Half Year Report 2009 London, 17 November 2009
These materials do not constitute an offer to sell or the solicitation of an offer to purchase any security. These materials contain "forward-looking statements" as defined in the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on current Company expectations and are subject to risks and uncertainties, which could cause actual results to differ materially. Such risks and uncertainties include, but are not limited to: fluctuations in interest rates and foreign currency exchange rates; market acceptance of new trading technologies; global and regional economic conditions and legislative, regulatory and political developments; and domestic and international competition in the Company's global markets. Additional information regarding these and other factors is available in the Company's reports available on request from the Company. This document may not be distributed where to do so would be unlawful. This document may not be distributed in the UK except to persons falling within article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. 2
Financial results 6 months to 30 Sept 2009 Solid performance with growth in revenue and EPS +6% +2% -5% Revenue Profit* EPS** * Pre-tax profit before amortisation and impairment of intangibles arising on consolidation ** Adjusted basic 3
4 Group Finance Director Matthew Lester
Financial summary • Markets stabilising following traumatic conditions of 2008 and early 2009 • Lapping strong comparatives • Revenue performance solid • Benefiting from diversified business model • New segmentation improves transparency • Continued investment in future growth impacts margins • Lower tax rate and purchase of Reset minority results in increased adjusted EPS • Continued strong cash flow and balance sheet 5
Group profit before tax Headline results 6 months 6 months Var to Sept 09 to Sept 08 Underlying growth £m £m % Revenue 809 764 6% 0 Net operating expenses 640 581 (10%) (9%) Operating profit 169 183 (8%) -5 Net finance charge (8) (13) 38% Associates 5 4 25% -10 (24%) Profit before tax 166 174 (5%) -15 -20 Sept 09 Sept 08 Operating profit margin 21% 24% -25 Revenue Operating profit The above table excludes amortisation and impairment of intangibles arising on consolidation. Underlying growth excludes the impact of foreign exchange. 6
Segmental analysis – IFRS 8 6 months to Sept 09 Revenue Operating Profit £m £m Headline results • IFRS 8 Requires segments consistent Core Voice with internal reporting EMEA 256 54 • Electronic comprises Americas 216 41 of EBS, BrokerTec Asia Pacific 46 2 and E CDS Total 518 97 • Post trade and information services includes Reset, Electronic Broking 122 47 Traiana and voice and electronic data Post Trade & Information Services 68 32 sales • New businesses New Businesses 101 (7) allows management to look at “investments” Total 809 169 separately from core and includes Link, Shipping, Brazil and Cash Equities The above table excludes amortisation and impairment of intangibles arising on consolidation. 7
Core voice 6 months Headline Underlying growth Headline results to Sept 09 variance £m vs prior year EMEA % 0 Revenue 256 2% EMEA Operating profit 54 (4%) Americas -2 Margin 21% -1ppt Total -4 (4%) US Americas (5%) Revenue 216 11% -6 Operating profit 41 11% Margin 19% - -8 (8%) (9%) Asia Pacific -10 (10%) Revenue 46 (10%) Operating profit 2 (33%) -12 (12%) Margin 4% -2ppts -14 Revenue Operating Profit Total core voice Revenue 518 4% Memo Revenue Operating profit Operating profit 97 1% Asia Pac underlying (22%) (40%) Margin 19% - The above table excludes amortisation and impairment of intangibles arising on consolidation. Underlying growth excludes the impact of foreign exchange. 8
Electronic, post trade, information sales 6 months Underlying growth Headline Results to Sept 09 Headline variance £m vs prior year % Electronic Broking Revenue Operating Profit 20 Revenue 122 (5%) Electronic 15% Broking Operating profit 47 (6%) Post trade & Margin 39% - 10 information 4% Post Trade and Information Services 0 Revenue 68 33% Operating profit 32 28% -10 Margin 47% -2ppts -20 Post trade financials 6 months to Sept 09 £m (including share of Trioptima) (24%) -30 Pro-forma revenue 50 (33%) Pro-forma operating profit 24 -40 The above table excludes amortisation and impairment of intangibles arising on consolidation. Underlying growth excludes the impact of foreign exchange. 9
