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Share Name Share Symbol Market Type Share ISIN Share Description
Tp Icap Plc LSE:TCAP London Ordinary Share GB00B1H0DZ51 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -2.80 -1.46% 189.40 189.20 189.50 191.70 184.50 188.60 1,792,722 16:35:04
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 1,833.0 93.0 12.0 15.8 1,050

TP ICAP PLC Financial and Interim Management Report

07/08/2020 7:00am

UK Regulatory (RNS & others)


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TIDMTCAP

RNS Number : 4342V

TP ICAP PLC

07 August 2020

7 August 2020

TP ICAP plc

Financial and Interim Management Report - for the six months ended 30 June 2020 (the "period")

TP ICAP plc (the "Company") announces its group (the "Group") results for the six months ended 30 June 2020 today. Commentary on year-on-year performance is on a reported and constant currency basis. Despite the unprecedented macroeconomic backdrop, characterised by the emergence of the COVID-19 pandemic, the Group took rapid and effective action to safeguard its staff and operations. In so doing, the Group delivered continuous service to its clients, essential liquidity to the markets and strong revenue growth.

Nicolas Breteau, CEO of TP ICAP plc, said:

"Against the COVID-19 backdrop, our primary focus has been to protect the wellbeing of our staff and ensure continuity of service excellence for our clients. We achieved this by deploying new technology and workflows that enabled the majority of our staff to work from home while maintaining seamless, global client coverage.

Despite the challenges posed by the pandemic, we have grown revenues and underlying profitability whilst advancing our strategic priorities of aggregating liquidity across our brands, increasing electronification and diversifying our revenue streams. We paid our full year dividend and have declared an interim dividend. Our performance is a testament to our operational strength, scale and diversified business portfolio, as well as the hard work and dedication of our teams.

We will update the market on our strategic priorities and medium-term growth plan at our Investor Update on 8 October 2020."

Response to COVID-19 pandemic:

   -- The Group fundamentally re-engineered its operations during lockdown to maintain continuous global client service 
      and liquidity across all asset classes and desks. 
 
   -- Tactical deployment of new digital solutions and new workflows enabled the vast majority of the Group's employees 
      to work from home effectively. 
 
   -- Re-engineering the business presented significant technological, management and regulatory challenges, coming as 
      it did during a period of extremely high volatility and a sharp increase in volumes.  The Group demonstrated 
      readiness and resilience to continue to serve clients and provide essential liquidity in the markets. 
 
   -- The Group has not furloughed or reduced its permanent workforce as a consequence of COVID-19, nor has it 
      requested any government aid in any of its global locations. 
 
   -- The Group paid its final 2019 dividend and has declared an interim dividend for 2020. 

The Group increased its underlying profits in the period, despite incurring a GBP10m charge due to an increase in unused annual leave as at 30 June ("impact from unused annual leave"), as employees chose not to use their annual leave due to the lockdown enforced in most jurisdictions where the Company operates. This charge will reverse in H2 2020 in line with Group policy on holiday carry-forward.

Financial highlights

Underlying (before acquisition, disposal and integration costs, and exceptional items)

 
                     H1 2020   H1 2019 
 Revenue             GBP990m   GBP922m 
 Operating profit    GBP159m   GBP158m 
 Operating margin      16.1%     17.1% 
 Profit before       GBP136m   GBP134m 
  tax 
 Basic EPS             19.9p     19.3p 
 

Statutory (after acquisition, disposal and integration costs, and exceptional items)

 
                     H1 2020   H1 2019 
 Revenue             GBP990m   GBP922m 
 Operating profit    GBP101m   GBP107m 
 Operating margin      10.2%     11.6% 
 Profit before        GBP78m    GBP83m 
  tax 
 Basic EPS              9.7p     11.8p 
 

A table showing Underlying and Statutory figures for each period, detailing acquisition, disposal and integration costs, and exceptional items is included in the Financial Review.

The average number of shares used for the basic H1 2020 EPS calculation for the period is 557.3m (H1 2019: 560m).

Operational highlights

-- The Group's performance reflected our operational and technological resilience and the benefits of a diversified portfolio.

   --      Revenue of GBP990m grew 7% on a reported basis (7% at constant currency). 

-- Underlying operating profitability was 1% higher (7% higher excluding the impact of unused annual leave, 6% lower on a statutory basis) on higher revenues and tight cost discipline, offset by measured strategic investments.

-- Global Broking revenue increased 2% on a reported basis (2% at constant currency), as stronger Rates were partially offset by weaker FX & Money Markets and Emerging Markets businesses.

-- Energy & Commodities revenue increased 15% on a reported basis (15% at constant currency) with strong organic growth in oil and non-oil products, boosted by strategic hires and favourable markets.

-- Institutional Services revenue increased 50% on a reported basis (50% at constant currency), as the division benefited from increased client appetite, increased capacity to service new accounts, and strategic hires.

-- Data & Analytics revenue increased 9% on a reported basis (8% at constant currency), against a strong prior year comparative period as the business continued to benefit from strategic initiatives to launch new, higher-value products and deeper client relationships. The minor slowdown reflects some COVID-19-driven reduction in clients' overall spend appetite.

Strategic highlights

-- Provided continuous global client service, whilst maintaining strong financial position and liquidity.

-- Furthered earnings diversification through continued strong growth in non-Global Broking businesses.

-- Expanded our customer base, range of services and geographic profile, especially in our newest divisions.

-- Enhanced the synergies and links between our business divisions to maximise cross-selling opportunities.

-- Modernised our technology infrastructure by investing in cloud capabilities, enabling the majority of our front-office employees to maintain full working capability remotely. The Group expects that this agility could lead to future property footprint savings, as it will require a smaller number of recovery sites.

-- Continued the measured execution of our strategy, investing in core long-term projects aligned to our three defined strategic themes of electronification, liquidity aggregation and diversification.

Dividend

A 5.6p per share interim dividend (2019: 5.6p) will be paid on 6 November 2020 to shareholders on the register at close of business on 2 October 2020.

2020 full year guidance and outlook

-- July trading activity has slowed down and is materially lower than 2019 levels. Consequently our full year guidance of low single-digit revenue growth remains unchanged. We will continue to monitor the impact of the COVID-19 pandemic on TP ICAP and its customers through the remainder of the year.

-- The targeted investment spend we guided to in March will be partially deferred as we manage resources prudently in response to the ongoing uncertainty caused by COVID-19. We will prioritise investment projects based on business needs. We aim to invest cGBP15m of cash in 2020, of which cGBP7m will be expensed.

Investor update and redomiciling timetable

   --      The Group plans to host its Investor Update on 8 October 2020. 

-- The Group maintains its intention to incorporate a new holding Company in Jersey and the Group is currently in the process of seeking the relevant regulatory approvals. This has taken longer than originally anticipated due to COVID-19. The Group will in due course seek shareholder approval and currently expects to post shareholder documentation by the end of 2020 with completion following shortly thereafter.

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: +44 (0) 203 933 3040

Email: Alevizos.Alevizakos@tpicap.com

Media

William Baldwin-Charles

Direct: +44 (0) 207 200 7124

Email: William.Baldwin-Charles@tpicap.com

Neil Bennett

Maitland

Direct: +44 0 20 7379 5151

Email: tpicap-maitland@maitland.co.uk

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

The emergence of COVID-19 caused a significant shock to the global economy and resulted in an uplift of volatility and trading volumes in the OTC markets where we operate.

Our focus during the pandemic has been on ensuring the safety of our employees while continuing to provide high quality service to our clients and maintaining our financial and operational resilience. I am pleased that we have achieved these three goals while growing our revenues and our underlying operating profit. This is testament to the resilience and adaptability of the Group and its employees.

We operate in 26 countries globally and therefore had to adapt to new working practices for each office to align with local guidance. In essence, this meant sending support staff to work from home as soon as was feasible allowing us to free up extra floor space to give the brokers who needed to remain in the office enough room to socially distance while continuing to work.

For brokers who could work from home, we introduced new digital technology and new workflows. This involved transferring more than 2,000 telephone lines to the cloud to create new client connections and installing desktop software to create digital dealer boards, or soft-turrets, for over 500 brokers. This solution was identified, purchased and rolled out effectively in less than two weeks. It provided a fully-integrated and compliant voice and electronic infrastructure with access to our global client base alongside a robust trading workflow.

Despite these challenges, all desks continued to be fully operational and our clients benefited from continuous global coverage across all asset classes.

Furthermore, in response to COVID-19, we have not furloughed any staff, reduced our permanent workforce, nor requested any government aid in any of our locations. We paid our full year dividend demonstrating our resilience and recognising the importance of income to our investors, and in turn, their customers.

As well as serving our clients and helping enable the markets to remain open and liquid, we have been mindful of our responsibilities to the communities in which we operate. We redirected our Disaster Relief Fund to global and local initiatives supporting those affected by the pandemic, for example the COVID-19 Solidarity Response Fund, the UK National Emergencies Trust, and the US CDP COVID-19 Response Fund. At a time when governments were lacking in Personal Protective Equipment, we donated 20,000 face masks to health authorities in the UK and US. Additionally, colleagues around the world have taken action to support those in need - for example, our UK employees took part in the 2.6 challenge to raise money for charities who have seen a significant reduction in donations during the period.

Financial performance

The Group delivered a good performance in the first half of 2020. The COVID-19 pandemic led to higher volatility and volumes particularly in February and March. This translated into higher revenues in our Energy & Commodities, Institutional Services and certain Global Broking asset classes, highlighting the Group's increasing diversification.

Revenue grew by 7% year-on-year to GBP990m on a reported basis (7% on a constant currency). We achieved an underlying operating profit of GBP159m, an increase of 1% on the GBP158m reported for H1 2019. Our underlying operating profit would have increased to GBP169m (7% higher year-on-year), excluding the GBP10m impact from unused annual leave. Our underlying operating profit margin of 16.1% (17.1% excluding impact from unused annual leave) was slightly lower than the 17.1% reported at H1 2019. We reported an underlying profit before tax of GBP136m, up 1% (9% excluding the impact from unused annual leave) from GBP134m in the prior year.

Statutory operating profit was GBP101m, 6% lower than the prior year, with an operating profit margin of 10.2% (2019: 11.6%) and statutory profit before tax of GBP78m was GBP5m lower in H1 2019. The decrease in statutory profit is mainly due to higher business reorganisation expense due to the proposed Group redomiciliation, and the GBP10m impact due to an increase in unused annual leave as at 30 June which will reverse by the year end in line with Group policy on holiday carry-forward and an Asia Pacific goodwill impairment. This is partially offset by the non-recurrence of costs associated with the ICAP integration that was completed in December 2019.

Basic underlying earnings per share ("EPS") were 19.9p (21.4p excluding the impact from unused annual leave, basic statutory EPS 9.7p) and we are paying a dividend of 5.6p per share for the half year, in line with our previously stated guidance.

Regional performance

Revenue for the EMEA region was GBP488m, a 7% year-on-year increase on a reported basis (6% at constant currency). This performance reflected an increase in all divisions, with notable growth in Institutional Services, due to strong growth in relative value (RV) strategies and our core product offering and Energy & Commodities, with strong revenue growth across all three brands. On a geographical basis, EMEA reported strong revenue growth year-on-year in Continental Europe, namely France, Spain and the Netherlands as well as in the UK and Africa, whilst the Middle East was more muted.

The Americas reported revenue of GBP376m, an increase of 11% year-on-year on a reported basis (+9% on constant currency), with strong growth in Global Broking, Energy & Commodities and Institutional Services.

In Asia Pacific, revenue was GBP126m, an increase of 2% year-on-year on a reported basis (2% on constant currency). This reflected a very solid growth in Energy & Commodities offset by more challenging Global Broking figures, especially in Q2, as trading appetite was dampened due to the pandemic that placed practical constraints on market activity.

Our business divisions

In March of this year we announced the three key strategic pillars which would drive our medium-term growth: electronification and technology; aggregation of liquidity across our brands; and diversification of our revenues.

These three pillars remain critical for our future growth but we have taken a prudent approach to managing these through the crisis and its associated macro uncertainty. Consequently, the execution of our strategy has been actively slowed as we prioritised our liquidity and capital buffers under stressed scenarios.

We previously indicated that we planned an additional GBP45m of investment for 2020, of which GBP30m would be capital expenditure.

Under our prudent approach, this has resulted in a lower-than-targeted H1 investment spend of cGBP7m, of which cGBP6m were operating expenses which was also lower than originally targeted. In addition we have incurred GBP3m of IT expenses related to the development of cloud capabilities as a response to COVID-19, which will have longer term benefits. We intend to flex our investment spending in line with market performance. We aim to invest cGBP15m of cash in 2020, of which cGBP7m will be expensed.

Despite the aforementioned deceleration, we were still able to continue with a number of initiatives which fit our three strategic themes: liquidity aggregation, electronification and diversification and detail these initiatives in the business division reviews below. We aim to update you on our revised plans at our Investor Update on 8 October 2020.

On top of these initiatives, we continue to expand our customer base, especially in our newest business divisions, whilst adding a range of new solutions (e.g. new agency execution products and new data offerings) in new jurisdictions. Previously, we have looked to increase collaboration between the four businesses to capitalise on the clear connections between them. In the first half of 2020, the increased footprint of our business has allowed us to pursue cross-divisional referrals, and we have seen particular success with this initiative between Institutional Services and Data & Analytics.

Looking ahead, we will continue to assess where and when it makes sense to invest. Where we see opportunities to acquire assets that would accelerate and further our strategic ambitions, then we will consider them carefully.

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.

Market volatility and market volumes increased from the impact of COVID-19 improving revenue performance by 2% both on reported basis and constant currency, at GBP656m (H1 2019: GBP642m). This is despite implementing a remote broking strategy due to COVID-19. Q1 2020 saw particularly high volatility and volumes driving the increased revenue performance with Q2 2020 offsetting much of the gains from the prior period as conditions in financial markets began a decline following fears of COVID-19 resurgence and a global recession.

The Rates business, largest of Global Broking, increased by 6% (both on reported basis and at constant currency) as interest rate swap and treasuries markets saw increased volatility. Equities business also increased 3% on reported basis (1% at constant currency) from good global market volatility, especially in Q1 2020.

Credit markets were in better shape, boosted by increased issuance, and revenues increased by 2% in H1 2020 year-on-year both on reported basis and at constant currency. FX & Money Markets and Emerging Markets were down 2% (3% at constant currency) and 5% (4% at constant currency) on a reported basis, respectively, as macroeconomic factors including slowdown in global growth challenged these businesses.

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 technology offering. These developments will better position TP ICAP to take advantage as market conditions and challenges adjust.

Our key strategic priorities remain aggregating liquidity from our competing brands; improving connectivity with our clients and delivering improved workflows for all products. Our Global Broking strategy is based around electronic hubs that create a seamless experience for our clients. These hubs offer a single point of liquidity for clients across our brands, from screens with a common look and feel together with robust post-trade processing.

For example:

-- In Rates, we continued the build-out of our Rates hub, with development of cross-brand execution platform for Sterling products with integrated functionalities. In addition, we continue the migration of legacy matching engines, mainly in Tullett Prebon, to TP ICAP's Fusion platform.

-- In Foreign Exchange, we launched the FXO hub in March. FXO hub is a multi-brand, hybrid trading platform for FX Options products, covering both G10 and emerging markets currency pairs. The platform supports collation of "Indication of Interest" bids and offers, via an electronic order book, "Request for Quote", plus Auxiliary matching order entry methods. It provides our clients with a much better user experience and improved connectivity. It has had an excellent response so far and we are seeing a good number of top tier banks already streaming liquidity.

-- 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.

-- In Equities, where the market is much more dispersed, we completed the acquisition of Louis Capital Markets, which brings us expertise and scale in cash equities and equity derivatives, as well as strengthening our Continental European franchise.

We will maintain this commitment to increase the electronification and innovation of our business to meet the changing demands of our clients.

Energy & Commodities

Energy & Commodities is our second largest division and operates through the Tullett Prebon, ICAP and PVM brands in all the 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.

Revenues were up 16% at GBP216m for the half year on a reported basis (15% at constant currency basis), as the market has been characterised by increased volatility with COVID-19 tensions, trade discussions and oil price war. The oil market faced unchartered territory with significantly reduced demand (particularly transportation fuels), excess supply combined with filled storage, resulting in decreased prices and negative territory for the first time in history. Freight economics have also played a significant part in the reduced movement of physical oil. We believe that during extreme Q1 volatility, clients turned to more established brokers with deeper liquidity pools.

Overall, the increased revenues with constant cost discipline, despite higher spending relating continuous strategic execution, led to increased divisional profitability (+2.5 ppts year-on-year).

