Half Yearly Results

Press release

Half year results for the six months ended 30 September 2016

Resilient performance despite ongoing market headwinds

London 16 November 2016 - ICAP plc (IAP.L), a leading markets operator and provider of post trade risk mitigation and information services, announces today its results for the six months ended 30 September 2016.

* before acquisition and disposal costs and exceptional items (note 1)

Group highlights

· The transaction with Tullett Prebon (the Transaction) has received FCA clearance and remains on track to complete this year, subject to outstanding change of control consents

· Group revenue from continuing operations increased by 11%, and was flat on a constant currency basis

· Trading profit before tax from continuing operations decreased 7% to £51 million

· Profit before tax from continuing operations increased 78% to £66 million

· Signed three year $65 million deal with China Foreign Exchange Trade System (CFETS) to deliver technology for electronic execution services

· Market share gains in trading activity on Electronic Markets in US Treasuries, Asian NDFs and FX Forwards

· Added ENSO Financial Analytics (ENSO) and Abide Financial (Abide) to the Group, complementing our ability to support customers across the transaction lifecycle

· ICAP's global hybrid voice broking and information business's trading profit before tax for the period increased 28% to £59 million; trading profit margin increased by 2 percentage points to 14%

· Interim dividend payment to shareholders maintained at 6.6p per share

Michael Spencer, Group Chief Executive Officer, said: "Throughout ICAP's 30 year history, we have always prided ourselves on being forward thinking for the benefit of our customers. Our strategic advantage lies in our unique networks, our strong product pipeline and our compelling value proposition. That is why we recently won the CFETS mandate and we continue to see market share gains at BrokerTec and EBS Direct. We have recently added both ENSO and Abide to the Group, complementing our ability to support our customers across the transaction lifecycle.

"These are uncertain times for global financial markets as we try to understand the impact of both the Brexit vote and the very recent US election. Despite this uncertainty, it is important that we continue to invest wisely in our product portfolio and financial technology incubator, Euclid Opportunities, to achieve long term profitable growth. In the absence of unforeseen circumstances, we plan to hold the dividend at 22.0p for this year.

"I am excited to be in the final phase of the Transaction before the launch of NEX Group plc. We are pleased that the FCA has recently cleared the Transaction with Tullett Prebon. We remain optimistic that the Transaction will complete by the end of the year, however the Transaction requires other change of control consents to be received before completion can occur. Tullett Prebon is responsible for and working to secure those outstanding clearances.

"While we continue along the slow journey to more normal market conditions I am confident that the fundamental strengths of the business will provide an excellent platform for NEX Group plc's long term growth and success."

Analysts and investors briefing

There will be a briefing for analysts and investors at 9.30am (GMT) on Wednesday 16 November 2016 at 2 Broadgate, London EC2M 7UR. An audiocast of the presentation will be available later that day at www.icap.com

Contacts

Introduction to NEX Group plc presentation

Following the half year results presentation of ICAP plc (ICAP), Michael Spencer alongside other members of the senior management team will present an Introduction to NEX Group plc (NEX) as it will trade following the completion of the Transaction, which will focus on the Group's long term competitive advantage and growth opportunities.

The following new information will be provided for NEX:

- Progressive dividend policy with an initial base of 40%-50% of NEX's post tax trading profit

- Margin aspiration to drive towards 40% for each of the business segments in the medium term

- Technology spend: Level of spend in Electronic Markets has peaked, further investment expected in Post Trade Risk and Information

- Effective group tax rate of 23%-25%

- A capital light business model with pro forma gross debt of £515 million and net debt of £225 million

- Approximately £110 million cash is expected to be required for regulatory liquidity purposes

- £40 million of regulatory capital held in subsidiaries

- Over the medium term free cash flow conversion is expected to be 80%-90%

Presentation of information

This document comprises the half year results to 30 September 2016 for 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 Half-Yearly Financial Report contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Group.

