1 Interim Results 22 November 2005
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 Review 3 Finance Director Jim Pettigrew
Income Statement 6 months 6 months* ended ended 30/09/05 30/09/04 Variance £m £m £’m % Revenue 443.9 395.8 48.1 12 Net operating expenses (349.5) (315.2) (34.3) (11) Group operating profit** 94.4 80.6 13.8 17 Associates (net of tax) 1.8 0.4 1.4 >100 Net interest 2.0 2.3 (0.3) (13) Profit before tax** 98.2 83.3 14.9 18 * At reported FX exchange rates on a restated IFRS basis. ** Excludes amortisation and impairment of intangibles and exceptional items. Note: FX movements have no material impact on the results. 4
Revenue and Net Operating Expenses Growth* % 20 10 0 Revenue Net operating expenses Net operating Revenue expenses Headline growth 12% 11% Underlying growth 11% 3% * Growth represents 6 months ended 30/09/05 compared with 6 months ended 30/09/04. Underlying revenue and net operating expenses growth excludes; the impact of FX movements, acquisitions, the proportional 5 consolidation of JVs and, in the case of net operating expenses, bonuses.
Underlying Revenue Performance* % Electronic 24 Voice 11 Information services (14) Group 11 * Underlying revenue growth excludes the impact of FX movements, acquisitions and the proportional consolidation of JVs. 6
Expenses Classification as a % of revenue Variable component of broker remuneration Classification as a % of revenue Variable component of broker remuneration % 100 90 80 70 60 50 40 30 6 months 6 months 20 ended ended 30/09/05 30/09/04 10 51 51 0 Broker Rem. 04/05 05/06 3 4 T&E 04/05 05/06 5 5 Telecoms 55 58 Variable 4 4 Other 45 42 Fixed 16 16 Overheads Note: all figures are for the 6 months ended 30/09/05 21 20 Operating Profit (comparatives 6 months ended 30/09/04). 7
Margins Group operating profit margin Electronic and voice broking margin Group operating profit margin Electronic and voice broking margin % 50 % 45 25 21% 20% 40 20 17% 15% 35 14% 15 30 10 25 Electronic Voice 5 20 0 15 00/01 01/02 02/03 03/04 04/05 10 5 0 03/04 04/05 05/06* * 6 Months to 30/09/05 8
Geographic Segment Performance Americas Europe Asia Pacific Americas Europe Asia Pacific Growth Growth Growth % % % Revenue 10 Revenue 7 Revenue 16 Profit 24 Profit (32) Profit 17 Margin Margin Margin % % % 05/06 9 05/06 21 05/06 25 04/05 14 04/05 20 04/05 22 Note: all numbers are on a reported basis and relate to the 6 months period ended 30/09/05 compared with 9 6 months period ended 30/09/04. Profit is Group operating profit before amortisation and impairment of intangibles.
Earnings 6 months 6 months ended ended 30/09/05 30/09/04 £’m £’m Profit before tax* 98.2 83.3 Amortisation and impairment of intangibles (2.8) - Exceptional items - (6.0) Taxation (33.5) (26.6) Profit for the period 61.9 50.7 Attributed to: Equity holders of parent 60.7 49.9 Minority interests 1.2 0.8 Earnings per share – basic 10.2p 8.6p Earnings per share – adjusted 10.6p 9.0p Interim dividend per share 2.50p 1.85p * Before amortisation and impairment of intangibles and exceptional items. Note: all at reported exchange rates, restated for IFRS. 10
Cash Flow Group net Profit Share £ cash Private before Asso- Dep’n/ Working buy Acqui- Excep- flow placement tax ciates capex capital Dividend back sitions tionals Tax 140 £118.8m 120 100 80 60 40 20 0 -20 -40 6 mths to Sept 05 £-44.8m 6 mths to Sept 04 -60 11
Balance Sheet 6 months 12 months* ended ended 30/09/05 31/03/05 £m £m Goodwill 257.3 253.7 Other non-current assets 149.6 133.7 Cash 350.0 231.3 Overdrafts (0.5) (0.6) Net cash 349.5 230.7 Private debt placement (126.1) - Net creditors (71.3) (98.1) Net assets 559.0 520.0 * On a restated IFRS basis, but excluding the gross up of all amounts due and payable by counter parties in respect of matched principal business. 12
