TP ICAP Regulatory News (TCAP)

7 November 2014

Tullett Prebon plc

Interim Management Statement

Tullett Prebon plc (the "Company") is today issuing its Interim Management Statement in relation to the period from 1 July 2014.

Business Update

Although market conditions have continued to be challenging, the level of activity in financial markets has benefited from some pick up in volatility in recent weeks, particularly in the Americas and in Asia Pacific. The level of activity in Europe and the Middle East has improved more modestly, reflecting the cyclical effect of further flattening and lowering of yield curves which continues to dampen trading activity in the region.

Revenue in the four months July to October of £233m was 4% lower than in the same period last year at constant exchange rates, and was 8% lower as reported. Revenue in the two months September and October was unchanged compared with the prior year at constant exchange rates (2% lower as reported). Year to date (January to October) revenue of £594m was 11% lower than in the same period last year at constant exchange rates (14% lower as reported).

As previously reported, a number of actions are being taken to further reduce headcount and other fixed costs. We continue to anticipate that this cost improvement programme will reduce annual fixed costs by over £40m through the exit of around 160 front office headcount and around 50 back office headcount and vacating office space. The annualised operating profit benefit from these actions, as previously estimated, is expected to be around £35m with a targeted benefit of around half that amount in the second half of this year. We continue to estimate that the cost of these actions, including the £3.2m non-cash write down of an employment incentive grant receivable that may not be recoverable due to the reduction in headcount, will be around £45m, of which £21m are non-cash charges. This cost will be charged as an exceptional item in the 2014 accounts.

For the fifth consecutive year the Company was voted number one in more product categories than any other single interdealer broker in Risk magazine's 2014 annual interdealer rankings published in September. Dealers across the wholesale banking markets in all three regions in which the business operates voted Tullett Prebon number one in 32 out of 99 categories, reflecting the Company's focus on first class service and delivery of flexible and innovative products.

The Company announced on 9 May 2014 that agreement has been reached to acquire PVM Oil Associates Limited and its subsidiaries ("PVM"), a leading independent broker of oil instruments. All the required change in control approvals from the FCA and other regulators that were conditions precedent to the completion of the acquisition of PVM have now been received, and the acquisition is expected to complete before the end of November. As previously reported, the initial consideration of $112.0m (£70.0m at current exchange rates) will be satisfied through the issue of new Ordinary Shares in the Company.

In the latest available audited accounts, for the year ended 31 July 2013, PVM reported revenue of $107.5m (£67.2m at current exchange rates). The unaudited management accounts for the 12 months to July 2014 show revenue of $114.2m (£71.4m at current exchange rates).

As part of the application for the change in control approval from the FCA for the acquisition of PVM the Group applied for and has received a new Investment Firm Consolidation Waiver. The new waiver took effect on 25 September 2014 and will expire on 24 September 2024. Consistent with the previous waiver, under the terms of the new waiver each investment firm within the Group must be either a limited activity or a limited licence firm and must comply with its individual regulatory capital resources requirements. Tullett Prebon plc, as the parent company, must continue to maintain capital resources in excess of the sum of the solo notional capital resources requirements for each relevant firm within the Group.

The terms of the new waiver require the Group to eliminate the excess of its consolidated own funds requirements compared with its consolidated own funds ("excess goodwill") over the ten year period to 24 September 2024. The amount of the excess goodwill must not exceed the amount determined as at the date the waiver took effect and must be reduced in line with a schedule over the ten years, with the first reduction of 25% required to be achieved by March 2017. The Company expects to achieve this reduction within its current business plan. The waiver also sets out conditions with respect to the maintenance of financial ratios relating to leverage, debt service and debt maturity profile.

The Company announced on 29 October 2014 that the SFO had issued criminal proceedings against Noel Cryan, a former employee, in connection with the manipulation of LIBOR. The Company has been asked to provide information to the FCA and other regulators and government agencies in connection with their enquiries in relation to LIBOR and is cooperating fully with those requests. The Company is currently under investigation by the FCA in relation to certain 'wash trades' (trades that are risk free, with no commercial rationale or economic purpose, on which brokerage is paid) carried out by two former employees, one of whom is Noel Cryan. As part of this investigation the Company continues to cooperate with regulators and government agencies.

The compensatory damages awarded to our subsidiary companies in the United States as a result of the FINRA arbitration on the claims against BGC and former employees brought by those subsidiary companies which were raided by BGC Partners Inc. and certain of its subsidiaries in the second half of 2009, along with various claims asserted against those subsidiary companies, were received in August.

The trial relating to the separate action being pursued by the Company and certain of its subsidiaries against BGC Partners Inc. in the New Jersey Superior Court, alleging, among other causes of action, violations under the NJ Racketeering Act, has started and is currently scheduled to conclude before the end of the year.

Since 30 June, £3.6m of costs have been incurred in relation to the legal actions between the Company and BGC. Including the £4.4m of costs incurred in the first half of this year, and net of the £15.8m arbitration award received in August, the year to date exceptional item relating to these major legal actions is a net credit of £7.8m.

The Company's financial position remains strong.

Enquiries:

Investors and Analysts Media

Paul Mainwaring Craig Breheny

Finance Director, Tullett Prebon plc Director, Brunswick Group LLP

Direct +44 (0)20 7200 7995 Direct: +44 (0) 20 7396 7429