TP ICAP Group plc Final Results (6098R)

TIDMTCAP

RNS Number : 6098R

TP ICAP Group plc

09 March 2021

09 March 2021

TP ICAP

Financial and Preliminary Management Report of TP ICAP Limited (the "Company") (formerly TP ICAP plc) for the year ended 31 December 2020 (the "Period")

   TP ICAP   announces its group (the "Group") results for the Period today. 

Nicolas Breteau, CEO of TP ICAP, said:

" We delivered a robust 2020 financial performance demonstrating our enhanced operational strength and the benefits of our diversified business model.

"To manage the impact of COVID-19, we swiftly deployed innovative technology and workflows meaning we were well-equipped to provide clients with continuous high quality service and play a systemic role in keeping markets open and liquid during a period of exceptional stress.

"2020 was a transformational year for TP ICAP. We set out a new strategy to deliver higher shareholder returns and made good progress in executing initiatives across all of our businesses to advance our strategic pillars of electronification, aggregation and diversification.

"We strengthened our financial position by redomiciling our Group's holding company and embedding a new risk management framework. And we announced the acquisition of Liquidnet, an electronic buyside-focused trading platform that will accelerate our strategy and transform the Group's growth trajectory. The acquisition is expected to complete at the end of this month, and together we will create a modern, global market infrastructure powerhouse, with strong sell-side and buy-side networks, and leading franchises across all major asset classes.

"During these unprecedented times I would like to thank our shareholders for their overwhelming support in relation to the acquisition of Liquidnet, the successful rights issue, and the redomiciliation of our Group's holding company. I would also like to thank my colleagues for their hard work and commitment and our clients for their ongoing trust and support."

Financial highlights

Commentary on year on year performance is on a reported and constant currency basis.

Adjusted (before significant items)

 
                          2020        2019   Change (%) 
 Revenue             GBP1,794m   GBP1,833m          -2% 
 Operating profit 
  (EBIT)               GBP272m     GBP279m          -3% 
 Op.profit margin        15.2%       15.2%       0% pts 
 Profit before 
  tax                  GBP223m     GBP230m          -3% 
 Basic EPS               32.9p       33.8p          -3% 
 

Reported (after significant items)

 
                           2020        2019   Change (%) 
 Revenue              GBP1,794m   GBP1,833m          -2% 
 Operating profit 
  (EBIT)                GBP178m     GBP142m         +25% 
 Op. profit margin         9.9%        7.7%    +2.2% pts 
 Profit before 
  tax                   GBP129m      GBP93m         +39% 
 Basic EPS                17.2p       12.0p         +43% 
 

A table showing Adjusted and Reported figures for each period, detailing significant items is included in the Financial Review.

The average number of shares used for the basic 2020 EPS calculation for the period is 557.0m (2019: 559.4m).

Operational highlights

-- Delivered a solid financial performance, demonstrating our strong operational capability and the growing success of our diversification strategy, against the difficult macroeconomic backdrop and reduced secondary volumes in the wider interdealer broker market.

-- Revenue of GBP1,794m marginally declined 2% on a reported basis (1% lower at constant currency).

   --      Diversified revenue(1) increased 6% (7% higher at constant currency) 

-- Reported operating profit was 25% higher than 2019. Adjusted was 3% lower, as lower revenues were only partially offset by tight cost discipline. Global Broking revenue decreased by 6% on a reported basis (5% lower at constant currency), as despite a strong first quarter, volumes shrunk as clients appetite for risk decreased. Energy & Commodities revenue increased 2% on a reported basis (3% higher at constant currency) with good growth in the majority of products, boosted by strategic hires.

-- Institutional Services revenue increased 21% on a reported and at constant currency basis, as the business benefited from investment in talent and enhanced asset classes and geographic coverage.

-- Data & Analytics revenue increased 7% on a reported basis (9% at constant currency), capitalising on the launch of new, higher-value products, whilst growing and deepening its client base.

(1) Diversified revenue is defined as the sum of Energy & Commodities, Institutional Services and Data & Analytics revenues.

Strategic highlights

-- Adapted our business quickly to manage the impact of the pandemic by deploying new technology and workflows. Protecting our employees' welfare enabled us to provide seamless, high-quality service to our clients, and maintain a strong balance sheet.

-- Announced the transformational acquisition of Liquidnet, an electronic, buy-side focused trading network, expected to be completed by the end of Q1 2021, after the successful completion of our GBP315m rights issue.

-- Continued to invest in and execute our electronification and aggregation strategy, while diversifying and growing our non-Global Broking businesses

-- Enhanced the enablers of our strategy, including a new Global Risk Framework and implementing a new ESG Reporting Framework.

Dividend

For 2020, the Board is recommending a final dividend per share (DPS) of 2p that equates to GBP16m. The dividend will be paid on 18 May 2021 (with a record date of 9 April 2021).

This will take the full-year DPS to 6p, (rebased to take into account the bonus element of the rights issue completed in February 2021), an one-off 50% reduction to the prior year, in line with the statement made on 9 October regarding the proposed Liquidnet acquisition.

This reduction will help fund the Liquidnet acquisition and minimise dilution of earnings on a per share basis. For 2021 onwards, we will target a dividend cover of approximately 2x adjusted earnings. The new dividend policy reflects a balanced approach to capital allocation and is expected to allow TP ICAP to drive growth, while allowing dividends to increase in line with adjusted earnings.

Please see the Financial Calendar on the Company's website for further information on upcoming dividend timings, including dividend re-investment plan election dates.

2021 guidance and outlook

-- The first two months' revenue per trading day is marginally higher than the prior year. March 2020 was a record month in terms of revenues, with very strong secondary volumes and exceptional volatility. As such, given this tough comparative, our Q1 2021 revenues may be lower than in the prior year. For 2021, we expect full year revenue to grow at low-single digit at constant currency basis.

-- As we outlined, in our Capital Markets Day ("CMD"), we are targeting cGBP30m of strategic cash investments in 2021, which includes cGBP13m of operating expenses.

-- We forecast that our contribution margin will be stable at c38% year on year, as higher investment will be offset by continuous cost-cutting initiatives in the front and back-office.

-- With regard to Brexit, despite the complications caused by COVID, we are executing our plans, leveraging our EU network, and moving brokers to our Paris hub. As a result, we continue to cover our EU clients effectively .

-- All the aforementioned targets exclude any potential impact from the completion of the Liquidnet acquisition.

Forward looking statements

This document contains forward looking statements with respect to the financial condition, results and business of the Company. By their nature, forward looking statements involve risk and uncertainty and there may be subsequent variations to estimates. The Company's actual future results may differ materially from the results expressed or implied in these forward looking statements.

Enquiries:

Analysts and investors

Al Alevizakos

Direct: [phone]

Email: [e-mail]

Media

William Baldwin-Charles

Direct: [phone]

Email: [e-mail]

Neil Bennett

Maitland

Direct: [phone]

Email: [e-mail]

About TP ICAP

-- TP ICAP brings together buyers and sellers in global financial, energy and commodities markets.

-- It is the world's largest wholesale market intermediary, with a portfolio of businesses that provide broking services, data & analytics and market intelligence, trusted by clients around the world.

-- We operate from offices in 26 countries, supporting award-winning brokers with market-leading technology.

CEO review

2020 was a year in which the Group made material progress in enhancing its position as a leading, global market infrastructure and data solutions provider.

We unveiled and started the execution of our new strategy to drive higher returns to shareholders. We announced the acquisition of Liquidnet, an electronic, buy-side focused trading network, which will fundamentally accelerate the execution of our strategy and transform our future growth prospects. We made good progress on the redomiciliation of our Group holding company, which will provide greater financial flexibility for the Group and became effective on 26 February 2021. And we continued to enhance the enablers of our strategy, such as embedding our Global Risk Framework and developing and launching our new ESG Reporting Framework.

That such progress was achieved against the backdrop of COVID-19 serves only to underline the operational strength and flexibility of our Group, which in turn positions us well to continue to execute our strategy to drive higher returns to shareholders over time.

Managing COVID-19

COVID-19 caused a considerable shock to the global economy and had a significant impact on the markets in which we operate. We saw a substantial increase in volatility in the early part of the year, although this dropped materially after April as clients assumed more risk averse positions and therefore traded significantly less. We saw a degree of normalisation of trading in OTC markets towards the end of the year.

Following the emergence of the pandemic, we acted quickly to adapt our operational processes to protect our staff and meet the various COVID-19 guidelines that were issued in the 26 countries where we operate. In a matter of weeks we introduced new digital technology and amended workflows which allowed a significant proportion of brokers to work from home. For those brokers who remained in the office during this time, we reconfigured the layout of our offices to provide adequate space to socially distance.

Through these actions, and at a time of unprecedented market volatility, we ensured that all desks continued to be fully operational, that our clients benefited from continuous global coverage across all asset classes, and that global markets remained open and liquid.

The overwhelming majority of our support staff have worked from home throughout the pandemic. Where required, particularly in the compliance, risk, regulatory and IT functions, we have enabled a small number of employees to come into our offices to support brokers.

Despite the challenges posed by the pandemic, we made significant progress during the year. We announced our new strategy in March, which was explained in detail at our Capital Markets Day in December 2020. We have started the execution of this strategy, albeit at a slower than originally intended pace as we took a prudent approach to investment given the uncertainty caused by COVID-19.

The acquisition of Liquidnet, approved by shareholders on 1 February 2021, will accelerate the execution of our strategy as well as provide our firm with significant new growth opportunities. Furthermore, we made progress in the redomiciliation of the holding company of TP ICAP, which came into effect on 26 February 2021. The redomiciliation will provide the Group with greater financial flexibility.

To partially fund the acquisition, we launched a rights issue to raise GBP315 million. This issue was successfully completed with existing shareholders taking up more than 98% of the new shares, with the remainder offered into the market. The new shares commenced trading on the London Stock Exchange on 17 February.

Financial performance

The Group delivered a robust performance in 2020. The year started with high market volatility, resulting in a very good performance in the first three months of the year. Markets were materially slower thereafter, with a consequential impact on revenues. This underlined the importance and growing success of our diversification strategy as lower full year revenues in Global Broking were partially offset by strong full year revenue growth in Energy & Commodities, Institutional Services and Data & Analytics ('D&A').

In 2020, revenues from our faster growing, non-global broking businesses accounted for 35% of total revenues, compared to 32% in 2019.

Group revenue declined 2% to GBP1,794m against GBP1,833m for the prior year on a reported basis (1% at constant currency) as although Global Broking experienced a weaker year we saw continued good growth in our other three businesses. We achieved a reported operating profit of GBP178m for the Group, up 25% on the prior year, with our adjusted operating profit of GBP272m, down 3% from last year. The increase in reported operating profit was mainly due to 2020 being the first year following the completion of the ICAP integration and therefore benefiting from no integration costs. Our reported operating profit margin of 9.9% was up 2.2% on last year, and the adjusted operating profit (EBIT) margin of 15.2% is flat on the prior year, due to strict cost controls. We reported a statutory profit before tax of GBP129m, 39% higher than last year with the adjusted profit before tax of GBP223m, down 3% from GBP230m in the prior year.

Basic reported earnings per share ('EPS') were 17.2p with adjusted earnings per share of 32.9p, and we are paying a dividend of 6.0p per share for the full year (rebased to take into account the bonus element of the rights issue), in line with our intention stated in the announcement regarding the acquisition of Liquidnet on 9 October 2020.

Regional performance

Revenue for the EMEA region was GBP888m, a 1% decrease on a reported basis (1% at constant currency). Global Broking revenue decreased 6% as a very strong first half, particularly in Rates and FX, was more than offset by a significantly weaker second half with the Emerging Markets business performance suffering from the pandemic driven slow-down in Turkey and South Africa. Energy & Commodities was up against a strong prior year performance, Institutional Services grew revenues as it continued to scale up and Data & Analytics delivered another year of strong growth.

The Americas reported revenue of GBP670m was down 2% year-on-year on a reported basis (down 1% in constant currency). Strong growth in E&C, Institutional and D&A was offset by Global Broking which faced difficult market conditions.

In Asia Pacific, revenue at GBP236m decreased 4% year-on-year on a reported basis (3% on constant currency). This reflected very good growth in Energy & Commodities, Institutional Services and D&A, with more challenging Global Broking figures, as trading appetite dampened due to the pandemic placing practical constraints on market activity.

Strategic delivery

In March 2020 we identified the three key strategic pillars which would underpin our medium-term growth strategy: electronification; aggregation of liquidity; and diversification of our revenues. On 1 December we held a Capital Markets Day at which senior management presented in detail how this strategy would be executed across the Group.

For our Global Broking and Energy & Commodities businesses, we are executing a hub strategy for the asset classes of Rates, Foreign Exchange, Credit, and Oil. These hubs will drive electronification and liquidity aggregation. They will offer clients a single sign-on to access via a single screen a multitude of TP ICAP products and brands all with a common look and feel. The hubs will provide robust pre- and post-trade processing, improved connectivity and straight-through processing ("STP").

The overall outcome from the hub strategy will be institutionalising volumes and client relationships. We have already launched several electronic platforms, and these are already demonstrating tangible benefits for TP ICAP and our clients. The hubs will result in increased revenues. With these platforms client volume tends to be stickier, and brokerage rates more standardised. Silos between bank traders should erode enabling more cross-asset or cross-instrument transaction activity which will result in increased volume. With more client activity conducted via platforms and common screens, there will also be more opportunity for us to provide targeted data and analytics products. Most importantly, we expect them to result in lower costs.

In Data & Analytics, our focus is on moving up the value chain in terms of product offering, going beyond selling raw data to selling value-adding solutions, something for which clients will pay a premium. We will also innovate in how we distribute, delivering our solutions both directly through a webstore but also partnering with other well-established cloud providers. Finally, our focus is to expand to new buy-side clients, and increase our market share of the wallet with existing clients.

In Institutional Services, the focus will remain on expanding product coverage as well as building out regional customer coverage.

Liquidnet

To materially accelerate our strategy we announced the proposed acquisition of Liquidnet, a premier, technology-driven, global electronic trading network focused on the buy-side. The acquisition will also bring deep expertise in the cash equities asset class as well as provide us with compelling new growth opportunities as we explained in detail at our Capital Markets Day.

The total consideration for the acquisition is between US$575m and US$700m, comprising cash of US$525m, subject to customary adjustments, payable on completion and with deferred consideration of US$50m and contingent deferred consideration of up to US$125m.

Liquidnet's electronic network incorporates extensive buyside trade workflow connectivity, including integrations with all major order management and execution management systems. We intend to build on Liquidnet's capabilities and connectivity, and expand its offering, particularly in respect of Dealer-2-Client ("D2C") electronic trading in Credit and Rates. Furthermore, we expect to leverage the data assets and analytics expertise of both organisations to drive non-transaction-related earnings.

We believe that TP ICAP's strong dealer relationships and product expertise are highly complementary to Liquidnet's electronic capabilities and global buyside customer base. In addition, its global low-touch block cash Equities franchise complements our existing high-touch derivatives and cash Equities activities. Combined, TP ICAP and Liquidnet will be able to offer our clients compelling electronic trading and analytics solutions, driving sustained growth and shareholder value creation over the medium and long term.

While this new strategy will drive the medium-term growth of TP ICAP, we took the decision to slow investment in 2020 adopting a prudent approach to managing through the crisis and prioritised our liquidity and capital buffers under stressed scenarios.

Despite the aforementioned deceleration, we were still able to progress with a number of strategic initiatives and detail some of these in the business division reviews below. We intend to accelerate the execution of our strategy in 2021 and the following years.

Business Review

Global Broking

Global Broking is our largest division covering Rates, Credit, Equities, Foreign Exchange & Money Markets and Emerging Markets, where we have market leading positions. We bring together buyers and sellers providing a range of professional intermediary services that enable them to execute trades successfully. We operate through Tullett Prebon and ICAP brands separately. We also offer clients a range of ways to interact with us - through voice, hybrid or electronically - depending on the nature of the market, product and transaction. One of our fundamental strengths is the long-established relationships we have with top-tier banks, and our ability to operate deep liquidity pools.

Global Broking had a very strong first quarter of 2020 primarily due to abnormal levels of volatility in March leading to significant trading volumes. In the ensuing months, many clients decided to wind down any positions they had and reduced their risk appetite. Consequently, from May through to October markets were much quieter with a resulting negative impact on revenues. Trading in the final months of the year improved slightly to more normalised patterns, albeit not with the levels of activity usually associated with a US Presidential election.

As a consequence of these macro conditions, revenues for the year were down 6% in reported currency (5% lower at constant currency) at GBP1,188m from GBP1,262m in the prior year. It is important to highlight that while the large Tier 1 investment banks are our main client base, their revenue performance is not always a good proxy for that of Global Broking. Global Broking is paid on volumes on secondary markets while Investment Banks benefit from, inter alia, primary issuance in the equity and debt markets, from principal trading and mark-to-market changes in inventory positions. We believe a better guide is provided by the public information on secondary volumes in the relevant market infrastructure markets, mainly exchanges and other platforms.

Our largest business, Rates, saw revenues decline 5% on a reported basis (4% in constant currency) year-on-year following a stand-out start to the year due to the impact of many countries also reducing interest rates to near zero and embracing quantitative easing. Our Equities business was flat on the year in reported currency, (2% higher in constant currency), as although the market was buoyant for cash equities, our business is geared toward Equity Derivatives which experienced a quieter period. We saw the benefit of the LCM acquisition towards the end of the year as the transaction closed. FX and Money Markets' revenue declined 7% on a reported basis (down 7% in constant currency) due to subdued client activity from lower volatility and volumes. The Credit market remained subdued for interdealer brokers as new market participants continued to take market share and new issuance growth did not translate into secondary trading, which resulted in a 4% revenue decline on a reported basis, and 3% lower in constant currency. The Emerging Markets business was affected by the practical impact the pandemic had on those countries with revenues declining 14% on a reported basis (12% at constant currency).

Despite the difficult macroeconomic backdrop, we continue to identify opportunities to fill gaps in coverage and offer additional products for our clients as well as continue to expand our hybrid and electronic matching technology offering.

We made progress in rolling out the hub strategy, although, as stated, at a slower pace than we had anticipated at the start of the year. For the Rates hub, we introduced several enhancements to our market leading ICAP Interest Rate Options ("IRO") platform and achieved our first cross-product electronic aggregation of liquidity, by bringing inflation swaps/index, conventional gilts, and interest rate swaps onto a single trading platform. We achieved cross-brand aggregation in September when we introduced the ICAP Interest Rate Options platform to the Tullett Prebon brand.

For the FX hub, we launched FXO Hub, our cross brand platform for trading FX Options in March this year and we are encouraged by its initial performance, increasing our market share for this asset class by approximately 5% pts.

In Credit, we increased electronification through launching the Matchbook Rebalance platform. This is a pure-electronic platform used for Emerging Market, Investment Grade, High Yield, Financial and Sterling Corporate Bonds. The platform, which has common TP ICAP branding, runs auctions allowing traders to clear up unwanted odd-lot risk on their books based on a total P&L marker, and has also recently been launched in the US.

