20th Nov 2007 07:01
ICAP PLC20 November 2007 Half Year Report to 30 September 2007 London - 20 November 2007 ICAP plc (IAP.L), the world's premier interdealer broker, today announced itsreport for the half year ended 30 September 2007. Highlights: 6 months to 6 months to Increase 30 September 2007 30 September 2006 £m £m % Revenue 626.2 542.8 15Operating expenses1 472.6 431.1 10Profit2 161.5 120.8 34Profit before taxation - statutory 141.1 104.1 36EPS (basic) 12.6 9.6 31EPS (adjusted) 15.4 12.1 27Dividend per share 3.7 3.0 23 • Record revenues, profit and adjusted EPS following continued strong growth across the Group • Group revenue rose by 15% to £626.2m and profit2 by 34% to £161.5m • Electronic revenue increased by 46% to £125.9m and operating profit3 by 107% to £47.1m, with underlying profit4 increased by 95% • The Group's operating profit3 margin rose to a record 26% • Average daily electronic trading volume in the half year up 27% to $818 billion • Significant investment in the Group's electronic broking systems enabled those systems to handle record volumes • Strong free cash flow of £108.6m. After spending £79.4m on acquisitions and dividends ICAP has net cash of £41.2m • Interim dividend per ICAP share of 3.7p Michael Spencer, Group Chief Executive Officer, said "ICAP delivered outstandingresults in busy markets during most of the first half to the year, despitesignificantly adverse exchange rates, benefiting from higher volatility in theinterest rate, foreign exchange, energy, emerging and credit markets. Theincreased activity in July and August, initially as a result of the instabilityin the sub-prime mortgage market in the US, was particularly noticeable as thosemonths had been very slow in 2006. Both electronic and voice broking businessesfelt the positive impact of these higher levels of activity and we benefitedfrom the substantial operating leverage in the electronic business. The newer growth areas that we have been focussing on; energy, creditderivatives, emerging markets, equity derivatives and transport, all grew fasterthan ICAP's business overall. The new markets and businesses that ICAP hasintroduced during the past three years together accounted for 19% of grouprevenue during the first half of the year. Our markets continue to display strong, long-term structural growth. Wecurrently estimate that the underlying rate of growth of industry revenues, inthe medium term, may be 10% or possibly higher, though there are periods whenvolatility and consequently volumes in our markets can be very high. The recently announced acquisition of Traiana, Inc. is expected to closeshortly. Post-trade services are an area where technology innovation is creatingexciting new business opportunities for ICAP and the acquisition of Traiana willhelp us to capitalise on the significant growth in this area. During the past eight years we have built a very strong competitive position inour markets; both voice and electronic. We have the resources, both people andfinancial, to drive further significant organic growth of our business and makeappropriate acquisitions." Notes 1 Excludes amortisation and impairment of intangibles arising on consolidation and exceptional items. 2 Profit is defined as pre-taxation profit before amortisation and impairment of intangibles arising on consolidation and exceptional items. 3 Operating profit excluding amortisation and impairment of intangibles arising on consolidation and exceptional items. 4 Operating profit per note 3 and adjusted to exclude the impact of foreign exchange and acquisitions. There will be a briefing for analysts and shareholders at 09:30 GMT on Tuesday20 November 2007 at 2 Broadgate, London EC2M 7UR. An audiocast of thepresentation made to analysts at 09:30 GMT on Tuesday 20 November 2007 will beavailable on the web site, www.icap.com at 13:30 GMT on Tuesday 20 November2007. It will remain on the web site for six months. A further conference callwill be held at 14:30 GMT/09:30 EST for investors and analysts based in NorthAmerica. For dial in details and a copy of the presentation please contactMaitland on (44) 20 7379 5151. Contacts: Michael Spencer Group Chief Executive Officer (44) 20 7050 7400Mike Sheard Director of Corporate Affairs (44) 20 7050 7103Neil Bennett Maitland (44) 20 7379 5151 ICAP plc Half Year Report to 30 September 2007 Active markets since June provided a strong performance in the first half ofICAP's financial year resulting in a record profit of £161.5m before taxation,amortisation and impairment of intangibles arising on consolidation andexceptional items; this represents a 34% increase over the prior year. On astatutory basis, profit before taxation was £141.1m for the half year ended 30September 2007 (2006 - £104.1m). We continue to believe that profit beforetaxation, amortisation and impairment of intangibles arising on consolidationand exceptional items better reflects the Group's underlying year-on-yearperformance. This measure is reconciled to profit before taxation on the face ofthe consolidated income statement. The majority of ICAP's revenue is dollar denominated and therefore the weakeningof the dollar against sterling had a significant adverse impact on ICAP'sreported results. Profit before tax would have been approximately £9m higher hadexchange rates remained the same as the comparative period. Strategy Our overall vision remains constant: to create the major global "exchange" forOTC financial and energy products and to build a global brand in wholesalefinancial services. Our strategic goals are clear and consistent: to be the leading intermediary inthe wholesale OTC markets by a clear margin. Our aim is to have at least a 35%share of overall market revenue and generate 50% of our profit from electronicbroking. This year we have made significant progress towards these goals byincreasing our share of the interdealer market dollar revenues and generating29% of our operating profit* from electronic broking. We have built the leading voice broking business together with a verysignificant technology-based business with an extensive global network. Webelieve that this combination is very valuable. The combined global networkcovers more than 6,000 workstations in 50 countries on more than 1,000 dealing floors. Review of Operations ICAP delivered outstanding results in busy markets during most of the first halfto the year, despite significantly adverse exchange rates, benefiting fromhigher volatility in the interest rate, foreign exchange, energy, emerging andcredit markets. The increased activity in July and August, initially as a resultof the instability in the sub-prime mortgage market in the US, was particularlynoticeable as those months had been very slow in 2006. Both electronic and voicebroking businesses felt the positive impact of these higher levels of activityand we benefited from the substantial operating leverage in the electronicbusiness. Our operating leverage was clearly demonstrated during this active period.Whilst revenues grew by 15%, cost growth was restricted to 10%. The vastmajority of this growth comprised acquisitions, investments in new business andbroker bonuses; net operating expenses* grew by only two percent. Staffcompensation