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ICAP PLC IAP Half Yearly Report

  ICAP PLC (IAP) - Half Yearly Report

RNS Number : 0521R
ICAP PLC
14 November 2012




Solid progress in difficult markets

London 14 November 2012 - ICAP plc (IAP.L), the world's leading interdealer
broker and provider of post trade risk and information services, today
announced its results for the six months ended 30 September 2012.

                                                     Six months to
                                    Sixmonthsto  30 September
                                   30September 2012          2011 Change
                                                  £m            £m      %
Revenue                                          746           867   (14)
Group operating profit1                          144           193   (25)
Profit before tax1                               137           186   (26)
Profit for the period (statutory)2                50           101   (50)
EPS (statutory basic)                            7.8          15.4   (49)
EPS (adjusted basic)3                           15.4          19.6   (21)
Interim dividend per share                      6.60          6.00     10



Highlights:

· Group revenue fell to £746 million, a 14% decrease

· Profit before tax1 of £137 million was down 26%

· Electronic, post trade risk and information contributed 67% of
operating profit1

· On target to realise cost savings of more than £50 million in the
current financial year and at least £60 million of annualised cost savings by
the year end in addition to the £20 million achieved in the prior year

· Group operating profit1 margin of 19% (30 September 2011 - 22%)

· EPS (adjusted basic) reduced by 21% to 15.4p; EPS (basic) reduced from
15.4p to 7.8p

· Ongoing free cash flow4 of £108 million (30 September 2011 - £105
million) with free cash flow conversion of 109% (30 September 2011 - 82%)

· Interim dividend payment to shareholders 6.60p per share (30 September
2011 - 6.00p per share)



Michael Spencer, Group Chief Executive Officer, said: "This has been one of
the toughest periods in my 36 year career in the wholesale financial markets.
Trading volumes this year have fallen significantly across nearly all asset
classes and geographies whether equities, futures, FX, commodities, fixed
income and also OTC. This has been caused by a combination of factors: global
economic weakness, the continuing Eurozone crisis, bank recapitalisation and
deleveraging, uncertainty over regulatory reform, quantitative easing and near
zero rates, to name the main ones. I do not believe this negative environment
will continue indefinitely but equally I do not expect it to improve
imminently. It has been a time to weather a hard storm and prepare thoroughly
for financial regulatory reform.

"Against this adverse backdrop we have focused strongly on cutting fixed costs
and compensation, slimming the firm to a lower expense base at the same time
as focusing on how US and European regulatory reform will create big changes
and big opportunities within our sector. We believe we have delivered a
creditable performance in a challenging half year. The profits from our
electronic division have also exceeded voice profits for the first time.

"Our cost reduction programme continues apace and we remain on track to
deliver in excess of £50 million of savings this year in addition to the £20
million achieved last year.

"Importantly we have seen a very significant increase in activity on our
i-Swap Euro platform as the dealers prepare for the new regulatory environment
with an eight fold increase in monthly volumes since the summer low point. We
intend to launch in US dollars in early 2013. We also recently launched ISDX,
The ICAP Securities and Derivatives Exchange (formerly Plus Stock Exchange).
Likewise the improvements in our electronic platforms and post trade services
are bearing more fruit. We have seen an increase in BrokerTec's market share
since the major technology upgrade earlier this year. And although it is
still early days, we are pleased that the changes we have recently made at EBS
have been well received by our customers. Our post trade businesses continue
to grow as we help our customers reduce risk and costs.

"In the very short term we are not anticipating any rapid improvement across
our markets. However over the past several years we have carefully formulated
and invested in our strategy for dealing with the implications of financial
regulatory reform which we believe will be significant. As these results
confirm, ICAP has successfully reengineered itself towards electronic
transaction and post trade services which we believe puts us in a very good
position when markets do improve.



There will be a briefing for analysts and investors at 9:00am (GMT) on
Wednesday 14 November 2012 at 2 Broadgate, London EC2M 7UR. A webcast of the
presentation made to analysts will be available at www.icap.com.



Contacts:



Brigitte Trafford Director of Corporate Affairs +44(0)2070507103
Alex Dee          Head of Investor Relations    +44(0)2070507123
Neil Bennett      Maitland                      +44(0)2073795151



Notes to editors:

About ICAP

ICAP is the world's leading interdealer broker and provider of post trade risk
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 voice and electronic networks. It operates
several electronic market places. Through our post trade risk and information
services we help our customers manage and mitigate risks in their portfolios.



Notes:

1 Excluding acquisition and disposal costs and exceptional items.

2 Statutory  profit  for the  period  after acquisition  and  disposal  costs, 
exceptional items and tax.

3 Adjusted basic EPS is based  on earnings from operations before  acquisition 
and disposal costs and exceptional items.

4  Ongoing  free  cash  flow  is  net  cash  flow  from  operating  activities 
(pre-exceptional)  excluding  movements  in  restricted  funds  and  initially 
unsettled items. Deductions  are made for  capital expenditure with  dividends 
received from associates and investments added back.



Review of operations

For the six months to 30 September 2012, the Group reported revenue of £746
million, 14% below the same period last year. Performance in the first half
has been impacted by a number of factors including the ongoing Eurozone
crisis, the London Olympics and regulatory uncertainty.

The Group reported an operating profit1 of £144 million, down 25% on the prior
period. The Group's operating margin for the six months to 30 September 2012
fell by 3% to 19% attributable to the reduction in revenue from voice broking
as well as a decline in electronic volumes which generate a higher incremental
margin.

Profit before tax1 of £137 million was £49 million or 26% down on the prior
period, in line with operating profit. Profit for the period on a statutory
basis was £50 million, down £51 million or 50%, after acquisition and disposal
costs and tax, and reflecting the additional impact of £32 million of
exceptional charges incurred during the period including £17 million of one
off costs associated with the Group's cost rationalisation programme.

As a result of the falling revenue and operating profit for the Global
Broking, Electronic and Post Trade Risk and Information businesses contributed
67% of the Group's operating profit^1 for the six months to 30 September 2012.



