TP ICAPTP Annual Report and Accounts 2018 Annual Report and Accounts 2018 TP ICAP facilitates the flow Contents of capital, energy and Strategic report Financial and strategic highlights 1 At a glance 2 commodities around the Our business model 4 Chairman’s statement 6 world, enhancing investment Chief Executive Officer’s review 8 Market factors 14 Strategic pillars 16 and contributing to economic Key performance indicators 18 Financial and operating review 20 growth and financial stability. Viability statement and going concern 37 Risk management 38 Principal risks and uncertainties 40 Resources, relationships > Our brokers match buyers and sellers of financial, and responsibilities 44 energy and commodities products and facilitate Governance report Compliance with the UK Corporate price discovery and execution. Code 2016 50 Chairman’s introduction to > We provide independent data to participants in Governance 51 Board of Directors 54 the financial, energy and commodities markets, Board in conversation 56 including live and historical pricing content, Corporate governance report 58 How the Board engages with and advanced valuation and risk analytics. stakeholders 66 Report of the Nominations and > We are a trusted partner to our clients, enabling Governance Committee 68 Report of the Audit Committee 72 them to transact with confidence. Report of the Risk Committee 76 Report of the Remuneration Committee 80 Directors’ report 108 Statement of Directors’ Responsibilities 112 Financial statements Independent Auditor’s Report to the Members of TP ICAP plc 113 Consolidated Income Statement 120 Consolidated Statement of Comprehensive Income 121 Consolidated Balance Sheet 122 Consolidated Statement of Changes in Equity 123 Consolidated Cash Flow Statement 124 Notes to the Consolidated Financial Statements 125 Company Balance Sheet 176 Statement of Changes in Equity 177 Notes to the Financial Statements 178 Shareholder information 181 Group undertakings 182 Glossary 191 Cautionary Statement This Annual Report has been prepared for, and only for, the members of the Company, as a body, and no other persons. The Company, its Directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this document is shown or into whose hands it may come and such responsibility is expressly disclaimed. By their nature, the statements concerning the risks and uncertainties facing the Group in this Annual Report involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this Annual Report and the Company undertakes no obligation to update these forward- looking statements. Nothing in this Annual Report should be construed as a profit forecast. Strategic report Governance report Financial statements 1 Financial and strategic highlights Revenue (£m) Contribution (£m) Operational performance2 > A resilient performance in a mixed market 670 6 1,757 1,63 environment. > Global Broking revenue increased 3% at constant exchange rates, driven by Rates and Equities. > Strong growth in Institutional Services and Data & Analytics businesses which have grown by 16% and 8% respectively 2017 2018 2017 2018 at constant exchange rates. Operating profit – statutory (£m) Operating profit – underlying1 (£m) > Energy & Commodities experienced a 1% decline in revenues at constant exchange 102 26 rates due to challenging market conditions. 3 263 > Total contribution increased by 4% to £679m (2017: £655m) at constant exchange rates. > Integration programme on track with synergy savings3 achieved to date of £71m per annum. 2017 2018 2017 2018 Strategic highlights Operating margin – statutory (%) Operating margin – underlying1 (%) > Focus on enhancing our competitive position. 5.8 15.0 15 53 > Increased investment allocated to our Data & Analytics business. > A renewed and strengthened senior management team. > New strategic pillars founded on Technology, Operational Excellence, 2017 2018 2017 2018 People and Diversification. 1 Profit before tax – statutory (£m) Profit before tax – underlying (£m) Dividend > Interim dividend of 5.6p per share 72 233 245 62 declared on 9 November 2018. > Final dividend recommended of 11.25p per share due to be paid 21 May 2019. > Total dividends in respect of 2018: 16.85p (2017: 16.85p). 2017 2018 2017 2018 1 Underlying results represent the results excluding Basic earnings per share – statutory (p) Basic earnings per share – underlying1 (p) acquisition costs and exceptional items. Please refer to page 21 of the Annual Report. 15.8 33.3 342 2 Revenue growth rates are calculated using revenue for 2017 translated at the same exchange rates as 2018. The statutory revenue figures as reported in 2017 and 2018 are shown in Note 4 to the 5 Consolidated Financial Statements. 3 Synergy savings reflect the reduction of underlying staff and other costs as a result of implementing the integration programme. Staff cost savings are a 2017 2018 2017 2018 result of both individuals leaving the Group or transferring to integration related roles that will cease once integration is complete. www.tpicap.com 2 Strategic report At a glance We are a global firm of professional intermediaries that plays a central role in the world’s wholesale financial, energy and commodities markets. Our brands We operate a global portfolio of highly respected brands, each with a separate and distinct client offering. Global Broking Energy & Commodities Institutional Services Data & Analytics Our vision, purpose, method and values Our vision Our purpose What we want to be What we want to do To be the most trusted and respected data and market execution To provide access to financial markets and facilitate the flow of provider in the financial, energy and commodities products that capital, energy and commodities around the world, improving we transact. pricing and contributing to economic growth. Our method Our values How we accomplish our purpose How we seek to act Our people utilise their skills and experience, combined with How we conduct ourselves as individuals and as a Group is as a strong technology offering, to work in close partnership important as the products and services we provide. We want to with a diverse range of clients to deliver services. We continually have a business culture that allows us to serve our clients in the enhance our services and our operations as our clients’ needs and best possible way, and holds up to the most intense scrutiny. preferences change and as markets and the regulatory Our values, which underpin everything we do, are: environment evolve. Honesty Integrity Respect Excellence TP ICAP Annual Report and Accounts 2018 Strategic report Governance report Financial statements 3 How we transact Read more about how we transact in our business model on pages 4 and 5. 1 2 3 TP ICAP 4 Oil It’s January To fly Brian there To get a fixed In August and Brian is in August the airline price for the fuel Brian jets off looking to buy needs to spend the airline uses a to Portugal. a plane ticket money on fuel. derivative. 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ABC Pension data from tens out the value of Fund gets this of thousands of all his pension information from transactions we fund assets. financial data execute every day. providers. www.tpicap.com 4 Strategic report Our business model We provide our clients with a wide choice of execution services, data products and analytics. Our resources What we do We allocate our resources in the most We act as an intermediary between buyers and sellers of complex financial efficient and sustainable way possible products, enabling them to trade efficiently and effectively. There are three main to increase shareholder value. models in