Energy & Commodities

Energy & Commodities ('E&C') is our second largest division and operates through the Tullett Prebon, ICAP and PVM brands in all key commodities markets including oil, gas, power, renewables, ferrous metals, base metals, precious metals and soft commodities. Clients include regional banks, corporates, hedge funds and trading companies.

The energy and commodities markets experienced high volatility in the first four months of the year as markets reacted to global trade wars and the pandemic, with clients adjusting positions to pandemic levels of supply and demand. A combination of clients assuming a risk off position and more people working from home led to quieter months between May and September before market activity returned to more normal levels for the remainder of the year.

E&C delivered a good performance in 2020. Revenues were up 2% in reported currency (3% in constant currency) to GBP391 million, against a particularly strong prior year performance. The primary driver of growth was new hires as a result of our successful hiring pipeline.

We saw growth across the majority of product areas, with Oils, our largest business, benefiting from the extraordinary conditions seen in the first part of the year as well as the continued build out of the ICAP oil desk. We recorded a strong performance in Liquified Natural Gas as the natural gas market became a global rather than regional market, and experienced good growth in Metals and Environmental products.

We continued to build and develop the business throughout the year, despite the practical constraints imposed by COVID-19: our successful Weather Derivatives desk in the US is now linking into our Global power desks; we are broking Japanese power contracts out of Singapore with a local Japanese entity due to launch shortly; we have a new ICAP desk covering power markets in Central and Eastern Europe; and have dedicated resource who are successfully growing our hedge fund platform.

We are making solid progress on building the Oil Hub, which will ultimately allow clients to view aggregated liquidity across our competing brands. We have started to roll out the electronic matching engine, and we are aiming for this to be on every broker's desk in Q2 2021. We have implemented an Order Management System on the platform to facilitate and manage trades and provide straight through processing.

Decarbonisation has become a significant theme of the energy and commodities markets and we are positioning our business to capture the benefits of this change. Approximately 40% of our revenues come from positive, transitional or neutral products and we anticipate this increasing over time.

Institutional Services

Institutional Services, which in 2021 will be renamed Agency Execution as it better describes the business and its activities, provides execution services to buy side clients including hedge funds, asset managers and corporates. The role of the division is to power clients' ability to manage their investment or trading process - from trade origination and execution through to post trade analytics. Institutional Services seeks to ensure clients receive the best pricing available in the market ; routing orders into multiple sources of pricing such as exchanges, partner bank liquidity providers and other venues whilst guaranteeing anonymity and neutrality. It is an important part of the Group's diversification strategy bringing in a new revenue stream from a different client base.

Institutional Services delivered an excellent performance in 2020, continuing its strong growth trajectory, with revenues up 21% on a reported basis (21% on constant currency) to GBP91m, up from GBP75m in 2019. Growth was driven by the investments already made in people, product coverage, geographic reach and technology as the business has greater capacity to service clients and meet their expanding needs.

Whilst exchange traded derivatives performed extremely well, we were particularly pleased with the ongoing and diversifying growth in FX , equity derivatives, IRS and government bonds which in aggregate secured our positive performance trajectory in all regions.

During the year we experienced significant growth in requests from investors that have traditionally sought execution services exclusively from banks. It is our belief that this trend will continue . Banks appear to be de-prioritising investment in agency execution services, consistent with the demands to "do more with less". Banks' investments are increasingly geared to businesses with better ability to capitalise on available leverage. At the same time our Institutional Services business has grown its breadth and quality of coverage to a point where we have a significant footprint and a growing reputation as an alternative to traditional banks' sales desks - evidenced in our ongoing market share growth.

As well as adding clients, we also note that the number of existing clients engaged in two or more products with us is increasing. This is an extremely encouraging development and one that we think becomes an important driver in our next growth phase.

Our strategy for Institutional Services remains to continue to grow the business and diversify our revenues through: adding more asset classes to our coverage; broadening our geographic reach; and investing in further electronification.

Data & Analytics

Our D&A business provides unbiased data products that facilitate trading, enhance transparency, reduce risk and improve operational efficiency. It is the leading provider of OTC pricing data and has access to pricing, reference data and analytical tools for major asset classes and markets. We pride ourselves on our rigorous quality assurance processes, which ensure the integrity and robustness of our products.

D&A is a fast growing, high margin business with revenues that are largely subscription-based - more than 90% of revenues were recurring in 2020 - so it provides us with excellent earnings diversification and sustainable growth opportunities.

Revenues for 2020 were up 7% on a reported basis (9% in constant currency) at GBP145m which was a strong performance given estimates that financial market data companies will have seen growth of between 4-5% for the year, according to Burton Taylor estimates. While the pandemic caused D&A to experience weaker growth in the first half of the year, it saw an improved performance in the second half with a particularly strong final quarter where revenues grew 11%. We remain confident that the business will deliver double-digit revenue growth in 2021.

The business also made further progress with its growth strategy in the period. It invested in its people and processes, introducing new sales methodology, appointing Regional Heads of Sales, and hiring sales specialists focused on Energy and Commodities. This new, systematic approach should lead to a shorter sales cycle and lasting revenue benefits.

We continued to develop new products, launching six new offerings, including, importantly, our first "information" product: Bond Evaluated Pricing ("BEP"). BEP combines our data with third parties' data to create intra-day, transparent insight with observable pricing from our neutral broking partners. We created the product after our clients told us that meaningful transparency in fixed income pricing has become critical as regulators globally require more detailed disclosure and stricter risk management. We intend to roll out further information products in 2021.

In the energy and commodities sector, we began the roll out of our new Oil Market Data Feed, on the crude and refined oil markets aimed at trading houses, major oil companies, buy-side funds and the banks. We have also enhanced our offering in Liquified Natural Gas expanding coverage to include additional markets such as US Gulf Coast and WIM (West India Marker).

In terms of distribution initiatives, we launched a new direct to client service, known as SURFIX, which provides clients direct access to our critical mass of breadth across our multiple brands, including Tullett Prebon, ICAP and PVM, in the easy-to use, industry standard FIX format. We expanded our Channel Partners to include the public cloud providers, providing clients with options on moving market data infrastructure into the cloud. This will allow client to operate with greater agility and a lower total cost of ownership.

We will continue to roll out new products covering other asset classes, third party data partnerships and moving up the value pyramid. We plan to capitalise on regulatory opportunities, including new risk free rates in connection with the retirement of LIBOR, and the need for regulated benchmarks and indices. This includes an Interest Rate Options Volatility Index based on our Global Broking data, and index partnerships, in Energy and Commodities.

Environmental, Social & Governance

Increasingly, clients, investors, ratings agencies, regulators, Non-Governmental Organisations and other core stakeholders including current and prospective employees incorporate environmental, social and corporate governance ("ESG") performance into their decision-making process. Consequently, TP ICAP believes that performing well in ESG represents a licence to do business and is a critical factor in achieving sustainable growth.

To strengthen how we measure, manage and report on the components of ESG that are most relevant to our Group in 2020 we undertook a comprehensive materiality assessment that led to us establishing an ESG Reporting Framework formed of 15 data disclosure areas. Each disclosure has an associated set of metrics according to internationally recognised standards. To ensure ownership and accountability, individual disclosure areas have been assigned to a relevant senior manager, and governance has been strengthened up to and including Board level. Having identified these 15 ESG disclosure areas, we have also begun to report against them.

Whilst important, we recognise that robust reporting is but one step forward in our sustainability journey. We have more to do, the next step being to develop an overarching ESG strategy that is aligned to our purpose. We commit to completing this strategy by the end of 2021, with execution to commence in 2022.

We introduced a new Enterprise Risk Management framework ("ERMF") in the second half of 2019 which took into account the increased scale and diversity of our business and responded to regulatory expectations. One of the key matters for the Risk Committee was the monitoring of the operation of the new ERMF with the objective of ensuring that this has been embedded across all areas of the Group (both organisationally and geographically). This includes the new Governance, Risk Management and Compliance ("GRC") system that underpins the ERMF and the delivery of risk management training to all staff. The EMRF has now had extensive third-party reviews which have found that the framework has been embedded consistently across the Group with no adverse findings. TP ICAP has now attested to the embedding and ongoing operation of the ERMF. We have reviewed our principal risks and evolved the ERMF to account for factors including the impact of Covid-19, the potential impact of Brexit on Financial Services and execution risk of the Liquidnet acquisition.

Near term outlook

-- The first two months' revenue per trading day was slightly higher year on year. March 2020 was a record month in terms of revenues, with very strong secondary volumes on record-high volatility. As such, given this tough comparative, we believe that our Q1 2021 revenues may be lower than in the prior year. For 2021, we forecast full year revenue to grow at low-single digit rates at constant currency basis. This excludes any positive revenue contribution following the completion of the Liquidnet acquisition.

-- As we outlined in our Capital Markets Day ("CMD"), we are targeting cGBP30m of strategic cash investments in 2021, which includes cGBP13m of operating expenses.

-- With regard to Brexit, despite the complications caused by COVID, we are executing our plans, leveraging our EU network, and moving brokers to our Paris hub. As a result, we continue to cover our EU clients effectively.

Concluding comments

2020 was in many ways a landmark year in the development of the Group. We announced a new strategy; unveiled a transformational transaction; and continued to adapt and strengthen our platform against the most challenging of backdrops. Consequently, TP ICAP is well placed to adapt and remain relevant as markets and clients' needs continue to evolve. In so doing, we will drive sustainable growth and higher returns to our shareholders over time and extend our position as a leading, global market infrastructure and data solutions provider.

During these unprecedented times I would like to thank our shareholders for their overwhelming and continued support in relation to the acquisition of Liquidnet, the successful rights issue and redomiciliation of our Group's holding company. I would also like to thank all of my colleagues at TP ICAP for the remarkable fortitude they have demonstrated throughout 2020, and of course our clients for their continuing trust in us. I look forward to working with you all in the coming year, one that I approach with confidence.

Nicolas Breteau

Chief Executive Officer

9 March 2021

Financial Review

Introduction

During 2020, we faced a unique macroeconomic backdrop marked by the emergence and continuous impact of the COVID-19 pandemic. The pandemic led us to adjust our ambitious 2020 IT investment plan as our primary focus has been the well-being of our employees, the seamless provision of our services, the support of financial market, and the protection of shareholders' value.

This once-in-a-generation environment initially led to record volatility and boosted market volumes. This was especially pronounced in March, across all our broking products. However, market volumes materially softened as the year progressed, most notably during the summer months. This was due to the fact that governments started to lower interest rates to support the wider economy and restarted large quantitative easing programmes. In addition, traders decided to de-risk.

Against this backdrop, Group revenues were slightly lower year-on year on a reported and constant currency basis. This is a big testament of the success of our diversification strategy. Our high-growth businesses, Institutional Services and Data & Analytics offered high top-line growth, whilst Energy & Commodities continued to grow its market share and capitalise on specific market opportunities.

Operating costs in 2020 have declined materially year-on-year following the completion of the integration of ICAP in 2019, reflected in a reduction in ' Significant items ' . Management adjusts for such items for planning purposes and measuring the Group ' s performance, and to aid comparability from period to period. They are also useful measures for investors and analysts when considered together with reported results .

Despite our initial plans to invest heavily in our core strategy, COVID-19 meant that we re-prioritised investment in cloud technology and workflows to support our brokers to work from home. Despite these unplanned investments and other costs regarding recent acquisitions, we were able to reduce our overall management and support costs year-on-year by GBP9m (GBP4m on a constant currency basis), which included material bonus adjustments. This highlights our ability to adapt our cost base to various macroeconomic circumstances. Looking forward, the proposed Liquidnet acquisition means that we will incur some non-recurring costs in 2021. However, we are all very excited to partner with Liquidnet as its cutting-edge technology, market-leading connectivity and well-known franchise will help us develop new, high-growth revenue streams.

Key financial and performance metrics

Our key financial and performance metrics for 2020 are summarised in the table below together with comparatives from the equivalent period in 2019 on a reported basis.

 
                                          2020        2019      Change 
----------------------------------  ----------  ----------  ---------- 
 Total revenue (reported) (1)        GBP1,794m   GBP1,833m         -2% 
----------------------------------  ----------  ----------  ---------- 
 Operating profit (EBIT): 
  - Reported                           GBP178m     GBP142m        +25% 
  - Reported margin                       9.9%        7.7%   +2.2% pts 
  - Adjusted                           GBP272m     GBP279m         -3% 
  - Adjusted margin                      15.2%       15.2%      0% pts 
----------------------------------  ----------  ----------  ---------- 
 Contribution (2) : 
  - Broking                            GBP606m     GBP626m         -3% 
  - Broking margin                       36.3%       36.4%   -0.1% pts 
  - Data & Analytics                    GBP68m      GBP68m        +24% 
  - Data & Analytics margin              50.4%       50.4%   +3.4% pts 
 Total contribution                    GBP680m     GBP694m         -2% 
----------------------------------  ----------  ----------  ---------- 
 Adjusted operating profit margin 
  (%): 
  - Global Broking                       16.6%       17.5%   -0.9% pts 
  - Energy & Commodities                 13.6%       12.0%   +1.6% pts 
  - Institutional Services                7.7%        4.0%   +3.7% pts 
  - Data & Analytics                     44.1%       43.7%   +0.4% pts 
----------------------------------  ----------  ----------  ---------- 
 Average: 
  - Broker headcount                     2,789       2,740         +2% 
  - Revenue per broker (GBP'000) 
   (3)                                     591         620         -5% 
  - Contribution per broker 
   (GBP'000) (4)                           217         228         -5% 
----------------------------------  ----------  ----------  ---------- 
 Period end: 
  - Broker headcount                     2,793       2,784          0% 
  - Broker support headcount             1,846       1,824         +1% 
  - Other support headcount                287         300         -4% 
----------------------------------  ----------  ----------  ---------- 
 Broker compensation costs : 
  broking revenue (5)                    54.7%       53.1%   +1.6% pts 
 

Average broker headcount was 2% higher to 2,789 in 2020 from 2,740 in 2019 due to the acquisition of Louis Capital Markets (LCM) and the consolidation of our business in Malaysia. However, with a 5% decrease in average revenue per broker, the resulting broking revenue was 3% lower than 2019 on a reported basis (2% lower on a constant currency basis). The period-end broking support headcount increased 1% primarily reflecting in-sourcing (including Belfast), and investing in Risk and Compliance functions as a response to increasing regulatory demands.

   (1)   On a reported basis. Revenues declined 1% at constant currency 

(2) Broking includes contribution from Global Broking, Energy & Commodities and Institutional Services. Figures include inter-division revenues in Global Broking and Energy & Commodities, and inter-division front-office costs in Data & Analytics.

(3) Average revenue per broker is defined as Total Broking revenues excluding inter-division revenues divided by average broker headcount.

(4) Average contribution per broker represents broking contribution (as defined in the Contribution section) divided by the average broker headcount.

(5) Broker compensation costs: broking revenue is defined as Total Broking compensation costs divided by Broking revenues excluding inter-division revenues

The tables that follow analyse revenue by business division as well as revenue and Adjusted operating profit by region for 2020 compared with the equivalent period in 2019.. The table also shows the change on a constant currency basis. A significant portion of the Group's activity is conducted outside the UK and the statutory revenue is therefore impacted by the movement in the foreign exchange rates used to translate the revenue from non-UK operations. The comparative data in the following tables therefore shows the statutory revenue change, but also the constant currency basis, where the 2019 revenues are translated at the same exchange rates as those used for 2020.

Income Statement

The Group presents its reported results in accordance with IFRSs as detailed in the financial statements. The Group also presents adjusted, non-IFRS, measures to report performance. Adjusted results and other alternative performance measures ('APMs') may be considered in addition to, but not as a substitute for, the reported results presented in accordance with IFRS. The Group believes that adjusted results and other APMs, when considered together with reported results, provide shareholders, analysts and other stakeholders with additional information to better understand the Group's financial performance and compare financial performance from period to period. These adjusted measures and other APMs are also used by management for planning and to measure the Group's performance. Management also uses adjusted measures to allow better comparability of information between operating segments. Investors and analysts should not rely on any single financial measure but should review the Annual Report, including the financial statements and notes, in their entirety.

Reported results are adjusted for significant items to derive adjusted results. A reconciliation from reported to adjusted measures is provided in the table below. The Group's adjusted performance is derived by adjusting reported results for Significant items. For 2020, the Group's adjusted and reported operating profit (or Earnings before interest and tax, 'EBIT') of GBP272m and GBP178m, versus GBP279m and GBP142m in the prior year. Reported operating profit (EBIT) increased by 25% due to a material reduction in the Significant items.

Adjusted operating profit (EBIT) decreased by 3% as lower revenues were only partially offset by lower costs.

 
                                             2020                                2019 
----------------------------  ----------------------------------  ---------------------------------- 
 GBPm                          Adjusted   Significant   Reported   Adjusted   Significant   Reported 
                                                items                               items 
----------------------------  ---------  ------------  ---------  ---------  ------------  --------- 
 Revenue                          1,794             -      1,794      1,833             -      1,833 
----------------------------  ---------  ------------  ---------  ---------  ------------  --------- 
 Employment, compensation 
  and benefit                   (1,147)           (6)    (1,153)    (1,134)          (20)    (1,154) 
 General and administrative 
  expenses                        (333)          (27)      (360)      (380)          (55)      (435) 
 Depreciation and 
  impairment of PPE 
  and ROUA                         (36)           (1)       (37)       (33)           (1)       (34) 
 Amortisation and 
  impairment of int. 
  assets                           (20)          (39)       (59)       (23)          (46)       (69) 
 Impairment of other 
  assets                              -          (23)       (23)          -          (24)       (24) 
----------------------------  ---------  ------------  ---------  ---------  ------------  --------- 
 Operating expenses             (1,536)          (96)    (1,632)    (1,570)         (146)    (1,716) 
 Other operating income 
  (1)                                14             2         16         16             9         25 
----------------------------  ---------  ------------  ---------  ---------  ------------  --------- 
 Operating profit 
  (EBIT) (1)                        272          (94)        178        279         (137)        142 
 Operating profit 
  margin                          15.2%             -       9.9%      15.2%             -       7.7% 
 Net finance expense 
  (1)                              (49)             -       (49)       (49)             -       (49) 
----------------------------  ---------  ------------  ---------  ---------  ------------  --------- 
 Profit before tax                  223          (94)        129        230         (137)         93 
 Tax (10)                          (55)             7       (48)       (55)            15       (40) 
 Share of net profit 
  of associates and 
  JVs                                16             -         16         15             -         15 

 Non-controlling interests          (1)             -        (1)        (1)             -        (1) 
----------------------------  ---------  ------------  ---------  ---------  ------------  --------- 
 Equity attributable 
  to the eq. holders 
  of the parent                     183          (87)         96        189         (122)         67 
============================  =========  ============  =========  =========  ============  ========= 
 Average number of 
  shares                         557.0m        557.0m     557.0m     559.4m        559.4m     559.4m 
 Basic EPS (1)                    32.9p       (15.7p)      17.2p      33.8p       (21.8p)      12.0p 
 

(1) 2019 has been restated to remove the initial IFRS16 impact that was adopted in 2019

Revenue

Total revenue of GBP1,794m in 2020 was 2% lower than 2019 on a reported basis, and 1% lower at constant exchange rates. 2020 marked an unprecedented period due to the emergence of the COVID-19 pandemic. This created a turbulent and uncertain environment globally. Throughout the period, much management attention was given to ensuring the continuity of our business and the broader financial services markets across every location during the evolving stages of the pandemic. We were taking into account varying external requirements and the safety and welfare of our staff and the need to maintain an appropriate level of supervision of broking activities in working from home conditions.

