statement.

In March the PTRI division announced that it had successfully completed a proof of technology test case for a distributed ledger using blockchain and smart contract technologies. The proof of technology demonstrated the potential to re-engineer processes and significantly transform post trade operations, while complying with new market practices within the post-crisis regulatory environment. Going forward, the PTRI division will assess how to realise technology savings using the blockchain technology while ensuring compliance with regulations intended to make markets safer and more efficient.

The table above is presented on a total Group basis and, therefore, includes continuing and discontinued operations. See note 2 to the financial statements for a breakdown between continuing and discontinued operations.

For the year ended 31 March 2016, revenue increased by 5% on a constant currency basis and increased by 7% on a reported basis to £245 million (2014/15: £228 million). The trading operating profit remained flat at £97 million (2014/15: £97 million) and the trading operating profit margin reduced by 3 percentage points to 40%, primarily driven by continued investment in new solutions.

TriOptima

TriOptima, through triReduce and triResolve, is a leader in risk mitigation solutions for OTC derivatives, primarily through the elimination and reconciliation of outstanding transactions. It continues to benefit from the strategic alignment of its offerings with the G20 policy objectives of transparency and risk reduction in the financial system.

For the year ended 31 March 2016, revenue increased by 14% on a constant currency basis and by 7% on a reported basis to £72 million (2014/15: £67 million) driven by increased participation in triReduce portfolio compression cycles and the uptake of the portfolio reconciliation service, triResolve.

During the year, triReduce terminated $168 trillion of gross notional outstanding (2014/15: $150 trillion). The more stringent leverage ratio included within the Basel III rules continues to drive demand from banks for the triReduce compression service. Since launch, more than 210 financial institutions worldwide have participated in eliminating $768 trillion in total notional outstanding from the OTC derivatives market. This significant achievement includes compression across a broad spectrum of products: cleared and uncleared interest rate products in 27 currencies, credit default swaps, commodity swaps, inflation swaps, cross currency swaps, and FX forwards. Currently TriOptima delivers triReduce compression for cleared trades in collaboration with leading clearing houses including LCH, SGX, Nasdaq and CME. TriOptima also offers triReduce to CLS members for FX forwards.

In March, triReduce announced that 18 SwapClear members had compressed 40% of outstanding notional and 49% of outstanding trades in Polish zloty (PLN) interest rate swaps and forward rate agreements in the largest PLN triReduce compression cycle that SwapClear has run to date. The local and international participants eliminated 2.6 trillion PLN/$654 billion dollars in the multilateral triReduce cycle. In January, triReduce announced the first inflation swap compression cycle terminating $98 billion notional in inflation index swaps for the EU.

Strong demand for triResolve, the reconciliation service, continues to be driven by both standard portfolio reconciliation, as required by regulation, and the new repository reconciliation service to validate reported data. For repository reconciliation triResolve supports interfaces to trade repositories globally. The number of institutions using the triResolve service has increased from 1,380 during 2015/16 to more than 1,680 who participate in 384,000 party-to-party reconciliations each month (2014/15: 330,000).

In July 2015, TriOptima announced the launch of triResolve Margin, a margin processing solution delivered in collaboration with AcadiaSoft which will enable customers to easily access an automated, streamlined tool to reduce fragmented and manual processing. triResolve Margin assists customers in meeting the challenges posed by the new regulatory requirements for margining uncleared OTC derivatives by automating the margin process in a comprehensive, scalable and cost-effective solution. ICAP increased its investment in AcadiaSoft, a Euclid investment, in July 2015.

Traiana

Traiana operates the leading market infrastructure for pre and post trade risk management and post trade processing across multiple asset classes. Its solutions and the Harmony network have become the market standard for post trade processing of FX, exchange traded derivatives, fixed income, CDS and synthetic and cash equity transactions. Traiana's Harmony network connects more than 750 global banks, broker/dealers, buy side firms and trading platforms.

For the year ended 31 March 2016, revenue decreased by 4% on a constant currency basis and remained flat on a reported basis at £53 million (2014/15: £53 million) as the reduction in FX-related volume-based services was only partly offset by the increase in other subscription based services.

Traiana continues to innovate, grow and diversify its business into other asset classes, delivering network based solutions for all financial market participants, while also continuing to innovate in FX. In August, Traiana reached a key milestone in the development of its CreditLink service which was used to check credit limits for an FX NDF trade on a SEF. In September, in partnership with Bloomberg, Traiana announced plans to develop straight-through processing infrastructure to further streamline the workflow of FX options. The solution integrates Traiana's Harmony messaging network with Bloomberg's trade processing tools.