Cost reduction programme

In light of the challenging market conditions, pre-emptive steps have been
taken to reduce the overall cost base of the business and improve its
flexibility including scaling back broker compensation rates and associated
fixed costs. A cost saving programme was initiated in June 2012 which is
expected to deliver cost savings of more than £50 million in the current
financial year and annualised cost savings of at least £60 million by March
2013. These savings are in addition to the £20 million achieved last year. A
key component of the cost saving programme is headcount reduction across all
areas of the business. Total staff numbers have declined from 5,122 to 5,043.
The overall net reduction includes the departure of 219 front office broking
staff partly offset by an increase in headcount in key growth areas.



Regulatory landscape

Regulators continue to pursue an ambitious agenda for reform. As a result the
market landscape is changing, creating new opportunities for ICAP which has
the scale and flexibility to adapt to the new environment. The move towards
more electronic trading of derivatives, central clearing and risk mitigation
for non-cleared trades are positive drivers for the business. ICAP has
invested in developing the technology and platforms that will be needed to
enable our customers to meet these new requirements.

In the US, CFTC rulemaking under the Dodd-Frank Act aims to be largely
complete by the end of this year. Final rules for Swap Execution Facilities
(SEF) and related rules are expected shortly, with implementation in 2013. The
extent of cross-border application of those rules between the US and non-US
markets remains to be resolved, with the international regulatory community
working to address this. ICAP will be ready to launch compliant services in
the US once the regulation is finalised.

In Europe, European Market Infrastructure Regulation (EMIR), which will
regulate central clearing and trade repositories, will be implemented during
the course of 2013. Negotiations continue on MiFID II (the Markets in
Financial Instruments Regulation) which is expected to introduce a new
category of trading venue in Europe, the Organised Trading Facility. Agreement
is expected in 2013 with implementation in 2015.



Markets

ICAP provides services in a wide range of geographies and asset classes, with
the breadth of its market coverage and extent of connectivity being key
strengths of the Group. ICAP reports on its business segments externally in
the same way that it manages and reports them internally. The major segments
are Global Broking, which is reported by geographic region, Electronic and
Post Trade Risk and Information.



                  Sixmonthsto

                  30September

                               2012 Six months to 30 September 2011
                            Revenue                         Revenue Change
Asset class                      £m                             £m*      %
Rates                           311                             351   (11)
FX                              156                             174   (10)
Commodities                      97                              98    (1)
Emerging markets                 69                              86   (20)
Credit                           58                              83   (30)
Equities                         55                              75   (27)
Total                           746                             867   (14)

* During the period the allocation of asset classes has been amended to
improve the accuracy of revenue allocated to each asset. The prior period
asset classes have been revised to enable comparability.

Global Broking

To ensure its continued success, the organisation adapts to the changing
market environment and in September was reorganised to create a single global
broking division. This new division, named Global Broking, will enable the
Group to execute a global strategy for voice and hybrid broking services,
mirroring how ICAP runs its other businesses. David Casterton, previously CEO
EMEA Voice, has been appointed as CEO Global Broking.

Our Global Broking business is active in wholesale markets across all asset
classes with the geographic performance shown below.

                                                  Sixmonthsto
                           Six months to
                                                 30September
                            30 September
                                                              2012
                                    2012
                                                         Operating
                                 Revenue Change            profit* Change
Global Broking performance            £m      %                 £m      %
EMEA                                 250   (14)                 33   (45)
The Americas                         204   (18)                 19   (10)
Asia Pacific                          56   (19)                (4)  (233)
Total                                510   (16)                 48   (43)

* Before acquisition and disposal costs and exceptional items.



ICAP's Global Broking strategy is to extend its hybrid capabilities further,
to invest in growth markets and seize opportunities as they arise, to expand
market share in products where we are not the leader, and to maintain our
market share where we are the leader.

In EMEA, markets continue to be dominated by the Eurozone crisis, regulatory
uncertainty and a weakened banking sector resulting in subdued customer
trading activity. Revenue of £250 million was down 14% on the prior period as
market uncertainty prevailed and the London Olympics further amplified the
historical summer slowdown. The year-on-year variance was also exaggerated by
unusually high activity in August 2011. Commodities outperformed other asset
classes in the first half of the year driven by its diversified client base.
While revenue was down across all asset classes period-on-period, the
performance of rates, commodities and emerging markets in the first half of
the current year was relatively stable compared to performance in the second
half of last year. Operating profit during the period fell by 45% reflecting
the decline in revenue and the semi-fixed cost nature of broker compensation.

Americas broking revenue of £204 million was down 18% on the prior period
reflecting depressed activity across most asset classes. Similar to EMEA,
August 2011 was a particularly strong month due to the US government debt
ceiling negotiations. Overall global economic conditions as well as
uncertainty regarding the impact of regulatory reform on derivatives trading
have contributed to lower dealer inventory and risk appetite resulting in
lower revenue. Volumes in some rates and FX businesses have been more
consistent, albeit at reduced levels from last year. A recent increase in new
issuance of corporate bonds has resulted in a marginal improvement in activity
month-on-month. There has been a stabilisation of previously eroded sectors
for example mortgages, as the commercial market recovers. Revenue in Brazil
has continued to grow and the business remains on track for run-rate break
even by year end.

In Asia Pacific first quarter revenue held up reasonably well but declined
over the European summer as clients reduced risk. Revenue fell by 19% to £56
million but on a comparative basis (excluding the Japanese Government Bond
business which was sold to Central Totan Securities) revenue declined by 11%.
In Hong Kong the CNH/CNY business remains strong and in China the strategic
alliance with CFETS continued to do well and improved profitability. In
November, the Singapore office launched a new Iron Ore desk.

Given the challenging market conditions, various steps have been taken to
reduce the fixed costs of the Global Broking business and to increase the
flexibility of its cost base. Total broker headcount has declined from 2,384
to 2,297 which includes an underlying gross reduction of 219. In addition,
individual broker contracts are being restructured across all regions to
enhance the variable nature of broker compensation costswhilst still
maintaining broker commitment via standard contract duration terms.



Electronic

ICAP operates EBS and BrokerTec, the world's leading electronic trading
platforms in FX and government fixed income. The platforms offer efficient and
effective trading solutions to customers in more than 50 countries across a
range of instruments including spot FX, US Treasuries, European government
bonds and EU and US repo. The platforms are built on our bespoke networks
which connect participants in wholesale financial markets.