remained at 57% of revenue in the period. The newer growth areas that we have been focussing on; energy, creditderivatives, emerging markets, equity derivatives and transport, all grew fasterthan ICAP's business overall. The new markets and businesses that ICAP hasintroduced during the past three years together accounted for 19% of grouprevenue during the first half of the year. To meet all the competing and divergent demands for technology support we haveseparated the delivery of technology for our voice and electronic businesses. Weare continuing the process of squeezing out more efficiency from our coreinfrastructure from better sourcing, network consolidation and data centreconsolidation. Expenditure on technology has remained steady at 10% of revenue. ICAP completed the acquisition in May 2007 of J. E. Hyde, a ship broker. Thebusiness, including our previous joint venture in freight derivatives, has had avery good half-year. The joint venture formed in February 2007 between ICAP and Jardine LloydThompson Group plc combines JLT's re-insurance and 'cross-market' capabilitieswith ICAP's capital markets' capabilities in order to develop a businessproviding capital markets' solutions to the re-insurance market. InitiallyICAP-JLT is focussing on broking catastrophe products including CatastropheSwaps and secondary market catastrophe bond securities. Further products, suchas longevity / mortality derivatives and other indices and financial instrumentswill be developed in line with market demand. ICAP has brokered the first derivative transaction based on the ResidentialProperty Index (RPX) in the United States. Derivative transactions on the RPXindex, created by Radar Logic, allow investors to hedge risk on residentialproperty prices in 25 major cities across the United States. Our joint venture in Shanghai, CFETS-ICAP, began voice broking operations on 13September 2007 in money, bond and derivative products in both the Renminbi andinternational markets. On 10 October 2007, the Group announced the acquisition of Traiana, Inc, aprovider of automated post-trade services to financial institutions for US$238mpayable in cash and US$9m of ICAP shares. The acquisition is expected to closeshortly. Post-trade services are an area where our technology innovation is creatingexciting new business opportunities for ICAP and the acquisition of Traiana willhelp us to capitalise on the significant growth in this area. More efficientpost trade processing increases the velocity of trading in our markets andfacilitates the adoption of electronic trading. ICAP's other investments inpost-trade services, Reset and TriOptima, have continued to perform well. Regional Summary Europe £m Headline Growth Underlying Growth Revenue 297.2 19% 16%Operating profit* 82.3 37% 37% Europe was the most profitable division with the highest operating profit*margin. Both voice and electronic broking contributed to a very good performanceduring the period with strong revenue growth. Our interest rate derivativebusiness responded to the much more active conditions in June, July and August,significantly outpacing the previous year. The fastest revenue growth was incredit derivatives, with over two thirds traded electronically. Demand forcorporate bonds remained subdued. Energy products grew strongly and had theadditional benefit of the shipping acquisition. The emerging markets businessescontinued to extend their product and customer coverage. Equities and equityderivatives performed in line with the previous year. The Americas £m Headline Growth Underlying Growth Revenue 249.8 11% 18%Operating profit* 61.8 22% 32% Both revenue and profit increased on a headline basis in the Americas, withstrong underlying growth. The overall operating profit* margin of the regionincreased to 25%. The recent credit crisis, stimulated by the tensions in thesub-prime mortgage market, created a "flight to quality" which benefited USTreasury volumes. The tightness in the overnight and short dated money marketsmeant that growth in activity slowed in those products. Emerging marketactivity, driven by our expansion in Latin American products, was veryencouraging. Asia Pacific £m Headline Growth Underlying Growth Revenue 79.2 15% 12%Operating profit* 16.8 102% 45% The Asia Pacific region showed a significant improvement in profit, principallyas a result of EBS in the foreign exchange market and Reset in the interest ratemarket with their attractive margins. The voice broking businesses in a numberof centres are continuing to rebuild in a highly competitive market. Business Performance Voice division £m Headline Growth Underlying Growth Revenue 480.3 10% 14%Operating profit* 102.8 20% 24% Voice broking volumes benefited from the higher volatility which began in thecredit markets and produced a very solid performance from voice broking withoperating profit* 20% higher than the previous year. Voice revenue per voicebroker grew by 9%. With the return of a positive yield curve in many markets,interest rate derivatives markets showed significant gains and this activitylooks set to continue. The credit markets have also been very active, notably insingle name credit default swap (CDS) and index products where we saw a 49%increase in revenues. The energy markets, which are not closely correlated withthe volatility in the financial markets, have also continued to be very active. Our focus has been on the faster growing areas in energy, credit derivatives,emerging markets and equity derivatives where we have increased headcount by 140staff in the last year and seen significant overall revenue growth. Electronic division £m Headline Growth Underlying Growth Revenue 125.9 46% 27%Operating profit* 47.1 107% 95% Accelerating the growth of our electronic broking business is a key priority forICAP this year and for the foreseeable future. The growth of ICAP's electronicbroking business accelerated in the first half. A combination of increasedelectronic volumes and the operating leverage referred to earlier drove profitup by 107% compared with the first half of 2006. We remain on track to deliverthe $58 million synergies we identified following the acquisition of EBS. The division now generates 29% of Group operating profit* from 20% of Grouprevenue. ICAP has a medium-term target to increase the share of operating profit* coming from electronic broking to 50%. The electronic broking margin in the first half of the year increased to 37% from 26% in same period in 2006. In May, John Nixon was appointed CEO of ICAP's Electronic Broking division (IEB)and David Rutter, Deputy CEO. Together with the senior management team and allthe IEB staff, they have been successful in delivering this growth, as well asworking on the incremental opportunities we envisage for the business. Average daily electronic Spot Foreign Exchange volumes over the half-year wereUS$180 billion (which includes US$1 billion in precious metals), an increase of21% compared with the same period in the previous year. In US Treasury productsaverage daily volumes rose 23% to US$146 billion during the same period. US andEuropean repo average daily volumes also increased significantly, both by 30%. We have seen significant growth in algorithmic trading and EBS