In March, ICAP announced that the PTRI division had made a series of enhancements that will significantly expand its existing suite of regulatory services to offer customers an end-to-end menu of products which meet MiFIR/MiFID II cross-asset reporting and processing obligations. The enhanced solutions leverage connectivity and build on functionality delivered by Traiana, for similar requirements under the Dodd-Frank Act, EMIR and other global regulatory regimes.

The new service suite includes the provision of trade certainty for venue executed trades, trade and transaction report submission to Approved Publication Arrangements and Approved Reporting Mechanisms respectively and global CCP connectivity for OTC executed trades.

Reset

Reset is a provider of services that reduce the basis risk within portfolios from fixings in the interest rate, FX and inflation derivatives and bond markets. Basis risk results from the structure of the instruments traded and unintended mismatches of exposure over time.

For the year ended 31 March 2016, revenue decreased by 12% on a constant currency basis and by 5% on a reported basis to £37 million (2014/15: £39 million) as the core business continues to be affected by low short dated interest rate volatility and further dampened volatility as a result of the ECB's quantitative easing programme. The reduction in revenue was partly offset by increased demand for the Reset service in September, as market commentators speculated about the timing of an increase in US interest rates. This was repeated in the run-up to the actual rate rise by the Federal Reserve in December.

ICAP Information Services

ICAP Information Services (IIS) delivers independent data solutions to financial market participants. ICAP Indices, the index arm of IIS, develops and publishes a range of transaction-broked indices. IIS generates subscription-based fees from a diversified global suite of products and services, while ICAP Indices' fee structure is based on assets under management of the products which are linked to the proprietary indices as well as licensing other index administrators for the use of ICAP data in their indices.

For the year ended 31 March 2016, revenue increased by 14% on a constant currency basis and 20% on a reported basis to £83 million (2014/15: £69 million) partly driven by a change to bill some customers directly, increasing both revenue, and the related operating expenses. The IIS product and service range includes real-time and historical data from the Group's electronic trading venues, EBS and BrokerTec, and the Global Broking division as well as from partners.

IIS has continued to both broaden its distribution throughout global financial markets and develop its product suite based on client demand and market trends. During the period, IIS extended the delivery of real-time EBS Data directly to clients and through new licensed distributors.

Euclid Opportunities

ICAP is building a portfolio of early-stage technology investments within Euclid Opportunities. It identifies and provides investment to emerging financial technology firms providing new platforms, business models and technologies that have the potential to drive efficiency, transparency and scale across the transaction life cycle for the financial services industry and are complementary to Newco's products.

During the period, Euclid Opportunities invested in Abide Financial, a market-leading regulatory reporting specialist, Digital Asset Holdings, a provider of distributed ledger technology and Cloud9, a cloud-based trading communication provider. In addition, Euclid made a further investment in Duco, a global provider of data control services and AcadiaSoft, an industry collaboration to automate collateral management.

In April 2016, ICAP announced it had acquired ENSO Financial Analytics, a portfolio analytics provider to asset managers and hedge funds. Euclid made its first investment in ENSO in June 2013, which was followed by a subsequent investment in October 2014 to enable further growth of the business. ENSO will become a subsidiary of ICAP's PTRI division.

Global Broking

Global Broking provides services to wholesale markets across a wide range of geographies and asset classes. ICAP's brokers leverage their deep customer relationships, help identify potential trading interest, access liquidity and facilitate price discovery in a vast array of financial instruments.

Global Broking's revenue by asset class for the year ended 31 March 2016 is set out below:

The table above is presented on a total Group basis and, therefore, includes continuing and discontinued operations. See note 2 to the financial statements for a breakdown between continuing and discontinued operations.

The commentary below excludes the impact of closed desks.

For the year ended 31 March 2016 revenue decreased by 5% on a constant currency basis and by 3% on a reported basis to £687 million. The ongoing combination of structural and cyclical factors, including historically low and negative interest rates, low levels of volatility, and bank deleveraging resulting in reduced risk appetite from bank customers, continue to act as headwinds for the business. Global economic uncertainties and oil price reductions have generated spikes in activity but overall market activity remains subdued.