Revenue by business division

 
                                                             Constant 
                                                 Reported    Currency 
                                  2020    2019     Change      Change 
                                ------  ------  ---------  ---------- 
 By region                        GBPm    GBPm          %           % 
                                ------  ------  ---------  ---------- 
 EMEA                              888     900        -1%         -1% 
 Americas                          670     687        -2%         -1% 
 Asia Pacific                      236     246        -4%         -3% 
                                ------  ------  ---------  ---------- 
 Total Revenues                  1,794   1,833        -2%         -1% 
                                ------  ------  ---------  ---------- 
 
 By business division             GBPm    GBPm          %           % 
   Rates                           510     537        -5%         -4% 
   Credit                           90      94        -4%         -3% 
   FX & Money Markets              186     201        -7%         -7% 
   Emerging Markets                183     213       -14%        -12% 
   Equities                        201     199         0%         +2% 
   Inter-division revenues(1)       18      18         0%          0% 
                                ------  ------  ---------  ---------- 
 Total Global Broking            1,188   1,262        -6%         -5% 
                                ------  ------  ---------  ---------- 
   Energy & Commodities            388     379        +2%         +3% 
   Inter-division revenues(2)        3       3         0%          0% 
                                ------  ------  ---------  ---------- 
 Total Energy & Commodities        391     382        +2%         +3% 
 Institutional Services             91      75       +21%        +21% 
 Data & Analytics                  145     135        +7%         +9% 
                                ------  ------  ---------  ---------- 
 Inter-division eliminations 
  (2)                             (21)    (21)         0%          0% 
                                ------  ------  ---------  ---------- 
 Total Revenues                  1,794   1,833        -2%         -1% 
                                ------  ------  ---------  ---------- 
 

(1) Inter-division revenues have been received by Global Broking and Energy & Commodities to reflect the value of proprietary data provided to the Data & Analytics division. The broking inter-segmental revenues and Data & Analytics inter-segmental costs are eliminated upon the consolidation of the Group financial results.

(2) Presented in line with our divisional disclosures

Regarding regional performance, EMEA revenue for the region decreased by 1% in 2020 compared with 2019 on a reported basis (1% lower on a constant currency basis), with mixed results in different asset classes. During 2020, our broking staff headcount increased to 1,260 mainly due to the Louis Capital Markets (LCM) acquisition and ICAP Oil hires.

Americas revenues decreased by 2% in 2020 versus 2019 on a reported basis (1% lower on a constant currency basis). This was due to difficult market conditions for TP ICAP's traditional Global Broking business, offset by strong growth in our growing Institutional Services and Energy & Commodities divisions.

Revenue in Asia Pacific in 2020 versus 2019 decreased 4% on a reported basis (3% lower on a constant currency basis). This was driven mainly by a decline in Global Broking, partially offset by revenue increases in Energy & Commodities, Institutional Services and Data & Analytics.

Regarding divisional performance, volatility indices spiked during the first quarter across a number of asset classes, including equities and energy. However, this trend largely reversed as the year progressed. Since May, we witnessed reduced volatility, a new round of quantitative easing, lowering interest rates and flattening yield curves. These trends are generally negative for our broking divisions. Despite this mixed environment, Energy & Commodities, Data & Analytics and Institutional Services performance remained strong. This performance was offset by subdued performances in Global Broking, especially in Emerging Markets.

We continued to recognise Inter-division revenue in Global Broking and Energy & Commodities to identify the value of data provided to the Data & Analytics division.

Global Broking revenues were 6% lower on a reported basis (5% lower on a constant currency basis). Rates division shrunk by 5% on a reported basis (4% lower on a constant currency basis). While rates activity was strong during the first quarter, new measures of governments' support globally, including interest rate reductions and quantitative easing, painted a weak picture since the summer. Conditions in credit markets were challenging for interdealer brokers, as a number of new competitors continued to gain market share and the issuance growth did not lead to high secondary trading. This led Credit revenue to decline 4% on a reported basis (3% lower on a constant currency basis). FX & Money Markets and Emerging Markets both saw revenue declines of 7%

(7% on a constant currency basis) and 14% (12% on a constant currency basis) respectively compared with the prior year due to subdued client activity on lower volume and volatility. Emerging Markets were especially impacted due to the earlier impact of COVID-19. Finally, Equities revenues were flat on a reported basis (2% higher on a constant currency basis). Market was favourable for cash equities trading, but TP ICAP is geared to equity derivatives, which was very mixed especially during the summer months.

Energy & Commodities revenue increased 2% on a reported basis (3% higher on a constant currency basis) compared to 2019 as market volatility provided a number of trading opportunities, especially between January and April. Revenues increased in most products, including Oil and Power. There was notable double-digit revenue growth in Gas and Environmental products. Other notable successes include the build-out of ICAP Oil business, Japanese Power, PVM US Gas & Power and Weather Derivatives.

Institutional Services revenue grew by 21% on a reported basis (21% higher on a constant currency basis) compared to 2019 on a broadened asset market coverage, expanded geographical presence and focusing on higher value electronic execution services. Revenues grew strongly in the key product lines, including exchange traded derivatives, equity derivatives, government bonds and FX. This performance was led by higher volatility and increased client demand. We also benefitted from changing market dynamics as our agency execution model continues to gain ground. We continued to add new hires and accelerate our client onboarding processes, which have also improved the performance of the business.

Data & Analytics revenue was 7% higher than 2019 on a reported basis (9% on a constant currency basis). Like most companies in the financial market data sector, we initially experienced a setback to growth earlier this year due to the impact of COVID-19. This was due to higher cancellation rates, deferral of clients' new initiatives and regulators' compliance dates for new regulations. However, the business recovered strongly through the second half of the year, producing double-digit growth for the last quarter. During 2020, we launched six new products, including our first Information product, started a direct-to-service service and expanded our Channel Partners to include the public cloud providers. We continue to show Inter-segmental revenues received by Global Broking and Energy & Commodities to reflect the value of proprietary data provided to the Data & Analytics division. These inter-division revenues are based on commercial terms benchmarked against third-party rates and rates charged by TP ICAP's broking desks to third parties.

The broking inter-division revenues and Data & Analytics interdivision costs are eliminated upon the consolidation of the Group financial results.

Operating expenses

Total operating costs were GBP1,632m, which was 5% lower than in 2019 on a reported basis. Total adjusted operating costs of GBP1,536m in 2020 were 2% lower than 2019 (1% lower on a constant currency basis (see Note 5 in the Financial Statements for further details)). This has been driven by a decrease in front office and management and support costs.

 
                                                                              Constant 
                                                  2019            Reported    Currency 
                                          2020     (1)   Change     Change      Change 
                                        ------  ------  -------  ---------  ---------- 
                                          GBPm    GBPm     GBPm          %           % 
                                        ------  ------  -------  ---------  ---------- 
   Broker compensation                     902     900        2         0%         +1% 
   Other front office costs                162     193     (31)       -16%        -14% 
   Data & Analytics costs                   50      46        4        +9%         +9% 
                                        ------  ------  -------  ---------  ---------- 
 Total front office costs 
  (2)                                    1,114   1,139     (25)        -2%         -1% 
                                        ------  ------  -------  ---------  ---------- 
 
   Other employment costs                  224     215        9        +4%         +5% 
   Technology and related 
    costs (3)                               69      59       10       +17%        +19% 
   Premises and related costs 
    (4)                                     27      26        1        +4%         +4% 
   Depreciation and amortisation 
    (4)                                     56      56        0         0%          0% 
   Other administrative costs 
    (4)                                     46      75     (29)       -39%        -38% 
 Total management and support 
  costs                                    422     431      (9)        -2%         -1% 
                                        ------  ------  -------  ---------  ---------- 
 Total adjusted operating 
  costs                                  1,536   1,570     (34)        -2%         -1% 
                                        ------  ------  -------  ---------  ---------- 
 
 Significant items:                         96     146     (50)       -34%         n/a 
   Restructuring and other 
    related items                           20      12 
   Disposals and acquisitions 
    and investments in new businesses       53      57 
   Goodwill impairment                      21      24 
   Settlements and provisions 
    in connection with legal 
    and regulatory matters                   2      19 
   ICAP integration costs                    -      34 
                                        ------  ------  -------  ---------  ---------- 
 Total operating expenses                1,632   1,716     (84)        -5%         n/a 
 

(1) 2019 has been restated to remove the initial IFRS16 impact that was adopted in 2019

(2) Presented in line with our divisional disclosures

(3) Included in general and administrative expenses

(4) Includes depreciation and impairment of PPE and ROUA and Amortisation and impairment of intangibles.

The table above sets out administrative expenses on the basis reviewed by management, divided principally between front office and management and support costs. Front office costs have a larger variable component to them and are directly linked to the output of our brokers.

The largest element of the front office is broker compensation and travel and entertainment. Other front office costs are telecommunications and information services, clearing and settlement fees as well as other direct costs. The remaining total cost base represents the management and support costs of the Group.

Broker compensation costs marginally increased on a reported basis (+GBP9m or +1% at constant currency) due to the acquisition of LCM. Excluding this acquisition, broker compensation costs were flat at constant currency. This is despite lower revenues, due to the shift in revenue mix towards businesses with a higher compensation ratio, mainly to Energy & Commodities, but also Institutional Services which is still in growth mode.

Overall, broker compensation ratio increased to 54.7% (+1.6% pts year-on-year). A proportion of the increase is due to the resulting decline in travel and entertainment caused by the pandemic during the year. Travel and entertainment costs are usually recharged to the brokers. This increases the broker compensation ratio but does not have an impact on contribution. The rest of the broker compensation ratio increase is due to the aforementioned revenue shift toward higher compensation ratio businesses.

Other front office costs have decreased by 16% (GBP31m) on a reported basis (14% lower on a constant currency basis). There were reductions of GBP22m in travel and entertainment and GBP5m lower expected credit losses on customer receivables, partly offset by higher telecommunications and information services costs. The increase in front-office Data & Analytics costs of 9% on a reported basis (9% higher on a constant currency basis) reflects its investment to achieve top-line growth. The GBP9m increase in the other staff costs on a reported basis (GBP11m on a constant currency basis reflect increased technology (GBP5m), risk (GBP1m) and legal and compliance (GBP1m) support costs as we enhance these functions to fulfil our increased IT strategic needs and ensure compliance in an ever-changing environment. Technology and related costs includes the costs of all external technology services, including maintenance contracts, consultancy, market data services and communications costs. During 2020, these costs increased by GBP10m on a reported basis (GBP11m higher on a constant currency basis) due to a combination of planned increases regarding IT infrastructure modernisation, cyber and surveillance IT projects, other IT investments and COVID-19 related IT spending,

such as investment in cloud services. The significant decrease in other administrative costs (GBP29m lower on a reported basis, GBP28m lower on a constant currency basis) includes lower corporate travel and entertainment (GBP4m), GBP9m lower consultancy and agency fees, lower Brexit costs (GBP3m), and lower currency exchange net losses arising on monetary assets and liabilities in the current year (GBP8m) compared to 2019.

Significant items

Significant items are material items, that may span several accounting periods, that are excluded from adjusted measures to allow better comparability of financial performance from period to period and give additional information to better understand the Group's financial performance when considered together with reported results.

Total significant items amounted to GBP94m in 2020 (2019: GBP84m). Significant items include:

Restructuring and related costs of GBP20m (2019: GBP12m)

Restructuring and related costs arise from initiatives to reduce the ongoing cost base and improve efficiency in the business to enable the delivery of our strategic priorities. These initiatives are material in size and nature to warrant exclusion from adjusted measures. These initiatives may span several accounting periods. Costs for other smaller scale restructuring are retained within both reported and adjusted results. In 2020, the following restructuring and related costs were considered to be significant items:

(i) GBP8m relating to the Group's re-domiciliation to Jersey announced in December 2019. These were mainly professional advisory fees in readiness preparation of the Group leading up to the re-domiciliation which was successfully undertaken on 26 February 2021. The nature of this project is one-off and costs are not expected to be incurred after 2021;

(ii) GBP4m of premises related costs following various office integrations, mainly in relation to ongoing costs of maintaining property which became vacant or is available to be sub-let;

(iii) GBP4m additional costs incurred from the restructuring of senior management within the Global broking division relating to the Group's cost reduction reorganisation programme announced in November 2020;

(iv) GBP2m relates to additional costs whilst transferring capabilities to our Belfast office which is part of the Group's cost effectiveness programme;

(v) GBP1m of on-going costs incurred in winding up the Group's UK defined benefit which commenced in 2019 (GBP4m for 2019); and

(vi) other employee long-term benefit costs of GBP1m relating to remeasurement of uninsured Group income protection liabilities (2019: GBP1m).

As adjusted results include the benefits of material restructuring programmes but some of the related costs have been excluded, they should not be regarded as a complete picture of the Group's financial performance, which is presented in the reported results.

Disposals, acquisitions and investments in new businesses GBP53m (2019: GBP57m)

Costs, and any related income, related to disposals, acquisitions and investments are transaction dependent and can vary significantly year on year, depending on the size and complexity of each transaction. These amounts, including the amortisation of intangible assets arising on consolidation, are excluded in deriving adjusted results to better reflect the trading performance of the Group and its segments. Amortisation of intangible assets arising on consolidation is treated in line with acquisition related costs, the exclusion of which normalises the impact of deal dependent pricing and allows comparability of performance from period to period. Amortisation of purchased and developed software is retained in both the reported and adjusted results as these are considered to be core to supporting the operations of the business.

In 2020 the following disposal, acquisition and investment costs were considered to be significant items:

(i) acquisition costs of GBP11m related mainly to the proposed Liquidnet acquisition. For 2019, we incurred GBP6m principally for the Axiom, ClearCompress and LCM acquisitions;

(ii) GBP39m (2019: GBP42m) relating to the amortisation of intangibles arising on acquisitions;

(iii) Adjustments to deferred or contingent consideration of GBP2m (2019: GBP6m) arose mainly from changes in estimates relating to the Axiom acquisition, partly offset by changes in estimates on the LCM and ClearCompress acquisitions;

   (iv)        The Group also impaired the carrying value of an investment in an associate by GBP1m. 

As adjusted results include the benefits of acquisitions but some of the related costs have been excluded, they should not be regarded as a complete picture of the Group's financial performance, which is presented in the reported results.

Goodwill impairment

As with other related acquisition costs and adjustments, management consider goodwill impairment separately, due to significant variations year-on-year, to aid comparability of results. In H1 2020, the carrying value of the Asia-Pacific CGU has been written down by GBP21m (2019: GBP24m) ( see note 13).

Legal and regulatory matters

Costs, and recoveries, related to certain legal and regulatory cases are treated as significant items due to their size and nature . Management consider these cases separately due to the judgements and estimation involved, the costs and recoveries of which could vary significantly year-on-year. In 2020, costs were GBP2m (2019:GBP19m). In 2020, this was made up of GBP5m costs relating to various ongoing material cases offset by a GBP3m provision release in relation to the European Commission Yen Libor. In 2019, costs of GBP19m were incurred, relating primarily to a GBP15m FCA fine.

Recoveries GBP2m (2019: GBP9m)

GBP2m was recovered from the CME Group under the terms of the ICAP acquisition and have been reported within other operating income. In 2019, GBP9m was recovered in relation to an employment-related legal settlement

Regional analysis

 
 2020 (GBPm)                      EMEA   Americas   Asia Pacific     Total 
                                ------  ---------  -------------  -------- 
 Revenue                           888        670            236      1794 
                                ------  ---------  -------------  -------- 
 Total front office costs        (518)      (442)          (154)   (1,114) 
                                ------  ---------  -------------  -------- 
 Contribution                      370        228             82       680 
   Contribution margin           41.2%      34.0%          34.7%     37.9% 
                                ------  ---------  -------------  -------- 
 Management and support costs    (216)      (135)           (71)     (422) 
 Other operating income              6          3              5        14 
                                ------  ---------  -------------  -------- 
 Adjusted operating profit 
  (EBIT)                           160         96             16       272 
   Adjusted operating profit 
    margin                       18.0%      14.3%           6.8%     15.2% 
 
 2019 (GBPm)                      EMEA   Americas   Asia Pacific     Total 
                                ------  ---------  -------------  -------- 
 Revenue                           900        687            246     1,833 
                                ------  ---------  -------------  -------- 
 Total front office costs        (524)      (458)          (157)   (1,139) 
                                ------  ---------  -------------  -------- 
 Contribution                      376        229             89       694 
   Contribution margin (%)       41.8%      33.3%          36.2%     37.9% 
                                ------  ---------  -------------  -------- 
 Management and support costs    (222)      (140)           (69)     (431) 
 Other operating income             10          5              1        16 
                                ------  ---------  -------------  -------- 
 Adjusted operating profit 
  (EBIT)                           164         94             21       279 
   Adjusted operating profit 
    margin (%)                   18.2%      13.7%           8.5%     15.2% 
 

EMEA

Revenue for the region decreased by 1% in 2020 compared with 2019 on a reported basis (1% lower on a constant currency basis), with mixed results in different asset classes. During 2020, our broking staff headcount increased to 1,266 mainly due to the Louis Capital Markets (LCM) acquisition and ICAP Oil hires.

Global Broking revenues fell 6% versus 2019. Overall, the division had a very strong first half of 2020 with exceptional volatility levels in March and April, caused by the pandemic. However, since May, market dynamics reversed as many clients decided to reduce risk and close out position and government reduced interest rates to very low levels and restarted quantitative easing. In terms of products, Rates and FX reported lower revenues as strong H1 was offset by lowering interest rates and traders working from home as the year progressed. Emerging Markets revenues were materially lower year-on-year as many emerging market economies were hit hard by COVID-19, especially South Africa and Turkey. Credit revenues increased during the year through higher primary issuance, stronger CDS and insurance markets, offset by weaker performance in some other products. Finally, Equities were slightly up year-on-year, primarily due to the LCM acquisition. LCM was able to offset the decline on Q2 dividend season that was severely impacted due to the pandemic.

Energy & Commodities revenues increased slightly year-on-year. This was materially due to the oil price volatility witnessed in the first half of the year. The second half saw some decline with less freight being transported around the world and continued uncertainty regarding forward contracts. The flight to gold enabled the precious metals business to have a very strong year. We continued to grow our ICAP brand with important hires in our oil products.

