IFRS has no material impact on ICAP s underlying cash flow, economic and risk profile, dividend policy, regulatory capital and bank covenants

Press Release ICAP plc releases IFRS Transition Report ICAP plc, the world s largest voice and electronic interdealer broker today releases the restatement of selected previously published financial information prepared under UK GAAP for the six month period to 30 September 2004 and the 12 month period to 31 March 2005 in accordance with International Financial Reporting Standards (IFRS). Impact on 12 months to 31 March 2005 The results of the Group for the year ended 31 March 2005 are not significantly impacted by the application of IFRS. The consequences of the adoption of IFRS for the Group s financial year ended 31 March 2005 on the audited reported UK GAAP results for the same period are as follows: Pre-tax profit before amortisation of intangibles and exceptional items remains largely unchanged at 176.7m on an IFRS basis compared to 178.9m under UK GAAP The Group s statutory IFRS profit before tax is 166.8m, compared to 131.7m under UK GAAP, principally as a result of goodwill not being amortised under IFRS. Similarly, basic EPS is 18.3p under IFRS, and 14.1p under UK GAAP Adjusted EPS on an IFRS basis is 19.4p compared to 19.5p under UK GAAP. ICAP continues to believe that adjusted EPS is the most appropriate EPS measurement ratio as it better reflects the underlying earnings of the business. Adjusted EPS excludes amortisation of intangibles and exceptional items Net assets are 520.0m on an IFRS basis, compared to 459.3m under UK GAAP. The main reasons for this increase are that the proposed final dividend for the year ended 31 March 2005 is no longer being accrued and the goodwill amortisation has been reversed IFRS has no material impact on ICAP s underlying cash flow, economic and risk profile, dividend policy, regulatory capital and bank covenants In accordance with ICAP s IFRS transition plan, as outlined in the Group s IFRS analysts briefing held on 8 March 2005 (on ICAP s website www.icap.com), ICAP has moved to reporting its financial results in accordance with IFRS, as endorsed by the EU from 1 April 2005. IFRS will apply for the first time in the Group s interim results for the six months to 30 September 2005 and the Group s full year results for the 12 months to 31 March 2006. Further standards and interpretations may be issued that could be applicable for the Group s financial year ending 31 March 2006 and other possible changes may arise as the application of IFRS develops. 13 July 2005

Enquiries ICAP plc Jim Pettigrew Group Finance Director (44) 20 7050 7108 Mike Sheard Director of Corporate Affairs (44) 20 7050 7103 The Maitland Consultancy Neil Bennett (44) 20 7379 5151 About ICAP ICAP is the world s largest voice and electronic interdealer broker with a daily average transaction volume in excess of $1 trillion, 50% of which is electronic. The Group is active in the wholesale market for OTC derivatives, fixed income securities, money market products, foreign exchange, energy, credit and equity derivatives. Please go to www.icap.com for more information.

abc ICAP PLC - IFRS TRANSITION REPORT Restatement of Financial Information for the year ended 31 March 2005 and 6 months to 30 September 2004 in accordance with International Financial Reporting Standards Contents 1 Introduction 3 Key differences between UK GAAP and IFRS 6 Consolidated IFRS Income Statement 7 Consolidated IFRS Statement of Recognised Income and Expense 8 Consolidated IFRS Balance Sheet 9 Consolidated IFRS Cash Flow Statement 10 Notes to the IFRS Financial Information 22 Special Purpose Audit Report 24 Appendices - Reconciliations to UK GAAP

abc Introduction ICAP plc and its subsidiaries ( the Group ) has previously reported its results for the year ended 31 March 2005 under UK generally accepted accounting principles ("UK GAAP"). With effect from 1 April 2005, the Group will prepare its financial statements in accordance with International Financial Reporting Standards and International Accounting Standards ( IFRS ). The interim results to 30 September 2005 and the annual results to 31 March 2006 will therefore be prepared under IFRS, together with comparatives. In advance of the above requirement, the Group is restating its results for both the year ended 31 March 2005 and the six months to 30 September 2004, on the basis of those standards currently issued by the International Accounting Standards Board ( IASB ) which have either been endorsed or are expected to be endorsed by the European Union ( EU ) before 31 March 2006, with the exception of IAS32 and IAS39 which will be adopted by the Group prospectively from 1 April 2005. The purpose of this document is to explain how the Group s IFRS financial performance for the year ended 31 March 2005 and the 6 months ended 30 September 2004 and its IFRS financial position at these dates, differ to that reported under UK GAAP. In addition to the adoption of IAS32 and IAS39 prospectively from 1 April 2005, further standards and interpretations could be issued that may be applicable for the year ended 31 March 2006. The Group s first interim and annual IFRS financial statements may therefore be prepared in accordance with different accounting policies to those used in this document, and as a result, the financial information in this document may be subject to change. The consolidated IFRS balance sheet as at 31 March 2005, the related consolidated IFRS income statement, consolidated statement of recognised income and expense and consolidated cash flow statement together with the related notes for the year ended 31 March 2005, have been audited by PricewaterhouseCoopers LLP. A copy of their audit report to the Company is set out on pages 22 and 23. The results of the Group for the year ended 31 March 2005 are not significantly impacted by the application of IFRS. The consequences of the adoption of IFRS for the Group s financial year ended 31 March 2005 on the audited reported UK GAAP results for the same period are as follows: - - Pre-tax profit before amortisation of intangibles and exceptional items remains largely unchanged at 176.7m on an IFRS basis compared to 178.9m under UK GAAP. - The Group s statutory IFRS profit before tax is 166.8m, compared to 131.7m under UK GAAP, principally as a result of goodwill not being amortised under IFRS. Similarly, basic EPS is 18.3p under IFRS, and 14.1p under UK GAAP. - Adjusted EPS on an IFRS basis is 19.4p compared to 19.5p under UK GAAP. ICAP continues to believe that adjusted EPS is the most appropriate EPS measurement ratio as it better reflects the underlying earnings of the business. Adjusted EPS excludes amortisation of intangibles and exceptional items. - Net assets are 520.0m on an IFRS basis, compared to 459.3m under UK GAAP. The main reasons for this increase are that the proposed final dividend for the year ended 31 March 2005 is no longer being accrued and the goodwill amortisation has been reversed. - IFRS has no material impact on ICAP s cash flow, economic and risk profile, dividend policy, regulatory capital and bank covenants. A high level reconciliation of profit between UK GAAP and IFRS is given in the table below. Detailed reconciliations are attached as an appendix to this report. 1