Diversifying operating profit Operating profit six months to September 2009 Operating profit year to March 2007 Electronic, Post Trade & Electronic, Post Trade & Information 47% Information 31% Voice 69% Voice 53% 10
Impact of investment strategy Headline variance Largest areas of New businesses £m vs prior year % investment Revenue 101 16% • Cash equities – global Operating profit (7) (158)% • Emerging markets – Brazil Impact on margin (3)ppts • New Products – Last 2 years Last 3 years patents Revenue from new business started or acquired 14% 18% New businesses 6 months to Year to Sept 09 Mar 09 March 09 2,292 Staff compensation / revenue 62% 59% New Business 89 Annualised revenue per voice broker £555k £560k Other (19) Sept 09 2,362 IT Spend as a percentage of revenue 11% 11% The above table excludes amortisation and impairment of intangibles arising on consolidation. 11
Net operating expenses 6 Months to Sept 09 % point 11% (4)% 6% (3)% (0)% £m movement 700 • Substantial investments in new businesses • Cost savings 38 (20) 650 particularly focused (1) on IEB and US 67 (25) voice broking 640 (1)% 600 581 550 Sep-08 FX Performance Investments Cost Savings Other Sep-09 commissions in new businesses The above table excludes amortisation of intangibles arising on consolidation. 12
Impact of exchange rates Impact on 2009/10 Transactional Translational Total PBT £m £m £m Six months to September 2009 17 25 42 Estimate of full year to March 2010 impact 34 17 51 Assumes $1.65/£ and €1.10/£ for the balance of the year, giving 2009/10 yearly translational rates of $1.61/£ and €1.12/£ Estimated effective transactional rates for full year to March 2010 are $1.64/£ and €1.26/£ (2009 - $1.92/£ and €1.36/£). ICAP is exposed to the translation of other currencies e.g. Yen. 13
Exchange rate sensitivities 2010/11 Updated full year unhedged impact of 10c strengthening vs sterling 2010/11 Transactional Translational Total onwards on PBT £m £m £m Dollar* 9 13 22 Euro** 16 2 18 Estimated impact at current FX rates for Transactional Translational Total 2010/11 on PBT *** £m £m £m Dollar 2 (5) (3) Hedged 2010/11 30% @ $1.52/£ Euro 21 - 21 Hedged 2010/11 55% @ €1.15/£ Total 18 * Variance of 10c movement vs $1.64/£ transactional and $1.61/£ translational ** Variance of 10c movement vs €1.26/£ transactional and $1.12/£ translational 14 *** Assumes $1.65/£ and €1.10/£ for 10/11 and the balance of 09/10
Earnings 6 months to 6 months Sept 2009 to Sept 2008 £m £m Profit before tax* 166 174 Tax* (54) (59) Effective tax rate 33% 34% Profit for the period* 112 115 Amortisation and impairment of intangibles inclusive of tax (18) (18) Profit for the period 94 97 94 Attributable to: Equity holders of parent 92 Minority interests - 5 Interim dividend 5.11p 4.7p Earning per share – basic 14.7p 14.5p Earning per share – adjusted basic 17.5p 17.2p * Before amortisation and impairment of intangibles arising on consolidation. Adjusted weighted average number of shares 6 months ended Sep 09 - 639m (Sep 08 - 635m). 15 .
Movement in free cash flow Profits vs free cash flow 6 months to Year to Year to Sept 09 Mar 09 Mar 08 Cash from operations £m £m £m Profit pre amortisation* 112 229 206 £m 200 Free cash flow 107 296 232 190 Cash > Profit (5) 67 26 (2) 180 (9) 170 28 Calculation of free cash flow 6 months 6 months 160 to Sept 09 to Sept 08 150 £m £m Cash from operations 168 151 140 168 Interest and tax (41) (57) 130 151 Cash flow from operating 127 94 120 activities 110 (29) (23) Capital expenditure 100 9 4 Dividends from associates Sep-08 Net impact of Movement due Movement due Sep-09 initially to changes in to trading and investments unsettled working items capital Free cash flow 107 75 * Profit after tax excludes amortisation and impairment of intangibles arising on consolidation. 16
Net borrowings Movement in net borrowings £m 50 0 Mar-09 Free cash Dividends Acquisitions Other Sep-09 (59) -50 (126) (144) 107 -100 (56) (10) -150 17
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