                          Sixmonthsto

                       30September 2012
                                              Change
Electronic performance                     £m      %
Revenue                                   134   (16)
Operating profit*                          53   (22)

* Before acquisition and disposal costs and exceptional items.



ICAP's strategy is to grow its global electronic business through increasing
its product portfolio and by developing new markets and services.

Combined average daily electronic volumes (ADV) for the EBS FX and BrokerTec
fixed income platforms for the six months ended 30 September 2012 were $689
billion, a decrease of 22% on the previous period.



BrokerTec

Lower volumes on the BrokerTec platform reflected a number of factors,
including the impact of the Eurozone crisis on investor confidence,
macroeconomic uncertainty and low interest rate volatility. US Treasury
electronic broking ADVs decreased 20% period-on-period to $114 billion, and US
repo volumes were down 15% period-on-period to $216 billion. In Europe, repo
volumes were $244 billion, down 21% period-on-period.

The two ECB 3-year borrowing programmes (LTRO) during the past year drained
liquidity from the secondary Government bond markets as large amounts of
Eurozone sovereign debt was placed as collateral at the ECB in return for
funding. However following the last LTRO in February 2012 we have seen a
steady improvement in Repo nominal volumes and a more pronounced amelioration
after the slow summer period.

BrokerTec saw an increase in market activity in September following the
Federal Reserve's launch of QE3 and had its strongest month in US Treasuries
in more than a year. Greater confidence in the European bond markets,
following the ECB proposals to address Eurozone sovereign debt issues, coupled
with continued strong issuance in Government Bonds also helped to drive up
volumes.



EBS

Average daily FX electronic broking volumes on the EBS platform were $115
billion, a 34% decrease on the prior period. Volumes on the EBS platform
declined largely due to depressed market activity across all major currency
pairs. There has been a reduction in carry trade activity as central banks
have maintained low interest rates, reducing the incentive for investors to
hold higher-yielding currencies. Trading activity has been further exacerbated
by the range-bound nature of some of EBS's main currencies resulting from
central bank intervention and policies.

In September EBS announced a number of system and policy changes following
extensive consultation with its customers. These included moving to half and
full pips in a selection of core pairs, the introduction of new quote and hit
fill ratio targets and the adoption of more rigorous enforcement policies for
disruptive behaviour on the platform. These changes followed the publication
of EBS's new dealing rules in July which were designed to improve the quality
and consistency of liquidity on the EBS platform.

Although it is still early days, the changes made at EBS have been well
received by its customers. The next steps in EBS's evolution will be to extend
the customer base by becoming an aggregator of FX liquidity and embed EBS more
deeply within its customers' value chain.



Other platforms

Volumes on i-Swap, ICAP's market leading trading platform for Euro interest
rate swaps, have improved markedly through late July onwards, as volatility
subsided and spreads narrowed. This trend further accelerated in October as
electronic trade volumes returned to levels last seen pre Euro crisis. ICAP
anticipates launching the platform in the US next year.

In June we completed the purchase of PLUS Stock Exchange which has been
renamed ICAP Securities & Derivatives Exchange (ISDX). ICAP has established a
new management team for ISDX committed to the development and success of the
exchange. The exchange will be a viable alternative listings venue to support
the growth of SMEs. ICAP is well positioned to leverage ISDX's exchange status
to offer new products and solutions for its customers including, listed
derivatives.



Post Trade Risk and Information

The post trade risk and information business comprises the portfolio risk
mitigation services businesses (Reset, ReMatch and TriOptima), the transaction
processing business, Traiana, and the information business.



                                                 Sixmonthsto

                                            30September 2012
                                                                   Change
Post trade risk and information performance                     £m      %
Revenue                                                        102      4
Operating profit*                                               43      5

* Before acquisition, disposal costs and exceptional items.



ICAP's aim is to continue to develop its post trade risk and information
business by providing innovative services that enable our customers to reduce
costs and risk, as well as to increase efficiency, return on capital and
capacity to process trades.



Reset and ReMatch

Reset is the market leading provider of bulk risk mitigation services within
the interest rate, NDF and inflation markets, and accounts for the largest
proportion of ICAP's post trade risk revenue and operating profit. Reset's
expertise in short-end risk management helps its customers to control multiple
forms of fixing and basis risk across numerous asset classes.

In the six months ended 30 September 2012 Reset's and ReMatch's revenue was
flat. Although global economic conditions have resulted in additional
quantitative easing and interest rates remain at historic lows with flat yield
curves customers have continued to focus on risk mitigation.

Reset's core markets in rates and NDFs have continued to perform well and have
not adversely suffered from wider market volume declines. Meanwhile in the CDS
space, ReMatch has further cemented its market leading position in the
sovereign and emerging markets while also launching a new service in credit
indices which has met with positive demand.



TriOptima

TriOptima, through triReduce and triResolve, is the market leader in risk
elimination and risk mitigation solutions for OTC derivatives, primarily
through the reconciliation and elimination of outstanding transactions.

The triReduce service decreases counterparty credit risk, the number of
outstanding contracts and the gross notional value through early termination
of existing contracts for rates, credit and commodity swaps. Since its launch
in 2003, triReduce has terminated more than $300 trillion in notional
principal outstandings. This includes more than $227 trillion of interest
rate swap terminations for both cleared and uncleared trades and over $77
trillion of credit derivative compression.

In the six months ended 30 September 2012 TriOptima's revenue decreased by 2%
but increased 7% on an underlying basis (at constant exchange rates). During
the period, triReduce eliminated $7 trillion in bilateral and $32 trillion in
LCH cleared outstanding interest rate swaps and $1.4 trillion of credit
default swaps.

Since its launch in 2006 triResolve, the counterparty exposure management
service, has been widely-adopted by a broad cross section of market
participants including 250 global dealers, regional institutions, asset
servicers, energy trading houses, asset managers and buy side institutions. As
a centralised platform capturing 90% of the collateralised OTC derivative
population, triResolve plays a critical role in the increasingly important
collateral management process from reconciliation through the stages of
exception management workflow, enabling users to identify and resolve issues
and disputes on the centralised platform.