Prime, and haveintroduced a range of new currencies including the Russian rouble and Turkishlira, Sterling/Yen and Australian dollar/New Zealand dollar together with newmetals like platinum and palladium. ICAP currently offers electronic trading inalmost 30 currencies and precious metals as well as 35 currency pairs. As marketleaders we need to continually invest in the latest technology. As an example,we have just completed an upgrade of all of our servers to ultra highperformance Linux hardware. In the fixed income markets, US mortgage backed securities and European creditderivatives volumes have grown significantly during the half-year. Over half ofthe volume traded is completed electronically. Information division £m Headline Growth Underlying Growth Revenue 20.0 10% 3%Operating profit* 11.0 6% -5% ICAP is the source of global market information and commentary for professionalsin the international financial markets. Our market data offers real-time,end-of-day and historical market data sourced from our global interdealertrading platforms, providing authoritative and comprehensive information onglobal markets across a broad range of asset classes. With the continuedconsolidation in financial markets it is essential that ICAP continues toposition itself successfully as the main source of data for our OTC markets. Thegrowth of our data business in this market environment is focussed on sellingcurrent and new data sets and creating optional services, with a specific focuson higher valued data delivery - both alone and in partnership with specialistservices providers. Markets To give our investors a greater understanding of the growth drivers of theGroup's business, ICAP discloses additional revenue information by productgroup. These are interest rates, credit, energy, foreign exchange, equities,emerging markets and information. These groups are aligned with the way ourcustomers manage their business. Revenue Growth compared with1H Proportion of ICAP £m 2006 revenues Interest Rates 252.5 +9% 40% Credit 74.5 +24% 12% Energy 61.4 +33% 10% ForeignExchange 92.7 +35% 15% Equities 62.6 +2% 10% EmergingMarkets 62.5 +12% 10% Information 20.0 +10% 3% 626.2 +15% 100% Balance sheet and cash flow The Group converted all of its operating profit to cash despite the impact ofexceptionally high trading volumes on customers' back offices. ICAP's free cashflow grew to £108.6m (2006 - £51.6m). Cash from operations grew by £65.8m to£184.6m. Of this increase £52.2m came from operating cash, the balancereflecting the year on year impact of initially unsettled trades and exceptionalitems. Offsetting this, cash tax and net interest payments increased by £6.2mand capital expenditure by rose by £2.8m to £19.6m. The very strong cash flow has meant that despite dividends paid in the periodincreasing by 32% and the investment of £13.9m in acquisitions in the six monthperiod, as at 30 September ICAP increased its net cash position to £41.2m(September 2006 - net debt £70.4m). Dividend In the normal course of events, ICAP's interim dividends are calculated at 30%of the previous year's full year dividend. As a result, an interim dividend of3.7 pence per share (2006: 3.0 pence) covering the six-month period to 30September 2007 will be paid on 22 February 2008 to shareholders on the registeron 25 January 2008. Exceptional items ICAP continues to recognise the EBS integration costs as exceptional andincurred a charge of £5.9m in the half year to 30 September 2007. As disclosed in the preliminary announcement in May, a sub-custodian made a postsettlement adjustment debiting ICAP's account for a total of £22.5m withoutnotice or our consent. ICAP continues to believe that this adjustment iserroneous and has formally requested the repayment of the money. After takingfurther legal advice, ICAP is in the process of drafting legal proceedings torecover this money and reserves its right to commence litigation. As a result ofthe need to resort to litigation to recover the debt relating to the postsettlement adjustment described above, ICAP has fully provided against this debt(£12.2m after offsetting cost recoveries). Meanwhile, since April, ICAP has continued to realise substantial profit fromthe disposal of exchange shares and seats which are no longer required. Inaddition ICAP has received litigation settlements in respect of disputes inAustralia and Hong Kong. A total of £14.8m has been recognised as exceptional income. Outlook Our markets have continued to be very active since September with electronicbroking volumes in October compared with the previous year up by 25% in USTreasury products, in US Repo up by 19%, European repo an increase of 23% and inspot foreign exchange reaching an average daily volume of US$200 billion a day,up by 49%. Activity in our markets is driven by the volatility generated from a broad rangeof influences, over which we have no control. Each market responds to theseinfluences in a different way, demonstrating ICAP's advantage in having a verybroad product and wide geographic base. An important influence on marketactivity is the continuing commitment of capital and staff to these markets byboth the banks and hedge funds. Our markets continue to display strong, long-term structural growth. Afterreviewing the activity of the five largest interdealer brokers in our marketduring the first half of 2007 we estimate that there was 21% growth in overallmarket size in US dollars terms. This was ahead of the underlying annual rate ofgrowth of industry revenues which we estimate, in the medium term, may be 10%and possibly higher. Although the origins of recent volatility have their heart in the creditmarkets, market activity growth has been widely spread across the foreignexchange, interest rate, equity and emerging markets. In the energy markets,where the growth drivers are generally uncorrelated with the financial markets,growth in activity levels has continued to be impressive. Steeper yield curves,the higher price of credit risk and continuing disruption in the money marketssuggest that this period of increased activity may continue for some time,though not necessarily at the very high levels of the last few months. Profit (before tax, amortisation and impairment of intangibles arising onconsolidation and exceptional items) for the financial year ending 31 March 2008is anticipated to be slightly higher than the average of analysts' currentforecasts# despite allowing for the adverse impact of the US dollar/sterlingexchange rate to date. Our more immediate aims are to: • Achieve secular growth from increasing market share • Deliver accelerated growth in electronic broking revenues and profit margins • Diversify voice business further into new asset classes • Provide more wholesale market infrastructure and post-trade services In addition to operating multilateral trading facilities under MiFiD, we believethat there are opportunities in several markets to offer trading on an "ICAPExchange". As a result we intend to apply to the FSA for the additional statusof a regulated market under MiFiD so that we can launch new products in marketslike emissions, energy and transport. During the past eight years we have built a very strong competitive position inour markets; both