In EMEA, we had a record first quarter in precious metals, and recorded a strong performance in LNG due to the market making greater use of it as a hedging tool. Oil performed well, driven by new hires, as well as increased volatility caused by the oil price war.

Utility markets have generally held up well with European gas (especially the UK) being over-supplied, with pricing moving to historical lows off the back of a long bear run as the market struggled with storage and capacity issues. Volatility and uncertainty in the power market has caused volumes to spike to record highs with participants adjusting positions as a result of reduced electricity demand.

In Americas, power revenue increased as the western market saw increased volatility. Oil revenue increased driven by extreme market volatility from both the pandemic and global oil price war, with high growth in crude swaps and refined products group, assisted with the Atlas partnership, physical refined products.

In APAC, we reported strong performance from our established oil desks within PVM and Tullett Prebon, notably Crude, fuel, middle distillates and Gasoline.

This is already a mature business and our strategic goal for Energy & Commodities is to consolidate our global leadership position. To this end, we have made further progress with several strategic initiatives, which include increasing aggregation and electronification.

Similarly to Global Broking, we are building an Oil hub which will ultimately allow clients to view aggregated liquidity across our competing brands and execute electronically via a range of low touch protocols.

In the half, we have made good progress with Nova, our electronic matching engine for Oil. This is an important initiative as we believe it will become a significant component in the oil trading market infrastructure and lead to increased efficiencies within the business, stronger margins and better client retention. Developments include implementing an Order Management System on the platform to facilitate and manage trades; automating straight through processing; and incorporating an instrument feed from the Intercontinental Stock Exchange ("ICE").

We will invest further in Nova in the second half to accelerate its deployment. We have already rolled out Nova to desks in Norway and Asia Pacific with the next stages being to onboard our remaining desks, and our clients, and then build a new front end. We expect to complete this in H2.

We have previously flagged our machine learning tool, Darwin. We have trialled this successfully during the first half and it will be rolled out to all desks this September. Darwin harvests and mines big data, ranging from clients' historic trading behaviour to external news events. It identifies trading opportunities for our brokers and alerts them to market triggers. In time, it will enable our brokers to anticipate and better meet the needs of our clients and in turn do more business. It will also capture trades across all our brands and provide our Data & Analytics business with fast, real-time information.

Institutional Services

Institutional Services provides trade ideas and agency execution to buy side clients including hedge funds, asset managers and non-bank liquidity providers. The role of an agency brokerage is to offer the buy side access to the best price in the market from a wide range of different banks, whilst guaranteeing client anonymity and neutrality. Institutional Services is an important part of the Group's diversification strategy bringing in a new revenue stream from a different client base.

In the first half of the year, Institutional Services achieved revenues of GBP57 million up 50% on the comparative period. This very strong growth underlines that the agency execution model has become an established and valued component of the market's ecosystem.

Growth was driven by increased client appetite and the business' greater capacity to service new clients, and was experienced across our core products and strategies: Foreign exchange, exchange traded and cleared derivatives; relative value; government bonds and cash equities.

We also grew our client base, mainly hedge funds and asset managers and grew our team by making new hires in Singapore and New York. Our continued ability to attract high calibre salespeople from both the buy-side and sell-side shows that our business model is recognised and accepted by seasoned market participants, and opportunities remain open as banks reduce their salesforce.

Our strategy for Institutional Services is to continue grow the business and further diversify our revenues. To this end, we are adding more asset classes to our coverage; broadening our geographic reach; and investing in further electronification. In the first half, we introduced additional interest swaps and equity derivatives to our asset coverage.

We have previously mentioned the importance of pre-trade connectivity to the business and we have since connected to Bloomberg's Fixed Income and Derivatives Execution System (TSOX) which is the gateway to the majority of the buy-side. In addition, we have added TP Credit Deal order book liquidity to institutional customers via Bloomberg, and will shortly be adding TP CreditDeal Volume Match liquidity.

Data & Analytics

Our Data & Analytics 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 more OTC data than any other company globally. We have 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.

It is a high margin business with revenues that are largely subscription-based and sticky, so it provides us with excellent earnings diversification and sustainable growth opportunities.

Data & Analytics grew its revenues by 8% in the half, which was a good performance given the impact of COVID-19 on many of its customers which lead to reduced spending, and expectations that Global Data revenues will decline in the full year due to the pandemic.

During the half, we increased permanent headcount to support our long-term initiatives and future revenue generation, including sales heads in Asia and America, which impacted contribution.

However, subscription revenues grew as we continued to roll out new products sets and signed new mandates with clients, enhancing our ability to generate strong recurring revenues going forward.

Our strategy to grow our Data & Analytics business is clear: to harvest the data generated internally which historically has not been captured; to broaden our distribution network, both internally and externally; and to move our product offering up the value chain.

In line with our strategy, we launched five new products in the first six months. In April, we launched a new FIX protocol-based data feed, called SURFIX. This allows us to distribute real-time market data for all security types, from all TP ICAP brands, via a single consolidated data feed. We launched new products via new distribution partners such as AWS Data Exchange. In addition, we are working on building a web store which will allow our clients to buy our products in the same way that people shop on Amazon.

In the half, we also launched our first information product called Bond Evaluated Price. We launched 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. This new product captures all available bond transaction across the Group and uses our proprietary model to offer clients more detailed information than the price of a bond at one point in time. The product employs machine learning to provide frequent and regular updates on a large number of bonds, rather than just indicative pricing. Clients therefore have better insights into the price formation process. The product will help financial institutions with exposure to government, corporate or supranational bond risk to run internal market risk tasks and meet regulatory requirements.

Near term outlook

The Group continues to monitor and respond as appropriate to the challenges presented by COVID-19. The emergence and continuation of the COVID-19 pandemic creates unusually high levels of uncertainty in our major markets, but our intention is to continue our technology implementation in H2, and we expect to see some early benefits from recent hires, geographic expansion and product roll-out. H2 has started slowly with July volumes materially lower than in 2019. We remain cautious and expect to see continued episodic volatility and the frequency, duration and intensity of these periods will be more significant determinants of our performance than usual.

Concluding comments

While the first six months of the year have been challenging, I am delighted with how the business and my colleagues responded. We acted rapidly and effectively to ensure that our staff remained safe and our clients continued to receive the service from us that they expect.

We continued to implement our strategic initiatives, albeit at a more measured pace, and we plan to update the market on our plans in detail on Thursday 8 October. Despite the near-term uncertainty, I am confident that our strategic initiatives will deliver sustainable profit growth.

I would like to thank all of my colleagues at TP ICAP for their enormous efforts and the remarkable resilience they have demonstrated in the first half of the year.

Nicolas Breteau

Chief Executive Officer

7 August 2020

Financial review

Statutory Income Statement

 
 H1 2020                              Underlying     Acquisition,   Exceptional   Statutory 
  GBPm                                                   disposal         items 
                                                    & integration 
                                                            costs 
-----------------------------------  -----------  ---------------  ------------  ---------- 
 Revenue                                     990                -             -         990 
-----------------------------------  -----------  ---------------  ------------  ---------- 
 Underlying Operating profit                 159                -             -         159 
 Net charge relating to legal 
  settlements                                  -                -           (2)         (2) 
 Business re-organisation costs                -                -          (13)        (13) 
 Impairment of intangible assets 
  arising on consolidation                     -             (21)             -        (21) 
 Amortisation of intangible 
  assets arising on consolidation              -             (20)             -        (20) 
 Other                                         -              (2)             -         (2) 
 Operating profit                            159             (43)          (15)         101 
 Net finance expense                        (23)                -             -        (23) 
-----------------------------------  -----------  ---------------  ------------  ---------- 
 Profit before tax                           136             (43)          (15)          78 
 Tax                                        (34)                -             1        (33) 
 Share of net profit of associates 
  and joint ventures                          10                -             -          10 
 Non-controlling interests                   (1)                -             -         (1) 
-----------------------------------  -----------  ---------------  ------------  ---------- 
 Earnings                                    111             (43)          (14)          54 
===================================  ===========  ===============  ============  ========== 
 Average number of shares                 557.3m                                     557.3m 
 Basic EPS                                 19.9p                                       9.7p 
 
 
 
 H1 2019                              Underlying     Acquisition,   Exceptional   Statutory 
  GBPm                                                   disposal         items 
                                                    & integration 
                                                            costs 
-----------------------------------  -----------  ---------------  ------------  ---------- 
 Revenue                                     922                -             -         922 
-----------------------------------  -----------  ---------------  ------------  ---------- 
 Operating profit                            158                -             -         158 
 ICAP integration costs                        -             (20)             -        (20) 
 Amortisation of intangible 
  assets arising on consolidation              -             (21)             -        (21) 
 Net charge relating to legal 
  settlements                                  -                -           (2)         (2) 
 Charge relating to business 
  reorganisation                               -                -           (4)         (4) 
 Other acquisition and disposal 
  items                                        -              (4)             -         (4) 
 Operating profit                            158             (45)           (6)         107 
 Net finance expense                        (24)                -             -        (24) 
-----------------------------------  -----------  ---------------  ------------  ---------- 
 Profit before tax                           134             (45)           (6)          83 
 Tax                                        (33)                8             1        (24) 
 Share of net profit of associates 
  and joint ventures                           8                -             -           8 
 Non-controlling interests                   (1)                -             -         (1) 
-----------------------------------  -----------  ---------------  ------------  ---------- 
 Earnings                                    108             (37)           (5)          66 
===================================  ===========  ===============  ============  ========== 
 Average number of shares                 560.0m                                     560.0m 
 Basic EPS                                 19.3p                                      11.8p 
 

Our key financial and performance indicators for H1 2020 are summarised in the table below together with comparatives from the equivalent period in H1 2019.

 
                                                      H1 2020    H1 2019       Change 
-------------------------------------------------  ----------  ---------  ----------- 
 Total revenue (reported basis)                       GBP990m    GBP922m          +7% 
-------------------------------------------------  ----------  ---------  ----------- 
 Operating profit: 
  - Underlying                                        GBP159m    GBP158m          +1% 
  - Underlying margin                                   16.1%      17.1%    -1.0% pts 
  - Statutory                                         GBP101m    GBP107m          -6% 
  - Statutory margin                                    10.2%      11.6%    -1.4% pts 
-------------------------------------------------  ----------  ---------  ----------- 
 Contribution: 
  - Broking(1)                                        GBP349m    GBP330m          +6% 
  - Broking margin                                      37.5%      38.4%    -0.9% pts 
  - Data & Analytics(1)                                GBP33m     GBP32m          +3% 
  - Data & Analytics margin                             47.1%      50.0%    -2.9% pts 
 Total contribution                                   GBP375m    GBP362m          +4% 
-------------------------------------------------  ----------  ---------  ----------- 
 Underlying operating profit margin 
  (%): 
  - EMEA                                                19.1%      21.0%    -1.9% pts 
  - Americas                                            14.9%      14.4%    +0.5% pts 
  - Asia Pacific                                         7.9%      10.5%    -2.6% pts 
-------------------------------------------------  ----------  ---------  ----------- 
 Underlying operating profit margin 
  (%): 
  - Global Broking                                      20.0%      20.7%    -0.7% pts 
  - Energy & Commodities                                14.7%      12.2%    +2.5% pts 
  - Institutional Services                              14.0%       8.1%    +5.9% pts 
  - Data & Analytics                                    40.0%      45.3%    -5.3% pts 
-------------------------------------------------  ----------  ---------  ----------- 
 Average: 
 - broker headcount                                     2,770      2,706          +2% 
  - revenue per broker(2) (GBP'000)                       332        318          +4% 
  - contribution per broker(3) (GBP'000)                  126        122          +3% 
-------------------------------------------------  ----------  ---------  ----------- 
 Period end: 
  - Broker headcount                                    2,754      2,728          +1% 
  - Broker support headcount                            1,833      1,798          +2% 
  - Total headcount                                     4,898      4,866          +1% 
-------------------------------------------------  ----------  ---------  ----------- 
 Broker compensation costs : broking 
  revenue(4)                                            53.8%      52.5%    +1.3% pts 
-------------------------------------------------  ----------  ---------  ----------- 
 
        1. Broking and Data & Analytics contribution and contribution 
        margins are defined in the Contribution & Underlying Profit 
        by Division section. Prior year figures have been restated due 
        to inter-division revenues in Global Broking and Energy & Commodities, 
        and inter-division front-office costs in Data & Analytics. 
        2. Average revenue per broker is defined as Total Broking revenues 
        excluding inter-division revenues divided by average broker 
        headcount. 
        3. Average contribution per broker represents broking contribution 
        (as defined in the Contribution section) divided by the average 
        broker headcount with the prior year comparative calculated 
        on the same basis. 
        4. Broker compensation costs : broking revenue is defined as 
        Total Broking compensation costs divided by Broking revenues 
        excluding inter-division revenues. 
 

Average broker headcount increased 2% in H1 2020 to 2,770 year-on-year, and with average revenues per broker increasing 6%, the resulting broking revenue was 7% higher than in H1 2019 on a reported basis.

The period-end broking support headcount increased by 2% year-on-year primarily reflecting in-sourcing (including Belfast), and investing in Risk and Compliance functions as a response to increasing regulatory demands.

The tables that follow analyse revenue by business division as well as revenue and underlying operating profit by region for H1 2020 compared with the equivalent period in 2019, on a reported basis. The tables also show the change at constant currency.

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 tables below therefore shows the statutory revenue change, but also the constant currency basis, where the revenues are translated at the same exchange rates as those used for H1 2020.

Revenue

Total revenue of GBP990m in H1 2020 was 7% higher than H1 2019 on a reported basis, and 7% higher at constant currency.

Revenue by business division

 
                                                                                  Constant 
                                                                     Reported     Currency 
 GBPm                                        H1 2020     H1 2019       Change       Change 
                                        ------------  ----------  -----------  ----------- 
   Rates(1)                                      290         273          +6%          +6% 
   Credit                                         51          50          +2%          +2% 
   FX & Money Markets                             98         100          -2%          -3% 
   Emerging Markets                              103         108          -5%          -4% 
   Equities                                      105         102          +3%          +1% 
   Inter-division revenues(2)                      9           9           0%           0% 
--------------------------------------  ------------  ---------- 
 Global Broking total                            656         642          +2%          +2% 
--------------------------------------  ------------  ---------- 
   Energy & Commodities                          216         187         +16%         +15% 
   Inter-division revenues(3)                      1           1          +0%          +0% 
--------------------------------------  ------------  ---------- 
 Energy & Commodities 
  total                                          217         188         +15%         +15% 
 Institutional Services 
  total(1)                                        57          38         +50%         +50% 
 Data & Analytics total                           70          64          +9%          +8% 
--------------------------------------  ------------  ---------- 
 Inter-division eliminations(3)                 (10)        (10)          +0%          +0% 
--------------------------------------  ------------  ---------- 
 Total Revenue                                   990         922          +7%          +7% 
======================================  ============  ========== 
 
        1. For H1 2019 GBP15m of revenues have been reclassified from 
        Rates business into Institutional Services as the Global Broking 
        Relative Value (RV) Rates businesses have been reclassified 
        to move all RV desks under Institutional Services. This is 
        to reflect the mechanics of the underlying business. 
        2. Institutional Services growth rate would have been 26% on 
        a reported and constant currency basis excluding the aforementioned 
        move of the RV desks. 
        3. Inter-division charges have been made by Global Broking 
        and Energy & Commodities to reflect the value of proprietary 
        data provided to the Data & Analytics division. Previous year 
        has been restated in line with the new presentation format. 
        The broking inter-segmental revenues and Data & Analytics inter-segmental 
        costs are eliminated upon the consolidation of the Group financial 
        results. 
 

Conditions in financial markets have generally been volatile in H1 2020 due to the unprecedented macroeconomic environment caused by the emergence of COVID-19 pandemic. The sharp volatility accompanied with higher industry volumes in February and March, was succeeded by flattening yield curves and more subdued activity in the latter part of the period.

Despite this mixed macroeconomic backdrop, Global Broking Rates, Energy & Commodities, Data & Analytics and Institutional Services performance was strong. This performance was only partially offset by weaker performances in Global Broking's Emerging Markets & FX & Money Markets.

Inter-division revenue has been recognised in Global Broking and Energy & Commodities to identify the value of data provided to the Data & Analytics division. Additionally, the Relative Value (RV) businesses from the Rates division in Global Broking have been reclassified to move all RV desks within the Group under Institutional Services. This leads to a GBP15m H1 2019 revenue reclassification from Global Broking Rates to Institutional Services.

In Global Broking, revenue grew by 2% as Q1 volumes surged on the back of sharp volatility boosted by the global pandemic. During the heightened volatility period, clients sought expert market colour and advice from the most established brokers. Conditions normalised in the beginning of Q2, before a drop in volatility towards the end of the H1 period.