abc Year ended 31 March 2005 Profit before tax, amortisation of intangibles & exceptionals m Profit before tax m UK GAAP profit 178.9 131.7 Reversal of goodwill amortisation - 38.1 Amortisation of other intangibles - (0.8) Share option charge (1.3) (1.3) Deferred pension scheme 0.2 0.2 Holiday pay provision (0.2) (0.2) Tax on associates (0.9) (0.9) IFRS profit 176.7 166.8 Under IFRS the Group will maintain the columnar format for the presentation of its consolidated income statement. This will enable the Group to continue its practice of improving the understanding of its results by presenting profit for the period before amortisation of intangibles and exceptional items. This is the profit measure used in the adjusted EPS calculation and is considered to be the most appropriate as it better reflects the Group's underlying cash earnings. Profit before amortisation of intangibles and exceptional items is reconciled to profit before tax on the face of the income statement. The adoption of IAS32 and IAS39 prospectively from 1 April 2005 is expected to result in a number of changes. The most significant is the requirement to gross-up matched principal receivables and payables on the face of the balance sheet. 2

abc Key differences between UK GAAP and IFRS The key differences between UK GAAP and IFRS that impact the results and the net assets of the Group are described below. A summary of the adjustments to the income statement and the net assets of the Group are provided in the reconciliations from UK GAAP to IFRS in the appendix to this report. Share-based payments (IFRS2) IFRS2 requires an expense to be recorded in the income statement for all forms of share-based payments. The expense is calculated with reference to the fair value of the award at the date of grant and is recognised over the period from the date of the award to the date of vesting. As referred to in note 1, the Group has applied IFRS2 in respect of all share options awarded to directors and employees since 7 November 2002. The fair value of the award has been calculated by using the Black-Scholes model. The key variables in arriving at the share option charge are the estimated future volatility in the ICAP share price, the expected period of time between grant and exercise date of an award and the expected level of forfeiture that will occur between award and vesting dates. In accordance with UK GAAP the Group amortised the matching element of awards under the Bonus Share Matching Plan (BSMP) over the vesting period, and the option based charge under IFRS2 is broadly unchanged. In the year ended 31 March 2005, application of IFRS2 results in a pre-tax charge in the income statement of 1.3m (6 months to 30 September 2004-0.6m). This has been partially offset by a deferred tax credit of 0.5m (30 September 2004-0.2m). Business combinations (IFRS3) Under IFRS3, goodwill is no longer amortised but instead is subject to annual impairment. The goodwill arising on acquisitions has therefore been frozen at its value as at 31 March 2004 and the amortisation previously charged under UK GAAP has been reversed. The goodwill reversed under IFRS for the year ended 31 March 2005 totals 38.1m (6 months to 30 September 2004-18.8m), of which 37.5m ( 18.6m) relates to subsidiaries and 0.6m ( 0.2m) to joint ventures and associates. This has been offset by a reversal of the tax credit of 11.5m in respect of the goodwill amortisation under UK GAAP for the year ended 31 March 2005 (6 months to 30 September 2004-5.6m). As a result of the above adjustments, the economic benefit of tax deductions on the amortisation of intangibles arising on certain US acquisitions which accrue over 15 years, are no longer reflected in the Group s EPS measurements under IFRS. Of the 11.5m tax credit under UK GAAP for the year ended 31 March 2005, 5.3m was a current cash tax deduction. Under IFRS, the cash tax deduction is reflected in the balance sheet as a creditor. The goodwill balances have been tested for impairment for the year ended 31 March 2005 and no adjustments to the carrying value are required. IFRS3 requires intangible assets arising on acquisitions since 1 April 2004 (the date of transition to IFRS) to be separately identified from goodwill, provided their value can be reliably measured. Examples of intangible assets that would typically be separately identified include customer lists, technology and tradenames. IFRS3 requires that such intangible assets should to be amortised over their useful life. Intangible assets identified separately from goodwill in respect of acquisitions of subsidiaries in the year ended 31 March 2005 total 3.5m (see note 6). This includes 2.8m in respect of the separate identification 3