voice and electronic. We have the resources, both people andfinancial, to drive further organic growth of our business and make appropriateacquisitions. *Operating profit excludes amortisation and impairment of intangibles arising onconsolidation and exceptional items. Underlying additionally excludes the impactof foreign exchange and acquisitions. # The current forecasts for ICAP plc pre-tax profits referred to in thisannouncement are based on forecasts of profit before tax, amortisation andimpairment of intangibles arising on consolidation and exceptional itemsprovided by 10 equity analysts. The average of those forecasts for the year toMarch 2008 is £299m compared with the results for the year to March 2007 whenICAP plc's profit was £252m. About ICAP ICAP is the world's premier voice and electronic interdealer broker and thesource of global market information and commentary for professionals in theinternational financial markets. The Group is active in the wholesale markets ininterest rates, credit, energy, foreign exchange and equity derivatives. ICAPhas an average daily transaction volume in excess of $1.5 trillion, more than50% of which is electronic. ICAP plc was added to the FTSE 100 Index on 30 June2006. For more information go to www.icap.com Consolidated income statement Unaudited 6 months ended Unaudited 6 months ended Audited year ended 30 September 2007 30 September 2007 31 March 2007 Before Before amort- amort- isation isation Amorti- and Amorti- and Amorti- sation impairment sation impairment sation Before and of and of and amortisation impair- intangibles impair- intangibles impair- and ment arising ment arising ment impairment of of on of on of intangibles intang- consoli- intang- consoli- intang- arising on ibles dation ibles dation ibles consolidation arising Excep- and arising Excep- and arising Excep- and on tional excep- on tional excep- on tional exceptional consol- items tional consol- items tional consol- items items idation (note 3) items idation (note 3) items idation (note 3)* Note £m £m £m £m £m £m £m £m £m £m £m £m Revenue 2 626.2 - - 626.2 542.8 - - 542.8 1,106.3 - - 1,106.3 Operatingexpenses (472.6) (16.2) (18.1) (506.9) (431.1) (13.4) (2.5) (447.0) (874.5) (40.9) (11.3) (926.7) Other income 7.3 - 14.8 22.1 7.4 - - 7.4 15.9 - 16.1 32.0 Operatingprofit 2 160.9 (16.2) (3.3) 141.4 119.1 (13.4) (2.5) 103.2 247.7 (40.9) 4.8 211.6 Finance income 10.1 - - 10.1 8.5 - - 8.5 23.0 - - 23.0 Finance costs (12.1) - - (12.1) (10.7) - - (10.7) (25.1) - - (25.1) Share ofprofits ofassociates(after tax) 2.6 (0.9) - 1.7 3.9 (0.8) - 3.1 6.0 (1.7) - 4.3 Profitbefore taxation 161.5 (17.1) (3.3) 141.1 120.8 (14.2) (2.5) 104.1 251.6 (42.6) 4.8 213.8 Taxation 4 (57.1) 0.3 1.9 (54.9) (44.9) - 1.4 (43.5) (92.1) 3.3 0.7 (88.1) Profit forthe period 104.4 (16.8) (1.4) 86.2 75.9 (14.2) (1.1) 60.6 159.5 (39.3) 5.5 125.7 Attributable to: Equityholders of theparent 97.7 (16.2) (1.4) 80.1 75.2 (14.2) (1.1) 59.9 155.1 (39.3) 5.5 121.3 Minorityinterests 6.7 (0.6) - 6.1 0.7 - - 0.7 4.4 - - 4.4 104.4 (16.8) (1.4) 86.2 75.9 (14.2) (1.1) 60.6 159.5 (39.3) 5.5 125.7 Earningsper ordinaryshare - basic 6 12.6p 9.6p 19.3p- diluted 6 12.3p 9.3p 18.8p Interimdividendper share 5 3.7p 3.0p 3.0p * Exceptional items for the prior year have been reanalysed to show income and expense items separately where the items are unrelated Consolidated statement of recognised income and expense Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 September 30 September 31 March 2007 2006 2007 £m £m £mRevaluation ofavailable-for-saleinvestments 0.3 0.2 3.5 Net movement on cashflow hedges (1.6) 0.8 1.8 Actuarial losses onretirement benefitobligations - - (0.2) Exchange adjustmentson net investmentsin overseassubsidiaries (18.8) (26.1) (52.7) Revaluation gainsrealised in theperiod (11.3) - (5.9) Net current tax onitems recognised inequity (1.1) (1.0) (0.1) Net deferred tax onitems recognised inequity 2.9 (4.3) 4.3 Income and expenserecognised directlyin equity (29.6) (30.4) (49.3) Profit for theperiod 86.2 60.6 125.7 Total recognisedincome and expensefor the period 56.6 30.2 76.4 Total recognised income and expense for the period attributable to: Equity holders ofthe parent 50.5 29.5 72.0 Minority interests 6.1 0.7 4.4 56.6 30.2 76.4Consolidated balance sheet Unaudited as Unaudited as Audited as at at at 30 September 30 September 31 March 2007 2006 2007 Note £m £m £m Assets Non-current assets Intangible assetsarising onconsolidation 8 694.2 714.9 681.8 Intangible assetsarising fromdevelopmentexpenditure 30.1 19.5 21.5 Property, plant andequipment 50.5 62.7 55.9 Investment inassociates 29.1 39.2 29.8 Deferred tax assets 33.1 32.1 33.3 Trade and otherreceivables 11.8 4.6 7.9 Available-for-saleinvestments 22.5 32.2 26.6 871.3 905.2 856.8 Current assets Trade and otherreceivables 7 54,971.3 53,897.4 83,804.3 Available-for-saleinvestments 9.9 11.5 20.0 Cash and cashequivalents 313.6 292.6 323.3 55,294.8 54,201.5 84,147.6 Total assets 56,166.1 55,106.7 85,004.4 Liabilities Current liabilities Trade and otherpayables 7 (54,987.7) (53,834.5) (83,794.9) Short-termborrowings andoverdrafts (17.5) (67.9) (22.9) Tax payable (67.2) (43.9) (71.1)Short-termprovisions (12.0) (7.9) (10.0) Obligations underfinance leases - (0.1) (0.1) (55,084.4) (53,954.3) (83,899.0) Non-current liabilities Trade and otherpayables (39.6) (57.5) (27.8) Long-term borrowings 9 (254.9) (295.1) (280.9) Retirement benefitobligations (1.5) (2.2) (1.4) Tax payable - (7.9) - Deferred taxliabilities (0.2) (9.4) (0.2) Long-term provisions (1.0) (2.6) (1.4) (297.2) (374.7) (311.7) Total liabilities (55,381.6) (54,329.0) (84,210.7) Net assets 784.5 777.7 793.7 Equity Capital and reserves Called up sharecapital 64.9 64.8 64.9 Share premiumaccount 397.2 394.7 397.2 Other reserves 33.5 38.8 43.7 Retained earnings 266.4 264.9 275.4 Equity attributableto equity holders ofthe parent 10 762.0 763.2 781.2 Minority interests 10 22.5 14.5 12.5 Total equity 784.5 777.7 793.7 Consolidated cash flow statement Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 September 30 September 31 March 2007 2006 2007 Note £m £m £m Cash flows fromoperating activities 11 (a) 125.8 66.2 217.3 Cash flows from investing activities Dividends receivedfrom associates 2.4 2.2 3.9 Other equitydividends received 1.6 - - Payments to acquireproperty, plant andequipment (5.4) (14.6) (18.3) Intangibledevelopmentexpenditure (14.2) (2.2) (12.8) Net (payments) /receipts in respectof available forsale investments (0.1) 2.2 (3.4) Acquisition ofinterests inbusinesses, net ofcash acquired (7.6) (274.2) (282.3) Acquisition ofassociates (6.3) (8.1) (7.9) Net cash flows frominvesting activities (29.6) (294.7) (320.8) Cash flows from financing activities Dividends paid tominority interests (6.4) (2.0) (2.8) Equity dividend paid (59.1) (47.6) (66.7) Payments to acquiretreasury shares (8.6) - (9.0) Payments to acquireown shares (5.3) (4.0) (5.1) Proceeds from issueof ordinary shares - 6.3 8.7 Capital element offinance leasepayments (0.1) (0.1) (0.1) Loan repayments (16.2) - - Funds received fromborrowing, net offees - 177.8 167.1 Net cash flows fromfinancing activities (95.7) 130.4 92.1 Exchange adjustments (4.8) (17.0) (28.0) Net decrease in cashand cash