With this in mind, Rates revenue grew 6% year-on-year both on reported and at constant currency basis. Similarly, Equities (3% on reported, 1% at constant currency) and Credit (2% on reported and at constant currency basis) benefited from the aforementioned volatility surge. On the contrary, conditions in emerging markets were challenging due to lower risk appetite in APAC since the beginning of the year, leading to Emerging Markets decline of 5% on a reported basis (4% lower at constant currency). FX & Money Markets were down 2% and 3%, on a reported and at constant currency respectively.

Energy & Commodities revenue was 16% higher than H1 2019 on a reported basis (15% at currency basis). The division has benefitted from higher volumes in all major products combined with additional strategic hires. Power & Gas demonstrated very strong revenue growth, while oil revenues increased 12% capitalising on unprecedented volatility across different oil products.

Institutional Services revenue of GBP57m grew 50% compared to H1 2019 on a reported basis (50% at constant currency. The continuous growth was supported by growing client appetite and increased capacity to service new accounts. This is due to continued improvement in client onboarding and referrals from other Group divisions, most notable Data & Analytics. The business now has a well-defined panoply of core product offerings, namely foreign exchange, listed derivatives, relative value execution and cleared interest rate swaps. New products include additional rate swaps and equity derivatives. Performance was also boosted through strategic hires, notably in Singapore and the US.

Data & Analytics revenue was 9% higher than H1 2019 on a reported basis (8% at constant currency). Despite the emergency of COVID-19, revenues continued to grow as we engaged with all our clients, in the sell and buy-side, in order to fulfil their previously unmet needs. However, our growth has been slightly reduced as: (a) clients' attrition rate increased to 0.7% (from 0.3% in H1 2019) where some clients "tightened the purse" due to the pandemic, (b) new initiatives requiring bulk historical data, e.g. ad hoc hedge fund requests, were postponed by clients and (c) one-time revenue recoveries have also slowed as we were unable to do on-side data audits. Despite these short-term obstacles, the division invested in its future by: (a) expanding Data, Channel Management and Technology partnerships, (b) creating a new Digital Marketing strategy for product and capabilities launch, (c) deploying a new scalable Sales methodology to enhance performance, (d) launched SURFIX for single line delivery of our multiple broking brands and (e) improved our back-office systems to automate certain processes and generate savings. Finally, during H1 2020, we deployed four new high-value data products, plus our very first information product (the Bond Evaluated Pricing or BEP) which is valuable for our clients.

Revenue by region

 
 GBPm                                             Constant 
                                      Reported    Currency 
                  H1 2020   H1 2019     Change      Change 
                 --------  --------  ---------  ---------- 
 EMEA                 488       458        +7%         +6% 
 Americas             376       340       +11%         +9% 
 Asia Pacific         126       124        +2%         +2% 
---------------  --------  -------- 
 Total Revenue        990       922        +7%         +7% 
---------------  --------  -------- 
 

EMEA

Revenue for the region increased by 7% in H1 2020 compared with H1 2019 on a reported basis (6% at constant currency). Revenues were uplifted by a strong month in March 2020 due to increased volatility created by the pandemic. Global Broking revenue increased slightly, with Rates and Credit being ahead year-on-year. The remaining three asset classes saw small revenue declines.

Revenue from Energy & Commodities increased materially with strong results stemming from all three brands. The growth came from strong performance in power, gas, environmental, metals, soft & agricultural products and oil. Our data expansion also delivered some good results with higher revenues.

Institutional Services also saw a strong year-on-year increase. This is due to material increases in relative value, COEX and electronic markets.

Americas

Americas revenues were up by 11% on a reported basis (9% at constant currency) to GBP376m in H1 2020 versus H1 2019 as global market volatility from COVID-19 fears drove increased performance despite the necessity to implement a remote broking strategy for a large percentage of the brokers.

Within our Global Broking business, increased market volatility and market volumes in Q1 2020 relative to Q1 2019 drove the overall H1 2020 revenue up year-on-year. Depressed volatility and general summer slowdown in the latter half of H1 2020 offset some of the year-on-year growth.

Rates revenue was up year-on-year as USD interest rate swaps and Treasuries markets were very active in the beginning of H1 2020 driven by increased volatility from a dipped yield curve with rising concerns around a recession. Rates continues to be Americas' largest asset class.

Equities revenue was materially up versus H1 2019 from increased volatility in global equity markets. US Credit markets remained subdued with revenues down marginally year-on-year. Continued focus remains on building an electronic strategy to improve Credit business.

FX & Money Markets business saw increased revenues in H1 2020 versus H1 2019, while emerging business was flat year-on-year. Lower levels of volatility, de-risking by some of our primary clients in Forward FX as well as new entrants in the emerging markets space continue to put pressure on revenue growth.

Americas Energy & Commodities outperformed in H1 2020 with strong double-digit increase year-on-year. Increased revenue across most products was driven by the COVID-19 pandemic and global oil price war as well as the strengthening of the PVM/Atlas partnership in Oil and organic growth in Power, Environmental and Gas businesses. Energy continues to be a target area for TP ICAP Americas across all three brands.

Institutional Services also performed well in H1 2020 with strong revenue growth as COEX and RV drove the increased performance from global market volatility. Finally, Data & Analytics continued its good performance as the business expanded further its product offering.

Asia Pacific

Overall revenue in the region was up by 2% year on year on a reported basis (2% at constant currency).

The Global Broking business in APAC suffered a small year-on-year revenue decline after a solid first quarter gave way to a very challenging second quarter. From April, turnover in the Asian markets suffered a sharp dip as COVID-19 dampened trading appetite and placed some practical constraints on market activity. The month of June saw some recovery in volumes across the region.

The sharp dip in market activity in the second quarter was especially pronounced in our Japan Rates business and to some extent in the Hong Kong based Rates and FX businesses. It was also a difficult period for the Singapore based NDF and INR Rates businesses. Overall, however, our various Equities businesses grew revenue year-on-year and the newly established Credit business in Hong Kong gained some traction. Encouragingly, our smaller offices in the region, continued to perform well, especially our Korean business which had strengthened its FX desk in the summer of 2019.

The Energy & Commodities business, the majority of which comprises of oil and gas related products, benefited from episodes of volatility in those markets, together with some increased scale and diversification within the ICAP branded business. Overall revenue from Energy & Commodities grew strongly year-on-year.

Underlying administrative expenses

Total underlying administrative expenses of GBP837m in H1 2020 were 8% higher than H1 2019 on a reported and at constant currency basis (see Note 6 in the financial statements for further details), or 7% excluding the impact of unused annual leave.

Underlying administrative expenses

 
                                                                              Constant 
                                                                  Reported    Currency 
                                                                    Change      Change 
 GBPm                             H1 2020   H1 2019(1)   Change        (%)         (%) 
                                 --------  -----------  -------  ---------  ---------- 
 Broker compensation                  495          451       44       +10%         +9% 
 Unused annual leave                    7            -        7      +100%       +100% 
 Other front office 
  costs                                86           88      (2)       -2%%         -3% 
 Data & Analytics costs                27           21        6       +29%        +29% 
-------------------------------  --------  -----------  ------- 
 Total front office 
  costs                               615          560       55       +10%         +9% 
-------------------------------  --------  -----------  ------- 
 
 Other staff costs                    121          108       13        12%         12% 
 Unused annual leave                    3            -        3      +100%       +100% 
 Technology and related 
  costs                                38           30        8       +27%        +27% 
 Premises and related 
  costs                                24           22        2        +9%         +4% 
 Depreciation and amortisation         15           18      (3)       -17%        -17% 
 Other administrative 
  costs                                21           34     (13)       -38%        -36% 
-------------------------------  -------- 
 Total management and 
  support costs                       222          212       10        +5%         +5% 
-------------------------------  --------  -----------  ------- 
 Total costs                          837          772       65        +8%         +8% 
-------------------------------  --------  -----------  ------- 
 
       1. Restated in line with our new divisional disclosures 
 

The table above sets out administrative expenses on the basis on which management chooses to view this area, divided principally between front office costs and management and support costs. Front office costs tend to have a large variable component to them and are directly linked to the output of our brokers. The largest element of this is broker compensation as well as other front office costs, which include travel and entertainment, telecommunications and information services, clearing and settlement fees as well as other direct costs. The remaining cost base represents the management and support costs of the Group.

Overall, the underlying cost base has seen a 8% increase at reported rates to GBP837m in H1 2020 compared with H1 2019 (8% at constant currency), or 7% excluding to a GBP10m increase in unused annual leave as at 30 June which will reverse by the year end in line with Group policy on holiday carry-forward.

The 8% increase has been primarily driven by an increase in total front office costs. Broker compensation costs increased by 10% at reported rates (9% at constant currency rates) during the period reflecting a 7% increase in broking revenue at reporting rates (7% at constant exchange rates) and an increase in the broker compensation ratio from 53.1% to 53.8%. The increase in broker compensation reflects the change in revenue mix between the two periods towards businesses with higher compensation ratio, mainly relating to the strong Energy & Commodities growth.

Other front office costs have decreased by 2% (GBP2m) on a reported basis (3% (GBP3m) at constant currency rates). Increases in information services (GBP3m), clearing & settlements (GBP5m) and increased revenue provisions (GBP1m) on the back of higher revenues have been offset by decreases in travel and entertainment (GBP10m). The increase in front office Data & Analytics costs of 29% reflect the continuous top-line growth in the business but also the significant investment in talent, which should increase revenues in future periods.

The GBP13m increase (GBP14m reduction at constant currency rates) in other staff costs on a reported basis mainly reflects previously announced increased technology (GBP5m), risk (GBP1m) and legal & 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 include the costs of all external technology services, maintenance contracts, consultancy, market data services and communications costs. During 2020 these costs increased GBP11m on a reported basis (GBP12m at constant currency) year-on-year due to a combination of planned increases regarding IT infrastructure modernisation, cyber and surveillance IT projects and other IT investments. The balance relates to other IT increases, mainly COVID-19 related IT spending, such as investment in cloud services.

The significant decrease in other administrative costs (GBP13m lower on a reported basis, GBP15m lower at constant currency rates) includes a decrease in corporate travel & entertainment(GBP2m), decreases in legal fees, higher capitalisation of support staff costs (GBP2m), lower audit & tax fees (GBP2m), lower one-off costs in respect of the Group strategy, lower Brexit costs and other FX gains (GBP6m).

Contribution & Underlying Operating Profit by division

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 H1 2020, the overall level of contribution was 4% higher at GBP375m year-on-year. The overall contribution margin decreased by 1.4 percentage points to 37.5% as higher revenues were more than offset by higher front office costs.

This decline mainly reflects the broker compensation ratio increase, due to revenue shift changes, combined with higher initial contract payments ("ICP") amortisation.

GB = Global Broking; E&C = Energy & Commodities; IS = Institutional Services, D&A = Data & Analytics, Corp. Centre = Corporate Centre and other unallocated costs

 
                                                                        Corp. 
 H1 2020 (GBPm)                 GB(1)      E&C   IS(1,2)     D&A    Centre(5)   Total 
-----------------------------  ------  -------  --------  ------  -----------  ------ 
 Revenue: 
  - External                      647      216        57      70            -     990 
  - Inter-division(3)               9        1         -       -         (10)       - 
                               ------  -------  --------  ------  -----------  ------ 
                                  656      217        57      70         (10)     990 
 Total front office costs: 
  - External                    (396)    (144)      (41)    (27)          (7)   (615) 
  - Inter-division(3)               -        -         -    (10)           10       - 
                               ------  -------  --------  ------  -----------  ------ 
                                (396)    (144)      (41)    (37)            3   (615) 
                               ------  -------  --------  ------  -----------  ------ 
 Contribution                     260       73        16      33          (7)     375 
                                                            47.1 
 Contribution margin(4)         39.6%   33 .6%     28.1%       %          n/a   37.9% 
 Net management and support 
  costs: 
  - Management and support 
   costs                        (131)     (41)       (8)     (5)         (37)   (222) 
  - Other operating income          2        -         -       -            4       6 
                               ------  -------  --------  ------  -----------  ------ 
                                (129)     (41)       (8)     (5)         (33)   (216) 
                               ------  -------  --------  ------  -----------  ------ 
 Underlying Operating profit 
  / (loss)                        131       32         8      28         (40)     159 
                               ======  =======  ========  ======  ===========  ====== 
 
 Underlying operating profit 
  margin(4)                     20.0%    14.7%     14.0%   40.0%          n/a   16.1% 
 
 
                                                                              Corp. 
 H1 2019 (GBPm)                        GB      E&C    IS(1,2)     D&A     Centre(5)   Total 
--------------------------------  -------  -------  ---------  ------  ------------  ------ 
 Revenue: 
  - External                          634      187         37      64             -       922 
  - Inter-division(3)                   9        1          -       -          (10)         - 
                                  -------  -------  ---------  ------  ------------  -------- 
                                      643      188         37      64          (10)       922 
 Total front office costs: 
  - External                        (381)    (129)       (28)    (22)             -     (560) 
  - Inter-division(3)                   -        -          -    (10)            10         - 
                                    (381)    (129)       (28)    (32)            10     (560) 
 Contribution                         262       59          9      32             -       362 
                                                                 50.0 
 Contribution margin(4)             40.7%    31.4%      24.3%       %           n/a     39.3% 
 
 Net management and support 
  costs: 
  - Management and support 
   costs                            (130)     (36)        (6)     (3)          (37)     (212) 
  - Other operating income              1        -          -       -             7         8 
                                  -------  -------  ---------  ------  ------------  -------- 
                                    (129)     (36)        (6)     (3)          (30)     (204) 
                                  -------  -------  ---------  ------  ------------  -------- 
 Underlying Operating profit 
  / (loss)                            133       23          3      29          (30)       158 
                                  =======  =======  =========  ======  ============  ======== 
 
 Underlying operating profit 
  margin                            20.7%    12.2%       8.1%   45.3%           n/a     17.1% 
 
                                1. For H1 2019 GBP15m of revenues have been reclassified from 
                             Rates business into Institutional Services as the Global Broking 
                                  Relative Value (RV) Rates businesses have been reclassified 
                                   to move all RV desks under Institutional Services. This is 
                                         to reflect the mechanics of the underlying business. 
                                    2. Institutional Services growth rate would have been 26% 
                       on a reported and constant currency basis excluding the aforementioned 
                                                                        move of the RV desks. 
                                   3. Inter-division charges have been made by Global Broking 
                                 and Energy & Commodities to reflect the value of proprietary 
                                data provided to the Data & Analytics division. Previous year 
                                  has been restated in line with the new presentation format. 
                                    The broking inter-segmental revenues and Data & Analytics 
                                  inter-segmental costs are eliminated upon the consolidation 
                                                              of the Group financial results. 
                                  4. Contribution and Underlying Operating Profit margins are 
                                 calculated using External and Inter-division revenues as the 
                                                                                 denominator. 
                                   5. Corporate Centre and Other unallocated costs represents 
                               the cost of group and central functions that are not allocated 
                                  to the Group's divisions, including a H1 2020 GBP10m charge 
                                  (H1 2019: GBPnil) due to an increase in unused annual leave 
                                as at 30 June which will reverse by the year-end in line with 
                                                       Group policy on holiday carry-forward. 
 

Broking contribution (excluding Data & Analytics) was 5% higher year-on-year at GBP349m, as higher contribution from Energy & Commodities and Institutional Services, was only partially offset by lower contribution from Global Broking, due to different product mix and the aforementioned higher ICP amortisation.

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 H1 2020 the overall level of contribution increased by GBP1m or 3% to GBP33m. The overall contribution margin decreased by 2.9 percentage points to 47.1% driven by hiring, mainly in H2 2019.

Underlying operating profit

The underlying operating profit of GBP159m is 1% higher than the prior year, with an underlying operating profit margin of 16.1%, 1percentage point lower than H1 2019. Underlying operating profit and profit margin would have been GBP169m (7% higher year-on-year) and 17.1%, excluding the impact of the unused annual leave.

We produce the underlying operating profit by division which is after the allocation of net management and support costs (excluding Corporate centre and other unallocated costs) to the different divisions.

For Global Broking, the underlying operating profit decreased to GBP131m, or 2% lower versus H1 2019. This was due to higher front office costs reflecting higher compensation ratio on the back of continuous retention and hiring efforts, as well as increased clearing and settlement costs reflecting to vendor cost increases. Moreover, other costs were increased due to higher IT allocations regarding investments in cloud capabilities, strategic investments and cyber and risk and compliance costs. Operating profit margin decreased 0.7 percentage points to 20%.