Certain statements that are not historical facts, including statements about the Group's beliefs and expectations, are forward-looking statements. Words such as 'expects', 'anticipates', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'potential' and 'reasonably possible', variations of these words and similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made, and it should not be assumed that they have been revised or updated in the light of new information or subsequent events.

Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in some instances materially, from those anticipated or implied in any forward-looking statement.

About ICAP

ICAP is a leading markets operator and provider of post trade risk mitigation and information services. The Group matches buyers and sellers in the wholesale markets in interest rates, credit, commodities, FX, emerging markets and equity derivatives through electronic and voice networks. Through our post trade risk and information services ICAP helps its customers manage and mitigate risks in their portfolios. For more information go to www.icap.com

Interim Management Report

Review of operations

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 (together IGBB), to Tullett Prebon. On completion of the Transaction with Tullett Prebon, the ICAP brand will be transferred to Tullett Prebon and the remaining business comprising of Electronic Markets and Post Trade Risk and Information services will be renamed NEX Group plc.

Consistent with the presentation in the 2016 Annual Report, the Group's performance for the six months ended 30 September 2016 is 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 (SPA).

In the review of operations, financial performance is presented on a NEX basis, therefore only for continuing operations, unless stated otherwise.

For the six months ended 30 September 2016, the Group reported continuing revenue of £254 million, 11% ahead of the prior period on a reported basis and flat on a constant currency basis. A 6% increase in Post Trade Risk and Information (PTRI) revenue to £113 million, on a constant currency basis, was partly offset by a 2% decrease in Electronic Markets revenue to £139 million, on a constant currency basis.

The Group's continuing 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 a greater demand for post trade products such as triReduce and triResolve.

Consistent with NEX's growth strategy, ICAP 's ongoing investment in new products and services continues to impact the Group's continuing trading operating profit margin which fell to 26% (H1 2015/16: 29%). In addition, this was also impacted by changes in the product mix within the PTRI business, the consolidation of ENSO for the first time and a change to direct billing within Information Services. The Group's continuing trading profit before tax of £51 million was 7% down on the prior year mainly due to an increase in net finance costs.

Dividend

Consistent with previous practice, ICAP's interim dividend per share has been calculated at 30% of the prior year's full year dividend. An interim dividend of 6.6p per share (H1 2015/16 - 6.6p per share) covering the six month period to 30 September 2016 will be paid on 25 January 2017 to shareholders on the register at 9 December 2016. The shares will be quoted ex-dividend from 8 December 2016.

Outlook

ICAP's deep insights into the needs of its customers, along with its investments in technology, strong relationships with its partners and its ability to embrace change means that it continues to grow its addressable market and deliver returns for its shareholders.  The very recent US election has prompted an increase in trading activity. It is, however, too early to assume that the prolonged period in which we have experienced subdued market conditions has come to an end. Nevertheless, management remains confident that the fundamental strengths of the business will provide an excellent platform for NEX's long term growth.

Management change

In July 2016, ICAP announced that Gil Mandelzis, CEO of EBS BrokerTec, has decided to step down from his position. Michael Spencer, CEO of ICAP, said: "Gil Mandelzis has been a truly outstanding leader of our Electronic Markets division, playing a central role in the successful expansion and integration of the EBS and BrokerTec businesses. Gil co-founded Traiana back in 2000, a business ICAP acquired in 2007, and has undoubtedly made a lasting and meaningful contribution to the evolution of the foreign exchange and fixed income industries. He has decided, however, that his career should now take a different direction and we have accepted this."

In September 2016, Seth Johnson, who joined ICAP in 1992 and most recently was Head of Strategy at ICAP's Global Broking division, was appointed CEO of EBS BrokerTec. As Head of Strategy for Global Broking, Seth has been responsible for growing revenues, improving the application of technology to the company's business model, and expanding customer coverage. Seth previously led the expansion of ICAP's Electronic Markets product portfolio as Chief Executive Officer of BrokerTec and CEO of the ICAP Securities & Derivatives Exchange (ISDX). Seth will continue to sit on the ICAP Global Executive Management Group and will report directly to ICAP CEO Michael Spencer.