More than six million trades across OTC derivative asset classes and product
structures are reconciled on a daily basis on triResolve in response to
current commitments to regulators for daily reconciliations, in addition to
new rules in the US and in requiring proactive reconciliation by market
participants. A further 700,000 trades are reconciled on a less frequent
basis, such as weekly or monthly.

TriOptima continues to innovate and respond to changing market dynamics. It
recently launched triBalance, an important new post trade risk management
service providing financial institutions with the ability to manage portfolio
risk proactively and simultaneously across multiple bilateral and CCP
exposures.



Traiana

Traiana provides global banks, broker/dealers, buy-side firms and e-trading
platforms with solutions to automate post trade processing of financial
transactions. The Harmony network is the backbone of Traiana's post trade
business. It is used by more than 500 of the world's leading financial
companies and has become the market standard for post trade processing of FX,
exchange traded derivatives, equities and equity derivatives.

In the six months ended 30 September 2012 Traiana's reported revenue increased
by 26% and on an underlying basis (at constant exchange rates) by 30%. At 30
September 2012, Harmony was processing an average of 1.3 million transactions
per day, an increase of more than 25% from the same period last year. In
addition, Traiana's trade aggregation joint venture with CLS Group, CLSAS, was
processing more than 350,000 transactions per day, growing by more than 55%
over the past 12 months.

Traiana also continues to develop its non-FX business. In June, Traiana's
Harmony CFD equity swap network announced that it has added 26 executing
brokers for give up processing and 11 prime brokers for enhanced client
servicing for buy-side clients over the past year. The total number of CFD
equity swap participants on the network now includes more than 85 executing
brokers, 14 prime brokers and a rapidly growing number of buy-side firms,
cementing Harmony's position as the post-trade standard for the CFD equity
swap market.

In September Traiana expanded its Harmony CreditLink initiative with the
addition of real-time limit monitoring and a Kill switch capability for
exchange traded derivatives. CME and NYSE Liffe are the first exchanges
connected, with further exchanges in the on-boarding process.



Information

ICAP Information is the leading provider of OTC market information, delivering
independent data solutions to financial market participants. It employs a
subscription based charging structure providing a regular revenue stream.
During the first six months of the year the business continued to grow despite
the loss of a proportion of data sales following a change to EBS's product
offering.

ICAP's information business expanded both its product and service offering
while continuing to broaden its customer base globally, in both developed and
emerging markets. The UK Labour Market Indices (LMI) was launched as a
monthly leading indicator for the UK labour market. In August, BrokerTec and
MTS announced a new joint Euro Repo Index service; a daily repo index series
for sovereign bond markets of the main Eurozone countries. ICAP also
collaborated with Rapid Ratings International Inc. to create a joint credit
derivatives service; a pricing service that combines pricing data from ICAP
and Rapid Ratings' Financial Health Rating data for each company entity.
These new services demonstrate ICAP's sustained commitment to its clients to
offer varied and innovative solutions at a time when transparency is
paramount.





Other Post Trade investments

ICAP's Post Trade Risk and Information business invests in new companies
developing innovative technology in the areas of post-trade risk management,
data and other financial market application via Euclid Opportunities. Euclid
is majority owned by ICAP and offers a funding program to early-stage
companies. Its portfolio includes minority stakes in Model Two Zero, an
early-stage software firm pioneering the next generation of innovative
matching, reconciliation and data-translation technologies (acquired in
December 2011) and OpenGamma, a risk management and analytics provider
(acquired in August 2012).



Profit for the period

                             Sixmonthsto
                                                    Six months to 30 September
                         30September 2012                           2011
                                             £m                             £m
Profit before tax*                          137                            186
Acquisition and disposal
costs                                      (37)                           (35)
Exceptional items                          (32)                              -
Profit before tax
(statutory)                                  68                            151
Tax                                        (18)                           (50)
Profit for period                            50                            101

* Before acquisition and disposal costs and exceptional items.



Acquisition and disposal costs

The Group saw amortisation of intangibles remain in line with the prior period
at £35 million. The remaining expense relates to legal fees for the
acquisition of PLUS Stock Exchange plc (£0.5 million consideration paid),
investments made acquiring the remaining shareholdings of two partly owned
Shipping entities and the unwinding of discounts on deferred consideration. No
impairments to goodwill and intangible assets was made during the period.



Exceptional items

The Group's policy is to disclose separately items in its income statement as
exceptional which are non-recurring and, in terms of both size and nature,
material.

For the six months to September 2012 exceptional items before tax were £32
million. These costs relate to the implementation of the cost reduction
programme, a write down of certain technology assets for the electronic
business and certain legal and professional fees.



Tax

The overall objective continues to be to plan and manage the tax affairs of
the Group efficiently while complying with local tax regulations. The Group's
effective tax rate excluding acquisition and disposal costs and exceptional
items is 28% (30 September 2011 - 31%).

The Group's effective tax rate for the financial period ending 31 March 2013,
excluding acquisition and disposal costs and exceptional items, is expected to
be between 27% - 29%.



Balance sheet

The Group's net assets at 30 September 2012 were £1,139 million (31 March 2012
- £1,210 million).

During the period, the Group issued £125 million of six year senior notes with
a coupon of 5.5% under its £1 billion Global Medium Term Note programme to UK
retail investors improving the debt maturity profile and reducing demand on
the revolving credit facility. Gross debt increased by £70 million to £699
million and net debt increased by £76 million to £158 million. This was due to
seasonal demands on working capital, the payment of the final dividend for the
financial year ended 31 March 2012 and the reversal of the year end restricted
cash position which is now back at a more traditional level. Committed
headroom at 30 September 2012 was £370 million (31 March 2012 - £324 million).

Net finance costs for the period were £10 million. In line with the pattern
in prior years, first half finance costs are net of dividends received from
investments which in this period were £6 million (30 September 2011 - £2
million).