abc of key revenue contracts for the GovPx acquisition. Amortisation of 0.7m has been charged to the income statement for the year ended 31 March 2005 (6 months to 30 September 2004 - nil). At 31 March 2005 the Group had no intangible assets other than goodwill and separately identifiable intangibles arising on acquisition. Joint ventures (IAS31) and associates (IAS28) Under UK GAAP, associates were accounted for under the equity method of consolidation whereby an interest in an associate is initially recorded at cost and adjusted thereafter for the post acquisition change in the Group s share of the net assets of the associated entity. The profit or loss of the Group included its share of the profit or loss of the associate. Under IAS28, the Group will continue to account for associates on an equity basis, although its share of the profit or loss of the associate will be shown post-tax in the Group s profit before tax line. Although this change will have no impact on the Group s earnings, it will reduce profit before tax by 0.9m (6 months to 30 September 2004-0.5m). Under UK GAAP, joint ventures were accounted for under the gross equity method of consolidation, similar to associates, but with revenue grossed up for the Group s share of joint venture revenue. Under IAS31, the Group will proportionately consolidate the results of its joint ventures, whereby the Group s share of each of the assets, liabilities, income and expenses of the joint venture is combined line by line with similar items in the Group s financial statements. This proportionate consolidation of joint ventures will result in no change to the Group s profit before tax, earning or net assets. It will however lead to a number of presentational changes including the segment information disclosed in note 4. Recognition of dividends (IAS10) Under UK GAAP the Group recognised a liability for dividends that were proposed in respect of an accounting period, even if formal authorisation of the dividend did not take place until after the period end. In accordance with IAS10 Events after the Balance Sheet Date, the declaration of a dividend is only recognised as a liability at the date it is approved. The impact is to increase net assets as at 31 March 2005 by 38.3m (30 September - 11.0m) due to the elimination of the final and interim dividends respectively. Employee benefits (IAS19) Pensions There are no significant defined benefit schemes in operation throughout the Group and consequently, the adoption of IAS19 does not have a major impact. Under UK GAAP, the Group accounted for pensions in accordance with SSAP24. This standard seeks to spread the cost of providing defined benefit pensions and post retirement benefits over the estimated average remaining service life of the scheme members. IAS19 takes a similar approach to accounting for defined benefit schemes as FRS17 Retirement Benefits. On transition to IFRS at 1 April 2004, the deficit disclosed under FRS17 has been recognised in the balance sheet in accordance with IAS19. This has resulted in a reduction to net assets on transition of 2.8m after taking into account the deferred tax impact. The impact of adopting IAS19 on the income statement is that a charge to operating profit is no longer required in respect of the pension deficit. Instead the standard requires the expected return on pension scheme assets and the increase in pension liabilities from unwinding the discount factor to be reported as part of employee benefit costs. The application of IAS19 for the year ended 31 March 2005 increases profit before tax by 0.2m. This is partially offset by a reduction in the deferred tax asset of 0.1m. 4

abc The Group has chosen to apply the amendment to IAS19 which allows for actuarial gains and losses to be recognised immediately in the statement of recognised income and expense. In the year ended 31 March 2005 such actuarial losses of 1.0m arose, offset by a deferred tax asset of 0.4m. In addition, the retranslation of the opening deficit gave rise to an exchange gain in the year of 0.1m. The net impact of the application of IAS19 on the Group s net assets at 31 March 2005, is a reduction of 3.2m The accounting for defined contribution schemes under IFRS is consistent with the previous accounting applied under UK GAAP. Holiday pay IAS19 requires full provisioning for all outstanding holiday pay. The impact of this change is a reduction in profit for the year ended 31 March 2005 of 0.2m (6 months to 30 September 2004 increase in profit of 0.7m). This has been offset by a deferred tax asset of 0.1m (6 months to 30 September 2004 deferred tax provision of 0.3m). Income taxes (IAS12) Under IAS12 deferred tax is recognised on all taxable temporary differences between the tax base and the accounting book value at the balance sheet date. UK GAAP required deferred tax to be recognised on timing differences that arose from the inclusion of gains and losses in tax assessments in periods different from those in which they were recognised in the financial statements. In general, this means that deferred tax is more likely to be recognised under IFRS than it was under UK GAAP. The impact of adopting IAS12 on accounting for share-based payments, business combinations and employee benefits is explained above. Deferred tax liabilities are required under IAS12 where earnings of overseas subsidiaries are expected to be remitted in the foreseeable future. No deferred tax provision has been made in the year ended 31 March 2005 because, so far as the Group envisages paying dividends from overseas companies, there are sufficient underlying double taxation relief tax credits to eliminate all UK taxation on repayment of such dividends. The Group s effective tax rate should not be significantly impacted by the transition to IFRS. Financial instruments (IAS32 and IAS39) The Group will apply IAS32 and IAS39 prospectively from 1 April 2005. The Group uses financial instruments such as interest rate derivatives and forward exchange contracts to hedge interest rate and currency transaction exposures. Not all such instruments will in future necessarily qualify for hedge accounting under the prescriptive rules of IAS39. For financial instruments not qualifying for hedge accounting, changes in their market value will be reported through the income statement. Cash flow (IAS7) The adoption of IFRS does not affect the Group s underlying cash flows. However the presentation of the cash flow statement differs from that required under UK GAAP. IFRS requires that the cash flows of the Group be split into three categories operating activities, investing activities and financing activities and reconciles movements in cash and cash equivalents. The main changes to cash and cash equivalents under IFRS are shown in note 9(c). 5

