ICAP Report 2010

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Annual Report 2010for the year ended 31 March 2010

Inside this report01 17 18 24 30 43 44 46 47 50 55 63 65 66 75 140 141 141 142 ICAP in ten Business review Group Chief Executive Officers review Business review Risk and control environment Governance Directors profiles Chairmans statement Directors report Corporate governance Remuneration report Independent auditors report Financial statements Financial statements Notes to the financial statements Index to the financial statements Shareholder information Information for shareholders Definitions

01

ICAP in ten 01 15 Business review 17 41

Welcome to ICAP in

Governance 43 63 Financial statements 65 140

ICAP is the worlds premier voice and electronic interdealer broker and provider of post trade risk and information services. In this section we provide a ten-point overview of ICAP, what we do and how we have performed.

Information for shareholders 141 143

ICAP plc Annual Report 2010

02

ICAP in ten

R R R R R

Group revenue from continuing operations rose to 1,605 million with profit before tax1 of 333 million Electronic revenue of 252 million produced operating profit1 of 100 million Post trade risk and information revenue rose to 142 million and produced operating profit1 of 69 million Electronic broking and post trade risk and information contributed 48% of Group operating profit1 Continued progress in new businesses during the period. However, expansion into full service agency cash equities in Europe and Asia Pacific failed to match up to our expectations and was closed; 18 million of post-tax losses have been recorded as discontinued operations Post-tax exceptional costs of 52 million, related to the costs of closing the European and Asia Pacific full service agency cash equities businesses and settling an SEC investigation On an underlying basis2 revenue fell by 6% and operating profit2 by 13% The Groups operating profit1 margin was 22% (2009 23%), reflecting the early stage of some acquisitions and investments Free cash flow3 of 219 million (2009 296 million). Net debt4 of 148 million (31 March 2009 net debt 126 million) after making acquisition related payments of 149 million and paying 92 million in dividends The directors recommend a final dividend per ICAP share of 12.44p, which will be paid on 20 August 2010. The full year dividend will be 17.55p compared with 17.05p per share in 2008/09

Highlights9Read more on page 24R R R

R

R

ICAP plc Annual Report 2010

03

Continuing operations Revenue Operating expenses1 Other income Operating profit1 Net finance costs Associates (net of tax)1 Profit before tax1

2010 m

2009 m

Variance %

ICAP in ten 01 15

1,605 (1,270) 19 354 (28) 7 333 247pence

1,585 (1,243) 23 365 (24) 9 350 285pence

1 (2) (17) (3) (17) (22) (5) (13)Variance %

Business review 17 41

Financial Summary9Read more on page 38

Profit before tax statutory3

Dividend per share Earnings per share total operations Basic Adjusted basic Earnings per share continuing operations Adjusted basic Total operations Net assets Free cash flow4 Net debt5

17.55

17.05

3Governance 43 63

18.0 32.3

27.6 34.1

(35) (5)

35.1m

34.7m

1Financial statements 65 140

Variance %

1,215 219 (148)

1,140 296 (126)

7 (26) (17)

Notes: 1 From continuing operations excluding amortisation and impairment of intangibles arising on consolidation and exceptional items. 2 From continuing operations excluding amortisation and impairment of intangibles arising on consolidation and exceptional items and adjusted to exclude the impact of FX. 3 From continuing operations. Total statutory profit after tax for the year of 116 million included a loss from discontinued operations and exceptional items after tax of 48 million. 4 Free cash flow is net cash flow from operating activities adjusted for capital expenditure and dividends received from associates and other investments. 5 Net debt is cash and cash equivalents less long-term and short-term borrowings and overdrafts.

Group revenue from continuing operations remained stable at 1,605 million and operating profit1 declined to 354 million, primarily as a result of investment in new businesses. However, ICAP has demonstrated that, as a result of investments made over a long period, its overall business is in good shape and is more broadly based than it has ever been. By following a clear growth and diversification strategy ICAP is well positioned to take advantage of any changes in the structure and regulation of the financial services industry.