Investments in e-commerce and Global Broking's hybrid footprint has driven a 14% increase in matching revenue. During the year, Global Broking launched Scrapbook, allowing customers to efficiently manage corporate bond positions and, in March 2016, launched CrossTrade on TrueQuote, a new portal for buyside customers after a successful pilot.

Rates

The rates business comprises interest rate derivatives, government bonds and repos. Rate products contribute the largest share of Global Broking's revenue (35%) of which interest rate derivatives represent the most significant component. For the year ended 31 March 2016, revenue decreased by 4% on a reported basis.

ICAP's interest rate derivatives franchise remained strong with i-Swap forming an integral part of the hybrid offering in G3 interest rate swaps. Low interest rates and a reduced risk appetite from bank customers continued to dampen market activity. Trading activity in dollar interest rate swaps decreased year-on-year despite the long awaited increase in the US Federal funds rate in December which was well anticipated and generated only modest activity. Revenue from euro interest rate swaps also decreased as the prior year benefited from the volatility around the introduction of quantitative easing.

Trading activity in US government bonds increased on the prior year as global market uncertainty drove a flight to quality especially in the fourth quarter. Activity in European government bonds continued to be hampered by a reduction in risk appetite and bank customers' balance sheet constraints. Global market uncertainty boosted repo activity in the Americas, a market which is heavily focused on the short term. The Relative Value business launched in August 2014 continued to grow and expand its footprint.

Commodities

The commodities business comprises energy (including refined products, electricity, natural gas, crude oil, coal and alternative fuels), environmental markets, forward freight derivatives, metals, agricultural and soft commodities.

For the year ended 31 March 2016, revenue increased by 3% on a reported basis. Refined products make up the majority of the oils business and experienced moderate growth, while the smaller crude oil business was impacted by reduced hedging activity in addition to a tough comparable period in 2014/15. Trading activity in iron ore nearly doubled as extreme volatility broadened the customer base for hedging instruments in Asia. Growth in trading activity in freight and US electricity was partly offset by decreased activity in natural gas, ethanol and coal volumes. UK and European natural gas was impacted by commission rate pressure from low cost competitors, while downward price pressure from over supply continued to hamper the US natural gas market.

After many market participants delayed hedging activity in the autumn seeking higher winter prices, the second half of the year saw improved US electricity volumes as necessary hedging could no longer be deferred. UK and European electricity volumes remained steady as compared to the prior year.

Emerging 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 year ended 31 March 2016, revenue decreased by 10% on a reported basis.

In addition to low global market volatility, economic and political concerns dampened trading activity in Latin America and central Europe. After a strong start to the year, growth in offshore renminbi related products slowed in the second half although there was an increase in trading activity in other Asian products due to uncertainty over the Chinese economy. Matching sessions continue to boost revenue in NDF's and generate a high portion of revenue in emerging market credit products.

Equities

The equities business principally comprises equity derivatives. For the year ended 31 March 2016, revenue increased by 6% on a reported basis.

Equity market volatility drove revenue growth but extreme volatility actually led to periods of reduced activity at times. Summer volatility in the equity markets boosted performance especially in the Americas, while significant growth in the Hong Kong equity derivatives marketplace was driven by the volatility in China. The launch of technology solutions in equity derivatives continued to improve the market position of the business.

FX and money markets

The FX and money markets business comprises spot, forwards and cash products. For the year ended 31 March 2016, revenue decreased by 7% on a reported basis.

Illiquid FX markets driven by the continuation of the low interest rate environment and a low risk appetite negatively impacted trading activity. Asia Pacific benefited from a restructuring of its FX presence in Singapore and Australia. Cash trading in the Americas remains strong driven by its positioning as the short-term funding tool of choice in the market.

Credit

The credit business comprises corporate bonds.

For the year ended 31 March 2016, revenue decreased by 10% on a reported basis. Inventory shift from banks to buy-side, driven by balance sheet constraints, remains a headwind for the business. Activity in high yield instruments was stronger than investment grade bonds as investors sought greater returns.

In response to a lack of liquidity in the corporate bond market, Global Broking launched Scrapbook and expects to launch I-Sam (ICAP's sponsored access for corporate bonds initiative) in the first quarter of 2016/17. Scrapbook allows traders to efficiently manage corporate bond positions which are available via Global Broking's e-commerce portal.