Institutional Services revenues saw a 17% increase versus 2019. The division expanded its EMEA product offering by opening a COEX Rates desk during the year as well as growing its exchange traded derivatives (ETD) business.

Data & Analytics were less impacted by market volatility due to the nature of its subscription business. However, the broadening of its product range and customer base led to 9% revenue increase year-on-year. Contribution margin for the region reduced by 0.6 percentage points to 41.2%, mainly due to lower revenues, increased costs associated with adjusting to a working from home environment and higher compensation ratio.

Adjusted operating profit in EMEA of GBP160m was 2% lower than 2019, and with revenue down 1% on a reported basis (and 1% lower on a constant currency basis), the adjusted operating profit margin has decreased by 0.2 percentage points, to 18.0%. This was a result of reduced revenues, the completion of Louis Capital Markets acquisition and continuous investment in IT and Hub Strategies,

offset by some reduction in the support head headcount.

Americas

Americas revenues decreased by 2% in 2020 versus 2019 on a reported basis (1% lower on a constant currency basis). This was due to difficult market conditions for TP ICAP's traditional Global Broking business, offset by strong growth in our Institutional Services and Energy & Commodities divisions.

Within the Global Broking business, the volatility in March and April boosted our first half markets. However, general market conditions worsened as the year progressed and clients reduced their risk appetite. Overall, Global Broking revenues declined 5% year on year. All asset classes, excluding Equities, posted lower revenues versus 2019.

Rates revenues decreased by 10% as USD swaps and Treasuries markets weakened in the second half of the year. Rates continues to be the largest asset class in the Americas. Emerging Markets revenues were the worst performing class for 2020, as developing markets were asymmetrically affected by the pandemic and working offsite conditions.

Equities revenues were up marginally year-on-year due to new product development. While cash equities market was very strong, equity derivatives (EQD) faced a mixed year, affected by a slower Q2 dividend season. FX & Money Markets businesses saw small revenue declines in 2020, due to lower volatility levels and client de-risking in Forward FX.

US fixed income markets remained subdued for inter-broker dealers, as market structure is changing and new market entrants surface. TP ICAP reported single-digit revenue decline.

The Americas' Energy & Commodities business demonstrated another strong year, with a 4% revenue increase. There were increased revenues in oil and gas businesses. Energy & Commodities continues to be a targeted growth area for TP ICAP Americas across all our brands.

Finally, TP ICAP's Institutional Services was the standout performer of the Americas' region in 2020, with 29% revenue growth. The business expanded its product offerings and it remains an area for growth opportunities.

Contribution margin improved 0.6 percentage points to 14.3%, as lower revenues were more than offset by materially lower travelling and entertainment.

In the Americas, the adjusted operating profit of GBP96m is 2% higher than 2019 but the adjusted operating profit margin has increased by 0.6 percentage point to 14.3% on higher contribution margin and tight cost management, partially offset by continuous investment in IT and Hub Strategies.

Asia Pacific

Revenue in Asia Pacific in 2020 versus 2019 decreased 4% on a reported basis (3% lower on a constant currency basis). This was driven mainly by a decline in Global Broking, partially offset by revenue increases in Energy & Commodities, Institutional Services and Data & Analytics.

Global Broking revenue declined year-on-year by 8% to GBP184m. The year started healthily but going into the second quarter, the impact of the pandemic began to cause a reduction in risk appetite and trading volumes. A low interest rate environment, especially in Australia where rates got capped during the year, kept market volumes at muted levels. Japanese markets were relatively quiet after the first quarter and remained slow throughout the year. During the year, we undertook a review of underperforming desks and took some actions, including targeted compensation adjustments and selected staff exits where appropriate, while maintaining our service to customers across all key asset classes. This review led to limited impact on revenue but was positive on Asia Pacific's contribution rate. During the year, we took majority control of our Malaysian business and started to consolidate it to our regional revenues.

Energy & Commodities revenue grew by 11% year-on-year. This reflected the benefit of a number of recently established desks as we have increased the scale and diversification of our business. These new desks brought in new revenue and included TP middle distillates, PVM Gasoline, and ICAP branded Precious Metals. Importantly, the competing desks already operating under other brands continued to perform well.

Institutional Services initiated FX Option business in Singapore in 2019 and this business continued to develop during 2020, though at a relative low pace given similar headwinds to those affecting the

Global Broking business.

The overall contribution margin decreased year-on-year by 1.6% from 36.3% to 34.7%. This deterioration in contribution rate arose in Global Broking, Energy & Commodities and also from the impact of starting up the Institutional Services business.

Adjusted operating profit in Asia Pacific decreased to GBP16m in 2020 (GBP5m lower than in 2019), while the adjusted operating profit margin has reduced by 1.7 percentage points to 6.8% with the benefit of reductions in management and support costs as a result of the integration being more than offset by revenue decline and costs relating with the scaling of Institutional Services.

Contribution margin declined 1.5 percentage point to 34.7%. This deterioration is contribution rate arose due to lower revenues in Global Broking, but also from the impact of starting up the Institutional Services business.

Overall, adjusted profit margin of 6.8% in 2020 was lower than the 8.5% 2019 margin, as lower revenues & contribution, combined with central allocations regarding IT investments could not be offset by support cost savings.

Divisional Analysis

This section demonstrates the performance of TP ICAP Group by division in terms of revenues, contribution and operating profit. The broking inter-segmental revenues and Data & Analytics inter-segmental costs are eliminated upon the consolidation of the Group financial results. Broker contribution (excluding Data & Analytics) declined 3% to GBP606m, as higher contribution from Energy & Commodities and Institutional Services was offset by lower contribution from Global Broking, due to lower revenues and higher ICP amortisation.

Contribution represents the revenue of our businesses less the total front office costs described above. An improvement in the absolute level of contribution is an important metric in driving earnings growth for the Group. In 2020 the overall level of contribution was 2% lower at GBP680m year-on-year. The overall contribution margin was flat at 37.9% as lower revenues were more than offset by lower front office costs. There was some broker compensation ratio increase, due to revenue shift changes and lower travel and entertainment that is usually recharged to the brokers, offset by lower discretionary bonuses and lower clearing and settlement fees. TP ICAP's adjusted operating profit (EBIT) of GBP272m is 3% lower than the prior year, as lower revenues were only partially offset by lower front office and net management and support cost savings. The operating profit (EBIT) margin stayed flat at 15.2%.

GB =Global Broking; E&C = Energy & Commodities; IS = Institutional Services, D&A = Data & Analytics

 
                                                                 Corp. 
 2020 (GBPm)                      GB     E&C      IS     D&A    Centre     Total 
----------------------------  ------  ------  ------  ------  --------  -------- 
 Revenue: 
  - External                   1,170     388      91     145         -     1,794 
  - Inter-division                18       3       -       -      (21)         - 
                               1,188     391      91     145      (21)     1,794 
 Total front office costs: 
  - External                   (734)   (261)    (69)    (50)             (1,114) 
  - Inter-division                 -       -       -    (21)        21         - 
                               (734)   (261)    (69)    (71)        21   (1,114) 
 
 Contribution                    454     130      22      74         -       680 
 Contribution margin           38.2%   33.2%   24.2%   51.0%       n/a     37.9% 
 Net management and support 
  costs: 
  - Management and support 
   costs                       (260)    (78)    (15)    (10)      (59)     (422) 
  - Other operating income         3       1       -                10        14 
                              ------  ------  ------  ------  --------  -------- 
                               (257)    (78)    (15)    (10)      (49)     (408) 
 Adjusted Operating profit 
  / (loss)                       197      53       7      64      (49)       272 
                              ======  ======  ======  ======  ========  ======== 
 
 Adjusted operating profit 
  margin                       16.6%   13.6%    7.7%   44.1%       n/a     15.2% 
 Significant items                                                          (94) 
 Reported operating profit 
  (EBIT)                                                                     129 
 Reported operating profit 
  margin                                                                    9.9% 
 
 
 
                                                                 Corp. 
 2019 (GBPm)                      GB     E&C      IS     D&A    Centre     Total 
----------------------------  ------  ------  ------  ------  --------  -------- 
 Revenue: 
  - External 
  - Inter-division             1,244     379      75     135         -     1,833 
                                  18       3               -      (21)         - 
 Total front office costs:     1,262     382      75     135      (21)     1,833 
  - External 
  - Inter-division             (775)   (261)    (57)    (46)             (1,139) 
                                   -       -       -    (21)        21         - 
 Contribution                  (775)   (261)    (57)    (67)        21   (1,139) 
 Contribution margin 
                                 487     121      18      68         -       694 
 Net management and support 
  costs:                       38.6%   31.7%   24.0%   50.4%       n/a     37.9% 
  - Management and support 
   costs 
  - Other operating income     (268)    (75)    (15)     (9)      (64)     (431) 
                              ------  ------  ------  ------  --------  -------- 
                                   2       -       -                14        16 
 Adjusted Operating profit 
  / (loss)                     (266)    (75)    (15)     (9)      (50)     (415) 
                              ======  ======  ======  ======  ========  ======== 
                                 221      46       3      59      (50)       279 
 Adjusted operating profit 
  margin                       17.5%   12.0%    4.0%   43.7%       n/a     15.2% 
 Significant items                                                         (137) 
 Reported operating profit 
  (EBIT)                                                                     142 
 Reported operating profit 
  margin                                                                    7.7% 
 

Global Broking revenues were 6% lower on a reported basis (5% lower on a constant currency basis). Following a strong first quarter, activity significantly abated as the year progressed. This led to a weaker performance in most asset classes. Rates, FX & Money Markets, Emerging Markets and Credit. This performance was only partially offset by small growth in Equities.

Lower revenues led to a small 0.4% pts decline in contribution margin, as the impact of smaller top-line was absorbed by lower discretionary bonuses, lower travel and entertainment and lower clearing and settlement fees.

The adjusted operating profit (EBIT) decreased to GBP197m, or 11% lower versus 2019. This was a result of reduced revenue, increased costs associated with adjusting to a working from home environment for many staff, the region becoming Brexit ready, the Louis Capital Markets (LCM) acquisition and continued investment in IT, Cyber and Risk & Compliance costs and our Hub strategy. Operating profit (EBIT) margin decreased 0.9 percentage points to 16.6%.

Energy & Commodities revenues increased 2% on a reported basis (3% higher on a constant currency basis) compared to 2019 as market volatility provided a number of trading opportunities,

especially between January and April. Revenues increased in most products, including Oil and Power. There were notable double-digit revenue growth in Gas and Environmental products.

Contribution increased 7% year on year to GBP130m, mainly due to higher revenues offset mainly through the broker compensation ratio increase, due to revenue shift changes, combined with higher initial contract payments ('ICP') amortisation.

The adjusted operating profit (EBIT) increased to GBP53m, or 15% higher versus 2019. This is primarily due to higher revenues, supported by some front-office, management related savings and contract re-negotiations partially offset by higher ICP. The Adjusted operating profit (EBIT) margin improved 1.6 percentage points to 13.6%.

Institutional Services revenue grew by 21% on a reported basis (21% higher on a constant currency basis) compared to 2019 on a broadened asset market coverage, expanded geographical presence and focusing on higher value electronic execution services. Revenues grew strongly in the key product lines, including exchange traded derivatives, equity derivatives, government bonds and FX. This performance was led by higher volatility, increased client demand but also stemming from changing market dynamics as our agency execution model continues to gain ground and investment banks continue to reorganise their sales coverage teams. We continued to add new hires and accelerate our client onboarding processes, which have also improved the performance of the business.

Contribution increased to GBP22m, with contribution margin increasing slightly by 0.2% pts to 24.2%. The increase is due to strong revenue growth, offset by higher trading costs, compensation and IT costs as we continue to build scale.

Institutional Services improved its adjusted operating profit (EBIT) to GBP7m (233% higher year-on-year). The business continues to generate necessary scale to improve its profitability, with very strong revenue growth. The adjusted operating profit (EBIT) margin improved to 7.7%, 3.7 percentage points higher year-on-year.

Data & Analytics revenue was 7% higher than 2019 on a reported basis (9% on a constant currency basis). Like most companies in the financial market data sector, we initially experienced a setback to

growth earlier this year due to the impact of COVID-19. This was due to higher cancellation rates, deferral of clients' new initiatives and regulators' compliance dates for new regulations. However, the business recovered strongly through the second half of the year, producing double-digit growth for the last quarter.

During 2020, we launched six new products, including our first Information product,

started a direct-to-service service and expanded our Channel Partners to include the public cloud providers. We continue to show Inter-segmental charges made by Global Broking and Energy &

Commodities to reflect the value of proprietary data provided to the Data & Analytics division. These inter-division charges are based on commercial terms benchmarked against third party rates

and rates charged by TP ICAP's broking desks to third parties. Data & Analytics contribution represents the revenue of the Data & Analytics business less the total front office costs associated with running the business, including the cost of internally generated data from the broking businesses. In 2020, Contribution improved to GBP74m (9% higher year-on-year) mainly due to higher revenues, as Data & Analytics continues to build scale, launching new higher-value products, improving distribution channels and increasing the number of clients in the buy-side and the sell-side. Contribution margin increased to 51.0% or 0.6 percentage points higher year-on-year.

Finally, Data & Analytics reported strong adjusted operating profit (EBIT) of GBP64m, or 8% higher versus 2019. The results benefited from strong revenue growth and positive operational leverage. As such, the adjusted operating profit (EBIT) margin improved to 44.1%, 0.4 percentage points higher year-on-year

Net finance expense

The reported net finance expense of GBP49m is in line with the GBP49m charged in 2019, as lower finance costs were offset by lower interest income. Interest expense was GBP52m, of which GBP36m relates to the Group's Sterling Notes, GBP3m of bank facility costs, GBP1m relating to the amortisation of debt issue and bank facilities and GBP1m of other interest payable. The interest expense includes GBP11m interest payable on IFRS16 lease liabilities. The expense is offset by GBP2m of interest income and GBP1m of income of finance lease receivables.

Tax

The effective rate of tax on reported profit before tax is 37% (2019: 43%), reflecting the tax deductibility of certain expenditure classed as significant items. The effective rate of tax on adjusted profit before tax is 24.7% (2019: 23.9%). The rate is consistent with the outlook previously given, noting that the prior year effective tax rate was lower due to a greater impact from the conclusion of prior year tax liabilities at less than the amount provided.

Basic EPS

The average number of shares used for the basic EPS calculation of 557m reflects the 563.3m shares in issue less the 4.5m shares held by the Employee Benefit Trust at the beginning of the year, less the difference between the time apportionment element of the 4.8m of shares acquired by the Employee Benefit Trust to satisfy deferred share awards made to senior management, and the 0.7m of deferred shares meeting their vesting requirements in June. The Employee Benefit Trust has waived its rights to dividends. Post year-end, the number of shares in issue increased to 788m due to the rights issue that was completed on 16 February 2021.

Dividend

For 2020, the Group proposes a full-year dividend per share ("DPS") of 6p that equates to GBP47m (2019 DPS: 11.9p, rebased to take into account the bonus element of the rights issue completed on 16 February 2021), a one-off c50% reduction to the prior year. This reduction will help fund the Liquidnet acquisition and minimise dilution of earnings on a per share basis. For 2021 onwards, we will target a dividend cover of approximately 2x adjusted earnings. The new dividend policy reflects a balanced approach to capital allocation and is expected to allow TP ICAP to drive growth, while allowing dividends to increase in line with adjusted earnings.

Cash flow statement

The cash flow presentation reconciles the adjusted cash flow generation, excluding the impact of Significant items, to the reported net cash flow from operations. The impact on EBITDA of significant items was GBP30m mainly due to acquisition and business reorganisation costs.

During the year, there was a 6% decline in reported operating cash flow of, as higher reported operating profit (EBIT) was offset by higher initial contract prepayments (ICP), changes in working capital and incremental capital expenditure regarding our new London Headquarters and investment in IT.

During the period there was a small increase in initial contract prepayments. The working capital outflow of GBP28m which mainly reflects the reduced management and support bonuses and associated payroll taxes. Capital expenditure has increased to GBP53m reflecting incremental spending on our new London Headquarters and continued IT spending on routine, mandatory and investment projects.

After interest paid and adjusted taxation paid, the adjusted free cash flow for the Group was GBP119m, a decrease of GBP41m year on year, mainly due to higher capital expenditure.

Cash Flow

Other* = Significant items

 
 2020 (GBPm)                                 Adjusted   Other*   Reported 
------------------------------------------  ---------  -------  --------- 
 Operating profit (EBIT)                          272     (94)        178 
 Share based payment charge and 
  pension scheme administration fees                9      (1)          8 
 Depreciation and amortisation                     33        -         33 
 Depreciation on leased assets                     23        -         23 
 Non-cash items                                     -        5          5 
  Impairment & amortisation of intangible 
   assets 
   arising on consolidation                                 60         60 
 Change in Initial contract prepayments           (4)        -        (4) 
 Working capital                                 (28)      (5)       (33) 
 Cash generated from operations                   305     (35)        270 
 Capital expenditure                             (53)        -       (53) 
                                            ---------  -------  --------- 
 Operating cash flow                              252     (35)        217 
 Interest paid                                   (53)        -       (53) 
 Tax paid                                        (80)        7       (73) 
                                            ---------  -------  --------- 
 Free cash flow                                   119     (28)         91 
                                            ---------  -------  --------- 
 
 
 2019 (GBPm)                                 Adjusted   Other*   Reported 
------------------------------------------  ---------  -------  --------- 
 Operating profit (EBIT)                          279    (137)        142 
 Share based payment charge and 
  pension scheme administration fees                6        3          9 
 Depreciation and amortisation                     36        4         40 
 Depreciation on leased assets                     20        1         21 
 Non-cash items                                     1        6          7 
  Impairment & amortisation of intangible 
   assets 
   arising on consolidation                                 66         66 
 Change in Initial contract prepayments           (2)        2          - 
 Working capital                                 (21)        1       (20) 
 Cash generated from operations                   319     (54)        265 
 Capital expenditure                             (33)        -       (33) 
                                            ---------  -------  --------- 
 Operating cash flow                              286     (54)        232 
 Interest paid                                   (53)        -       (53) 
 Tax paid                                        (73)        9       (64) 
                                            ---------  -------  --------- 

 Free cash flow                                   160     (45)        115 
                                            ---------  -------  --------- 
 

Debt finance

The revolving credit facility provided by a syndicate of banks was refinanced in December 2018 on improved terms increasing our overall facility to GBP270m from GBP250m. The main revolving credit facility now matures in December 2023,

The composition of the Group's outstanding debt is summarised below. In August 2020 the Group entered into a revolving credit facility with Tokyo Tanshi Co., Ltd. ('Totan') for JPY 10 bn (cGBP70m equivalent) with an initial maturity of two years. This facility can be extended for six months by mutual agreement semi-annually. The current maturity date is 27 February 2023. JPY 4 bn (GBP28m

equivalent) was drawn as at the period-end (2019: GBP0m). During 2020, no refinancing actions were carried out on the bonds issued by the Group under its GBP1bn Euro Medium Term Note Programme.

