ANNUAL RESULTS PRESENTATION 25 MAY 2004 INTRODUCTION The fourth - - PowerPoint PPT Presentation

ANNUAL RESULTS PRESENTATION

25 MAY 2004

2

INTRODUCTION

• The fourth year in succession that turnover,

profit, EPS (on adjusted basis) and dividend per share have increased substantially.

• Costs continue to be effectively controlled

and margins are now 20%

• Underlying turnover growth 12%
• Market growth 7%

3

TIMETABLE

• Results for the year ended 31 March 2004
• Michael Spencer
• Jim Pettigrew
• Asia Pacific Region
• David Gelber
• London and Europe
• George Macdonald
• Update on Electronic Broking
• Garry Jones

4

RECORD RESULTS

Profit before tax - adjusted

25 50 75 100 125 150 175 2001 2002 2003 2004

£m

Dividends per share

2 4 6 8 2001 2002 2003 2004

Pence

Turnover (£m)

200 400 600 800 1000 2001 2002 2003 2004 £m

Earnings per share - adjusted

5 10 15 20 2001 2002 2003 2004

Pence

5

PROFIT & LOSS

Year ended Year ended* Variance Against Prior Year 31/03/04 £’m 31/03/03 £’m £’m % Turnover 801.4 664.3 137.1 21 Expenses (641.1) (550.8) (90.3) (16) Group operating profit 160.3 113.5 46.8 41 JVs & Associates 8.3 7.1 1.2 17 Total operating profit 168.6 120.6 48.0 40 Net interest 1.6 3.1 (1.5) (48) Pre tax profit** 170.2 123.7 46.5 38

*At reported exchange rates. **Excludes goodwill amortisation and exceptional items.

6

UNDERLYING GROWTH

Notes:

• 1. Consolidated from: BrokerTec-May 03, APB-Oct 02, Nittan-Nov 02, First Brokers-May 02 and Intercontinental Energy-June 03.
• 2. Excess of US BEIP grant over increased US costs following move from WTC to Harborside shown in “Other” as an add-back for

the purpose of calculating underlying cost increase.

• 3. Intercontinental Energy numbers are estimated as business has been integrated.

Variance against prior year Turnover Expenses £m % £m % Headline 137.1 21 (90.3) (16) Acquisitions

• BrokerTec

(58.2) 41.3

• APB

(8.8) 7.7

• Nittan

(13.3) 9.1

• First Brokers

(5.0) 4.0

• Intercontinental Energy

(2.7) 2.4 Fx movements 23.7 (20.8) Other

• (3.7)

Bonuses

• 39.0

Underlying 72.8 12 (11.3) 3

7

EXPENSES

Classification as a % of turnover Broker remuneration fixed/variable

Broker Rem. T&E Telecoms Other Overheads Profit* 02/03

54 4 6 4 15 17

03/04

51 4 5 5 15 20

10 20 30 40 50 60 70 80 90 100 03/04 02/03

Fixed Variable % of Turnover

* Group operating profit.

8

GROUP OPERATING MARGIN

5 10 15 20 25 99/00 00/01 01/02 02/03 03/04

%*

**

20% 17% 15% 14% 7%

*Group operating profit margin. ** Pro forma 15 months, all others based on 12 months reported results.

9

PROFIT & MARGINS BY REGION

10 20 30 40 50 60 70 80 90 2003 2004 £’m

Asia Pacific Americas Europe

Notes : profit is defined as pre-tax profit before goodwill amortisation, exceptional items, interest, and excludes share of profit (losses) for JVs and associates. : bar represents profit, % is margin.

9% 24% 19% 14% 22% 8%

10

PROFIT AND MARGINS BY ACTIVITY

• 20
• 10

10 20 30 40 50 60 70 80 2003 2004

£’m

Securities broking Information services Derivatives and money broking Electronic broking 8% 65% 16% 18% 22% 20% 13% 15%

• 75%

Energy broking 64%

Notes : profit is defined as pre-tax profit before goodwill amortisation, exceptional items, interest, and excludes share of profit (losses) for JVs and associates. : bar represents profit, % is margin.