Operating profit/cash conversion

The Group continues to generate substantial free cash flow. The long term
expectation remains that free cash and post-tax profit converge, reflecting
the strength of the Group's underlying business model. This strength is
demonstrated by underlying free cash flow, before exceptionals and adjusting
for the short-term movements in restricted funds and initially unsettled
items, of £108 million, representing 109% conversion of profit after tax for
the period of £99 million.



Dividend

Consistent with previous practice, ICAP's interim dividend has been calculated
at 30% of the prior year's full year dividend. As a result, an interim
dividend of 6.60p per share (30 September 2011 - 6.00p per share) covering the
six month period to 30 September 2012 will be paid on the 8 February 2013 to
shareholders on the register at 4 January 2013.

During the period the Group bought back 97,523 shares into Treasury Shares at
a cost of £0.3 million.



Risk

The Group continues to classify its exposure into eight risk categories:
operational, liquidity, strategic, credit, legal and compliance, market,
reputational and financial. Of these, it considers operational, liquidity and
strategic to be the principal risks. Operational risk is the risk that the
Group may suffer a financial loss or reputational damage directly or
indirectly from inadequate or failed internal processes, human error, systems
failure or external events. Operational risk is intrinsic in all the Group's
diverse activities. Liquidity risk is the risk that any part of the Group does
not have sufficient financial resources available to enable it to meet its
financial obligations as they fall due. Strategic risk is the risk of its
services becoming superseded by competitor solutions, changes in the Group's
customer base, changes in market structure or failure to appropriately
implement strategic projects.

Further details of each of the eight risks categories were set out on pages 33
to 35 and notes 6, 10, 15 and 16 of the Group's 2012 Annual Report. The
directors have reviewed these risks 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 control and do not consider there to be any
significant changes since the report. The section entitled 'Outlook' sets out
details of the current market conditions and outlook.



Outlook

Since ICAP's last update, trading conditions have remained challenging and the
Company remains cautious in its outlook for the rest of the financial year.
Inevitably the closure of the US bond market on 30 October and the widespread
disruption caused by Hurricane Sandy together with the uncertainty created by
the US Presidential election have impacted volumes. Accordingly, the Company
anticipates that trading will remain subdued for the remainder of the third
quarter.

Historically, ICAP's last financial quarter is its strongest as it is the
first quarter of the new financial year for many of its customers. In
addition it is anticipated that there will be some more clarity around the
regulatory environment. As a result of these, and other factors, the Company
expects a return to more active trading in the New Year but does not expect a
material improvement in performance compared to the final quarter of the prior
year.

The Company expects pre-tax profit for the full year to 31 March 2013 to be at
the lower end of the analyst range of £300 million to £332 million.



Consolidated income statement

For the six month period to 30 September 2012



                                      Before
                             acquisition and
                              disposal costs   Acquisition  Exceptional
                             and exceptional  and disposal        items
                                       items         costs     (note 3)  Total
                      Note                £m            £m           £m     £m
Continuing operations
Revenue                  2               746             -            -    746
Operating expenses                     (608)          (36)         (32)  (676)
Other income                               6             -            -      6
Operating profit         2               144          (36)         (32)     76
Finance income                             8             -            -      8
Finance costs                           (18)           (1)            -   (19)
Share of profit of
associates after tax                       3             -            -      3
Profit before tax        2               137          (37)         (32)     68
Tax                      6              (38)            10           10   (18)
Profit for the period                     99          (27)         (22)     50
Attributable to:
Owners of the Company                     99          (27)         (22)     50
Non-controlling
interests                                  -             -            -      -
                                          99          (27)         (22)     50
Earnings per ordinary
share
- basic                  4                                                 7.8
- diluted                4                                                 7.7

The accompanying notes form an  integral part of these Condensed  Consolidated 
Interim Financial Statements.

Consolidated income statement continued

For the six month period to 30 September 2011



                                      Before
                             acquisition and
                              disposal costs   Acquisition  Exceptional
                             and exceptional  and disposal        items
                                       items         costs     (note 3)  Total
                       Note               £m            £m           £m     £m
Continuing operations
Revenue                   2              867             -            -    867
Operating expenses                     (687)          (35)            -  (722)
Other income                              13             -            -     13
Operating profit          2              193          (35)            -    158
Finance income                             6             -            -      6
Finance costs                           (16)             -            -   (16)
Share of profit of
associates after tax                       3             -            -      3
Profit before tax         2              186          (35)            -    151
Tax                       6             (58)             8            -   (50)
Profit for the period                    128          (27)            -    101
Attributable to:
Owners of the Company                    128          (27)            -    101
Non-controlling
interests                                  -             -            -      -
                                         128          (27)            -    101
Earnings per ordinary
share
- basic                   4                                               15.4
- diluted                 4                                               15.2

The accompanying notes form an  integral part of these Condensed  Consolidated 
Interim Financial Statements.



Consolidated income statement continued

For the year ended 31 March 2012



                                    Before
                           acquisition and
                            disposal costs   Acquisition  Exceptional
                           and exceptional  and disposal        items
                                     items         costs     (note 3)    Total
                     Note               £m            £m           £m       £m
Continuing
operations
Revenue                 2            1,681             -            -    1,681
Operating expenses                 (1,335)         (150)            -  (1,485)
Other income                            26            13            -       39
Operating profit        2              372         (137)            -      235
Finance income                          10             -            -       10
Finance costs                         (34)             -            -     (34)
Share of profit of
associates after tax                     6             -            -        6
Profit before tax       2              354         (137)            -      217
Tax                     6             (95)            18            -     (77)
Profit for the year                    259         (119)            -      140
Attributable to:
Owners of the
Company                                260         (123)            -      137
Non-controlling
interests                              (1)             4            -        3
                                       259         (119)            -      140
Earnings per
ordinary share
- basic                 4                                                 21.1
- diluted               4                                                 20.8

The accompanying notes form an  integral part of these Condensed  Consolidated 
Interim Financial Statements.