Electronic Markets

EBS BrokerTec is a leading electronic trading business operating platforms in FX and fixed income. These platforms offer efficient and effective trading solutions to customers in more than 50 countries across a range of instruments including spot FX, FX Forwards, 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.

For the six months ended 30 September 2016, Electronic Markets revenue decreased by 2% on a constant currency basis and increased by 8% on a reported basis to £139 million (H1 2015/16 - £129 million) as a result of its dollar exposure. The trading operating profit decreased to £43 million (H1 2015/16 - £44 million) and the trading operating profit margin decreased to 31%.

BrokerTec

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

For the six months ended 30 September 2016, revenue was flat on a constant currency basis and increased by 9% on a reported basis to £70 million (H1 2015/16 - £64 million) as a result of the platform's dollar exposure. This performance reflects a 10% decrease in US Treasury average daily volume to $154 billion, a 1% increase in US repo to $213 billion and a 3% decrease in European repo to €173 billion. The revenue impact was partly offset by BrokerTec's tariff structure which provides for volume-based tiered pricing.

During the period BrokerTec increased its market share in the interdealer US Treasury on-the-run segment as its customer's prioritised price and trade transparency. Whilst trading activity during the period benefitted from a combination of central bank actions and the uncertainty created by the UK referendum on Brexit, it did not have the same level of trading activity as the speculation around the timing of an increase in US interest rates and central bank action in China in the comparable period.

The repo market remains pivotal to the effective functioning of almost all financial markets, and provides an efficient source of collateralised money market funding. During the period both the US and European markets continued to face regulatory headwinds as reduced balance sheet allocation remains an inhibiter of activity. Despite a tough competitive environment BrokerTec has built on its market share in repo and has recently launched several enhancements to the functionality of the platform.

Activity in European government bonds was episodic and benefited from a move in UK interest rates following the UK referendum and the ongoing uncertainty over the monetary policy outlook. In general, European markets were hampered by subdued risk appetite and inventory reductions over the summer months.

The development of BrokerTec Direct, the innovative fully disclosed and relationship-based electronic platform for the trading of on-the-run US Treasuries, continues to on-board new customers with a focus on attracting major dealer liquidity providers.

EBS

EBS, an electronic FX business, is a reliable and trusted source of orderly, 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 multiple ways of trading through a common distribution network.

For the six months ended 30 September 2016, revenue decreased by 10% on a constant currency basis and was flat on a reported basis at £64 million (H1 2015/16 - £64 million) reflecting a 14% decrease in average daily volume to $81 billion. Whilst trading activity in Asian currencies remained buoyant, activity levels in G7 currencies were subdued as volatility generated by central bank actions in the comparable period were not repeated.

EBS Market, the exchange-like platform, has maintained its position as a primary interbank venue for the trading of the world's most actively traded currency pairs, including euro/dollar and dollar/yen. During the period EBS Market's strategic efforts to gain 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 10% and 20% respectively compared with the comparable period. As a result dollar/ CNH is now the third most actively traded currency pair on the platform.

EBS Direct, the platform that allows liquidity providers to stream tailored prices directly to liquidity consumers has continued to grow steadily. The platform now has more than 44 liquidity providers compared to 25 last year and over 470 liquidity consumers using the service compared to 400 last year. Average daily volume on the platform increased to more than $20 billion, up 22% on the same period last year. FX forwards, a significant part of the FX market in which EBS has never previously participated, have continued to grow month on month.

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 80% over the comparable period to more than $1.5 billion matched per day.

In September, as a direct response to EBS customers' desire for improved and faster data provision, EBS launched EBS Live Ultra. The new service will significantly improve price discovery, enhance the light pool (also known as lit) FX market and increase market transparency, efficiency and liquidity.

CFETS

In June, ICAP announced that CFETS, China's official inter-bank market trading platform and infrastructure provider, has chosen EBS BrokerTec to deliver the underlying technology for fixed income and FX electronic execution services in mainland China. The deal, valued at $65 million over a three year period, will see ICAP expand into China, a key growth market for the business, with EBS BrokerTec establishing a local office and development centre in Shanghai.