For Energy & Commodities, the underlying operating profit increased to GBP32m, or 39% higher versus H1 2019. This is primarily due to higher revenues, only partially offset by higher support costs. The underlying operating profit margin improved 2.5 percentage points to 14.7%.

Institutional Services improved its underlying operating profit to GBP8m, or 267% higher than H1 2019. Our newest business division continues to generate necessary scale to improve its profitability, with very strong revenue growth. The underlying operating profit margin improved to 14.0%, 5.9 percentage points higher year-on-year.

Data & Analytics reported minor underlying operating profit decline to GBP32m, or 3% lower versus H1 2019. Despite solid revenue growth in a tough environment, the cost base included a number of H2 2019 strategic hires that were not fully deployed due to the global pandemic. As such, the underlying operating profit margin slightly deteriorated to 40.0%, 5.3 percentage points lower year-on-year.

Underlying operating profit by region

The underlying operating profit and underlying operating profit margin by region are shown below are compared against reported data for the prior period.

Underlying operating profit

 
 GBPm            H1 2020   H1 2019   Change 
 EMEA                 93        96      -3% 
 Americas             56        49      14% 
 Asia Pacific         10        13     -23% 
--------------  --------  -------- 
 Underlying          159       158       1% 
--------------  --------  -------- 
 

Underlying operating profit margin by region

 
 GBPm            H1 2020   H1 2019 
 EMEA              19.1%     21.0% 
 Americas          14.9%     14.4% 
 Asia Pacific       7.9%     10.5% 
--------------  --------  -------- 
 Underlying        16.1%     17.1% 
--------------  --------  -------- 
 

EMEA

Underlying operating profit in EMEA of GBP93m was 3% lower than H1 2019 on a reported basis, and with revenue up 7% on a reported basis (6% at constant currency), the underlying operating profit margin has decreased by 1.9 percentage points, to 19.1%. The decrease reflects higher broker compensation due to different revenue mix, higher clearing and settlement costs due to increase market volumes, combined with slightly inflated support costs mainly through increased employee in-sourcing of IT consultancy.

Americas

The Americas underlying operating profit of GBP56m was 14% higher than H1 2019. Revenue in the Americas was 11% higher than the prior year at reported exchange rates (9% at constant currency), and the operating profit margin of 14.9% in H1 2020 was 0.5 percentage points higher than H1 2019, as higher contribution in the region more than offset a higher net support cost base.

Asia Pacific

Underlying operating profit in Asia Pacific decreased by GBP3m to GBP10m in H1 2020, while the underlying operating profit margin has reduced by 2.6 percentage points to 7.9%. This was due to the building of new businesses in Energy & Commodities and Institutional Services that created some drag on the contribution margin. Meanwhile additional expenditure on the Group's technology infrastructure, together with some specific need to put in place recovery sites to cater for pandemic contingency, put upward pressure on support costs despite a strong focus on cost control in other areas.

Exceptional and acquisition, disposal and integration items

The Group presents its Condensed Consolidated Income Statement in a columnar format on page 28 to aid the understanding of its results by separately presenting its underlying operating profit before acquisition, disposal and integration costs and exceptional items. Underlying operating profit is reconciled to profit before tax in the Condensed Consolidated Income Statement and is disclosed separately to give a clearer presentation of the Group's underlying trading results.

Acquisition, disposal and integration costs are excluded from underlying results as they reflect the impact of acquisitions and disposals rather than underlying trading performance.

A further amount of GBP20m has been charged through the income statement reflecting the amortisation of intangible assets other than goodwill arising on acquisitions, reflecting brand value, the value of customer relationships and other intangible assets. This non-cash item is excluded from underlying results to present the performance of the Group's acquired businesses consistently with its organically grown businesses where such intangible assets are not recognised.

In accordance with its obligations under IAS 36 (see also Note 13), the Group has undertaken an impairment review of the carrying value of its regional cash generating units ('CGU') to which goodwill arising on acquisitions, including the acquisition of ICAP, has been allocated. In determining whether goodwill is impaired under IAS 36, the resulting value of each CGU has been estimated based on its value in use. As a result of the review, the carrying value of the Asia Pacific CGU has been written down by GBP21m and this charge is included as an acquisition related item. This non-cash impairment does not have an impact on the Group's regulatory capital position, which excludes the carrying value of intangible assets in the calculation of the Group's allowable resources.

Other acquisition, disposal and integration costs also include a GBP1m charge for adjustments to acquisition consideration, due to an increase in the expected deferred consideration on the Axiom acquisition due to its continuous strong performance, partially offset by the finalisation of the COEX acquisition payment. There are also cGBP1m of other minor acquisition and disposal items that have been excluded from underlying results, mainly relating to the Louis Capital acquisition.

Other exceptional items include GBP2m legal provision in connection with ongoing court cases in Australia and Germany, plus some costs associated with enforcing escrow related claims.

A GBP13m charge relating to business reorganisations, which includes GBP9m in relation to our proposed redomiciliation, GBP2m charge for other business reorganisation including office moves the Group has undertaken in Belfast and GBP2m in relation to the impairment of a lease receivable and a right-of-use asset as a result of office consolidations.

Exceptional items have been excluded from underlying results as they are non-recurring and do not relate to the underlying performance of the business.

Net finance expense

The underlying net finance expense of GBP23m is GBP1m lower than the GBP24m charged in H1 2019. This comprises GBP25m of interest expense, of which GBP18m relates to the Group's Sterling Notes, GBP1m of costs relating to interest fees on bank facilities, GBP1m relating to the amortisation of debt issue and bank facilities and GBP5m interest payable on lease liabilities. The expense is offset by GBP2m of interest income.

Tax

The effective rate of tax on underlying profit before tax is 25% (2019: 25%). The effective rate of tax on reported profit before tax is 42% (2019: 29%) as some exceptional expenses are not tax deductible, in particular the goodwill write-off. The outlook for the underlying effective tax rate in 2021 is for it to remain broadly in line with that for the current period.

Basic EPS

The average number of shares used for the basic EPS calculation of 557.3m reflects the 563.3m shares in issue less the 4.5m shares held by the TP ICAP plc Employee Benefit Trust at the beginning of the year, less the difference between the time apportionment elements of the 2.8m of shares acquired by the TP ICAP plc Employee Benefit Trust to satisfy deferred share awards made to senior management, and the 0.8m of deferred shares meeting their vesting requirements in June. The TP ICAP plc Employee Benefit Trust has waived its rights to dividends.

Dividend

A 5.6p per share interim dividend H1 2019: 5.6p will be paid on 6 November 2020 to shareholders on the register at close of business on 2 October 2020. The ex-dividend date will be 1 October 2020.

The Company offers a Dividend Reinvestment Plan ("DRIP"), where dividends can be reinvested in further TP ICAP plc shares. The DRIP election cut-off date will be 16 October 2020.

Cash Flow H1 2020

 
 GBPm                                       Underlying   Non-Underlying(1)   Reported 
-----------------------------------------  -----------  ------------------  --------- 
 Operating profit                                  159               ( 58)        101 
 Share based compensation and pension 
  admin fees                                         4                   -          4 
 Depreciation and amortisation                      15                   -         15 
 Depreciation on leased assets                      12                   -         12 
 Exceptional non-cash items                          -                   3          3 
 Impairment & amortisation of intangible 
  assets arising on consolidation                    -                  41         41 
----------------------------------------- 
 EBITDA                                            190              ( 14 )        176 
 Working capital                                  (24)                   1       (23) 
 Unused annual leave                                10                   -         10 
----------------------------------------- 
 Cash generated from operations                    176                (13)        163 
 Capital expenditure                              (23) 
----------------------------------------- 
 Operating cash flow                               153 
 Interest paid                                    (24)                           (24) 
 Income taxes paid                                (37)                   4       (33) 
----------------------------------------- 
 Underlying Free cash flow                          92 
----------------------------------------- 
 Reported net cash flow from operating 
  activities                                                                      106 
-----------------------------------------  -----------  ------------------  --------- 
 
        1. Acquisition, disposal and integration costs, and exceptional 
        items 
 

The cash flow presentation above reconciles the underlying cash flow generation, excluding the impact of acquisition, disposal and integration costs and exceptional items, to the reported net cash flow from operations. The impact on EBITDA of acquisition, disposal and integration costs and exceptional items was GBP14m during the period principally relating to the costs of the business reorganisation.

During the period, there was a working capital outflow of GBP24m that mainly reflects a seasonal increase in trade receivables (GBP18m) and settlement balances (GBP6m). This outflow is significantly lower than the prior period as change to settlement balances was GBP48m. Capital expenditure has increased to GBP23m, slightly higher than in the prior year. This is due to incremental spending on our new London Headquarters and continued IT spending on routine, mandatory and investment projects.

After interest paid and underlying taxation paid, the underlying free cash flow for the Group was GBP92m, an increase of GBP97m versus 2019, mainly due to lower working capital outflows. Interest paid was GBP3m lower than the prior year.

Cash Flow H1 2019

 
 GBPm                                      Underlying   Non-Underlying(1)   Reported 
----------------------------------------  -----------  ------------------  --------- 
 Operating profit                                 158                (51)        107 
 Share based compensation and 
  pension admin fees                                3                   2          5 
 Depreciation and amortisation                     18                   1         19 
 Depreciation on leased assets                     11                   -         11 
 Exceptional non-cash items                         -                   2          2 
 Impairment & amortisation of 
  intangible assets arising on 
  consolidation                                     -                  21         21 
---------------------------------------- 
 EBITDA                                           190                (25)        165 
 Change in Initial contract prepayments             2                   2          4 
 Working capital                                (112)                   2      (110) 
---------------------------------------- 
 Cash generated from operations                    80                (21)         59 
 Capital expenditure                             (19) 
---------------------------------------- 
 Operating cash flow                               61 
---------------------------------------- 
 Interest paid                                   (27)                           (27) 
 Income taxes paid                               (39)                   5       (34) 
---------------------------------------- 
 Underlying Free cash flow                        (5) 
----------------------------------------                                   --------- 
 Reported net cash flow from operations                                          (2) 
----------------------------------------  -----------  ------------------  --------- 
 
                     1. Acquisition, disposal and integration costs, and exceptional 
                                                                               items 
 

The movement in net funds is summarised below:

 
                                                                                                         Net 
                                           Cash &       Financial     Total                  Lease    funds/ 
 GBPm                            cash equivalents    invest-ments     funds    Debt    liabilities    (debt) 
-----------------------------  ------------------  --------------  --------  ------  -------------  -------- 
 At 31 December 2019                          676             148       824   (689)          (140)       (5) 
 Reported net cash 
  flow from operations                        106               -       106       -              -       106 
 Net cash flow from 
  investment activities                      (29)               8      (21)       -              -      (21) 
 Dividends paid                              (63)               -      (63)       -              -      (63) 
 Net drawdown of the 
  RCF                                          40               -        40    (40)              -         - 
 Other financing activities                   (9)               -       (9)     (1)              -      (10) 
 Change in lease liabilities 
  net of interest                               -               -         -       -           (85)      (85) 
 Payments of lease 
  liabilities                                (16)               -      (16)       -             16         - 
 Effect of movements 
  in exchange rates                            23               2        25       -              7        18 
-----------------------------  ------------------  --------------  --------  ------  -------------  -------- 
 At 30 June 2020                              728             158       886   (730)          (216)      (60) 
-----------------------------  ------------------  --------------  --------  ------  -------------  -------- 
 

Of the GBP886m cash and financial investments balance at the period end, GBP798m is held in 61 regulated entities to meet regulatory capital, margin and other trading requirements as well as accrued profits, GBP80m is held in non-regulated entities for working capital requirements as well as accrued profits and GBP8m is held in corporate holding companies. GBP641m of cash is held in regulated entities for regulatory and operational reasons.

Details of the Sterling Note & other debt refinancing in the period can be found in the next section. The Group's net debt position of GBP60m has increased from a net debt position of GBP5m at 2019 year-end. Net debt has increased mainly due to a net GBP85m increase in IFRS 16 lease liabilities increased in the period due the commencement of three new leases relating to our new City of London premises in 135 Bishopsgate.

Excluding the impact of IFRS 16, that requires the recognition of GBP216m lease liabilities, the Group would have a net funds position of GBP156m. The IFRS 16 impact is not recognised within the Group's banking covenant calculations.

Debt finance

The composition of the Group's outstanding debt, excluding lease liabilities, is summarised below.

 
                                      At 30   At 30       At 31 
                                       June    June    December 
 GBPm                                  2020    2019        2019 
-----------------------------------  ------  ------  ---------- 
 5.25% Sterling Notes January 2024      431     431         431 
 5.25% Sterling Notes May 2026          250     250         250 
 Loan from related party                  -      37           - 
 Revolving credit facility drawn         40       -           - 
 Unamortised debt issue costs           (2)     (3)         (3) 
 Accrued interest                        11      11          11 
-----------------------------------  ------  ------  ---------- 
 Debt                                   730     726         689 
 Lease liabilities                      216     150         140 
-----------------------------------  ------  ------  ---------- 
 Total Debt                             946     876         829 
-----------------------------------  ------  ------  ---------- 
 

The Group's core debt, pre lease liability has increased to GBP730m. The increase was due to a drawdown on our revolving credit facility (RCF). The GBP270m RCF was extended in December 2019 and matures in December 2022. We have drawn GBP40m at the end of the period for general corporate purposes.

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 
                                                ---------------------------- 
                   H1        H1        FY             H1        H1        H2 
                 2020      2019      2019           2020      2019      2019 
 US Dollar      $1.28     $1.30     $1.28          $1.24     $1.27     $1.32 
 Euro         EUR1.15   EUR1.15   EUR1.14        EUR1.10   EUR1.12   EUR1.18 
 

Pensions

The Group has one defined benefit pension scheme in the UK which is in the process of being wound up and individual policies issued to beneficiaries. During the wind-up period, the Group will continue to restrict the recognition of the net surplus applying an asset recognition ceiling.

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

Regulatory capital

The Group's lead regulator is the FCA. The Group has a waiver from the consolidated capital adequacy requirements under CRD IV. The Group's current waiver took effect on 30 December 2016, following the acquisition of ICAP, and will expire on 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, 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 stepped basis. The Group expects to reduce its Excess Goodwill in accordance with the declining Excess Goodwill Ceiling. The waiver also sets out conditions with respect to the maintenance of financial ratios relating to leverage, debt service and debt maturity profile.

The Group's regulatory capital headroom under the Financial Holding Company test calculated in accordance with Pillar 1 was GBP1,453m (2019 year-end: 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.

Going concern

The Group has sufficient financial resources both in the regions and at the corporate centre to meet the Group's ongoing obligations. After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Interim Management Report continues to be prepared on the going concern basis.