Financial review

In November 2015, we announced that we had entered into a Transaction which will, when completed, involve the disposal of our global hybrid voice broking and information business, including our associated technology and broking platforms (including i-Swap and Fusion), certain of our joint ventures and our associates (IGBB), to Tullett Prebon. For the year ended 31 March 2016, the Group's performance is therefore reported in the Group consolidated income statement separately for continuing and discontinued operations (net of tax). Discontinued operations consist of financials attributable to IGBB, adjusted for certain provisions in the SPA. The table below provides a breakdown of the Group's performance for the year.

Discontinued profit after tax is presented on one line in the consolidated income statement. A separate discontinued income statement is presented in note 4.

The Group's £221 million trading operating profit (2014/15 - £252 million) converted to a trading profit before tax of £203 million (2014/15 - £229 million) after deducting net finance costs of £25 million (2014/15 - £31 million) and recording a share of profit of joint ventures and associates after tax of £7 million (2014/15 - £8 million).

Trading net finance costs were £25 million for the year, £6 million lower than the prior year primarily reflecting the higher cost of the €300 million eurobond (settled in July 2014) and the double running of bonds in the prior year.

Trading profit before tax of £203 million includes £110 million from continuing operations (2014/15 - £122 million) and £93 million from discontinued operations (2014/15 - £107 million). The continuing income statement is not reflective of the financials of Newco going forward. The Group expects to receive dividend income for its investment in TP ICAP.

The £26 million decrease in trading profit before tax includes an £11 million year-on-year adverse movement from FX losses. Excluding the FX loss, trading profit before tax was down 7% on the prior year. Trading profit before tax was adversely affected by increased investment in the development of new products and solutions across the business, which offset the synergies realised in the year from the prior year cost savings programme.

Tax on trading profit

The Group's tax charge of £43 million on trading profit before tax represents an ETR of 21% (2014/15 - 19%). The ETR primarily reflects the various statutory tax rates applied to taxable profits in territories in which the Group operates.

The trading ETR is 2 percentage points higher than the prior year primarily driven by certain one-off adjustments in the prior year.

The Group manages its tax affairs in accordance with its tax strategy. The tax strategy was presented to the Audit Committee during the year.

Acquisition and disposal costs

Acquisition and disposal costs in the year were £74 million (2014/15 - £59 million) before a tax credit of £16 million (2014/15 - £15 million).

The continuing acquisition and disposal costs of £74 million include £25 million of impairment charges relating to our investments in certain non-core associates (2014/15 - £nil), £38 million of amortisation charges on acquired intangibles (2014/15 - £55 million), and a £9 million write down on reclassification of the shipping business to held for sale. During the year the Group undertook a review of the recoverability of its investments in non-core associates, in particular those that are associated with the voice broking business but will be retained by Newco. The review resulted in £25 million of impairment charges relating to the Group's investment in Howe Robinson Partners Pte Ltd, BSN Holdings Limited and Capital Shipbrokers Limited.

Other intangibles attributable to TriOptima were fully amortised in the prior year which explains the £17 million decrease in amortisation charges in the year.

Exceptional items

The Group discloses separately items that are non-recurring and material in terms of both size and nature. This allows appropriate visibility of these items and reflects how information is reviewed by management. It allows focus on the Group's trading performance, as well as due attention specifically on the exceptional items.

For the year to March 2016 exceptional items were £40 million (2014/15 - £75 million) before a tax credit of £6 million (2014/15 - £18 million). This includes £9 million relating to continuing operations (2014/15 - £16 million) and £31 million relating to discontinued operations (2014/15 - £59 million).

The discontinued exceptional costs represent Transaction-related costs including costs of sale and separation costs that were incurred and provided at 31 March 2016. The provision at 31 March 2016 does not include those Transaction-related costs which do not meet the provision recognition criteria. The £9 million continuing exceptional costs relate to exiting non-core businesses within Electronic Markets and are therefore presented in the continuing income statement.

The prior year costs principally related to the prior year restructuring programme of £60 million and the remaining £15 million related to regulatory matters including an £11 million provision relating to a €14.9 million (£10.9 million) fine imposed by the European Commission for alleged competition violations in relation to yen Libor.

Trading EPS and dividend

Trading EPS (basic) is calculated based on the trading profit for the year.