The amounts of bonds outstanding remain GBP250m 5.25% Notes due 2026 (2019: GBP250m) and GBP431m 5.25% Notes due 2024 (2019: GBP431m).

 
                                     At 31       At 31 
 GBPm                             Dec 2020    Dec 2019 
------------------------------  ----------  ---------- 
 5.25% Sterling Notes January 
  2024                                 431         431 
 5.25% Sterling Notes May 
  2026                                 250         250 
 Revolving credit facility 
  drawn - Banks                          -           - 
 Revolving credit facility 
  drawn - Totan                         28           - 
 Overdraft                               7           - 
 Unamortised debt issue 
  costs                                (2)         (2) 
 Accrued interest                       11          11 
------------------------------  ----------  ---------- 
 Gross Debt pre-IFRS 16                725         689 
 IFRS 16 lease liabilities             212         140 
------------------------------  ----------  ---------- 
 Total Debt                            937         829 
 

Cash and cash equivalent

Of the GBP783m cash and financial investments balance at the period end, GBP687m is held in 74 regulated entities to meet regulatory capital, margin and other trading requirements as well as accrued profits, GBP86m is held in non-regulated entities for working capital requirements as well as accrued profits and GBP10m is held in corporate holding companies. The GBP687m of cash held in regulated entities generally remains held within those Group's entities for regulatory and operational reasons.

Exchange rates

The income statements and balance sheets of the Group's businesses whose functional currencies are not GBP are translated into Sterling at average and period end exchange rates respectively. The most significant exchange rates for the Group are the US Dollar and the Euro. The Group's current policy is not to hedge income statement or balance sheet translation exposure. Average and period end exchange rates used in the preparation of the financial statements are shown below.

 
                   Average           Period End 
                 2020      2019      2020      2019 
 US dollar      $1.29     $1.28     $1.37     $1.28 
 Euro         EUR1.13   EUR1.14   EUR1.12   EUR1.14 
 

Pensions

The Group has one defined benefit pension scheme in the UK that is currently in the process of being wound up.

The Sponsor and Trustee commenced the wind-up of the Scheme in 2019 to enable the Trustee to exchange the Scheme's bulk annuity policy for individual policies that will be held directly by the Scheme's beneficiaries, in a process known as a 'buy-out'. Under UK legislation, once a Scheme commences wind-up, the assets of the Scheme pass unconditionally to the Trustee to enable it to settle the Scheme's liabilities. As a result, the Group has applied the requirement of IFRIC 14, fully restricting the Group's recognition of the GBP49m (2019: GBP52m) net surplus by applying an asset recognition ceiling. The asset ceiling is recorded as a charge in other comprehensive income.

During the wind-up period, the Group will continue to restrict the recognition of the net surplus. Should any member benefits be augmented during this period, they will represent a past service cost and will be recorded as a significant item in the Income Statement as and when those benefits are agreed. Costs associated with the settlement of the Scheme's liabilities will also be recorded as a significant item in the Income Statement as and when incurred. Past service and settlement costs amounted to GBP1m in 2020 (2019: GBP3m).

Following the full settlement of the Scheme's liabilities the Scheme will be wound-up and the Sponsor expects to receive the remaining asset. Any repayment received will also be subject to applicable taxes at that time, currently 35%.

Regulatory capital

As at 31 December 2020 the Group's lead regulator was the FCA. Following the Group's redomiciliation to Jersey on 26 February 2021, the Group now falls under the regulation of the Jersey Financial Services Commission. As at 31 December 2020 the Group held an FCA waiver from the consolidated capital adequacy requirements under CRD IV. The waiver took effect on 30 December 2016, following the acquisition of ICAP, with an expiry of 30 December 2026. Under the terms of the waiver, each investment firm within the Group must be treated as either a limited activity or a limited licence firm and comply with its individual regulatory capital resources requirements. TP ICAP plc, as the parent Company as at 31 December 2020, 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 'Financial Holding Company test'). The terms of the waiver require the Group to eliminate the excess of its consolidated own funds requirement compared with its consolidated own funds ('Excess Goodwill') over the ten-year period to 30 December 2026. The amount of the Excess Goodwill must not exceed the amount determined as at the date the waiver took effect (the 'Excess Goodwill Ceiling'). The Excess Goodwill Ceiling is reduced to nil in line with a schedule over ten years to December 2026, with the first reduction of 25% having occurred at the end of June 2019. The Excess Goodwill Ceiling continues to reduce 25% every 2.5 years on a straight-line basis. The waiver also sets out conditions with respect to the maintenance of financial ratios relating to leverage, debt service and debt maturity profile. As at 31 December 2020, the Group's regulatory capital headroom under the Financial Holding Company test calculated in accordance with Pillar 1 was GBP1,550m (2019: GBP1,591m). Many of the Group's broking entities are regulated on a 'solo' basis, and are obliged to meet the regulatory capital requirements imposed by the local regulator of the jurisdiction in which they operate. The Group maintains an appropriate excess of financial resources in such entities. Information disclosure under Pillar 3 is available on the Group's website: www.tpicap.com . Following the redomiciliation to Jersey, the Group will no longer be subject to the consolidated capital adequacy requirements under CRD IV and as a result the 'Financial Holding Company test' and CRD IV waiver requirements of the FCA are no longer applicable. The FCA has become the lead regulator of the Group's sub-consolidated activities, legally headed by the UK, for which the consolidated capital adequacy requirements under CRD IV now apply. This sub-group has not applied for a waiver as the sub-group maintains an appropriate excess of financial resources.

Consolidated Income Statement

for the year ended 31 December 2020

 
                                                         2020      2019 
                                              Notes      GBPm      GBPm 
-------------------------------------------  ------  --------  -------- 
 Revenue                                          3     1,794     1,833 
-------------------------------------------  ------  --------  -------- 
 Employment, compensation and benefits                (1,153)   (1,154) 
 General and administrative expenses                    (360)     (435) 
 Depreciation and impairment of PPE 
  and ROUA                                               (37)      (34) 
 Amortisation and impairment of Intangible 
  asset                                                  (59)      (69) 
 Impairment of other assets                              (23)      (24) 
-------------------------------------------  ------  --------  -------- 
 Total operating costs                            4   (1,632)   (1,716) 
 Other operating income                           5        16        25 
-------------------------------------------  ------  --------  -------- 
 Operating profit                                         178       142 
 Finance income                                   6         3         6 
 Finance costs                                    7      (52)      (55) 
-------------------------------------------  ------  --------  -------- 
 Profit before tax                                        129        93 
 Taxation                                                (48)      (40) 
-------------------------------------------  ------  --------  -------- 
 Profit after tax                                          81        53 
 Share of results of associates and 
  joint ventures                                           16        15 
-------------------------------------------  ------  --------  -------- 
 Profit for the year                                       97        68 
===========================================  ======  ========  ======== 
 
 Attributable to: 
 Equity holders of the parent                              96        67 
 Non-controlling interests                                  1         1 
-------------------------------------------  ------  --------  -------- 
                                                           97        68 

===========================================  ======  ========  ======== 
 
 Earnings per share 
 - Basic                                          8     17.2p     12.0p 
 - Diluted                                        8     17.0p     11.9p 
-------------------------------------------  ------  --------  -------- 
 
 

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2020

 
                                                     2020   2019 
                                                     GBPm   GBPm 
--------------------------------------------------  -----  ----- 
 Profit for the year                                   97     68 
--------------------------------------------------  -----  ----- 
 Items that will not be reclassified subsequently 
  to profit or loss: 
 Remeasurement of defined benefit pension 
  schemes                                               2   (52) 
 Equity instruments at FVTOCI - net change 
  in fair value                                         -      1 
 Taxation                                               -     19 
--------------------------------------------------  -----  ----- 
                                                        2   (32) 
--------------------------------------------------  -----  ----- 
 Items that may be reclassified subsequently 
  to profit or loss: 
 Fair value movements on net investment 
  hedge                                                 2      - 
 Effect of changes in exchange rates on 
  translation 
  of foreign operations                              (30)   (44) 
 Taxation                                             (1)      - 
                                                     (29)   (44) 
                                                    ----- 
 Other comprehensive loss for the year               (27)   (76) 
--------------------------------------------------  -----  ----- 
 Total comprehensive income/(loss) for the 
  year                                                 70    (8) 
==================================================  =====  ===== 
 
 Attributable to: 
 Equity holders of the parent                          69    (8) 
 Non-controlling interests                              1      - 
--------------------------------------------------  -----  ----- 
                                                       70    (8) 
==================================================  =====  ===== 
 

Consolidated Balance Sheet

as at 31 December 2020

 
                                                           2020       2019 
                                               Notes       GBPm       GBPm 
--------------------------------------------  ------  ---------  --------- 
 Non-current assets 
 Intangible assets arising on consolidation       10      1,463      1,511 
 Other intangible assets                                     58         61 
 Property, plant and equipment                              101         72 
 Right-of-use assets                                        163         91 
 Investment in associates                                    61         58 
 Investment in joint ventures                                29         28 
 Other investments                                           18         20 
 Deferred tax assets                                          4          3 
 Retirement benefit assets                                    -          - 
 Other long term receivables                                 24         26 
--------------------------------------------  ------  ---------  --------- 
                                                          1,921      1,870 
--------------------------------------------  ------  ---------  --------- 
 
 Current assets 
 Trade and other receivables                             70,027     49,371 
 Financial investments                            13        127        148 
 Derivative financial instruments                             3          - 
 Cash and cash equivalents                        13        656        676 
--------------------------------------------  ------  ---------  --------- 
                                                         70,813     50,195 
--------------------------------------------  ------  ---------  --------- 
 Total assets                                            72,734     52,065 
============================================  ======  =========  ========= 
 
 Current liabilities 
 Trade and other payables                              (69,927)   (49,305) 
 Loans and borrowings                          11,13       (46)       (11) 
 Lease liabilities                                13       (26)       (23) 
 Current tax liabilities                                   (28)       (48) 
 Short term provisions                            14       (17)       (21) 
--------------------------------------------  ------  ---------  --------- 
                                                       (70,044)   (49,408) 
--------------------------------------------  ------  ---------  --------- 
 Net current assets                                         769        787 
============================================  ======  =========  ========= 
 
 Non-current liabilities 
 Loans and borrowings                          11,13      (679)      (678) 
 Lease liabilities                                13      (186)      (117) 
 Deferred tax liabilities                                  (79)       (83) 
 Long term provisions                             14       (23)       (26) 
 Other long term payables                                  (23)       (21) 
 Retirement benefit obligations                             (2)        (2) 
--------------------------------------------  ------  ---------  --------- 
                                                          (992)      (927) 
--------------------------------------------  ------  ---------  --------- 
 Total liabilities                                     (71,036)   (50,335) 
--------------------------------------------  ------  ---------  --------- 
 Net assets                                               1,698      1,730 
============================================  ======  =========  ========= 
 
 Equity 
 Share capital                                              141        141 
 Share premium                                               17         17 
 Merger reserve                                           1,384      1,384 
 Other reserves                                         (1,246)    (1,205) 
 Retained earnings                                        1,383      1,375 
--------------------------------------------  ------  ---------  --------- 
 Equity attributable to equity holders 
  of the parent                                           1,679      1,712 
 Non-controlling interests                                   19         18 
--------------------------------------------  ------  ---------  --------- 
 Total equity                                             1,698      1,730 
============================================  ======  =========  ========= 
 

Consolidated Statement of Changes in Equity

for the year ended 31 December 2020

 
                                        Equity attributable to equity holders of the parent 
                                Share                Reverse        Re-      Hedging 
                      Share   premium    Merger  acquisition  valuation          and     Own   Retained           Non-controlling    Total 
                    capital   account   reserve      reserve    reserve  translation  shares   earnings   Total         interests   equity 
 2020                  GBPm      GBPm      GBPm         GBPm       GBPm         GBPm    GBPm       GBPm    GBPm              GBPm     GBPm 
-----------------  --------  --------  --------  -----------  ---------  -----------  ------  ---------  ------  ----------------  ------- 
 Balance at 
  1 January 2020        141        17     1,384      (1,182)          5         (12)    (16)      1,375   1,712                18    1,730 
 Profit for the 
  year                    -         -         -            -          -            -       -         96      96                 1       97 
 Other 
  comprehensive 
  (loss)/income 
  for the year            -         -         -            -          -         (29)       -          2    (27)                 -     (27) 
-----------------  --------  --------  --------  -----------  ---------  -----------  ------  ---------  ------  ----------------  ------- 
 Total 
  comprehensive 
  income/(loss) 
  for the year            -         -         -            -          -         (29)       -         98      69                 1       70 
 Dividends paid           -         -         -            -          -            -       -       (94)    (94)               (1)     (95) 
 Gain on disposal 
  of equity 
  investments 
  at FVTOCI               -         -         -            -        (1)            -       -          1       -                 -        - 
 Share settlement 
  of share-based 
  awards                  -         -         -            -          -            -       3        (3)       -                 -        - 
 Own shares 
  acquired 
  for employee 
  trusts                  -         -         -            -          -            -    (14)          -    (14)                 -     (14) 
 Increase in 
  non-controlling 
  interests               -         -         -            -          -            -       -          -       -                 1        1 
 Credit arising 
  on share-based 
  awards                  -         -         -            -          -            -       -          6       6                 -        6 
-----------------  --------  --------  --------  -----------  ---------  -----------  ------  ---------  ------  ----------------  ------- 
 Balance at 
  31 December 
  2020                  141        17     1,384      (1,182)          4         (41)    (27)      1,383   1,679                19    1,698 

=================  ========  ========  ========  ===========  =========  ===========  ======  =========  ======  ================  ======= 
 
 2019 
-----------------  --------  --------  --------  -----------  ---------  -----------  ------  ---------  ------  ----------------  ------- 
 Balance at 
  1 January 2019        141        17     1,384      (1,182)          4           31    (11)      1,430   1,814                16    1,830 
 Profit for the 
  year                    -         -         -            -          -            -       -         67      67                 1       68 
 Other 
  comprehensive 
  (loss)/income 
  for the year            -         -         -            -          1         (43)       -       (33)    (75)               (1)     (76) 
-----------------  --------  --------  --------  -----------  ---------  -----------  ------  ---------  ------  ----------------  ------- 
 Total 
  comprehensive 
  (loss)/income 
  for the year            -         -         -            -          1         (43)       -         34     (8)                 -      (8) 
 Dividends paid           -         -         -            -          -            -       -       (94)    (94)               (1)     (95) 
 Share settlement 
  of share-based 
  awards                  -         -         -            -          -            -       2        (3)     (1)                 -      (1) 
 Own shares 
  acquired 
  for employee 
  trusts                  -         -         -            -          -            -     (7)          -     (7)                 -      (7) 
 Increase in 
  non-controlling 
  interests               -         -         -            -          -            -       -          3       3                 3        6 
 Credit arising 
  on share-based 
  awards                  -         -         -            -          -            -       -          5       5                 -        5 
-----------------  --------  --------  --------  -----------  ---------  -----------  ------  ---------  ------  ----------------  ------- 
 Balance at 
  31 December 
  2019                  141        17     1,384      (1,182)          5         (12)    (16)      1,375   1,712                18    1,730 
=================  ========  ========  ========  ===========  =========  ===========  ======  =========  ======  ================  ======= 
 
 

Consolidated Cash Flow Statement

for the year ended 31 December 2020

 
                                                  Notes    2020    2019 
                                                           GBPm    GBPm 
-----------------------------------------------  ------  ------  ------ 
 Cash from operating activities                      12     144     148 
-----------------------------------------------  ------  ------  ------ 
 
 Investing activities 
 Sale/(purchase) of financial investments(1)                 18    (20) 
 Sale of equity instruments at FVTOCI                         2       1 
 Purchase of equity instruments at 
  FVTOCI                                                      -     (1) 
 Purchase of derivative financial instruments               (2)       - 
 Interest received                                            3       5 
 Dividends from associates and joint 
  ventures                                                   13      10 
 Expenditure on intangible fixed assets                    (16)    (20) 
 Purchase of property, plant and equipment                 (35)    (13) 
 Direct costs on acquiring right-of-use-assets              (2) 
 Deferred consideration paid                               (22)    (12) 
 Investment in associates and joint 
  ventures                                                  (3)     (5) 
 Acquisition consideration paid                            (18)       - 
 Cash acquired with acquisitions                              9       - 
 Net cash flows from investment activities                 (53)    (55) 
-----------------------------------------------  ------  ------  ------ 
 
 Financing activities 
 Dividends paid                                       9    (94)    (94) 
 Dividends paid to non-controlling 
  interests                                                 (1)     (1) 
 Dividend equivalents paid on share-based 
  awards                                                      -     (1) 
 Sale of equity to non-controlling 
  interests                                                   -       6 
 Own shares acquired for employee trusts                   (14)     (7) 
 Net repayment of bank loans(2)                      11       -    (52) 
 Net borrowing/(repayment) of loans 
  from related parties(2)                            11      28     (3) 
 Gain on derivative financial instruments                     -       3 
 Funds received from issue of Sterling 
  Notes                                                       -     250 
 Repayment/repurchase of Sterling Notes                       -   (149) 
 Bank facility arrangement fees and 
  debt issue costs                                            -     (2) 
 Payment of lease liabilities                              (24)    (21) 
-----------------------------------------------  ------  ------  ------ 
 Net cash flows from financing activities                 (105)    (71) 
-----------------------------------------------  ------  ------  ------ 
 
 (Decrease)/increase in cash and overdrafts                (14)      22 
 
 Cash and overdrafts at the beginning 
  of the year                                               676     667 
 Effect of foreign exchange rate changes                   (13)    (13) 
-----------------------------------------------  ------  ------  ------ 
 Cash and overdrafts at the end of 
  the year                                           13     649     676 
-----------------------------------------------  ------  ------  ------ 
 
 Cash and cash equivalents                                  656     686 
 Overdrafts                                                 (7)    (10) 
-----------------------------------------------  ------  ------  ------ 
                                                            649     676 
===============================================  ======  ======  ====== 
 
   1.    The Includes the impact of changes in restricted funds during the year. 

2. The Group utilises credit facilities throughout the year, entering into numerous short term bank and other loans where maturities are less than three months. The turnover is quick and the volume is large and resultant flows are presented net. Further details are set out in Note 11.

   1.      General information 

As at 31 December 2020 TP ICAP plc (the 'Company') was a public company limited by shares incorporated in England and Wales under the Companies Act. On 26 February 2021 following a Scheme of Arrangement TP ICAP Group plc acquired the entire share capital of the Company, resulting in TP ICAP Group plc becoming the Group's ultimate parent undertaking. On 8 March 2021 the Company re-registered as a limited company.