equivalents (4.3) (115.1) (39.4) Net cash and cashequivalents atbeginning of period 11 (b) 300.4 339.8 339.8 Net cash and cashequivalents at endof period 11 (b) 296.1 224.7 300.4 Notes to the financial statements 1 Basis of preparation The financial information for the 6 months to 30 September 2007 does not constitute statutory financial information as defined in Section 240 of the Companies Act 1985. The financial information is unaudited but has been reviewed by the auditors, PricewaterhouseCoopers LLP, and their report is set out on at the end of this report. The statutory accounts for the year ended 31 March 2007 have been filed with the Registrar of Companies and the auditors issued an unqualified report thereon which did not contain any statement under Section 237 of the Companies Act 1985. The consolidated financial information for the 6 months to 30 September 2007 has been prepared in accordance with the Disclosure and Transparency Rules (DTR) of the Financial Services Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union (EU). This financial information should be read in conjunction with the Annual Report for the year ended 31 March 2007 which was prepared in accordance with IFRS as adopted by the EU. The Group has reanalysed its prior period exceptional items to show income and expenses separately. There is no overall effect on the results or net assets of the Group. The preparation of the interim financial information requires the Group to make various estimates and assumptions when determining the carrying value of certain assets and liabilities. The significant judgements and estimates applied by the Group in this interim financial information have been applied on a consistent basis with the Annual Report for the year ended 31 March 2007. The Group maintains a columnar format for the presentation of its consolidated income statement. This enables the Group to continue its practice of improving the understanding of its results by presenting profit for the year before amortisation and impairment of intangibles arising on consolidation and exceptional items. This is the profit measure used to calculate adjusted EPS and is considered to be the most appropriate as it better reflects the Group's underlying cash earnings. Profit before amortisation and impairment of intangibles arising on consolidation and exceptional items is reconciled to profit before taxation on the face of the income statement. Items which are of a non-recurring nature and material when considering both size and nature have been disclosed separately to give a clearer presentation of the Group's results. These items are shown as 'exceptional items' on the face of the income statement. Intangible assets arising on consolidation represent goodwill and other separately identifiable intangible assets on business combinations since 1 April 2004. The amortisation of separately identifiable intangible assets and any impairment of goodwill is included in the income statement within the column 'amortisation and impairment of intangibles arising on consolidation'. Accounting policies The accounting policies followed in the financial information for the 6 months to 30 September 2007 are the same as those published in the Annual Report for the year ended 31 March 2007 with the addition of the following new standards or interpretations: IFRIC 8 'Scope of IFRS2' has not had any impact on the recognition of share-based payments by the Group. IFRIC 9 'Reassessment of embedded derivatives' has not had any impact on the reassessment of embedded derivatives by the Group. IFRIC 10 'Interims and Impairment' has not had any impact on the timing or recognition of impairment losses by the Group. IFRIC 11, 'IFRS 2 - Group and Treasury Share Transactions' has been adopted by the Group, but this interpretation affects only individual company results and has no effect on the consolidated results of the Group. IFRS 7 'Financial Instruments: Disclosures' has been adopted by the Group, however as this Interim Report contains only condensed financial statements full IFRS 7 disclosures are not required at this stage. The full IFRS 7 disclosures, including the capital disclosures required by the amendment of IAS1 'Presentation of Financial Statements',will be given in the Annual Report for the year ended 31 March 2008. 2 Segment reporting (a) Analysis by geographic segment 6 months ended 30 September 2007 Asia Americas Europe Pacific Total £m £m £m £m Revenue 249.8 297.2 79.2 626.2 Operating profit before amortisation and impairment of intangibles arising on consolidation and exceptional items 61.8 82.3 16.8 160.9 Amortisation and impairment of intangibles arising on consolidation (4.6) (5.7) (5.9) (16.2) Exceptional items 3.4 (11.6) 4.9 (3.3) Operating profit 60.6 65.0 15.8 141.4 Net finance income/(expense) (0.6) (2.0) 0.6 (2.0) Share of post-tax profit of associates - 0.8 0.9 1.7 Profit before taxation 60.0 63.8 17.3 141.1 Included in revenue is £11.0m in respect of joint ventures (Americas £4.2m, Europe £4.7m, Asia Pacific £2.1m). Included in operating profit is £3.3m in respect of joint ventures (Americas £1.0m, Europe £1.3m, Asia Pacific £1.0m). 6 months ended 30 September 2006 Asia Americas Europe Pacific Total £m £m £m £m Revenue 224.2 249.5 69.1 542.8 Operating profit before amortisation and impairment of intangibles arising on consolidation and exceptional items 50.8 60.0 8.3 119.1 Amortisation and impairment of intangibles arising on consolidation (2.5) (4.9) (6.0) (13.4) Exceptional items (0.5) (2.0) - (2.5) Operating profit 47.8 53.1 2.3 103.2 Net finance income/(expense) (0.6) (1.9) 0.3 (2.2) Share of post-tax profit of associates - 2.4 0.7 3.1 Profit before taxation 47.2 53.6 3.3 104.1 Included in revenue is £12.0m in respect of joint ventures (Americas £4.9m, Europe £5.4m, Asia Pacific £1.7m). Included in operating profit is £3.4m in respect of joint ventures (Americas £1.4m, Europe £1.6m, Asia Pacific £0.4m). Year ended 31 March 2007 Asia Americas Europe Pacific Total £m £m £m £m Revenue 458.3 502.4 145.6 1,106.3 Operating profit before amortisation and impairment of intangibles arising on consolidation and exceptional items 104.2 124.4 19.1 247.7 Amortisation and impairment of intangibles arising on consolidation (14.9) (12.8) (13.2) (40.9) Exceptional Items 9.4 (4.4) (0.2) 4.8 Operating profit 98.7 107.2 5.7 211.6 Net finance income/(expense) (5.5) 2.7 0.7 (2.1) Share of post-tax profit of associates - 2.7 1.6 4.3 Profit before taxation 93.2 112.6 8.0 213.8 Included in revenue is £24.2m in respect of joint ventures (Americas £9.2m, Europe £11.4m, Asia Pacific £3.6m). Included in operating profit is £6.7m in respect of joint ventures (Americas £2.7m, Europe £3.3m, Asia Pacific £0.7m). (b) Analysis by business segment 6 months ended 30 September 2007 Voice Electronic division division Total £m £m £m £m Revenue 480.3 125.9 20.0 626.2 Operating profit before amortisation and impairment of intangibles arising on consolidation and exceptional items 102.8 47.1 11.0 160.9 Amortisation and impairment of intangibles arising on consolidation (3.4) (12.8) - (16.2) Exceptional items 2.6 (5.9) - (3.3) Operating profit 102.0 28.4 11.0 141.4 Revenue of £11.0m and operating profit of £3.3m in respect of joint ventures is all included in the voice division. 