Management believes that trading EPS (basic) is the most appropriate EPS measurement ratio for the Group as this most closely reflects the ongoing generation of cash attributable to shareholders and in turn the Group's ability to fund sustainable dividends. In line with this the Remuneration Committee considers trading EPS (basic) in its review of management performance and uses that metric in the remuneration of the executive directors. A reconciliation between trading EPS (basic) and EPS (basic) is presented in note 5 to the financial statements.

The Group reported a trading EPS of 24.60p per share, a decrease of 14% on the prior year driven by a combination of a decrease in the trading profit before tax and the increase in the ETR.

The directors recommend a final dividend of 15.40p per share. If approved, the final dividend will be paid on 22 July 2016 to shareholders on the register at the close of business on 1 July 2016. The shares will be quoted ex-dividend from 30 June 2016.

The full-year dividend will be 22.00p (2014/15 - 22.00p) including the payment of the 6.60p interim dividend on 5 February 2016. The full-year dividend per share is covered 1.1 times (2014/15 - 1.3 times) by trading EPS of 24.60p.

Free cash flow

The Groups' free cash flow conversion for the year was 96% (2014/15 - 121%) of the Group's trading profit. Cash generated from operating activities before exceptional items of £273 million was £69 million lower than the prior year. The decrease was driven by a combination of a lower trading EBITDA and adverse year-on-year working capital movements.

* Before exceptional items

** Re-presented to exclude effects of short-term timing differences arising from unsettled matched principal trades at 31 March 2016

Application of free cash flow

Cash flow from trading activities of £216 million (2014/15 - £276 million) was used to pay £141 million in dividends to shareholders as the Group continues to maintain strong dividend payments.

Capital expenditure of £71 million includes £66 million of investment in technology assets. Additionally, £93 million of cash spend on technology during the year was directly charged to the income statement. ICAP's market leading position has been achieved and maintained through substantial investment over many years in technology and market user infrastructure. ICAP is committed to maintaining a high level of investment in technology assets, especially in growth areas in Electronic Markets and Post Trade Risk and Information, over the coming years as ICAP continues its drive to improve and widen our product offerings to our customers.

Balance sheet highlights

The Group's net assets as at 31 March 2016 were £1,018 million (2014/15 - £1,018 million). The retained deficit in the year of £73 million (net of £141 million dividends) was offset by £61 million of gains arising from favourable FX movements and £12 million of other favourable movements in reserves.

The assets and liabilities attributable to IGBB are presented as held for sale assets and liabilities on the face of the consolidated balance sheet which net to £532 million.

The Group's financial position is presented separately for the IGBB business from the retained Group in the consolidated balance sheet. Assets and liabilities attributable to IGBB, subject to certain provisions in the SPA, are disclosed on the balance sheet in two separate line items - held for sale assets and held for sale liabilities. The continuing balance sheet is not reflective of the balance sheet of the retained Group going forward.

On completion, the Group will receive £330 million of cash from the enlarged Tullett Prebon and will recognise an available-for-sale investment equal to the fair value of its stake in the enlarged Tullett Prebon.

The significant balance sheet line items, including intangible assets arising on consolidation, trade receivables and payables, cash and cash equivalents and borrowings are discussed below, together with regulatory capital.

Intangible assets arising on consolidation

The continuing Group's goodwill and other intangible assets arising from consolidation as at 31 March 2016 were £826 million (2014/15 - £930 million). During the year, £92 million of goodwill primarily attributable to IGBB was transferred to held for sale. Other intangible assets were amortised by £38 million (2014/15 - £55 million) during the year.

The board reviewed the Group's goodwill and other intangible assets arising on consolidation for impairment as at 31 March 2016 and concluded that there was no impairment at that date.

The review was based on certain estimates and assumptions, including future cash flow projections and discount rates. The Audit Committee challenged management's judgements and estimates and has approved the appropriateness of management assumptions.

Trade receivables and payables

The increase in trade receivables and payables is principally due to a change in clearing arrangements for certain US Treasuries within BrokerTec. This resulted in an increase in matched principal receivables and payables.

Liquidity and funding

The Group's overall funding position at 31 March 2016 remains strong.