   2.      Basis of preparation 

(a) Basis of accounting

The financial information included in this document does not constitute the Group's statutory accounts for the years ended 31 December 2020 or 2019, but is derived from those accounts. Statutory accounts for 2019 have been delivered to the Registrar of Companies and those for 2020 will be delivered following the Company's Annual General Meeting. The auditor has reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.

The Financial Statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the going concern basis continues to be used in preparing these Financial Statements.

(b) Basis of consolidation

The Group's Consolidated Financial Statements incorporate the Financial Statements of the Company and entities controlled by the Company made up to 31 December each year. Under IFRS 10 control is achieved where the Company exercises power over an entity, is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to use its power to affect the returns from the entity.

(c) Presentation of the Income Statement

Previously the Group presented a columnar format for its Consolidated Income Statement in order to aid the understanding of the 'underlying' performance measures used by the Group's Chief Operating Decision Maker ('CODM') and to provide a reconciliation to the Group's IFRS reported numbers. For 2020 the information considered by the Group's CODM is contained in Note 3 'Segmental Analysis', and in the Financial and Operating Review.

(d) Adoption of new and revised Accounting Standards

The following new and revised Standards and Interpretations are effective from 1 January 2020 but they do not have a material effect on the Group's Consolidated financial statements:

Ø Amendments to IAS 1 and IAS 8: Definition of Material;

Ø Amendments to References to the Conceptual Framework in IFRS Standards;

Ø Amendments to IFRS 3 Business Combinations; and

Ø Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform.

   3.         Segmental analysis 

Products and services from which reportable segments derive their revenues

The Group has a matrix management structure. The Group's Chief Operating Decision Maker ("CODM") is the Executive Committee ("Exco") which operates as a general management committee under the direct authority of the Board. The Exco regularly reviews operating activity on a number of bases, including by geographical region and by business division. The Group considers that geographic segments represent the most appropriate view for the purposes of resource allocation and assessment of the nature and financial effects of the business activities in which the Group engages. These are the Group's primary reportable segments under IFRS 8 'Operating Segments'.

The Group's performance is assessed by the CODM on the basis of adjusted performance that removes the effects of significant items from reported results. Significant items are items that management identify and consider separately in order to improve the understanding of the underlying trends and performance of the busines, that would otherwise distort year-or-year comparison. These segmental results are therefore presented on an adjusted basis.

In addition the Group has presented its adjusted results by business division: Global Broking, Energy & Commodities, Institutional Services, and Data & Analytics. Segmental income and expenses include transfers between segments and these transfers are conducted at arm's length.

Information regarding the Group's operating segments is reported below:

Analysis by geographic segment

 
                                       EMEA   Americas   Asia Pacific     Total 
 2020                                  GBPm       GBPm           GBPm      GBPm 
-----------------------------------  ------  ---------  -------------  -------- 
 Revenue                                888        670            236     1,794 
 Total front-office costs             (518)      (442)          (154)   (1,114) 
-----------------------------------  ------  ---------  -------------  -------- 
 Contribution                           370        228             82       680 
-----------------------------------  ------  ---------  -------------  -------- 
 Employment and general and 
  administrative expenses             (185)      (119)           (62)     (366) 
 Depreciation and impairment 
  of property, plant and equipment 
  and right-of-use-assets              (15)       (12)            (9)      (36) 
 Amortisation and impairment 
  of intangibles                       (16)        (4)              -      (20) 
-----------------------------------  ------  ---------  -------------  -------- 
 Total management and support 
  costs                               (216)      (135)           (71)     (422) 
-----------------------------------  ------  ---------  -------------  -------- 
 Other operating income                   6          3              5        14 
-----------------------------------  ------  ---------  -------------  -------- 
 Adjusted operating profit              160         96             16       272 
===================================  ======  =========  =============  ======== 
 
 2019 
-----------------------------------  ------  ---------  -------------  -------- 
 Revenue                                900        687            246     1,833 
 Total front-office costs             (524)      (458)          (157)   (1,139) 
-----------------------------------  ------  ---------  -------------  -------- 
 Contribution                           376        220             89       694 
-----------------------------------  ------  ---------  -------------  -------- 
 Employment and general and 
  administrative expenses             (190)      (124)           (60)     (374) 
 Depreciation and impairment 
  of property, plant and equipment 
  and right-of-use-assets              (14)       (12)            (8)      (34) 
 Amortisation and impairment 
  of intangibles                       (18)        (4)            (1)      (23) 
-----------------------------------  ------  ---------  -------------  -------- 
 Total management and support 
  costs                               (222)      (140)           (69)     (431) 
-----------------------------------  ------  ---------  -------------  -------- 
 Other operating income                  10          5              1        16 
-----------------------------------  ------  ---------  -------------  -------- 
 Adjusted operating profit              164         94             21       279 
===================================  ======  =========  =============  ======== 
 

There are no inter-segment sales included in the geographic segment revenue.

Analysis by division

 
                                         Energy 
                           Global             &  Institutional          Data  Corporate 
                          Broking   Commodities       Services   & Analytics     Centre    Total 
2020                         GBPm          GBPm           GBPm          GBPm       GBPm     GBPm 
-----------------------  --------  ------------  -------------  ------------  ---------  ------- 
Reported Revenue            1,188           391             91           145       (21)    1,794 
- External                  1,170           388             91           145          -    1,794 
- Inter-division               18             3              -             -       (21)        - 
-----------------------  --------  ------------  -------------  ------------  ---------  ------- 
Total front-office 
 costs                      (734)         (261)           (69)          (71)         21  (1,114) 
- External                  (734)         (261)           (69)          (50)          -  (1,114) 
- Inter-division                -             -              -          (21)         21        - 
-----------------------  --------  ------------  -------------  ------------  ---------  ------- 
Contribution                  454           130             22            74          -      680 
-----------------------  --------  ------------  -------------  ------------  ---------  ------- 
Total management and 
 support costs              (260)          (78)           (15)          (10)       (59)    (422) 
Other operating income          3             1              -             -         10       14 
-----------------------  --------  ------------  -------------  ------------  ---------  ------- 
Adjusted operating 
 profit                       197            53              7            64       (49)      272 
=======================  ========  ============  =============  ============  =========  ======= 
 
2019 
-----------------------  --------  ------------  -------------  ------------  ---------  ------- 
Reported Revenue            1,262           382             75           135       (21)    1,833 
- External                  1,244           379             75           135          -    1,833 
- Inter-division               18             3              -             -       (21)        - 
-----------------------  --------  ------------  -------------  ------------  ---------  ------- 
Total front-office 
 costs                      (775)         (261)           (57)          (67)         21  (1,139) 
- External                  (775)         (261)           (57)          (46)          -  (1,139) 
- Inter-division                -             -              -          (21)         21        - 
-----------------------  --------  ------------  -------------  ------------  ---------  ------- 
Contribution                  487           121             18            68          -      694 
-----------------------  --------  ------------  -------------  ------------  ---------  ------- 
Total management and 
 support costs              (268)          (75)           (15)           (9)       (64)    (431) 
Other operating income          2             -              -             -         14     (16) 
-----------------------  --------  ------------  -------------  ------------  ---------  ------- 
Adjusted operating 
 profit                       221            46              3            59       (50)      279 
=======================  ========  ============  =============  ============  =========  ======= 
 
 

Corporate centre represents the cost of group and central functions that are not allocated to the Group's divisions.

Significant items are centrally managed and controlled by the Group and are not allocated to regional or divisional segments.

Analysis of Significant items

 
                                                                                    Settlements 
                                                        Disposal,                and provisions 
                                   Restructuring     acquisitions                 in connection 
                                       and other   and investment                    with legal 
                                         related           in new     Goodwill   and regulatory 
                                           costs       businesses   impairment          matters  Total 
2020                                        GBPm             GBPm         GBPm             GBPm   GBPm 
---------------------------------  -------------  ---------------  -----------  ---------------  ----- 
Employment, compensation 
 and benefits costs                            6                -            -                -      6 
---------------------------------  -------------  ---------------  -----------  ---------------  ----- 
Premises and related 
 costs                                         2                -            -                -      2 
Deferred consideration                         -                2            -                -      2 
Credit relating to 
 significant legal and 
 regulatory settlements                        -                -            -              (3)    (3) 
Pension scheme past 
 service and settlement 
 costs                                         1                -            -                -      1 

Acquisition costs                              -               11            -                -     11 
Other general and administration 
 costs                                         9                -            -                5     14 
---------------------------------  -------------  ---------------  -----------  ---------------  ----- 
Total included within 
 general and administration 
 costs                                        12               13            -                2     27 
Depreciation and impairment 
 of PPE and ROUA                               1                -            -                -      1 
Amortisation and impairment 
 of intangible assets                          -               39            -                -     39 
Impairment of other 
 assets                                        1                1           21                -     23 
---------------------------------  -------------  ---------------  -----------  ---------------  ----- 
Total included within 
 operating costs                              20               53           21                2     96 
Included in other operating 
 income                                        -                -            -              (2)    (2) 
---------------------------------  -------------  ---------------  -----------  ---------------  ----- 
Total significant items                       20               53           21                -     94 
=================================  =============  ===============  ===========  ===============  ===== 
 
 
                                                Restructuring                                    Settlements 
                                                    and other        Disposal,                and provisions 
                                                      related     acquisitions                 in connection 
                                                        costs   and investment                    with legal 
                              ICAP integration                          in new     Goodwill   and regulatory 
                                         costs                      businesses   impairment          matters  Total 
2019                                      GBPm           GBPm             GBPm         GBPm             GBPm   GBPm 
----------------------------  ----------------  -------------  ---------------  -----------  ---------------  ----- 
Employment, compensation 
 and benefits costs                         15              3                2            -                -     20 
----------------------------  ----------------  -------------  ---------------  -----------  ---------------  ----- 
Premises and related 
 costs                                       -              1                -            -                -      1 
Deferred consideration                       -              -                6            -                -      6 
Adjustments to provisions 
 and contingent liabilities 
 acquired                                                   -                3            -                -      3 
Charge relating to 
 significant legal 
 and regulatory settlements                  -              -                -            -               18     18 
Pension scheme past 
 service and settlement 
 costs                                       -              4                -            -                -      4 
Acquisition costs                            -              -                2            -                -      2 
Other general and 
 administration costs                       15              3                2            -                1     21 
----------------------------  ----------------  -------------  ---------------  -----------  ---------------  ----- 
Total included within 
 general and administration 
 costs                                      15              8               13            -               19     55 
Depreciation and 
 impairment of PPE 
 and ROUA                                    4              1                -            -                -      5 
Amortisation and 
 impairment of intangible 
 assets                                      -              -               42            -                -     42 
Impairment of other 
 assets                                      -              -                -           24                -     24 
----------------------------  ----------------  -------------  ---------------  -----------  ---------------  ----- 
Total included within 
 operating costs                            34             12               57           24               19    146 
Included in other 
 operating income                            -              -                -            -              (9)    (9) 
----------------------------  ----------------  -------------  ---------------  -----------  ---------------  ----- 
Total significant 
 items                                      34             12               57           24               10    137 
============================  ================  =============  ===============  ===========  ===============  ===== 
 
 

The Group's reported performance includes significant items. A reconciliation from adjusted operating profit, as considered by CODM, to Group reported performance is included:

Adjusted profit reconciliation

 
                                              2020    2019 
                                              GBPm    GBPm 
-------------------------------------------  -----  ------ 
 Adjusted operating profit                     272     279 
 Significant items                            (94)   (137) 
-------------------------------------------  -----  ------ 
 Operating profit                              178     142 
 Net finance costs                            (49)    (49) 
-------------------------------------------  -----  ------ 
 Profit before tax                             129      93 
 Taxation on significant items                   7      15 
 Taxation on adjusted profit before tax       (55)    (55) 
-------------------------------------------  -----  ------ 
 Profit after tax                               81      53 
 Share of profit from associated and joint 
  ventures                                      16      15 
-------------------------------------------  -----  ------ 
 Profit for the year                            97      68 
===========================================  =====  ====== 
 
   4.      Operating costs 
 
                                               2020   2019 
                                               GBPm   GBPm 
-------------------------------------------   -----  ----- 
Broker compensation costs                       902    900 
Other staff costs                               244    248 
Share-based payment charge                        6      5 
Charge relating to employee long-term 
 benefits                                         1      1 
--------------------------------------------  -----  ----- 
Employee compensation and benefits            1,153   1154 
--------------------------------------------  -----  ----- 
Technology and related costs                    167    158 
Premises and related costs                       29     27 
Adjustments to deferred consideration             2      6 
Adjustments to provisions and contingent 
 liabilities acquired                             -      3 
(Credit)/charge relating to significant 
 legal and regulatory settlements               (3)     18 
Pension scheme past service and settlement 
 costs                                            1      4 
Acquisition costs                                11      2 
Expected credit loss adjustment                 (6)      - 
Other administrative costs                      159    217 
--------------------------------------------  -----  ----- 
General and administrative expenses             360    435 
--------------------------------------------  -----  ----- 
Depreciation of property, plant and 
 equipment                                       13     13 
Depreciation of right-of-use assets              23     21 
Impairment of right-of-use assets                 1      - 
--------------------------------------------  -----  ----- 
Depreciation and impairment of property, 
 plant and equipment and right-of-use 
 assets                                          37     34 
--------------------------------------------  -----  ----- 
Amortisation of other intangible assets          20     27 
Amortisation of intangible assets 
 arising on consolidation                        39     42 
--------------------------------------------  -----  ----- 
Amortisation and impairment of intangible 
 assets                                          59     69 
--------------------------------------------  -----  ----- 
Goodwill impairment                              21     24 
Impairment of finance lease receivables           1      - 
Impairment of associates                          1      - 
--------------------------------------------  -----  ----- 
Impairment of other assets                       23     24 
--------------------------------------------  -----  ----- 
                                              1,632  1,716 
 ===========================================  =====  ===== 
 
   5.      Other operating income 

Other operating income comprises:

 
                                        2020   2019 
                                        GBPm   GBPm 
-------------------------------------  -----  ----- 
 Business relocation grants                3      3 
 Employee related insurance receipts       2      2 
 Management fees                           3      1 
 Legal settlement receipts                 2      9 
 Other receipts                            6     10 
-------------------------------------  -----  ----- 
                                          16     25 
=====================================  =====  ===== 
 

Other receipts include royalties, rebates, non-employee related insurance proceeds, tax credits and refunds. Costs associated with such items are included in administrative expenses.

   6.      Finance income 
 
                                           2020   2019 
                                           GBPm   GBPm 
----------------------------------------  -----  ----- 
 Interest receivable and similar income       2      5 
 Interest receivable on finance leases        1      1 
                                              3      6 
========================================  =====  ===== 
 
   7.         Finance costs 
 
                                                   2020   2019 
                                                   GBPm   GBPm 
------------------------------------------------  -----  ----- 
 Fees payable on bank and other loan facilities       2      2 
 Interest payable on bank and other loans             1      1 
 Interest payable on Sterling Notes June 
  2019                                                -      2 
 Interest payable on Sterling Notes January 
  2024                                               23     24 
 Interest payable on Sterling Notes May 
  2026                                               13      8 
 Other interest payable                               1      1 
 Amortisation of debt issue and bank facility 
  costs                                               1      2 
------------------------------------------------  -----  ----- 
 Borrowing costs                                     41     40 
 Interest payable on lease liabilities               11     12 
 Premium on repurchase of Sterling Notes 
  January 2024                                        -      3 
------------------------------------------------  -----  ----- 
                                                     52     55 
================================================  =====  ===== 
 
   8.         Earnings per share 
 
             2020    2019 
---------  ------  ------ 
 Basic      17.2p   12.0p 
 Diluted    17.0p   11.9p 
---------  ------  ------ 
 

The calculation of basic and diluted earnings per share is based on the following number of shares:

 
                                       2020      2019 
                                     No.(m)    No.(m) 
---------------------------------  --------  -------- 
 Basic weighted average shares        557.0     559.4 
 Contingently issuable shares           6.9       4.2 
---------------------------------  --------  -------- 
 Diluted weighted average shares      563.9     563.6 
=================================  ========  ======== 
 

The earnings used in the calculation basic and diluted earnings per share, are set out below:

 
                                            2020   2019 
                                            GBPm   GBPm 
-----------------------------------------  -----  ----- 
 Earnings for the year                        97     68 
 Non-controlling interests                   (1)    (1) 
-----------------------------------------  -----  ----- 
 Earnings attributable to equity holders 
  of the parent                               96     67 
=========================================  =====  ===== 
 
   9.      Dividends 
 
                                                  2020   2019 
                                                  GBPm   GBPm 
-----------------------------------------------  -----  ----- 
 Amounts recognised as distributions to 
  equity holders in the year: 
 Final dividend for the year ended 31 December 
  2019 
  of 11.25p per share                               63      - 
 Interim dividend for the year ended 31 
  December 2020 
  of 5.6p per share                                 31      - 
 Final dividend for the year ended 31 December 
  2018 
  of 11.25p per share                                -     63 
 Interim dividend for the year ended 31 
  December 2019 
  of 5.6p per share                                  -     31 
-----------------------------------------------  -----  ----- 
                                                    94     94 
===============================================  =====  ===== 
 

Dividends in respect of the current year and future dividend policy are discussed in the Financial Review.

During the year, the Trustees of the TP ICAP plc Employee Benefit Trust have waived their rights to dividends.

   10.       Intangible assets arising on consolidation 
 
                                         Goodwill   Other   Total 
                                             GBPm    GBPm    GBPm 
-------------------------------------   ---------  ------  ------ 
 At 1 January 2020                            993     518   1,511 
 Recognised on acquisitions                    25       -      25 
 Amortisation of acquisition 
  related intangibles                           -    (39)    (39) 
 Impairment of acquisition 
  related intangibles                        (21)       -    (21) 
 Effect of movements in exchange 
  rates                                       (8)     (5)    (13) 
--------------------------------------  ---------  ------  ------ 
 At 31 December 2020                          989     474   1,463 
======================================  =========  ======  ====== 
 
 At 1 January 2019                          1,030     564   1,594 
 Recognised on acquisitions                     7       -       7 
 Remeasurement period adjustments 
 - Remeasurement of other intangible 
  assets                                      (5)       5       - 
 - Increase in net assets acquired            (2)       -     (2) 
 Amortisation of acquisition 
  related intangibles                           -    (42)    (42) 
 Impairment of acquisition 
  related intangibles                        (24)       -    (24) 
 Effect of movements in exchange 
  rates                                      (13)     (9)    (22) 
--------------------------------------  ---------  ------  ------ 
 At 31 December 2019                          993     518   1,511 
======================================  =========  ======  ====== 
 

Other intangible assets at 31 December 2020 represent customer relationships, GBP469m (2019: GBP506m), business brands and trademarks, GBP5m (2019: GBP10m), and other intangibles, GBPnil (2019: GBP2m) that arise through business combinations. Customer relationships are being amortised between 10 and 20 years. Goodwill arising through business combinations is allocated to groups of individual cash-generating units ('CGUs'), reflecting the lowest level at which the Group monitors and tests goodwill for impairment purposes. The Group's CGUs are as follows:

 
                               2020   2019 
                               GBPm   GBPm 
----------------------------  -----  ----- 
 EMEA                           686    663 
 Americas                       253    262 
 Asia Pacific                    50     68 
----------------------------  -----  ----- 
 Goodwill allocated to CGUs     989    993 
============================  =====  ===== 
 

CGUs, to which goodwill has been allocated, are tested for impairment at least annually. Review for indicators of impairment are undertaken at each reporting date. During the year the Group undertook impairment tests as at 30 June and as at 30 September, triggered as a result of sensitivity of the Asia Pacific CGU to reasonable possible changes in cash flow and discount rate assumptions.