11

EARNINGS

Year ended Year ended* 31/03/04 £’m 31/03/03 £’m Pre-tax profit 170.2 123.7 Goodwill amortisation (38.8) (17.0) Exceptional items (0.9) 10.8 Taxation (42.8) (38.1) Minority interests (3.2) (2.6) Profit for the financial period 84.5 76.8 Earnings per share – basic 15.1p 15.4p Earnings per share – adjusted 18.4p 15.5p Interim dividend per share 1.7p 1.4p Proposed final dividend per share 5.7p 4.6p

*At reported exchange rates.

EPS & dividend per share reflects the 5 for 1 share split.

12

PRE-TAX EXCEPTIONAL ITEMS

Year ended 31/03/04 £’m WTC insurance proceeds 4.4 BrokerTec integration (5.6) Other 0.3 (0.9)

13

TAXATION

Pre-Tax Profit Tax Effective Rate £’m £’m % Subsidiaries 161.9 (54.6) 34 JVs & Associates 8.3 (3.0) 36 170.2 (57.6) 34 Exceptional items (0.9) 2.8 Goodwill amortisation (38.8) 12.0 130.5 (42.8) 33

14

PROFIT*/CASH CONVERSION

20 40 60 80 100 120 140 160 180 2002 2003 2004 £m 103% 125%

Group operating profit Cash inflow from operating activities (FRS1)

114%

* Operating profit before goodwill amortisation and exceptional items.

15

CASHFLOW

Year ended Year ended 31/03/04 £’m 31/03/03 £’m Pre-tax profit 170.2 123.7 JVs & associates (4.7) (3.2) Depreciation 26.9 15.8 Net capital expenditure* (28.0) (16.0) Exchange adjustments (21.7) (6.5) Working capital and other 0.9 17.8 Tax (49.7) (35.7) 93.9 95.9 Acquisitions/investments (13.0) (36.4) Dividends (37.1) (26.5) Exceptional items (1.2) (14.1) Change in net funds 42.6 18.9

* Excludes £4.4m (2003:£15.4m) of insurance proceeds which are shown as exceptional items, net of a £5.6m (2003: £8.3m) exceptional costs outflow , 2003 exceptional items also include £21.2m of US build out related capex,.

16

BALANCE SHEET

Year ended Year ended 31/03/04 £’m 31/03/03 £’m Goodwill 269.0 118.8 Other fixed assets 81.2 65.9* Net funds 227.2 184.6 Net creditors (98.5) (108.3) Net assets 478.9 261.0*

* Restated to adopt the provisions of UITF 38 ‘Accounting for ESOP Trusts’ (reduction of £2.2 m).

17

CAPITAL RESERVES

£’m Shareholders’ funds at 1/4/03 254.8 Share capital issued during the year 120.0 Net increase in contingent share capital 85.2 Profit for the financial period 84.5 Dividend (44.9) Exchange adjustments (27.5) UITF 38 adjustment (3.9) Shareholders’ funds at 31/3/04 468.2 Minority interest 10.7 Net assets 478.9

18

EXCHANGE RATE SENSITIVITY

Pre hedging impact on pre-tax profit US$ +/- 10 cents £7m* Euro +/- 10 cents £4m**

* £2.5m transactional, £4m-£5m translational. ** Almost entirely transactional.

19

UK TRANSACTIONAL FOREX HEDGING

Year to 31/03/05 Currency Exposure (m) Indicative Cover US$ 69 100% @ 1.72* Euro 115 61% @ 1.45* Year to 31/03/06 Currency Exposure (m) Cover US$ 69 4% @ 1.74 Euro 115 _

* Worse case rate as rate for certain fx contracts is dependent upon spot rate at maturity.