Post Trade Risk and Information

The Post Trade Risk and Information business operates leading market infrastructure for post trade processing and risk management across multiple asset classes and enables users of financial products to reduce operational and system-wide risks. The services offered by the PTRI business enable customers to increase the efficiency of trading, clearing and settlement and facilitate the effective management of capital and associated cost.

The portfolio risk services 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; the information and data sales business; and ENSO, which provides insight on counterparty credit risk, collateral management, portfolio financing and treasury.

For the six months ended 30 September 2016, revenue increased by 6% on a constant currency basis and by 19% on a reported basis to £113 million (H1 2015/16 - £95 million). Trading operating profit increased to £32 million (H1 2015/16 - £31 million). The trading operating profit margin decreased to 28% as a result of a combination of factors including increased investment in Traiana, consolidation of ENSO for the first time and a change to direct billing within Information Services.

TriOptima

TriOptima, through triReduce and triResolve, is a leader in risk mitigation solutions for Over The Counter (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 six months ended 30 September 2016, revenue increased 2% on a constant currency basis and increased by 20% on a reported basis to £42 million (H1 2015/16 - £35 million) driven by increased demand for triReduce portfolio compression and uptake of the portfolio reconciliation service, triResolve.

The stringent leverage ratio included within the Basel III rules continues to drive demand from banks for the triReduce compression service. During the period, triReduce terminated a further $94 trillion of gross notional outstanding (H1 2015/16 - $87 trillion), taking the total eliminated since launch to $862 trillion. This significant achievement includes compression across a broad range of products: cleared and uncleared interest rate products in 27 currencies, credit default swaps, commodity swaps, inflation swaps, cross currency swaps, and FX forwards for more than 210 financial institutions. TriOptima delivers triReduce compression for cleared trades in collaboration with several clearing houses including LCH, SGX, Nasdaq and CME. TriOptima also offers triReduce to CLS members for FX forwards.

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 trade repositories globally. The number of institutions using the triResolve service has increased from 1,686 during H1 2015/16, who participated in 384,000 party-to-party reconciliations each month, to more than 1,800 in H1 2016/17, who participated in 398,000 party-to-party reconciliations each month.

In May, triResolve announced that it is collaborating with The Depository Trust & Clearing Corporation (DTCC) to reconcile data reported to Asian regulators. triResolve's Repository Reconciliation service is actively reconciling data reported to DTCC's Global Trade Repository by institutions regulated by the Monetary Authority of Singapore, the Australian Securities and Investments Commission and the Hong Kong Monetary Authority.

triResolve Margin, which TriOptima launched in April, supports its customers following the introduction of the new uncleared margin rules. It connects triResolve's existing award-winning portfolio reconciliation tool, case management workflow and dispute analytics to AcadiaSoft's MarginSphere®. By linking the margin call and portfolio reconciliation process together triResolve Margin drives efficiency through straight through processing

triCalculate continues to grow and sign new customers. It is a centralised risk analytics service which provides a web-based service to price, report and validate risk calculations using transparent and consistent models across a wide range of asset classes, data sources, and business units.

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-based 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 six months ended 30 September 2016, revenue increased by 24% on a constant currency basis and 31% on a reported basis to £21 million (H1 2015/16 - £16 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 BrokerTec, as well as from partners.

In July, in collaboration with EBS BrokerTec, IIS launched the EBS CNH Benchmark, the first fully electronic, trade-backed reference rate for the offshore CNH market. The benchmark has been launched following considerable interest from a number of major Chinese banks and senior onshore authorities.

In September 2016 it was announced that IIS together with Wind Information Co., Ltd, a leading provider of financial data in China, had extended their market data portfolio to include real-time US Treasury pricing and global FX spot rates. This follows the partnership signed in early 2015 between the two parties to provide CNH and end-of-day US Treasury data in China.