Determining whether goodwill is impaired requires an estimation of the recoverable amount of each CGU. The recoverable amount is the higher of its value in use ('VIU') or its fair value less cost of disposal ('FVLCD'). VIU is a pre-tax valuation, using pre-tax cash flows and pre-tax discount rates which is compared to the pre-tax carrying value of the CGU, whereas FVLCD is a post-tax valuation, using post-tax cash flows, post-tax discount rates and other post-tax observable valuation inputs, which is compared to a post-tax carrying value of the CGU.

The key assumptions for the VIU calculations are those regarding expected regional cash flows arising in future years, regional growth rates and regional discount rates as considered by management. Regional specific assumptions reflect the divisional mix in each region and the size and risk profile of that region. Future projections are based on the most recent financial projections considered by the Board which are used to project pre-tax cash flows for the next five years. After this period a steady state cash flow is used to derive a terminal value for the CGU.

As at 30 June 2020, the recoverable amount for the Asia Pacific CGU was estimated to be lower than its carrying value by GBP21m and was impaired by that amount. Growth rates on underlying revenues were 1.4% (2019: 2.1%) for EMEA, 1.1% (2019: 1.6%) for Americas and 2.0% (2019: 1.2%) for Asia Pacific over the five year projected period, with pre-tax discount rates of 10.6% (2019: 11.0%) for EMEA, 13.2% (2019: 13.6%) for Americas and 11.6% (2019: 11.6%) for Asia Pacific.

As at 30 September 2020, growth rates on underlying revenues were 1.8% for EMEA, 0.8% for Americas and 1.5% for Asia Pacific over the five year projected period, with pre-tax discount rates of 11.0% for EMEA, 13.4% for Americas and 11.8% for Asia Pacific. No further impairment was identified.

As at 31 December 2020, the review of the indicators of impairment did not result in a requirement to undertake further impairment testing.

The Asia Pacific CGU remains sensitive to reasonably possible changes in the VIU assumptions. Further impairment of the Asia Pacific CGU would be required if there are changes in the applicable assumptions. A reduction in the growth rate over the period by 0.5% would result in a reduction in the value of the CGU by GBP25m and a 1% increase in the discount rate would reduce the value of the CGU by GBP13m. A permanent 5% reduction in projected 2021 revenues in each CGU would lead to a GBP52m reduction in the value of the Asia Pacific CGU and result in an impairment of GBP2m. The impact on future cash flows resulting from falling growth rates does not reflect any management actions that would be taken under such circumstances.

The recoverable amounts of EMEA and Americas CGU continue to be in excess of their carrying value and are not sensitive to reasonable possible changes in the VIU assumptions.

   11.       Loans and borrowings 
 
                                 Less than     Greater   Total 
                                  one year        than 
                                              one year 
 2020                                 GBPm        GBPm    GBPm 
-----------------------------   ----------  ----------  ------ 
 Overdrafts                              7           -       7 
 Loans from related parties             28           -      28 
 Sterling Notes January 2024            10         430     440 
 Sterling Notes May 2026                 1         249     250 
------------------------------  ----------  ----------  ------ 
                                        46         679     725 
 =============================  ==========  ==========  ====== 
 2019 
 Sterling Notes January 2024            10         430     440 
 Sterling Notes May 2026                 1         248     249 
                                        11         678     689 
 =============================  ==========  ==========  ====== 
 

Overdrafts

Overdrafts arising as a result of settling security transactions pending the completion of the onward sale.

Bank credit facilities and bank loans

The Group has a GBP270m committed revolving facility that matures in December 2023. Facility commitment fees of 0.8% on the undrawn balance are payable on the facility. Arrangement fees of GBP3m are being amortised over the maturity of the facility.

As at 31 December 2020, the revolving credit facility was undrawn. Amounts drawn down are reported as bank loans in the above table. Bank loans are denominated in Sterling. During the year, the maximum amount drawn was GBP161m (2019: GBP39m), and the average amount drawn was GBP39m. The Group utilises the credit facility throughout the year, entering into numerous short term bank loans where maturities are less than three months. The turnover is quick and the volume is large and resultant flows are presented net in the Group's cash flow statement in accordance with IAS 7 'Cash Flow'.

Interest and facility fees of GBP3m were incurred in 2020 (2019: GBP3m).

Loans from related parties

In August 2020, the Group entered into a Yen 10bn committed facility with The Tokyo Tanshi Co., Ltd, a related party, that matures in February 2023. As at 31 December, the 10bn Yen committed facility equated to GBP71m. Facility commitment fees of 0.64% on the undrawn balance are payable on the facility. Arrangement fees of less than GBP1m are being amortised over the maturity of the facility.

As at 31 December 2020, Yen 4bn (GBP28m) of the facility was drawn. The Directors consider that the carrying amount of the loan which is not held at fair value through profit or loss approximates to its fair value. During the year, the maximum amount drawn was GBP75m, and the average amount drawn was GBP36m. The Group utilises the credit facility throughout the year, entering into numerous short term bank loans where maturities are less than three months. The turnover is quick and the volume is large and resultant flows are presented net in the Group's cash flow statement in accordance with IAS 7 'Cash Flow'.

Interest and facility fees of less than GBP1m were incurred in 2020.

Amounts drawn down are reported as loans from related parties in the above table.

Sterling Notes: Due January 2024

In January 2017 the Group issued GBP500m unsecured Sterling Notes due January 2024. The Notes have a fixed coupon of 5.25% payable semi-annually, subject to compliance with the terms of the Notes. In May 2019, the Group repurchased GBP69m of the Notes. At 31 December 2020, the fair value of the Notes (Level 1) was GBP473m. Accrued interest at 31 December 2020 amounted to GBP10m. Unamortised issue costs were GBP1m.

Interest of GBP23m was incurred in 2020 (2019: GBP24m). The amortisation expense of issue costs in 2020 and 2019 were less than GBP1m.

Sterling Notes: Due May 2026

In May 2019 the Group issued GBP250m unsecured Sterling Notes due May 2026. The Notes have a fixed coupon of 5.25% paid semi-annually, subject to compliance with the terms of the Notes. At 31 December 2020 the fair value of the Notes (Level 1) was GBP284m. Accrued interest at 31 December 2020 amounted to GBP1m. Unamortised issue costs were GBP1m.

Interest of GBP13m was incurred in 2020 (2019: GBP8m). Issue costs of GBP1m were incurred in 2019 and their amortisation expense in 2020 and 2019 was less than GBP1m.

   12.       Reconciliation of operating result to net cash from operating activities 
 
                                                   2020   2019 
                                                   GBPm   GBPm 
------------------------------------------------  -----  ----- 
 Operating profit                                   178    142 
 Adjustments for: 
 - Share-based payment charge                         6      5 
 - Pension scheme's administration costs              1      - 
 - Pension scheme past service and settlement 
  costs                                               1      4 
 - Depreciation of property, plant and 
  equipment                                          13     13 
 - Depreciation of right-of-use assets               23     21 
 - Amortisation of intangible assets                 20     27 
 - Amortisation of intangible assets arising 
  on consolidation                                   39     42 
 - Impairment of intangible assets arising 
  on consolidation                                   21     24 
 - Impairment of associates                           1      - 
 - Loss on disposal of property, plant 
  and equipment                                       -      1 
 - Impairment of right-of-use assets                  1      - 
 - Impairment of finance lease receivables            1      - 
 - Remeasurement of deferred consideration            2      6 
 Net operating cash flow before movement 
  in working capital                                307    285 
 Decrease/(increase) in trade and other 
  receivables                                         6   (24) 
 (Increase)/decrease in net settlement 
  and trading balances                              (2)      8 
 (Decrease)/increase in trade and other 
  payables                                         (34)      4 
 Decrease in provisions                             (7)    (5) 
 Increase/(decrease) in non-current liabilities       1    (2) 
 Retirement benefit scheme contributions            (1)    (1) 
------------------------------------------------  -----  ----- 
 Net cash generated from operations                 270    265 
 Income taxes paid                                 (73)   (64) 
 Fees paid on bank and other loan facilities        (2)    (2) 
 Interest paid                                     (37)   (39) 
 Interest paid - finance leases                    (14)   (12) 
------------------------------------------------  -----  ----- 
 Net cash flow from operating activities            144    148 
================================================  =====  ===== 
 
   13.    Analysis of net debt 
 
                              At 1     Cash   Non-cash             Acquired       Exchange       At 31 
                           January     flow      items    with acquisitions    differences    December 
 2020                         GBPm     GBPm       GBPm                 GBPm           GBPm        GBPm 
-----------------------  ---------  -------  ---------  -------------------  -------------  ---------- 
 Cash and cash 
  equivalents                  686     (17)          -                    -           (13)         656 
 Overdrafts                   (10)        3          -                    -              -         (7) 
-----------------------  ---------  -------  ---------  -------------------  -------------  ---------- 
                               676     (14)          -                    -           (13)         649 
-----------------------  ---------  -------  ---------  -------------------  -------------  ---------- 
 Financial investments         148     (18)          -                    -            (3)         127 
-----------------------  ---------  -------  ---------  -------------------  -------------  ---------- 
 Bank loan due 
  within one year                -    1 (1)        (1)                    -              -           - 
 Loans from related 
  parties                        -     (28)          -                    -              -        (28) 
 Sterling Notes 
  January 2024               (440)   23 (1)       (23)                    -              -       (440) 
 Sterling Notes 
  May 2026                   (249)   13 (1)       (14)                    -              -       (250) 
 Lease liabilities           (140)   38 (2)      (108)                  (5)              3       (212) 
-----------------------  ---------  -------  ---------  -------------------  -------------  ---------- 
 Total financing 
  liabilities                (829)       47      (146)                  (5)              3       (930) 
-----------------------  ---------  -------  ---------  -------------------  -------------  ---------- 

 Net debt                      (5)       15      (146)                  (5)           (13)       (154) 
=======================  =========  =======  =========  ===================  =============  ========== 
 
 
                              At 1       Cash   Non-cash   Adoption       Exchange       At 31 
                           January       flow      items    of IFRS    differences    December 
                                                                 16 
 2019                         GBPm       GBPm       GBPm       GBPm           GBPm        GBPm 
-----------------------  ---------  ---------  ---------  ---------  -------------  ---------- 
 Cash and cash 
  equivalents                  680         19          -          -           (13)         686 
 Overdrafts                   (13)          3          -          -              -        (10) 
-----------------------  ---------  ---------  ---------  ---------  -------------  ---------- 
                               667         22          -          -           (13)         676 
-----------------------  ---------  ---------  ---------  ---------  -------------  ---------- 
 Financial investments         133         20          -          -            (5)         148 
-----------------------  ---------  ---------  ---------  ---------  -------------  ---------- 
 Bank loan due 
  within one year             (52)      53(1)        (1)          -              -           - 
 Loans from related 
  parties                        -          3          -          -            (3)           - 
 Sterling Notes 
  June 2019                   (80)      82(3)        (2)          -              -           - 
 Sterling Notes 
  January 2024               (510)      97(4)       (27)          -              -       (440) 
 Sterling Notes 
  May 2026                       -   (241)(5)        (8)          -              -       (249) 
 Lease liabilities               -      33(2)       (32)      (145)              4       (140) 
-----------------------  ---------  ---------  ---------  ---------  -------------  ---------- 
 Total financing 
  liabilities                (642)         27       (70)      (145)              1       (829) 
=======================  =========  =========  =========  =========  =============  ========== 
 Net funds/(debt)              158         69       (70)      (145)           (17)         (5) 
=======================  =========  =========  =========  =========  =============  ========== 
 

1 Relates to interest paid reported as a cash outflow from operating activities

2 Relates to interest paid of GBP14m (2019: GBP12m) reported as a cash outflow from operating activities and principal paid of GBP24m (2019:GBP21m) reported as a cash outflow from financing activities

3 Relates to principal repayment of GBP80m reported as a cash outflow from financing activities plus GBP2m of interest paid reported as a cash outflow from operating activities

4 Relates to principal repayment of GBP69m reported as a cash outflow from financing activities plus GBP28m of interest paid reported as a cash outflow from operating activities

5 Relates to principal received of GBP250m less GBP2m of debt issue costs reported as a cash outflow from financing activities and GBP7m of interest paid reported as cash outflow from operating activities

Cash and cash equivalents comprise cash at bank and other short term highly liquid investments with an original maturity of three months or less. As at 31 December 2020 cash and cash equivalents, net of overdrafts, amounted to GBP649m (2019: GBP676m) of which GBP10m represent amounts subject to regulatory restrictions and are not readily available to be used for other purposes within the Group. Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short term deposit rates.

Financial investments comprise short term government securities, term deposits and restricted funds held with banks and clearing organisations.

Non-cash items represent interest expense, the amortisation of debt issue costs and recognition of new lease liabilities.

   14.    Provisions 
 
                                                                         Legal 
                                        Property   Re-structuring    and other   Total 
 2020                                       GBPm             GBPm         GBPm    GBPm 
-------------------------------------  ---------  ---------------  -----------  ------ 
 At 1 January                                  6                8           33      47 
 Charge/(credit) to income statement           2                8          (5)       5 
 Utilisation of provisions                   (1)              (7)          (4)    (12) 
 Effect of movements in exchange               -                -            -       - 
  rates 
-------------------------------------  ---------  ---------------  -----------  ------ 
 At 31 December                                7                9           24      40 
=====================================  =========  ===============  ===========  ====== 
 
 2019 
-------------------------------------  ---------  ---------------  -----------  ------ 
 At 1 January                                 14               10           37      61 
 Charge to income statement                    -                8           23      31 
 Utilisation of provisions                     -             (10)         (26)    (36) 
 Effect of movements in exchange 
  rates                                      (1)                -          (1)     (2) 
-------------------------------------  ---------  ---------------  -----------  ------ 
 At 31 December                                6                8           33      47 
=====================================  =========  ===============  ===========  ====== 
 
                                                                          2020    2019 
                                                                          GBPm    GBPm 
-------------------------------------  ---------  ---------------  -----------  ------ 
 Included in current liabilities                                            17      21 
 Included in non-current liabilities                                        23      26 
-------------------------------------  ---------  ---------------  -----------  ------ 
                                                                            40   47 
=====================================  =========  ===============  ===========  ====== 
 

Property provisions outstanding as at 31 December 2020 relate to provisions in respect of building dilapidations, representing the estimated cost of making good dilapidations and disrepair on various leasehold buildings. Onerous provisions as at 1 January 2019 were offset against the right-of-use asset arising on the adoption of IFRS 16.

Restructuring provisions outstanding as at 31 December 2020 relate to termination and other employee related costs. The movement during the year reflects the actions taken under the Group's restructuring initiatives. It is expected that the remaining obligations will be discharged during 2021.

Legal and other provisions include provisions for legal claims brought against subsidiaries of the Group together with provisions against obligations for certain long-term employee benefits and non-property related onerous contracts. At present the timing and amount of any payments are uncertain and provisions are subject to regular review. It is expected that the obligations will be discharged over the next 25 years.

European Commission Yen LIBOR

In February 2015 the European Commission imposed a fine of EUR15m on NEX International Limited (formerly ICAP plc), ICAP Management Services Limited and ICAP New Zealand Limited for alleged competition violations in relation to the involvement of certain of ICAP's brokers in the attempted manipulation of Yen LIBOR by bank traders between October 2006 and January 2011. Whilst this matter relates to alleged conduct violations prior to completion of the Group's acquisition of the ICAP global broking business, it is noted that the fine imposed by the European Commission has been appealed, seeking a full annulment of the Commission's decision. In the event that the Commission imposes a fine in excess of EUR15m such excess will be borne by NEX Group plc ('NEX'). In November 2017, the European General Court granted a partial annulment of the Commission's findings. The Commission appealed this decision in February 2018 and the Group served its reply during April 2018. A decision from the Courts of Justice of the European Union was received on 10 July 2019 which determined that the decision of the European Commission in relation to the competition violations stood but the decision of the European Commission imposing the fine was annulled. The European Commission is likely to adopt new articles in relation to a fine. Based on the latest review, the Group updated the provision to EUR6.5m (GBP6m) in December 2020.

IFUS

On 11 May 2020, Tullett Prebon (Europe) Ltd ("TPE") received notice of the instigation of disciplinary proceedings by ICE Futures U.S. ("IFUS") relating to activities undertaken between March 2018 and September 2019. Following engagement and consultation with IFUS, TPE agreed a settlement with IFUS dated 13 August 2020 under which TPE agreed and paid a fine of less than USD 1m (less than GBP1m) in respect of failures of block trades, general record requirements, order ticket requirements, minimum quantity requirements, disclosure of customer identity and failure to supervise. As part of that agreement TPE agreed to enhance its compliance manual, take reasonable proactive and appropriate measures to be in compliance with Exchange Rules, conduct training covering Exchange Rules and to require all TPE brokers to acknowledge receipt and understanding of such training and to cooperate with periodic audits of TPE compliance in connection with Exchange Rules.

   15.    Contingent liabilities 

Bank Bill Swap Reference Rate case

On 16 August 2016, a complaint was filed in the United States District Court for the Southern District of New York naming Tullett Prebon plc, ICAP plc, ICAP Australia Pty LTD and Tullett Prebon (Australia) Pty. Limited as defendants together with various Bank Bill Swap Reference Rate ('BBSW') setting banks. The complaint alleges collusion by the defendants to fix BBSW-based derivatives prices through manipulative trading during the fixing window and false BBSW rate submissions. On 26 November 2018, the Court dismissed all of the claims against the TP ICAP defendants and certain other defendants. On 28 January 2019, the Court ordered that a stipulation signed by the plaintiffs and the TP ICAP defendants meant that the TP ICAP defendants were not required to respond to any Proposed Second Amended Class Action Complaint ('PSAC') that the plaintiffs were seeking to file. On 3 April 2019 the plaintiffs filed a PSAC, however the TP ICAP defendants have no obligation to respond. The plaintiffs have reserved the right to appeal the dismissal of the TP ICAP defendants but have not as yet done so. It is not possible to predict the ultimate outcome of the litigation or to provide an estimate of any potential financial impact.