20

INTERNATIONAL ACCOUNTING STANDARDS

• On track with implementation plans
• Main areas that will effect ICAP
• goodwill amortisation
• share options
• disclosures
• 2004/2005 interims will include an IFRS update

21

BROKERTEC

• Revenue and profit performance has exceeded

expectations

• 2003/2004 cost saving target bettered
• Exceptional costs in 2003/2004 of £5.6m
• Integration will continue and will deliver further cost

efficiencies and synergies

• Possibility of some exceptional costs in 2004/2005
• Leverage potential

22

BROKERTEC

5 10 15 20 25 30 35 40 45 50

Fixed Variable

Actual 7/5/03 to 31/3/04 £’m Turnover 58 Costs 41 Profit before tax 17 Margin 29%

Notes: The above figures exclude the Group’s original electronic broking operations (ETC) which increased their turnover in 2003/2004 compared to 2002/2003 by £3.7m. For the year to 31/12/02, BrokerTec’s acquired operations recorded a profit of $20.5m (£12.1m at a 1.70 rate).

£m

Cost Profile

23

FUTURE GROWTH

• Continued expansion through both organic growth

and acquisitions

• Underlying cost base remains stable
• Market conditions:
• demand for significant deficit financing in many of the G7 countries
• increased issuance in the corporate bond and mortgage backed

securities markets

• volatility in medium term interest rates
• increased allocation of capital for trading and position taking by the

banks and hedge funds

• shifts in foreign exchange rates
• increased use by banks and other financial institutions of the

derivatives market to unbundle and redistribute a range of financial risks including credit, interest rate and exchange rate risks

• changes in the demand for commodities such as oil, coal and gas

24

INTERNATIONAL BONDS AND NOTES

AMOUNTS OUTSTANDING (US$ billions)

2000 4000 6000 8000 10000 12000 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Source: BIS

25

MARKET GROWTH

INTEREST RATE SWAPS OUTSTANDING

20 40 60 80 100 120

D e c

• 9

D e c

• 9

1 D e c

• 9

2 D e c

• 9

3 D e c

• 9

4 D e c

• 9

5 D e c

• 9

6 D e c

• 9

7 D e c

• 9

8 D e c

• 9

9 D e c

• D

e c

• 1

D e c

• 2

D e c

• 3

Amount $ Trillions *Figures supplied by BIS

26

ICAP/BROKERTEC COMBINATION

• Key strategic objective
• Bank dealers now have both voice and electronic

access to a combined liquidity pool covering both benchmark and off the run issues

• Technology project to bring dealers access to the

combined liquidity on BrokerTecs and ICAP electronic platforms in the US Treasury markets completed in September 2003

• Extensive electronic broking footprint
• Significant economies of scale

27

ELECTRONIC BROKING VOLUMES

ALL FIXED INCOME PRODUCTS ($billion/day)

50 100 150 200 250 300 350 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04

ICAP/ETC MTS Group eSpeed BrokerTec + ETC from 4Q03

Sources: BrokerTec, ICAP, estimates from eSpeed and MTS websites - counting

• nly trades executed electronically

28

ELECTRONIC BROKING

• High Initial Fixed Costs, Low Variable costs
• Margins on additional business much higher
• STP (straight through processing)/PTF (post trade

feed)

• Lowers client’s cost of trading
• Velocity of trading increases
• Offensive strategy and Defensive hedge
• Benefits of cross market trading both E/V & E/E

29

ELECTRONIC BROKING PENETRATION

% OF BUSINESS TRANSACTED ELECTRONICALLY

US Treasury Bonds T Bills US Agencies Mortgage Securities US$ Repo Australian GBs Japanese GBs South African GBs 20 40 60 80 100

30

INDUSTRY DEVELOPMENTS

• Increased liquidity concentration, big get

stronger

• Pace of consolidation should continue to

increase driven by:

• Increasing impact of technology
• The growth of e-broking
• Wider appreciation of the potential of scale

economies

THE INDUSTRY

31

MARKET SHARE ESTIMATE*

GLOBAL INTERDEALER BROKING 2003/4 - $4.6 billion

0% 5% 10% 15% 20% 25% 30%

Other voice brokers Other Energy brokers Other Electronic brokers Cantor/Espeed GFI Prebon Tradition Tullett ICAP 2003/4 2002/3

*Where no public information is available, estimates have been used

32

STRATEGY

• Growth from both voice and electronic markets
• Growth from building market share organically and,

where appropriate, through selective acquisition.