Condensed Consolidated Income Statement

for the six months ended 30 June 2020

 
                                                        Acquisition, 
                                                            disposal 
                                                                 and 
                                                         integration   Exceptional 
 Six months ended                                              costs         Items 
  30 June 2020 (unaudited)                 Underlying       (Note 7)      (Note 7)   Total 
                                   Notes         GBPm           GBPm          GBPm    GBPm 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 Revenue                               5          990              -             -     990 
 Administrative expenses               6        (837)           (43)          (15)   (895) 
 Other operating income                8            6              -             -       6 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 Operating profit                      5          159           (43)          (15)     101 
 Finance income                        9            2              -             -       2 
 Finance costs                        10         (25)              -             -    (25) 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 Profit before tax                                136           (43)          (15)      78 
 Taxation                                        (34)              -             1    (33) 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 Profit after tax                                 102           (43)          (14)      45 
 Share of results of associates 
  and joint ventures                               10              -             -      10 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 Profit for the period                            112           (43)          (14)      55 
================================  ======  ===========  =============  ============  ====== 
 Attributable to: 
 Equity holders of the 
  parent                                          111           (43)          (14)      54 
 Non-controlling interests                          1              -             -       1 
--------------------------------  ------  -----------  -------------  ------------  ------ 
                                                  112           (43)          (14)      55 
================================  ======  ===========  =============  ============  ====== 
 Earnings per share 
 - Basic                              11        19.9p                                 9.7p 
 - Diluted                            11        19.7p                                 9.6p 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 
 
                                                        Acquisition, 
                                                            disposal 
                                                                 and 
                                                         integration   Exceptional 
 Six months ended                                              costs         Items 
  30 June 2019 (unaudited)                 Underlying       (Note 7)      (Note 7)   Total 
                                   Notes         GBPm           GBPm          GBPm    GBPm 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 Revenue                               5          922              -             -     922 
 Administrative expenses               6        (772)           (45)           (6)   (823) 
 Other operating income                8            8              -             -       8 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 Operating profit                      5          158           (45)           (6)     107 
 Finance income                        9            3              -             -       3 
 Finance costs                        10         (27)              -             -    (27) 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 Profit before tax                                134           (45)           (6)      83 
 Taxation                                        (33)              8             1    (24) 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 Profit after tax                                 101           (37)           (5)      59 
 Share of results of associates 
  and joint ventures                                8              -             -       8 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 Profit for the period                            109           (37)           (5)      67 
================================  ======  ===========  =============  ============  ====== 
 Attributable to: 
 Equity holders of the 
  parent                                          108           (37)           (5)      66 
 Non-controlling interests                          1              -             -       1 
--------------------------------  ------  -----------  -------------  ------------  ------ 
                                                  109           (37)           (5)      67 
================================  ======  ===========  =============  ============  ====== 
 Earnings per share 
 - Basic                              11        19.3p                                11.8p 
 - Diluted                            11        19.1p                                11.7p 
--------------------------------  ------  -----------  -------------  ------------  ------ 
 
 
                                                        Acquisition, 
                                                            Disposal 
                                                                 and 
                                                         integration   Exceptional 
 Year ended                                                    costs         Items 
  31 December 2019                         Underlying       (Note 7)      (Note 7)     Total 
                                   Notes         GBPm           GBPm          GBPm      GBPm 
--------------------------------  ------  -----------  -------------  ------------  -------- 
 Revenue                               5        1,833              -             -     1,833 
 Administrative expenses               6      (1,570)          (115)          (31)   (1,716) 
 Other operating income                8           16              -             9        25 
--------------------------------  ------  -----------  -------------  ------------  -------- 
 Operating profit                      5          279          (115)          (22)       142 
 Finance income                        9            6              -             -         6 
 Finance costs                        10         (55)              -             -      (55) 
--------------------------------  ------  -----------  -------------  ------------  -------- 
 Profit before tax                                230          (115)          (22)        93 
 Taxation                                        (55)             15             -      (40) 
--------------------------------  ------  -----------  -------------  ------------  -------- 
 Profit after tax                                 175          (100)          (22)        53 
 Share of results of associates 
  and joint ventures                               15              -             -        15 
--------------------------------  ------  -----------  -------------  ------------  -------- 
 Profit for the period                            190          (100)          (22)        68 
================================  ======  ===========  =============  ============  ======== 
 Attributable to: 
 Equity holders of the 
  parent                                          189          (100)          (22)        67 
 Non-controlling interests                          1              -             -         1 
--------------------------------  ------  -----------  -------------  ------------  -------- 
                                                  190          (100)          (22)        68 
================================  ======  ===========  =============  ============  ======== 
 Earnings per share 
 - Basic                              11        33.8p                                  12.0p 
 - Diluted                            11        33.5p                                  11.9p 
--------------------------------  ------  -----------  -------------  ------------  -------- 
 
 

Condensed Consolidated Statement of Comprehensive Income

for the six months ended 30 June 2020

 
                                                Six months     Six months           Year 
                                                     ended          ended          ended 
                                                   30 June        30 June    31 December 
                                                      2020           2019           2019 
                                               (unaudited)    (unaudited) 
                                                      GBPm           GBPm           GBPm 
-------------------------------------  ----  -------------  -------------  ------------- 
 Profit for the period                                  55             67             68 
-------------------------------------------  -------------  -------------  ------------- 
 Items that will not be reclassified 
  subsequently to profit or loss: 
-------------------------------------  ----  -------------  -------------  ------------- 
 Remeasurement of defined benefit 
  pension schemes                                        -           (55)           (52) 
 Equity investments at FVTOCI 
  - net change in fair value                           (1)              1              1 
 Taxation relating to items not 
  reclassified                                           -             19             19 
-------------------------------------------  -------------  -------------  ------------- 
                                                       (1)           (35)           (32) 
 ------------------------------------------  -------------  -------------  ------------- 
 Items that may be reclassified 
  subsequently to profit or loss: 
-------------------------------------  ----  -------------  -------------  ------------- 
 Effect of changes in exchange 
  rates on 
  translation of foreign operations                     66              3           (44) 
 Taxation relating to items that 
  may be reclassified                                    1              -              - 
-------------------------------------  ----  -------------  -------------  ------------- 
                                                        67              3           (44) 
 ------------------------------------------  -------------  -------------  ------------- 
 Other comprehensive income/(loss) 
  for the period                                        66           (32)           (76) 
-------------------------------------------  -------------  -------------  ------------- 
 Total comprehensive income/(loss) 
  for the period                                       121             35            (8) 
===========================================  =============  =============  ============= 
 
 Attributable to: 
 Equity holders of the parent                          118             34            (8) 
 Non-controlling interests                               3              1              - 
-------------------------------------------  -------------  -------------  ------------- 
                                                       121             35            (8) 
 ==========================================  =============  =============  ============= 
 
 

Condensed Consolidated Balance Sheet

as at 30 June 2020

 
                                                       30 June        30 June   31 December 
                                                          2020           2019          2019 
                                                   (unaudited)    (unaudited) 
                                                                  Restated(1) 
                                          Notes           GBPm           GBPm          GBPm 
---------------------------------------  ------  -------------  -------------  ------------ 
 Non-current assets 
 Intangible assets arising on 
  consolidation                              13          1,505          1,571         1,511 
 Other intangible assets                                    62             64            61 
 Property, plant and equipment                              82             78            72 
 Right-of-use assets                         14            164         106(1)            91 
 Investment in associates                                   60             53            58 
 Investment in joint ventures                               27             27            28 
 Other investments                                          17             20            20 
 Deferred tax assets                                         3              3             3 
 Other long term receivables                 15             25          28(1)            26 
---------------------------------------  ------  -------------  -------------  ------------ 
                                                         1,945          1,950         1,870 
---------------------------------------  ------  -------------  -------------  ------------ 
 Current assets 
 Trade and other receivables                 15         37,672         57,638        49,371 
 Financial investments                       19            158            135           148 
 Cash and cash equivalents                   19            728            646           676 
---------------------------------------  ------  -------------  -------------  ------------ 
                                                        38,558         58,419        50,195 
---------------------------------------  ------  -------------  -------------  ------------ 
 Total assets                                           40,503         60,369        52,065 
=======================================  ======  =============  =============  ============ 
 
 Current liabilities 
 Trade and other payables                             (37,577)       (57,470)      (49,305) 
 Interest bearing loans and borrowings       16           (51)           (48)          (11) 
 Lease liabilities                           17           (22)           (23)          (23) 
 Current tax liabilities                                  (55)           (49)          (48) 
 Short term provisions                       20           (20)           (29)          (21) 
---------------------------------------  ------  -------------  -------------  ------------ 
                                                      (37,725)       (57,619)      (49,408) 
---------------------------------------  ------  -------------  -------------  ------------ 
 Net current assets                                        833            800           787 
=======================================  ======  =============  =============  ============ 
 
 Non-current liabilities 
 Interest bearing loans and borrowings       16          (679)          (678)         (678) 
 Lease liabilities                           17          (194)          (127)         (117) 
 Deferred tax liabilities                                 (78)           (98)          (83) 
 Long term provisions                        20           (26)           (25)          (26) 
 Other long term payables                                 (16)           (20)          (21) 
 Retirement benefit obligations                            (2)            (3)           (2) 
---------------------------------------  ------  -------------  -------------  ------------ 
                                                         (995)          (951)         (927) 
---------------------------------------  ------  -------------  -------------  ------------ 
 Total liabilities                                    (38,720)       (58,570)      (50,335) 
---------------------------------------  ------  -------------  -------------  ------------ 
 Net assets                                              1,783          1,799         1,730 
=======================================  ======  =============  =============  ============ 
 
 Equity 
 Share capital                                             141            141           141 
 Share premium                                              17             17            17 
 Merger reserve                                          1,384          1,384         1,384 
 Other reserves                                        (1,148)        (1,159)       (1,205) 
 Retained earnings                                       1,368          1,399         1,375 
---------------------------------------  ------  -------------  -------------  ------------ 
 Equity attributable to 
  equity holders of the parent                           1,762          1,782         1,712 
 Non-controlling interests                                  21             17            18 
---------------------------------------  ------  -------------  -------------  ------------ 
 Total equity                                            1,783          1,799         1,730 
=======================================  ======  =============  =============  ============ 
 

1. Right-of-use assets and other long term receivables as at 30 June 2019 have been restated for the adoption of IFRS 16 in 2019.

Condensed Consolidated Statement of Changes in Equity

for the six months ended 30 June 2020

 
                                       Equity attributable to equity holders of the parent 
                               Share                 Reverse        Re-      Hedging                                     Non- 
                     Share   premium    Merger   acquisition  valuation          and     Own   Retained           controlling    Total 
                   capital   account   reserve       reserve    reserve  translation  shares   earnings   Total     interests   equity 
                      GBPm      GBPm      GBPm          GBPm       GBPm         GBPm    GBPm       GBPm    GBPm          GBPm     GBPm 
----------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 
 30 June 2020 
  (unaudited) 
----------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 Balance at                                 1,           (1, 
  1 January 2020       141        17       384          182)          5         (12)    (16)      1,375   1,712            18    1,730 
----------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 Profit for the 
  period                 -         -         -             -          -            -       -         54      54             1       55 
 Other 
  comprehensive 
  income/(loss) 
  for the period         -         -         -             -        (1)           65       -          -      64             2       66 
----------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 Total 
  comprehensive 
  Income/(loss) 
  for the period         -         -         -             -        (1)           65       -         54     118             3      121 
 Dividends paid          -         -         -             -          -            -       -       (63)    (63)             -     (63) 
 Gain on 
  disposal 
  of equity 
  instruments 
  at FVTOCI              -         -         -             -        (1)            -       -          1       -             -        - 
 Share 
  settlement 
  of share- 
  based payment 
  awards                 -         -         -             -          -            -       3        (3)       -             -        - 
 Own shares 
  acquired 
  for employee 
  trusts                 -         -         -             -          -            -     (9)          -     (9)             -      (9) 
 Credit arising 
  on share-based 
  payment awards         -         -         -             -          -            -       -          4       4             -        4 
----------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 Balance at 
  30 June 2020         141        17     1,384       (1,182)          3           53    (22)      1,368   1,762            21    1,783 
================  ========  ========  ========  ============  =========  ===========  ======  =========  ======  ============  ======= 
 
                               Equity attributable to equity holders of the parent 
                               Share                 Reverse        Re-      Hedging                                     Non- 
                     Share   premium    Merger   acquisition  valuation          and     Own   Retained           controlling    Total 
                   capital   account   reserve       reserve    reserve  translation  shares   earnings   Total     interests   equity 
                      GBPm      GBPm      GBPm          GBPm       GBPm         GBPm    GBPm       GBPm    GBPm          GBPm     GBPm 
----------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 
 30 June 2019 
  (unaudited) 
 Balance at 
  1 January 2019       141        17     1,384       (1,182)          4           31    (11)      1,430   1,814            16    1,830 
----------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 Profit for the 
  period                 -         -         -             -          -            -       -         66      66             1       67 
 Other 
  comprehensive 
  income/(loss) 
  for the period         -         -         -             -          1            3       -       (36)    (32)             -     (32) 
----------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 Total 
  comprehensive 
  income for the 
  period                 -         -         -             -          1            3       -         30      34             1       35 
 Dividends paid          -         -         -             -          -            -       -       (63)    (63)             -     (63) 
 Share 
  settlement 
  of share- 
  based payment 
  awards                 -         -         -             -          -            -       2        (3)     (1)             -      (1) 
 Own shares 
  acquired 
  for employee 
  trusts                 -         -         -             -          -            -     (7)          -     (7)             -      (7) 
 Credit arising 
  on share-based 
  payment awards         -         -         -             -          -            -       -          5       5             -        5 
----------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 Balance at 
  30 June 2019         141        17     1,384       (1,182)          5           34    (16)      1,399   1,782            17    1,799 
================  ========  ========  ========  ============  =========  ===========  ======  =========  ======  ============  ======= 
 
 
 
                                Equity attributable to equity holders of the parent 
                                 Share                 Reverse        Re-      Hedging                                     Non- 
                       Share   premium    Merger   acquisition  valuation          and     Own   Retained           controlling    Total 
                     capital   account   reserve       reserve    reserve  translation  shares   earnings   Total     interests   equity 
                        GBPm      GBPm      GBPm          GBPm       GBPm         GBPm    GBPm       GBPm    GBPm          GBPm     GBPm 
------------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 31 December 2019 
------------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 Balance at                                   1, 
  1 January 2019         141        17       384       (1,182)          4           31    (11)      1,430   1,814            16    1,830 
 Profit for the 
  period                   -         -         -             -          -            -       -         67      67             1       68 
 Other 
  comprehensive 
  (loss)/income 
  for the period           -         -         -             -          1         (43)       -       (33)    (75)           (1)     (76) 
------------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 Total 
  comprehensive 
  Income/(loss) 
  for the period           -         -         -             -          1         (43)       -         34     (8)             -      (8) 
 Dividends paid            -         -         -             -          -            -       -      ( 94)    (94)           (1)     (95) 
 Share settlement 
  of share- 
  based payment 
  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 
  payment awards           -         -         -             -          -            -       -          5       5             -        5 
------------------  --------  --------  --------  ------------  ---------  -----------  ------  ---------  ------  ------------  ------- 
 Balance at                                   1,           (1, 
  31 December 2019       141        17       384          182)          5        ( 12)    (16)      1,375   1,712            18    1,730 
==================  ========  ========  ========  ============  =========  ===========  ======  =========  ======  ============  ======= 
 
 

Condensed Consolidated Cash Flow Statement

for the six months ended 30 June 2020

 
                                                   Six months     Six months           Year 
                                                        ended          ended          ended 
                                                      30 June        30 June    31 December 
                                                         2020           2019           2019 
                                                  (unaudited)    (unaudited) 
                                         Notes           GBPm           GBPm           GBPm 
--------------------------------------  ------  -------------  -------------  ------------- 
 Cash flows from operating activities       18            106            (2)            148 
--------------------------------------  ------  -------------  -------------  ------------- 
 
 Investing activities 
 Purchase of financial investments                        (8)            (2)           (20) 
 Sale of equity investments at 
  FVTOCI                                                    2              1              1 
 Purchase of equity investments 
  at FVTOCI                                                 -            (1)            (1) 
 Interest received                                          2              3              5 
 Dividends from associates and 
  joint ventures                                            3              9             10 
 Expenditure on intangible fixed 
  assets                                                 (10)            (8)           (20) 
 Purchase of property, plant 
  and equipment                                          (13)           (11)           (13) 
 Deferred consideration paid                              (4)           (12)           (12) 
 Investment in associates                                 (1)              -            (5) 
 Net cash flows from investment 
  activities                                             (29)           (21)           (55) 
--------------------------------------  ------  -------------  -------------  ------------- 
 
 Financing activities 
 Dividends paid                             12           (63)           (63)           (94) 
 Dividends paid to non-controlling 
  interests                                                 -              -            (1) 
 Dividend equivalents paid on 
  share-based awards                                        -              -            (1) 
 Sale of equity to non-controlling 
  interests                                                 -              -              6 
 Own shares acquired for employee 
  trusts                                                  (9)            (8)            (7) 
 Drawdown of revolving credit 
  facility                                                161             39             39 
 Repayment of revolving credit 
  facility                                              (121)           (91)           (91) 
 Funds received from loans from 
  related parties                                           -             35             35 
 Repayment of loans from related 
  parties                                                   -              -         ( 38 ) 
 Gain on derivative financial 
  instruments                                               -              -              3 
 Funds received from issue of 
  Sterling Notes                                            -            250            250 
 Repayment of Sterling Notes                                -          (149)          (149) 
 Debt issue and bank facility 
  arrangement costs                                         -            (1)            (2) 
 Payment of lease liabilities                            (16)           (10)           (21) 
--------------------------------------  ------  -------------  -------------  ------------- 
 Net cash flows from financing 
  activities                                             (48)              2           (71) 
--------------------------------------  ------  -------------  -------------  ------------- 
 
 Net increase/(decrease) 
  in cash and cash equivalents                             29           (21)             22 
 Cash and cash equivalents 
  at the beginning of the period                          676            667            667 
 Effect of foreign exchange rate 
  changes                                                  23              -           (13) 
--------------------------------------  ------  -------------  -------------  ------------- 
 Net cash and cash equivalents 
  at the end of the period                  19            728            646            676 
======================================  ======  =============  =============  ============= 
 
 Cash and cash equivalents                                733            706            686 
 Overdrafts                                               (5)           (60)           (10) 
--------------------------------------  ------  -------------  -------------  ------------- 
 Net cash and cash equivalents 
  at the end of the period                                728            646            676 
======================================  ======  =============  =============  ============= 
 

Notes to the Condensed Consolidated Financial Statements

for the six months ended 30 June 2020

   1.         General information 

The condensed consolidated financial information for the six months ended 30 June 2020 has been prepared in accordance with the Disclosure and Transparency Rules ('DTR') of the Financial Conduct Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union ('EU'). This condensed financial information should be read in conjunction with the statutory Group Financial Statements for the year ended 31 December 2019 which were prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the EU.