Consolidated IFRS Income Statement 6 Year ended 31 March 2005 - audited 6 months ended 30 September 2004 - unaudited Before Before amortisation of amortisation of intangibles and Amortisation Exceptional intangibles and Amortisation Exceptional exceptional items of intangibles items Total exceptional items of intangibles items Total Note m m m m m m m m Revenue 4 812.7 - - 812.7 395.8 - - 395.8 Operating expenses (651.0) (0.7) (9.1) (660.8) (321.0) - (6.0) (327.0) Other income 12.3 - - 12.3 5.8 - - 5.8 Group operating profit 4 174.0 (0.7) (9.1) 164.2 80.6 - (6.0) 74.6 Finance income 6.9 - - 6.9 3.5 - - 3.5 Finance costs (2.3) - - (2.3) (1.2) - - (1.2) Share of (loss)/profit of associates (after tax) (1.9) (0.1) - (2.0) 0.4 - - 0.4 Profit before tax 176.7 (0.8) (9.1) 166.8 83.3 - (6.0) 77.3 Taxation (58.4) - 1.2 (57.2) (28.4) - 1.8 (26.6) Profit for the period 118.3 (0.8) (7.9) 109.6 54.9 - (4.2) 50.7 Attributable to: Equity holders of the parent 116.2 (0.8) (7.9) 107.5 54.1 - (4.2) 49.9 Minority interests 2.1 - - 2.1 0.8 - - 0.8 118.3 (0.8) (7.9) 109.6 54.9 - (4.2) 50.7 Earnings per ordinary share - basic 5 18.3 p 8.6 p - diluted 5 17.5 p 8.1 p

Consolidated IFRS Statement of Recognised Income and Expense Audited Unaudited Year ended 6 months ended 31 March 30 September 2005 2004 m m Profit for the financial period 109.6 50.7 Actuarial losses on post retirement employee benefits (0.6) - Currency translation differences (7.0) 4.2 Total recognised income and expenses for the period 102.0 54.9 7

Consolidated IFRS Balance Sheet Audited Unaudited As at As at 31 March 30 September 2005 2004 Note m m ASSETS Non-current assets Goodwill 6 253.7 249.8 Other intangible assets 6 2.8 - Property, plant and equipment 67.2 76.8 Investments in associates 8.9 10.6 Deferred tax assets 42.9 35.5 Trade and other receivables 4.4 2.4 Other investments 7.5 7.8 387.4 382.9 Current assets Short-term investments 16.2 15.6 Trade and other receivables 170.7 165.5 Initially unsettled transactions 509.9 569.0 Cash and cash equivalents 231.3 172.7 928.1 922.8 Total assets 1,315.5 1,305.7 LIABILITIES Current liabilities Trade and other payables (198.4) (171.8) Initially unsettled transactions (509.9) (569.0) Short-term borrowings - (5.0) Bank overdrafts (0.6) (0.2) Short-term provisions (7.5) (6.4) Tax payable (38.0) (32.3) Obligations under finance leases (0.7) (1.3) (755.1) (786.0) Non-current liabilities Trade and other payables (11.1) (9.4) Retirement benefit obligations (2.7) (3.0) Tax payable (9.8) (7.9) Deferred tax liabilities (12.7) (10.2) Long-term provisions (3.8) (8.5) Obligations under finance leases (0.3) (0.6) (40.4) (39.6) Total liabilities (795.5) (825.6) Net assets 520.0 480.1 EQUITY Capital and reserves Called up share capital 8 60.6 60.5 Contingent share capital 8 7.0 5.6 Share premium account 8 215.2 215.0 Other reserves 8 28.8 29.1 Retained earnings 8 197.9 160.4 Equity attributable to equity holders of the parent 509.5 470.6 Minority interests - equity 8 10.5 9.5 520.0 480.1 8

Consolidated IFRS Cash Flow Statement Audited Unaudited Year ended 6 months ended 31 March 30 September 2005 2004 Note m m Cash flows from continuing operating activities 9 (a) 133.0 49.4 Cash flows from investing activities Dividends received from associates 0.9 0.4 Interest received from third parties 6.8 3.5 Payments to acquire tangible fixed assets (26.9) (25.6) Receipts from sale of tangible fixed assets 0.3 - Payments to acquire fixed asset investments (4.8) (8.1) Payments to acquire own shares (3.8) (3.8) Receipts from sale of own shares 1.1 - Acquisition of interests in businesses net of cash acquired (16.0) (11.7) Acquisition of associates (5.1) (4.1) Net (purchase) / sale of short-term investments (0.4) 4.1 Net cash used in investing (47.9) (45.3) Cash flows from financing activities Interest element of finance lease payments (0.1) (0.1) Interest paid to third parties (1.8) (1.4) Dividends paid to minority interests (2.1) (1.7) Equity dividend paid (45.0) (34.0) Share capital purchased for cancellation (17.3) (17.3) Proceeds from issue of ordinary shares 0.8 0.4 Net proceeds/(repayments) from short-term borrowings - 5.0 Capital element of finance lease payments (1.5) (0.7) Net cash used in financing activities (67.0) (49.8) Exchange adjustments (4.7) 0.9 Net increase / (decrease) in net cash and cash equivalents 13.4 (44.8) Net cash and cash equivalents at beginning of period 217.3 217.3 Net cash and cash equivalents at end of period 9 (b) 230.7 172.5 9