The gross debt position, including that of IGBB, increased by £115 million to £664 million as at 31 March 2016. This position includes overdrafts of £83 million (2014/15 - £33 million), net of fees. The increase relates to the £110 million drawdown of the revolving credit facility (less fees of £2 million), the Japanese yen loan of £62 million, a £25 million adverse impact of FX and the £50 million increase in overdrafts driven by short-term timing differences arising as a result of unsettled matched principal trades as at 31 March 2016, which subsequently reversed within a few days. The adverse movement was partially offset by a £130 million repayment of the guaranteed subordinated loan notes in June 2015. As at 31 March 2016, the Group had committed undrawn headroom under its core credit facilities of £315 million (2014/15 - £425 million). The Group agreed an extension of the maturity date on its revolving credit facility to March 2018.

In November 2015, following the announcement of the Transaction with Tullett Prebon, Moody's changed its outlook for the Group from negative to stable while its rating remained as Baa3. Fitch

maintained their rating of BBB (stable) throughout the year.

Net debt

Net debt, including that of IGBB, increased by £80 million in the year to £148 million as at 31 March 2016. The increase in net debt was principally driven by £40 million short-term timing differences arising from unsettled matched principal trades which reversed subsequently within a few days. The remainder was a result of a combination of factors including £17 million of further investments in new businesses in the PTRI division and a £29 million payment in relation to one-off Transaction-related costs and payout in relation to last year's global broking restructuring programme.

Regulatory capital

ICAP operates its business under an investment firm waiver, which currently runs until December 2017. The waiver modifies the basis on which regulatory capital is assessed and, at 31 March 2016, ICAP had £0.8 billion (2014/15 - £0.7 billion) of headroom on this basis. The effect of the waiver is to exclude goodwill and other intangibles from the assessment and, in doing so, allows the Group to undertake acquisitions using debt rather than equity finance. In the event that the waiver was not renewed, applying a consolidated approach would increase the regulatory capital requirement by approximately £0.5 billion which, in line with recent precedent, would most likely be met through retained profit over time.

Following the disposal of IGBB, it is expected that the retained Group will not be subject to consolidated regulatory capital requirements.

ICAP operates 43 regulated subsidiaries globally. Each is locally capitalised and regulated. Together these entities hold £494 million of cash (including restricted funds) of which £348 million (2014/15 - £357 million) is held by the Global Broking businesses. Electronic Markets and Post Trade Risk and Information hold £126 million (2014/15 - £55 million) and £20 million (2014/15 - £18 million) respectively.

Financial statements

Consolidated income statement 

Year ended 31 March 2016

Year ended 31 March 2015

Financial statements

Consolidated statement of comprehensive income

Financial statements

Consolidated and Company balance sheet

The financial statements were approved by the board on 16 May 2016 and signed on its behalf by:

Stuart BridgesGroup Finance Director

Financial statements

Consolidated statement of changes in equity

Financial statements

Company statement of changes in equity

Financial statements 

Consolidated and Company statement of cash flow

*Net of £83m overdraft as at 31 March 2016 (2014/15 - £33m).

Cash flows of discontinued operations

Cash inflows from operating activities of £23m, cash outflows from investing activities of £15m and cash outflows from financing activities of £2m were incurred in the year relating to the discontinued business.

Basis of preparation

Preparation of financial statements

The consolidated financial statements of the Group and the separate financial statements of ICAP plc have been prepared in accordance with IFRSs, as issued by the IASB and the interpretations issued by the IFRS Interpretations Committee (IFRIC) and their predecessor bodies, and as endorsed by the EU and the Companies Act 2006 applicable to companies reporting under IFRS. In publishing the parent Company financial statements here together with the Group financial statements, ICAP plc has taken advantage of the exemption in section 408(3) of the Companies Act 2006 not to present its individual income statement, individual statement of comprehensive income and related notes that form a part of these financial statements. The financial statements are prepared in pounds sterling, which is the functional currency of the Company and presented in millions. ICAP plc is incorporated and domiciled in the UK.

The significant accounting policies adopted by the Group and the Company are included within the notes to which they relate.

The preparation of financial statements requires management to apply judgements and the use of estimates and assumptions about future conditions. Management considers impairment of goodwill and other intangible assets arising on consolidation, investment in joint ventures and associates, contingent liabilities (note 9), and the presentation of exceptional items (note 3) to be the areas where increased judgement is required. Further information about key assumptions concerning the future, and other key sources of estimation uncertainty, are set out in the relevant notes to the financial statements. Estimates and assumptions are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Due to the inherent uncertainty in making estimates, actual results reported in future periods may be based on amounts which differ from those estimates. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In November 2015, the Group announced that it had entered into a Transaction which will, when completed, involve the disposal of its global hybrid voice broking and information business, including the associated technology and broking platforms (including i-Swap and Fusion), and certain joint ventures and associates (IGBB), to Tullett Prebon. The disposal is subject to approvals from regulatory authorities across jurisdictions. The Group is committed to a plan to sell having signed the SPA with Tullett Prebon and it is anticipated that the required regulatory approvals will be obtained and the transaction will complete in 2016.