• Developing and delivering technology to make

cross market trading possible

• Continuing innovation and product development
• Expanding customer base
• Develop global futures business

33

FUTURES BROKING

• Greater penetration of electronic trading, reducing barriers to entry

and lowering commissions

• Increased demand for risk mitigation through correspondent

clearing pools and transparent valuation

• Standardisation of product and trading methodology of OTC

products

• Packaged products and cross product execution across OTC &

Exchange Traded environment

• Aggregation of product responsibility amongst dealers
• Convergence requires brokers to present strong and integrated
• fferings in both the OTC and Exchange Traded markets

34

OUTLOOK

• Leveraging off our unique combination as the world’s

leading voice and electronic broker

• Industry activity levels will continue to grow steadily
• High levels of bond and issuance
• Credit derivatives growth
• Energy related activity
• Prospect for further policy tightening, which has lifted the US

yield curve and the euro curve has followed in its wake.

• Turning point in the interest rate cycle will maintain medium

term interest rate volatility

• FX movements
• Continue growing voice and electronic market share

ICAP IN ASIA

David Gelber COO ICAP

36

FOUR TYPES OF CENTRE

• MAJOR:
• Tokyo
• Singapore
• Hong Kong
• Sydney

37

FOUR TYPES OF CENTRE

• MINOR
• Indonesia
• Thailand
• Malaysia
• New Zealand
• Philippines
• Bahrain
• MAJOR:
• Tokyo
• Singapore
• Hong Kong
• Sydney

38

FOUR TYPES OF CENTRE

• MINOR
• Indonesia
• Thailand
• Malaysia
• New Zealand
• Philippines
• Bahrain
• MAJOR:
• Tokyo
• Singapore
• Hong Kong
• Sydney
• DEVELOPING
• India
• Korea

39

FOUR TYPES OF CENTRE

• MINOR
• Indonesia
• Thailand
• Malaysia
• New Zealand
• Philippines
• Bahrain
• THE FUTURE
• China
• MAJOR:
• Tokyo
• Singapore
• Hong Kong
• Sydney
• DEVELOPING
• India
• Korea

40

JAPAN

• Japanese Government bonds
• No. 2 broker (40% market share)
• Equity derivatives
• No. 1 broker (50%+ market share)
• Interest rate derivatives
• Totan Capital Markets (Joint venture - 22.5%)
• No. 1 broker in (38% market share)
• FX Options
• TFS/ICAP/Volbroker (Joint venture - 25%)
• No. 1 broker (40% market share)
• Japan Credit Trading (JCT)

41

JAPAN REVENUE FROM JAPANESE OPERATIONS (INCLUDING SHARE OF JV’S) 2002/3 2003/4 CHANGE 24.9 31.3 +6.4 (25.7%)

42

SINGAPORE

• Wide range of products
• No. 1 broker(40% market share)
• Regional coverage of markets in Korea,

Taiwan and Malaysia

• Small oil broking business
• FX Options
• TFS/ICAP/Volbroker (Joint venture - 25%)
• No. 1 broker (40% market share)

43

SINGAPORE REVENUES (INCLUDING SHARE OF JV) 2002/3 2003/4 CHANGE 16.8 19.2 +2.4 (14.3%)

44

HONG KONG

• Wide range of products
• No. 1 broker (33% market share)
• Regional centre for non government bonds

and credit derivatives

• Market share 60:40:30

45

HONG KONG REVENUES 2002/3 2003/4 CHANGE 15.7 20.1 +4.4 (21.9%)