Notes to the IFRS Financial Information 1 Basis of preparation and first time adoption of IFRS (a) Basis of preparation The Group has previously reported its results for the year ended 31 March 2005 under UK generally accepted accounting principles ("UK GAAP"). With effect from 1 April 2005, the Group will prepare its financial statements in accordance with International Financial Reporting Standards and International Accounting Standards ( IFRS ). The interim results to 30 September 2005 and the annual results to 31 March 2006 will therefore be prepared under IFRS, together with comparatives. In advance of this requirement, the Group is restating its results for both the year ended 31 March 2005 and the six months to 30 September 2004, on the basis of those standards currently issued by the International Accounting Standards Board ( IASB ) which have either been endorsed or are expected to be endorsed by the European Union ( EU ) before 31 March 2006, with the exception of IAS32 and IAS39 which will be adopted by the Group prospectively from 1 April 2005. The date of transition to IFRS is deemed to be 1 April 2004, being the start of the earliest period of comparative information. The consolidated Financial Information included in this document is not intended to represent the statutory accounts of the Group (within the meaning of section 240 of the Companies Act 1985). The consolidated statutory accounts of the Group, for the year ended 31 March 2005, upon which the auditors have reported in accordance with section 235 of the Companies Act 1985, have been delivered to the registrar of companies. The Financial Information has been prepared under the historical cost convention. The Financial Information in this document includes all primary statements, key extracts from selected notes and reconciliations from UK GAAP to IFRS results and net assets. This financial information is expected to form the basis for comparatives when reporting the financial results for the year ended 31 March 2006. The Financial Information for the year ended 31 March 2005 included in this document has been audited by PricewaterhouseCoopers LLP. Their report to the Company is set out on pages 22 and 23. They have also reviewed the Financial Information for the half year ended 30 September 2004. As the work of the IASB is ongoing it is possible that further standards, amendments and interpretations become applicable and relevant to the Group for financial years beginning on or after 1 April 2005. In this situation the Group's accounting policies may change prior to publication of those financial statements. Previously the financial statements of the Group were prepared under UK accounting standards issued by the UK Accounting Standards Board and the pronouncements of its Urgent Issues Task Force, Statements of Recommended Practice and the Companies Act 1985, referred to collectively as UK Generally Accepted Accounting Principles ( UK GAAP ). Where no definitive presentation guidance under IFRS exists or where IFRS are not yet being applied the existing UK GAAP treatment has been maintained. Under IFRS the Group will maintain the columnar format for the presentation of its consolidated income statement. This will enable the Group to continue its practice of improving the understanding of its results by presenting profit for the period before amortisation of intangibles and exceptional items. This is the profit measure used in the adjusted EPS calculation and is considered to be the most appropriate as it better reflects the Group's underlying cash earnings. Profit before amortisation of intangibles and exceptional items is reconciled to profit before tax on the face of the income statement. Items which are of a material and non-recurring nature, such as disposals of items of property, plant and equipment, restructuring of activities and litigation settlements, have been disclosed separately to give a clearer presentation of the Group's results. These items are shown as "exceptional items" on the face of the income statement. Amortisation of intangibles arising from the application of IFRS3 "Business Combinations" is shown on the face of the income statement. (b) First Time Adoption of IFRS Transitional provisions for the first time adoption of IFRS are set out in IFRS1 First time adoption of International Financial Reporting Standards and allow companies adopting IFRS for the first time to apply certain exemptions from the full requirements of IFRS in the year of transition. The Group has applied the following key exemptions: IAS32 Financial Instruments: Disclosure and Presentation and IAS39 "Financial Instruments: Recognition and Measurement" The Group will be adopting IAS32 and IAS39 prospectively from 1 April 2005 as recommended by the UK Accounting Standards Board and will not present comparative information for the year ended 31 March 2005, as permitted by IFRS1. In the year ended 31 March 2005 financial instruments continue to be valued using the accounting principles adopted in the Group's UK GAAP annual report. 10