Consolidated statement of comprehensive income



                                Six months ended  Six months ended  Year ended
                                    30 September      30 September    31 March
                                            2012              2011        2012
                                              £m                £m          £m
Profit for the period                         50               101         140
Other comprehensive income from
continuing operations
Net movement on cash flow
hedges                                         2              (1)          12
Net exchange adjustments on
investments in overseas
subsidiaries                                (17)                 8        (31)
Revaluation gains in the period                -                 -           4
Net current tax recognised in
other comprehensive income                   (1)                 5         (1)
Other comprehensive
(losses)/income for the period              (16)                12        (16)
Total comprehensive income for
the period                                    34               113         124
Total comprehensive income
attributable to:
Owners of the Company                         34               113         121
Non-controlling interests                      -                 -           3
                                              34               113         124

The accompanying notes form an integral part of these Condensed Consolidated
Interim Financial Statements.





Consolidated balance sheet



                                                 As at         As at     As at
                                          30 September  30 September  31 March
                                                  2012          2011      2012
                                    Note            £m            £m        £m
Assets
Non-current assets
Intangible assets arising on
consolidation                          7         1,143         1,337     1,188
Intangible assets arising from
development expenditure                             73            61        68
Property and equipment                              57            91        82
Investment in associates                            63            33        54
Deferred tax assets                                 15            15        12
Trade and other receivables                         12            16        11
Available-for-sale investments                      31            29        31
                                                 1,394         1,582     1,446
Current assets
Trade and other receivables           10        69,462        61,990    79,254
Restricted funds                    8(b)            88            98        50
Cash and cash equivalents                          541           527       547
                                                70,091        62,615    79,851
Total assets                                    71,485        64,197    81,297
Liabilities
Current liabilities
Trade and other payables              10      (69,374)      (61,890)  (79,184)
Short-term borrowings and
overdrafts                             9         (213)         (356)     (255)
Tax payable                                      (116)         (128)     (123)
Short-term provisions                              (1)           (2)       (1)
                                              (69,704)      (62,376)  (79,563)
Non-current liabilities
Trade and other payables                          (46)          (34)      (33)
Long-term borrowings                   9         (486)         (384)     (374)
Deferred tax liabilities                          (93)         (104)      (98)
Retirement benefit obligations                     (1)           (1)       (1)
Long-term provisions                              (16)          (47)      (18)
                                                 (642)         (570)     (524)
Total liabilities                             (70,346)      (62,946)  (80,087)
Net assets                                       1,139         1,251     1,210
Equity
Capital and reserves
Called up share capital                             66            66        66
Share premium account                              454           452       453
Other reserves                                      93            74        91
Translation                                         25            81        42
Retained earnings                                  460           556       516
Equity attributable to owners of
the Company                                      1,098         1,229     1,168
Non-controlling interests                           41            22        42
Total equity                                     1,139         1,251     1,210

The accompanying notes form an  integral part of these Condensed  Consolidated 
Interim Financial Statements.

The Condensed Consolidated Interim Financial Statements, including
accompanying notes, were approved by the board on 14 November 2012 and were
signed on its behalf by:



Michael Spencer               Iain Torrens
Group Chief Executive Officer Group Finance Director



Consolidated statement of changes in equity



                                                                   Attributable
                  Share    Share     Other               Retained  to owners of  Non-controlling
                capital  premium  reserves  Translation  earnings   the Company        interests  Total
                     £m       £m        £m           £m        £m            £m               £m     £m
Balance at 1
April 2011           66      452        75           73       565     1,231                   20  1,251
Total
comprehensive
income for the
period*               -        -       (1)            8       106       113                    -    113
Share-based
payments in the
period                -        -         -            -         4         4                    -      4
Net movements
in
employee trusts       -        -         -            -         5         5                    -      5
Other movements
in
non-controlling
interests             -        -         -            -         -         -                    2      2
Dividends paid
in the period         -        -         -            -     (96)     (96)                    -   (96)
Net Treasury
Shares acquired
in the period         -        -         -            -      (28)      (28)                    -   (28)
Balance at 30
September 2011       66      452        74           81       556     1,229                   22  1,251
Total
comprehensive
income for the
period*               -        -       17         (39)        30         8                    3     11
Share-based
payments in
the period            -        -         -            -       (1)       (1)                    -    (1)
Other movements
in
non-controlling
interests             -        -         -            -         -         -                   20     20
Dividends paid
in the period         -        -         -            -      (39)      (39)                  (3)   (42)
Net Treasury
Shares acquired
in the period         -        -         -            -      (28)      (28)                    -   (28)
Ordinary shares
issued                -        1         -            -         -         1                    -      1
Cancellation of
ordinary shares       -        -         -            -       (2)       (2)                    -    (2)
Balance at 31
March 2012           66      453        91           42       516     1,168                   42  1,210
Total
comprehensive
income for the
period*               -        -         2         (17)        49        34                    -     34
Share-based
payments in
the period            -        -         -            -         1         1                    -      1
Net movements
in
employee trusts       -        -         -            -       (3)       (3)                    -    (3)
Other movements
in
non-controlling
interests             -        -         -            -       (1)       (1)                  (1)    (2)
Dividends paid
in the period         -        -         -            -     (102)     (102)                    -  (102)
Ordinary shares
issued                -        1         -            -         -         1                    -      1
Balance at 30
September 2012       66      454        93           25       460     1,098                   41  1,139

*See Consolidated statement of comprehensive income

The accompanying notes form an  integral part of these Condensed  Consolidated 
Interim Financial Statements.