Operational Review Group Chief Operating Officer 13 Mark Yallop
Operational Review 1. Industry Dynamics and the Competitive Landscape 2. Developments in Asia 3. Voice business 4. Electronic business 5. Importance of Innovation 14
Capital allocated to markets continues to rise … Hedge funds Major banks interest rate VaR/ Fixed income Hedge funds Major banks interest rate VaR/ Fixed income revenues Number and AUM revenues Number and AUM Interest Rate VaR 800 25,000 Number (line) 9000 1000 Fixed Income Revenues 700 $bn assets (bars) 900 8000 20,000 600 800 7000 700 500 6000 15,000 600 5000 400 500 4000 10,000 300 400 3000 300 200 5,000 2000 200 100 1000 100 0 0 0 0 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 2000 2001 2002 2003 2004 Source: Hennessee Group LLC; Hedgefund Research Source: Morgan Stanley 15
The search for yield continues … Bond spreads Yield Curves Bond spreads Yield Curves US Corporate (10 year) US$ and Euro US Corporate (10 year) US$ and Euro 8 12 AA A USD/03/2005 11 7 USD/09/2005 BBB BB 10 EUR/03/2005 6 EUR/09/2005 B 9 5 8 4 7 6 3 5 2 4 1 3 2 0 r r r r r r r r a a a a a a a a 2002 2003 2004 2005 e e e e e e e e Y Y Y Y Y Y Y Y 1 3 5 7 9 2 0 0 1 2 3 Source: ICAP Source: Wrightson ICAP 16
Significant fiscal and economic imbalances remain … Global Government debt outstanding Current account deficits Global Government debt outstanding Current account deficits (US$ Trillions) (as a proportion of GDP (%)) (US$ Trillions) (as a proportion of GDP (%)) -6 8 Eurozone Japan -4 7 US -2 6 5 0 4 2 China 3 4 Eurozone Japan US 2 6 1997 1998 1999 2000 2001 2002 2003 2004 1997 1998 1999 2000 2001 2002 2003 2004 Source: ICAP Source: ICAP 17
Risk transfer and ALM remain critical … International Bonds And Notes Banks: External Loans And Deposits International Bonds And Notes Banks: External Loans And Deposits Amounts Outstanding (US$ billions) (US$ billions) Amounts Outstanding (US$ billions) (US$ billions) 14000 16000 15000 12000 14000 10000 13000 12000 8000 11000 6000 10000 4000 9000 8000 2000 7000 0 6000 1993 1995 1997 1999 2001 2003 2000 2001 2002 2003 2004 2005 Source: BIS Source: BIS 18
Industry consolidation continues … Global FX ICAP Customer Revenues Global FX ICAP Customer Revenues Top 5 Market Share (%) Top 10 Market Share (%) Top 5 Market Share (%) Top 10 Market Share (%) Medium Term IRS Equity Derivatives Medium Term IRS Equity Derivatives 46 55 56.5 56% 45 45% 54% 54.5 56 44 54 55.5 43 53.5 55 42 53 54.5 41 40 52.5 54 39 38% 53% 52% 52 53.5 38 51.5 53 37 51 52.5 36 35 50.5 52 2000 2005 2003 2005 2003 2005 19
Overall market growth rates 2004/2005 140% Credit Default Swaps Commodity derivatives OTC Equity derivatives FX Forwards Interest Rate Options FX Options Exchange traded derivatives Interest Rate Swaps 0 10 20 30 40 % 20 Source: ISDA, BIS
Others Reuters EBS MTS eSpeed BGC/Euro/ GFI Viel Tradition / Liberty Tullett ICAP Competitive landscape: market penetration Voice only Electronic Only US Treasuries US Repo US Agencies North America US Corporates/HY Electronic Available Voice / US Mortgages Not Canadian GB's Bradys IRS Swaps/Derivatives Credit Derivatives Euro-Govts/EU Basis UK Gilts Europe EU Repo Other Eurobonds Pfandbriefe Credit Derivatives IRS Swaps/Derivatives JGBs Asia/Other Australia GBs South Africa GB's FX/Forwards 21 FX Options Global FX Spot Cash Markets Energy & Commodities Equity derivatives
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