Traiana

Traiana operates the leading market infrastructure for cross-asset pre and post trade processing, risk management and regulatory compliance across the world. 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 six month ended 30 September 2016, revenue decreased by 7% on a constant currency basis and increased by 4% on a reported basis at £27 million (H1 2015/16 - £26 million) as the reduction in FX- related volume-based services was only partly offset by the increase in other cross assets subscription based services mainly the Client Link service to the Buy Side and Tier 2/3 banks.

Traiana continues to innovate 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 June, both Barclays and UBS went live on its Harmony CCP Connect for Equities platform. These new banks will further enhance the netting benefits already seen by the market through automated central clearing of OTC equity trades. Some of the largest equity broker dealers, including Credit Suisse, Deutsche Bank, Instinet and J.P. Morgan, are already using Harmony CCP Connect to automate the matching and central clearing of their OTC equity contract for difference trades at their preferred clearing houses.

During the period, Traiana's equity swaps solution saw a threefold growth in allocation as clients embrace the post-trade efficiencies. Growth has been particularly strong in the Asia Pacific region reflecting the strong adoption of electronic trading in these markets, increased access by global buy-side firms and increased focus on straight-through-processing services by global equity prime brokers.

Reset

Reset is a provider of risk mitigation services, reducing basis risk within trading portfolios in interest rate derivative, FX, inflation, and options markets.

For the six months ended 30 September 2016, revenue decreased by 5% on a constant currency basis and increased by 6% on a reported basis to £19 million (H1 2015/16 - £18 million). The core business continues to be affected by low short dated interest rate volatility and further dampened volatility as a result of the quantitative easing programme of the European Central Bank (ECB).

ENSO

ENSO is changing the way that hedge funds and prime brokers communicate and enhance relationships by offering a suite of analytics and tools that provide its hedge fund clients with a macro view of all their relationships across multiple prime brokers and counterparties. Their services deliver data and insight on counterparty credit risk, collateral management, portfolio financing and treasury. At the same time, all of these counterparties can connect and directly engage through ENSO's network.

In April 2016, through Euclid Opportunities (Euclid), ENSO was acquired by ICAP.

Euclid Opportunities

Euclid 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.

In October 2016, ICAP announced that it had acquired Abide, following a previous investment by Euclid in July 2015. Abide will become a subsidiary of ICAP's PTRI division. Following the acquisition, Abide will integrate its regulatory reporting hub and venues with Traiana's connectivity and ICAP's Approved Publication Arrangement reporting service providing PTRI's client base with a full spectrum of integrated reporting solutions

During the period, Euclid co-led the funding round of Cloud9 Technologies, a cloud-based trading communication provider and OpenGamma, a provider of open source financial software and derivatives risk analytics tools. In addition Euclid joined the Utility Settlement Coin, a collaboration between UBS, BNY Mellon, Deutsche Bank, Santander and Clearmatics, which is exploring future implementation of an asset-backed digital cash instrument.

ICAP Global Broking Business

The ICAP Global Broking Business is active in wholesale markets across all asset classes as shown below:

For the six months ended 30 September 2016, the trading performance of IGBB benefitted from volatility after the Brexit referendum. This was partly offset by a combination of the ongoing structural and cyclical factors such as historically low interest rates and bank deleveraging which impacted trading activity. Excluding the closed desks and on a constant currency basis, Global Broking revenue remained flat against the prior year.

Trading operating profit grew strongly to £55 million resulting in an operating margin of 14% (H1 2015/16 - 12%). The increase in the operating margin versus last year reflects the benefit of a change in the product mix and the benefits of the 2014/15 cost saving programme that are now fully coming through. In addition, the broker compensation pay-out ratio improved to 49.6% for the period (H1 2015/16 - 50.4%). This has reduced from 57% in FY2013/14.

Rates

The rates business comprises interest rate derivatives, government bonds, repos and financial futures. Rate products contribute the largest share of IGBB's revenue of which interest rate derivatives represent the most significant component. For the six months ended 30 September 2016, revenue increased by 9% on a reported basis.