Consolidated statement of cash flow



                                          Six months     Six months       Year
                                               ended          ended      ended
                                        30 September   30 September   31 March
                                                2012           2011       2012
                                 Note             £m             £m         £m
Cash flows from operating
activities                       8(a)             38             99        312
Cash flows from investing
activities
Dividends received from
associates                                         1              3          5
Other equity dividends received                    6              2          3
Payments to acquire property and
equipment                                        (2)           (14)       (17)
Intangible development
expenditure                                     (10)            (8)       (35)
Net receipts on disposal of
available-for-sale investments                     -              1          1
Proceeds from sale of business
net of cash disposed                               -              -         13
Acquisition of interests in
businesses net of cash acquired                  (2)              -        (3)
Acquisition of associates and
joint ventures                                   (7)              -       (24)
Net cash flows from investing
activities                                      (14)           (16)       (57)
Cash flows from financing
activities
Dividends paid to
non-controlling interest                           -              -        (3)
Proceeds from exercise of share
options                                            1              -          1
Cancellation of ordinary shares                    -              -        (2)
Proceeds from issue of ordinary
shares to non-controlling
interest                                           -              -         22
Dividends paid to owners of the
Company                                        (102)           (96)      (135)
Payments to acquire Treasury
Shares                                             -           (28)       (56)
Payments to acquire own shares
for employee trusts*                             (3)            (6)          -
Repayment of borrowings                         (54)              -          -
Funds received from borrowing,
net of fees                                      145            155         57
Net cash flows from financing
activities                                      (13)             25      (116)
FX adjustments                                   (8)             10        (5)
Net increase in cash and cash
equivalents                                        3            118        134
Net cash and cash equivalents at
beginning of period                              538            404        404
Net cash and cash equivalents at
end of period                                    541            522        538
Net cash and cash equivalents
consists of:
Cash and cash equivalents                        541            527        547
Bank overdrafts                                    -            (5)        (9)
Net cash and cash equivalents at
end of period                                    541            522        538

*Payments to acquire own shares for employee  share trusts is shown net of  £5 
million (six month period ended
30 September 2011  - £6 million,  year ended 31  March 2012 -  £6 million)  of 
contributions received from participants in the trust.

The accompanying notes form an integral part of these Condensed Consolidated
Interim Financial Statements.



Notes to the financial statements



1 Basis of preparation

a) Basis of preparation

The Condensed Consolidated Interim Financial Statements for the six months to
30 September 2012 do not constitute statutory financial information as defined
in section 434 of the Companies Act 2006. The Condensed Consolidated Interim
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 Annual Report for the year ended 31 March 2012 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 Interim Financial Statements for the six months to
30 September 2012 have been prepared in accordance with the Disclosure and
Transparency Rules (DTR) of the Financial Services Authority and with IAS34
'Interim financial reporting' as adopted by the European Union (EU). These
Condensed Consolidated Interim Financial Statements should be read in
conjunction with the Annual Report for the year ended 31March 2012 which was
prepared in accordance with IFRS as adopted by the EU.

The accounting policies applied in the preparation of the Condensed
Consolidated Interim Financial Statements are consistent with the Annual
Report for the year ended 31 March 2012.

The preparation of the Condensed Consolidated Interim Financial Statements
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 these Condensed Consolidated
Interim Financial Statements have been applied on a consistent basis with the
Annual Report for the year ended 31 March 2012.

After making relevant enquiries, the directors consider that the Group has
adequate resources to continue in operational existence for the foreseeable
future and therefore continue to adopt the going concern basis in preparing
the Condensed Consolidated Interim Financial Statements.

  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 profit
for the period before acquisition and disposal costs 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 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 has been disclosed.

b) Recent accounting developments

The following new standards and amendments to standards and interpretations
have been issued, but are not effective for the financial year beginning 1
April 2012 and have not been early adopted:

- IAS1 'Presentation of financial statements' - Amendments to revise the
way other comprehensive income is presented.The amendments require entities
to group items presented in other comprehensive income based on whether they
are potentially reclassifiable to profit or loss subsequentlyand require tax
associated with items presented before tax to be shown separately for each of
the two groups of other comprehensive income items. These amendments become
effective for annual periods beginning on or after 1 January 2013.

- IFRS9 'Financial instruments' addresses classification and measurement
of financial assets, as the first phase of the replacement of IAS39 'Financial
Instruments - recognition and measurement' and is effective for annual periods
beginning after 1 January 2015, subject to EU endorsement.

- IFRS10 'Consolidated financial statements' requires a parent to present
consolidated financial statements as those of a single economic entity,
replacing the requirements previously contained in IAS27 'Consolidated and
separate financial statements' and SIC-12 'Consolidation - special purpose
entities'. The standard becomes effective for annual periods beginning on or
after 1 January 2013.

- IFRS11 'Joint arrangements' replaces IAS31 'Interests in joint ventures'
and requires a party to a joint arrangement to determine the type of joint
arrangement in which it is involved by assessing its rights and obligations
and then account for those rights and obligations in accordance with that type
of joint arrangement. The standard becomes effective for annual periods
beginning on or after 1 January 2013.

- IFRS12 'Disclosure of interests in other entities' requires the
extensive disclosure of information that enables users of financial statements
to evaluate the nature of, and risks associated with, interests in other
entities and the effects of those interests on its financial position,
financial performance and cash flows. The standard becomes effective for
annual periods beginning on or after 1 January 2013.

- IFRS13 'Fair value measurement' replaces the guidance on fair value
measurement in existing IFRS accounting literature with a single standard. The
standard becomes effective for annual periods beginning on or after 1 January
2013.

- IAS27 'Consolidated and separate financial statements' - reissued as
IAS27 'Separate financial statements' (as amended in 2011). Thisstandard is
an amended version of IAS27 'Consolidated and separate financial statements'
which now deals only with the requirements for separate financial statements,
which have been carried over largely unchanged from IAS27 'Consolidated and
separate financial statements'. Requirements for consolidated financial
statements are now contained in IFRS10 'Consolidated financialstatements'.
Thestandard becomes effective for annual periods beginning on or after 1
January 2013.

- IAS28 'Investments in associates and joint ventures (2011)' supersedes
IAS28 'Investments in associates' and prescribes the accounting for
investments in associates and sets out the requirements for the application of
the equity method when accounting for investments in associates and joint
ventures. Thestandard becomes effective for annual periods beginning on or
after 1 January 2013.

The impact on the Group financial statements of adopting the above standards
is currently under review. The adoption of the standards that become effective
from 1 January 2013 are not expected to have a material impact, with the
impact of adopting IFRS9 still to be determined.



2 Segmental information

The Group has determined its operating segments based on the management
information reviewed on a regular basis by the ICAP plc board. The Group
considers the executive members of the ICAP plc board to be the Chief
Operating Decision Maker (CODM).

As at 31 March 2012 the business consisted of regional voice businesses in
EMEA, the Americas and Asia Pacific, a global electronic business active in
fixed income interest rate derivatives and FX markets and a global post trade
risk and information services business. From 1 September 2012 a CEO of Global
Broking was appointed with responsibility for all three former voice regions.
The former voice segments have been renamed under Global Broking. While the
restructuring continues, the CODM will continue to receive information in the
previous format leaving the segments unchanged as at 30 September 2012.

