IAP.L Regulatory News (IAP)

ICAP plc - Trading Statement

- Positive momentum in new Electronic and Post Trade initiatives

- Activity on EBS increased significantly as FX market volatility rose sharply

- Global Broking impacted by a reduction in bank client activity

- Cost savings programme remains on track

London, 10 February, 2015 - 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 October 2014 to 31 December 2014. Results for the year ended 31 March 2015 will be announced on 19 May 2015.

Group revenue for the third quarter to 31 December 2014 was 1% lower than the same period last year on a constant currency basis, 2% lower on a reported basis.

In December, ICAP announced its strategic plans to combine its electronic businesses EBS and BrokerTec. The combined business, known as EBS-BrokerTec, will allow ICAP to leverage BrokerTec's market leading platform, client relationships and strong team, as well as EBS's technology and innovation pipeline, to deliver unique products and services to the industry and expand the addressable market of both platforms under the leadership of Gil Mandelzis. Gil Mandelzis has been CEO of EBS since March 2012 and founded Traiana, a provider of post-trade and risk management services acquired by ICAP in 2007.

Electronic Markets delivered low double digit revenue growth in the third quarter underpinned by significantly increased activity levels at EBS, which saw its highest monthly average daily volume (ADV) since February 2013 as all currency pairs benefited from the uptick in volatility. The Bank of Japan's bond buying announcement on 30th October drove near record levels of volumes in dollar/ yen, as did the recent removal of the cap by the Swiss National Bank in euro/ Swiss franc. Recent structural growth in non-deliverable forwards and offshore Chinese renminbi has continued. Customer interest in EBS Direct remains strong with over 100 new customers in the pipeline to be on boarded. EBS Direct is in an investment phase as additional functionality and services are added to the platform. Trading activity on the BrokerTec platform was mixed with strength in US Treasuries partly offset by weakness in Repos.

Low double digit revenue growth was also achieved by the Post Trade Risk and Information division in the third quarter, a reflection of the positive return from the ongoing investment in the business and the strong demand for TriOptima's compression (triReduce) and portfolio reconciliation (triResolve) services. In December, TriOptima completed its first compression cycle in the Japanese Securities Clearing Corporation and more recently announced that it will be collaborating with CLS Group to deliver an FX forward compression service. Traiana's Harmony network has benefited from the recent increase in FX activity. Performance at Reset continues to be hindered by the lack of short-term volatility.

As previously highlighted, a combination of factors including low interest rates, flat yield curves and bank deleveraging have all impacted the performance of Global Broking. In response to structural changes in customer demand, the division has refocused its priorities towards franchises where it has market leading positions and as a result has closed unprofitable desks and operations. Although Global Broking revenues declined by 8% during the period (on both a constant currency and on a reported basis) excluding the businesses that were exited, this decline was 4%.

Global Broking is investing in areas where it has market leading franchises such as OTC European Interest Rate Derivatives, which has benefited from rising volatility and continues to develop hybrid and electronic trading offerings such as i-Swap and other matching platforms.

The Group remains focused on delivering its cost savings programme and is on track to reach the target of £43 million for the current year and at least £60 million on an annualised basis.

On 4 February ICAP confirmed that it intended to challenge at appeal in the European Courts the European Commission's decision to issue a fine of £11.3 million in relation to Yen Libor.

Michael Spencer, Group Chief Executive Officer of ICAP said: "After a challenging first half, we have witnessed welcome signs of improved market activity in a number of areas, notably in FX. Moreover, we have seen the benefits of the significant investment in our exchange-like electronic platforms, EBS and BrokerTec, as well as in our Post Trade risk reduction services. We are committed to grow our addressable markets and strengthen the position of our innovative businesses. We are also making good progress with our restructuring programme. While we see signs of increased activity in some markets we continue to remain cautious as conditions in Global Broking remain challenging.

"We are confident our strategy will position ICAP to deliver future growth. Our cash generation remains strong and we will continue to balance the need to invest in growth opportunities with returns to our shareholders."

Investors & Analysts Conference Call:This will be hosted by Michael Spencer at 09:00am on Tuesday 10 February 2015:Dial in number: +44 (0)20 3003 2666Access Code: ICAPA recording of this call will be available at www.icap.com

Contacts

Notes:The closing exchange rates at 6 February 2015 were $1.52/£ and €1.35/£. If these rates remain constant for the rest of FY2014/15 then the average exchange rates for FY2014/15 would be $1.61/£ (FY2013/14: $1.59/£) and €1.27/£ (FY2013/14: €1.19/£). The estimated year-on-year impact on FY2014/15 is £12m operating profit reduction from translational and transactional exposures.

Each 1 cent change in US dollar and euro full year average exchange rates would impact FY2014/15 operating profit by £1 million and £1 million respectively. For FY2014/15, current hedges represent hedged 74% of $/£ and 94% of €/£ forecast transactional exposures.

Notes to the editorAbout ICAPICAP is a leading markets operator and provider of post trade risk mitigation and information services. Group companies provide services that match buyers and sellers in the wholesale markets in interest rates, credit, commodities, FX and money markets, emerging markets and equity derivatives through voice and electronic networks. Our post trade risk and information services help our customers manage and mitigate risks in their portfolios.

For more information go to www.icap.com.