Labour claims - ICAP Brazil

ICAP do Brasil Corretora De Títulos e Valores Mobiliários Ltda ('ICAP Brazil') is a defendant in 11 (31 December 2019: 13) pending lawsuits filed in the Brazilian Labour Court by persons formerly associated with ICAP Brazil seeking damages under various statutory labour rights accorded to employees and in relation to various other claims including wrongful termination, breach of contract and harassment (together the 'Labour Claims'). The Group estimates the maximum potential aggregate exposure in relation to the Labour Claims, including any potential social security tax liability, to be BRL 56.8m (GBP8m) (31 December 2019: BRL 49m (GBP11m)). The Group is the beneficiary of an indemnity from NEX in relation to any liabilities in respect of 7 of the 11 Labour Claims insofar as they relate to periods prior to completion of the Group's acquisition of ICAP. This includes a claim that is indemnified by a predecessor to ICAP Brazil by way of escrowed funds in the amount of BRL 28 million (GBP4million). The Labour Claims are at various stages of their respective proceedings and are pending an initial witness hearing, the court's decision on appeal or a ruling on a motion for clarification. The Group intends to contest liability in each of these matters and to vigorously defend itself. It is not possible to predict the ultimate outcome of these actions.

Flow case - Tullett Prebon Brazil

In December 2012, Flow Participações Ltda and Brasil Plural Corretora de Câmbio, Títulos e Valores ('Flow') initiated a lawsuit against Tullett Prebon Brasil S.A. Corretora de Valores e Câmbio and Tullett Prebon Holdings do Brasil Ltda alleging that the defendants have committed a series of unfair competition misconducts, such as the recruitment of Flow's former employees, the illegal obtainment and use of systems and software developed by the plaintiffs, as well as the transfer of technology and confidential information from Flow and the collusion to do so in order to increase profits from economic activities. The amount currently claimed is BRL 272m (GBP38m) (31 December 2019: BRL 243m (GBP44m)). The Group intends to vigorously defend itself but there is no certainty as to the outcome of these claims. Currently the case is in an early evidentiary phase.

LIBOR Class actions

The Group is currently defending the following LIBOR related actions.

(i) Stichting LIBOR Class Action

On 15 December 2017, the Stichting Elco Foundation, a Netherlands-based claim foundation, filed a writ initiating litigation in the Dutch court in Amsterdam on behalf of institutional investors against ICAP Europe Limited ('IEL'), ICAP plc, Cooperative Rabobank U.A., UBS AG, UBS Securities Japan Co. Ltd, Lloyds Banking Group plc, and Lloyds Bank plc. The litigation alleges manipulation by the defendants of the JPY LIBOR, GBP LIBOR, CHF LIBOR, USD LIBOR, EURIBOR, TIBOR, SOR, BBSW and HIBOR benchmark rates, and seeks a declaratory judgment that the defendants acted unlawfully and conspired to engage in improper manipulation of benchmarks. If the plaintiffs succeed in the action, the defendants would be responsible for paying costs of the litigation, but each allegedly impacted investor would need to prove its own actual damages. It is not possible at this time to determine the final outcome of this litigation, but IEL has factual and legal defences to the claims and intends to defend the lawsuit vigorously. A hearing took place on 18 June 2019 on Defendants motions to dismiss the proceedings. On 14 August 2019 the Dutch Court issued a ruling dismissing ICAP plc from the case entirely but keeping certain claims against IEL relating solely to JPY LIBOR. On 9 December 2020, the Dutch Court issued a final judgment dismissing the Foundation's claims in their entirety. The Foundation has until March 2021 to appeal this final judgement. The Group is covered by an indemnity from NEX in relation to any outflow in respect of the ICAP entities with regard to these matters. It is not possible to estimate any potential financial impact in respect of this matter at this time.

(ii) Swiss LIBOR Class Action

On 4 December 2017, a class of plaintiffs filed a Second Amended Class Action Complaint in the matter of Sonterra Capital Master Fund Ltd. et al. v. Credit Suisse Group AG et al. naming as defendants, among others, TP ICAP plc, Tullett Prebon Americas Corp., Tullett Prebon (USA) Inc., Tullett Prebon Financial Services LLC, Tullett Prebon (Europe) Limited, Cosmorex AG, ICAP Europe Limited, and ICAP Securities USA LLC (together, the 'Companies'). The Second Amended Complaint generally alleges that the Companies conspired with certain bank customers to manipulate Swiss Franc LIBOR and prices of Swiss Franc LIBOR based derivatives by disseminating false pricing information in false run-throughs and false prices published on screens viewed by customers in violation of the Sherman Act (anti-trust) and RICO. On 16 September 2019, the Court granted the Companies' motions to dismiss in their entirety. The plaintiffs have appealed the dismissal to the United States Court of Appeals for the Second Circuit. The Companies intend to contest liability in the matter and to vigorously defend themselves. It is not possible to predict the ultimate outcome of this action or to provide an estimate of any potential financial impact.

(iii) Yen LIBOR Class Actions

In April 2013, ICAP plc was added as a defendant to an existing civil litigation originally filed in April 2012, Laydon v. Mizuho Bank, Ltd, against certain Yen LIBOR and Euroyen TIBOR panel banks alleging purported manipulation of the Yen LIBOR and Euroyen TIBOR benchmark interest rates. The United States District Court for the Southern District of New York dismissed the plaintiff's antitrust and unjust enrichment claims, but upheld the plaintiff's claim for purported manipulation under the Commodity Exchange Act. ICAP plc and certain other foreign defendants were dismissed in March 2015 for lack of personal jurisdiction. The Court permitted plaintiffs to file an amended complaint whereby they added new defendants to the action including ICAP Europe Limited and Tullett Prebon plc. On 10 March 2017, both ICAP Europe Limited and Tullett Prebon plc were dismissed for lack of personal jurisdiction. On 23 October 2020, the plaintiffs served their formal notice of intent to appeal the dismissal of the TP ICAP defendants. The Group is covered by an indemnity from NEX in relation to any outflow in respect of ICAP Europe Limited with regard to these matters. It is not possible to predict the ultimate outcome of the litigation or to provide an estimate of any potential financial impact.

Other plaintiffs filed a related complaint, Sonterra Capital Master Fund, Ltd. v. UBS AG, which included ICAP plc, ICAP Europe Limited and Tullett Prebon plc as defendants, asserting a cause of action for antitrust injury only as a result of the purported manipulation of Yen LIBOR and Euroyen TIBOR by panel banks and brokers. Defendants filed motions to dismiss for lack of jurisdiction and failure to state a claim. On 10 March 2017, the Court issued an order dismissing the entirety of the Sonterra case on the grounds that the plaintiffs lacked antitrust standing. Plaintiffs appealed the dismissal, which was then stayed to accommodate new settlements reached between the plaintiffs and some of the defendants. The briefing on the appeal was completed on 28 January 2019 and oral argument was heard on 5 February 2020. On 1 April 1 2020, the Second Circuit Court of appeals reversed and remanded the dismissal. In October 2020, the Company filed a renewed motion to dismiss on grounds that were not reached in the original decision to dismiss including but not limited to lack of personal jurisdiction. It is not possible to predict the

ultimate outcome of the litigation or to provide an estimate of any potential financial impact. The Group is covered by an indemnity from NEX in relation to any outflow in respect of ICAP Europe Limited with regard to these matters.

ICAP Securities Limited, Frankfurt branch - Frankfurt Attorney General administrative proceedings

On 19 December 2018, ICAP Securities Limited, Frankfurt branch ('ISL') was notified by the Attorney General's office in Frankfurt notifying ISL that it had commenced administrative proceedings against ISL and criminal proceedings against former employees and a former director of ISL, in respect of aiding and abetting tax evasion by Rafael Roth Financial Enterprises GmbH ("RRFE"). It is possible that a corporate administrative fine may be imposed on ISL and earnings derived from the criminal offence confiscated. ISL has appointed external counsel and is in the process of investigating the activities of the relevant desk from 2006-2009. This investigation is complicated as the majority of relevant records are held by NEX and NEX failed to disclose its engagement with the relevant authorities prior to the sale of ICAP to Tullett Prebon in 2016. The Group has issued proceedings against NEX in respect of (i) breach of warranties under the sale and purchase agreement, and (ii) an indemnity claim under the tax deed entered into in connection with the IGBB acquisition in relation to these matters. Since the proceedings are at an early stage, details of the alleged wrongdoing or case against ISL are not yet available, and it is not possible at present to provide a reliable estimate of any potential financial impact on the Group.

ICAP Securities Limited and The Link Asset and Securities Company Limited - Proceedings by the Cologne Public Prosecutor

On 11 May 2020, TP ICAP learned that proceedings have been commenced by the Cologne Public prosecutor against ICAP Securities Limited ('ISL') and The Link Asset and Securities Company Ltd ('Link') in connection with criminal investigations into individuals suspected of aiding and abetting tax evasion between 2004 and 2012. It is possible that the Cologne Public Prosecutor may seek to impose an administrative fine against ISL or Link and confiscate the earnings that ISL or Link allegedly derived from the underlying alleged criminal conduct by the relevant individuals. ISL and Link have appointed external lawyers to advise them. The Group has issued proceedings against NEX in respect of (i) breach of warranties under the sale and purchase agreement, and (ii) an indemnity claim under the tax deed entered into in connection with the IGBB acquisition in relation to these matters. Since the proceedings are at an early stage, details of the alleged wrongdoing or case against ISL and Link are not yet available, and it is not possible at present to provide a reliable estimate of any potential financial impact on the Group.

Autorité des Marchés Financiers ('AMF')

In August 2019, Tullett Prebon (Europe) Limited ('TPEL') was notified that the AMF was investigating alleged facilitation of market abuse conduct concerning historical transactions with a client undertaken in 2015 on Eurex. In June 2020, the AMF initiated enforcement proceedings before the Enforcement Committee of the AMF. TPEL has responded to the AMF's letter of grievance and is waiting to hear further. It is not possible at present to provide a reliable estimate of any potential financial impact on the Group.

General note

The Group operates in a wide variety of jurisdictions around the world and uncertainties therefore exist with respect to the interpretation of complex regulatory, corporate and tax laws and practices of those territories. Accordingly, and as part of its normal course of business, the Group is required to provide information to various authorities as part of informal and formal enquiries, investigations or market reviews.

From time to time the Group's subsidiaries are engaged in litigation in relation to a variety of matters. The Group's reputation may also be damaged by any involvement or the involvement of any of its employees or former employees in any regulatory investigation and by any allegations or findings, even where the associated fine or penalty is not material.

Save as outlined above in respect of legal matters or disputes for which a provision has not been made, notwithstanding the uncertainties that are inherent in the outcome of such matters, currently there are no individual matters which are considered to pose a significant risk of material adverse financial impact on the Group's results or net assets.

The Group establishes provisions for taxes other than current and deferred income taxes, based upon various factors which are continually evaluated, if there is a present obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made.

In the normal course of business, certain of the Group's subsidiaries enter into guarantees and indemnities to cover trading arrangements and/or the use of third party services or software.

INDEPENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF TP ICAP LIMITED (PREVIOUSLY 'TP ICAP PLC') ON THE PRELIMINARY ANNOUNCEMENT OF TP ICAP LIMITED

As the independent auditor of TP ICAP Limited we are required by UK Listing Rule LR 9.7A.1(2)R to agree to the publication of TP ICAP Limited's preliminary announcement statement of annual results for the period ended 31 December 2020.

The preliminary statement of annual results for the period ended 31 December 2020 includes operational performance, strategic highlights, financial highlights, the dividend statement, the CEO review, financial review, the consolidated financial statements and disclosures required by the Listing Rules. We are not required to agree to the publication of presentations to analysts.

The directors of TP ICAP Limited are responsible for the preparation, presentation and publication of the preliminary statement of annual results in accordance with the UK Listing Rules.

We are responsible for agreeing to the publication of the preliminary statement of annual results, having regard to the Financial Reporting Council's Bulletin "The Auditor's Association with Preliminary Announcements made in accordance with UK Listing Rules".

Status of our audit of the financial statements

Our audit of the annual financial statements of TP ICAP Limited is complete and we signed our auditor's report on 09 March 2020. Our auditor's report is not modified and contains no emphasis of matter paragraph.

Our audit report on the full financial statements sets out the following key audit matters which had the greatest effect on our overall audit strategy; the allocation of resources in our audit; and directing the efforts of the engagement team, together with how our audit responded to those key audit matters and the key observations arising from our work:

 
 Name Passing revenue 
 Key audit          Name Passing revenue is earned for the service of 
  matter             matching buyers and sellers of financial instruments. 
  description        The Group is not a counterparty to the trade and 
                     commissions are invoiced for the service provided 
                     by the Group. 
                     It is the largest revenue stream of the Group and 
                     accounts for approximately 70% of the Group's revenue 
                     and so a significant amount of audit time is utilised 
                     on this area. It also has a longer cash collection 
                     period than the other revenue streams of the Group. 
                     Revenue associated with past due trade debtors was 
                     GBP90.2m (89% of total trade debtors) at 31 December 
                     2020. 
                     We identified a risk of material misstatement of 
                     revenue, due to fraud or error, related to revenue 
                     incurred during the year but remain unpaid for 60 
                     or more days as at year-end. 
                   --------------------------------------------------------------- 
 How the            We obtained an understanding of relevant controls 
  scope of           relating to Name Passing invoicing and cash collection. 
  our audit          The Group's control environment continues to be decentralised 
  responded          and reliant on manual processes, and there are improvements 
  to the             required to the IT environment. As a result we did 
  key audit          not adopt a controls reliance approach. 
  matter             We agreed a sample of Name Passing transactions, 
                     which were outstanding at year-end, to cash received 
                     post year-end or where amounts remained unpaid to 
                     other evidence to corroborate the validity of the 
                     revenue booked. 
                     We reviewed communications with counterparties and 
                     tested a sample of post year-end trade adjustments 
                     and credit notes to evaluate whether these items 
                     were accurate and valid. 
                   --------------------------------------------------------------- 
 Key observations   Our substantive procedures were completed satisfactorily. 
                     We consider Name Passing revenue incurred during 
                     the year, but remaining unpaid for 60 or more days 
                     as at year-end, to be appropriate. 
                   --------------------------------------------------------------- 
 
 
 Impairment of goodwill 
 Key audit          As required by IAS 36, goodwill is reviewed for impairment 
  matter             at least annually. The Group has changed its annual 
  description        impairment assessment from 31 December to 30 September 
                     and annually thereafter. Determining whether the 

                     goodwill of GBP998m is impaired requires an estimation 
                     of the recoverable amount of the Group's cash generating 
                     units ("CGUs"), or a group of CGUs, using the higher 
                     of the value in use or fair value less costs to sell. 
                     The value in use approach was used to assess the 
                     recoverable amount of the EMEA, Americas and APAC 
                     Group of CGUs . 
                     The value in use approach involves an estimation 
                     of future cash flows arising for the CGUs or group 
                     of CGUs and hence requires the selection of suitable 
                     discount rates and forecast future growth rates. 
                     It is therefore inherently subjective with an increased 
                     risk of material misstatement due to error or fraud. 
                     The value in use of each CGU or group of CGU can 
                     be sensitive to changes in underlying assumptions. 
                     We focused our testing on the EMEA CGU cashflows, 
                     due to the impact of Brexit, and the Asia Pacific 
                     CGU which was sensitive to the forecast future growth 
                     rate. Management have also assessed for impairment 
                     triggers between 30 September 2020 and 31 December 
                     2020 and concluded no impairment triggers were identified. 
                     An impairment of GBP21m was recorded in the year 
                     for the Asia Pacific CGU. 
                   -------------------------------------------------------------- 
 How the            We obtained an understanding of relevant controls 
  scope of           relating to the impairment of goodwill. 
  our audit          We performed detailed analysis of the Group's assumptions 
  responded          used in the annual impairment review, in particular 
  to the             the cashflow projections, forecast future growth 
  key audit          rates, and discount rates used by the Group in its 
  matter             impairment tests of the group of CGUs. We challenged 
                     cash flow projections and growth rates by evaluating 
                     recent performance, trend analysis and comparing 
                     growth rates to those achieved historically and to 
                     external market data where available. 
                     We have also assessed the impact of the UK based 
                     subsidiaries losing their regulatory permissions 
                     to service clients in a number of EU countries subsequent 
                     to the UK leaving the EU on the EMEA CGU cashflows. 
                     We worked with our internal valuations specialists 
                     to independently derive discount rates which we compared 
                     to the rates used by the Group and we benchmarked 
                     discount rates to available external peer group data. 
                     We performed scenario analysis, flexed key assumptions, 
                     assessed for impairment triggers between 30 September 
                     2020 and 31 December 2020 and considered the appropriateness 
                     of the disclosures in the notes to the financial 
                     statements. 
                   -------------------------------------------------------------- 
 Key observations    We concluded that the directors' valuation used 
                      in the impairment test and the recognition of an 
                      impairment charge in respect of the Asia Pacific 
                      CGUs was appropriate. 
                      The cash flow forecasts used in the annual impairment 
                      review were consistent with the most recent financial 
                      budgets approved by the Board and were reasonable 
                      in the context of recent business performance. The 
                      growth rates used by management were reasonable. 
                      We identified the discount rate for the EMEA CGU 
                      was not within the reasonable range calculated by 
                      our internal valuation specialist, however, the recoverable 
                      value of the EMEA CGU is not sensitive to a reasonable 
                      possible change in discount rates. We concurred with 
                      the directors' conclusion that no impairment was 
                      required. 
                   -------------------------------------------------------------- 
 

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we did not provide a separate opinion on these matters.

Procedures performed to agree to the preliminary announcement of annual results

In order to agree to the publication of the preliminary announcement of annual results of TP ICAP Limited we carried out the following procedures:

(a) checked that the figures in the preliminary announcement covering the full year have been accurately extracted from the audited or draft financial statements and reflect the presentation to be adopted in the audited financial statements;

(b) considered whether the information (including the management commentary) is consistent with other expected contents of the annual report;

(c) considered whether the financial information in the preliminary announcement is misstated;

(d) considered whether the preliminary announcement includes a statement by directors as required by section 435 of CA 2006 and whether the preliminary announcement includes the minimum information required by UKLA Listing Rule 9.7A.1;

(e) where the preliminary announcement includes alternative performance measures ("APMs"), considered whether appropriate prominence is given to statutory financial information and whether:

   --    the use, relevance and reliability of APMs has been explained; 

-- the APMs used have been clearly defined, and have been given meaningful labels reflecting their content and basis of calculation;

-- the APMs have been reconciled to the most directly reconcilable line item, subtotal or total presented in the financial statements of the corresponding period; and

-- comparatives have been included, and where the basis of calculation has changed over time this is explained.

(f) read the management commentary, any other narrative disclosures and any final interim period figures and considered whether they are fair, balanced and understandable.

Use of our report

Our liability for this report, and for our full audit report on the financial statements is to the company's members as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for our audit report or this report, or for the opinions we have formed.

Fiona Walker, FCA (Senior statutory auditor)

For and on behalf of Deloitte LLP

Statutory Auditor

London, United Kingdom

09 March 2021

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(END) Dow Jones Newswires

March 09, 2021 02:03 ET (07:03 GMT)