The IGBB business disposal meets the criteria of IFRS5 for held for sale classification. The criteria for held for sale are met as the business is available for sale in its present condition and the sale is highly probable.

The results of the IGBB business, subject to certain provisions in the SPA, are presented as discontinued operations in the consolidated income statement as the sale is a single co-ordinated plan to dispose of a separate major line of business. The assets and liabilities attributable to IGBB, also subject to certain provisions in the SPA, are presented as held for sale assets and liabilities on the face of the balance sheet.

Presentation of the income statement

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 its trading profit. This is the profit measure used to calculate trading EPS (note 5) and is considered to be the most appropriate as it better reflects the Group's trading earnings. Trading profit is reconciled to profit before tax on the face of the consolidated income statement, which also includes acquisition and disposal costs and exceptional items.

The column 'acquisition and disposal costs' includes: any gains, losses or other associated costs on the full or partial disposal of investments, associates, joint ventures or subsidiaries and costs associated with a business combination that do not constitute fees relating to the arrangement of financing; amortisation or impairment of intangible assets arising on consolidation; any re-measurement after initial recognition of deferred contingent consideration which has been classified as a liability, and any gains or losses on the revaluation of previous interests. The column may also include items such as gains or losses on the settlement of pre-existing relationships with acquired businesses and the re-measurement of liabilities that are above the value of indemnification.

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 consolidated income statement.

When the Group has disposed of or intends to dispose of a business component that represents a major line of business or geographic area of operations, it classifies such operations as discontinued. The post-tax profit or loss of the discontinued operations is shown as a single line on the face of the consolidated income statement, separate from the other results of the Group. The consolidated income statement for the comparative periods is restated to show the discontinued operations separate from those generated by the continuing operations.

Basis of consolidation

The Group's consolidated financial statements include the results and net assets of the Company, its subsidiaries and the Group's share of joint ventures and associates.

Subsidiaries

An entity is regarded as a subsidiary if the Group has control over its strategic, operating and financial policies and intends to hold the investment on a long-term basis for the purpose of securing a contribution to the Group's activities.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of acquisition is measured at fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in the business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the costs of the acquisition are less than the fair value of the net assets acquired, the difference is recognised directly in the consolidated income statement.

Fees associated with an acquisition are expensed as incurred. When the Group increases its investment in an entity resulting in an associate becoming a subsidiary, the intangibles related to the acquisition are valued and the element of those not previously recognised as a share of net assets are recorded as revaluation gains realised in the year in other comprehensive income. A change of ownership that does not result in a loss of control is classified as an equity transaction, with the difference between the amount by which the non-controlling interest is recorded and the fair value of the consideration received recognised directly in equity.

Where the Group has issued a put option over shares held by a non-controlling interest, the Group derecognises the non-controlling interests and instead recognises a contingent deferred consideration liability for the estimated amount likely to be paid to the non-controlling interest on exercise of those options. The residual amount, representing the difference between any consideration paid/payable and the non-controlling interest's share of net assets, is recognised in equity. Movements in the estimated liability after initial recognition are recognised within the consolidated income statement. Where the Group has a call option over shares held by a non-controlling interest, the Group continues to recognise the non-controlling interest until it is certain that the option will be called. At that point the accounting treatment is the same as for a put option.

The results of companies acquired during the year are included in the Group's results from the effective date of acquisition. The results of companies disposed of during the year are included up to the effective date of disposal.

The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

On consolidation, the accounting policies of Group companies (the Company and its subsidiaries) are consistent with those applied by the Group. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated as part of the consolidation process. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Joint ventures

A joint venture is an entity in which the Group has an interest and, in the opinion of the directors, exercises joint control over its operating and financial policies. An interest exists where an investment is held on a long-term basis for the purpose of securing a contribution to the Group's activities. Following the adoption of IFRS11 'Joint Arrangements' and IAS28 'Investments in Associates and Joint Ventures' on 1 April 2014, investments in joint ventures are recognised using the equity method. Under this method, such investments are initially stated at cost, including attributable goodwill, and are adjusted thereafter for the post-acquisition change in the Group's share of net assets.