Notes to the IFRS Financial Information IFRS3 "Business Combinations" The Group has applied the transitional provision of IFRS1 and has accounted for acquisitions since 1 April 2004 under IFRS3 and has applied the requirements of IAS36 "Impairment of Assets" and IAS38 "Intangible Assets" since that date. Acquisitions and mergers prior to 31 March 2004 have not been restated and are included in the results at their book value as at 1 April 2004. No impairments were required as at 1 April 2004 under IAS36. IAS21 "The Effects of Changes in Foreign Exchange Rates" Exchange differences on the retranslation of the balance sheets of subsidiary undertakings at the balance sheet date are deemed to be nil as at the date of adoption of IFRS as permitted by the transitional arrangements of IFRS1. As permitted by IFRS1, the Group has not applied the requirements of IAS21 "The Effects of Changes in Foreign Exchange Rates" to Goodwill arising on business combinations prior to 1 April 2004. Goodwill on the balance sheet as at 31 March 2004 continues to be recorded in the functional currency of the Group, i.e. UK sterling. Goodwill arising since 1 April 2004 is recorded in the functional currency of the acquired entity. IFRS2 "Share-based Payments" The Group has adopted IFRS2 for all employee share options granted since 7 November 2002, as permitted by the transitional arrangements of IFRS2. Other than employee share options, the Group has no share-based payments. IAS19 "Employee Benefits" The Group has chosen to recognise all cumulative actuarial gains and losses at the date of its transition to IFRS. The Group has taken advantage of the option available in the amendment to IAS19 (issued in December 2004) for subsequent actuarial gains and losses to be recognised immediately in the Statement of Recognised Income and Expense. 2 Basis of consolidation The Group's consolidated IFRS Financial Information comprises the Financial Information of the Company, its subsidiaries and its share of interests in joint ventures and associates. Subsidiaries acquired or disposed of during the period are included in the income statement from the effective date of acquisition or disposal. Intra-group transactions, balances, income and expenses are eliminated on consolidation. In the Group's consolidated Financial Information, joint ventures are accounted for under the proportional consolidation method of accounting whereby the Group includes its share of each of the assets, liabilities, income and expenses on a line by line basis. Associates are accounted for under the equity accounting method whereby the Group's profit and loss account includes its share of their post-tax profits and losses and the Group's balance sheet includes its share of their net assets or liabilities. The accounts of certain subsidiaries incorporated outside the United Kingdom are drawn up initially to conform with local regulations and adjusted subsequently to comply with IFRS and United Kingdom company law. 11

Notes to the IFRS Financial Information 3 Significant accounting polices (a) Property, plant and equipment Tangible fixed assets are stated at historical cost less provision for any impairment in their values and are depreciated on a straight line basis over their expected useful economic lives as follows: Short leasehold property Furniture, fixtures and equipment Software development Motor vehicles Period of lease 3-5 years 3-5 years 3-4 years The Group reviews its depreciation rates regularly to take account of any changes in circumstances. These rates are determined upon consideration of factors such as the expected rate of technological development and anticipated usage levels. Depreciation is charged against assets from the date at which the Group begins to derive economic benefit from the asset. When a leasehold property becomes surplus to the Group's foreseeable business requirements, provision is made on a discounted basis for the expected future net cost of the property. The Group treats software development as a tangible fixed asset where it forms part of an overall trading system which includes hardware costs. (b) Fixed Asset Investments (i) Associates An associate is an entity in which the Group has an interest and, in the opinion of the directors, can exercise significant influence, but not control, over its operating and financial policies. An interest exists where an investment is held on a long-term basis for the purpose of securing a contribution to the Group s activities. Significant influence will generally exist where the Group holds more than 20% and less than 50% of the shareholders voting rights. The consolidated Financial Information includes investments in associates under the equity method of accounting. The income statement includes the Group s share of the annual post-tax profits or losses of those entities. The balance sheet shows the Group s share of the net assets or liabilities of those entities, together with attributable goodwill and separately identifiable intangible assets. (ii) Joint ventures A joint venture is an entity in which the Group has a long term interest and exercises joint control. The consolidated Financial Information includes investments in joint ventures under the proportionate consolidation method of accounting. The income statement and balance sheet include the Group s share of the entities results and net assets on a line by line basis. (c) Goodwill Goodwill arises upon the acquisition of subsidiaries, associates and joint ventures and represents the cost of the acquisition in excess of the fair value of the Group s share of the net assets acquired. Fair values are determined based upon an assessment of the value of the individual assets and liabilities acquired, including reference to market prices and by discounting expected future cash flows to present value. Prior to 1 January 1998, goodwill was written off to reserves and has not subsequently been reinstated. For acquisitions on or after 1 January 1998, goodwill was capitalised and, until 31 March 2004, was amortised to the profit and loss account on a straight line basis over its useful life. From 1 April 2004 goodwill is no longer amortised but is subject to an annual impairment review. On disposal of a subsidiary, associate or joint venture, the attributable goodwill is included in the determination of the profit or loss on disposal, except for goodwill written off to reserves prior to 1998. Goodwill arising on the acquisition of associates is included within the carrying value of investments in associates. Goodwill arising on the acquisition of subsidiaries and joint ventures is shown separately on the face of the balance sheet. 12