The Group continues to disclose an operating segment for the broking business
in Asia Pacific even though this segment does not meet the quantitative
thresholds to be mandatory under IFRS8 'Operating segments'. This is to
reflect the importance of the Asia Pacific region to the Group and the way the
Group is managed.

                               Six months ended 30 September 2012
                        Global Broking                     Post trade
                                       Asia                  risk and
                   EMEA  Americas   Pacific  Electronic   information    Total
                     £m        £m        £m          £m            £m       £m
Revenue             250       204        56         134           102      746
Operating profit
before acquisition
and disposal costs
and exceptional
items                33        19       (4)          53            43      144
Reconciliation to
the consolidated
income statement:
Acquisition and
disposal costs                                                            (36)
Exceptional items                                                         (32)
Operating profit                                                            76
Finance income                                                               8
Finance costs                                                             (19)
Share of profit of
associates after
tax                                                                          3
Profit before tax                                                           68
Tax                                                                       (18)
Profit for the
period                                                                      50



                               Six months ended 30 September 2011*
                        Global Broking                     Post trade
                                       Asia                  risk and
                   EMEA  Americas   Pacific  Electronic   information    Total
                     £m        £m        £m          £m            £m       £m
Revenue             291       249        69         160            98      867
Operating profit
before acquisition
and disposal costs
and exceptional
items                60        21         3          68            41      193
Reconciliation to
the consolidated
income statement:
Acquisition and
disposal costs                                                            (35)
Exceptional items                                                            -
Operating profit                                                           158
Finance income                                                               6
Finance costs                                                             (16)
Share of profit of
associates after
tax                                                                          3
Profit before tax                                                          151
Tax                                                                       (50)
Profit for the
period                                                                     101

*During the current period the allocation of revenue and operating profit  has 
been amended to improve the accuracy of revenue and operating profit allocated
to each segment.

                                    Year ended 31 March 2012*
                        Global Broking                     Post-trade
                                       Asia                  risk and
                   EMEA  Americas   Pacific  Electronic   information    Total
                     £m        £m        £m          £m            £m       £m
Revenue             564       478       130         301           208    1,681
Operating profit
before acquisition
and disposal costs
and exceptional
items               105        42         6         127            92      372
Reconciliation to
the consolidated
income statement:
Acquisition and
disposal costs                                                           (137)
Exceptional items                                                            -
Operating profit                                                           235
Finance income                                                              10
Finance costs                                                             (34)
Share of profit of
associates after
tax                                                                          6
Profit before tax                                                          217
Tax                                                                       (77)
Profit for the
year                                                                       140

*During the current period the allocation of revenue and operating profit  has 
been amended to improve the accuracy of revenue and operating profit allocated
to each segment.



Revenue earned by product type is disclosed below:

                 Six months ended  Six months ended  Year ended
                     30 September      30 September    31 March
                             2012              2011        2012
                               £m               £m*         £m*
Product type
Rates                         311               351         682
FX                            156               174         343
Commodities                    97                98         203
Emerging markets               69                86         160
Credit                         58                83         160
Equities                       55                75         133
Total revenue                 746               867       1,681

*During the current period the allocation  of asset class has been amended  to 
improve the accuracy  of revenue  allocated to  each asset.  The prior  period 
asset classes have been re-presented to ensure comparability.

The Group does not earn more than 10% of its total revenue from any individual
customer.

3 Exceptional items



                                Six months ended  Six months ended  Year ended
                                    30 September      30 September    31 March
                                            2012              2011        2012
                                              £m                £m          £m
Exceptional items before tax
Staff termination and property                                   -
exits                                       (17)                             -
Information technology                      (10)                 -           -
Legal and professional fees                  (5)                 -           -
Total exceptional items before
tax                                         (32)                 -           -
Tax                                           10                 -           -
Total exceptional items after
tax                                         (22)                 -           -

As a result of the cost reduction programme announced in June 2012, the Group
has recognised staff terminations and property exit costs of £17 million for
the six months to 30 September 2012.

On 12 March 2012, the Group announced a change in senior management of the
electronic business. During the current period a strategic review of ongoing
product and trading platform developments was undertaken, leading to an
impairment of intangible assets and property and equipment of £10 million.

The Group has incurred £5 million of legal and professional fees for advice in
responding to requests received from and in co-operating with some government
agencies as part of industry-wide investigations. Further details of these
enquiries are provided in note 11 contingent liabilities.



4 Earnings per share

The Group continues to calculate an adjusted earnings per share measurement
ratio in the notes to the financial statements as it believes that it is the
most appropriate measurement, since it better reflects the Group's underlying
cash earnings.

Earnings per share

                  Six months ended 30 September  Six months ended 30 September
                              2012                           2011
                                       Earnings                       Earnings
                  Earnings    Shares  per share  Earnings    Shares  per share
Basic and diluted       £m  millions      pence        £m  millions      pence
Basic                   50       641        7.8       101       654       15.4
Dilutive effect
of share options         -        10      (0.1)         -         9      (0.2)
Diluted basic           50       651        7.7       101       663       15.2



                 Six months ended 30 September   Six months ended 30 September
                              2012                           2011
                                                                      Earnings
                                       Earnings                            per
Adjusted basic    Earnings    Shares  per share   Earnings    Shares     share
and diluted             £m  millions      pence         £m  millions     pence
Basic                   50       641        7.8        101       654      15.4
Acquisition and
disposal costs          27         -        4.2         27         -       4.2
Exceptional
items after tax
(note 3)                22         -        3.4          -         -         -
Adjusted basic          99       641       15.4        128       654      19.6
Dilutive effect
of share options         -        10      (0.2)          -         9     (0.3)
Adjusted diluted        99       651       15.2        128       663      19.3



                                   Year ended 31 March 2012
                                                      Earnings
                                 Earnings    Shares  per share
Basic and diluted                      £m  millions      pence
Basic                                 137       649      21.1
Dilutive effect of share options        -         9     (0.3)
Diluted basic                         137       658      20.8



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