Information for shareholders 141 143

ICAP plc Annual Report 2010

04

ICAP in ten

ICAP is the worlds premier voice and electronic interdealer broker and provider of post trade risk and information services. The Group is active in the wholesale markets in interest rates, credit, commodities, FX, emerging markets and equity derivatives.

What we do9Read more on page 24

Customer ACustomer A is interested in selling certain securities and contracts to dealer 1

Dealer 1Dealer 1 places a sell order with ICAP

ICAP plc Annual Report 2010

Electronic and voice brokingAn interdealer broker draws together willingness to buy and sell in wholesale markets. ICAP uses voice broking or electronic networks to bring these buyers and sellers together, facilitating price discovery and receiving a commission when a transaction is entered into. In many of the markets where ICAP operates, voice brokers help to create liquidity and facilitate the price discovery process. This is particularly important in non-standardised, bespoke markets where the number of parties willing to enter certain transactions may be limited. In more standardised markets with higher and more frequent participation, such as spot FX and government bonds, ICAP operates electronic broking platforms. ICAPs combined solution offers access to markets across all asset classes and levels of liquidity.

05

ICAP in ten 01 15 Business review 17 41 Governance 43 63

Voice broking Electronic broking

Dealer 2The dealer who buys the securities will in turn sell them on to a customer

Customer BCustomer B buys the securities from dealer 2

Financial statements 65 140

Post trade risk

Post trade riskICAP also provides a range of post trade risk services to help its customers reduce operational and systemic risk in their markets. This increases their capacity, reduces their costs and creates new trading opportunities, which in turn benefits ICAP. As regulatory and market demand for such products and services increases, ICAP expects this business to grow.

Information for shareholders 141 143

ICAP plc Annual Report 2010

06

ICAP in ten

Our divisions Our business is managed across the following divisions:R R R R

core voice broking (by geographic region) electronic broking post trade risk and information new businesses

Diversity of our business9 9 9 9Read more about Voice broking on page 24

Core voice broking Voice brokers help to create liquidity in wholesale markets by bringing together buyers and sellers, creating liquidity and easing the price discovery process. This is particularly important in non-standardised, bespoke markets as well as innovative new markets where there may be less liquidity. In challenging market conditions voice brokers offer a very valuable service to the dealer community. Electronic broking When markets are more liquid and products more standardised, they are most efficiently traded on electronic broking platforms. ICAP offers a number of electronic broking platforms, the largest of which are the EBS platform for spot FX and the BrokerTec platform for fixed income products. ICAP also offers platforms for electronic broking of interest rate and credit default swaps. In addition to efficiency benefits for customers, electronic broking has many transparency and audit benefits, which are of particular interest to regulators. ICAPs electronic broking networks are often integrated with our customers post trade networks. Post trade risk and information Post trade risk and information services help customers reduce operational and systemic risk in their markets. This includes services such as portfolio reconciliation and compression, netting and aggregation services and information data services that offer regulators and market participants greater insight into the markets. New businesses The breadth and diversity of ICAPs business is one of the key drivers of its success. ICAP continues to expand and diversify through a series of investments, despite sometimes challenging conditions in many of these markets. This segment includes businesses that have been acquired or set up within the past two years. Examples of these businesses are shipping, equity derivatives, base metals and our investment in Brazil.

Read more about Electronic broking on page 25

Read more about Post trade risk and information on page 26

Read more about New businesses on page 27

ICAP plc Annual Report 2010

Our key markets Revenue comparison from continuing operations by asset classRates Emerging markets 2005/06 9% 14% 11% 6% 8% 52% FX Credit Equities Commodities

ICAP is active in a broad range of markets, including interest rates, credit, commodities, FX, emerging markets and equity derivatives, and post trade risk and information services. ICAP continues to have the potential for further growth and we have invested ahead of our competitors. Factors that support this growth include:R