Trading activity in interest rate derivatives benefitted from the volatility created by the Brexit referendum, the reduction of interest rates in the UK and the reinstatement of quantitative easing by the Bank of England. In addition, trading activity in dollar interest rate derivatives was fuelled by speculation around US interest rates and increased issuance. In contrast, reduced liquidity following the US Federal Reserve's decision not to change US interest rates dampened US government bonds activity.

The relative value desk continues to grow and expand its footprint and has benefitted from US interest rate speculation and increased market share.

Commodities

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

For the six months ended 30 September 2016, revenue increased by 4% on a reported basis. An increase in trading activity in metals and North American electricity was more than offset by subdued conditions in alternative fuels and softs and agriculture.

In October 2016, initial completion documents were signed to transfer ICAP's London-based desks responsible for providing broking services in relation to fuel oil, crude oil, middle distillates, oil futures and options, along with ancillary New York-based and Singapore-based desks to INTL FCStone Ltd. Final completion is expected by the end of the 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 six months ended 30 September 2016, revenue increased by 7%.

Increased market confidence, corporate earnings and government commitment resulted in an improvement in the Brazil business performance whilst Latin American products were boosted by local currency appreciation and speculation around Colombian interest rates. Central and Eastern European markets have seen an increase in activity due to post Brexit volatility. High activity in Turkish products was driven by political instability and the recent failed military coup. Asian products have experienced challenging conditions, with the CNH forwards market lacking volatility due to the tightening of the onshore short term rate. Matching sessions have driven improvement in emerging markets.

Equities

The Equities business principally comprises equity derivatives. For the six months ended 30 September 2016, revenue increased by 2% due to uncertainty around Brexit and continued low interest rate environment affecting global equity markets.

FX and money markets

The FX and money markets business comprises spot, forwards and cash products. For the six months ended 30 September 2016, revenue increased by 6%.

FX volatility remained at low levels due to compressed volumes and a contracting market. FX volumes benefitted from volatility around the time of the Brexit referendum however, continue to be impacted by low risk appetite and the low interest rate environment.

Credit

The credit business comprises corporate bonds and credit derivatives. Revenue for the six months ended 30 September 2016 decreased by 11% as balance sheet constraints, resulting in low bank bond inventory, continue to reduce secondary market activity in all regions.

Scrapbook, an e-solution for the corporate bond market, continues to gain traction. In addition, CrossTrade, ICAP's first buy side offering launched in December 2015, has now been launched in the Americas in addition to EMEA.

Summary consolidated income statement

Trading profit before tax

Continuing trading profit before tax for the six months ended 30 September 2016 was down £4 million (decreased by 7%), mainly driven by a £3 million increase in net finance expense on the prior year as there were increased drawdowns on the Revolving Credit Facility (RCF) and an increase in the Japanese yen loan.

Tax

The Group's trading Effective Tax Rate (ETR) is 19% (H1 2015/16 - 17%) with continuing trading ETR at 16% and discontinued trading ETR 22%. Excluding discrete prior year tax adjustments, the Group's trading ETR and continuing trading ETR are both 22%.

Trading EPS

Trading EPS (basic) increased by 5% to 13.7p (30 September 2015 - 13.0p), reflecting an increase in the trading profit for the period.

Acquisition and disposal costs

Acquisition and disposal costs in the period in relation to continuing operations were an income of £7 million (H1 2015/16 expense - £18 million) before a tax credit of £3 million (H1 2015/16 tax credit - £12 million). The favourable movement of £25 million in Group's acquisition and disposal costs before tax on the prior period is attributable to £19 million fair value gain arising from increased investment in ENSO and a £6 million decrease on the amortisation of intangibles arising on consolidation.

There were no discontinued acquisition and disposal costs during the period (H1 2015/16 - £nil).

Exceptional items

Exceptional items in relation to continuing operations in the period was a gain of £8 million (H1 2015/16 - £nil), comprising a £5 million release of an onerous lease provision as previously vacated office space has now been sublet and a £3 million income from an insurance recovery relating to past legal costs.