The statutory Group Financial Statements for the year ended 31 December 2019 have been reported on by the Company's auditors, Deloitte LLP, and have been delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The condensed consolidated financial information for the six months ended 30 June 2020 has been prepared using accounting policies consistent with IFRS. The interim information, together with the comparative information contained in this report for the year ended 31 December 2019, does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006. The financial information is unaudited but has been reviewed by the Company's auditor, Deloitte LLP, and their report appears at the end of the Interim Management Report.

   2.         Basis of preparation 

(a) Basis of accounting

The Condensed Consolidated 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 Condensed Consolidated Financial Statements.

The Condensed Consolidated Financial Statements are rounded to the nearest million pounds (expressed as GBPm), except where otherwise indicated.

(b) Basis of consolidation

The Group's Condensed Consolidated Financial Statements incorporate the financial information of the Company and entities controlled by the Company made up to each reporting period. 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

The Group maintains a columnar format for the presentation of its Condensed Consolidated Income Statement. The columnar format enables the Group to continue its practice of aiding the understanding of its results by presenting its underlying profit. This is the profit measure used to calculate underlying EPS (Note 11) and is considered to be the most appropriate as it better reflects the Group's underlying earnings. Underlying profit is reconciled to profit before tax on the face of the Condensed Consolidated Income Statement, which also includes acquisition, disposal and integration costs and exceptional items.

The column 'acquisition, disposal and integration costs' includes: any gains, losses or other associated costs on the full or partial disposal of investments, associates, joint ventures or subsidiaries and costs associated with a business combination that do not constitute fees relating to the arrangement of financing; amortisation or impairment of intangible assets arising on consolidation; any re-measurement after initial recognition of contingent consideration which has been classified as a liability, and any gains or losses on the revaluation of previous interests. The column may also include items such as gains or losses on the settlement of pre-existing relationships with acquired businesses and the re-measurement of liabilities that are above the value of indemnification.

Acquisition related integration costs include costs associated with exit or disposal activities, which do not meet the criteria of discontinued operations, including costs for employee and lease terminations, or other exit activities. Additionally, these costs include expenses directly related to integrating and reorganising acquired businesses and include items such as employee retention costs, recruiting costs, certain moving costs, certain duplicative costs during integration and asset impairments.

Items which are of a non-routine nature and material, when considering both size and nature, are disclosed separately to give a clearer presentation of the Group's results. These are shown as 'exceptional items' on the face of the Condensed Consolidated Income Statement.

(d) Accounting policies

Except as described below, the accounting policies applied in these Condensed Consolidated Financial Statements are the same as those applied in the Group's Consolidated Financial Statements as at and for the year ended 31 December 2019.

The following new Standards and Interpretations are effective from 1 January 2020 but they do not have a material effect on the Group's 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 IFRS17: Interest Rate Benchmark.

(e) Restatement of 30 June 2019 comparative information

Right-of-use assets and trade and other receivables have been restated as at 30 June 2019 reflecting a reclassification of finance lease receivables, included in trade and other receivables, as right-of-use assets following the adoption of IFRS 16. The reported value of right-of-use assets has increased by GBP5m with a corresponding reduction in trade and other receivables.

   3.         Related party transactions 

The total amount due from related parties as at 30 June 2020 was GBP11m (31 December 2019: GBP3m) and amounts due to related parties as at 30 June 2020 was GBP3m (31 December 2019: GBP3m).

   4.         Principal risks and uncertainties 

Robust risk management is fundamental to the achievement of the Group's objectives. The Group identifies the risks to which it is exposed as a result of its business objectives, strategy and operating model, and categorises those risks into five 'risk objectives': Financial position, Operational effectiveness and resilience, Regulatory standing, Reputation and Business strategy. The risks identified within each of these categories, along with an explanation of how the Group seeks to manage or mitigate these risk exposures can be found on pages 35 to 39 of the latest Annual Report which is available at www.tpicap.com . The Directors do not consider that the principal risks and uncertainties have changed since the publication of the Annual Report for the year ended 31 December 2019. Risks and uncertainties, which could have a material impact on the Group's performance over the remaining six months of the financial year are discussed in the Interim Management Report.

   5.         Segmental analysis 

Products and services from which reportable segments derive their revenues

The Group is organised by geographic reporting segments which are used for the purposes of resource allocation and assessment of segmental performance by Group management. These are the Group's reportable segments under IFRS 8 'Operating Segments'.

Revenue arising in each geographic reportable segment is derived from four business divisions; Global Broking, Energy & Commodities, Institutional Services, and Data & Analytics.

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

 
                                          Six months   Six months           Year 
                                               ended        ended          ended 
                                             30 June      30 June    31 December 
                                                2020         2019           2019 
                                                GBPm         GBPm           GBPm 
---------------------------------------  -----------  -----------  ------------- 
 Revenue 
 EMEA                                            488          458            900 
 Americas                                        376          340            687 
 Asia Pacific                                    126          124            246 
---------------------------------------  -----------  -----------  ------------- 
                                                 990          922          1,833 
=======================================  ===========  ===========  ============= 
 Operating profit 
 EMEA                                             93           96            164 
 Americas                                         56           49             94 
 Asia Pacific                                     10           13             21 
---------------------------------------  -----------  -----------  ------------- 
 Underlying operating profit                     159          158            279 
 Acquisition, disposal and integration 
  costs (Note 7)                                (43)         (45)        ( 115 ) 
 Exceptional items (Note 7)                     (15)          (6)         ( 22 ) 
---------------------------------------  -----------  -----------  ------------- 
 Reported operating profit                       101          107            142 
 Finance income                                    2            3              6 
 Finance costs                                  (25)         (27)         ( 55 ) 
---------------------------------------  -----------  -----------  ------------- 
 Profit before tax                                78           83             93 
 Taxation                                       (33)         (24)         ( 40 ) 
---------------------------------------  -----------  -----------  ------------- 
 Profit of consolidated companies                 45           59             53 
 Share of results of associates and 
  joint ventures                                  10            8             15 
---------------------------------------  -----------  -----------  ------------- 
 Profit for the period                            55           67             68 
=======================================  ===========  ===========  ============= 
 

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

 
                                           Six months     Six months           Year 
                                                ended          ended          ended 
                                              30 June        30 June    31 December 
                                                 2020           2019           2019 
                                                         Restated(1) 
 Revenue by Business Division                    GBPm           GBPm           GBPm 
----------------------------------------  -----------  -------------  ------------- 
 
   *    Rates                                     290         273(1)            537 
 
   *    Credit                                     51             50             94 
 
   *    FX & Money Markets                         98            100            201 
 
   *    Emerging Markets                          103            108            213 
 
   *    Equities                                  105            102            199 
----------------------------------------  -----------  -------------  ------------- 
 Global Broking                                   647            633          1,244 
 Energy & Commodities                             216            187            379 
 Institutional Services                            57          38(1)             75 
 Data & Analytics                                  70             64            135 
----------------------------------------  -----------  -------------  ------------- 
                                                  990            922          1,833 
========================================  ===========  =============  ============= 
 
 Operating Profit 
 Global Broking                                   131            133            221 
 Energy & Commodities                              32             23             46 
 Institutional Services                             8              3              3 
 Data & Analytics                                  28             29             59 
 Corporate Centre and other unallocated 
  costs                                        ( 40 )           (30)           (50) 
                                                  159            158            279 
========================================  ===========  =============  ============= 
 

1. In 2019, RV broking business was transferred from Global Broking to Institutional Services. June 2019 revenue has been restated to reclassify GBP15m from Global Broking to Institutional Services

Corporate Centre represents the cost of group and central functions that are not allocated to the Groups divisions including a GBP10m (2019: GBPnil) charge relating to an increase in unused annual leave on 30 June 2020 which will reverse by the year end in line with Group policy on holiday carry-forward.

Other segmental information

 
                          30 June   30 June   31 December 
                             2020      2019          2019 
 Segment assets              GBPm      GBPm          GBPm 
-----------------------  --------  --------  ------------ 
 EMEA - UK                 24,804    14,356        11,219 
 EMEA - Other                 412       855           223 
 Americas                  14,943    44,780        40,280 
 Asia Pacific                 344       378           343 
-----------------------  --------  --------  ------------ 
                           40,503    60,369        52,065 
=======================  ========  ========  ============ 
 
   Segment liabilities 
-----------------------  --------  --------  ------------ 
 EMEA - UK                 23,729    13,289        10,161 
 EMEA - Other                 395       834           208 
 Americas                  14,403    44,259        39,782 
 Asia Pacific                 193       188           184 
-----------------------  --------  --------  ------------ 
                           38,720    58,570        50,335 
=======================  ========  ========  ============ 
 

Segmental assets and liabilities exclude all inter-segment balances.

   6.         Administrative expenses 

Administrative expenses comprise:

 
                                                                         Acquisition, 
                                                                             disposal 
                                 Underlying                                       and 
 Six months ended                     Front   Underlying         Total    integration   Exceptional 
  30 June 2020 (unaudited)           Office      Support    Underlying          costs         items   Total 
                                       GBPm         GBPm          GBPm           GBPm          GBPm    GBPm 
------------------------------  -----------  -----------  ------------  -------------  ------------  ------ 
 Broker compensation 
  costs                                 495            -           495              -             -     495 
 Other staff costs                       11          117           128              -             2     130 
 Other share-based 
  payment charge                          -            4             4              -             -       4 
------------------------------  -----------  -----------  ------------  -------------  ------------  ------ 
 Employment costs - 
  divisionally allocated                506          121           627              -             2     629 
 Unused annual leave                      7            3            10              -             -      10 
 Employment costs                       513          124           637              -             2     639 
 Technology and related 
  costs                                  49           38            87              -             -      87 
 Premises and related 
  costs                                   -           12            12              -             2      14 
 Amortisation of other 
  intangible assets                       -            9             9              -             -       9 
 Depreciation of property, 
  plant and equipment                     -            6             6              -             -       6 
 Depreciation of right-of-use 
  assets                                  -           12            12              -             -      12 
 Amortisation of intangible 
  assets arising on 
  consolidation                           -            -             -             20             -      20 
 Impairment of intangible 
  assets arising on 
  consolidation                           -            -             -             21             -      21 
 Adjustments to deferred 
  consideration                           -            -             -              1             -       1 
 Net charge related 
  to legal settlements                    -            -             -              -             2       2 
 Acquisition Costs                        -            -             -              1             -       1 
 Other administrative 
  costs                                  51           19            70              -             9      79 
                                        613          220           833             43            15     891 
 Impairment loss on 
  trade receivables                       2            2             4              -             -       4 
------------------------------  -----------  -----------  ------------  -------------  ------------  ------ 
 Total Administrative 
  Expenses                              615          222           837             43            15     895 
==============================  ===========  ===========  ============  =============  ============  ====== 
 
 
                                                                         Acquisition, 
                                                                             disposal 
                                 Underlying                                       and 
 Six months ended                     Front   Underlying         Total    integration   Exceptional 
  30 June 2019 (unaudited)           Office      Support    Underlying          costs         items   Total 
                                       GBPm         GBPm          GBPm           GBPm          GBPm    GBPm 
------------------------------  -----------  -----------  ------------  -------------  ------------  ------ 
 Broker compensation 
  costs                                 451            -           451              -             -     451 
 Other staff costs                        8          105           113              9             1     123 
 Other share-based 
  payment charge                          -            3             3              2             -       5 
 Employment costs - 
  divisionally allocated                459          108           567             11             1     579 
 Technology and related 
  costs                                  46           30            76              3             -      79 
 Premises and related 
  costs                                   -           11            11              -             2      13 
 Amortisation of other 
  intangible assets                       -           12            12              1             -      13 
 Depreciation of property, 
  plant and equipment                     -            6             6              -             -       6 
 Depreciation of right-of-use 
  assets                                  -           11            11              -             -      11 
 Amortisation of intangible 
  assets arising on 
  consolidation                           -            -             -             21             -      21 
 Adjustments to deferred 
  consideration                           -            -             -              2             -       2 
 Other administrative 
  costs                                  55           33            88              7             3      98 
------------------------------  -----------  -----------  ------------  -------------  ------------  ------ 
                                        560          211           771             45             6     822 
 Impairment loss on 
  trade receivables                       -            1             1              -             -       1 
------------------------------  -----------  -----------  ------------  -------------  ------------  ------ 
                                        560          212           772             45             6     823 
==============================  ===========  ===========  ============  =============  ============  ====== 
 
 
                                                                         Acquisition, 
                                                                             disposal 
                                 Underlying                                       and 
 Year ended                           Front   Underlying         Total    integration   Exceptional 
  31 December 2019                   Office      Support    Underlying          costs         items   Total 
                                       GBPm         GBPm          GBPm           GBPm          GBPm    GBPm 
------------------------------  -----------  -----------  ------------  -------------  ------------  ------ 
 Broker compensation 
  costs                                 900            -           900              -             -     900 
 Other staff costs                       19          209           228             18             2     248 
 Other share-based 
  payment charge/(credit)                 -            6             6            (1)             -       5 
 Charge relating to 
  employee long-term 
  benefits                                -            -             -              -             1       1 
------------------------------  -----------  -----------  ------------  -------------  ------------  ------ 
 Employment costs - 
  divisionally allocated                919          215         1,134             17             3   1,154 
 Technology and related 
  costs                                  99           59           158              -             -     158 
 Premises and related 
  costs                                   -           26            26              -             1      27 
 Amortisation of other 
  intangible assets                       1           22            23              4             -      27 
 Depreciation of property, 
  plant and equipment                     1           12            13              -             -      13 
 Depreciation of right-of-use 
  assets                                  -           20            20              -             1      21 
 Amortisation of intangible 
  assets arising on 
  consolidation                           -            -             -             42             -      42 
 Impairment of intangible 
  assets arising on 
  consolidation                           -            -             -             24             -      24 
 Adjustments to deferred 
  consideration                           -            -             -              6             -       6 
 Adjustments to provisions 
  and contingent liabilities 
  acquired                                -            -             -              3             -       3 
 Charge relating to 
  legal and regulatory 
  settlements                             -            -             -              -            18      18 
 Pension scheme past 
  service and settlement 
  costs                                   -            -             -              -             4       4 
 Acquisition costs                        -            -             -              2             -       2 
 Other administrative 
  costs                                 119           77           196             17             4     217 
------------------------------  -----------  -----------  ------------  -------------  ------------  ------ 
                                      1,139          431         1,570            115            31   1,716 
 Impairment loss on                       -            -             -              -             -       - 
  trade receivables 
------------------------------  -----------  -----------  ------------  -------------  ------------  ------ 
                                      1,139          431         1,570            115            31   1,716 
==============================  ===========  ===========  ============  =============  ============  ====== 
 
   7.         Acquisition, disposal and integration costs, and Exceptional items 

Acquisition, disposal and integration costs comprise:

 
                                               Six months   Six months           Year 
                                                    ended        ended          ended 
                                                  30 June      30 June    31 December 
                                                     2020         2019           2019 
                                                     GBPm         GBPm           GBPm 
--------------------------------------------  -----------  -----------  ------------- 
 ICAP integration costs 
 - Employee related costs                               -            9             16 
 - Share-based payment charge/(credit)                  -            2            (1) 
 - Premises, equipment and other intangible             -            3              - 
  assets 
 - Amortisation of other intangible 
  assets                                                -            1              4 
 - Other administrative costs                           -            5             15 
--------------------------------------------  -----------  -----------  ------------- 
                                                        -           20             34 
 Acquisition and disposal costs 
 - Acquisition costs                                    1            2              6 
 - Amortisation of intangible assets 
  arising on consolidation                             20           21             42 
 - Impairment of intangible assets 
  arising on consolidation                             21            -             24 
 - Adjustments to deferred consideration                1            2              6 
 - Adjustments to provisions and contingent 
  liabilities acquired                                  -            -              3 
--------------------------------------------  -----------  -----------  ------------- 
                                                       43           45            115 
 Taxation                                               -          (8)           (15) 
--------------------------------------------  -----------  -----------  ------------- 
                                                       43           37            100 
============================================  ===========  ===========  ============= 
 

Exceptional items comprise:

 
                                                  Six months   Six months           Year 
                                                       ended        ended          ended 
                                                     30 June      30 June    31 December 
                                                        2020         2019           2019 
                                                        GBPm         GBPm           GBPm 
-----------------------------------------------  -----------  -----------  ------------- 
 Exceptional items 
  - Charge relating to business reorganisation            13            4              7 
 - Pension scheme past service and 
  settlement costs                                         -            -              4 
 - Charge relating to employee long-term 
  benefits                                                 -            -              1 
 - Charge relating to legal costs                          2            -              1 
 - Charge relating to legal and regulatory 
  settlements                                              -            2             18 
                                                          15            6             31 
 - Employment related legal settlement 
  receipt                                                  -            -            (9) 
-----------------------------------------------  -----------  -----------  ------------- 
                                                          15            6             22 
 Taxation                                                (1)          (1)              - 
-----------------------------------------------  -----------  -----------  ------------- 
                                                          14            5             22 
===============================================  ===========  ===========  ============= 
 
   8.         Other operating income 

Other operating income comprises:

 
                                        Six months   Six months           Year 
                                             ended        ended          ended 
                                           30 June      30 June    31 December 
                                              2020         2019           2019 
                                              GBPm         GBPm           GBPm 
-------------------------------------  -----------  -----------  ------------- 
 Business relocation grants                      1            2              3 
 Employee related insurance receipts             1            1              2 
 Management fees from associates                 1            1              1 
 Other receipts                                  3            4             10 
                                                 6            8             16 
=====================================  ===========  ===========  ============= 
 
   9.         Finance income 
 
                                           Six months   Six months           Year 
                                                ended        ended          ended 
                                              30 June      30 June    31 December 
                                                 2020         2019           2019 
                                                 GBPm         GBPm           GBPm 
----------------------------------------  -----------  -----------  ------------- 
 Interest receivable and similar income             2            2              5 
 Interest receivable on finance lease 
  receivables                                       -            1              1 
                                                    2            3              6 
========================================  ===========  ===========  ============= 
 
   10.       Finance costs 
 
                                          Six months   Six months           Year 
                                               ended        ended          ended 
                                             30 June      30 June    31 December 
                                                2020         2019           2019 
                                                GBPm         GBPm           GBPm 
---------------------------------------  -----------  -----------  ------------- 
 Interest and fees payable on bank 
  facilities                                       1            2              3 
 Interest payable on Sterling Notes 
  June 2019                                        -            2              2 
 Interest payable on Sterling Notes 
  January 2024                                    11           12             24 
 Interest payable on Sterling Notes 
  May 2026                                         7            1              8 
 Other interest payable                            -            -              1 
 Amortisation of debt issue and bank 
  facility costs                                   1            1              2 
---------------------------------------  -----------  -----------  ------------- 
 Borrowing costs                                  20           18             40 
 Interest payable on lease liabilities             5            6             12 
 Premium on repurchase of Sterling 
  Notes January 2024                               -            3              3 
---------------------------------------  -----------  -----------  ------------- 
                                                  25           27             55 
=======================================  ===========  ===========  ============= 
 
   11.       Earnings per share 
 
                         Six months   Six months           Year 
                              ended        ended          ended 
                            30 June      30 June    31 December 
                               2020         2019           2019 
----------------------  -----------  -----------  ------------- 
 Basic - underlying           19.9p        19.3p          33.8p 
 Diluted - underlying         19.7p        19.1p          33.5p 
 Basic                         9.7p        11.8p          12.0p 
 Diluted                       9.6p        11.7p          11.9p 
----------------------  -----------  -----------  ------------- 
 

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

 
                                    Six months   Six months           Year 
                                         ended        ended          ended 
                                       30 June      30 June    31 December 
                                          2020         2019           2019 
                                       No. (m)      No. (m)        No. (m) 
---------------------------------  -----------  -----------  ------------- 
 Basic weighted average shares           557.3        560.0          559.4 
 Contingently issuable shares              5.7          5.7            4.2 
---------------------------------  -----------  -----------  ------------- 
 Diluted weighted average shares         563.0        565.7          563.6 
=================================  ===========  ===========  ============= 
 

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

 
                                          Six months   Six months           Year 
                                               ended        ended          ended 
                                             30 June      30 June    31 December 
                                                2020         2019           2019 
                                                GBPm         GBPm           GBPm 
---------------------------------------  -----------  -----------  ------------- 
 Earnings for the period                          55           67             68 
 Non-controlling interests                       (1)          (1)            (1) 
---------------------------------------  -----------  -----------  ------------- 
 Earnings                                         54           66             67 
 Acquisition, disposal and integration 
  costs (Note 7)                                  43           45            115 
 Exceptional items (Note 7)                       15            6             22 
 Taxation                                        (1)          (9)           (15) 
---------------------------------------  -----------  -----------  ------------- 
 Underlying earnings                             111          108            189 
=======================================  ===========  ===========  ============= 
 
   12.       Dividends 
 
                                        Six months   Six months           Year 
                                             ended        ended          ended 
                                           30 June      30 June    31 December 
                                              2020         2019           2019 
                                              GBPm         GBPm           GBPm 
-------------------------------------  -----------  -----------  ------------- 
 Amounts recognised as distributions 
  to 
  equity holders in the period: 
 Final dividend for the year ended 
  31 December 2019 
  of 11.25p per share                           63            -              - 
 Interim dividend for the year ended 
  31 December 2019 
  of 5.6p per share                              -            -             31 
 Final dividend for the year ended 
  31 December 2018 
  of 11.25p per share                            -           63             63 
                                                63           63             94 
=====================================  ===========  ===========  ============= 
 

An interim dividend of 5.6p per share will be paid on 6 November 2020 to all shareholders on the Register of Members on 2 October 2020.

As at 30 June 2020 the TP ICAP plc Employee Benefit Trust held 6,624,662 ordinary shares (31 December 2019 and 30 June 2019: 4,535,504 ordinary shares) and has waived its rights to dividends.

   13.       Intangible assets arising on consolidation 
 
                                          Goodwill   Other   Total 
                                              GBPm    GBPm    GBPm 
---------------------------------------  ---------  ------  ------ 
 As at 1 January 2020                          993     518   1,511 
 Amortisation of acquisition related 
  intangibles                                    -    (20)    (20) 
 Impairment of acquisition related 
  intangibles                               ( 21 )       -    (21) 
 Effect of movements in exchange rates          20      15      35 
---------------------------------------  ---------  ------  ------ 
 As at 30 June 2020                            992     513   1,505 
=======================================  =========  ======  ====== 
 

Other intangible assets at 30 June 2020 represent customer relationships of GBP505m (31 December 2019: GBP506m), business brands and trademarks of GBP7m (31 December 2019: GBP10m), and other intangibles of GBP1m (31 December 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 CGU groupings are as follows:

 
                                30 June   31 December 
                                   2020          2019 
                                   GBPm          GBPm 
----------------------------   --------  ------------ 
 CGU 
 EMEA                               662           663 
 Americas                           280           262 
 Asia Pacific                        50            68 
-----------------------------  --------  ------------ 
 Goodwill allocated to CGUs         992           993 
=============================  ========  ============ 
 

During the period the Group has undertaken an impairment assessment of its CGUs to which goodwill has been allocated, triggered as a result of changes in expected CGU cash flows. Determining whether goodwill is impaired requires an estimation of the recoverable amount of each group of CGUs. 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 CGU's recoverable amount is compared to its carrying value to determine if an impairment is required.

As at 30 June 2020 the recoverable amount for each CGU has been based on their VIU. The key assumptions for the VIU calculations are those regarding expected cash flows arising in future periods, regional growth rates and the discount rates. 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. 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 a result, the recoverable amount for the Asia Pacific CGU was estimated to be lower than its carrying value by GBP21m and has been impaired by this amount.

As at 30 June 2020 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 increase the impairment charge by GBP24m and a 1% increase in the discount rate would increase the charge by GBP9m. The impact on future cash flows resulting from falling growth rates does not reflect any management actions that would be taken under such circumstances.

   14.       Right-of-use assets 
 
                                            Land and   Furniture,   Total 
                                           buildings    fixtures, 
                                                        equipment 
                                                        and motor 
                                                         vehicles 
                                                GBPm         GBPm    GBPm 
---------------------------------------  -----------  -----------  ------ 
 As at 1 January 2020                             90            1      91 
 Additions                                        76            -      76 
 Modifications                                     8            -       8 
 Capitalised costs                               (2)            -     (2) 
 Depreciation                                   (12)            -    (12) 
 Impairment                                      (1)            -     (1) 
 Effect of movements in exchange rates             4            -       4 
---------------------------------------  -----------  -----------  ------ 
 As at 30 June 2020                              163            1     164 
=======================================  ===========  ===========  ====== 
 

The Group leases several buildings which have an average lease terms of 11 years (2019: 10 years).

Additions to right-of-use assets was GBP76m, GBP75m of which is for new leases for the Group's London based headquarters and broking operations. Under an agreement with the landlord, two existing London property leases will be terminated once the Group has moved its operations to several floors in the newly leased building. The new leases commenced in January and June 2020 at a weighted average incremental borrowing rate of 5.32% and the leased space will be further developed during 2020 enabling the transfer of operations during the first quarter of 2021. During the development phase of these leased spaces the depreciation and lease interest expense is being capitalised as a direct cost of the leasehold improvements being undertaken. During the period to 30 June 2020 GBP3m has been capitalised.

   15.       Trade and other receivables 
 
                                          30 June        30 June   31 December 
                                             2020           2019          2019 
                                                     Restated(1) 
                                             GBPm           GBPm          GBPm 
---------------------------------------  --------  -------------  ------------ 
 Non-current receivables 
 Finance lease receivables                      6           7(1)             7 
 Other receivables                             19             21            19 
---------------------------------------  --------  -------------  ------------ 
                                               25             28            26 
=======================================  ========  =============  ============ 
 Current receivables 
 Settlement balances                       36,373         56,369        48,295 
 Deposits paid for securities borrowed        831            818           652 
 Trade receivables                            335            323           301 
 Finance lease receivables                      1              1             1 
---------------------------------------  --------  -------------  ------------ 
 Financial assets                          37,540         57,511        49,249 
 Other debtors                                 19             18            17 
 Prepayments                                   92             89            91 
 Accrued income                                 9             11            10 
 Corporation tax                                1              2             1 
 Owed by associates and joint ventures         11              7             3 
---------------------------------------  --------  -------------  ------------ 
                                           37,672         57,638        49,371 
=======================================  ========  =============  ============ 
 

1. Right-of-use assets and other long term receivables as at 30 June 2019 have been restated for the adoption of IFRS 16 in 2019.

Settlement balances arise on Matched Principal brokerage whereby securities are bought from one counterparty and simultaneously sold to another counterparty. Settlement of such transactions is primarily on a delivery vs payment basis ('DVP') and typically take place within a few business days of the transaction date according to the relevant market rules and conventions. The amounts due from and payable to counterparties in respect of as yet unsettled Matched Principal transactions are shown gross, except where a netting agreement, which is legally enforceable at all times, exists and the asset and liability are either settled net or simultaneously. The above analysis reflects only the receivable side of such transactions. Corresponding payable amounts are shown in 'Trade and other payables'. The Group measures loss allowances for settlement balances under the general approach reflecting the probability of default based on the credit rating of the counterparty together with an assessment of the loss, after the sale of underlying instruments, that could arise as a result of default. As at 30 June 2020, the provision for expected credit losses amounted to less than GBP1m (2019: less than GBP1m).

Deposits paid for securities borrowed arise on collateralised stock lending transactions. Such trades are complete only when both the collateral and stock for each side of the transaction are returned. The above analysis reflects the receivable side of such transactions. Corresponding deposits received for securities loaned are shown in 'Trade and other payables'. The Group measures loss allowances for these balances under the general approach reflecting the probability of default based on the credit rating of the counterparty together with an assessment of the loss, after the sale of collateral, that could arise as a result of default. As at 30 June 2020, the provision for expected credit losses amounted to less than GBP1m (2019: less than GBP1m).

The Group measures the loss allowance for trade receivables at an amount equal to the lifetime expected credit loss. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor's current financial position, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

The following table details the risk profile of trade receivables based on the Group's provision matrix by region. As the Group's historical credit loss experience does not show significantly different loss patterns for different regional customer segments, the provision for loss allowance based on past due status is not further distinguished between the Group's different customer base.

 
                                                      Less                    Greater 
                                                      than   31-60   61-90       than 
                                                   30 days    days    days    91 days 
                                       Not past       past    past    past       past 
 Trade receivables             Total        due        due     due     due        due 
                                GBPm       GBPm       GBPm    GBPm    GBPm       GBPm 
----------------------------  ------  ---------  ---------  ------  ------  --------- 
 30 June 2020 
 EMEA                            179         66         26      22      16         49 
 Americas                        118         53         17      13      11         24 
 Asia Pacific                     54         24          7       5       4         14 
----------------------------  ------  ---------  ---------  ------  ------  --------- 
 Group balances outstanding      351        143         50      40      31         87 
                                      =========  =========  ======  ======  ========= 
 Lifetime ECL                   (16) 
----------------------------  ------ 
                                 335 
============================  ====== 
 
 31 December 2019 
 EMEA                            161         49         34      21      15         42 
 Americas                        104         47         17      13       7         20 
 Asia Pacific                     48         18          8       5       3         14 
----------------------------  ------  ---------  ---------  ------  ------  --------- 
 Group balances outstanding      313        114         59      39      25         76 
                                      =========  =========  ======  ======  ========= 
 Lifetime ECL                  ( 12) 
----------------------------  ------ 
                                 301 
============================  ====== 
 
   16.       Interest bearing loans and borrowings 
 
                                Current   Non-current   Total 
 30 June 2020                      GBPm          GBPm    GBPm 
-----------------------------  --------  ------------  ------ 
 Bank loans                          40             -      40 
 Sterling Notes January 2024         10           430     440 
 Sterling Notes May 2026              1           249     250 
-----------------------------  --------  ------------  ------ 
                                     51           679     730 
=============================  ========  ============  ====== 
 31 December 2019 
 Sterling Notes January 2024         10           430     440 
 Sterling Notes May 2026              1           248     249 
-----------------------------  --------  ------------  ------ 
                                     11           678     689 
=============================  ========  ============  ====== 
 

All amounts are stated after unamortised transaction costs.

Bank credit facilities and bank loans

The Group has a GBP270m committed revolving facility that matures in December 2022. 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 30 June 2020, GBP40m of the revolving credit facility was drawn. Amounts drawn down are reported as bank loans in the above table. Bank loans are denominated in Sterling.

Interest and facility fees of GBP1m were incurred in the six months to 30 June 2020.

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. Accrued interest at 30 June 2020 amounted to GBP10m. Unamortised issue costs were 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. Accrued interest at 30 June 2020 was GBP1m. Unamortised issue costs were GBP1m.