6 months ended 30 September 2006 Voice Electronic division division Total £m £m £m £m Revenue 438.4 86.2 18.2 542.8 Operating profit before amortisation and impairment of intangibles arising on consolidation and exceptional items 85.9 22.8 10.4 119.1 Amortisation and impairment of intangibles arising on consolidation (1.7) (11.6) (0.1) (13.4) Exceptional items - (2.5) - (2.5) Operating profit 84.2 8.7 10.3 103.2 Revenue of £12.0m and operating profit of £3.4m in respect of joint ventures is all included in the voice division. Year ended 31 March 2007 Voice Electronic division division Total £m £m £m £m Revenue 867.4 199.1 39.8 1,106.3 Operating profit before amortisation and impairment of intangibles arising on consolidation and exceptional items 169.9 55.4 22.4 247.7 Amortisation and impairment of intangibles arising on consolidation (15.1) (25.6) (0.2) (40.9) Exceptional Items 16.1 (11.3) - 4.8 Operating profit 170.9 18.5 22.2 211.6 Revenue of £24.2m and operating profit of £6.7m in respect of joint ventures is all included in the voice division. 3 Exceptional items 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007* £m £m £m EBS related exceptional costs (5.9) (2.5) (11.3) Disputed post-trade settlement clearing adjustment (12.2) - - Exceptional costs (18.1) (2.5) (11.3) Disposal and closure of operations in prior period 1.4 - 16.1 Other exceptional gains 13.4 - - Exceptional income 14.8 - 16.1 Net exceptional items before taxation (3.3) (2.5) 4.8 Taxation 1.9 1.4 0.7 (1.4) (1.1) 5.5 *Exceptional items for the prior year have been reanalysed to show income and expenses separately where the items are unrelated. There is no effect on the overall results or net assets of the Group. The EBS related exceptional item relates to reorganisation and rationalisation costs following the acquisition of EBS in June 2006. During the year ended 31 March 2007, the Group closed a number of its futures operations. The gain arises in the current period as a result of the disposal of shares and memberships included within available-for-sale assets whose disposal was restricted in the prior year. This is offset by rationalisation and other costs related to the closure of these businesses. Other exceptional gains arose from the disposal of exchange shares and seats together with litigation settlements in Australia and Hong Kong. 4 Taxation Tax charged to the income statement in the period 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 £m £m £m Current taxation UK Corporation Tax at 30.0% - Current period 23.8 17.7 36.3 - Double tax relief - (0.1) (0.4) - Adjustment to prior periods 1.5 0.1 (5.1) Overseas taxation - Current period 31.7 22.6 55.1 - Adjustment to prior periods 0.3 0.8 0.5 57.3 41.1 86.4 Deferred taxation (2.4) 2.4 1.7 54.9 43.5 88.1 The Group's share of profit of associates in the income statement is shown net of tax of £1.8m (30 September 2006 - £2.4m; 31 March 2007 - £3.8m). 5 Dividends 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 Amounts recognised as distributions to equity holders in the period: £m £m £m Final dividend for the year ended 31 March 2007 of 9.3p (2006 - 7.5p) per share 59.1 47.6 47.6 Interim dividend for the year ended 31 March 2007 of 3.0p per share - - 19.1 59.1 47.6 66.7 On 19 November 2007 the Board approved an interim dividend for the year ended 31 March 2008 of 3.7p per share. 6 Earnings per ordinary share The Group continues to calculate an adjusted EPS measurement ratio in the notes to the financial statements as it believes that it is the most appropriate measurement, since it better reflects the business's underlying cash earnings. 6 monthS 6 months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 £m £m £m Earnings attributable to equity holders of the parent 80.1 59.9 121.3 Amortisation and impairment of intangibles arising on consolidation net of taxation and minority interests 16.2 14.2 39.3 Exceptional items net of taxation 1.4 1.1 (5.5) Adjusted 97.7 75.2 155.1 Shares Shares Shares millions millions millions Weighted average number of shares Basic 635.7 622.6 629.9 Dilutive effect of contingent share capital - 0.5 0.3 Adjusted 635.7 623.1 630.2 Dilutive effect of share options 16.3 17.6 16.4 Diluted 652.0 640.7 646.6 Pence Pence Pence Earnings per share Basic 12.6 9.6 19.3 Diluted 12.3 9.3 18.8 Adjusted 15.4 12.1 24.6 7 Matched principal transactions Certain Group companies are involved as principal in the purchase and simultaneous commitment to sell securities between third parties. Such trades are complete only when both sides of the deal are settled and so the Group is exposed to risk in the event that one side of the transaction remains unsettled. Substantially all the transactions settle within a short period of time and the settlement risk is considered to be minimal. All amounts due to and payable by counterparties in respect of matched principal business are shown gross, except where a legally enforceable netting agreement exists and the asset and liability are either settled net or simultaneously. The gross amount of matched principal transactions included in both trade and other receivables and trade and other payables is £54,143.7m (September 2006 - £52,501.7m, March 2007 - £82,734.3m). Certain Group companies are involved in collateralised stock lending transactions as an intermediary between counterparties. The gross amount of these transactions included within trade and other receivables and trade and other payables is £524.9m (September 2006 - £1,087.4m, March 2007 - £778.4m). 8 Acquisitions Subsidiaries ICAP Hyde Holdings Limited (formerly Hyde Holdings Limited) and subsidiary companies (Hyde) On 1 May 2007 the Group completed the acquisition of Hyde which consisted of 75% of ICAP Hyde & Company Limited (formerly J.E. Hyde & Co. Limited), a provider of a wide range of shipbroking and related services, and a 75% controlling interest in the freight derivatives joint venture that was created with ICAP in 2005. The consideration of £14.6m includes £2.0m of estimated deferred consideration, the final amount of which is dependent upon certain future revenues of Hyde. The maximum consideration payable is capped at £17.7m. The fair value of the assets acquired is given below. The fair value adjustments include the recognition of intangible assets arising on consolidation of £5.5m, the majority of which is in respect of customer relationships that is being amortised over six years. The Group considers that the fair value of £9.6m for the goodwill is reasonable and relates to the value of the brand name of Hyde and the future growth potential of the business. These assets were not separately identifiable. In the period from acquisition to 30 September 2007, Hyde contributed an additional £7.9m to revenue and £2.0m to pre-tax profit (before amortisation of intangibles arising on consolidation and exceptional items). If the acquisition had been completed on the first day of the financial year, the estimated revenue would have been £9.2m with pre-tax profit (before amortisation of intangibles arising on consolidation and exceptional items) of £2.4m. Hyde Provisional Book value fair value £m £m Net assets