46

SYDNEY

• Traditional money markets and interest rate derivatives
• No. 1 broker overall (35% market share)
• Australian government bonds
• No. 1 broker (80% market share)
• 30% electronically broked
• Futures
• Leading broker
• Electricity
• No. 1 broker
• FX Options
• TFS/ICAP/Volbroker (Joint venture - 25%)
• No. 1 broker (50% market share)

47

SYDNEY REVENUES (INCLUDING SHARE OF JV) 2002/3 2003/4 CHANGE 10.5 11.3 +0.8 (7.7%)

48

MINOR FINANCIAL CENTRES

• New Zealand, Malaysia, Thailand,

Indonesia, India, Bahrain

• Not significant contributors
• No loss making operations
• Awaiting developments/de-regulation
• A minimal amount of management time

49

CHINA – THE BIG PRIZE

• Well positioned with two representative
• ffices
• Painfully slow to “open up”
• In “pole position” for first joint venture with

government owned broker in Shanghai

• Doing increasing business from Hong Kong

in voice/electronic US Treasuries

50

ELECTRONIC BROKING

• Other than Australia very slow take up
• Good progress in increasing BrokerTec

coverage in the region

• Two local consortia closed down
• MTS Japan ceased operations
• Ongoing initiatives in New Zealand, Korea

and Malaysia

• Difficult regulatory environments

51

COMPETITIVE LANDSCAPE

• Voice Broking
• Collins Stewart Tullet
• Tradition
• Prebon Yamane
• GFI
• Local Companies
• E-Broking
• eSpeed
• The Bond Broker

52

MEDIUM TERM DEVELOPMENTS

• Korea opening up to foreign owned brokers
• Credit derivatives continued growth
• Slow take up of e-broking
• Generally improving economic outlook
• China

ICAP IN EUROPE

George Macdonald CEO London & Europe

54

PERFORMANCE

ICAP’s European operations including London, Frankfurt, Copenhagen, Warsaw, Prague, Johannesburg

+2 24 22 Margins % +22 81.3 66.7 Profits +11 333.6 300.1 Turnover Increase % 2003/4 2002/3

55

FACTORS IN SUCCESS

• Management and Broking Staff
• Total London staff 978, brokers 615
• Flat Management Structure
• Quality, Experienced Brokers
• Recruitment
• Market Share
• Electronic Capability
• Product Diversity

56

PRODUCTS

• Foreign Exchange
• Spot
• Forward
• N.D.F’s
• Money Markets
• Cash Deposits
• Certificates of Deposits
• Energy
• Oils
• Power
• Coal
• Natural Gas

+ Bullion + Base Metals

• Interest Rate Swaps
• Interest Rate Options
• Government Bonds
• Repurchase Agreements

(Repo)

• Credit Derivatives
• Eurobonds
• Sovereign
• Supranational
• Corporate
• Emerging Markets
• Distressed debt
• Equities
• Futures

57

MARKETS

• Market Share & Competitors
• Current Stage Of Electronic Trading
• Market Development

58

INTEREST RATE SWAPS

• Euro, US$, £, Yen
• IDB market growth

36% from 2002/3 to 2003/4

• iSwap
• Hedge funds

ICAP Tradition Tullett Prebon Cantor Eurobrokers R P Martin

59

INTEREST RATE OPTIONS

• Caps, Collars,

Floors, Swaptions & Inflation Swaps

• IDB market growth

33% from 2002/3 to 2003/4

• iSwap
• Volatility & inflation

ICAP Eurobrokers Tradition Tullett Cantor Prebon

60

CREDIT DERIVATIVES

• Credit Default Swaps,

Indices (iboxx, tracx)

• Convergence &

sectorisation

• Overall market growth*

29% in CDS in 2002/3

• Preparing to trade

indices electronically

• Spread volatility, credit

management, (increased participation) credit events

*ISDA Survey ICAP GFI Prebon CreditEx Credit Trade Others

61

REPO(REPURCHASE AGREEMENTS)