Notes to the IFRS Financial Information (d) Other intangible assets For acquisitions since 1 April 2004, the Group has applied the provisions of IFRS3 "Business Combinations" and has separately identified intangible assets where appropriate. These may include customer contracts, customer lists, software development and other assets. Intangible assets acquired by the Group are stated at cost less accumulated amortisation and impairment losses. Amortisation of intangible assets is charged to the income statement on an appropriate basis over their estimated useful lives. (e) Impairment of tangible and intangible assets An impairment review of the recoverable amounts of fixed assets and intangible assets is undertaken at each balance sheet date or when such events or changes in circumstances indicate that an impairment loss may have occurred. Where an asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash - generating unit to which the asset belongs for the purpose of impairment reviews. Impairments identified are taken to the income statement as they arise, unless the asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. When an impairment loss subsequently reverses, the carrying amount of the asset is increased but not above the carrying value that would have been recognised had no impairment reviews previously been undertaken. A reversal of an impairment loss is taken to the income statement immediately, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. (f) Pensions The Group accounts for pensions and other post-retirement benefits under IAS19 'Employee Benefits'. For defined benefit pension schemes, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date. The pension scheme deficit recognised in the balance sheet represents the difference between the fair value of the assets of the plan and the present value of the defined benefit obligation at the balance sheet date. Actuarial gains and losses are recognised in full in the period in which they occur in the Statement of Recognised Income and Expense, net of the deferred tax impact. Payments to defined contribution schemes are recognised as an expense as they fall due. (g) Revenue Revenue comprises commission and brokerage income derived from securities broking, derivatives and money broking, energy broking, electronic broking and information services and is recognised as earned. Securities broking comprises voice broking and is mainly transacted on a matched principal basis. To represent the substance of matched principal services provided by the Group, where it acts as principal for the simultaneous purchase and sale of securities to third parties, commission income represents the differential between the consideration received on the sale of the security and its purchase price. Derivatives and money broking and energy broking comprise voice broking and are mainly transacted on an agency basis. Agency trades revenue is stated net of rebates and discounts, value added tax and other sales taxes. Electronic broking includes the broking of securities and derivatives and money broking products on electronic platforms. Revenue recognition for these products is in accordance with the treatment for the equivalent voice broked products. Revenue from information services represents fees received from the sale of financial information to third parties. This is stated net of value added tax and other sales taxes. 13

Notes to the IFRS Financial Information (h) Employee share-based payments and share ownership trusts From time to time, the Group awards share options and other share-based payments as part of employee incentive schemes. The Group has applied IFRS2 "Share-based Payments" for all such awards granted since 7 November 2002. The fair value of services acquired is measured by the fair value of the shares or share options awarded at the time of granting, and is charged to staff costs over the period the service is received on a straight line basis. A reserve of an equivalent amount is held on the balance sheet as part of the retained earnings. The fair value of share options awarded is calculated using option pricing models and factors into account various parameters including the exercise price, current share price, risk free rate of return and the volatility of ICAP s share price. The expected lives used in the fair value calculations are adjusted for the estimated effect of non-transferability and exercise restrictions. Investments in own shares held in connection with the Group's employee share schemes are deducted from shareholders' equity. Purchases, sales and transfers of own shares are disclosed as changes in shareholders equity. (i) Foreign currencies At entity level, transactions denominated in foreign currencies are translated into the functional currency at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Exchange differences are taken to the income statement, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are taken directly to reserves. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. On consolidation, the results of overseas businesses are translated into the presentational currency of the Group at the average exchange rates for the period where these approximate to the rate at the date of transaction. Assets and liabilities of overseas businesses are translated into the presentational currency of the Group at the exchange rate prevailing at the balance sheet date. Exchange differences arising are classified within equity and transferred to the Group's retained earnings. Cumulative translation differences arising after the transition to IFRS are taken to the income statement on disposal of the net investment. In accordance with IAS29 "Financial Reporting in Hyperinflationary Economies" the financial statements of foreign subsidiaries and joint ventures that report in the currency of a hyperinflationary economy are restated in terms of the measuring unit current at the balance sheet date before they are translated into the presentational currency of the Group. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Where applicable the Group has elected to treat goodwill and fair value adjustments arising before the date of transition to IFRS as denominated in the presentational currency of the Group. In the cash flow statement, cash flows denominated in foreign currencies are translated into the presentational currency of the Group at the average exchange rate for the period. (j) Taxation Tax on the profit for the year comprises both current and deferred tax as well as adjustments in respect of prior periods. Tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted, or substantially enacted by the balance sheet date. Deferred tax is recognised in respect of all temporary differences between the carrying value of assets and liabilities for reporting purposes and the amounts charged or credited for tax purposes. Deferred tax is calculated at the rate of tax expected to apply when the liability is settled or the asset is realised. A deferred tax asset is only recognised to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax liabilities are offset against deferred tax assets within the same taxable entity or qualifying local tax group where there is both the legal right and the intention to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group is able to control the timing of dividends from its overseas undertakings and hence does not expect to remit overseas earnings in the foreseeable future in a way which would result in a tax charge. Hence deferred tax is recognised in respect of retained earnings of overseas subsidiaries only to the extent that, at the balance sheet date, dividends have been accrued or receivable or a binding agreement to distribute past earnings in the future has been entered into by the subsidiary. 14