Associates

The Group classifies investments in entities over which it has significant influence, but not control, and that are neither subsidiaries nor joint ventures, as associates. Investments in associates are recognised using the equity method. Under this method, such investments are initially stated at cost, including attributable goodwill, and are adjusted thereafter for the post-acquisition change in the Group's share of net assets.

Foreign currencies

In individual entities, transactions denominated in foreign currencies are recorded at the prior month closing exchange rate between the functional currency and the foreign currency. At each end of the reporting period, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Exchange differences are recognised in the consolidated income statement, except for exchange differences arising on non-monetary assets and liabilities where these form part of the net investment of an overseas business or are designated as hedges of a net investment or cash flow and, therefore, the changes in value resulting from exchange differences are recognised directly in other comprehensive income. Non-monetary items carried at historical cost are translated in the balance sheet at the exchange rate on the original transaction date. Non-monetary items measured at fair value are translated using the exchange rate ruling when the fair value was determined.

On consolidation, the results of businesses with non-pound sterling functional currencies are translated into the presentational currency of the Group at the average exchange rates for the year where these approximate to the rate at the date of the transactions. Assets and liabilities of overseas businesses are translated into the presentational currency of the Group at the exchange rate prevailing at the end of the reporting period. Exchange differences arising are recognised within other comprehensive income. Cumulative translation differences arising after the transition to IFRS are taken to the consolidated income statement on disposal of the net investment.

Goodwill and fair value adjustments arising on the acquisition of a non-pound sterling entity are treated as assets and liabilities of that entity and translated into the presentational currency of the Group at the period closing rate. Where applicable, the Group has elected to treat goodwill and fair value adjustments arising before the date of transition to IFRS as denominated in the presentational currency of the Group.

In the consolidated statement of cash flows, cash flows denominated in foreign currencies are translated into the presentational currency of the Group at the average exchange rates for the year or at the rate prevailing at the time of the transaction where more appropriate.

Future accounting developments

At 31 March 2016, 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 intends to adopt IFRS9 for its financial statements for the year ending 31 March 2019; and

· 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 intends to adopt IFRS15 for its financial statements for the year ending 31 March 2018.

The impact on ICAP's financial statements from the adoption of these IFRS standards is currently being assessed and will be disclosed closer to the time of the adoption.

1. Segmental information

The Group has determined its operating segments based on the management information including trading revenue and trading operating profit reviewed on a regular basis by the Company's board. The Group considers the executive members of the Company's board to be the Chief Operating Decision Maker (CODM). ICAP's three operating segments are Electronic Markets, Post Trade Risk and Information and Global Broking.

Revenue comprises brokerage or access fees from its Electronic Markets business, fees from the provision of Post Trade Risk and Information services and commission from the Group's Global Broking division.

Electronic Markets

The Group acts as an intermediary for FX, interest rate derivatives, fixed income products and CDS through the Group's electronic platforms. Revenue is generated from brokerage fees which are dependent on the average trading volumes. The Group also charges fees to use the electronic trading platform for access to liquidity in the FX or precious metal markets.

Post Trade Risk and Information (PTRI)

The Group receives fees from the sale of financial information and provision of PTRI services to third parties. These are stated net of VAT, rebates and other sales taxes and recognised in revenue on an accruals basis to match the provision of the service.

Global Broking

Matched principal and stock lending business

Certain Group companies are involved in a non-advisory capacity as principals in the matched purchase and sale of securities and other financial instruments between our customers. Revenue is generated from the difference between the purchase and sale proceeds and is recognised in full at the time of the commitment by our customers to sell and purchase the security or financial instrument. The revenue generated by the stock lending business is not material to the Group.

Agency business (name give-up)

The Group acts in a non-advisory capacity to match buyers and sellers of financial instruments and raises invoices for the service provided. The Group does not act as principal in name give-up transactions and only receives and transmits orders between counterparties. Revenue is stated net of rebates and discounts, VAT and other sales taxes and is recognised in full on the date of the trade.

Execution on exchange business

The Group also acts as a broker of exchange-listed products, where the Group executes customer orders as principal and then novates the trade to the underlying customer's respective clearing broker for settlement. Revenue is generated by raising an invoice and is recognised on the trade date.

(a) Revenue relating to the Group's total operations