There were £22 million (H1 2015/16 - £nil) of exceptional items costs recognised in the period relating to discontinued operations, which is £19 million (H1 2015/16 - £nil) after tax. The discontinued exceptional costs represent Transaction-related costs including £12 million cost of sale and separation costs that were incurred and £10 million provided at 30 September 2016.

The provision at 30 September 2016 does not include certain additional Transaction-related costs that are anticipated to be incurred before the Transaction completes as they do not meet the provision recognition criteria at 30 September 2016.

Free cash flow

Trading free cash flow generated during the period was £40 million, a conversion rate of 45% (H1 2015/16 - 86%). The reduced conversion of £40 million (when compared to trading profit for the period of £89 million) in the period is primarily explained by a £50 million adverse movement in working capital.

The first half cash conversion has always been lower due to seasonality. H1 2015/16 conversion of 86% included £36 million favourable impact from short-term timing differences driven by movements in restricted funds and initially unsettled trades at the balance sheet date.

Balance sheet

The Group's net assets at 30 September 2016 were £1,150 million, £132 million higher than the 31 March 2016 position (£1,018 million), principally reflecting profit for the period of £86 million and a £144 million gain for the retranslation of foreign currency net assets driven by the weakening of sterling during the period. This was partially offset by the £100 million payment of the 2015/16 final dividend.

Debt

The Group's overall funding position remains strong given the maturity profile of its committed financings, the manageable level of gross debt and the committed undrawn headroom under its core credit facility.

Short-term borrowings are comprised of JPY 18 billion Japanese yen loan (equivalent to £137 million), which matures in January 2017 and £16 million overdrafts related to short-term timing differences on trade settlements. At 30 September 2016, the Group had committed undrawn headroom under its core credit facility of £277 million (31 March 2016 - £425 million, 30 September 2015 - £253 million).

€100 million of the 5 year €350 million senior notes and €15 million of the 10 year senior notes are designated as net investment hedges. The remaining foreign currency debt is swapped to GBP using a combination of long-term and short-term FX contracts.

As at 30 September 2016 the Group's long-term issuer default rating on senior debt remained unchanged from 31 March 2016 at BBB (stable) with Fitch and Baa3 (stable) with Moody's.

Net debt at 30 September 2016 of £245 million has increased by £97 million on the 31 March 2016 position of £148 million. The increase in the net debt position resulted from usual seasonality of major cash flows including the dividend payment of £100 million in July 2016, £42 million to acquire a subsidiary and available-for-sale investment interests in emerging financial technology firms in PTRI and an £11 million payment in relation to exceptional expenses. Trading free cash flow for the period of £40 million and £16 million FX gain on net cash partially offset the adverse movement on the net debt position.

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 30 September 2016, ICAP had £1 billion (31 March 2016 - £0.8 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 absence of a waiver the Group's consolidated regulatory capital requirement would increase by approximately £0.5 billion.

Following the disposal of IGBB, it is expected that the retained Group will not be subject to consolidated regulatory capital requirements. NEX will have 7 regulated subsidiaries compared to the current 39 regulated subsidiaries (which includes IGBB).

Risk

Details of the Group's approach to risk management and its risk profile were set out on pages 16 to 21 of the 2016 Annual Report. As of 30 September 2016, the directors have reviewed the Group's risk profile in the context of current market conditions and the outlook for the remaining six months of the financial year. In addition, they have reconsidered previous statements made on risk appetite, risk governance and internal controls and do not consider there to be any significant changes since the 2016 Annual Report.

Directors' statement of responsibilities

The directors confirm that, to the best of their knowledge, this condensed set of financial statements has been prepared in accordance with IAS34 'Interim Financial Reporting' as adopted by the European Union, and that the interim management report and the condensed set of financial statements herein includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

· an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related party transactions in the first six months of the financial year and any material changes in the related party transactions described in the 2016 Annual Report.