acquired Intangible assets arising on consolidation - 5.5 Available for sale assets - 0.1 Property, plant and equipment 0.2 0.1 Cash and cash equivalents 1.3 1.3 Trade and other receivables 4.3 4.3 Trade and other payables (6.2) (6.3) (0.4) 5.0 Goodwill 9.6 Consideration 14.6 Satisfied by: Cash 8.4 Loan notes 4.2 Deferred consideration 2.0 14.6 Reset Pte Limited (Reset) In April 2006, the Group acquired a 25% controlling interest in Reset. One of the stated aims of the acquisition agreement was to include a third party as a minority shareholder in the new venture. In July 2007, 15% of Reset was acquired by a third party in accordance with the stated aims of the original acquisition agreement. In return the Group received various assets, including intellectual property and a trading agreement with the other party, with a fair value of £5.4m ($10.9m). The Group considers these to be intangible assets arising on consolidation and is amortising them over three years. A negligible profit has been recognised on the disposal. The Group now owns 21.25%, but continues to retain control, of Reset. EBS Group Limited and subsidiary companies (EBS) The final agreed fair value of assets acquired relating to the acquisition of EBS Group Limited and subsidiary companies (EBS) on 5 June 2006 has been agreed at £253.6m (31 March 2007 - £251.7m), including separately identifiable intangible assets arising on consolidation of £224.0m. Goodwill of £205.3m (31 March 2007 - £207.2m) has also been recognised. The provisional fair values of all other acquisitions in the year ended 31 March 2007 are considered to be final with no further adjustments. Other acquisitions The Group has also invested £0.6m in companies in Argentina and Chile and a further £0.2m in Colombia. Contingent deferred consideration in respect of acquisitions A number of acquisitions made by the Group are satisfied in part by contingent deferred consideration. The Group has re-estimated the amounts due as deferred contingent consideration where necessary, with any corresponding adjustments being made to goodwill. The performance criteria for the final payment for the acquisition of the Group's associate, BSN, were met in March 2007, and an amount of $12.4m (£6.3m) was paid in April 2007. During the period a further payment of £0.1m was made for the acquisition of ETL. Payments are due in respect of Reset in January 2008 and 2009 of £56.2m in total, which represents the net present value of the estimated amounts payable based on the updated forecast of Reset. The discount rate used in this estimate was the Group's expected borrowing rate of 6.0%. Period ended 30 September 2007 ETL and ICAP Reset BSN Hyde Total £m £m £m £m Deferred contingent consideration outstanding as at 1 April 2007 36.5 6.3 - 42.8 Acquisition in the period - - 2.0 2.0 Consideration paid in the period (0.1) (6.3) - (6.4) Unwinding of discount 1.7 - - 1.7 Adjustments to goodwill during the period 20.1 - - 20.1 Exchange adjustments (2.0) - - (2.0) Deferred contingent consideration outstanding as at 30 September 2007 56.2 - 2.0 58.2 The deferred contingent consideration consists of cash only. 9 Long-term borrowings As at As at As at 30 September 30 September 31 March 2007 2006 2007 £m £m £m Subordinated loan notes repayable 2015 94.0 119.7 114.0 Bank loans 160.9 175.4 166.9 254.9 295.1 280.9 The subordinated loan notes represent $193.0m of ten-year loan notes of fixed rate debt at 5.84% issued in June 2005 following a private placement. The $32.0m floating rate component was repaid in June 2007. The bank loan represents a five year facility originally signed in May 2006 consisting of a dollar term loan of $328m included within long-term borrowings above and a £175.0m revolving credit facility of which £10.0m was drawn down as at 30 September 2007 (30 September 2006 - £33.0m, 31 March 2007 - nil) (included within short-term borrowings and overdrafts). 10 Reconciliation of total equity 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 £m £m £m Equity attributable to equity holders of the parent As at beginning of period 781.2 603.8 603.8 Total recognised income and expenses for the period 50.5 29.5 72.0 Ordinary shares issued - 179.0 181.0 Net own shares acquired (12.2) (2.8) (13.8) Dividends paid in the period (59.1) (47.6) (66.7) Net share-based payments in the period 1.6 1.3 4.9 As at end of period 762.0 763.2 781.2 Minority interests - equity 22.5 14.5 12.5 Total equity 784.5 777.7 793.7 11 Cash flow (a) Reconciliation of profit before taxation to net cash flow from operating activities 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 £m £m £m Profit before taxation 141.1 104.1 213.8 Operating exceptional items 3.3 2.5 (4.8) Share of operating profits of associates after tax (2.6) (3.9) (6.0) Amortisation and impairment of intangible assets arising on consolidation 17.1 14.2 42.6 Amortisation of intangible assets arising from development expenditure 5.4 4.6 10.2 Depreciation of property, plant and equipment 10.6 10.5 21.5 Other amortisation and impairments 0.2 0.1 0.3 Share-based payments 3.0 2.5 4.9 Loss on sale of property, plant and equipment - - 2.6 Profit on disposal of available-for-sale investments - (1.9) Net finance income 2.0 2.2 2.1 Operating cash flows before movements in working capital 180.1 136.8 285.3 Increase in trade and other receivables (15.3) (24.1) (25.9) Increase in trade and other payables 20.2 6.0 14.2 Net receipts in respect of financial assets held at fair value 0.6 2.6 7.9 Cash generated by operations before exceptional items 185.6 121.3 281.5 Operating exceptional items (paid) / received (1.0) (2.5) 22.0 Cash generated by operations 184.6 118.8 303.5 Interest received 8.0 8.6 14.7 Interest paid (9.0) (9.0) (20.9) Taxation paid (57.8) (52.2) (80.0) Net cash flow from operating activities 125.8 66.2 217.3 The movement in trade and other receivables and trade and other payables excludes the impact of the gross up of matched principal trades as permitted by IAS7 "Cash Flow Statements". Excluding the impact of the gross-up, the net debtor for matched principal transactions and deposits for securities borrowed/loaned was £20.9m (September 2006 - £55.4m, March 2007 - £30.0m). (b) Net cash and cash equivalents Net cash and cash equivalents comprise cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. Net cash and cash equivalents comprise the following amounts: 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 £m £m £m Cash and cash equivalents included in current assets 313.6 292.6 323.3 Short-term borrowings and overdrafts (17.5) (67.9) (22.9) Net cash and cash equivalents 296.1 224.7 300.4 12 Contingent Liabilities (a) In July 2003, it was announced that two of the Group's subsidiaries and the Company were among those being sued in connection with an alleged infringement of patent number 6,560,580 in the United States of America. The Group rejected the claim. On 5 September 2007, the time for the claimants to appeal the decision of the Federal Appeals Court to the US Supreme Court expired. Therefore, the decisions at the trial level are now final and the matter is closed. (b) ICAP plc has received correspondence from National Australia Bank (NAB) alleging that revaluation data, supplied