ANNUAL RESULTS 2002

Annual Results Presentationfor the year ended 31 March 2002

29 MAY 2002

ANNUAL RESULTS 2002

The world’s largest interdealer broker in the

derivatives, securities and money markets

• Active trading conditions

• Strong global market position

• Continuing progress in electronic broking

• Rapid recovery from the WTC disaster

ANNUAL RESULTS 2002

WTC – Recovery post 9/11

• Very rapid recovery

• Still in interim space but operating at 90% capacity

• Move to permanent HQ in New Jersey by October 2002

• No adverse effect on future profitability

ANNUAL RESULTS 2002

Review of operations

• Strong growth in derivatives and money broking, profit up 37%

• Securities broking up 9%, held back by the disruption in New York

• European profit ahead by 31% in strong trading conditions

• Information services profit increased by 16%

• Acquisition of First Brokers Securites completed April 2002

ANNUAL RESULTS 2002

Progress in electronic broking• Established in the Fixed Income markets

– US Treasuries and Japan Government Bonds– Australian Government Bonds, Euro Eurobonds

and UK Gilts added since start of 2002

• Innovation in the Derivatives markets– TFS-ICAP combined with Volbroker– i-swap initiative in line with market demand– FRA-Cross– Commodities

• Revenues increased but overall loss £13.8m

ANNUAL RESULTS 2002

Financial Results for the year ended 31 March 2002

29 MAY 2002

ANNUAL RESULTS 2002

Profit & Loss

*at reported exchange rates.

**excludes goodwill amortisation and exceptional items.

Year ended

Year* ended

Variance* Against Prior Year

31/03/02 £’m

31/03/01 £’m

£’m

%

Turnover 527.9 472.6 55.3 12

Expenses (447.8) (405.4) (42.4) (10)

Group operating profit 80.1 67.2 12.9 19

JVs & Associates 5.8 4.9 0.9 18

Total operating profit 85.9 72.1 13.8 19

Net interest 3.2 3.5 (0.3) (9)

Pre tax profit** 89.1 75.6 13.5 18

ANNUAL RESULTS 2002

Group Turnover by Activity

Year ended

Variance* Against Prior Year

31/03/02 £’m

£’m

%

Securities Broking 257.6 24.6 11

Derivatives & Money Broking 251.0 24.2 11

Electronic Broking 7.3 4.5 161

Information Services 12.0 2.0 20

527.9 55.3 12

*at reported exchange rates.

ANNUAL RESULTS 2002

Group Turnover by Geographic Location

0

50

100

150

200

250

300

Europe Americas Asia Pac

2001

2002

£’m

10%

10%

33%

ANNUAL RESULTS 2002

Underlying Expense Growth

Variance against prior year

£’m %

Operating expenses* 42.4 10

Broker bonuses (28.9)

Acquisitions/disposals (1.7)

Foreign exchange (3.2)

Underlying expense growth** 8.6 3

*before goodwill amortisation and exceptional items.

**operating expenses excluding broker bonuses.

ANNUAL RESULTS 2002

Expenses

4

73

1517

54Broker Rem.

T&E

Telecoms

Other

Overheads

Profit*0

50

100

150

200

250

300

Variable

Fixed

Classification as a % of Turnover Broker remuneration variable/fixed

%

45%

55%* Profit before goodwill amortisation and exceptional items.

£’m

ANNUAL RESULTS 2002

Operating Profit* by Activity

-20.0 0.0 20.0 40.0 60.0

2002

2001

£’m

Securities

Information

Derivatives

Electronic

9%

37%

-100%

16%

*after charging goodwill amortisation and including share of profit (losses)

for JVs & associates but before exceptional items and interest.

ANNUAL RESULTS 2002

Operating Profit* by Geographical Region

0 20 40 60

2002

2001

£’m

Asia Pacific

Americas

Europe

-20%

31%

49%

*includes share of JVs & associates and goodwill amortisation but excludes exceptional items.

ANNUAL RESULTS 2002

Earnings

Year ended

31/03/02 £’m

Year ended

31/03/01 £’m

Pre-tax profit

89.1

75.6

Goodwill amortisation (8.2) (5.8)

Exceptional items 2.9 (2.6)

Taxation (30.3) (26.1) Minority interests (1.1) (1.0)

Profit for the financial year 52.4 40.1

Earnings per share – basic 52.8p 40.4p

Earnings per share – adjusted* 58.0p 49.4p

Interim dividend per share 6.0p 5.0p

Proposed final dividend per share 18.0p 15.0p

*excluding goodwill amortisation and exceptional items.