Going concern basis

The financial statements are prepared on the going concern basis, as the directors are satisfied that the Group has the resources to continue in business for the foreseeable future. In making this assessment, the directors have considered a wide range of information relating to present and future conditions, including the Group's profitability, liquidity requirements, plans and financing arrangements.

Changes in directors

A list of current directors is maintained on the ICAP plc website www.icap.com.

By order of the board

Stuart Bridges

Group Finance Director

16 November 2016

Consolidated income statement

The consolidated Financial Statements, including accompanying notes, were approved by the board on 16 November 2016 and were signed on its behalf by:

Stuart Bridges

Group Finance Director

Cash flows of discontinued operations

The consolidated statement of cash flow above includes discontinued operations. Cash inflows from operating activities of £6 million, cash outflows from investing activities of £5 million and cash outflows from financing activities of £1 million were incurred in the period relating to the discontinued business.

Notes to the Financial Statements

(a) Basis of preparation

The condensed consolidated financial statements for the half year to 30 September 2016 do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The condensed consolidated financial statements are unaudited but have been reviewed by the auditors, PricewaterhouseCoopers LLP, and their report is set out at the end of this document. The 2016 Annual Report has been filed with the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

The condensed consolidated financial statements for the half year to 30 September 2016 have been prepared in accordance with the DTR4.2 of the FCA and with IAS34 'Interim Financial Reporting' as issued by the International Accounting Standards Board (IASB) and endorsed by the European Union (EU). These condensed consolidated financial statements should be read in conjunction with the 2016 Annual Report which was prepared in accordance with IFRSs as issued by the IASB and endorsed by the EU at that date.

The accounting policies applied in the preparation of the condensed consolidated financial statements are consistent with those applied in the preparation of the 2016 Annual Report.

The preparation of financial information requires the use of estimates and assumptions about future conditions. The use of available information and the application of judgement are inherent in the formation of estimates; actual results in the future may differ from those reported. The significant judgements and estimates applied by the Group in these consolidated financial statements have been applied on a basis consistent with the 2016 Annual Report.

In November 2015, the Group announced that it had entered into the Transaction which will, when completed, involve the disposal of IGBB to Tullet Prebon. The disposal is subject to approvals from regulatory authorities across multiple 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.

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 primary statements

The Group maintains a columnar format for the presentation of its consolidated income statement. The columnar format enables the Group to continue its practice of improving the understanding of its results by presenting its trading profit. This is the profit measure used to calculate trading EPS and is considered to be the most relevant as it better reflects the Group's trading earnings.

Profit before acquisition and disposal costs and exceptional items are reconciled to profit before tax on the face of the consolidated income statement. On the face of the consolidated income statement basic and diluted EPS have been disclosed.

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.

(b) Future accounting developments

At 30 September 2016, the following standards have been issued by the IASB which are not effective for these consolidated financial statements:

· In July 2014, the IASB issued IFRS9 'Financial Instruments', which will replace IAS39 'Financial Instruments: Recognition and Measurement'. The standard will become effective for annual periods beginning on or after 1 January 2018. ICAP intends to adopt IFRS9 for its financial statements for the year ended 31 March 2019;

· In May 2014, the 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 2018. ICAP intends to adopt IFRS15 for its financial statements for the year ended 31 March 2019; and

· In January 2016, the IASB issued IFRS16 'Leases', which will replace IAS17 'Leases' and other related interpretations on leases. The standard will become effective for annual periods beginning on or after 1 January 2019. ICAP intends to adopt IFRS16 for its financial statements for the year ended 31 March 2020.

The basis of identifying segments and measuring segmental results is set out on page 89 of the 2016 Annual Report.

* Trading EBIT is the trading profit before deducting net finance cost and tax.

** Given the Group's debt financing arrangements are managed centrally through a treasury function, ICAP plc Board does not incorporate net finance cost in the assessment of the segments' performance.

*** Trading EBITDA is the trading profit before deducting net finance cost, tax and amortisation and depreciation charges. Segments' trading EBITDA best represents the cash generated from their ongoing operations.