• European & Gilt

Repo

• IDB market growth

22% in 2002/3*

• Electronic hybrid

model now

• perating
• New asset classes

ICAP/BrokerTec MTS (Italy) Eurex Repo Other Voice *ISMA Survey

62

UK GILTS

• 4 IDBs servicing 16

GEMMS

• Volume growth 23%

from 2002/3 to 2003/4

• Gradual increase in

electronic broking

• Increase in

issuance, interest rate volatility

ICAP/BrokerTec Cantor/Espeed Dowgate 10 20 30 40 50 60 2

• 1

2 2

• 3

2 4

• 5

2 6

• 7

Financing Requirement UK Gilts

* Debt Management Office

63

EUROPEAN GOVERNMENT BONDS

• Markets in German,

Italian, French, Spanish, Greek, Belgian, Dutch and Portuguese bonds

• Highly fragmented

market

• Barriers to entry

Local MTS* Euro MTS* Hdat* Espeed* BrokerTec* Senaf* Eurex Bonds* Tulllett Finacor/Viel/Tradition Others voice incl ICAP

* Electronic brokers

64

FACTORS IN SUCCESS

• Management and Broking Staff
• Market Share
• Electronic Capability
• Product Diversity

ICAP ELECTRONIC BROKING

Garry Jones CEO, IEB Europe

66

OVERVIEW

• 1. Electronic Broking in context
• 2. Current position and performance
• 3. Hybrid Strategy and growth
• 4. Technology update
• 5. ICAP’s unique position

67

ICAP ELECTRONIC BROKING (IEB) - MANDATE

• Develop significant e-broking revenue for

ICAP and expand product range for e-trading within the group

• Help to increase ICAP’s overall market share

in both electronic and Voice businesses by creating hybrid liquidity pools

• Manage and develop e-solutions for our

Voice and Electronic markets.

68

IEB ORGANISATION

• 1. E-Trading

e.g. BrokerTec ETC

• 2. Voice Support

e.g. STP Post Trade Feeds

• 3. E-Solutions

e.g. Fra-Cross I-Swap FX Forwards

69

BUILDING THE ELECTRONIC PIPELINE

Settlement and Custody

Clearing Internal Processing

Electronic Direct Hybrid Input

5% 60% 5% 30%

Cost Chain

70

BROAD PRODUCT RANGE

Global Reach Government Bonds and Basis Agency, Supras and Sovrereigns Repo in Government Bonds and Agencies Energy and Commodities FRAs Q3 2003 Eonia – overnight index swaps on I-Swap FX Forwards

71

ELECTRONIC BROKING

AVERAGE DAILY VOLUMES

305,966 244,063 212,485 201,631 191,115 Total Electronic Volumes 315,819 250,576 Including Reference Legs

$ Million Q1 2004 Q4 2003 Q3 2003 Q2 2003 Q1 2003

% Change Y/Y Q1 2003 to Q1 2004 : +60%

72

ELECTRONIC BROKING

TOTAL QUARTERLY VOLUMES 18,830,145 15,347,654 13,804,403 12,702,736 11,657,989 Total Electronic Volumes 19,431,163 15,764,487 14,231,931 Including Reference Legs

$ Million Q1 2004 Q4 2003 Q3 2003 Q2 2003 Q1 2003

% Change Y/Y Q1 2003 to Q1 2004 : +62%

73

US TREASURIES MARKET SHARE ICAP is now the leading IDB globally in US Treasuries

• Estimated Market Share : March 51%
• Increased market share from Sep 03 is + 7%
• 100% of Actives is Electronic
• > 40% of Off the Runs is Electronic
• Leading position in Electronic Repo and Agencies