ANNUAL RESULTS 2002

Pre-Tax Exceptional Items Year

ended 31/03/02

£’m

WTC: Costs (28.7)

Insurance receipts 11.9

Share disposals: LSE, LIFFE & Deutsche Borse 32.1

Investment write offs: Moneyline (6.7)

Other (5.7)

2.9

ANNUAL RESULTS 2002

Taxation

Pre-Tax Tax Effective

Profit £’m

£’m

Rate %

Subsidiaries 83.3 (27.3) 33

JVs & Associates 5.8 (3.2) 55

89.1 (30.5) 34

Exceptional items 2.9 0.2

ANNUAL RESULTS 2002

Cash Inflow from Operations

Year ended

31/03/02 £’m

Year ended

31/03/01 £’m

Group operating profit*

80.1

67.2

Cash Inflow 82.7 74.6

*excludes goodwill amortisation and exceptional items.

ANNUAL RESULTS 2002

Cashflow Year

ended 31/03/02

£’m

Pre-tax profit 89.1

JVs & Associates (4.2)

Depreciation 10.9

Net capital expenditure (16.5)

Acquisitions/investments (8.9)

Dividend (21.8)

Tax (21.8)

Working capital and other (8.8)

Net own funds inflow 18.0

Exceptional items* 25.4

Increase in net funds 43.4

*includes: insurance proceeds £11.9m, share disposals £34.3m offset by WTC

costs of £14.8m, WTC related capex £5m and other £1m.

ANNUAL RESULTS 2002

Balance Sheet

As at As at

31/03/02 £’m

31/03/01 £’m

Goodwill 42.8 43.3

Other fixed assets 48.7 62.7

Net funds 165.7 122.3

Net creditors (60.8) (57.9)

Net assets 196.4 170.4

ANNUAL RESULTS 2002

Return on Capital Employed*

28.8 29.3

0

5

10

15

20

25

30

35

2001 2002

%

*post tax profit excluding goodwill as a % of capital employed.

ANNUAL RESULTS 2002

First Brokers

• Revenue $87m (year to 31/12/01).

• Normalised pre-tax profit US$17.7m (year to 31/12/01).

• Consideration: $36m.

Estimated deferred cashflow $55m.

• Synergies.

• Earnings enhancing.

• Net assets $3.5m.

• Goodwill of some $87m amortised over seven years.

ANNUAL RESULTS 2002

Financial Highlights

Results Change

Profit* £89.1m +18%

Turnover £527.9m +12%

Adjusted earnings per share 58.0p +17%

Shareholders’ funds £188.5m +£26.5m

Cash balances £155.8m +£31.4m

Cash inflow from operating activities £82.7m +11%

Annual dividend 24.0p +20%

*Profit before tax, goodwill amortisation and exceptional items

ANNUAL RESULTS 2002

• Overall OTC broking market revenues, excluding

equities – $4 billion in 2001• Strong underlying market growth• Historically fragmented but changing extremely rapidly,

consolidation driven by: Merger of customers Increasing impact of technology Weakess of some balance sheets Operational leverage and economies of scale

• Difficult to attract liquidity to new platforms eg Instinet

and ATRIAX recently closed

The interdealer broking industry

ANNUAL RESULTS 2002

• Most “traditional” firms ill-equipped to face the changing

environment• Smaller niche businesses may continue• Of “traditional” brokers, currently only ICAP and

Cantor/E-speed are able to compete in electronic

broking• Conceptually flawed, customer owned consortia

brokers will eventually merge or be sold• After the shake out, there will not be more than

two/three global interdealer brokers

Outlook for the industry

ANNUAL RESULTS 2002

• Automation, including STP, to create improved efficiency, cost reduction and economies of scale

• Adoption of electronic broking remains a gradual process in most markets

• ICAP hybrid model most suitable to e-broking

• Pure electronic trading really only suits liquid and vanilla markets. Difficult for derivatives eg interest rate swaps

• Electronic broking will initially be financially painful, but ultimately will be more profitable with information sales, increased trading volumes, higher market share and potentially a wider customer base

Adding value with technology

ANNUAL RESULTS 2002

Growth• Underlying market growth rates

• Expanding market share – 20% in 2001• Operational leverage • Converting the direct market• Product innovation

Increase in 2001 Increase in last 5 years

International bonds outstanding 16% 19% p.a.

Interest rate swaps outstanding 21% 26% p.a.

Foreign exchange derivatives 7% NA

ANNUAL RESULTS 2002

Information Services

• Increasing value of information –

fewer and bigger IDBs

• Core customers - data vendors

• Added value products

ANNUAL RESULTS 2002

• Extend strong global position in voice and

electronic broking• Expansion of market share• Improve capability in the energy market• Acquisitions with overall strategic fit, strong

market positions or relevant technology

eg. First Broker Securities

Strategy for ICAP

ANNUAL RESULTS 2002

• Excellent results under the circumstances • Competitive landscape altered, ICAP’s

leading position underlined• Attractive growth potential

– Underlying strong market volume growth, so far markets continue to be busy this year

– Multiple acquisition opportunities

• Good return on capital• Profit target for 2002/3 of £100m

Summary

ANNUAL RESULTS 2002

Annual Results Presentationfor the year ended 31 March 2002

29 MAY 2002