Notes to the IFRS Financial Information The following significant policies, which have been applied in the preparation of the 31 March 2005 IFRS Financial Information, were the Group s UK GAAP accounting policies, amended for IAS21. The Group will implement IAS32 and IAS39 prospectively from 1 April 2005 (see Basis of Preparation), at which time the policies will be revised and adopted. (k) Matched principal business Certain Group companies are involved as principal in the purchase and simultaneous commitment to sell securities between third parties. Such trades are complete only when both sides of the deal are settled, and so the Group is exposed to risk in the event that one side of the transaction remains unmatched. Substantially all the transactions settle within a short period of time and the settlement risk is considered to be minimal. In order to reflect the substance of these transactions, the amounts due to and payable by counterparties in respect of matched principal business expected to settle in the normal course of trading are offset and the net amount is included in trade and other receivables. Outstanding transactions which have gone beyond settlement date (initially unsettled transactions) and where neither side of the transaction has settled are shown gross on the face of the balance sheet as initially unsettled transactions within current assets and liabilities. Transactions where one side has settled but the other remains outstanding (unmatched transactions) are shown as the gross amount in the balance sheet and included within trade and other receivables and trade and other payables with the corresponding amount included as a cash movement. (l) Stock lending transactions Certain Group companies are involved in collateralised stock lending transactions as an intermediary between counterparties. Although the legal form of such transactions is that the securities broker acts as principal on both sides of the transaction, the substance of the transaction is that the Group companies involved act as intermediaries and assume minimal risk. Accordingly, for those transactions where there is a legally enforceable right of offset the net amount is included within trade and other receivables or payables. (m) Financial instruments The Group uses various financial instruments as hedges to reduce exposure to foreign exchange and interest rate risk. These include forward foreign exchange contracts, currency options, cross currency and interest rate swaps. Forward foreign exchange contracts are the principal instruments used to hedge foreign exchange exposures both on assets and liabilities recognised in the Financial Information and forecast receipts and payments denominated in foreign currencies. Gains and losses on forward foreign exchange contracts are offset against the exchange differences arising on the hedged assets and liabilities. Where a contract is a hedge against future transactions, gains and losses on the contract are deferred until the transaction is recognised in the financial statements. Where the hedged asset or liability ceases to exist, or is not expected to occur in the future, the hedging instrument is closed out and any profit or loss is recognised in the income statement immediately as part of operating profit. (n) Debt provisioning Provisions are made for specific debts when it is considered that the credit-worthiness of the debtor has deteriorated such that the recovery of all or part of a debt is in serious doubt. A provision is made in respect of potential losses which are judged to be present in debtor balances at the balance sheet date, but which will not be identified as such until some time in the future. The level of provision is based upon the previous experience of such losses in the Group and is reviewed on a periodic basis. The appropriateness of the provision is periodically assessed against any actual losses that have arisen. All provisions are recorded within operating expenses in the income statement. 15

Notes to the IFRS Financial Information 4 Segment reporting (a) Primary segment - Geographical In accordance with IAS14 "Segment Reporting" the primary segment is geographical as this is the basis on which the Group manages its operations. Year ended 31 March 2005 - audited Americas Europe Asia Pacific Total m m m m Revenue 374.0 354.5 84.2 812.7 Group operating profit before amortisation of intangibles and exceptional items 88.2 76.4 9.4 174.0 Amortisation of intangibles (0.5) (0.2) - (0.7) Exceptional items 0.3 (7.0) (2.4) (9.1) Group operating profit 88.0 69.2 7.0 164.2 Net finance income 1.3 3.4 (0.1) 4.6 Share of (loss)/profit of associates (post-tax) - (2.7) 0.7 (2.0) Profit before tax 89.3 69.9 7.6 166.8 Included in revenue is 18.7m in respect of joint ventures (Americas 10.2m, Europe 5.8m, Asia Pacific 2.7m). Included in Group operating profit is 6.0m in respect of joint ventures (Americas 2.9m, Europe 1.6m, Asia Pacific 1.5m). 6 months ended 30 September 2004 - unaudited Americas Europe Asia Pacific Total m m m m Revenue 184.8 168.7 42.3 395.8 Group operating profit before amortisation of intangibles and 40.5 34.2 5.9 80.6 exceptional items Amortisation of intangibles - - - - Exceptional items - (6.0) - (6.0) Group operating profit 40.5 28.2 5.9 74.6 Net finance income 0.5 1.9 (0.1) 2.3 Share of profit of associates (post-tax) - - 0.4 0.4 Profit before tax 41.0 30.1 6.2 77.3 Included in revenue is 8.9m in respect of joint ventures (Americas 5.1m, Europe 2.5m, Asia Pacific 1.3m). Included in Group operating profit is 3.0m in respect of joint ventures (Americas 1.5m, Europe 0.6m, Asia Pacific 0.9m). 16

Notes to the IFRS Financial Information (b) Secondary segment - Business activity Securities broking Derivatives and money broking Year ended 31 March 2005 - audited Energy broking Electronic broking Information services Total m m m m m m Revenue 324.6 328.4 50.9 83.8 25.0 812.7 Group operating profit before amortisation of intangibles and exceptional items 52.0 75.7 7.5 23.7 15.1 174.0 Amortisation of intangibles - (0.2) - - (0.5) (0.7) Exceptional items (2.2) (6.7) (0.3) 0.1 - (9.1) Group operating profit 49.8 68.8 7.2 23.8 14.6 164.2 6 months ended 30 September 2004 - unaudited Securities broking Derivatives and money broking Energy broking Electronic broking Information services Total m m m m m m Revenue 164.4 156.0 23.7 39.9 11.8 395.8 Group operating profit before amortisation of intangibles and exceptional items 25.7 35.2 3.0 9.4 7.3 80.6 Amortisation of intangibles - - - - - - Exceptional items (2.3) (3.3) (0.5) 0.1 (6.0) Group operating profit 23.4 31.9 2.5 9.5 7.3 74.6 17