by an individual within one of ICAP's Singapore subsidiaries (a member of the TFS-ICAP joint venture), helped mask trading losses in NAB's foreign exchange (FX) options business. The last such correspondence was received on 27 October 2006. On 27 January 2004 NAB announced that it incurred FX trading losses of A$360 million (£156 million). Detailed reports following full investigations into these losses were published by PricewaterhouseCoopers Australia (PwC) and the Australian Prudential Regulation Authority (APRA) in March 2004 and indicated that NAB incurred these FX trading losses between April 2003 and January 2004. The PwC report includes descriptions of how certain NAB dealers concealed losses by processing false spot FX and false FX option transactions, booking one-sided internal FX option transactions and using incorrect dealing rates for genuine transactions. The reports analyse the cause of these trading losses, including the methods of concealment employed by the NAB dealers, repeated failures of NAB risk management, absence of NAB financial controls, gaps in NAB back office procedures, inadequate NAB corporate governance and NAB corporate cultural weaknesses. NAB accepted the findings of the PwC report on 28 April 2004. Neither the ICAP Group nor TFS-ICAP accept any responsibility for these NAB FX trading losses and intend to vigorously contest any claim which may be made against them in this matter. ICAP has been informed that a similar allegation has been asserted by NAB against another inter-dealer broker, which is not a party to the joint venture, in respect of these NAB FX trading losses. It is not possible at this stage to predict the outcome with certainty or to determine the extent of liability, if any, of the Group. No provision has been made in the Financial Statements. (c) From time to time the Group is engaged in litigation on employee related and other matters. It is not possible to quantify the extent of such liabilities but they are not expected to have a material, adverse effect on the Group's results or net assets. 13 Post-balance sheet events On 10 October 2007, the Group announced the acquisition of Traiana, Inc, a provider of automated post-trade services to financial institutions for US$238m payable in cash and US$9m of ICAP shares. The acquisition of Traiana will be initially financed using a new acquisition facility on similar terms to the Group's existing five year facility. 14 Related party transactions The Group has no material or unusual related party transactions during the period to 30 September 2007. The nature of the various services to some of its joint ventures and associates is similar to those for the year ended 31 March 2007. The basis of remuneration of key management personnel remains consistent with that disclosed in the Annual Report for the year ended 31 March 2007. There have been a number of changes in the executive management group during the period as three former members have left the Group. 15 Exchange Rates The principal exchange rates which affect the Group, expressed in currency per £1, are shown below: Average rate Average Average rate rate Closing rate Closing rate Closing rate 6 months 6 months year as at 30 as at 30 as at 31 ended 30 ended 30 ended 31 September September March September September March 2007 2006 2007 2007 2006 2007 US dollar 2.04 1.87 1.96 2.00 1.84 1.89 Euro 1.43 1.47 1.47 1.47 1.46 1.47 Yen 234.33 220.54 231.59 238.48 212.96 221.19 Statement of directors' responsibilities The directors confirm that this condensed set of financial statements has beenprepared in accordance with IAS 34 as adopted by the European Union, and thatthe interim management report herein includes a fair review of the informationrequired by DTR 4.2.7 and DTR 4.2.8. The directors of ICAP plc are listed in the ICAP plc Annual Report for the yearended 31 March 2007. The only changes in directors since the year end are theresignation of Duncan Goldie-Morrison, a non-executive director, on the 18 July2007 and the appointment of David Puth as his replacement on 15 November 2007. By order of the Board Michael SpencerGroup Chief Executive Officer Matthew LesterGroup Finance Director 19 November 2007 Independent review report to ICAP plc Introduction We have been instructed by the company to review the financial informationfor the six months ended 30 September 2007 which comprises the consolidatedincome statement, the consolidated statement of recognised income andexpense, the consolidated balance sheet, the consolidated cash flow statementand the related notes. We have read the other information contained in theInterim Report and considered whether it contains any apparent misstatementsor material inconsistencies with the financial information. Directors' responsibilities The half-yearly financial report is the responsibility of, and has beenapproved by, the directors. The directors are responsible for preparing thehalf-yearly financial report in accordance with the Disclosure andTransparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half-yearly financialreport has been prepared in accordance with International Accounting Standard34, "Interim Financial Reporting", as adopted by the European Union. Our responsibility Our responsibility is to express to the company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. This report, including the conclusion, has been prepared for and onlyfor the company for the purpose of the Disclosure and Transparency Rules ofthe Financial Services Authority and for no other purpose. We do not, inproducing this report, accept or assume responsibility for any other purposeor to any other person to whom this report is shown or into whose hands itmay come save where expressly agreed by our prior consent in writing. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsiblefor financial and accounting matters, and applying analytical and otherreview procedures. A review is substantially less in scope than an auditconducted in accordance with International Standards on Auditing (UK andIreland) and consequently does not enable us to obtain assurance that wewould become aware of all significant matters that might be identified in anaudit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us tobelieve that the condensed set of financial statements in the half-yearlyfinancial report for the six months ended 30 September 2007 is not prepared,in all material respects, in accordance with International AccountingStandard 34 as adopted by the European Union and the Disclosure andTransparency Rules of the United Kingdom's Financial Services Authority. PricewaterhouseCoopers LLPChartered AccountantsLondon19 November 2007 Notes: a) The maintenance and integrity of the ICAP website is the responsibility ofthe directors; the work carried out by the auditors does not involveconsideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the financialinformation since they were initially presented on the website. b) Legislation in the United Kingdom governing the preparation anddissemination of financial information may differ from legislation in otherjurisdictions. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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