   17.       Lease liabilities 

The maturity analysis of lease liabilities is as follows:

 
                                         30 June   31 December 
                                            2020          2019 
                                            GBPm          GBPm 
-------------------------------------   --------  ------------ 
 Year 1                                       35            33 
 Year 2                                       34            25 
 Year 3                                       32            21 
 Year 4                                       27            20 
 Year 5                                       23            15 
 Onwards                                     164            91 
--------------------------------------  --------  ------------ 
                                             315           205 
 Less interest                              (99)          (65) 
--------------------------------------  --------  ------------ 
                                             216           140 
 =====================================  ========  ============ 
 Included in current liabilities              22            23 
 Included in non-current liabilities         194           117 
--------------------------------------  --------  ------------ 
                                             216           140 
 =====================================  ========  ============ 
 
   18.       Reconciliation of operating result to net cash from operating activities 
 
                                                             Six months   Six months           Year 
                                                                  ended        ended          ended 
                                                                30 June      30 June    31 December 
                                                                   2020         2019           2019 
                                                                   GBPm         GBPm           GBPm 
----------------------------------------------------------  -----------  -----------  ------------- 
 Operating profit                                                   101          107            142 
 Adjustments for: 
 - Share-based payment charge                                         4            5              5 
 - Pension scheme's administration 
  costs                                                               -            -              4 
 - Depreciation of property, plant 
  and equipment                                                       6            6             13 
 - Depreciation of right-of-use assets                               12           11             21 
 - Amortisation of intangible assets                                  9           13             27 
 
   *    Amortisation of intangible assets arising on 
        consolidation                                                20           21             42 
 
   *    Impairment of intangible assets arising on 
        consolidation                                                21            -             24 
 
   *    Loss on disposal of property, plant and equipment             -            -              1 
                                                                      1            -              - 
   *    Impairment of right-of-use assets 
                                                                      1            -              - 
   *    Impairment of finance lease receivables 
 - Remeasurement of deferred consideration                            1            2              6 
 - Revaluation of debt instruments                                    -            2              - 
 - Non-cash movement in FVTPL balances                                -          (2)              - 
----------------------------------------------------------  -----------  -----------  ------------- 
 Operating cash flows before movement 
  in working capital                                                176          165            285 
 Increase in trade and other receivables                           (17)         (38)           (24) 
 (Increase)/decrease in net settlement 
  and trading balances                                              (6)         (48)              8 
 Increase/(decrease) in trade and 
  other payables                                                     12         (20)              4 
 Decrease in provisions                                             (2)            -            (5) 
 Increase in non-current liabilities                                  -            -            (2) 
 Retirement benefit scheme contributions                              -            -            (1) 
----------------------------------------------------------  -----------  -----------  ------------- 
 Cash generated from operations                                     163           59            265 
 Income taxes paid                                                 (33)         (34)           (64) 
 Interest paid                                                     (19)         (21)           (41) 
 Interest paid - finance leases                                     (5)          (6)           (12) 
----------------------------------------------------------  -----------  -----------  ------------- 
 Net cash from operating activities                                 106          (2)            148 
==========================================================  ===========  ===========  ============= 
 
   19.       Analysis of net funds 
 
                               1 January    Cash   Non-cash       Exchange   30 June 
                                    2020    flow      items    differences      2020 
                                    GBPm    GBPm       GBPm           GBPm      GBPm 
---------------------------   ----------  ------  ---------  -------------  -------- 
 Cash                                678      26          -             23       727 
 Cash equivalents                      8     (2)          -              -         6 
 Overdrafts                         (10)       5          -              -       (5) 
---------------------------- 
 Cash and cash equivalents           676      29          -             23       728 
 Financial investments               148       8          -              2       158 
----------------------------  ----------  ------  ---------  -------------  -------- 
 Total funds                         824      37          -             25       886 
============================  ==========  ======  =========  =============  ======== 
 
 Bank loan due within                       ( 40                                ( 40 
  one year                             -    )(1)          -              -         ) 
 Sterling Notes January 
  2024                             (440)   11(1)       (11)              -     (440) 
 Sterling Notes May 
  2026                             (249)    7(1)        (8)              -     (250) 
 Lease liabilities                 (140)   21(1)       (90)            (7)     (216) 
----------------------------  ----------  ------  ---------  -------------  -------- 
                                   (829)     (1)      (109)            (7)     (946) 
 ===========================  ==========  ======  =========  =============  ======== 
 
 Total net funds                     (5)      36      (109)             18      (60) 
============================  ==========  ======  =========  =============  ======== 
 
   1.    Principal changes plus payment of interest and debt issue costs where applicable 

Cash and cash equivalents comprise cash at bank and other short term highly liquid investments with an original maturity of three months or less. 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 government debt securities, term deposits and restricted funds held with banks and clearing organisations.

Non-cash items represent additions to lease liabilities, accrued interest and the amortisation of debt issue.

   20.       Provisions 
 
                                        Property   Re-structuring        Legal   Total 
                                                                     and other 
                                            GBPm             GBPm         GBPm    GBPm 
-------------------------------------  ---------  ---------------  -----------  ------ 
 At 1 January 2020                             6                8           33      47 
 Charge to income statement                    -                -            1       1 
 Utilisation of provisions                   (1)              (2)            -     (3) 
 Effect of movements in exchange 
  rates                                        -                -            1       1 
-------------------------------------  ---------  ---------------  -----------  ------ 
 At 30 June 2020                               5                6           35      46 
=====================================  =========  ===============  ===========  ====== 
 Included in current liabilities                                                    20 
 Included in non-current liabilities                                                26 
-------------------------------------  ---------  ---------------  -----------  ------ 
                                                                                    46 
=====================================  =========  ===============  ===========  ====== 
 

Property provisions outstanding as at 30 June 2020 relate to provisions in respect of building dilapidations, represents the estimated cost of making good dilapidations and disrepair on various leasehold buildings. Property leases expire in one to 14 years.

Restructuring provisions outstanding as at 30 June 2020 relate to termination and other employee related costs. The movements during the period reflects the actions taken under the Group's integration of ICAP and other business reorganisations. It is expected that these obligations will continue to be discharged during 2020.

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 24 years.

European Commission Yen Libor

In February 2015 the European Commission imposed a fine of GBP13m (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. While 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 still stands 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 however and the Group has retained a EUR10m (GBP9m) provision in its accounts in connection with this matter.

IFUS

On 11 May 2020, Tullett Prebon (Europe) Ltd ("TPE") received notice of the instigation of disciplinary proceedings by ICE Futures US ("IFUS") relating to activities undertaken between March 2018 and September 2019. TPE is currently in discussion with IFUS concerning the violations with the prospect of settling the matter and agreeing the scope of remediation.

   21.       Contingent liabilities 

Bank Bill Swap Reference Rate case

On 16 August 2016, a litigation 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 Varoles Mobiliários Ltda ('ICAP Brazil') is a defendant in 12 (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 60m (GBP9m) (31 December 2019: BRL 49m (GBP11m)). The Group is the beneficiary of an indemnity from NEX in relation to any outflow in respect of materially all of these Labour claims insofar as they relate to periods prior to completion of the Group's acquisition of ICAP. The Company 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 253m (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. The case is currently in an early evidentiary phase.

LIBOR Class 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. 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 Court 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. 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. 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.

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 February 5, 2020. On April 1, 2020, the Second Circuit Court of appeals reversed and remanded the dismissal. The Company intends to renew its 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, the Attorney General's office of Frankfurt notified ICAP Securities Limited (Frankfurt Branch) ('ISL'), that administrative offence proceedings have been initiated against ISL in connection with criminal investigations into two former employees and a former Director of ISL suspected of aiding and abetting tax evasion for the benefit of a third party between 2007 and 2008. The Attorney General's office is considering imposing a corporate administrative fine against ISL or confiscating the earnings that ISL derived from the underlying alleged criminal conduct by the former employees and former Director. Not all details of the alleged wrongdoing or of the case against ISL are yet available. External lawyers have been instructed to represent ISL and to seek further access to the Attorney General's case file. As a result, it is not possible at this stage 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 or 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. 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 was notified that the AMF was investigating alleged facilitation of market abuse conduct concerning historic transactions with a client undertaken in 2015 on Eurex. In June 2020, the AMF initiated enforcement proceedings before the Enforcement Committee of the AMF which is at an early stage of the process.

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 or market review.

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, 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 operates in a wide variety of jurisdictions around the world and uncertainties therefore exist with respect to the interpretation of complex tax laws and practices of those territories. 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.

   22.       Allocation of other comprehensive income within Equity 
 
                                                 Equity attributable to equity 
                                                     holders of the parent 
                                            Re-       Hedging                                        Non- 
                                      valuation           and      Own    Retained            controlling     Total 
                                        reserve   translation   shares    earnings   Total      interests    equity 
                                           GBPm          GBPm     GBPm        GBPm    GBPm           GBPm      GBPm 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Six months ended 30 June 
  2020 
  (unaudited) 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Equity investments at FVTOCI 
  - net change in fair value                (1)             -        -           -     (1)              -       (1) 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Effect of changes in exchange 
  rates on translation of 
  foreign operations                          -            64        -           -      64              2        66 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Taxation on components 
  of 
  other comprehensive income                  -             1        -           -       1              -         1 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Other comprehensive income/(loss) 
  for the period                            (1)            65        -           -      64              2        66 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Six months ended 30 June 
  2019 
  (unaudited) 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Equity investments at FVTOCI 
  - net change in fair value                  1             -        -           -       1              -         1 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Effect of changes in exchange 
  rates on translation of 
  foreign operations                          -             3        -           -       3              -         3 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Remeasurement of the defined 
  benefit pension scheme                      -             -        -        (55)    (55)              -      (55) 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Taxation on components 
  of 
  other comprehensive income                  -             -        -          19      19              -        19 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Other comprehensive income/(loss) 
  for the period                              1             3        -        (36)    (32)              -      (32) 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 
   Year ended 31 December 
   2019 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Equity investments at FVTOCI 
  - net change in fair value                  1             -        -           -       1              -         1 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Effect of changes in exchange 
  rates on translation of 
  foreign operations                          -          (43)        -           -    (43)            (1)      (44) 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Remeasurement of the defined 
  benefit pension scheme                      -             -        -        (52)    (52)              -      (52) 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Taxation on components 
  of 
  other comprehensive income                  -             -        -          19      19              -        19 
-----------------------------------  ----------  ------------  -------  ----------  ------  -------------  -------- 
 Other comprehensive income/(loss) 
  for the year                                1          (43)        -        (33)    (75)            (1)      (76) 
===================================  ==========  ============  =======  ==========  ======  =============  ======== 
 
   23.       Financial instruments 
   (a)       Categorisation of financial assets and liabilities 
 
                                           FVTOCI         FVTOCI                                     Total 
                                 debt instruments         equity     Amortised     Mandatorily    carrying 
 Financial Assets                                    instruments          cost        at FVTPL      amount 
 30 June 2020 (unaudited)                    GBPm           GBPm          GBPm            GBPm        GBPm 
-----------------------------  ------------------  -------------  ------------  --------------  ---------- 
 Non-current financial 
  assets 
  measured at fair 
  value 
 Equity securities                              -             15             -               -          15 
 Corporate debt securities                      2              -             -               -           2 
 Non-current financial 
  assets not measured 
  at fair value 
 Finance lease receivables                      -              -             6               -           6 
-----------------------------  ------------------  -------------  ------------  --------------  ---------- 
                                                2             15             6               -          23 
=============================  ==================  =============  ============  ==============  ========== 
 Current financial 
  assets 
  measured at fair 
  value 
 Government debt securities                    86              -             -               -          86 
 Current financial 
  assets 
  Not measured at fair 
  value 
 Term deposits                                  -              -            61               -          61 
 Restricted funds                               -              -            11               -          11 
 Trade receivables                              -              -           335               -         335 
 Settlement balances 
  receivable                                    -              -        36,373               -      36,373 
 Deposits paid for 
  securities borrowed                           -              -           831               -         831 
 Finance lease receivables                      -              -             1               -           1 
 Cash and cash equivalents                      -              -           728               -         728 
-----------------------------  ------------------  -------------  ------------  --------------  ---------- 
                                               86              -        38,340               -      38,426 
=============================  ==================  =============  ============  ==============  ========== 
 Total financial assets                        88             15        38,346               -      38,449 
=============================  ==================  =============  ============  ==============  ========== 
 
                                      Mandatorily at FVTPL               Other financial             Total 
                                                                           liabilities            carrying 
 Financial Liabilities                                                                              amount 
-----------------------------  ---------------------------------  ---------------------------- 
                                      Non-current        Current   Non-current         Current 
 30 June 2020 (unaudited)                    GBPm           GBPm          GBPm            GBPm        GBPm 
-----------------------------  ------------------  -------------  ------------  --------------  ---------- 
 Financial liabilities 
  measured at fair 
  value 
 Deferred consideration                        13             26             -               -          39 
                                               13             26             -               -          39 
=============================  ==================  =============  ============  ==============  ========== 
 Financial liabilities 
  Not measured at fair 
  value 
 Bank loan                                      -              -             -              40          40 
 Sterling Notes January 
  2024                                          -              -           430              10         440 
 Sterling Notes May 
  2026                                          -              -           249               1         250 
 Trade payables                                 -              -             -              20          20 
 Settlement balances 
  payable                                       -              -             -          36,352      36,352 
 Deposits received 
  for 
  securities loaned                             -              -             -             826         826 
-----------------------------  ------------------  -------------  ------------  --------------  ---------- 
                                                -              -           679          37,249      37,928 
=============================  ==================  =============  ============  ==============  ========== 
 Total financial liabilities                   13             26           679          37,249      37,967 
=============================  ==================  =============  ============  ==============  ========== 
 
    (b)      Maturity profile of financial liabilities 

As at 30 June 2020, the contractual maturities, including future interest obligations, of the Group's financial liabilities were as follows:

 
 Contractual maturities                      Between    Between                      Total 
  of financial and             Less than    3 and 12    1 and 5        Over    contractual 
  lease liabilities             3 months      months      years     5 years     cash flows 
 30 June 2020 (unaudited)           GBPm        GBPm       GBPm        GBPm           GBPm 
--------------------------  ------------  ----------  ---------  ----------  ------------- 
 Settlement balances              36,351           1          -           -         36,352 
 Deposits received 
  for 
  securities loaned                  826           -          -           -            826 
 Trade payables                       20           -          -           -             20 
 Bank loan                            40           -          -           -             40 
 Sterling Notes January 
  2024                                11          11        499           -            521 
 Sterling Notes May 
  2026                                 -          13         53         263            329 
 Lease liabilities                     5          30        116         164            315 
 Deferred consideration               16          10          8           5             39 
--------------------------  ------------  ----------  ---------  ----------  ------------- 
                                  37,269          65        676         432         38,442 
==========================  ============  ==========  =========  ==========  ============= 
 
   (c)       Fair value measurements recognised in the statement of financial position 

The following table provides an analysis of the financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

Ø Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Ø Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Ø Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 
                                   Level 1   Level 2   Level 3   Total 
 As at 30 June 2020 (unaudited)       GBPm      GBPm      GBPm    GBPm 
--------------------------------  --------  --------  --------  ------ 
 Financial assets 
  measured at fair value 
 Equity instruments                      -         8         7      15 
 Corporate debt securities               -         -         2       2 
 Government debt securities             86         -         -      86 
 Derivative instruments                  -         -         -       - 
 Financial liabilities 
  measured at fair value 
 Deferred consideration                  -        15        24      39 
 Derivative instruments                  -         -         -       - 
--------------------------------  --------  --------  --------  ------ 
                                        86        23        33     142 
================================  ========  ========  ========  ====== 
 

There were no transfers between Level 1 and 2 during the period.

Reconciliation of Level 3 fair value movements:

 
                                          Equity   Debt securities            Deferred 
                                     instruments       (at FVTOCI)    consideration(at 
                                     (at FVTOCI)                                FVTPL)   Total 
                                            GBPm              GBPm                GBPm    GBPm 
---------------------------------  -------------  ----------------  ------------------  ------ 
 Balance as at 1 January 2020                  7                 2                (25)    (16) 
 Net change in fair value 
  - included in 'administrative 
  expenses'                                    -                 -                 (2)     (2) 
 Amounts settled during the 
  period                                       -                 -                   4       4 
 Effect of movements in exchange 
  rates                                        -                 -                 (1)     (1) 
---------------------------------  -------------  ----------------  ------------------  ------ 
 Balance as at 30 June 2020                    7                 2                (24)    (15) 
=================================  =============  ================  ==================  ====== 
 
   24.       Events after the balance sheet date 

Louis Capital Markets and MidCap Partners

In July 2020 the Group announced the acquisition of Louis Capital Markets and MidCap Partners (collectively 'Louis Capital'), a private brokerage group specialising in equities and fixed income, primarily based in Europe.

Under the agreement, initial cash consideration is estimated to be US$21m (GBP16m). Consideration is subject to adjustment based on the level of regulatory capital, working capital and net cash at completion, estimated to be an offset of US$1m (GBP1m). Deferred non-contingent consideration with an estimated fair value of US$5m (GBP4m) is payable over two years and deferred contingent consideration, with an estimated fair value of US$11m (GBP9m), is payable dependent upon the performance of the business over five years. The gross payment of deferred contingent consideration is capped at US$17m (GBP13m).

The initial fair value of the net assets acquired is estimated to be US$5m (GBP4m). The estimated excess purchase price of US$31m (GBP24m) will be allocated to goodwill and other acquisition related intangibles during the measurement period commencing in 2020 with goodwill estimated to be US$19m (GBP14m) and US$12m (GBP10m) relating to other acquisition related intangibles. Acquisition costs, included in administrative expenses, amounted to GBP1m in the period to 30 June 2020 and GBP1m was incurred in 2019.

Had Louis Capital been acquired on 1 January 2020 the Group's underlying operating profit would have been GBP2m higher and its underlying earnings GBP1m higher.

Statement of Directors' Responsibilities

Each of the Directors who are Directors as at the date of this Statement of Directors' Responsibilities confirm to the best of their knowledge that:

-- the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union;

-- the condensed set of financial statements gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group as required by DTR 4.2.4R; and

-- the Interim Management Report herein includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions.

By order of the Board

Robin Stewart

Chief Financial Officer

7 August 2020

Independent Review Report to TP ICAP plc

We have been engaged by the Company to review the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2020 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Cash Flow Statement and related Notes 1 to 24. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2020 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Use of our report

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review 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, for our review work, for this report, or for the conclusions we have formed.

Deloitte LLP

Statutory Auditor

London, UK

7 August 2020

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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