IAP.L Regulatory News (IAP)

ICAP plc - Trading Statement

- Positive momentum from investment in new products

- EBS BrokerTec wins contract to deliver technology to CFETS

- Transaction with Tullett Prebon on track to complete later this year

London, 13 July 2016 - ICAP plc (IAP.L), a leading markets operator and provider of post trade risk mitigation and information services announces today its trading statement for the period from 1 April 2016 to 30 June 2016. It will be delivered to shareholders attending ICAP's Annual General Meeting today.

Michael Spencer, Group Chief Executive Officer of ICAP, said: "I expect 2016/17 to be an exciting and challenging year for ICAP as we transition to become NEX Group plc, the leading venue for electronic transactions in OTC products and post trade services. Our industry position, built around market-leading products and services developed over many years, provides us with an outstanding opportunity to deliver long-term profitable growth.

"We have made a good start to the year and remain cautiously confident looking ahead despite a more uncertain macroeconomic outlook for the UK and the global economy since the Brexit vote in the UK on 23 June. The referendum result was a tremendous shock to global financial markets but our platforms demonstrated resilience. We handled more than $200 billion of FX volume on 24 June on our EBS platform demonstrating deep and reliable liquidity throughout a period of extreme volatility.

"Prior to the UK referendum, we were looking towards a long and slow journey on the road to more normal market conditions following the decision by the Fed to raise interest rates back in December. This journey looks more uncertain now although the subsequent decline in sterling in the FX markets does provide us with a significant windfall benefit."

Group revenue from continuing operations for the quarter increased by 2%* on a constant currency basis and increased by 7%* on a reported basis compared with the same period last year. Overall market conditions have been mixed as the malaise in global financial markets, low interest rates and bank deleveraging persists. Trading activity levels saw a spike around the time of the referendum.

Continuing operations

Electronic Markets

Revenue decreased by 2% on a constant currency basis and increased 3% on a reported basis during the first quarter compared to the same period last year. On the BrokerTec platform, average daily volume decreased in US Treasuries by 17% to $142 billion, in US repo by 7% to $202 billion and in European repo by 2% to €175 billion. Average daily volume on EBS decreased by 15% to $83 billion for the first quarter as volatility remained low. Revenue did not decrease in line with volume as a result of changes to the product mix and the effect of the volume-based tiered tariff structure.

EBS Direct, the disclosed, relationship-based liquidity service, continued to expand with more than 400 customers on the platform and average daily volume increased to $21 billion (Q1 2015/16 $17 billion) for the period. Interest in forwards and swaps on EBS Direct has seen steady growth in both average daily volume and the number of liquidity consumers trading. BrokerTec Direct, the recently launched relationship-based liquidity service in the US Treasury market, continues to onboard new customers.

In June, ICAP announced that the China Foreign Exchange Trade System (CFETS), China's official inter-bank market trading platform and infrastructure provider, has chosen EBS BrokerTec to deliver the underlying technology for fixed income and FX electronic execution services in mainland China. The deal, valued at $65 million over a three-year period, will see ICAP expand into China, a key growth market for the business, with EBS BrokerTec establishing a local office and development centre in Shanghai.

Post Trade Risk and Information

Revenue increased 6%* on a constant currency basis and 12%* on a reported basis during the first quarter compared to the same period last year. The continuing demand for risk mitigation products was a key driver of growth in the period, particularly at TriOptima. During the quarter, triReduce extended its customer base by completing the first successful compression cycle for cleared euro interest rate swaps at Eurex Clearing and expanded its product range by adding an inflation product for compression. The repository reconciliation offering from triResolve, which aligns the records of the reporting parties with those of the global trade repositories, continues to grow and the user base during the period reached more than 1,700 parties. The division's performance also benefited from the performance of Reset in which the core business saw improvement in its US dollar revenue, following the significant impact in the prior year of low short dated interest rate volatility and the ECB's quantitative easing programme.

As announced in April 2016, ICAP acquired ENSO, a leading provider of data analytics for hedge funds and prime brokers. Enso is now fully consolidated and reported as part of the Post Trade Risk and Information division.

Discontinuing operations

IGBB

Revenue was flat on a constant currency basis and increased by 2% on a reported basis during the first quarter compared to the same period last year. Trading activity continued to be impacted by ongoing structural and cyclical factors. This was, however, partly offset by increased activity following the result of the UK referendum in late June. Good progress was made with the continued roll out of Global Broking's e-Commerce solutions and hybrid footprint, including an increase in the number of customers using TrueQuote, a portal for the buyside. The marginal decline in revenue on a constant currency basis for Global Broking was partly offset by an increase in revenue from the related information business.

Transaction with Tullett Prebon

In November 2015, ICAP announced that it had entered into a transaction which will, when completed, involve the disposal of its global hybrid voice broking and information business, including its associated technology and broking platforms, certain of its joint ventures and associates (IGBB), to Tullett Prebon. In June, the Competition and Markets Authority (CMA), announced that unless the companies were able to offer undertakings which addressed the CMA's competition concerns in relation to the broking of oil products, the anticipated acquisition would be referred for an in-depth phase 2 investigation. In response, ICAP and Tullett Prebon announced that they are working together to sell ICAP's voice/hybrid EMEA oil broking business within the appropriate timeframe. The proposed transaction remains on track to complete later this year.

In addition, ICAP no longer intends to retain a 19.9% interest in TP ICAP plc after completion of the transaction and has agreed with Tullett Prebon that, subject to the requisite approvals (including the approval of ICAP shareholders), these shares will be issued directly to ICAP shareholders such that they will hold approximately 56% of TP ICAP's enlarged share capital on completion. A revised circular will be sent to ICAP shareholders in due course.

-Ends-

Investors & Analysts Conference Call:

This will be hosted by Michael Spencer at 08:00am on Wednesday 13 July 2015:

Dial in number: +44 (0)20 3003 2666

Access Code: ICAP

A recording of this call will be available at www.icap.com

Notes:

* The percentage change in revenue excludes: the effect of the discontinued businesses being sold as part of the transaction with Tullet Prebon, the consolidation of ENSO and residual revenue from existing shipping contracts

FX

The closing exchange rates at 11 July 2016 were $1.30/£ and €1.17/£. If these rates remain constant for the rest of FY2016/17 then the average exchange rates for FY2016/17 would be $1.34/£ (FY2015/16: $1.50/£) and €1.20/£ (FY2015/16: €1.36/£). If FY2015/16 was retranslated at these average rates then it would have a £28m favourable impact on Group operating profit. £18m of this impact relates to the US dollar and £10m relates to the Euro.

About ICAP

ICAP is a leading markets operator and provider of post trade risk mitigation 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. Through our post trade risk and information services we help our customers manage and mitigate risks in their portfolios. For more information, please go to www.icap.com.