74

EUROPEAN – ELECTRONIC PLATFORMS

EU REPO EU GOV EU BASIS UST GILTS

E-SPEED BROKERTEC ETC DOWGATE SENAF SBORSE EUREX REPO GFI NET SENAF E-SPEED BROKERTEC E-SPEED BROKERTEC EUREX BONDS HDAT MTS (ITALY) BROKERTEC E-SPEED MTS BROKERTEC

MARKET LEADERS IMPORTANT PROVIDERS PARTIAL BUSINESS

75

DEVELOPING ENVIRONMENT

How it will develop How the industry is

Electronic Hybrid Voice

Illiquid, bespoke, complex, lower volume markets New products Liquid, commoditised, simple, higher volume markets

76

HYBRID WORLD

• Price Discovery and Access to Liquidity
• Client Choice
• Combined Liquidity Pools
• Broaden the Footprint Overall
• Infrastructure already built
• Electronic Efficiencies of STP and PTF

77

LEVERAGE OF ELECTRONIC ACCESS

Electronic Ave Daily Tickets Repo Traders

• Jan 2001:

45 525

• Jan 2002:

186 2,104

• Jan 2003:

277 4,277

• Jan 2004:

368 6,527

• Largest number of tickets by individual bank:

650(19/2/04)

• Largest number of tickets by individual trader: 450

(23/2/04)

78

KEY SYNERGISTIC FOCUS ON HYBRID MODEL

• 1. Geographical reporting lines, with

Electronic and Voice in common reporting structure

• 2. Tie-in objectives and incentives for both

areas

• 3. Overall ICAP market share and profitability

is primary focus

79

ELEMENTS OF GROWTH

1. Gain Market Share in Existing Markets

:UST :EU Repo

2. Extend Existing Markets

:Spread Trading :Credit Products

3. New Markets :Eurobonds

:Eonia :FX Forwards

80

DRIVERS OF E-TRADING

CLIENT DEMAND NEW TECHNOLOGY INNOVATION NEW PRODUCTS

81

TECHNOLOGY VISION

• 1. Consolidate systems and API’s (I-connect)
• 2. Creation of Common Middleware
• 3. Optimise connectivity and networks
• 4. Build on ‘Best of Breed’ functionality
• 5. Careful balance between new system

development and client technology plans and resources

82

CONSOLIDATION OVERVIEW

(EXAMPLES)

BTEC ETC STP MKT DATA AOG

ICAP Middleware : I-Connect API

OM GTN NEW SOLUTIONS

83

KEY CHALLENGES

• Broad competition
• Changing Working Practices
• Client “Overload”
• Technology consolidation risks
• Government Regulations

84

ICAP’S UNIQUE POSITION

• Global Presence, Large Client Footprint
• Real momentum, Gains in market share
• Unrivalled Product Range
• Pipeline of new initiatives
• Hybrid Model

: Combined Liquidity Pools : E-Solutions for V Businesses

• Leading Technology Portfolio
• Internal Focus and senior management commitment

ANNUAL RESULTS PRESENTATION

25 MAY 2004

86

BUSINESS ACTIVITY TURNOVER GROWTH

Year ended Year ended Variance against prior year 31/03/04 £’m 31/03/03 £’m Reported % Underlying % Securities Broking 365.0 347.4 5 8 Derivatives & money broking 309.2 264.9 17 15 Energy broking 41.4 28.5 45 8 Electronic broking 62.0 10.8 474 45 Information services 23.8 12.7 87 7 801.4 664.3 21 12

Notes

: Turnover excludes joint ventures. : Underlying excludes acquisitions and FX impact.

87

GEOGRAPHICAL TURNOVER GROWTH

Year ended Year ended Variance against prior year 31/03/04 £’m 31/03/03 £’m Reported % Underlying % Americas 371.7 300.7 24 14 Europe 345.1 300.1 15 9 Asia Pacific 84.6 63.5 33 13 801.4 664.3 21 12

Notes : Turnover excludes joint ventures. : Underlying excludes acquisitions and FX impact.